Opinion
99-CV-0417E(Sr).
July 23, 2002
MEMORANDUM and ORDER
This decision may be cited in whole or in any part.
Midwest Financial Acceptance Corporation ("Midwest") commenced this action against defendants Se-Fish Associates ("Se-Fish"), David Segal, Arnold Kostiner and John Doe June 21, 1999, seeking three reliefs — viz., (1) mortgage foreclosure, (2) judgment against Se-Fish on a promissory note and (3) judgment against Segal and Kostiner (a) as principals of Se-Fish and (b) as guarantors of the promissory note. Plaintiff is a Missouri corporation with its principal place of business therein, Se-Fish is a Canadian joint venture consisting of Segal and Kostiner, both of whom are Canadian citizens and the amount in controversy exceeds $75,000; accordingly this Court has diversity jurisdiction pursuant to 28 U.S.C. § 1332(a)(2). Defendants filed a motion for leave to serve and file an amended answer pursuant to Rule 15 of the Federal Rules of Civil Procedure ("FRCvP") October 12, 2001 and a motion for partial summary judgment on the first ground of plaintiff's third cause of action pursuant to FRCvP 56(b) October 22, 2001. Plaintiff filed two motions for summary judgment pursuant to FRCvP 56(a), the first on October 24, 2001 seeking summary judgment on its first two causes of action and the second on November 9, 2001 seeking summary judgment on its third cause of action. Oral argument on the above motions was held November 16, 2001 and such motions have thereafter been before this Court for disposition.
Midwest assigned its rights to Citizens Bank and Trust Company ("Citizens") July 3, 2002, which assignment was filed with the Clerk of this Court July 17, 2002 — i.e., after the present motions had been argued and submitted and while this decision was being drafted. Accordingly, the term "plaintiff" will be used to refer to Citizens, not to Midwest, which had been the plaintiff when those motions were filed and submitted.
Inasmuch as discovery ended October 5, 2001 and plaintiff has yet to identify fictitious defendant John Doe, such defendant will be dismissed by this Court sua sponte and the caption will be amended to reflect his dismissal.
On December 28, 1971 Hy Fisher, Segal and Kostiner formed Se-Fish as a joint venture for the purpose of purchasing a parcel of real property located in Hamburg, N.Y. ("the Hamburg property"). Based upon their capital contributions towards the purchase of the Hamburg property, Fisher was allocated 50% interest, Segal 45% interest and Kostiner 5% interest in the joint venture. On July 3, 1975 Fisher, Segal and Kostiner amended the joint venture agreement to reflect the purchase of a second parcel of real property at 599 Delaware Avenue in Buffalo, N.Y. ("the Delaware Avenue property"). The respective interests of Fisher, Segal and Kostiner remained the same under the terms of the July 3, 1975 joint venture agreement. On June 6, 1991 Se-Fish obtained a $550,000 loan from The Savings Bank of Utica ("SBU") which was secured by (1) a mortgage on the Delaware Avenue property, (2) a promissory note in the amount of $550,000 given by Se-Fish and (3) a personal guaranty executed by each of the joint venturers. Fisher died June 7, 1993 as a result of which the joint venture was dissolved.
The July 3, 1975 amended joint venture agreement superseded the December 28, 1971 joint venture agreement.
Fisher, Segal and Kostiner bore joint and several liability under the terms of the June 6, 1991 mortgage.
Fisher, Segal and Kostiner bore joint and several liability under the terms of the June 6, 1991 promissory note.
Fisher and Segal bore joint and several liability under the terms of their June 6, 1991 personal guarantees, whereas Kostiner's liability was limited to 5% of the debt.
The SBU released Fisher's estate from liability under the June 6, 1991 mortgage, promissory note and personal guarantee July 18, 1995.
