MEMORANDUM Defendant 45-34 Pearson Shlaf, LLC and defendant 45-34 Pearson Street LIC have moved for an order permitting them to reargue a previous motion made by plaintiff Pearson Street Funding LLC for, inter alia, summary judgment.I. Reargument WarrantedA motion to reargue may be brought where “the court overlooked or misapprehended the facts or the law or for some reason mistakenly arrived at its earlier decision.” (Schneider v. Solowey, 141 AD2d 813 [2nd Dept 1988]; see, CPLR 2221[d]; Vanderbilt Brookland, LLC v. Vanderbilt Myrtle, Inc., 147 AD3d 1106 [2nd Dept 2017]; Ahmed v. Pannone, 116 AD3d 802[2nd Dept 2014].) In the case at bar, reargument is warranted. The Honorable Thomas D. Raffaele, now retired, decided the plaintiff’s previous motion by a memorandum dated June 14, 2018 and order dated June 14, 2018. The memorandum states that the plaintiff established its prima facie entitlement to summary judgment and further states without elaboration “[d]efendants fail to raise a triable issue of fact***.” The memorandum gives the impression that the motion was treated as submitted without opposition. The order states in relevant part (at page 2) “and no affidavits being considered in opposition thereto” and further states (at page 3) “and no party having appeared in opposition thereto.” The Pearson defendants assert: “It thus seems clear that, perhaps for reasons beyond the Court’s control, Your Honor failed to consider Defendants’ opposition papers***and the appearance of counsel.” This court agrees with the defendants’ assertion and will decide the previous motion and cross motion de novo.II. The Allegations of the ComplaintThe complaint alleges the following:On April 15, 2016, defendant Shai Ohana, the sole member of 45-34 Pearson Street LLC (the borrower or mortgagor), acting for his company, executed and delivered to plaintiff Pearson Street Funding LLC (PSF) a consolidated mortgage note in the principal amount of $1,250,000. On April 15, 2016, Ohana, acting on behalf of his company, also executed and delivered to the plaintiff a consolidated mortgage encumbering premises known as 45-34 Pearson Street, Queens, New York (the subject property). In addition Ohana gave his personal guarantee of the repayment of the debt. The defendant borrower subsequently conveyed title to the subject premises to defendant 45-34 Pearson Shlaf, LLC (collectively with the defendant borrower the Pearson defendants). The defendant borrower defaulted under the terms of the note and mortgage by failing to fully pay installments of interest due on December 1, 2016 and thereafter. By notice dated December 24, 2016, the plaintiff accelerated the principal sum due.III. Relevant Procedural HistoryOn December 30, 2016, the plaintiff began the instant action to foreclose on the mortgage by the filing of a summons and a complaint. On March 8, 2018, the plaintiff submitted a motion for, inter alia, summary judgment which was decided by Judge Raffaele by decision and order dated June 14, 2018. The Pearson defendants submitted a cross motion for an order of consolidation. As discussed above, the court has decided to vacate the decision and order and to determine the previous motion and cross motion de novo.IV. The Plaintiff’s MotionA. Summary Judgment on the Complaint Against the Pearson Defendants1. The Plaintiff’s Burden“”[T]he proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact***.” (Alvarez v. Prospect Hospital, 68 NY2d 320, 324. [1986]) Plaintiff PSF successfully carried this burden. The plaintiff made a prima facie showing of entitlement to judgment as a matter of law by submission of the mortgage, the unpaid note, and proof of default. (See, GRP Loan, LLC v. Taylor, 95 AD3d 1172 [2nd Dept 2012]; Capstone Business Credit, LLC v. Imperia Family Realty, LLC, 70 AD3d 882 [2nd Dept 2010]; EMC Mtge. Corp. v. Riverdale Assoc., 291 AD2d 370 [2nd Dept 1002].)2. The Defendants’ BurdenThe burden on this branch of the motion shifted to the Pearson defendants, requiring them to demonstrate the existence of a triable issue of fact concerning a bona fide defense such as waiver, estoppel, bad faith, fraud, or oppressive or unconscionable conduct on the part of the plaintiff. (See, Capstone Bus. Credit, LLC v. Imperia Family Realty, LLC, supra; Cochran Inv. Co. v. Jackson, 38 AD3d 704 [[2nd Dept 