Motion for Child Support in 31 East 28th Street Note Buyer Llc v. Jack Terzi, Hagai Laniado| Trellis.Law

On July 17, 2019 a Motion-Secondary was filed involving a dispute between 31 East 28Th Street Note Buyer Llc, and Hagai Laniado, Jack Terzi, for Commercial Division in the District Court of New York County.

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FILED: NEW YORK COUNTY CLERK 10/11/2019 12:14 PM INDEX NO. 654085/2019
NYSCEF DOC. NO. 19 RECEIVED NYSCEF: 10/11/2019

SUPREME COURT of the STATE of NEW YORK
COUNTY of NEW YORK
------------------------------------------------------------------------X
31 EAST 28TH STREET NOTE BUYER LLC,

Plaintiff,
Index No.: 654085/2019
-against-

JACK TERZI and HAGAI LANIADO,

Defendants.
------------------------------------------------------------------------X

DEFENDANTS’ MEMORANDUM OF LAW
IN SUPPORT OF THEIR CROSS-MOTION TO DISMISS
OR STAY PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT
IN LIEU OF COMPLAINT AND IN OPPOSITION TO SUMMARY JUDGMENT

OVED & OVED LLP
Attorneys for Defendants
Jack Terzi and Hagai Laniado
401 Greenwich Street
New York, NY 10013
(212) 226-2376

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TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES .......................................................................................................... ii

PRELIMINARY STATEMENT ......................................................................................................1

BACKGROUND .............................................................................................................................3

A. THE PARTIES .............................................................................................................3

B. THE PRIOR ACTION ...................................................................................................4

C. THE INSTANT ACTION .............................................................................................10

ARGUMENT ................................................................................................................................11

I. THIS ACTION SHOULD BE DISMISSED PURSUANT TO CPLR 3211(A)(4) .................11

II. THIS ACTION IS BARRED BY RPAPL 1301 .............................................................14

III. IF NOT DISMISSED, THIS ACTION SHOULD BE STAYED
PURSUANT TO CPLR 2201 ......................................................................................17

IV. SUMMARY JUDGMENT SHOULD BE DENIED ............................................................19

CONCLUSION ..............................................................................................................................22

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TABLE OF AUTHORITIES

Cases Page(s)

330 Acquisition Co., LLC v. Regency Sav. Bank, F.S.B.,
293 A.D.2d 314 (1st Dep’t 2002) ......................................................................................21

Asher v. Abbott Labs.,
307 A.D.2d 211 (1st Dep’t 2003) ................................................................................17, 18

Barringer v. Zgoda,
91 A.D.2d 811 (3d Dep’t 1982) .........................................................................................12

Belopolsky v. Renew Data Corp.,
41 A.D.3d 322 (1st Dep’t 2007) ........................................................................................18

Black Bear Fuel Oil, Ltd. v. Swan Lake Developers LLC,
128 A.D.3d 1191 (3d Dep’t 2015) .....................................................................................21

Blank v. Miller,
122 A.D.2d 356 (3d Dep’t 1986) .................................................................................11, 14

Britt v. Int’l Bus Servs., Inc.,
255 A.D.2d 143 (1st Dep’t 1998) ......................................................................................17

Case Capital Corp. v. Morgan Invest., Inc.,
154 A.D.2d 501 (2d Dep’t 1989) .................................................................................13, 17

Central Trust Co. v. Dann,
85 N.Y.2d 767 (1995) ........................................................................................................17

Chen v. Yeung,
No. 100645/2011, 2011 N.Y. Misc. LEXIS 4660
(Sup. Ct. N.Y. County Sept. 23, 2011) ..............................................................................17

Cherico, Cherico & Assoc. v. Midollo,
67 A.D.3d 622 (2d Dep’t 2009) .........................................................................................13

Citimortgage, Inc. v. Gueye,
No. 103199/09, 2016 N.Y. Misc. LEXIS 2316
(Sup. Ct. N.Y. County June 21, 2016) .................................................................................9

Civ. Serv. Bar Asso., Local 237, etc. v. New York,
99 A.D.2d 264 (1st Dep’t 1984) ..................................................................................12, 16

