Toorak Capital Partners, LLC v 15 Dewey Place Corp.
Attorneys and Parties
Brief Summary
Commercial mortgage foreclosure—whether a lender established a prima facie case and standing for summary judgment with an affidavit lacking personal knowledge and without admissible business records.
Granted plaintiff summary judgment, struck defendants' answer and counterclaims, issued an order of reference, later confirmed the referee's report, and entered a judgment of foreclosure and sale.
The order and judgment of foreclosure and sale were reversed; plaintiff's motions for summary judgment, to strike defenses and counterclaims, for an order of reference, and to confirm the referee's report and for a foreclosure judgment were denied.
Plaintiff failed to make a prima facie showing with admissible evidence. The affiant lacked personal knowledge and did not attach the business records purportedly reviewed, rendering the affidavit hearsay without probative value. The verified complaint, signed by an agent, did not lay a proper foundation under New York Civil Practice Law and Rules (CPLR) 105(u) [verified pleading may be used as an affidavit if the verifier has personal knowledge], and the attached records did not establish default.
Background
In February 2019, 15 Dewey Place Corp. executed a consolidated commercial promissory note and a consolidation and modification mortgage security agreement in favor of Ice Lender Holdings, LLC, creating a single lien of approximately $477,750 on Staten Island property. Suzan Amash executed a guaranty. The loan was allegedly assigned to Toorak Capital Partners, LLC. Toorak commenced foreclosure in December 2019; defendants answered with affirmative defenses and counterclaims. Plaintiff moved for summary judgment, to strike the defenses and counterclaims, and for an order of reference.
Lower Court Decision
The Supreme Court, Richmond County, granted plaintiff summary judgment on the complaint against 15 Dewey Place Corp. and Suzan Amash, struck their answer and counterclaims, and issued an order of reference (June 30, 2022). It later granted plaintiff's motion to confirm the referee's report and entered an order and judgment of foreclosure and sale (September 5, 2023).
Appellate Division Reversal
The appeal from the intermediate order was dismissed as subsumed by the appeal from the final order and judgment; the issues were reviewed on the appeal from the final order under CPLR 5501(a)(1) [appeal from a final judgment brings up for review prior nonfinal orders that necessarily affect the final judgment]. The Appellate Division reversed the order and judgment of foreclosure and sale, denied plaintiff's motions for summary judgment, to strike defendants' answer and counterclaims, for an order of reference, and to confirm the referee's report and for a judgment of foreclosure and sale, and awarded costs to defendants.
Legal Significance
In mortgage foreclosure actions, a plaintiff must establish a prima facie case with admissible evidence: the note, mortgage, evidence of default, and, where standing is contested, proof of standing. Affidavits must be based on personal knowledge or be supported by properly introduced business records; conclusory assertions based on unidentified records are inadmissible hearsay. A verified complaint may substitute for an affidavit only if the verifier demonstrates personal knowledge and lays a CPLR-compliant foundation for attached records (CPLR 105[u] [verified pleading may serve as an affidavit when the verifier has personal knowledge]). Failure to meet this burden requires denial of summary judgment regardless of the adequacy of the opponent's papers.
In the Second Department, lenders seeking foreclosure summary judgment must provide a competent affiant with personal knowledge and attach business records establishing default and standing; loan documents and a conclusory, records-referential affidavit—or a verified complaint without a proper foundation—are insufficient and will result in denial and reversal.