| 71 Clinton St. Apts. LLC v 71 Clinton Inc. |
| 2014 NY Slip Op 01269 [114 AD3d 583] |
| February 25, 2014 |
| Appellate Division, First Department |
| 71 Clinton St. Apts. LLC, as Assignee of People's UnitedBank, as Successor by Merger to Bank of Smithtown, Appellant, v 71 ClintonInc. et al., Respondents, et al., Defendants. |
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Order, Supreme Court, New York County (Barbara Jaffe, J.), entered May 16, 2013,which, insofar as appealed from as limited by the briefs, denied plaintiff's motion forsummary judgment on its complaint and dismissing defendants-respondents' (hereinafterdefendants) third, fourth, eleventh, and twelfth affirmative defenses, unanimouslyreversed, on the law, without costs and the motion granted.
Defendants are judicially estopped from arguing that the merger between nonpartiesBank of Smithtown and People's United Bank was not completed before plaintiffbrought this foreclosure action (see e.g. D & L Holdings v Goldman Co., 287AD2d 65, 71 [1st Dept 2001], lv denied 97 NY2d 611 [2002]). They obtaineddismissal of the Bank of Smithtown's foreclosure action by arguing that the bank hadmerged into People's United. They may not now turn around and argue that the Bank ofSmithtown did not merge into People's United. Hence, defendants' fourthaffirmative defense should be dismissed.
Plaintiff properly submitted a reply affidavit that responded to defendants' argumentthat People's United's June 20, 2011 letter cast doubt on whether People's United hadreally assigned defendant 71 Clinton Inc.'s note and mortgage to plaintiff on June 2, 2011(see Sanford v 27-29 W. 181st St. Assn., 300 AD2d 250 [1st Dept 2002]).Furthermore, plaintiff's reply was an adequate explanation for the June 20 letter.Therefore, as the assignee of the mortgage and of the note when the action wascommenced, plaintiff has standing (see e.g. OneWest Bank FSB v Carey, 104 AD3d 444, 445[1st Dept 2013]).
The motion court denied plaintiff's motion to dismiss the third and eleventhaffirmative defenses (preclusion and right of redemption, respectively) on the ground thatplaintiff had failed to address them. However, as can be seen from its opening briefbefore the motion court, plaintiff addressed those defenses.
Plaintiff established its prima facie right to foreclose by producing the note,mortgage and guaranty, and affidavits establishing 71 Clinton Inc.'s nonpayment (seeRed Tulip, LLC v Neiva, [*2]44 AD3d 204, 209 [1stDept 2007], lv dismissed 10 NY3d 741 [2008]). Although defendant StevenRosenfeld (the president of 71 Clinton Inc.) claimed he never received a notice ofdefault, that does not preclude summary judgment in plaintiff's favor because it fails toraise a material issue of fact (see Forrest v Jewish Guild for the Blind, 3 NY3d 295, 312[2004]). To establish 71 Clinton Inc.'s default, plaintiff was not required to prove that ithad sent a notice of default (see Chemical Bank v Broadway 55-56th St. Assoc.,220 AD2d 308 [1st Dept 1995]).
The twelfth affirmative defense based on Judiciary Law § 489 must also bedismissed. That provision of the Judiciary Law codifies the old doctrine of champerty,which is an equitable defense that was developed "to prevent or curtail thecommercialization of or trading in litigation" (Bluebird Partners v First Fid.Bank, 94 NY2d 726, 729 [2000]). "What the statute prohibits . . . is thepurchase of claims with the intent and for the purpose of bringing an action that [thepurchaser] may involve parties in costs and annoyance, where such claims would not beprosecuted if not stirred up . . . in [an] effort to secure costs" (Trust for Certificate Holders ofMerrill Lynch Mtge. Invs., Inc. Mtge. Pass-Through Certificates, Series 1999-C1 v LoveFunding Corp., 13 NY3d 190, 201 [2009] [internal quotation marks omitted]).
Defendants do not assert, nor could they, that plaintiff commenced suit for theprimary purpose of obtaining costs or to harass them. Defendants assert that plaintiffacquired the assignment for purposes of foreclosure; the law allows such an acquisition."New York cases agree that if a party acquires a debt instrument for the purpose ofenforcing it, that is not champerty simply because the party intends to do so by litigation"(Trust for Certificate Holders at 200). Plaintiff acquired the loan for the purposeof enforcing a legitimate claim, namely to obtain a judgment of foreclosure on adefaulted mortgage in a proceeding that was already under way. Concur—Sweeny,J.P., Andrias, Freedman, Richter and Clark, JJ. [Prior Case History: 2013 NY SlipOp 32889(U).]