Justice Shirley Werner Kornreich
UBS Real Estate Securities made a nonrecourse loan to NMP-Group secured by a mortgage on real property. Repayment was guaranteed by NMP’s sole member, Pirogova, who promised to be liable for the full amount in the event NMP filed for voluntary bankruptcy. Lender sought to foreclose on the mortgage property claiming borrower defaulted on the loan. The court issued a judgment of foreclosure, directing a referee to sell the property. The day of the auction, borrower filed a voluntary bankruptcy petition. Lender moved for summary judgment against Pirogova arguing the bankruptcy petition triggered her liability under the guaranty for the full amount owed on the loan under the foreclosure judgment. The court noted an election of remedies doctrine only operated when there was a choice of remedies available at the time prior actions were undertaken. It stated to hold in the context of a nonrecourse loan the election of remedies barred an action on debt even when the springing recourse event occurred after the start of the foreclosure action would transform the lender’s conditional waiver into an absolute one. The court ruled as a result of NMP’s voluntary bankruptcy filing, Pirogova was liable for the entirety of all sums due lender regarding the loan, granting plaintiff’s motion.