2007].) They successfully carried this burden through, inter alia, the submission of a decision and order (one paper) dated January 31, 2017 rendered by the Honorable Marguerite A. Grays in a related action pending in the New York State Supreme Court, County of Queens (45-34 Pearson Street LIC, LLC v. Ohana, Index No. 706833/16.)The facts and allegations made in the related action are given more extensively in the eight page decision and order rendered by Judge Grays. Briefly, 45-34 Pearson Street LLC (Pearson Street) and 45-34 Pearson Shlaf LLC brought an action against Shai Ohana and PSF, among others, asserting causes of action which included fraud. The Pearson plaintiffs alleged that Ohana and two other individuals (collectively the Ohana defendants) had devised a fraudulent scheme to refinance the subject property by falsely representing that Ohana was the sole member of Pearson Street, the owner of the subject property. The Pearson plaintiffs alleged that Ohana never had any interest in the company that owned the subject property and that the company had never authorized Ohana or his co-conspirators to mortgage the subject property. Pearson Street’s operating agreement named Pearson Shlaf as the managing member and Shlaf 1 LLC as the manager to “take any action of any kind***and to sign any document on behalf of the company.” Pearson Street purchased the property for $3,500,000 without financing. The Ohana defendants placed four mortgages on the subject property by creating an operating agreement for Pearson Street which falsely stated that Ohana was the sole member of the company. Ohana also created a fraudulent Consent and Certification from the company, and a fraudulent certificate of authority. The Pearson plaintiffs alleged that the lenders whose loans were eventually consolidated made the loans despite certain “red flags” which indicated fraud.Justice Grays’ decision and order were rendered on a motion made by PSF and two other defendants for an order pursuant to CPLR 3211(a)(1) and (7) dismissing the seventh, tenth, eleventh, and twelfth causes of action asserted in the complaint. Justice Grays dismissed the seventh cause of action, asserted against PSF for conversion, as “unopposed and otherwise on the merits.” Justice Grays denied those branches of the motion which were “(a) to dismiss the tenth cause of action for a declaratory judgment that the Consolidated Pearson Loan, Consolidated Pearson Note, Consolidated Pearson Mortgage and related documents are void ab initio and unenforceable; and (b) to dismiss the eleventh cause to quiet title on the property and declare that the Consolidated Mortgage and related documents are void ab initio and unenforceable.” Judge Grays stated (at page 6): “Contrary to the Lender defendants’ contentions, however, Ohana did not have the authority to act on behalf of the Company in taking out mortgages on the subject property,” Judge Grays stated further (at page 6): “[A] mortgagee is not a bona fide encumbrancer where, despite being aware of facts that would lead a reasonable, prudent lender to make inquiries of the circumstances of the transaction at issue, it fails to make such inquiries***. Significantly, the documentary evidence does not conclusively establish that Pearson Street is a bona fide encumbrancer for value such that the tenth and eleventh causes of action should be dismissed.” Judge Grays dismissed the twelfth cause of action which was for unjust enrichment as asserted against PSF.“[A] mortgagee is not protected in its title if it had previous notice of potential fraud by the immediate seller, or knowledge of facts which put it on inquiry notice as to the existence of a right in potential conflict with its own. A mortgagee has a duty to inquire when it is aware of facts that would lead a reasonable, prudent lender to inquire into the circumstances of the transaction at issue. A mortgagee who fails to make such an inquiry is not a bona fide incumbrancer for value. “(Williams v. Mentore, 115 AD3d 664, 664-65 [2nd Dept 2014] [internal quotation marks and citations omitted]; Mortg. Elec. Registration Sys., Inc. v. Pagan, 119 AD3d 749 [2nd Dept 2014]; Booth v. Ameriquest Mortg. Co., 63 AD3d 769 [2nd Dept 2009].)PSF did not show that the evidence it presented on the instant motion differs significantly, if at all, from