FILED: NEW YORK COUNTY CLERK 09/21/ :07 PM INDEX NO /2016 NYSCEF DOC. NO. 45 RECEIVED NYSCEF: 09/21/2016

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1 FILED NEW YORK COUNTY CLERK 09/21/ PM INDEX NO /2016 NYSCEF DOC. NO. 45 RECEIVED NYSCEF 09/21/2016 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK NATIONAL CREDIT UNION ADMINISTRATION BOARD, ACTING IN ITS CAPACITY AS CONSERVATOR OF MONTAUK CREDIT UNION v. Plaintiff, BORIS BASIN, CAPITAL TAXI LLC, KING OF RUSSIA TAXI, LLC, SUNNY TAXI LLC, BROTHER TAXI LLC, HOLIDAY TAXI LLC, Defendants. Index No /2016 DEFENDANTS MEMORANDUM OF LAW IN OPPOSITION TO PLAINTIFF S MOTION FOR SUMMARY JUDGMENT Brett A. Berman, Esquire Jordan B. Kaplan, Esquire 100 Park Avenue, 15 th Floor New York, New York Tel. No Attorneys for Defendants v1 1 of 9

2 PRELIMINARY STATEMENT Defendants Boris Basin, Capital Taxi LLC, King of Russia Taxi, LLC, Sunny Taxi LLC, Brother Taxi LLC, and Holiday Taxi LLC (collectively, Defendants ), by and through their attorneys, Fox Rothschild LLP and pursuant to CPLR 3212, respectfully submit this Memorandum of Law in opposition to the motion for summary judgment and to dismiss the affirmative defenses (the Motion ) filed by plaintiff National Credit Union Administration Board, acting in its capacity as conservator of Montauk Credit Union ( Plaintiff ). For the reasons set forth herein, Plaintiff s motion should be denied in its entirety, and Defendants should be permitted to proceed with discovery to defend against the spurious allegations asserted against them. In this action, Plaintiff alleges that, as a lender, it entered into a number of promissory notes (the Notes ) with a number of different entities (the Borrowers ). (See Affidavit of Boris Basin ( Defendants Aff. ) at 7). The Borrowers obligations to pay back the Notes were conditioned on the performance of the terms of the Notes by Plaintiff, as lender. (Id. at 8). To date, Plaintiff has not provided any evidence that it performed as lender pursuant to the Notes. (Id. at 9). This Court should deny summary judgment as the Motion is significantly premature, filed a mere three weeks after service of the answer. (Id. at 6). The parties have not had the opportunity to conduct any discovery and as a result there are significant factual issues in dispute. (Ibid.). Moreover, summary judgment should be denied because Plaintiff fails to make a prima facie case for breach of contract. Finally, Plaintiff s argument that Defendants affirmative defenses fail as a matter of law is without merit because Defendants have not been afforded the opportunity to obtain discovery to address the significant disputes issues of fact in v1 1 2 of 9

3 this case. Stated simply, Plaintiff has not met its burden of proof to demonstrate that it is entitled to judgment as a matter of law. LEGAL ARGUMENT New York law is clear that a party moving for summary judgment must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact from the case. See Korina et al. v. New York City Transit Authority, et al., 37 A.D.3d 765, (2d Dept, 2007). The remedy of summary judgment is a drastic one, and should not be granted where there is any doubt as to the existence of a triable issue of fact. See Rotuba Extruders, Inc. v. Ceppos, 46 N.Y.2d 223, 231 (1978) (citation omitted). New York Courts have consistently stated that the existence of a single genuine issue of fact is sufficient to preclude summary judgment. See e.g. Wanger v. Zeh., 45 Misc. 2d 93, 94 (Sup. Ct., Albany Co., 1965), aff d 26 A.D.2d 729 (3d Dept. 1966). New York law is further clear that a motion for summary judgment is also premature, and should therefore be denied, when substantial discovery remains outstanding. See Ramos v. Dego Deutsche Gesellschaft Fuer Imobilienfonds MBH, 37 A.D.3d 802, 803 (2d Dep t 2007). POINT I PLAINTIFF S MOTION FOR SUMMARY JUDGMENT MUST BE DENIED BECAUSE PLAINTIFF FAILS TO DEMONSTRATE A PRIMA FACIE CASE FOR BREACH OF CONTRACT Plaintiff s Motion should be denied as a matter of law because disputed issues of fact exist as to whether Plaintiff performed its obligations under the Notes, a necessary element of Plaintiff s claim. Without those proofs, Plaintiff cannot establish that it is entitled to the relief sought through its pending motion for summary judgment. It is black letter law in New York that, in order to establish a claim for a breach of v1 2 3 of 9