On October 14, 1994 Segal and Kostiner re-established Se-Fish as a joint venture to continue the ownership of the Hamburg and Delaware Avenue properties and to purchase Fisher's estate's interest therein. Pursuant to the terms of the October 14, 1994 joint venture agreement, Segal obtained a 90% interest and Kostiner a 10% interest in such properties. On January 30, 1997 Se-Fish obtained a second loan from SBU in the amount of $363,572.48 which was consolidated with the outstanding principal of $486,427.52 on the June 6, 1991 loan for a total indebtedness of $850,000 which was secured by (1) a second mortgage on the Delaware Avenue property, (2) a second promissory note in the amount of $363,572.48 given by Se-Fish and (3) new personal guarantees from Segal and Kostiner in the amounts of 95% and 5% of the total indebtedness respectively. Interest under the Mortgage, Security, Consolidation and Modification Agreement was at the rate of 9% per annum and would increase to 11% per annum upon, inter alia, actual demand for payment. The mortgage and promissory note contain the following relevant provisions.
The October 14, 1994 joint venture agreement superseded the July 3, 1975 joint venture agreement.
Pursuant to its terms, the January 30, 1997 mortgage — referred to as the "Mortgage, Security, Consolidation and Modification Agreement" — merged with the June 6, 1991 mortgage to create a single mortgage on the Delaware Avenue Property and, in addition, consolidated the June 6, 1991 promissory note and the January 30, 1997 promissory note to form a single promissory note in the amount of $850,000; accordingly the June 6, 1991 and the January 30, 1997 mortgages and promissory notes will hereafter be referred to collectively as "the mortgage" and "the promissory note" respectively.
The personal guarantees given January 30, 1997 replaced those that had been given June 6, 1991 and will therefore be referred to hereafter as the "personal guarantees."
"The entire unpaid balance of the Mortgage debt shall immediately become due and payable at the option of Mortgagee: *** after failure by Mortgagor to pay any installment of principal or interest for fifteen (15) days or more ***.
* * * * *
"Any event which under the terms and provisions of section `12.1' gives Mortgagee the right to cause the unpaid balance of the Mortgage Debt to become immediately due and payable shall be deemed an `Event of Default.'
* * * * *
"Mortgagee shall have the right, but not the obligation, to foreclose this mortgage by reason of any Event of Default. Mortgagee, in any application to foreclose this mortgage, shall be entitled to the appointment of a receiver without notice to Mortgagor. In case of a foreclosure sale, the Collateral, or so much thereof as may be affected by this mortgage, may be sold in one parcel.
* * * * *
"If any action or proceeding be commenced to foreclose this mortgage or to collect the Mortgage Debt or any action or proceeding be commenced to which action or proceeding Mortgagee is made a party or in which it becomes necessary to defend or uphold the lien of this mortgage, all sums paid by Mortgagee for the expense of any litigation to collect the Mortgage Debt and/or to prosecute or defend the rights and lien created by this mortgage (including reasonable counsel fees), shall be paid by Mortgagor, together with interest thereon at the rate then applicable to the Mortgage Debt, and shall be secured by the lien of this mortgage, prior to any right, title to, interest in or claim upon the Collateral attaching or accruing subsequent to the lien of this mortgage. In any action or proceeding to foreclose this mortgage, or to recover or collect the Mortgage Debt, or any interest due thereon, the provisions of law respecting the recovering of costs, disbursements and allowances (including counsel fees) shall prevail unaffected by this covenant.
* * * * *
"The validity and enforceability of this mortgage and all transactions and questions arising hereunder shall be construed and interpreted according to the laws of the State of New York. Whenever possible, each provision of this mortgage shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this mortgage shall be prohibited by, or invalid under, applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remaining provisions of this mortgage. ***
"If there is more than one person designated herein as Mortgagor, the obligations hereunder of each person so designated shall be deemed liable as follows: David Segal to the extent of 95% and Arnold Kostiner to the extent of 5%." Compl. Ex. D (Mortgage, Security, Consolidation and Modification Agreement ¶¶ 12.1, 12.1.1, 12.2, 13.1, 13.4, 21, 22).
