Consolidated Mortgage, LLC v. Westport Golf Investors, LLC

Appeal from an order of the Supreme Court (Bruening, J.), entered November 9, 2015 in Essex County, which, among other things, denied plaintiff’s motion for summary judgment.

Defendant Westport Golf Investors, LLC (hereinafter Westport) owns and operates a public golf course known as the Westport Country Club (hereinafter the Country Club) located in the Town of Westport, Essex County. Westport’s members include, among others, defendant John F. Hall, defendant Rodney E. Edwards, Leslie Hall-Butzer and Como Oil and Propane Company, which is owned by Robert Hall. Robert Hall, Hall-Butzer and John Hall are siblings, and Edwards is John Hall’s brother-in-law.

From May 2013 to August 2013, Westport made payments to First Niagara in compliance with the forbearance agreement. In the meantime, on or about June 13, 2013, Robert Hall and Hall-Butzer formed plaintiff, a Florida limited liability company. On August 27, 2013, unbeknown to Westport, plaintiff acquired the notes and mortgages from First Niagara for the sum of $825,000. When Westport tendered the next payment due under the forbearance agreement (hereinafter the September 2013 payment), plaintiff rejected and returned the payment, asserted that Westport was in default of the loan documents and promptly commenced this action to foreclose on the mortgages.

In December 2013, plaintiff moved for summary judgment asserting, among other things, that the forbearance agreement was a nullity. By order entered on February 5, 2014, Supreme Court (Buchanan, J.) denied the motion, concluding that triable questions of fact existed as to the validity of the forbearance agreement and whether plaintiff caused the default by refusing to accept the September 2013 payment tendered by Westport pursuant to such agreement. The following month, Westport filed a petition for bankruptcy, resulting in an automatic stay of the instant action (see 11 USC § 362 [a] [1]). After the stay was lifted for the express purpose of allowing plaintiff to continue this action, plaintiff once again moved for summary judgment, contending that the forbearance agreement, even if valid and enforceable, did not cure Westport’s underlying default on the loan. Supreme Court (Bruening, J.), among other things, denied plaintiff’s motion, finding that the arguments raised by plaintiff were, or could have been, made in the previous motion for summary judgment and that, in any event, triable issues of fact existed as to whether plaintiff purposefully caused Westport’s default in bad faith. This appeal by plaintiff ensued.

Furthermore, when the evidence is viewed in the light most favorable to defendants (see Vega v Restani Constr. Corp., 18 NY3d 499 , 503 [2012]), factual issues remain precluding an award of summary judgment. Evidence of “bad faith, fraud, or oppressive or unconscionable conduct by the mortgagee will operate to relieve a default” (192 Sheridan Corp. v O’Brien, 252 AD2d 934 , 936 [1998] [internal quotation marks and citation omitted]; accord First Union Natl. Bank v Weston, 261 AD2d 668 , 669 [1999]; see Nassau Trust Co. v Montrose Concrete Prods. Corp., 56 NY2d 175 , 183 [1982]; Citibank, N.A. v Van Brunt Props., LLC, 95 AD3d 1158 , 1159 [2012]). “It is also well established that implicit in all contracts is an implied covenant of fair dealing and good faith” (River Bank Am. v Daniel Equities Corp., 213 AD2d 929 , 930 [1995] [citation omitted]; see 511 W. 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144 , 153 [2002]; Dalton v Educational Testing Serv., 87 NY2d 384 , 389 [1995]), “which encompasses any promises that a reasonable promisee would understand to be included” (New York Univ. v Continental Ins. Co., 87 NY2d 308 , 318 [1995]; see 511 W. 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d at 153 ; Rowe v Great Atl. & Pac. Tea Co., 46 NY2d 62 , 69 [1978]).

The submissions in opposition to plaintiff’s motion established that plaintiff’s soon-to-be member Robert Hall, through Como Oil, attempted to remove John Hall from his position as a general manager of Westport; that, approximately 16 days later, Robert Hall and Hall-Butzer formed plaintiff, which went on to purchase the subject notes from First Niagara at a

Moreover, given plaintiff’s conduct — as well as that of its members — and the manner in which it declared a default, we agree with Supreme Court that triable issues of fact exist as to whether plaintiff purposefully caused Westport’s default in an attempt to oust Westport of its interest in its real property (see Cassara v Wynn, 55 AD3d 1356 , 1356 [2008], appeal and lv dismissed 11 NY3d 919 [2009]; 192 Sheridan Corp. v O’Brien, 252 AD2d at 935-936 ; River Bank Am. v Daniel Equities Corp., 213 AD2d at 930 ). While plaintiff is correct when it asserts that Westport made no further payments under the forbearance agreement subsequent to its rejection of the September 2013 payment, this is of little consequence since an action in foreclosure sounds in equity, “and the equities herein compel the conclusion that plaintiff was not entitled to reject tender of payment, then use that rejection as a basis for holding [Westport] in default” (Perla Assoc. v ZLD Realty, 277 AD2d 115 , 115 [2000]; see Futterman v Calce, 226 AD2d 306 , 307 [1996]; European Am. Bank v Harper, 163 AD2d 458 , 460-461 [1990]).

Finally, assuming, without deciding, that Supreme Court

McCarthy, Egan Jr., Lynch and Devine, JJ., concur.

Ordered that the order is affirmed, with costs.