FILED: NEW YORK COUNTY CLERK 11/17/ :53 PM INDEX NO /2014 NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 11/17/2014

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1 FILED: NEW YORK COUNTY CLERK 11/17/ :53 PM INDEX NO /2014 NYSCEF DOC. NO. 35 RECEIVED NYSCEF: 11/17/2014 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK RCG LV DEBT NON-REIT ASSETS HOLDINGS, LLC, -against- Plaintiff, BENJAMIN RINGEL, TIBOR KLEIN, and GERSHON KLEIN, Defendants. Index No /14 AFFIRMATION IN SUPPORT OF CROSS MOTION TO AMEND CAPTION AND IN OPPOSITION TO MOTION TO DISMISS DANI SCHWARTZ, an attorney admitted to practice before the Courts of the State of New York, hereby affirms the following under the penalties of perjury pursuant to CPLR 2106: 1. I am a member of the law firm of Rosenberg & Estis, P.C., attorneys for plaintiff RCG LV Debt IV Non-REIT Assets Holdings, LLC ("Plaintiff'). As such, I am fully familiar with the facts and circumstances set forth below. 2. This affirmation is respectfully submitted in support of Plaintiff's cross motion, pursuant to CPLR 305(c), CPLR 2101 and CPLR 3025(b), amending the caption of this action to reflect the name of Plaintiff as "RCG LV Debt IV Non-REIT Assets Holdings, LLC" and deeming the summons and second amended complaint bearing the amended caption, served and filed nunc pro tunc, together with such other and further relief that this Court inay deem just and proper. 3. This affirmation is also respectfully submitted in opposition to the instant motion of defendants Tibor Klein and Gershon Klein (collectively and individually with Defendant Benjamin Ringel, as the context may require, ``Guarantor") for an order, pursuant to CPLR 3013 and CPLR 3211(a) (3),(7) and (10), dismissing the amended complaint.

2 PRELIMINARY STATEMENT 4. In this guaranty enforcement action, Guarantor moves for dismissal of the amended complaint on the grounds that Plaintiff lacks standing and/or capacity to maintain this action due to a trivial typographic error in the caption of this case, and because the amended complaint purportedly fails to state a cause of action for account stated and attachment. 5. As a threshold matter, Guarantor has not submitted an answer and/or affidavit denying any of the allegations contained in the amended complaint, or denying that Guarantor is liable for the money sought in this action. Instead, Guarantor relies solely upon an attorney's hyper-technical arguments in an attempt to evade their obligations under the guaranty. 6. In any event, desperate to avoid their obligations under the Guaranty, Guarantor frivolously alleges that this action should be dismissed because Plaintiff has a typographic error in the caption; specifically, that Plaintiff's name is incorrect. This constitutes harmless error which the Court should disregard pursuant to CPLR 2101 since no prejudice has been shown or even alleged. 7. The amended complaint clearly states a viable cause of action against Guarantor for account stated. The amended complaint alleges that Guarantor received bills, invoices, demands and/or requests for payment from Plaintiff for amounts due and owing to Plaintiff from Guarantor, and that Guarantor failed to pay same. 8. Contrary to Guarantor's claim, Plaintiff is under no obligation to specifically state in its pleading the dates and times accountings were rendered. Nor is there any validity to Guarantor's claim that Plaintiff's cause of action for account stated is deficient because it is based upon the Mezzanine Loan (defined below). Pursuant to the terms of the Guaranty (defined below), defaults under the Mezzanine Loan triggered Guarantor's obligations under the Guaranty -2-