4 contract, the plaintiff must show (i) the existence of a contract, (ii) plaintiff s performance thereunder, (iii) a breach by the defendant, and (iv) damages resulting therefrom. Morris v. 702 E. Fifth St. HDFC, 46 A.D.3d 478 (1st Dep t 2007); Furia v. Furia, 116 A.D.2d 694 (2d Dep t 1986). Plaintiff s pleadings, to date, are deficient and never allege Plaintiff performed its obligations under the Notes. Indeed, notwithstanding the multitude of allegations and testamentary statements contained in Plaintiff s complaint and the multiple purported affidavits submitted with Plaintiff s instant Motion, not once does Plaintiff allege that it actually performed its obligations under the agreements alleged in the Complaint. Plaintiff submits only that it allegedly entered into agreements with each of the Defendants and, with no facts to support its statements, makes the conclusory statement that each of the Defendants defaulted under those agreements. Nowhere does Plaintiff state, demonstrate, or otherwise show the Court that it performed all of its obligations under the parties alleged agreements. Absent any proof as to whether Plaintiff performed its obligations under the Notes, Plaintiff cannot be entitled to summary judgment. Indeed, at its very core, Plaintiff cannot even establish that it has even stated a claim upon which relief may be granted. Accordingly, Plaintiff s Motion should be denied in its entirety and Defendants should be afforded the opportunity to conduct basic discovery concerning these disputed issues of material fact. POINT II PLAINTIFF FAILS TO BEAR ITS BURDEN TO DEMONSTRATE THAT DEFENDANTS AFFIRMATIVE DEFENSES SHOULD BE DISMISSED Plaintiff s request to dismiss Defendants affirmative defenses is without merit and entirely premature at this juncture. It is well-settled under New York law that [i]n reviewing a v1 3 4 of 9

5 motion to dismiss an affirmative defense, the court must liberally construe the pleadings in favor of the party asserting the defense and give that party the benefit of every reasonable inference. Mazzei v. Kyriacou, 98 A.D.3d 1088, 1089 (2d Dep t 2012) (quoting Fireman's Fund Ins. Co. v. Farrell, 57 A.D.3d 721, 723 (2d Dept. 2008)). Further, [w]hen moving to dismiss an affirmative defense, the plaintiff bears the burden of demonstrating that the affirmative defense is without merit as a matter of law. Bank of N.Y. v. Penalver, 125 A.D.3d 796, 797 (2d Dept. 2015) quoting Vita v. N.Y. Waste Servs., LLC, 34 A.D.3d 559, 559 (2d Dept. 2006); see also Chestnut Realty Corp. v. Kaminski, 95 A.D.3d 1254 (2d Dept. 2012) (affirming lower court denial of motion to dismiss affirmative defenses where plaintiff could not show that affirmative defense is without merit as a matter of law). A. Defendants Have Established that Plaintiff Fails to State a Claim Upon Which Relief May be Granted As to the first affirmative defense, as set forth above, Plaintiff has failed to allege that it performed its obligations under the parties alleged agreement, and therefore has failed to state a claim upon which relief can be granted. Plaintiff s argument that Defendants first affirmative defense should be dismissed is therefore without merit. B. Defendants Have Been Unduly Prejudiced by Plaintiff s Delay in Prosecuting this Action As to the second affirmative defense, Plaintiff s entire argument is based upon the unsupported conclusory statement that Defendants provide no evidence that they have suffered any injury by the alleged delay of Plaintiff. (See Plaintiff s Memorandum of Law at p. 7). It is quite intriguing that Plaintiff is even able to make such a statement, especially considering that the parties have not taken any discovery in this matter and that Plaintiff has no basis for its purported conclusions concerning Defendants damages. Accordingly, Defendants are entitled to v1 4 5 of 9

6 demonstrate the multiple ways in which they have been damaged by Plaintiff s failure to act. C. Plaintiff Cannot Benefit From its Misconduct and Fraud New York law is clear that the default of a primary obligation must be a bona fide default and not one caused by the lender. See generally, Canterbury Realty & Equip. Corp. v. Poughkeepsie Sav. Bank, 135 A.D.2d 102 (3d Dep t 1988); see also Bank of China v. Chan, 937 F.2d 780, 789 (2d Cir. 1991)(bank s bad faith conduct in connection with underlying obligation would be complete defense to unconditional guaranty). Where, as here, a corporate principal/mortgagee purposefully causes a corporate mortgagor to default on a loan which the principal holds, the principal/mortgagee is estopped from foreclosure. See 192 Sheridan Corp. v. O Brien, 252 A.D.2d 934, 935 (3d Dep t 1998). New York law precludes foreclosure where the mortgagee is alleged to have wrongfully caused the mortgagor s default or some other condition that led to the foreclosure action. MCC Funding LLC v. Diamond Point Enters., LLC, 36 Misc.3d 1206(A) (Sup. Ct. Kings Cty., 2012)(citing Red Tulip, LLC v. Neiva, 44 A.D.3d 204, (1st Dep t 2007). The Appellate Division in 192 Sheridan Corp. expounded on these principles and held that a mortgagee could not benefit from its own bad-faith conduct, stating It is well settled that bad faith, fraud, or oppressive or unconscionable conduct by the mortgagee will operate to relieve a default... [Defendants] affidavit... alleges facts which, if proven, would relieve defendants of the default. These include claims that... [the foreclosing partners], as general managers of the partnership s operations, paid themselves excessive management fees, failed to account to their copartners for the property s income and expenses and purposefully caused the default on the original note and mortgage. Id. at 936 (emphasis added). By filing the instant motion, Plaintiff attempt to cut off Defendants from taking any v1 5 6 of 9

