Archer Capital Fund, L.P. v. GEL, LLC

RUTH C. BALKIN

Andrew B. Schultz, Jericho, N.Y., and Ginsberg & Katsorhis, P.C., Flushing, N.Y., for appellants (one brief filed). Kaye Scholer, LLP, New York, N.Y. (Richard C. Seltzer and Margaret A. Prystowsky of counsel), for respondent.
RUTH C. BALKIN, J.P., CHERYL E. CHAMBERS, L. PRISCILLA HALL, and LEONARD B. AUSTIN, JJ.

In an action, inter alia, to foreclose a mortgage, the defendants GEL, LLC, GRL, LLC, Eagle Realty, LLC, Emmanuel Lambrakis, George Lambrakis, Gregory Lambrakis, and Alexander Lambrakis appeal, as limited by their brief, from so much of an order of the Supreme Court, Queens County (Agate, J.), entered November 5, 2010, as granted those branches of the plaintiff's motion which were for summary judgment on the complaint, for the appointment of a referee to compute the amount due to the plaintiff, and for leave to seek a deficiency judgment.

ORDERED that the order is affirmed insofar as appealed from, with costs.

Archer Capital Fund, L.P. (hereinafter Archer), commenced this action to foreclose a mortgage given to it by the defendants GEL, LLC, GRL, LLC, and Eagle Realty, LLC (hereinafter collectively Eagle), and to enforce a guarantee by the defendants Emmanuel Lambrakis, George Lambrakis, and Gregory Lambrakis (hereinafter collectively the Lambrakis defendants). Archer moved for summary judgment on the complaint. The Supreme Court granted the motion, relying, in part, on a conditional order of preclusion barring the appellants from introducing evidence supporting their defenses and counterclaims.

Archer established its prima facie entitlement to judgment as a matter of law ( see Petra CRE CDO 2007–1, Ltd. v. 160 Jamaica Owners, LLC, 73 A.D.3d 883, 884, 904 N.Y.S.2d 699). With respect to the foreclosure cause of action, Archer submitted the mortgage and the unpaid note and evidence that Eagle defaulted ( id.; see Wells Fargo Bank v. Das Karla, 71 A.D.3d 1006, 896 N.Y.S.2d 681;Capstone Bus. Credit, LLC v. Imperia Family Realty, LLC, 70 A.D.3d 882, 883, 895 N.Y.S.2d 199;Neighborhood Hous. Servs. of N.Y. City, Inc. v. Meltzer, 67 A.D.3d 872, 873, 889 N.Y.S.2d 627;Quest Commercial, LLC v. Rovner, 35 A.D.3d 576, 825 N.Y.S.2d 766). With respect to the cause of action for a deficiency judgment based upon the Lambrakis defendants' guarantee, Archer produced the underlying agreements and evidence of Eagle's default ( see North Fork Bank Corp. v. Graphic Forms Assoc., Inc., 36 A.D.3d 676, 828 N.Y.S.2d 194;E.D.S. Sec. Sys. v. Allyn, 262 A.D.2d 351, 691 N.Y.S.2d 567;Federal Deposit Ins. Corp. v. 7 A.M. to 11 P.M. Delicatessen, 251 A.D.2d 620, 675 N.Y.S.2d 872).