3 to repay the debt under the Mezzanine Loan. Thus, the account stated cause of action, which again, Guarantor does not deny, is more than sufficiently pleaded. 9. As to the balance of Guarantor's motion with respect to Plaintiff's third cause of action for attachment, Plaintiff hereby withdraws its third cause of action without prejudice to its right to subsequently seek attachment relief. Therefore, the portion of Guarantor's motion that seeks dismissal of the third cause of action is moot. 10. Finally, the caption of this action should be amended to correct Plaintiff's name on the sulninons and amended complaint. 11. Accordingly, Guarantor's motion should be denied in its entirety and Plaintiff s cross motion granted in its entirety. RELEVANT FACTS A. The Parties 12. Plaintiff is the lender under a certain Promissory Note, dated February 3, 2011, between Plaintiff, as lender, and AC I Manahawkin Mezz, LLC ("Mezzanine Borrower"), as borrower (the ``Mezzanine Note"). The Mezzanine Note was amended by Amended and Restated Promissory Note, dated May 27, 2011 (the ``Amended Mezzanine Note''). Copies of the Mezzanine Note and the Amended Mezzanine Note are annexed hereto as Exhibits A and B, respectively. 13. Guarantor is the guarantor of Mezzanine Borrower's obligations under the Mezzanine Note and Amended Mezzanine Note pursuant to a written Mezzanine Guaranty of Recourse Obligations of Borrower, dated February 3, 2011 (the ``Guaranty"), and a "Reaffirmation of Guarantees,'' dated June 7, Copies of the Guaranty and Reaffirmation of Guarantees are annexed hereto as Exhibits C and D, respectively. -3-

4 B. The Mezzanine Loan 14. The Mezzanine Note, originally in the amount of $370,000.00, is secured through a Pledge and Security Agreement, dated February 3, 2011 (the "Pledge Agreement"), by a first priority interest in all of Mezzanine Borrower's ownership interest in AC I Manahawkin, LLC (the "Mortgage Borrower"), the owner of the commercial real property (the "Property") known as The Commons at Manahawkin Village in Stafford Township, New Jersey (the "Mezzanine Loan"). A copy of the Pledge Agreement is annexed hereto as Exhibit E. 15. The Mezzanine Loan, as amended, is governed by a Mezzanine Loan Agreement, dated February 3, 2011 (the "MLA"), between Plaintiff and Mezzanine Borrower, as amended. A copy of the MLA is annexed hereto as Exhibit F. 16. Pursuant to a First Amendment to Mezzanine Loan Agreement and other loan documents, dated May 27, 2011 (the "First Amendment"), Plaintiff, Mortgage Borrower and Mezzanine Borrower restructured the Mezzanine Loan in order to reallocate a portion of the principal balance of the mortgage loan on the Property to the Mezzanine Loan. Plaintiff and Guarantor agreed that the principal amount of the Mezzanine Loan was increased from $370, to $4,941, A copy of the First Amendment is annexed hereto as Exhibit G. 17. Critically, the First Amendment, including Guarantor's acknowledgment of the guaranteed increase in debt, was "ACKNOWLEDGED AND AGREED TO BY GUARANTOR," and executed by the defendants herein: Benjamin Ringel, Tibor Klein and Gershon Klein. 18. The First Amendment to Mezzanine Loan was evidenced by the Amended Mezzanine Note. See Exhibit B. -4-

5 C. Guarantor's Obligations under the Guaranty 19. Under the terms of the Guaranty, Guarantor jointly and severally "absolutely and unconditionally," guaranteed to Plaintiff "the prompt and unconditional payment" of certain obligations of Mezzanine Borrower to Plaintiff. See Exhibit C. 20. The Guaranty further provides that the Guaranty "shall remain and continue in full force and effect as to any modification, extension or renewal of the Note, the Loan AgY-eement, or the other Loan Documents." See Exhibit C. See Exhibit C. 21. The Guaranty further provides that: upon any default of Borrower under the Note, the Loan Agreement, or the other Loan Documents, Lender may, at its option, proceed directly and at once, without notice, against Guarantor to collect and recover the full amount of the liability hereunder or any portion thereof, without proceeding against Borrower or any other person, or foreclosing upon, selling, or otherwise disposing of or collecting or applying against any of the Collateral for the Loan. D. Guarantor Reaffirmed the Guaranty and its Obligation to Guaranty Payment of the Increased Mezzanine Loan Debt Following Mezzanine Borrower's Default in Payments under the Mezzanine Loan 22. Following various payment defaults under the Mezzanine Loan by Mezzanine Borrower, on or about June 7, 2012, Mezzanine Borrower executed a Forbearance Agreement with Plaintiff (the "Forbearance Agreement"). A copy of the Forbearance Agreement is annexed hereto as Exhibit H. 23. The same day, Guarantor executed the Reaffirmation of Guarantees in Plaintiff's favor, wherein Guarantor acknowledges receipt of the Forbearance Agreement. See Exhibit D. 24. The Reaffirmation of Guarantees provides that: -5-