Esquire Indus., Inc. v. E. Bay Textiles, Inc.,
68 A.D.2d 845 (1st Dep’t 1979) ..................................................................................12, 16

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Federal Home Loan Mtge. Corp v. Sierra,
226 A.D.2d 283 (1st Dep’t 1996) ......................................................................................15

First Fid. Bank, N.A. v. Best Petroleum, Inc.,
757 F. Supp. 293 (S.D.N.Y. 1991) ....................................................................................15

Goodridge v. Fernandez,
121 A.D.2d 942 (1st Dep’t 1986) ................................................................................17, 18

GSL Enters., Inc. v. Citibank, N.A.,
155 A.D.2d 247 (1st Dep’t 1989) ......................................................................................14

Innovative Audio Video v. Friedman,
7 Misc. 3d 383 (Sup. Ct. N.Y. County 2005) ......................................................................4

Interman Ind. Prods. v. R.S.M. Electron Power,
37 N.Y.2d 151 (1975) ........................................................................................................19

In re Solutia Inc.,
379 B.R. 473 (Bankr. S.D.N.Y. 2007) ...............................................................................20

Jadron v. 10 Leonard St., LLC,
124 A.D.3d 842 (2d Dep’t 2015) .......................................................................................11

JP Foodservice Distribs. v. PricewaterhouseCoopers LLP,
291 A.D.2d 323 (1st Dep’t 2002) ................................................................................17, 18

Maglich v. Saxe, Bacon & Bolan, P.C.,
97 A.D.2d 19 (1st Dep’t 1983) ..........................................................................................19

Malay v. City of Syracuse,
25 N.Y.3d 323 (2015) ..................................................................................................12, 16

Minin v. 2494 Amsterdam Ave. LLC,
2011 N.Y. Slip. Op. 32879[U] (Sup. Ct., N.Y. County 2011) ...........................................15

OneBeacon Am. Ins. Co. v. Colgate-Palmolive Co.,
96 A.D.3d 541 (1st Dep’t 2012) ........................................................................................18

Pacheco v. Heussler,
56 A.D.2d 85 (4th Dep’t 1977) ..........................................................................................21

Peck v. Hotchkiss,
1874 N.Y. Misc. LEXIS 2 (N.Y. Dec. 1, 1874).................................................................12

iii

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Reichert v. Stilwell,
172 N.Y. 83 (1902) ............................................................................................................17

Salch v. Paratore,
60 N.Y.2d 851 (1983) ..........................................................................................................4

Seaman-Andwall Corp. v. Wright Mach. Corp.,
31 A.D.2d 136 (1st Dep’t 1968),
aff’d 29 N.Y.2d 617 (1971)................................................................................................19

Sec. Pac. Nat’l Bank v. Evans,
62 A.D.3d 512 (1st Dep’t 2009) ........................................................................................21

Seidman v. Indus. Recycling Props., Inc.,
106 A.D.3d 983 (2d Dep’t 2013) .......................................................................................21

Shah v. RBC Capital Mkts. LLC,
115 A.D.3d 444 (1st Dep’t 2014) ......................................................................................13

Stewart Title Ins. Co. v. Wingate, Kearney & Cullen,
145 A.D.3d 462 (1st Dep’t 2016) ......................................................................................13

Syncora Guar. Inc. v. J.P. Morgan Sec. LLC,
110 A.D.3d 87 (1st Dep’t 2013) ............................................................................11, 12, 13

TBS Enters., Inc. v. Grobe,
114 A.D.2d 445 (2d Dep’t 1985) .......................................................................................15

Tonkonogy v. Seidenberg,
63 A.D.2d 587 (1st Dep’t 1978) ........................................................................................19

Trieber v. Hopson,
27 A.D.2d 151 (3d Dep’t 1967) .........................................................................................17

Trinity Prods., Inc. v. Burgess Steel LLC,
18 A.D.3d 318 (1st Dep’t 2005) ........................................................................................18

Trustco Bank v. Pearl Mont Commons, LLC,
55 Misc. 3d 371 (Sup. Ct., Schenectady County 2016) .....................................................15

Uptown Healthcare Mgmt., Inc. v. Rivkin Radler LLP,
116 A.D.3d 631 (1st Dep’t 2014) ................................................................................17, 18

