ATX Debt Fund 2, LLC v. Paul

2022 NY Slip Op 03865

• Court: Appellate Division of the Supreme Court of the State of New York
• Decided: June 14, 2022
• Docket: Index No. 650728/20 Appeal No. 16244-16245 & M-1666 Case No. 2022-1131, 2022-00108
• Status: Published

Opinion

ATX Debt Fund 2, LLC v Paul (2022 NY Slip Op 03865)

ATX Debt Fund 2, LLC v Paul

2022 NY Slip Op 03865

Decided on June 14, 2022

Appellate Division, First Department

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and subject to revision before publication in the Official Reports.

Decided and Entered: June 14, 2022
Before: Kapnick, J.P., Friedman, Moulton, Shulman, Pitt, JJ.

Index No. 650728/20 Appeal No. 16244-16245 & M-1666 Case No. 2022-1131, 2022-00108

[*1]ATX Debt Fund 2, LLC, Plaintiff-Respondent,

v

Natin Paul Also Known as Nate Paul, Defendant-Appellant.

MCShapiro Law Group PC, Great Neck (Mitchell C. Shapiro of counsel), for appellant.

Gibson, Dunn & Crutcher LLP, New York (Mitchell A. Karlan of counsel), for respondent.

Order, Supreme Court, New York County (Andrew Borrok, J.), entered March 7, 2022, which denied defendant guarantor's motion to strike plaintiff lender's note of issue and certificate of readiness, granted plaintiff's motion to dismiss the affirmative defenses, denied defendant's cross motion to file an amended answer, and granted plaintiff's motion for summary judgment on its claims, unanimously modified, on the law and the facts, to grant defendant's motions to strike the note of issue and to amend the answer to the extent of asserting the fraud-based affirmative defenses and counterclaim, and deny plaintiff's motion for summary judgment, and otherwise affirmed. Order, same court and Justice, entered on or about October 4, 2021, which denied defendant's motions to compel discovery, for a confidentiality order, to commission the service of third-party subpoenas, and to extend the discovery deadline, unanimously reversed, on the facts, with costs, the order vacated, and the matter remanded for the setting of a discovery schedule concerning the affirmative defenses and counterclaim and for further consideration of defendant's discovery motions.

While defendant waived his affirmative defenses pursuant to the broad waiver provisions in the guaranties, he is entitled to serve the amended answer to the extent it asserts affirmative defenses based on fraudulent conduct that occurred after the execution of the guaranties. The guaranties include a waiver carveout provision that negates the broad waiver with respect to postclosing claims or defenses that sound in fraud (cf. North Fork Bank v Computerized Quality Separation Corp., 62 AD3d 973, 974 [2d Dept 2009]). The allegations in the amended answer are sufficient to state the fraud-based affirmative defenses as well as the counterclaim for a declaration that this action is fraudulent, within the scope of the waiver carveout.

M-1666 — ATX Debt Fund 2, LLC v Natin Paul

Motion to dismiss the appeal in Case No. 2022-00108, denied.

THIS CONSTITUTES THE DECISION AND ORDER OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

ENTERED: June 14, 2022