6 Guarantor hereby reaffirms each of its respective obligations arising under the Guaranty, and covenants and agrees that its obligations thereunder are in no way impaired or diminished as a result of the execution and delivery by Borrower and Lender [i.e., Plaintiff) of the Forbearance Agreement. See Exhibit D. See Exhibit D. Exhibit D. 25. The Reaffirmation of Guarantees further provides that: Guarantor hereby consents to the agreements set forth in the Forbearance Agreement and expressly acknowledges, confirms, ratifies and reaffirms the terms, provisions, validity and binding nature, both at the time of delivery and on the date hereof, of its obligations under each guaranty and/or indemnity agreement executed by Guarantor in connection with the Loan, agrees that any reference made in such documents, the Loan Agreement, the Note or in any of the other documents evidencing, securing or guaranteeing the Loan and agrees that the obligations arising thereunder shall continue and remain in full force and effect and shall in no way be impaired or diminished as a result of the Forbearance Agreement. 26. Each of the Guarantor defendants signed the Reaffirmation of Guarantees. See 27. To date, Guarantor has not denied any of the foregoing allegations. E. Procedural History "Complaint"). 28. Plaintiff commenced this action by Verified Complaint, dated June 25, 2014 (the 29. On August 29, 2014, Guarantor, together with defendant Benjamin Ringel ("Ringel"), filed motions to dismiss the Complaint. -6-

7 30. On September 18, 2014, Plaintiff filed an amended verified complaint (the ``Amended Complaint"), a copy of which is annexed hereto as Exhibit I. 31. Guarantor and Ringel subsequently withdrew the motions to dismiss the Complaint based upon the allegations in the Amended Complaint, but on October 8, 2014, Guarantor filed the instant motion to dismiss the Amended Complaint. APPLICABLE STANDARD OF REVIEW 32. As stated by the Court of Appeals in J.P. Morgan Secuf-ities Inc. v Vigilant Insuj~ance Company, 21 NY3d 324, 334 (2013): the rules governing CPLR 3211 motions to dismiss are well established. In assessing the adequacy of a complaint under CPLR 3211(a)(7), the court must give the pleading a liberal construction, accept the facts alleged in the complaint to be true and afford the plaintiff the benefit of every possible favorable inference (internal quotations and citations omitted). 33. A "motion to dismiss will fail if, from the pleading's four corners factual allegations are discerned which taken together manifest anv cause of action cognizable at law (citations and internal quotation marks omitted).'" Khan v Newsweek, Inc., 160 AD2d 425, 426 (1st Dept 1990) (emphasis supplied). "Whether a plaintiff can ultimately establish its allegations is not part of the calculus in determining a motion to dismiss." EBC I, Inc. v Goldman, Sachs ~ Co., 5 NY3d 11, 19 (2005). 34. Indeed, "[s]o liberal is the standard that the test is simply whether the proponent of the pleading has a cause of action, not even whether he has stated one." Wiener v Lazard Freres 8c Co., 241 AD2d 114, 120 (1st Dept 1998) (internal quotations and citation omitted). 35. Moreover, in opposing a motion to dismiss, the allegations in the pleading maybe amplified or supplemented by additional submissions, which must also be accepted as true. Nat'l Puerto Rican Day Parade, Inc. v Casa Publications, Inc., 79 AD3d 592, 595 (1st Dept 2010). -7-