White Light Prods. v. On the Scene Prods.,
231 A.D.2d 90 (1st Dep’t 1997) ..................................................................................12, 13

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Zyskind v. FaceCake Mktg. Techs., Inc.,
101 A.D.3d 550 (1st Dep’t 2012) ......................................................................................19

Statutes & Rules

CPLR 105(u) ....................................................................................................................................4

CPLR 602(a) .................................................................................................................................11

CPLR 2201.....................................................................................................................................17

CPLR 3211(a)(4) .........................................................................................................11, 12, 13, 17

CPLR 3213.....................................................................................................................................19

CPLR 5001(a) ............................................................................................................................9, 21

RPAPL 1301 ..................................................................................................................................14

Other Sources

Michael Shah, THE REAL DEAL,
https://therealdeal.com/new-research/topics/people/michael-shah
(last visited Sept. 9, 2019)....................................................................................................5

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Defendants Jack Terzi (“Terzi”) and Hagai Laniado (“Laniado”) (collectively,

“Defendants”) respectfully submit this memorandum of law (a) in support of their cross-motion

(the “Cross-Motion”) for an order dismissing the instant action pursuant to CPLR 3211(a)(4) and

RPAPL 1301, or alternatively, staying this action pursuant to CPLR 2201 pending the resolution

of the related and earlier-filed action captioned 31 East 28th Street Note Buyer LLC v. JTRE

Park 28 LLC, et al., No. 850193/2017 (Sup. Ct., N.Y. County) (the “Prior Action”); and (b) in

opposition to Plaintiff’s motion for summary judgment in lieu of complaint pursuant to CPLR

3213 (the “Motion”).

PRELIMINARY STATEMENT

This action should be dismissed or, at minimum, stayed, because the central issue in this

action is already being litigated in the Prior Action pending in this Court, the resolution of which

will render this entire action moot. Plaintiff commenced the Prior Action on August 22, 2017

asserting a claim to foreclose on mortgages on 31-33 East 28th Street (the “Mortgages”) and, just

like in this action, a claim to enforce a Limited Guaranty of the amounts due under the Mortgage

by Defendants. In the Prior Action, the mortgagor, JTRE Park 28 LLC (“JTRE”) and

Defendants (collectively, the “JTRE Parties”) asserted numerous counterclaims, all of which

centered around the fact that Plaintiff engaged in bad faith scheme to manufacturer a default

under Mortgages in order to charge excessive interest from JTRE at the default rate of 24% and

then buy the property at a discount in foreclosure. In the Prior Action, the JTRE Parties already

obtained a judicial determination from this Court that Plaintiff did indeed breach the Mortgages

by improperly declaring JTRE in default and improperly accelerating the Mortgages Maturity

Date.

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More specifically, after Plaintiff commenced the Prior Action, Plaintiff moved for

summary judgment for its claim of default and to dismiss Defendants’ counterclaims for breach

of contract, breach of the implied covenant of good faith and fair dealing, and tortious

interference with contract. In response, Defendants cross-moved for summary judgment

dismissing the Complaint. The Court (Hon. Arlene Bluth, J.S.C) agreed that it was Plaintiff, not

JTRE, who breached the Loan Documents, dismissed Plaintiff’s claims and denied Plaintiff’s

motion to dismiss the JTRE Parties’ counterclaims, which therefore remain live and pending

(Prior Action, NYSCEF Dkt. No. 163, the “Prior Decision”). The JTRE Parties now have a

cross-motion pending in the Prior Action to: (i) obtain a judicial determination as to the present

amount due and owing under the Mortgage after Plaintiff’s improper acceleration of the

Mortgage Maturity Date, and (ii) compel Plaintiff to issue a payoff statement for that amount,

which Plaintiff has refused to do, so that JTRE can finally payoff the Mortgage (the “Prior

Action Motion”). The Prior Action Motion also seeks to (i) amend and supplement the JTRE

Parties’ counterclaims to assert additional claims and allegations and to seek additional relief

against Plaintiff and Shah, and (ii) consolidate this action with the Prior Action and another

related motion involving the same parties and facts.