7 discovery relating to these facts, from adding additional information relevant to these claims, and from otherwise forming the foundation for its claims. (See e.g. Defendants Aff. at 6; CPLR 3212(f)). Plaintiff cannot be permitted to continue to benefit from its bad faith precluding Defendants from uncovering their bad faith conduct. Accordingly, it is premature to dismiss Defendants third affirmative defense at this juncture. In light of the above, Defendants affirmative defenses should not be dismissed. POINT III SUMMARY JUDGMENT AS TO ANY OF PLAINTIFF S CLAIMS IS PREMATURE BECAUSE DISCOVERY HAS NOT YET BEGUN Plaintiff s motion for partial summary judgment requests that the Court fund, where Defendants have not even had a chance to serve their first set of discovery requests upon Plaintiff, that, as a matter of law, Defendants are liable to Plaintiff. However, because the parties have not engaged in any discovery in connection with this litigation, Plaintiff s and Defendants allegations have, to date, been completely untested and material facts remain disputed at every level. Gera v. All-Pro Athletics, Inc., 870 N.Y.S.2d 87 (2d Dep t 2008); Groves v. Land s End Housing Co., Inc., 80 N.Y.2d 978 (1992). Notwithstanding the parties multiple filings in this matter, Plaintiff has failed to submit a certification or affidavit from any representative that dispels or otherwise challenges the untested allegation that Plaintiff caused any purported default of the subject Notes. Thus, material issues of fact remain and further development of the record through discovery is necessary to ensure that no disputed issues of material fact exist before any party is entitled to judgment as a matter of law. See e.g. CPLR 3212(f) ( Should it appear from affidavits submitted in opposition that facts essential to justify opposition may exist but cannot then be stated, the court may deny the v1 6 7 of 9

8 motion... ); see also O Hara v. New School, 987 N.Y.S.2d 386 (1st Dep t 2014)(denying plaintiffs pre-discovery motion for summary judgment where issues of material fact relating to the ultimate issues of the case were not within the movant s knowledge, requiring discovery); Belziti v. Langford, 963 N.Y.S.2d 654 (1st Dep t 2013)(finding summary judgment motion was properly denied as premature where limited discovery had taken place and the movant had not yet been deposed); Rodrigues v. County of Westchester, 993 N.Y.S.2d 52 (2d Dep t 2014) (finding summary judgment was premature in action seeking to recover damages for personal injuries where depositions were not yet complete); O'Toole v. County of Sullivan, 680 N.Y.S.2d 315 (3d Dep't 1998)(finding summary judgment was not warranted on a negligence cause of action where there were only approximately seven days between the answer and the motion for summary judgment, which deprived the plaintiff of a reasonable opportunity for disclosure). Accordingly, the resolution of Plaintiff s claims is not proper for adjudication on a motion for summary judgment at this time, especially given the fact that no discovery especially on the most critical disputed facts has occurred. New York law is clear that judgment should not be granted until the parties have had a reasonable opportunity to take discovery, particularly where fats upon which liability is predicated are particularly within a party s knowledge and necessitate a level of unearthing before the issues are clear, such as the case here. See e.g. O Hara, 987 N.Y.S.2d 386 (1st Dep t 2014); Belziti, 963 N.Y.S.2d 654 (1st Dep t 2013); Rodrigues, 993 N.Y.S.2d 52 (2d Dep t 2014). In other words, the objective facts that exist, even with the undeveloped record in this case, reveal significant issues with Plaintiff s claims. All these facts run, when viewed in the light most favorable to Defendants, as they must for purposes of this Motion, counter to Plaintiff s allegations that Defendants defaulted on the Notes, and therefore are capable of defeating v1 7 8 of 9

9 summary judgment at this time. CONCLUSION For all of the foregoing reasons, Plaintiff s motion for summary judgment should be denied in its entirety. Dated September 21, 2016 FOX ROTHSCHILD, LLP By /s/ Brett A. Berman Brett A. Berman, Esquire Jordan B. Kaplan, Esquire 100 Park Avenue, 15 th Floor New York, New York Telephone No Attorneys for Defendants v1 8 9 of 9