8 36. On a motion to dismiss based on documentary evidence, "the documentary evidence must resolve all factual issues and dispose of the plaintiffs claim as a matter of law." Foster v Kovner, 44 AD3d 23, 28 (1st Dept 2007). If such standard is not met, the motion must be denied. ARGUMENT THE AMENDED COMPLAINT STATES A CAUSE OF ACTION FOR ACCOUNT STATED AGAINST GUARANTOR 37. "An account stated is an account, balanced and rendered, with an assent to the balance either express or implied." Abbott Duncan c~c Wiener v Ragusa, 214 AD2d 412, 413 (lst Dept 1995). 38. It is well-settled that a party's "receipt and retention of plaintiff s invoices seeking payment...without objection within a reasonable time, [gives] rise to an actionable account stated.'" Manhattan Telecommunications Corporation v Best Payphones, Inc., 299 AD2d 178, 178 (1st Dept 2002); Ruskin, Moscou, Evans ~ Faltischek, P. C. v FGH Realty CYedit Corp., 228 AD2d 294, 295 (1st Dept 1996); Miller v Nadler, 60 AD3d 499, 499 (1st Dept 2009). 39. Here, the Amended Complaint alleges: "Guarantor received bills, invoices, demands, and/or requests for payments and amounts due and owing to Plaintiff under the Mezzanine Loan, but failed and refused to pay same." See Exhibit I, 74; and "Guarantor did not object to or protest Plaintiff s demands for payments due to Plaintiff pursuant to the Mezzanine Loan Documents." See Exhibit I, 75. "By reason of the foregoing, an account stated exists with respect to the amounts due and owing from Guarantor to Plaintiff." See Exhibit I, 76. "By reason of the foregoing, Plaintiff is entitled to a money judgment against Guarantor for all sums due and owing to Plaintiff pursuant to the Mezzanine Loan Documents, in an amount to be determined at trial, but in no event less than $7,100, " See Exhibit I,

9 40. Thus, the Amended Complaint clearly states a cause of action against Guarantor for an account stated. A. Plaintiff s Cause of Action for Account Stated Complies with CPLR Guarantor, relying upon CPLR 3013, argues that Plaintiff's cause of action for account stated should be dismissed because it lacks particularity. See Guarantor's Memorandum of Law, p Guarantor's argument is without merit. 43. At the outset, it should be noted that Guarantor has neither denied that bills, invoices, demands and/or requests for payments were received, nor has Guarantor objected to their validity. In fact, noticeably lacking from Guarantor's moving papers is an affidavit from the Guarantor addressing any of the allegations in the Amended Complaint. Guarantor instead relies solely upon an attorney's technical legal argument that Plaintiff has not met the pleading requirements to state a cause of action. 44. In any event, a cause of action is sufficiently particular under CPLR 3013 where it apprises the defendant of the plaintiff s claim. Indeed, as stated by the First Department: the emphasis with respect to pleading is placed, where it should be, upon the primary function of pleadings, namely, that of adequately advising the adverse party of the pleader's claim or defense. (See David D. Siegel, A Biannual Survey of New York Practice, 38 St. John's L.Rev. pp. 190, ) The `basic requirement [now] is that the pleadings identify the transaction and indicate the theory of recovery with sufficient precision to enable the court to control the case and the opponent to prepare.' (1957 First Preliminary Report, supra, p. 63.) So, generally speaking, `pleadings should not be dismissed or ordered amended unless the allegations therein are not sufficiently particular to apprise the court and parties of the subject matter of -9-

