Kazantzis v. Cascade Funding RM1 Acquisitions Grantor Trust

2024 NY Slip Op 34341(U)

• Court: New York Supreme Court, New York County
• Decided: December 12, 2024
• Docket: Index No. 157203/2021
• Status: Unpublished

Opinion

Kazantzis v Cascade Funding RM1 Acquisitions Grantor Trust 2024 NY Slip Op 34341(U) December 12, 2024 Supreme Court, New York County Docket Number: Index No. 157203/2021 Judge: Leslie A. Stroth Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. [FILED: NEW YORK COUNTY CLERK 12/12/2024 04:21 P~ INDEX NO. 157203/2021 NYSCEF DOC. NO. 171 RECEIVED NYSCEF: 12/12/2024

SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY PRESENT: HON. LESLIE A. STROTH PART 12M Justice ------------------------------------------X INDEX NO. 157203/2021 GEORGE E. KAZANTZIS, EXECUTOR OF THE ESTATE MOTION DATE 12/15/2022 OF DAVID N. EDELSTEIN, MOTION SEQ. NO. 004 Plaintiffs,

- V -

CASCADE FUNDING RM1 ACQUISITIONS GRANTOR TRUST and WILMINGTON SAVINGS FUND SOCIETY, DECISION + ORDER ON FSB, as Trustee for Cascade Funding RM1 Acquisitions MOTION Granter Trust,

Defendants. -----X

The following e-filed documents, listed by NYSCEF document number (Motion 004) 1, 8, 12, 13, 16, 47, 48,124,125, 126, 127,128,129, 130, 131, 132, 133, 134, 135, 136, 137, 138,139,140, 141,142,143, 144,145,146,147,148,149,150,151,152,153,154,156,157,158,159,160,161,162,163,164,165, 166, 168, 169, 170 were read on this motion to/for JUDGMENT-SUMMARY

This is an action arising out of a property dispute. Pursuant to CPLR § 3212, defendants

move for summary judgment to dismiss the complaint, and plaintiff opposes the motion.

Background

This lawsuit concerns a cooperative corporation located at 1040 Park Avenue, New York,

New York ("the building") (complaint, NYSCEF Doc No. 1 ,i 5). The Estate of David N.

Edelstein ("the estate") is a shareholder and lessee of apartment 11 C in the building, and the

lease expires on September 30, 2065 (see Lease, NYSCEF Doc No. 8). Florence Koch Edelstein

("Florence"), Jeffrey Edelstein ("Jeffrey"), and Jonathan Edelstein ("Jonathan") were appointed

executors of the estate (Will, NYSCEF Doc No. 128). Upon the death of Jonathan in February

2005, Richard Janvey ("Richard") was appointed as co-executor in place of Jonathan

(defendants' affirmation of material facts, NYSCEF Doc No. 125). Upon the death of Jeffrey in

157203/2021 GEORGE E. KAZANTZIS, vs. CASCADE FUNDING RM1 Page 1 of 9 Motion No. 004

1 of 9 [* 1] [FILED: NEW YORK COUNTY CLERK 12/12/2024 04:21 P~ INDEX NO. 157203/2021 NYSCEF DOC. NO. 171 RECEIVED NYSCEF: 12/12/2024

September 2008, the New York County Surrogate's Court appointed plaintiff George E.

Kazantzis ("plaintiff') as Florence's co-executor in March 201 7 and granted Richard leave to

resign as co-trustee (id. ifif16-18, see Surrogate's Court Certificate of Appointment, NYSCEF

Doc No. 131 ). Florence passed away in April 2018, leaving plaintiff as sole executor of the

estate (NYSCEF Doc No. 125 ,r 30).