The January 30, 1997 guaranty contained the following relevant provisions.
"WHEREAS, SBU is unwilling to modify the note and mortgage and loan the additional monies and to consolidate the existing and new note unless Guarantor guarantees, in writing, the payment of all moneys and the performance of all obligations to be paid and performed, *** which Guarantor is willing to do, and hereby does, on the terms hereinafter set forth,
* * * * *
Guarantor David Segal, to the extent of 95% of the mortgage loan, and Guarantor Arnold Kostiner, to the extent of 5% of the mortgage loan, UNCONDITIONALLY GUARANTEES TO SBU that the Mortgagor will promptly and punctually pay or cause to be paid to SBU all principal and interest and any other sums which may become payable to SBU pursuant to the terms of the Note and Mortgage and in default of such payment [Segal and Kostiner] unconditionally promises and agrees to pay to SBU, its successors and/or assigns, upon demand, all amounts which Mortgagor shall owe SBU whether such amounts now exist or shall hereafter arise, together with interests thereon and costs of collections, including reasonable attorney's fees ***.
* * * * *
"[T]he liability of the Guarantor hereunder shall be immediate, direct and unconditional and may be enforced without SBU pursuing any of its rights or remedies against the Mortgagor *** or against any security that SBU may have, hold or be entitled to or against the Guarantor ***."
* * * * *
"All of the rights of SBU may be assigned by it and shall inure to the benefit of its successors and assigns ***." Compl. Ex. F.
SBU would not have given the second loan to Se-Fish absent personal guarantees by Segal and Kostiner and Segal and Kostiner would not have incurred the additional debt unless their respective personal liabilities were limited to 95% and 5% respectively. In entering into the January 30, 1997 mortgage and promissory note and personal guarantees, it was the intention of SBU, Segal and Kostiner that the personal liabilities of Segal and Kostiner be limited to 95% and 5%, respectively, of the total debt of Se-Fish. Segal Oct. 17, 2001 Aff. ¶¶ 6-15; Kostiner Oct. 11, 2001 Aff. ¶¶ 5-8; Defs.' Statement of Undisputed Facts Exs. 6 (June 22, 1994 Commitment Letter from SBU ¶ 4), 7 (June 14, 1994 Commitment Letter from SBU ¶ 4) and 8 (Dep. of James C. Musa, Vice-President of SBU at 5-23, 28-36).
The June 14, 1994 Commitment Letter from SBU had contained a provision stating that Segal and Kostiner would bear joint and several liability and had been rejected by Segal and Kostiner on such basis; the June 22, 1994 Commitment Letter was amended to state that Segal's liability would be limited to 95% and Kostiner's to 5% and such had been accepted by Segal and Kostiner July 9, 1994.
Musa had negotiated with Se-Fish on behalf of the SBU.
SBU assigned the mortgage, promissory note and personal guarantees to Midwest December 16, 1998. Se-Fish last made payments under the mortgage March 1, 1999. On April 23, 1999 Timothy P. Sheehan, Esq. wrote to each of Segal and Kostiner stating that Se-Fish was in default of the mortgage pursuant to paragraph 12.1.1 thereof due to its failure to tender the payment that had been due April 1, 1999 and that, as a result thereof, Midwest had elected to declare the entire outstanding principal and interest under the mortgage and promissory note to be immediately due and owing pursuant to paragraph 12.1.2 thereof. Defendants failed to pay the outstanding balance — or any portion thereof — and plaintiff accordingly commenced the present action June 21, 1999.
Then an attorney with Phillips, Lytle, Hitchcock, Blaine Huber and now general counsel to Midwest.
In his letter to Kostiner — but not to Segal — Sheehan had also demanded that Kostiner pay 5% of the outstanding debt and that Segal pay 95% of the outstanding debt pursuant to their personal guarantees.