In opposition, the appellants failed to raise a triable issue of fact ( see JPMCC 2007–CIBC19 Bronx Apts., LLC v. Fordham Fulton LLC, 84 A.D.3d 613, 922 N.Y.S.2d 779;Petra CRE CDO 2007–1, Ltd. v. 160 Jamaica Owners, LLC, 73 A.D.3d at 884, 904 N.Y.S.2d 699;North Fork Bank v. Computerized Quality Separation Corp., 62 A.D.3d 973, 974, 879 N.Y.S.2d 575;Quest Commercial, LLC v. Rovner, 35 A.D.3d 576, 825 N.Y.S.2d 766). The appellants were barred from submitting evidence sufficient to defeat Archer's prima facie showing because the conditional order of preclusion became absolute upon the appellants' noncompliance with its terms ( see Gibbs v. St. Barnabas Hosp., 16 N.Y.3d 74, 79, 917 N.Y.S.2d 68, 942 N.E.2d 277;Wilson v. Galicia Contr. & Restoration Corp., 10 N.Y.3d 827, 830, 860 N.Y.S.2d 417, 890 N.E.2d 179;Wei Hong Hu v. Sadiqi, 83 A.D.3d 820, 821, 921 N.Y.S.2d 133;Alphonse v. UBJ Inc., 266 A.D.2d 171, 697 N.Y.S.2d 324). In seeking to be relieved from the consequences of that noncompliance, the appellants failed to demonstrate a reasonable excuse for such noncompliance, and the existence of a potentially meritorious claim or defense ( see Gibbs v. St. Barnabas Hosp., 16 N.Y.3d at 79, 917 N.Y.S.2d 68, 942 N.E.2d 277;see Wei Hong Hu v. Sadiqi, 83 A.D.3d at 821, 921 N.Y.S.2d 133;Nurse v. Figeroux & Assoc., 47 A.D.3d 778, 849 N.Y.S.2d 644;Alphonse v. UBJ Inc., 266 A.D.2d at 171, 697 N.Y.S.2d 324). Specifically, the appellants failed to adequately explain and document their claim of law office failure ( see Campbell–Jarvis v. Alves, 68 A.D.3d 701, 702, 889 N.Y.S.2d 257;cf. Nurse v. Figeroux & Assoc., 47 A.D.3d at 779, 849 N.Y.S.2d 644). Under the circumstances, any alleged negligence by the appellants ' former attorney was properly imputed to the appellants because of their failure to ascertain the status of the case ( see Diamond Truck Leasing Corp. v. Cross Country Ins. Brokerage, Inc., 62 A.D.3d 745, 877 N.Y.S.2d 901; Santiago v. Santana, 54 A.D.3d 929, 930, 864 N.Y.S.2d 122;Nurse v. Figeroux & Assoc., 47 A.D.3d at 779, 849 N.Y.S.2d 644;Edwards v. Feliz, 28 A.D.3d 512, 513, 813 N.Y.S.2d 494;MRI Enters. v. Amanat, 263 A.D.2d 530, 531, 693 N.Y.S.2d 211;cf. L & L Auto Distribs. & Suppliers Inc. v. Auto Collection, Inc., 85 A.D.3d 734, 735–736, 925 N.Y.S.2d 151). Moreover, in the mortgage and loan documents, Eagle waived its right to assert defenses or counterclaims in response to any action commenced by Archer to enforce Eagle's obligations thereunder and to recover the debt. Although the appellants' counterclaim alleging fraud survives such a waiver ( see North Fork Bank v. Computerized Quality Separation Corp., 62 A.D.3d at 974, 879 N.Y.S.2d 575), that counterclaim was supported only by conclusory allegations against Archer ( see Eurycleia Partners, LP v. Seward & Kissel, LLP, 12 N.Y.3d 553, 559, 883 N.Y.S.2d 147, 910 N.E.2d 976;Heffez v. L & G Gen. Constr., Inc., 56 A.D.3d 526, 527, 867 N.Y.S.2d 198;Quest Commercial, LLC v. Rovner, 35 A.D.3d at 577, 825 N.Y.S.2d 766;Old Republic Natl. Tit. Ins. Co. v. Cardinal Abstract Corp., 14 A.D.3d 678, 680, 790 N.Y.S.2d 143;E.D.S. Sec. Sys. v. Allyn, 262 A.D.2d 351, 691 N.Y.S.2d 567). The appellants' specific allegations of fraud were not directed at Archer, but at the appellants' own transactional attorney.

Accordingly, the Supreme Court properly granted those branches of Archer's motion which were for summary judgment on the complaint, for the appointment of a referee to compute the amount due to it, and for leave to seek a deficiency judgment.