On September 21, 2007, the estate executed an adjustable-rate reverse mortgage loan note

("note"), in the principal amount of $1,801,338, with Financial Freedom Senior Funding

Cooperation ("Financial Freedom") as the lender (NYSCEF Doc No. 1 ,r 8). At the same time,

the estate also made a loan security agreement ("agreement") with the lender (id. ,r 9). Under the

loan agreement, repayment of the loan was required upon the occurrence of a maturity event,

such as the sale or transfer of the apartment or the death of the borrower, or by September 30,

2065, whichever occurred first (id. ,r,r 10, 15). On December 10, 2009, Financial Freedom

recorded a UCC3 financing statement with the New York City Register at CRFN

2009000423866. Subsequently, Financial Freedom assigned the note and agreement to defendant

Cascade Funding RMl Acquisitions Grantor Trust ("Cascade") (NYSCEF Doc No. 1 ,r 17).

Cascade initiated a UCC3 Assignment Statement, which was dated and recorded on July 2, 2021,

in the New York City Register at CFRN 2021000253783 (id. ,r 18) pursuant to which

Wilmington Savings Fund ("FSB") served as trustee for Cascade (id.).

As stated, the loan agreement was to expire before September 30, 2065, if a maturity

event occurred. On September 22, 2020, a law firm representing Celink, a servicer for Cascade,

issued a letter to the estate stating that Celink intended to commence legal proceedings to

foreclose on the loan (see Letter, NYSCEF Doc No. 12). Defendants state that there were two

bases for its decision to foreclose. First, according to the Note, a maturity event occurs when

157203/2021 GEORGE E. KAZANTZIS, vs. CASCADE FUNDING RM1 Page 2 of 9 Motion No. 004

2 of 9 [* 2] [FILED: NEW YORK COUNTY CLERK 12/12/2024 04:21 P~ INDEX NO. 157203/2021 NYSCEF DOC. NO. 171 RECEIVED NYSCEF: 12/12/2024

"[a]ll borrowers [cease] to use the Apartment as their principal residence" (Note, NYSCEF Doc

No. 134 ~ 6). Upon Florence's death, the apartment was not being used as the principal residence

of any signatories on the note and agreement or the estate itself; hence, according to defendants,

when Florence died, a maturity event had occurred. Second, defendants argue that the estate was

in default of the lease, with an outstanding balance of $265,275.97 in maintenance arrears as of

September 1, 2022 (Billing Statement, NYSCEF Doc No. 139 at 11).

Between January 2021 and March 2021, the estate and defendants "negotiated the

assignment, sale or satisfaction of the loan" (NYSCEF Doc. No. 1 ~ 23), and on June 8, 2021,

defendants' attorneys emailed a notice that there would be a foreclosure sale on August 5, 2021

(id., ~24; see Emails, NYSCEF Doc No. 16). Plaintiff alleges that the negotiations were

unsuccessful. On August 3, 2021, defendants' counsel reaffirmed via email that the foreclosure

sale would proceed on the scheduled date, but the note did not indicate the time or place for the

sale (NYSCEF Doc No. 1 ~ 26).

Plaintiffs first cause of action is for a declaratory judgment "(a) that it is not in material

breach under the subject Loan Agreement; (b) that the maturity date under the Loan Agreement

comports to the term of the Lease, subject to earlier cancelation or termination; and (c) that

default has occurred under the Loan Agreement" (NYSCEF Doc. No. 1, ~ 31 ). Plaintiffs second

cause of action seeks a preliminary and permanent injunction preventing defendants or its agents

from interfering with plaintiffs rights in any respect, including by moving forward with a

foreclosure sale.

As is relevant here, in motion sequence 001, the court denied plaintiffs motion for a

preliminary injunction, stating that plaintiff did "not dispute that an event of maturity occurred,

namely, that the apartment was and is not occupied following the death of the last note-holder, he

157203/2021 GEORGE E. KAZANTZIS, vs. CASCADE FUNDING RM1 Page 3 of 9 Motion No. 004

3 of 9 [* 3] [FILED: NEW YORK COUNTY CLERK 12/12/2024 04:21 P~ INDEX NO. 157203/2021 NYSCEF DOC. NO. 171 RECEIVED NYSCEF: 12/12/2024

does not establish that his cause of action for a declaratory judgment has merit" (Order, NYSCEF

Doc No. 47 at 1). Plaintiff appealed this decision (see appeal, NYSCEF Doc No. 48), and the First

Department dismissed the appeal. The court stated that plaintiffs application for an injunction

staying the sale of the apartment was moot, as the sale had taken place (Kazantzis v Cascade

Funding RMI Acquisitions Grantor Trust, et al. 217 AD3d 410, 411 [1st Dept 2023], [NYSCEF

Doc No. 169 at 3]). Alternatively, the court stated, it would have ruled against the injunction

because plaintiff failed to establish his likelihood of success on the merits, had not shown by clear

and convincing evidence that there were issues of fact, that irreparable harm existed, or that the

equities favored plaintiff (id. at 412). Presently, defendants move for summary judgment

dismissing the complaint with prejudice.