At the time this action was commenced, defendants owed a total of $801,361.18 under the mortgage and promissory note.
This Court will first address defendants' motion to amend their Answer. Defendants seek leave to serve and file a proposed amended answer wherein they add three affirmative defenses based upon (1) the terms of the parties' agreement, (2) equitable and promissory estoppel and (3) unconscionability and change their respective responses to paragraphs four, five, seven, eleven and thirty-two of the Complaint. Defendants state that they wish to amend their Answer based upon information received from plaintiff during discovery concerning plaintiff's theory of recovery on its third cause of action — i.e., that Segal and Kostiner are jointly liable for the full amount of the debt of Se-Fish as principals therein, in addition to being liable in the amounts of 95% and 5% thereof pursuant to the personal guarantees they had executed as security for such debt — which they state had been unclear to them based upon the Complaint. Plaintiff opposes defendants' motion for leave to file an amended answer on the basis that such would be futile because the limitation of liability in the personal guarantees of Segal and Kostiner has no effect upon their unlimited liability on the promissory note as principals of Se-Fish pursuant to N.Y. Partnership Law.
Attached as exhibit A to the October 12, 2001 Affidavit of Bernard M. Brodsky, Esq.
Pursuant to FRCvP 15(a) leave to amend "shall be freely given when justice so requires." Although the decision whether to grant leave to file an amended answer rests within the sound discretion of the trial court, in "the absence of any apparent or declared reason — such as *** futility of amendment, etc. — the leave sought should, as the rules require, be `freely given.'" Foman v. Davis, 371 U.S. 178, 182 (1962). See also Rachman Bag Co. v. Liberty Mut. Ins. Co., 46 F.3d 230, 235 (2d Cir. 1995); Ruffolo v. Oppenheimer Co., 987 F.2d 129, 131 (2d Cir. 1993); Blaskiewicz v. County of Suffolk, 29 F. Supp.2d 134, 137 (E.D.N.Y. 1998). A motion for leave to file an amended answer should not be denied on the basis of futility unless the proposed amendment is clearly frivolous or facially insufficient and, where the proposed amendment raises a colorable defense, the court should not consider its substantive merits but should grant leave to amend and allow the opposing party to subsequently test the merits of the amendment through a dispositive motion. Randolph Found. v. Duncan, No. 00Civ.6445(AKH)(THK), 2002 WL 32862, at *4 (S.D.N.Y. Jan. 11, 2002); Garvin v. United States, No. 00-CV-2810(JG), 2001 WL 1078339, at *3 (E.D.N.Y. Aug. 22, 2001); Blaskiewicz, at 138; Calzaturificio v. U.S. Shoe Corp., No. 92 Civ. 2020 (JFK), 1993 WL 485753, at *1, 2 (S.D.N.Y. Nov. 23, 1993); Lerman v. Chuckleberry Publ'g, Inc., 521 F. Supp. 228, 231 (S.D.N.Y. 1981), rev'd on other grounds sub nom. Lerman v. Flynt Distrib. Co., Inc., 745 F.2d 123 (2d Cir. 1984), cert. denied, 471 U.S. 1054 (1985). Defendants' proposed amended answer raises a colorable defense and, accordingly, leave to file the proposed amended answer attached as exhibit A to the October 12, 2001 Affidavit of Brodsky will be granted.