the evidence it presented on the motion made in the related action. PSF already had an opportunity to litigate whether, on the evidence presented, there is an issue of fact pertaining to the validity of the mortgage and an issue of fact pertaining to the duty to inquire. “A motion to dismiss pursuant to CPLR 3211(a)(1) will be granted only if the documentary evidence resolves all factual issues as a matter of law, and conclusively disposes of the plaintiff’s claim.” (Fontanetta v. Doe, 73 AD3d 78, 83,[2nd Dept 2010] [internal quotation marks and citation omitted].) “To establish collateral estoppel, it must be shown that a decisive issue in the current action is identical to an issue resolved in a prior action, and that there was a full and fair opportunity to litigate that issue in the prior proceeding.” (Wen Mei Lu v. Gamba, 158 AD3d 1032, [Third Dept 2018].) The doctrine of collateral estoppel bars PSF from seeking summary judgment on its instant complaint. Judge Grays already determined in the prior action that PSF’s evidence does not resolve critical issues as a matter of law.In any event, the Pearson defendants presented ample evidence showing that there are issues of fact which preclude summary judgment on the complaint’B. Summary Judgment Dismissing the Pearson Defendants’ Affirmative DefensesThe first affirmative defense has no merit because the complaint does state a cause of action. (,(See, GRP Loan, LLC v. Taylor, supra.) The second affirmative defense (estoppel) is not adequately stated. Affirmative defenses which merely plead conclusions of law without supporting facts are insufficient. (See, Becher v. Feller, 64 AD3d 672 [2nd Dept 2009]; The third affirmative defense (culpable conduct) apparently has reference to such issues as whether the plaintiff failed to make inquiry, and it will be permitted to stand. The fourth affirmative defense (unclean hands) is not adequately stated. The fifth affirmative defense (no authority to act) raises an issue of fact present in this case. The sixth affirmative defense (damages caused by plaintiff itself or others) raises an issue of fact present in this case. The seventh affirmative defense (material breach by the plaintiff is not adequately stated. The eighth affirmative defense (breach of the implied duty of good faith and fair conduct is not adequately stated. The ninth affirmative defense (failure to mitigate damages) is not adequately stated. The tenth affirmative defense (unjust enrichment is not adequately stated. The purported eleventh affirmative defense (another action pending) is not an affirmative defense. There is no affirmative defense labeled the twelfth. The purported thirteenth affirmative defense, which requests a stay until the resolution of the related action is not an affirmative defense. The purported fourteenth affirmative defense, which concerns a consolidation with a related action, is not an affirmative defense. The fifteenth affirmative defense (defense founded on documentary evidence) will be permitted to stand. The sixteenth affirmative defense (unconscionability) is not adequately stated. The seventeenth affirmative defense (reservation of rights) is not an affirmative defense. The court notes that the failure to raise pleaded affirmative defenses in opposition to a motion for summary judgment renders those defenses abandoned and thus subject to dismissal (See, New York Commercial Bank v. J. Realty F Rockaway, Ltd., 108 AD3d 756 [2nd Dept. 2013]; Starkman v. City of Long Beach, 106 AD3d 1076 [2nd Dept 2013].)C. Summary Judgment on the Complaint Against Defendant OhanaPSF joined Ohana as a defendant because he executed a guarantee of the payment of the note and mortgage. “On a motion for summary judgment to enforce a written guarantee, the creditor must prove an absolute and unconditional guarantee, the underlying debt, and the guarantor’s failure to perform under the guarantee.” (United Rentals (N. Am.), Inc. v. Iron Age Tool Corp., 150 AD3d 1304, 1306 [2nd Dept 2017].) PSF demonstrated its prima facie entitlement to judgment against Ohana (see, United Rentals (N. Am.), Inc. v. Iron Age Tool Corp., supra), and the burden shifted to defendant Ohana to demonstrate that there is a triable issue of fact which precludes summary judgment against him. (See Alvarez v. Prospect Hospital, supra.) Ohana successfully carried this burden. There are issues of fact pertaining to whether the underlying note and mortgage are valid. “The liability of a guarantor or surety may be defeated by the invalidity of the principal contract.” (63 NYJur. 