Now, in an attempt to forum shop, bypass the properly and orderly litigation of the issues

and claims set forth above, and multiply litigation, Plaintiff tactically filed this action asserting a

single claim to enforce the Guarantors’ Limited Guaranty of the Mortgage, and two other

separate actions, all of which arise from the same transactions and occurrence as the Prior

Action.

As detailed in Point I, infra, this action should be dismissed pursuant to CPLR 3211(a)(4)

because both this action and the Prior Action involve the same parties, facts, documents and

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witnesses, and hinge on the exact same threshold issue, namely, the amount that Plaintiff is

required to accept to discharge the Mortgage and Guaranty in light of its default and improper

acceleration of the Mortgage that tied the parties up in litigation for years.

As detailed in Point II,infra, this action should independently be dismissed pursuant to

RPAPL 1301. RPAPL 1301 expressly prohibits a party, without advanced leave of Court, from

filing an action to collect any portion of a mortgaged debt when another action on that same debt

is already pending. The Prior Action is still pending in that Plaintiff’s claims, although

dismissed, are on appeal and Defendants counterclaims were sustained. Accordingly, this action

is barred as matter of law.

As detailed in Point III, infra, in the event this action is not dismissed, it should at least

be stayed pursuant to CPLR 2201 pending the determination of the threshold issue in the Prior

Action by Justice Bluth. Otherwise, the parties will have to litigate identical issues before two

different Justices, which would be a waste of judicial and party resources, and would be severely

prejudicial to Defendants by creating a risk of inconsistent and irreconcilable decisions, which

would only result in confusion, delay and more unnecessary litigation.

As detailed in Point IV, infra, Plaintiff’s motion for summary judgment should be denied

because the same factual disputes that permeate the Prior Action preclude summary judgment in

this action. This is because Defendants’ Limited Guaranty is expressly subject to whatever is

actually due under the Mortgage in light of Plaintiff’s default, and Plaintiff’s claims are

“inextricably intertwined” with the JTRE Parties’ counterclaims in the Prior Action.

BACKGROUND

A. The Parties

Plaintiff is a New York limited liability company with offices located at 114 E. 13th

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Street, Front 1, New York, New York 10003. AA ¶ 8. It is owned and controlled by Shah, who

is a person that resides in New York, New York. Shah is a distressed real estate investor who is

notorious for buying allegedly “defaulted mortgages from New York-area banks” which “often

result[] in Shah taking possession of the mortgaged building.”1 Id. ¶ 9.

Jack Terzi is a person who resides in New York, New York. He is the principal of JTRE.

Hagai Laniado is also a person who resides in New York.

B. The Prior Action

JTRE owns the commercial-use condominium located at 31-33 East 28th Street, New

York, New York (the “Property”). AA ¶ 10. By Mortgage dated August 6, 2014 and March 3,

2015, JTRE and Signature Bank encumbered the Property with $4,000,000 of debt. Id. ¶¶ 11-12.

Defendants signed a Limited Guaranty of “all obligations or liabilities of Borrower to Lender

under the Note, Mortgage and all other Loan Documents” due under the Mortgage until

“repayment in full of the Loan.”2 Under the Loan Documents, JTRE was technically required to

keep a certain amount of funds in a Signature Bank account (the “Collateral Account”) to

encourage banking with Signature Bank, but Signature Bank never enforced that technical

requirement. Id. ¶¶ 14, 15, 17; Prior Decision, NYSCEF Dkt. No. 163 at 2. From the inception

