FILED: NEW YORK COUNTY CLERK 02/13/ :02 PM INDEX NO /2014 NYSCEF DOC. NO. 50 RECEIVED NYSCEF: 02/13/2015

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1 FILED: NEW YORK COUNTY CLERK 02/13/ :02 PM INDEX NO /2014 NYSCEF DOC. NO. 50 RECEIVED NYSCEF: 02/13/2015 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK X CANADA INC., -against- Plaintiff, Index No /2014 IAS Part 54 (Justice Kornreich) Motion Seq. No UNITED REALTY ADVISORS LP, ELI VERSCHLEISER and JACOB FRYDMAN, Defendants X REPLY MEMORANDUM TO OPPOSITION OF ELI VERSCHLEISER TO PLAINTIFF S MOTION FOR SUMMARY JUDGMENT IN LIEU OF COMPLAINT Plaintiff respectfully submits this Reply Memorandum of Law in response to the Opposition of Defendant, Eli Verschleiser ( Mr. Verschleiser ) dated January 30, The crux of Mr. Verschleiser s argument in Simcha Gitelis, Esq s Opposition (the Opp. ) to Plaintiff s CPLR 3213 motion is that the Promissory Note dated October 25, 2013 (the Note ) between Canada Inc. ( Plaintiff ) and United Realty Advisors LP ( URA ) and the Guaranties (each a Guaranty ) dated October 25, 2013 in favor of Plaintiff executed by Mr. Verschleiser and his co-defendant, Mr. Jacob Frydman ( Mr. Frydman ) are subject to a Heter Iska also dated October 25, 2013 (the Heter Iska ) which contains an express arbitration provision selecting a Rabbinical court (Opp. at 9). 1 Plaintiff also refers to the Affidavit of William Gryzwacz, sworn to Novemnber 14, 2014, submitted with Plaintiff s initial motion (the Initial Gryzwacz Aff. ).

2 Mr. Verschleiser argues that the Heter Iska was agreed by the parties to govern the terms of Promissory Note and Guaranty. (Opp. at 7). In fact, what the Note and Guaranty actually say is that the Note and Guaranty are subject to that certain Heter Iska executed in connection with the loan. Neither the Note nor the Guaranty contains any statements about the Heter Iska governing the terms of those documents. What the Note actually says about governance is that this Promissory Note shall be governed and construed in accordance with the laws of the State of New York. See Affidavit of William Gryzwacz, sworn to November 14, 2014, Ex. A (the Initial Gryzwacz Aff. ). The Guaranty states (in all capital letters): ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS GUARANTY SHALL BE TRIED AND LITIGATED IN THE STATE OR FEDERAL COURTS LOCATED IN THE STATE, CITY AND COUNTY OF NEW YORK, UNLESS SUCH ACTION OR PROCEEDING ARE REQUIRED TO BE BROUGHT IN ANOTHER COURT TO OBTAIN SUBJECT MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY. See Initial Gryzwacz Aff., Ex. B, p. 2. The notion that the Note and Guaranty are subject to the Heter Iska, a device intended to avoid the Hebraic religious proscription against lending money for interest, does not mean the terms of the Note and the Guaranty are governed by the Heter Iska. See Barclays v Commerce Corp. v Finkelstein, 11 A.D.2d 327, 205 N.Y.S.2d 551 (1 st Dep t 1960), lv to appeal denied, 11 A.D.2d 1019, 207 N.Y. 995 (1960); Arnav Industries, Inc. Employee Retirement Trust v Westside Realty Associates, 180 A.D.2d 463, 579 N.Y.S. 2d 382 (1 st Dep t 1992). 2

3 Mr. Verschleiser s argument that the Plaintiff s CPLR 3213 Motion must be dismissed because the documentary evidence expressly provides that any dispute is subject to mandatory arbitration also (Opp. at 5) fails because of Mr. Verschleiser s faulty reading of the conflict and dispute provisions of the Heter Iska. Mr. Verschleiser s argument is predicated on the mistaken assumption that a conflict exists between the Note and Guaranty on the one hand and the Heter Iska on the other hand. Mr. Verschleiser highlights the provision of the Heter Iska which states that [i]n the event of any conflict between the terms of this Iska agreement and the terms of any other agreement signed by the two parties in regards these funds, the terms of this agreement shall prevail. (Opp. at 7). In fact, a plain reading of the pertinent operative paragraph of the Heter Iska that describes the Note and Guaranties demonstrates no conflict exists at all between the Note and Guaranty and the Heter Iska, but instead there is a clear accord of purpose and direction as to when the Note and Guaranty may be enforced in New York. The Heter Iska provides: It is agreed that if the under-signed returns the abovementioned [$2 million] principle to the Investing Partner, together with other amounts owed pursuant to the Promissory Note dated as of the date hereof, as payment for his share of the profits which are generated, then United Realty Advisor, LP, or Jacob Frydman or Eli Verschleiser, as guarantors under the guaranties given in connection therewith, will not be required to make payment under the note or the guaranties, nor will they be required to make an oath. See Initial Gryzwacz Aff., Ex. A, p. 3. ( Iska Contract ) URA did not pay the $2 million plus accumulated interest under the Note denominated as profit under the Heter Iska and hence the Note and Guaranty are enforceable in New York in accordance with the terms of those documents. Any other 3

4 reading renders the provisions of the Note and Guaranty signed the same day as the Heter Iska - as meaningless. Mr. Verschleiser also relies on the provision of the Heter Iska that states that [i]t is agreed that any dispute which may arise in connection with this agreement (emphasis added) shall be submitted before a Beis Din as support for his assertion that Plaintiff cannot enforce the Note and Guaranty in New York (Opp. 9). Here, Mr. Verschleiser fails to articulate what the dispute is which purportedly has risen in connection with the Heter Iska. By presuming that a conflict exists when the clear language of the Heter Iska permits enforcement of the Note and Guaranty in accordance with the terms thereof, Mr. Verschleiser does not articulate a dispute which has arisen under the Heter Iska. The core of Mr. Verschleiser s dispute seems to be Plaintiff s right to enforce the Note and Guaranty in New York court but that issue is directly addressed in the plain language of the Heter Iska. 4

5 CONCLUSION Accordingly, the undersigned respectfully requests that this Court grant Plaintiff s Motion for Summary Judgment in Lieu of a Complaint, and such other and further relief as the Court deems just and proper. Dated: New York, New York February 13, 2015 Respectfully submitted, The Ryan Law Group LLP By:/s/ Andrew J. Ryan Andrew J. Ryan George B. Schwab 14 E. 4 th Street Suite 406 New York, New York ar@trlg-llp.com Attorney for Canada, Inc. 5