Discussion

Summary judgment is appropriate where there are no disputed material facts (Andre v

Pomeroy, 35 NY2d 361,364 [1974]). The moving party must tender sufficient evidentiary proof

to warrant judgment as a matter oflaw (Zuckerman v City of New York, 49 NY2d 557, 562

[1980]). If the moving party tenders sufficient evidentiary proof, the opposing party must proffer

its own evidence to show disputed material facts requiring a trial (id.). However, the reviewing

court should accept as true both the opposing party's evidence and any evidence proffered by the

movant that favors the opposing party (Aguilar v City of New York, 162 AD3d 601,601 [1st

Dept 2018]). Further, the court should give the opposing party the benefit of all reasonable

inferences (Negri v Stop & Shop, 65 NY2d 625, 626 [1985]).

First Cause ofAction

The first cause of action for declaratory judgment is twofold, as it seeks declaratory

judgments that the estate is in compliance with the terms and conditions of the loan and that the

157203/2021 GEORGE E. KAZANTZIS, vs. CASCADE FUNDING RM1 Page 4 of 9 Motion No. 004

4 of 9 [* 4] [FILED: NEW YORK COUNTY CLERK 12/12/2024 04:21 P~ INDEX NO. 157203/2021 NYSCEF DOC. NO. 171 RECEIVED NYSCEF: 12/12/2024

loan should conform to the maturity date in the lease. In support of this prong of their

application, defendants point to the terms and conditions section of the loan agreement, which

states that, among other things, maturity occurs upon the death of the last living borrower or

when all borrowers stop using the apartment as their principal residence (NYSCEF Doc No. 134

at 5). Plaintiff argues that the terms of the loan are ambiguous, because the two maturity events

apply to an individual borrower, not the estate as a borrower. In plaintiffs view, Florence was

not the borrower since she was an executor. Instead, plaintiff argues that the borrower is the

estate. Plaintiff argues that this presents a factual issue as the estate itself cannot die. Defendants

also state that the estate was in default for failing to make maintenance payments. Plaintiff

argues that this is a curable default and that it was entitled to notice to cure and a reasonable

period of time to cure.

The court rejects plaintiff's argument that the loan terms are ambiguous. As the First

Department stated, in the initial application, plaintiff did not show by clear and convincing

evidence that issues of fact existed "as to how both to interpret the relevant documents and to

reconcile the parties' competing interpretations thereof' (Kazantzis, 217 AD3d at 411 ). In this

current motion, plaintiff has not overcome this hurdle. The note explicitly states that a maturity

event occurs if the borrowers cease to use the apartment as a principal residence (NYSCEF Doc

No. 134 at 5). The note is signed by Florence, Jeffrey, and Richard in their capacity as trustees

and executors. All the signatories are now deceased, and, for obvious reasons, they do not reside

at the apartment. Plaintiff asks the court to reinterpret the plain language of the agreement to

include the estate as a borrower. However, the court "may not rewrite the plain contractual

language" (B.D. v ED, 218 AD3d 9, 18 [1st Dept 2023]). Furthermore, the "[m]ere assertion that

contractual language is ambiguous is insufficient to raise an issue of fact" ( Crenulated Co. v City

157203/2021 GEORGE E. KAZANTZIS, vs. CASCADE FUNDING RM1 Page 5 of 9 Motion No. 004

5 of 9 [* 5] [FILED: NEW YORK COUNTY CLERK 12/12/2024 04:21 P~ INDEX NO. 157203/2021 NYSCEF DOC. NO. 171 RECEIVED NYSCEF: 12/12/2024

of New York, 244 AD2d 191, 191 [1st Dept 1997]). The court denies plaintiffs request for a

declaratory judgment that the estate is in compliance with the terms and conditions of the loan.