1
See the Proposed Amended Answer in Prior Action, NYSCEF Dkt. No. 182 (the “Amended Answer” or “AA”).
The Amended Answer isverified and thus tantamount to an affidavitfor purposes of these motions. See, e.g.,
Innovative Audio Video v. Friedman, 7 Misc. 3d 383, 385 n.2 (Sup. Ct. N.Y. County 2005) (“‘verified pleading may
be utilized as an affidavit whenever the latter is required’”) (quoting CPLR 105(u)); Salch v. Paratore, 60 N.Y.2d
851, 852-53 (1983) (same). The Amended Answer isattached as Exhibit A to the Affirmation of Andrew J.
Urgenson, Esq. filed concurrently herewith (the “Urgenson Aff.”).
2
The term “Loan Documents” refers to the following documents: (1) the Mortgage Note, dated August 6, 2014
(the “First Note,” Prior Action, NYSCEF Dkt. No. 2); (2) the Mortgage, Security Agreement, Assignment of Leases
and Rents and Fixture Filing, dated August 6, 2014 (the “First Mortgage,” Prior Action, NYSCEF Dkt. No. 3); (3)
the Second Mortgage Note, dated March 3, 2015 (the “Second Note,” Prior Action, NYSCEF Dkt. No. 7); (4) the
Second Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Filing, dated March 3, 2015
(the “Second Mortgage,” Prior Action, NYSCEF Dkt. No. 8); and (5) the Amended and Restated Cash Collateral
Agreement (the “Cash Collateral Agreement”), dated March 3, 2015 (Prior Action, NYSCEF Dkt. No. 9), which
are the subject of this action.The First Mortgage, First Note, Second Mortgage and Second Note are collectively
referred to herein as the “Mortgages.”.

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of the Loan Documents, JTRE never missed a single mortgage payment until Shah manufactured

a technical default in or around May 2017. Prior Decision, NYSCEF Dkt. No. 163 at 1.

Specifically, in early 2017, Shah expressed an interest in purchasing the Property from

JTRE, but never made an offer to JTRE. AA ¶ 20. This is because Shah’s modus operandi is to

buy mortgages on real property, not the property itself, and then take title via foreclosure. See

Michael Shah, THE REAL DEAL, https://therealdeal.com/new-research/topics/people/michael-shah

(last visited Sept. 9, 2019). That way, he can build equity in the property by charging exorbitant

default interest and then buy the property in foreclosure at a deep discount. The problem,

however, is that the mortgages need to be in default for this practice to work, and JTRE was a

dutiful borrower that always made its mortgage payments on time.

Accordingly, even though JTRE never missed a single mortgage payment, Shah and

Signature Bank colluded to manufacture a default under the Loan Documents so that Shah could

buy the Loan Documents and effectuate this scheme against JTRE.3 AA ¶¶ 21-33. While the

particulars are still not completely known because the parties have yet to conduct discovery, it

culminated in JTRE receiving both a notice to cure a default (the “Default Notice”) and a notice

of acceleration (the “Acceleration Notice”) simultaneously in June 2017. Id. ¶¶ 23-26. While

the maturity date on the Mortgage was originally August 10, 2017 (the “Original Maturity

Date”), the Acceleration Notice immediately accelerated the maturity date to May 30, 2017. Id.

¶ 26. The sole basis for this sudden declaration of default was JTRE’s alleged failure to keep

sufficient funds in the Collateral Account. Id. ¶ 24. Additionally, the Default Notice only

3
Shah even admitted later in court filings that he would only have bought the Loan Documents if they were first put
into default. See Prior Action, NYSCEF Dkt. No. 91 at 23. Shah also engaged in an identical scheme with respect
to the mortgages on two other Terzi properties. The first such property, 27 West 72nd Street, New York, New York,
is subject to an identical foreclosure action before this Court. See 27 West 72nd Street Note Buyer LLC v. JTRE
W72nd Street LLC, No. 850183/2017. The second such property was 349 West Broadway New York, New York.
Tellingly, once Shah decided not to purchase the mortgage for the West Broadway property, the cash collateral
account was suddenly unfrozen and the JTRE Parties were allowed to cure its alleged default.

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afforded JTRE ten (10) days to cure the alleged default, even though the Loan Documents

allowed for thirty (30) days to cure, and in any event, JTRE received the Default Notice and

Acceleration Notice on the same day, which left it with no time to cure. Id. ¶¶ 16, 23-25.

Immediately after simultaneously receiving the Default Notice and Acceleration Notice,

in or around June 2017, JTRE diligently made multiple attempts to replenish the Collateral

Account in order to cure its alleged default and to continue making its monthly mortgage

payments. Id. ¶ 31. However, in furtherance of Shah’s scheme to force JTRE into a technical

default, Signature Bank (1) froze the Collateral Account; (2) expressly rejected JTRE’s

numerous requests to replenish the Collateral Account; and (3) refused to accept JTRE’s

attempts to make its monthly mortgage payments. Id. ¶ 30.

