State of New York
Supreme Court, Appellate Division
Third Judicial Department
Decided and Entered: July 14, 2016 522381
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CONSOLIDATED MORTGAGE, LLC,
Appellant,
v
WESTPORT GOLF INVESTORS, LLC,
et al.,
Defendants, MEMORANDUM AND ORDER
and
JOHN F. HALL et al.,
Respondents.
(And a Third-Party Action.)
________________________________
Calendar Date: May 25, 2016
Before: Peters, P.J., McCarthy, Egan Jr., Lynch and Devine, JJ.
__________
Law Office of Louis J. Maione, P.C., New York City (Louis
J. Maione of counsel), for appellant.
Stanclift, Ludemann, Silvestri & McMorris, PC, Glens Falls
(John M. Silvestri of counsel), for John F. Hall and another,
respondents.
__________
Peters, P.J.
Appeal from an order of the Supreme Court (Bruening, J.),
entered November 9, 2015 in Essex County, which, among other
things, denied plaintiff's motion for summary judgment.
Defendant Westport Golf Investors, LLC (hereinafter
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Westport) owns and operates a public golf course known as the
Westport Country Club (hereinafter the Country Club) located in
the Town of Westport, Essex County. Westport's members include,
among others, defendant John F. Hall, defendant Rodney E.
Edwards, Leslie Hall-Butzer and Como Oil and Propane Company,
which is owned by Robert Hall. Robert Hall, Hall-Butzer and John
Hall are siblings, and Edwards is John Hall's brother-in-law.
Westport entered into a consolidation, modification and
extension agreement with First Niagara Funding, Inc. in July
2009, pursuant to which certain mortgages and notes encumbering
the Country Club property were consolidated into a single lien in
the amount of $1,500,000, with a maturity date of August 1, 2014.
In April 2013, after Westport had failed to make four consecutive
monthly payments on the loan, a forbearance agreement was entered
into for the stated purpose of allowing Westport time to market
the Country Club. Under its terms, Westport acknowledged being
in default of the consolidation agreement and agreed to
temporarily pay a reduced monthly installment of approximately
$5,600 to First Niagara commencing May 1, 2013 through April 1,
2014.
From May 2013 to August 2013, Westport made payments to
First Niagara in compliance with the forbearance agreement. In
the meantime, on or about June 13, 2013, Robert Hall and
Hall-Butzer formed plaintiff, a Florida limited liability
company. On August 27, 2013, unbeknown to Westport, plaintiff
acquired the notes and mortgages from First Niagara for the sum
of $825,000. When Westport tendered the next payment due under
the forbearance agreement (hereinafter the September 2013
payment), plaintiff rejected and returned the payment, asserted
that Westport was in default of the loan documents and promptly
commenced this action to foreclose on the mortgages.
In December 2013, plaintiff moved for summary judgment
asserting, among other things, that the forbearance agreement was
a nullity. By order entered on February 5, 2014, Supreme Court
(Buchanan, J.) denied the motion, concluding that triable
questions of fact existed as to the validity of the forbearance
agreement and whether plaintiff caused the default by refusing to
accept the September 2013 payment tendered by Westport pursuant
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to such agreement. The following month, Westport filed a
petition for bankruptcy, resulting in an automatic stay of the
instant action (see 11 USC § 362 [a] [1]). After the stay was
lifted for the express purpose of allowing plaintiff to continue
this action, plaintiff once again moved for summary judgment,
contending that the forbearance agreement, even if valid and
enforceable, did not cure Westport's underlying default on the
loan. Supreme Court (Bruening, J.), among other things, denied
plaintiff's motion, finding that the arguments raised by
plaintiff were, or could have been, made in the previous motion
for summary judgment and that, in any event, triable issues of
fact existed as to whether plaintiff purposefully caused
Westport's default in bad faith. This appeal by plaintiff
ensued.
We affirm. "Generally, successive motions for summary
judgment should not be entertained, absent a showing of newly
discovered evidence or other sufficient cause" (MLCFC 2007-9 ACR
Master SPE, LLC v Camp Waubeeka, LLC, 123 AD3d 1269, 1271 [2014]
[internal quotation marks and citation omitted]; see Green
Harbour Homeowners Assn., Inc. v Ermiger, 128 AD3d 1142, 1143
[2015]; Keating v Town of Burke, 105 AD3d 1127, 1128 [2013]). As
Supreme Court noted, plaintiff's second motion for summary
judgment raised essentially the same arguments made in the prior
motion seeking the same relief, and the developments since the
denial of that earlier motion did not constitute "sufficiently
new evidence to warrant reconsideration of summary judgment"
(Pavlovich v Zimmet, 50 AD3d 1364, 1365 [2008]; see Matter of
Bronsky-Graff Orthodontics, P.C., 37 AD3d 946, 947 [2007]).
Absent sufficient cause for advancing the successive motions for
summary judgment, plaintiff's application could have been denied
on this basis alone.