2d, “Guaranty and Suretyship,” §333.) “A guarantor may be able to assert any legal and/or equitable defenses which would have been available to the primary obligor.” (A N.Y. Prac., Enforcing Judgments and Collecting Debts §3:92; 63 NYJur2d,” Guaranty and Suretyship,” §333.) “[A]n individual guarantor of a corporate obligation stands in the shoes of his principal and can avail himself of only those defenses available to it.” (Dart Assocs. v. Ste-Con Corp., 66 AD2d 973, 973, [3d Dept 1978 [citation and quotation marks omitted[.] PSF did not point out to the court that there is a clause in the guarantee making it enforceable despite the validity of the underlying debt. “A guaranty ideally contains language that waives any defenses which the primary debtor may have.” (A N.Y. Prac., Enforcing Judgments and Collecting Debts §3:92.) The court notes that Ohana may be estopped from avoiding the enforceability of the guarantee if he committed fraud, but whether he did so is at present an issue of fact. There may be an estoppel on other grounds as well. In sum, there are legal and factual complexities involved in PSF’s attempt to obtain summary judgment against Ohana, and neither side adequately addressed those complexities if it did so at all.D. Summary Judgment Dismissing the Affirmative Defenses Raised by Defendant OhanaThe affirmative defenses raised by defendant Ohana are dismissible because, inter alia, they are inadequately stated or deemed abandoned. (See, New York Commercial Bank v. J. Realty F Rockaway, Ltd., supra; Starkman v. City of Long Beach, supra; Becher v. Feller, supra.)E. Default Judgment Against the Remaining DefendantsCPLR 3215(f) requires a party to support a motion for a default judgment with at least enough facts to enable the court to determine that a viable cause of action exists. (McGee v. Dunn, 75 AD3d 624 [2nd Dept 2010]; Resnick v. Lebovitz, 28 AD3d 533[2nd Dept 2006].) PSF successfully carried this burden, and the remaining defendants did not oppose the application for a default judgment against them.F. Appointment of a RefereeWhile a court can appoint a referee to compute the sums due and owing to the plaintiff. In connection with a motion for summary judgment (see, PNC Bank, Nat. Ass’n v. Campbell, 142 AD3d 1148 [2nd Dept 2016]), PSF did not obtain summary judgment on its complaint.G. Amendment of CaptionThe plaintiff may amend the caption to delete “John Does.” (See, CPLR 1024; Deutsche Bank Nat. Trust Co. v. Islar, 122 AD3d 566 [2nd Dept 2014]; Flagstar Bank v. Bellafiore, 94 AD3d 1044 [2nd Dept 2012].)V. The Cross MotionThe cross motion by the Pearson defendants has merit to the extent that this action may be joined with 45-34 Pearson Street LIC, LLC v. Ohana, Index No. 706833/16 for the purposes of discovery and trial. (See, CPLR 602[a].)VI. DispositionThe court grants leave to reargue. Upon reargument, the memorandum dated June 14, 2018 and order dated June 14, 2018 are vacated.The branch of PSF’s motion which is for summary judgment on the complaint against the Pearson defendants is denied. The branch of PSF’s motion which is for summary judgment dismissing the affirmative defenses raised by the Pearson defendants is granted except as to the third, fifth, sixth, and fifteenth affirmative defenses. The branch of PSF’s motion which is for summary judgment on its complaint against defendant Ohana is denied. The branch of PSF’s motion which is for summary judgment dismissing the affirmative defenses raised by defendant Ohana is granted. The branch of PSF’s motion which is for a default judgment against those parties that did not appear or answer is granted. The branch of the motion by PSF which is for an order appointing a referee is denied. The branch of the motion which is for an order permitting PSF to amend the caption of this action to delete “John Does” is granted.The cross motion by the Pearson defendants is granted to the extent that this action may be joined with 45-34 Pearson Street LIC, LLC v. Ohana. Index No. 706833/16 for the purposes of discovery and trial. (See, CPLR 602[a].)Settle order.