This Court will next address the parties' respective motions for summary judgment and for such purposes will consider defendants' proposed amended answer to have already been served and filed inasmuch as a copy thereof had been served on plaintiff prior to the filing of any of the motions for summary judgment. Pursuant to FRCvP 56(c), summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." The party moving for summary judgment must demonstrate the "lack of a genuine, triable issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986). A fact is material if it "might affect the outcome of the suit under the governing law" and is genuine if it "is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, 477 U.S. 242, 247-248 (1986). When ruling on a motion for summary judgment the court must view the facts in the "light most favorable to the opposing party" — Adickes v. H.S. Kress Co., 398 U.S. 144, 157 (1970) —; however, the opposing party may not rest upon conclusory statements in his pleadings but "must set forth specific facts showing that there is a genuine issue for trial." FRCvP 56(e). "[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment" and, if "the evidence is merely colorable *** or is not significantly probative ***, summary judgment may be granted." Anderson, at 247-250. Furthermore, summary judgment must be granted when a party "fails to make a showing sufficient to establish the existence of an element essential to that party's case and on which that party will bear the burden of proof at trial. In such a situation, there can be no `genuine issue as to any material fact,' since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Celotex, at 322-323.
This Court will first address plaintiff's October 24, 2001 motion for summary judgment on its first two causes of action. On its first cause of action plaintiff seeks summary judgment of foreclosure of the mortgage and the appointment of a receiver to conduct a sale of the Delaware Avenue property. To state a prima facie cause of action for mortgage foreclosure under New York law, plaintiff must allege that defendant owes it a debt, which is secured by a mortgage and which is in default. Midfirst Bank v. Rath, 270 A.D.2d 932, 932 (4th Dep't 2000); New York State Mortgage Loan Enforcement Admin Corp. v. North Town Phase II Houses, Inc., 191 A.D.2d 151, 152 (1st Dep't 1993); Metro. Distrib. Servs., Inc. v. DiLascio, 176 A.D.2d 312, 312 (2d Dep't 1991); Northeast Savings. F.A. v. Rodriguez, 159 A.D.2d 820, 821 (3d Dep't 1990). Plaintiff has annexed to its moving papers copies of the promissory note evidencing the debt and the mortgage securing it and an affidavit stating that defendants are in default of payments thereon and has accordingly established a prima facie case for mortgage foreclosure. Defendants concede plaintiff's right to foreclose; accordingly, plaintiff will be granted summary judgment on its first cause of action seeking mortgage foreclosure.
On its second cause of action, plaintiff seeks summary judgment that defendants are in breach of the promissory note. To state a prima facie case for breach of a promissory note, a plaintiff must allege that defendant executed a promissory note in its favor and is in default of repayment thereon after due demand. Layden v. Boccio, 253 A.D.2d 540, 540 (2d Dep't 1998); Dvoskin v. Prinz, 205 A.D.2d 661, 662 (2d Dep't 1994); Unisource, Inc. v. Wolfe, 169 A.D.2d 567, 568 (1st Dep't 1991). Plaintiff has annexed to its moving papers copies of the promissory note evidencing defendants' indebtedness to it and proof of defendants' failure to make the required payments after due demand and has therefore demonstrated its entitlement to summary judgment on its second cause of action for breach of the promissory note. Defendants do not contest that they are in default of the promissory note; however, they argue that plaintiff is not entitled to summary judgment on both its first and second causes of action because such would constitute an impermissible double recovery on a single debt in violation of section 1301 of New York's Real Property Actions Law which bars a plaintiff from simultaneously being awarded both equitable relief in the form of mortgage foreclosure and legal relief in the form of judgment on the promissory note.
This Court previously held that plaintiff could seek both the equitable relief of mortgage foreclosure and the legal relief of judgment against Se-Fish on the promissory note in this action because the joinder of such claims/remedies is governed by FRCvP 18 and not by N.Y. Real Prop. Acts. Law § 1301. Midwest Fin. Servs. v. Se-Fish Assocs., No. 99-CV-0417E(H), 2000 WL 743993, at *2-3 (W.D.N.Y. June 7, 2000). However, although this Court had allowed plaintiff to simultaneously proceed under both such causes of action, plaintiff cannot recover the full amount owed by defendants both through foreclosure of the mortgage and again through judgment on the promissory note because such would give plaintiff twice the recovery to which it is entitled. Although this Court will at this time adjudge defendants to be liable under the promissory note, the amount of such liability, if any, can not and will not be determined until after the foreclosure of the mortgage and the sale of the Delaware Avenue property when both the sale price and the fair market value of the Delaware Avenue property have been determined so that the amount of any debt remaining unsatisfied can be properly ascertained. See N.Y. Real Prop. Acts. Law § 1371. At such time plaintiffs can move for a determination of the amount of defendants' remaining liability for breach of the promissory note.
