Upon the foregoing papers, plaintiff Gro-Wit Capital, LTD, (Gro-Wit) moves for an order, pursuant to CPLR 3212, granting summary judgment against defendants 1080 Utica, LLC (1080); East Coast Superior Educore, Inc. (East Coast); Children's Colony Center, Inc. (Children's Colony); Carmen Philips; and the City of New York on the ground that no triable issues of fact exist. In their opposition papers, Ms. Phillips, East Coast and Children's Colony (hereinafter collectively referred to as the East Coast defendants) seek leave to amend their answer. In its reply, plaintiff seeks to have sanctions awarded against 1080.

In this action, Gro-wit is seeking to foreclose on a consolidated mortgage dated November 15, 1988 given by it to East Coast and encumbering the property located at 1078-1080 Utica Avenue in Brooklyn. By deed dated August 15, 2007, East Coast sold the mortgaged property to 1080.

During oral argument, 1080 represented that it was willing to bring the mortgage current to settle the action, which offer was accepted by Gro-Wit. After numerous adjournments, however, it appears that the parties were unable to agree to the amount due.

In support of the motion, plaintiff relies upon an affidavit submitted by Alvin Wittlin (Alvin) and an affirmation from counsel. In his affidavit, Alvin alleges that he is the president of Gro-Wit and that two defendants served answers to the complaint. More specifically, Ms. Phillips served an answer on behalf of herself and East Coast. Plaintiff first alleges that inasmuch as Ms. Phillips is not an attorney, she cannot answer on behalf of East Coast. In addressing the merits of Ms. Phillips answer, plaintiff alleges that her assertion that she is a tenant at the premises and as such, is entitled to damages by reason of plaintiff's failure to provide her with a payoff letter upon request is without merit.

With regard to 1080, plaintiff avers that none of the six affirmative defenses interposed in its answer have any merit in truth or fact. In this regard, plaintiff asserts that 1080's claim that plaintiff did not acquire jurisdiction over it is refuted by the receipt from the Secretary of State that establishes that the corporation was properly served.^[FN1] Plaintiff also contends that the second affirmative defense in which 1080 alleges that when the property was purchased on August 15, 2007, the principals were told that all of the existing mortgages were current, was untrue in that there were two mortgages on the premises that were in arrears at the time. In addition, the third affirmative defense in which 1080 alleges that plaintiff advised the corporation that the two brothers owning Gro-Wit were involved in a dispute, so that 1080 should not make any further payments on the mortgage, is not accurate. Alvin explains that his attorney had a conversation with 1080's attorney during which it was stated that there was a dispute concerning the first mortgage, which is held by him and his brother, Theodore Wittlin (Theodore), in their individual capacities, not the second mortgage that he is seeking to foreclose herein. Plaintiff further avers that the fourth, fifth and sixth affirmative defenses in which 1080 alleges that the instant action is barred by the doctrines of estoppel, waiver and/or unclean hands are legally insufficient to preclude an award of summary judgment in its favor.

In his affirmation, counsel alleges that 1080 obtained two mortgages when it purchased the subject property. The first mortgage is for more than $300,000 and has not [*3]been paid for more than one year. The second mortgage, the one at issue herein, is for more than $145,000, plus interest, and is held by Gro-Wit. Counsel further avers that as the president of Gro-Wit, Alvin has the duty to protect the mortgage and to institute the instant action. He further explains that no action was commenced to foreclose the first mortgage because Theodore refuses to cooperate with Alvin. Counsel concludes by asserting that plaintiff is entitled to summary judgment foreclosing the mortgage since it is clear that the second mortgage is in default and that defendants have no defense to this foreclosure action.

In opposition to the motion, 1080 argues, in reliance upon an affidavit from Neville Patterson, a member of the corporation, and an affirmation from its attorney, that on March 9, 2007, this defendant entered into a contract to purchase the subject premises from East Coast for $1,250,000. Pursuant to that contract, 1080 made a down payment of $70,000; the purchase was subject to the existing mortgages on the property; and 1080 agreed to execute a purchase money mortgage in the amount of $280,000. The sale closed on August 15, 2007. Mr. Patterson claims that prior to the closing, 1080's attorney was advised by Ms. Phillips that both the first and second mortgages on the property were current.