Then, like clockwork, on or about July 19, 2017, Shah, through his wholly-owned entity,

the Plaintiff, purchased the Loan Documents from Signature Bank. Id. ¶ 35. Despite JTRE’s

repeated attempts to reach a resolution, Shah, like Signature Bank, repeatedly refused and

continues to refuse to accept either a cure of the alleged default or a payoff unless it includes

default interest, which is at the exorbitant rate of 24% per annum, as opposed to the ordinary

3.75% interest rate under the Loan Documents. Id. ¶ 36.

On August 22, 2017, Plaintiff filed the Prior Action against the JTRE Parties based solely

on JTRE’s alleged failure to replenish the Collateral Account, seeking to enforce the Mortgage

and the same Limited Guaranty that Plaintiff seeks to enforce in this action. Id. ¶ 42.

Before even serving the Complaint, Plaintiff and Shah (the “Shah Parties”) immediately

sought to seize control over the Property from JTRE through an ex parte receivership application

that was not supported by a single fact that could conceivably warrant the imposition of a

receiver over the Property. The Court eventually vacated its ex parte receivership order on the

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grounds that Plaintiff and Shah had failed to satisfy their burden of proving that a receiver was

necessary to avoid irreparable harm. Id. ¶ 43.

On March 7, 2018, the JTRE Parties filed an Answer With Affirmative Defenses,

Counterclaims and Third-Party Complaint (the “Answer”). See Prior Action, NYSCEF Dkt. No.

64. Based on the facts set forth above, the Answer asserts JTRE’s Claims that Plaintiff breached

the Mortgage and the implied covenant of good faith and fair dealing and that Shah tortiously

interfered with JTRE’s contractual relationship with Signature Bank.

On April 19, 2018, JTRE served discovery demands and deposition notices on Plaintiff

and Shah to obtain the documents and information necessary to further support JTRE’s Claims.

AA ¶ 45.

On April 25, 2018, to avoid complying with discovery, Shah and Plaintiff filed a motion

seeking, inter alia, (1) summary judgment on Plaintiff’s foreclosure claims; and (2) summary

judgment dismissing JTRE’s Claims (the “Summary Judgment Motion”). Id. ¶ 46. Attempting

to exploit the fact that, in the interim, the Loan Documents’ original maturity of August 10, 2017

date had passed, Plaintiff now also claimed it was entitled to summary judgment because JTRE

did not pay-off the Loan Documents on that date. Prior Action, NYSCEF Dkt. No. 129 at p. 7.

Plaintiff made this argument even though it had already accelerated the Maturity Date and

refused to accept a payoff in the amount that would have been due on that date, and insisting

instead on exorbitant default interest stemming from the date JTRE was improperly declared in

default. AA ¶ 36.

On June 7, 2018, the JTRE Parties filed their opposition to the Summary Judgment

Motion and cross-moved seeking summary judgment dismissing the Complaint. AA ¶ 47.

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On May 21, 2019, the Court issued the Prior Decision granting the JTRE Parties’ cross-

motion for summary judgment dismissing Plaintiff’s Complaint and denied Plaintiff’s Summary

Judgment Motion. Prior Decision, NYSCEF Dkt. No. 163 at 6; AA ¶ 48. The Court held that

Plaintiff did indeed violate the Loan Documents by declaring JTRE in default and accelerating

the Original Maturity Date. Prior Decision, NYSCEF Dkt. No. 163 at 6.

Following the Prior Decision, JTRE began lining up lenders in the hopes that Shah would

finally allow it to refinance the Loan Documents, so that JTRE could focus its attention on

developing the Property, which has been tied up with litigation and uncertainty as a result of

Shah’s predatory practices. In order to refinance, however, JTRE required a payoff statement

from Shah reflecting the amount due and owing under the Loan Documents. Absent a proper

payoff statement, JTRE cannot refinance because, among many other reasons, a new lender

needs to know the terms upon which Shah would discharge the Mortgage on the Property before

committing to lend. AA ¶ 49. Accordingly, on June 5, 2019, JTRE requested from Shah a

payoff statement that reflected what JTRE would have had to pay under the Loan Documents if

Plaintiff did not improperly declare a default and accelerate the Maturity Date. AA ¶ 50.