Were plaintiff's request to be granted, it would receive both a judgment against Se-Fish for the full amount of the debt and title to the Delaware Avenue property. Such would constitute an impermissible double recovery for a single debt.
The Delaware Avenue property had been appraised at $1,350,000 October 26, 1998. Defs.' Statement of Undisputed Facts Ex. 11 (Report on Se-Fish compiled by Landauer Loan Sale Advisory Group).
Plaintiff also seeks to recover its attorney fees; however, such request is premature. Upon the completion of this case, plaintiff may file a motion seeking reasonable attorney fees.
Lastly, this Court will address the parties' cross-motions for summary judgment on the first ground of plaintiff's third cause of action which seeks judgment against Segal and Kostiner individually on the promissory note as principals of Se-Fish. Plaintiff seeks summary judgment against Segal and Kostiner as principals of Se-Fish on the basis that New York's Partnership Law permits recovery against them individually for Se-Fish's debt under the promissory note. "Under New York state law, *** a joint venture `is in a sense a partnership for a limited purpose, and it has long been recognized that the legal consequences of a joint venture are equivalent to those of a partnership.'" Itel Containers v. Atlanttrafik Exp. Service Ltd., 909 F.2d 698, 701 (2d. Cir. 1990) (quoting Gramercy Equities v. Dumont, 72 N.Y.2d 560, 565 (1988)). See also Tehran-Berkeley v. Tippetts-Abbett, et al., 888 F.2d 239, 243 (2d Cir. 1989). Under section 26(a)(2) of New York's Partnership Law "all partners are liable *** [j]ointly for *** debts and obligations of the partnership; but any partner may enter into a separate obligation to perform a partnership contract." N.Y. Partnership Law § 26(a)(2); FDIC v. Shea Gould, No. 95 Civ. 5491(JFK), 1997 WL 401822, at *14 (S.D.N.Y. July 17, 1997); Owen Steel Co., Inc. v. George A. Fuller Co., 563 F. Supp. 298, 300 (S.D.N.Y. 1983); Sitchenko v. DiResta, 512 F. Supp. 758, 762 (E.D.N.Y. 1981); Midwood Development Corp. v. K 12th Associates, 146 A.D.2d 754, 755 (2d Dep't 1989); Patrikes v. J.C.H. Service Stations, Inc., 41 N.Y.S.2d 158, 167 (Queens City Ct.), aff'd, 46 N.Y.S.2d 233 (App.Div.2d Dep't 1943); Gomez v. Vazquez, 32 N.Y.S.2d 34, 35 (New York City Ct. 1941). Plaintiff therefore seeks judgment against Segal and Kostiner individually for the full amount of the promissory note executed by Se-Fish. Defendants maintain that, pursuant to the terms of their personal guarantees, plaintiff can only recover 95% of the debt from Segal and 5% from Kostiner. Plaintiff responds that the terms of the personal guarantees have no effect on Segal's and Kostiner's individual liabilities under the promissory note as principals of Se-Fish.
