FILED: NEW YORK COUNTY CLERK 08/27/ :37 PM INDEX NO /2014 NYSCEF DOC. NO. 69 RECEIVED NYSCEF: 08/27/2015. Exhibit

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1 FILED: NEW YORK COUNTY CLERK 08/27/ :37 PM INDEX NO /2014 NYSCEF DOC. NO. 69 RECEIVED NYSCEF: 08/27/2015 Exhibit

2 FILED: NEW YORK COUNTY CLERK 02/10/ :01 PM INDEX NO /2014 NYSCEF DOC. NO. 32 RECEIVED NYSCEF: 02/10/2015

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5 FILED: NEW YORK COUNTY CLERK 02/10/ :01 PM INDEX NO /2014 NYSCEF DOC. NO. 33 RECEIVED NYSCEF: 02/10/2015

6 FILED: NEW YORK COUNTY CLERK 02/10/ :01 PM INDEX NO /2014 NYSCEF DOC. NO. 34 RECEIVED NYSCEF: 02/10/2015 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 PLAINTIFF CANADA INC. S OPPOSITION TO DEFENDANTS UNITED REALTY ADVISORS LP AND JACOB FRYDMAN S CROSS MOTION PURSUANT TO CPLR 3213 FOR JUDGMENT IN LIEU OF COMPLAINT Plaintiff Canada Inc. ( Plaintiff ) respectfully submits this Memorandum of Law 1 in opposition to the cross motion of Defendants United Realty Advisors LP ( URA ) and Mr. Jacob Frydman ( Mr. Frydman ) for summary judgment in lieu of a complaint (the Cross Motion ) based on an allegation that a partnership agreement was formed as a result of a heter iska. 2 URA and Mr. Frydman defy logic and the clear text of the New York Civil Practice Law and Rules ( CPLR ) 3213 as well as the heter iska dated October 25, 2013 (the Heter Iska ) to claim that they are 1 Plaintiff also submits herewith the Affirmation of Hershey Friedman dated February 10, 2015 and the exhibit thereto (the Friedman Aff. ). 2 A heter iska is a device intended to avoid the Hebraic religious proscription against lending money for interest.

7 entitled to a sum certain from Plaintiff under the Heter Iska. URA and Mr. Frydman are wasting this Court s time with this spurious Cross Motion and it should be summarily denied. I. The Heter Iska Did Not Create a Partnership URA and Mr. Frydman by their Cross Motion purport to seek summary judgment pursuant to CPLR 3213 against Plaintiff to reimburse Defendants for Plaintiff s share of losses purportedly incurred by URA pursuant to the partnership which they assert was created by the Heter Iska. This is a diversionary tactic intended to distract attention from URA s obligation under the $2 million dollar promissory note signed by URA on October 25, 2013 in favor of Plaintiff (the Note ) and the Guaranty given by Mr. Frydman in favor of Plaintiff dated October 25, 2013 (the Guaranty ). The gist of URA s and Mr. Frydman s argument on the Cross Motion is that the Heter Iska signed the same day as the Note and Guaranty somehow superseded the Note and Guaranty (Mr. Frydman s Aff. at pg. 2 attached to Cross Motion ( Frydman Aff. )) and negated the obligation of URA to make payment on the Note (Frydman Aff. at 10) and of Mr. Frydman to make payment on the Guaranty (Frydman s Aff. at 10, 11) because the Heter Iska created a partnership between Plaintiff and URA. The Appellate Division, First Department, has previously addressed that this sort of heter iska was a partnership/joint venture which purportedly negated a debt instrument. In Barclay s 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.S.2d 995 (1960), the Appellate Division found a heter iska to be merely a compliance in form with Hebraic 2

8 Law and went on to find that the defendant s counterclaim of a joint venture raised what was at best a phantom issue [which was] clearly without merit. Id. at 328. See also 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). In this case, the notion that the Heter Iska created a partnership which superseded the Note and Guaranty is belied by Mr. Frydman s 3 own (Ex. A to the Declaration of Mr. Friedman attached hereto) sent October 21, 2014, which was four days prior to the stated one year maturity date of the Note, as follows: Hershey In furtherance of our discussion, and based on the fact that United Realty Advisors has lost approximately $1.7 million in the past year it is impossible to make a payment at this time either of profits or against the note. I think there are several options which I would like to propose. One option would be to formalize the arrangement by converting the obligation to an equity stake in United Realty Advisors at par based on the total capital contributed to the company. On that basis I believe it would represent slightly over 10% of the capital of the company. Another alternative would be to keep the arrangement as is and extend out the payment date for six months. I would hope that we will be able to solve some issues and get to profitability within that time period. Please let me know if either option works for you. Alternatively, I am also happy to explore other ideas you may have. I look forward to hearing from you soon. Thank you, Jacob Frydman Chairman, CEO UNITED REALTY GROUP OF COMPANIES 3 Mr. Frydman is the Chairman and Chief Executive Officer of URA as indicated on the . Mr. Frydman appears in this action Pro Se but on information and belief is a lawyer. 3