10 the controversy.' (3 Weinstein-Korn-Miller, New York Civil Practice, ) Foley v D 'Agostino, 21 AD2d 60, 61 (1st Dept 1964). 45. Having put Guarantor on notice of a cause of action for account stated, which Guarantor has not denied, Plaintiff has complied with the requirements of CPLR Moreover, Guarantor fails to cite any authority which requires a plaintiff to particularly state the date, time and/or specifics relating to an accounting when pleading a cause of action for account stated. The reason is simple: there is no such requirement. 47. As explained by the Court of Appeals over a century ago in Critten v Vredenburgh, 151 NY 536, 539 (1897): the statement showed an account stated between the parties and a resulting indebtedness. There was enough in either statement to comply with the statute, which requires that it shall be concise, and it is not material that there was not r particularity or definiteness in regard to the times and amounts of the loans of money, or of the sales of merchandise upon commission. This statement satisfies the object of the statute, because it indicates the facts out of which the indebtedness arose, and the form which it assumed in the account stated between the parties (emphasis supplied). 48. Thus, Plaintiff was under no obligation to state the date, time and/or specifics relating to when an accounting was rendered. 49. The case of Fendt Finding Company, Inc. v Private Brands, Inc., 182 A.D.2d 548, 549 (1st Dept 1992) is also instructive. There, plaintiff moved for summary judgment on account stated. The Court denied summary judgment with respect to the account stated because "Plaintiffs papers on the initial motion failed to assert that the invoices had been sent to said defendant, let alone retained by it without objection." Id. RE\66473\0040\56290 I v2-10-

11 50. Accordingly, a claim for account stated need only state that invoices were sent and that they were retained without objection. Had the plaintiff in Fendt Finding Company, Inc. done so, according to the Appellate Division, it would have been entitled to summary judgment. 51. Here, the Amended Complaint unquestionably states a claim for account stated. 52. Guarantor's argument that "particularity of dates and times is especially necessary for defendant to respondent to" Plaintiff's cause of action for account stated, "including to assess responses and/or potential defenses" (See Guarantor's Memorandum of Law, p. 9), is baseless. 53. This is not a motion for summary judgment where Plaintiff is obligated to lay bare all of its proof relating to its cause of action. Rather, as set forth above, Plaintiff need only put Guarantor on notice of the cause of action. 54. Moreover, it is black letter law that "there can be no account stated where no account was presented or where any dispute about the account is shown to have existed." Ragusa, 214 AD2d at Therefore, Guarantor's defense is not dependent upon the dates and times of the alleged accountings, but whether Guarantor ever received an accounting or disputed its validity. As set forth above, Guarantor has failed to allege either. 56. The two cases relied on by Guarantor to allegedly support this baseless argument -- Hanson v Hanson, 203 Misc 396 (Sup Ct, New York County 1953), and MaYco v Sachs, 270 AD 948 (2d Dept 1946) -- are inapposite. In neither case did the Court address the pleading requirements of a cause of action for account stated. 57. Accordingly, Plaintiff has properly pleaded a cause of action for account stated. -11-

12 B. Guarantor is Liable for Payments Due Under the Mezzanine Loan pursuant to the Guaranty 58. Guarantor argues that ``since the account stated claim seeks liability against Defendants based solely on the Mezzanine Loan, as opposed to their Guaranty thereof, it should be dismissed." See Guarantor's Memorandum of Law, p. 9. However, the very terms of the Guaranty, as pleaded in the Amended Complaint, fatally undermines Guarantor's argument. 59. Specifically, the Guaranty provides: See Exhibit I, 28. upon any default of Borrower under the Note, the Loan Agreement, or the other Loan Documents, Lender may, at its option, proceed directly and at once, without notice, against Guarantor to collect and recover the full amount of the liability hereunder or any portion thereof, without proceeding against Borrower or any other person, or foreclosing upon, selling, or otherwise disposing of or collecting or applying against any of the Collateral for the Loan (emphasis supplied). 60. Thus, pursuant to the terms of the Guaranty, defaults under the Mezzanine Loan trigger Guarantor's obligations under the Guaranty to repay the debt under the Mezzanine Loan. 61. Put differently, Guarantor's obligation under the Guaranty is inextricably intertwined with Mezzanine Borrower's obligation under Mezzanine Loan, and demands for payments resulting from defaults under the Mezzanine Loan due pursuant to the Guaranty are demands for payments under the Guaranty. 62. By Guarantor's logic, a plaintiff could never have an account stated where a guarantor guarantees payments under a separate document. However, the Appellate Division has held that such relief is available where, as here, the elements of the cause of action are set forth. See Fendt Finding Company, Inc., 182 A.D.2d at