Defendants have caused a great deal of confusion by more often than not referring to the terms of the personal guarantees given by Segal and Kostiner — which as plaintiff points out are irrelevant to their liability for the debt of Se-Fish as principals therein — rather than solely and consistently to paragraph 22 of the Mortgage, Security, Consolidation and Modification Agreement which contains substantially identical language. Plaintiff, however, has completely overlooked said paragraph 22 which is dispositive of the cross-motions for summary judgment on the first ground of plaintiff's third cause of action and has thereby made a false statement to this Court on page 8 of its Memorandum of Law in Opposition to Defendants' Motion for Partial Summary Judgment wherein it states: "Neither the Note nor the Mortgage provides any limitation upon the liability of the general partners for the debts of Se-Fish." Paragraph 22 of the Mortgage, Security, Consolidation and Modification Agreement — i.e., the Note and the Mortgage referred to by plaintiff — clearly states: "If there is more than one person designated herein as Mortgagor, the obligations hereunder of each person so designated shall be deemed liable as follows: David Segal to the extent of 95% and Arnold Kostiner to the extent of 5%." As noted above it was the intention of defendants and the SBU to limit the liability of Segal to 95% and of Kostiner to 5% of Se-Fish's debt under the promissory note and mortgage. The "objective of contract interpretation is to give effect to the expressed intentions of the parties." Record Club of America, Inc. v. United Artists Records, Inc., 890 F.2d 1264, 1271 (2d Cir. 1989). Because as assignee of the mortgage and promissory note plaintiff obtained only the rights held by SBU — N.Y. Gen. Oblig. Law § 13-105; Matter of International Ribbon Mills (Arjan Ribbons), 36 N.Y.2d 121, 126 (1975); Westervelt v. Dryden Mutual Ins. Co., 252 A.D.2d 877, 878 (3d Dep't 1998); Robischon v. Genesee Valley Medical Care, Inc., 401 N.Y.S.2d 379, 381 (Sup.Ct. Monroe County 1977), aff'd, 65 A.D.2d 681 (App.Div. 4th Dep't 1978) — this Court will grant defendants' motion for summary judgment and deny plaintiff's November 9, 2001 motion for summary judgment.
Indeed, this Court even questions whether the parties had the Mortgage, Security, Consolidation and Modification Agreement in front of them when drafting their papers because defendants usually refer to the irrelevant guarantee — see, e.g., Reply Mem. of Law in Further Supp. of Defs.' Mot. for Partial Summ. J. to Amend their Answer in Further Opp'n to Pl.'s Mot. for Partial Summ. J. at 2 — and plaintiff has repeatedly stated that under the terms of the mortgage, default occurs if a monthly payment is late by thirty days. However, pursuant to paragraph 12.1.1 of the Mortgage, Security, Consolidation and Modification Agreement such period is actually fifteen days. Plaintiff then comes to the unsupportable conclusion that, because Se-Fish's last timely payment had been March 1, 1999; it had been in default since April 1, 1999 — i.e. plaintiff states that such defendant was in default before its payment was even overdue. See, e.g. Mem. of Law in Opp'n to Defs.' Mot. for Partial Summ. J. at 3.
Accordingly, it is hereby ORDERED that defendant's motion for leave to serve and file an amended answer is granted, that defendants shall serve and file their proposed amended answer within ten days of the filing of this Order, that plaintiff's October 24, 2001 motion for summary judgment is granted in part, that plaintiff is granted summary judgment of foreclosure of the mortgage, that defendant Se-Fish is adjudged liable for any deficiency remaining after the foreclosure and sale of the Delaware Avenue property based upon its breach of the promissory note, that plaintiff shall submit the name of a receiver and a proposed order appointing such receiver to, inter alia, take possession of and conduct the sale of the Delaware Avenue property and calculate the amount of the remaining deficiency judgment within forty-five days of the filing of this Order, that defendants' motion for summary judgment is granted, that plaintiff's November 9, 2001 motion for summary judgment is denied, that defendant Segal is liable for 95% of the debt of Se-Fish and Kostiner is liable for 5% of the debt of Se-Fish based upon the terms of the mortgage and promissory note and their personal guarantees, that defendant John Doe is dismissed and that the caption shall be changed to:
"CITIZENS BANK AND TRUST COMPANY, Plaintiff,
-vs-
SE-FISH ASSOCIATES, DAVID SEGAL and ARNOLD KOSTINER, Defendants."