9 Mr. Frydman, URA s Chairman and CEO, sent this just prior to stated maturity of the Note. It conclusively demonstrates that the notion of the Heter Iska as creating an equity partnership which negated the Note and Guaranty is a litigation fabrication. In this , Mr. Frydman is asking on October 21, 2014 to convert the Note to equity. Alternatively he is asking for a six month period of forbearance on the Note. This makes a mockery of the arguments set forth in support of URA s and Mr. Frydman s Cross Motion. II. The Heter Iska In This Case Does Not Constitute an Instrument for the Payment of Money Only Entitling URA and Mr. Frydman To Summary Judgment Under CPLR 3213 URA and Mr. Frydman go on further to claim that the Heter Iska as a partnership entitles them to a summary judgment for one half of URA s losses in the amount of $1,233, To support this claimed amount as a sum certain under CPLR 3213, URA and Mr. Frydman submit an Affidavit of Steven Kahn as to profit and losses of URA for a specified period ( Kahn Affidavit ). Even assuming for the sake of argument that the Heter Iska did create a partnership as URA and Mr. Frydman only now claim, the Kahn Affidavit is patently insufficient to create a sum certain under CPLR 3213 based on the express language of the Heter Iska if that document were treated as a partnership agreement. Normally the question of whether a dispute involves an instrument for the payment of money only, is determined by whether any extrinsic evidence, beyond proof of non-payment and the instrument itself, is required to establish a prima facie case in 4

10 order for liability to attach. See Weissman v Sinorm Deli, Inc, 88 N.Y.2d 437, (1997). A document comes within the ambit of CPLR 3213 if a prima facie case would be made out by the instrument and the failure to make the payment called for by its terms. See Weissman, 88 NY 2d at 445 (indemnification agreement was not an instrument for the payment of money only and claim did not qualify for CPLR 3213); Russo v O Meara, 300 A.D.2d 563 (2d Dep t 2002). An instrument does not qualify as an instrument for the payment of money only if outside proof is needed other than simple proof of non-payment. See Kaplan v U.S. Coal Corp., 115 A.D.3d 517, 517 (1st Dep't 2014) ( Supreme Court properly denied plaintiff's motion for summary judgment in lieu of complaint because determination of the amount to be paid under the agreement requires reference to proof extrinsic to the instrument. ); Kerin v. Kaufman, 296 A.D.2d 336, 338 (1st Dep't 2002) ( In contrast, the instrument now before us does not qualify for accelerated judgment under CPLR 3213 because "outside proof is needed [for summary enforcement], other than simple proof of nonpayment or a similar de minimis deviation from the face of the document"); Russo, 300 A.D.2d at 564 ( In the case at bar, since the note at issue could be satisfied by means other than the payment of money, and outside proof was required to determine if this condition was satisfied, the granting of the plaintiff's motion for summary judgment in lieu of complaint was inappropriate. ) Here, the Heter Iska (if actually deemed to be a partnership) makes it clear that outside proof is necessary. The Heter Iska specifies that any claim of loss must be verified through the testimony of two qualified witnesses in, and under conditions acceptable to, an Orthodox Jewish court of law. Thus, outside proof is needed to 5

11 determine liability (even if URA s and Mr. Frydman s argument were believable), and CPLR 3213 is inapplicable on its face. Moreover, the Heter Iska asserted to be a partnership agreement specifies that disputes with regard to that document must be submitted before a Rabbinical court. There is no provision in the Heter Iska that would allow a New York Court to establish liability on the Heter Iska as a sum certain based on the Kahn Affidavit and to grant summary judgment pursuant to CPLR III. Conclusion For the reasons set forth above, Plaintiff respectfully submits that URA s and Mr. Frydman s motion for summary judgment under CPLR 3213 should be dismissed and that Plaintiff should be granted such other relief as the Court may deem just and proper. Dated: New York, New York February 10, 2015 Andrew J. Ryan Andrew J. Ryan, Esq. George B. Schwab, Esq. Attorney for Plaintiff Canada, Inc. The Ryan Law Group LLP 14 E. 4 th Street Suite 406 New York, New York ar@trlg-llp.com 6