13 63. Guarantor never denied receipt of demands for payynents under the Mezzanine Loan. 64. As such, the Amended Complaint states a viable claim for account stated against Guarantor and there is no basis for dismissal of Plaintiff s account stated cause of action. PLAINTIFF HAS STANDING TO COMMENCE AND MAINTAIN THIS ACTION 65. Without citing a shred of authority to support their argument, Guarantor alleges that "Plaintiff..lacks standing and/or capacity to sue and to bring this action" because "plaintiff is still suing in the name of the wrong entity." See Guarantor's Memorandum of Law, p. 8. Specifically, Guarantor claims that ``the Amended Complaint fails to change the name of Plaintiff in the caption" from RCG LV Debt Non-REIT Assets Holdings, LLC to RCG LV Debt IV Non-REIT Assets Holdings, LLC. Id. at p This argument is frivolous. 67. Plaintiff's correct name is RCG LV Debt IV Non-REIT Assets Holding, LLC. The omission of "IV" from the caption of this action (but not in the body of the Amended Complaint itsel f was a harmless typographical error and in no way effects Plaintiff's standing to either commence this action or maintain it. 68. Indeed, CPLR 2101(fl provides that "[a] defect in the form of a paper, if a substantial right of a party is not prejudiced, shall be disregarded by the court, and leave to correct shall be freely given." 69. Here, the Guarantors do not allege that they have been prejudiced by the omission of "IV" from the caption of the action or that they were unaware of Plaintiffs identity. In fact, Guarantor's moving papers are silent as to the effect, if any, the omission of "IV" from the caption of the action had on Guarantors. -13-

14 70. The Court should therefore disregard Plaintiffs omission of "IV" from the caption of this action, and as briefly explained immediately below, direct the Clerk to amend the caption of this action. THE CAPTION OF THIS ACTION SHOULD BE AMENDED 71. Pursuant to CPLR 2101, where, as here, there is a defect in form of a paper, and no prejudice will result, "leave to correct shall be freely given." Similarly, pursuant to CPLR 305(c), "[a]t any tune, in its discretion...the court may allow any summons... to be amended, if a substantial right of a party against whom the summons issued is not prejudiced.'" Likewise, CPLR 3025(b) provides that leave to amend a pleading "shall be freely given upon such terms as may be just." 72. Here, as set forth above, Plaintiff inadvertently omitted "IV" in the caption of this action. Correcting this trivial irregularity will not prejudice Guarantor. 73. Accordingly, the caption of this action should be amended on the summons and Amended Complaint to reflect "RCG LV Debt IV Non-REIT Assets Holding, LLC" as the Plaintiff herein, as shown below: SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK RCG LV DEBT IV NON-REIT ASSETS HOLDINGS, LLC, Plaintiff, Index No /14 BENJAMIN RINGEL, TIBOR KLEIN, and GERSHON KLEIN, Defendants. -against- -14-

15 and to deem such amended summons and pleading served and filed Hunt pro font. A copy of the proposed amended summons and second amended complaint are annexed collectively hereto as Exhibit J. 74. The Appellate Division has repeatedly held that "a motion for leave to amend a complaint pursuant to CPLR 3025(b) should be freely granted unless the proposed amendment is palpably insufficient to state a cause of action or is patently devoid of merit.'" Bishop v Maurer, 83 AD3d 483, 485 (1st Dept 2011) (citation omitted). 75. "A party opposing leave to amend `must overcome a heavy presumption of validity in favor of [permitting amendment]' (Otis El. Co. v Ave. of Ams. Condominium, 166 A.D.2d 307, 307 [ 1990])." McGhee v Odell, 96 AD3d 449, 450 (1st Dept 2012). 76. Based upon the foregoing, the caption should be amended. -15-

16 CONCLUSION For all of the foregoing reasons, Guarantor's motion for dismissal should be denied in its entirety, and Plaintiffs cross-motion be granted in its entirety, together with such other and further relief that this Court may deem just and proper. Dated: New York, New York November 17, 2014 I SCHWARTZ