Second, defendants stress that plaintiff provides no legal basis for its position that the

loan must conform with the lease, which expires on September 30, 2065. It disputes plaintiffs

position that this would allow the estate to continue to possess the apartment under the theory

that the estate is a borrower of the loan. The note states that it is secured by the loan agreement

(Note, NYSCEF Doc No. 134 at 1), and that the agreement acts a first lien security interest in the

lease (Agreement, NYSCEF Doc No. 135 at 3). Furthermore, the lease states:

"This lease is and shall be subject and subordinate to the mortgages now a lien upon the property and to any and all extensions, modification, and renewals and replacements thereof and this lease shall be subject and subordinate to the lien of any other mortgage or mortgages which shall at any time be placed on the property" (Lease, NYSCEF Doc No. 8 at 11).

Defendants argue that by the express terms of the lease, the agreement, and the note, the lease is

not collateral for the note and agreement; hence, the loan's maturity date does not have to

parallel the lease's expiration date of 2065. Plaintiff disagrees under the theory that because the

estate is the last borrower on the note, a maturity event has not occurred. Thus, according to

plaintiff, the estate has the right to continue to possess the apartment through September 30,

2065, the date listed in the lease. Plaintiff states that there is nothing contrary to this in the note

terms.

The court rejects plaintiffs position based on its review of the lease terms describing the

lease's subordination to the mortgage (see Lease, NYSCEF Doc No. 8 at 11), and the note terms

describing maturity events (see, Note, NYSCEF Doc No. 134 ~ 6). "When the terms of a written

contract are clear and unambiguous, the intent of the parties must be found within the four

corners of the contract, giving practical interpretation to the language employed and the parties'

157203/2021 GEORGE E. KAZANTZIS, vs. CASCADE FUNDING RM1 Page 6 of 9 Motion No. 004

6 of 9 [* 6] [FILED: NEW YORK COUNTY CLERK 12/12/2024 04:21 P~ INDEX NO. 157203/2021 NYSCEF DOC. NO. 171 RECEIVED NYSCEF: 12/12/2024

reasonable expectations," and a lease is to be interpreted like any other contract (112 W 34th St.

Assocs., LLC v 112-1400 Trade Props. LLC, 95 AD3d 529, 531 [1st Dept 2012]). As stated

above, there is no language in the loan documents to suggest that the estate is viewed as a party

in addition to the three signing parties. Thus, a maturity event occurred after the last signatory

died, and the estate had no right to continue to possess the apartment. Plaintiffs request for a

declaration that the mortgage must conform to the lease's expiration date of 2065 is an attempt to

circumvent the maturity event. This is contradictory to the terms of the lease that it is subordinate

to the mortgage. This court shall not interpret the "agreement as impliedly stating something

which the parties have neglected to specifically include" (Bazin v Walsam 240 Owner, LLC, 72

AD3d 190, 195 [l st Dept 201 OJ). Accordingly, the court grants the prong of defendants' motion

for summary judgment dismissing the request for a declaratory judgment that the loan must

conform to the expiration date within the lease.

Next, defendants argue that plaintiffs argument that the note and agreement do not

conform with the lease is time barred under the six-year statute of limitations for an action based

upon mistake in a note or mortgage. Although the note and agreement were executed in 2007,

more than six years before plaintiff started this action, plaintiff does not predicate his legal

theory on a mistake. Instead, plaintiffs theory is that defendants have misinterpreted the note

and agreement. Because mistake is not at issue, the court denies this prong of defendants'

motion.