Furthermore, when the evidence is viewed in the light most
favorable to defendants (see Vega v Restani Constr. Corp., 18
NY3d 499, 503 [2012]), factual issues remain precluding an award
of summary judgment. Evidence of "bad faith, fraud, or
oppressive or unconscionable conduct by the mortgagee will
operate to relieve [a] default" (192 Sheridan Corp. v O'Brien,
252 AD2d 934, 936 [1998] [internal quotation marks and citation
omitted]; accord First Union Natl. Bank v Weston, 261 AD2d 668,
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669 [1999]; see Nassau Trust Co. v Montrose Concrete Prods.
Corp., 56 NY2d 175, 183 [1982]; Citibank, N.A. v Van Brunt
Props., LLC, 95 AD3d 1158, 1159 [2012]). "It is also well
established that implicit in all contracts is an implied covenant
of fair dealing and good faith" (River Bank Am. v Daniel Equities
Corp., 213 AD2d 929, 930 [1995] [citation omitted]; see 511 W.
232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144, 153
[2002]; Dalton v Educational Testing Serv., 87 NY2d 384, 389
[1995]), "which encompasses any promises that a reasonable
promisee would understand to be included" (New York Univ. v
Continental Ins. Co., 87 NY2d 308, 318 [1995]; see 511 W. 232nd
Owners Corp. v Jennifer Realty Co., 98 NY2d at 153; Rowe v Great
Atl. & Pac. Tea Co., 46 NY2d 62, 69 [1978]).
The submissions in opposition to plaintiff's motion
established that plaintiff's soon-to-be member Robert Hall,
through Como Oil, attempted to remove John Hall from his position
as a general manager of Westport; that, approximately 16 days
later, Robert Hall and Hall-Butzer formed plaintiff, which went
on to purchase the subject notes from First Niagara at a
significantly discounted rate; that plaintiff subsequently
rejected the timely September 2013 payment under the forbearance
agreement; and that, shortly after rejecting that payment,
plaintiff commenced this action to foreclose on the Country Club.
The validity of the forbearance agreement is not in dispute, and
plaintiff concedes that it is bound by its terms as
successor-in-interest to the mortgage and loan documents. While
plaintiff accurately points out that, under the terms of the
forbearance agreement, First Niagara reserved all of its rights
under the mortgage instrument, the express purpose of the
forbearance agreement was to provide Westport with a period of
time to market the mortgaged property in the hopes of
consummating a negotiated (as opposed to a forced) sale, while,
at the same time, requiring it to make specified payments on the
note. Under these circumstances, it is for a jury to conclude
whether plaintiff breached its obligation to act in good faith by
surreptitiously purchasing Westport's debt, rejecting Westport's
September 2013 payment and claiming a default despite Westport's
undisputed compliance with the foreclosure agreement (see Nassau
Trust Co. v Montrose Concrete Prods. Corp., 56 NY2d at 186-187;
Bank of N.Y. v Spring Glen Assoc., 222 AD2d 992, 995 [1995];
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River Bank Am. v Daniel Equities Corp., 213 AD2d at 930; compare
United Cos. Lending Corp. v Hingos, 283 AD2d 764, 766 [2001];
Credit-Based Asset Servicing & Securitization v Castelli, 275
AD2d 542, 544 [2000]).
Moreover, given plaintiff's conduct – as well as that of
its members – and the manner in which it declared a default, we
agree with Supreme Court that triable issues of fact exist as to
whether plaintiff purposefully caused Westport's default in an
attempt to oust Westport of its interest in its real property
(see Cassara v Wynn, 55 AD3d 1356, 1356 [2008], appeal and lv
dismissed 11 NY3d 919 [2009]; 192 Sheridan Corp. v O'Brien, 252
AD2d at 935-936; River Bank Am. v Daniel Equities Corp., 213 AD2d
at 930). While plaintiff is correct when it asserts that
Westport made no further payments under the forbearance agreement
subsequent to its rejection of the September 2013 payment, this
is of little consequence since an action in foreclosure sounds in
equity, "and the equities herein compel the conclusion that
plaintiff was not entitled to reject tender of payment, then use
that rejection as a basis for holding [Westport] in default"
(Perla Assoc. v ZLD Realty, 277 AD2d 115, 115 [2000]; see
Futterman v Calce, 226 AD2d 306, 307 [1996]; European Am. Bank v
Harper, 163 AD2d 458, 460-461 [1990]).
Finally, assuming, without deciding, that Supreme Court
erred in permitting counsel for John Hall and Edwards to submit a
surreply affidavit on the motion, we find such error, if any, to
be harmless inasmuch as the affidavit largely reiterated the
assertions made in the prior submissions and provided no new
facts or evidence (see Gray v R.L. Best Co., 78 AD3d 1346, 1351 n
4 [2010]).
McCarthy, Egan Jr., Lynch and Devine, JJ., concur.
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ORDERED that the order is affirmed, with costs.
ENTER:
Robert D. Mayberger
Clerk of the Court