After JTRE followed up on this request, Shah finally provided JTRE with a payoff letter

nearly a month later on July 1, 2019. Id. ¶ 52. However, consistent with his bad faith lending

practices, Shah, in his “payoff letter,” not only demanded that JTRE be responsible for default

interest during the time it took to litigate Shah’s default, he also demanded attorneys’ fees

incurred in connection with the Prior Action, even though the Court found the Complaint to be

without merit. Id. ¶ 53. Shah even sought late charges on mortgage payments, when he was the

one who refused to accept JTRE’s mortgage payments and Signature Bank had frozen JTRE’s

Collateral Account. Id. This “payoff letter” made clear that Shah formulated a new bad faith

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and predatory tactic: to hold JTRE hostage to the Loan Documents unless JTRE capitulates to

Shah’s demand to pay default interest and the costs of Shah’s default. Id. Despite JTRE’s

repeated attempts to resolve this issue, Shah has continued his refusal of providing a proper

payoff statement, which (1) is stifling JTRE’s ability to move forward with its plans for the

Property and causing JTRE significant damage, and (2) is designed to deprive JTRE of the fruits

of the Loan Documents because he knows that JTRE cannot refinance the debt absent a proper

payoff statement. Id. ¶ 54.

On June 20, 2019, Plaintiff and Shah moved for clarification or, alternatively, re-

argument of certain portions of the Prior Decision. See Prior Action, NYSCEF Dkt. Nos. 169-

175. On August 26, 2019, JTRE filed a cross-motion (which is referred to above as the “Prior

Motion”) seeking to compel Plaintiff and Shah to provide an accurate payoff statement for the

Mortgage so that JTRE can refinance the Mortgage and finally resolve this matter.4 The Prior

Motion also seeks to amend JTRE’s counterclaims to add additional claims for damages and

injunctive relief against Plaintiff and Shah, and to consolidate this action with that one.

In the Prior Motion, the JTRE Parties are specifically asking the Court to exercise its

inherent discretion to determine that the amount presently due and owing under the Mortgages

based on the unique and particular facts of this case.5 As the Prior Motion demonstrates, that

amount should be $3,830,182.77, which equals the principal amount due under the Loan

Documents plus the standard interest rate under the Note (3.75%), as opposed to the default

interest rate (24%), up until the Original Maturity Date, which was August 10, 2017, before

4
A copy of the JTRE Parties’ brief in support of the Prior Motion (“Prior Motion Brief”) is attached as Exhibit B to
the Urgenson Aff.
5
See CPLR 5001(a) (“interestand the rate and date from which it shall be computed shall be in the court’s
discretion.”).The “resolution of the interest question is dependent upon the facts of each case.” Citimortgage, Inc.
v. Gueye, No. 103199/09, 2016 N.Y. Misc. LEXIS 2316, at *4-5 (Sup. Ct. N.Y. County June 21, 2016) (Bluth, J.).

Page 9

15 of 28
FILED: NEW YORK COUNTY CLERK 10/11/2019 12:14 PM INDEX NO. 654085/2019
NYSCEF DOC. NO. 19 RECEIVED NYSCEF: 10/11/2019

Plaintiff improperly accelerated it to May 30, 2017. The reason the ordinary interest rate should

apply is because the Court already determined that the declaration of default against JTRE was

“void” and that it was Plaintiff who breached the Loan Documents by improperly accelerating

the Mortgages without giving JTRE the requisite 30-day opportunity to cure. The reason interest

should be calculated up until the Original Maturity Date is because that is the date that JTRE

could have, and would have, paid off the Loan Documents, but for Plaintiff’s improper

acceleration of the maturity date to May 30, 2017 and other bad faith conduct. Otherwise,

Plaintiff would be heavily rewarded for its breach of the Loan Documents and predatory lending

practices.6

Plaintiff and Shah also filed a notice of appeal from the Prior Decision. A copy of the

notice of appeal is attached as Exhibit C to the Urgenson Aff.

C. The Instant Action

In a blatant attempt

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Andrew S Borrok Track Judge’s New Case

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October 11, 2019

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July 17, 2019

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Motion-Secondary: 31 East 28th Street Note Buyer Llc v. Jack Terzi, Hagai Laniado

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