Second Cause ofAction

As to the second cause of action, defendants state that plaintiffs claim is moot since the

apartment was sold on July 2, 2021 (Terms of Sale, NYSCEF Doc No. 142). Plaintiff argues

157203/2021 GEORGE E. KAZANTZIS, vs. CASCADE FUNDING RM1 Page 7 of 9 Motion No. 004

7 of 9 [* 7] [FILED: NEW YORK COUNTY CLERK 12/12/2024 04:21 P~ INDEX NO. 157203/2021 NYSCEF DOC. NO. 171 RECEIVED NYSCEF: 12/12/2024

that, although the First Department already ruled that this cause of action is moot, the court

should revisit the issue. According to plaintiff, the current executor of the estate:

Notwithstanding that purported sale, the Estate continues to own the shares of stock and proprietary lease appurtenant to the Apartment. I am not aware, and was not given notice, that either the stock certificate nor the proprietary lease had been transferred to any other party, and I continue to receive bills for maintenance charges from the Cooperative on behalf of the Estate. This means that the Estate retains its interest in the Apartment (Affidavit, NYSCEF Doc No. 162, 26).

Plaintiff argues that because defendants do not assert that a third party has purchased the

apartment, the issue is not moot. Plaintiff again focuses on the Court's language that states,

"plaintiff failed to establish his likelihood of success on the merits by clear and convincing

evidence given the existence of issues offact as to how both to interpret the relevant documents

and to reconcile the parties' competing interpretations" (Kazantzis, 217 AD3d at 411 [emphasis

supplied]). Plaintiff misinterprets the court's decision, however. First, the holding of the decision

is that the matter is moot. The language plaintiff quotes is part of "an alternative holding" (id.).

Second, the quoted sentence does not indicate that factual issues exist, but instead indicates that

plaintiff has not provided clear and convincing evidence that issues of fact exist as to these

matters. Third, as part of the basis of its alternative holding, the First Department stated that

equitable relief was unnecessary because plaintiff can be compensated fully through monetary

relief. Thus, the argument lacks merit.

Plaintiff next asserts that, despite the above, the matter is not moot because if the court

finds that the reverse mortgage loan is void and unenforceable (see Memorandum of Law in

Opposition, NYSCEF Doc No. 160 at 6), it can order defendants to remit possession of the

apartment. However, this was premised on the conclusion that the apartment had not been sold.

The enforceability of the mortgage is not before the court.

157203/2021 GEORGE E. KAZANTZIS, vs. CASCADE FUNDING RM1 Page 8 of 9 Motion No. 004

8 of 9 [* 8] [FILED: NEW YORK COUNTY CLERK 12/12/2024 04:21 P~ INDEX NO. 157203/2021 NYSCEF DOC. NO. 171 RECEIVED NYSCEF: 12/12/2024

Lastly, plaintiff argues that he was given no notice of the sale of the apartment, but by

plaintiffs own admission, plaintiff received a letter from a law firm announcing the

commencement of legal proceedings to foreclose on the apartment (NYSCEF Doc No. 162113;

see Letter, NYSCEF Doc No. 12). The agreement only requires 10 days-notice of any sale

(NYSCEF Doc No 1351 11). Plaintiff has provided emails in which the law firm advised

plaintiff in June 2021 that the foreclosure sale was scheduled for August 5, 2021 (emails,

NYSCEF Doc No. 16), which is more than 10 days in advance. Plaintiff further argues that the

estate was not given notice or time to cure its default in payments; however, this is irrelevant as

the defendants foreclosed on the property due to a maturity event rather than payment default.

Plaintiff has not demonstrated that defendants failed to give necessary notices and has failed to

provide evidence that would raise a genuine issue of material fact in response to defendants'

evidence (see Zuckerman v City of New York, 49 NY2d 557, 562 [1980]).

For the reasons stated above, the court grants defendants' motion for summary judgment

on the second cause of action.

Accordingly, it is hereby

ORDERED that defendants' motion for summary judgment is granted and the action is

dismissed.

The foregoing constitutes the decision and order of the Court. 'I

DATE: 12/12/2024

B CHECK ONE: CASE DISPOSED NON-FINAL DISPOSITION

GRANTED □ DENIED GRANTED IN PART □ OTHER APPLICATION: SETTLE ORDER SUBMIT ORDER

157203/2021 GEORGE E. KAZANTZIS, vs. CASCADE FUNDING RM1 Page 9 of 9 Motion No. 004

9 of 9 [* 9]