Mr. Patterson further alleges that in accordance with the second mortgage, 1080 made the requisite monthly payments of $2,175 for September, October and November of 2007 and that the check tendered for the payment due in December 2007 was refused. In December 2007, he received a telephone call from a gentleman who represented that he was Al Wittlin, during which Alvin informed him that he was involved in litigation with his brother and that until such time as that dispute was resolved, any mortgage payments that were tendered to Gro-Wit would not be deposited, so that no additional payments should be made. 1080 accordingly concludes that plaintiff is estopped from proceeding with the foreclosure action because it waived its right to receive payments on the subject mortgage pending resolution of the dispute. Mr. Patterson also alleges that 1080 was never served with a copy of the summons and complaint commencing the instant action and requests that a traverse hearing be held.

In an affirmation submitted by counsel, these defendants explain that East Coast was the previous owner of the subject property; Ms. Phillips was the CEO of the corporation. When East Coast owned the property, it was encumbered by two mortgages. The first, dated July 31, 1986, was given by Theodore and Alvin, individually, in the amount of $360,000.^[FN2] The second, dated November 15, 1988, was given to East Coast by Gro-Wit, in the amount of $145,000; Theodore and Alvin are the shareholders and [*4]officers of Gro-Wit. The East Coast defendants also allege that by contract dated March 9, 2007, East Coast agreed to sell the property to 1080, subject to the two mortgages, adding that no written assignments were executed by the parties, so that none were recorded. At the closing on August 15, 2007, 1080 also executed a purchase money mortgage in the amount of $195,000 to reflect actual costs; it is alleged that this mortgage was similarly not recorded. The East Coast defendants further represent that as of the date of the closing, both of the mortgages were current. They claim that they made no further payments after the closing and did not monitor the payments made by 1080 because the purchaser agreed to assume the mortgages and their attorney advised them that they were no longer liable on the mortgage.

In the affirmation in opposition, counsel also requests leave to amend the answer interposed by Ms. Phillips, explaining that when it was served, she and East Coast had not retained an attorney. Counsel accordingly seeks to amend the answer to allege that Ms. Phillips is not a proper party to the action, since the mortgages were signed by her on behalf of East Coast, and not in her individual capacity. Similarly, Children's Colony is not a proper party because it is a learning center run by Ms. Phillips that rents the property and like her, did not sign the mortgage.

In reply, Alvin submits an affidavit in which he alleges that he never met Mr. Patterson and never told him that he did not want the Gro-Wit mortgage to be paid. He further avers that he is the only officer who has the right and obligation to act on behalf of the corporation. Morovever, Alvin contends that Mr. Patterson seems to be confusing the first and second mortgages, explaining that his attorney had a converstion with the attorney for Ms. Phillips before the property was sold to 1080 who informed her that Alvin was having a problem with his brother. In fact, that is the reason that the first mortgage is not being foreclosed at the prsent time. He alleges, however, that he never gave up his rights in either mortgage.

In his affirmation, counsel alleges that 1080's claim that it was not properly served is belied by a copy of the receipt from the Secretary of State indicating that 1080 was served pursuant to Section 303 of the Limited Liability Law. He accordingly asserts that 1080's attorney should be sanctioned for suggesting that the Secretary of State is a liar. Counsel also alleges that there is no truth to any of the statements made by Mr. Patterson.

Mr. Finkelstein represents Theodore. Following a conference call with Mr. Finklestein when the parties appeared in court on June 29, 2009, at the court's request, he put Theodore's contentions in a letter. Therein, he alleges that Theodore is the majority holder of the note that secures the second mortgage on the subject property. This allegation is made in reliance upon an agreement dated November 4, 1993, which states that Theodore holds a 51.72% interest in the mortgage and which names Gro-Wit as the [*5]nominee to collect the mortgage payments on Gro-Wit's behalf; that agreement is signed by Theodore, as the president of Gro-Wit. Counsel further states that by letters dated May 5, 2009 to Gro-Wit, Alvin and East Coast, Theodore, as the majority holder, terminated Gro-Wit as the nominee for receipt of the proceeds for the mortgage and directed that the payments be sent to DMETS Management LLC, care of him, at an address in New Jersey. Mr. Finkelstein concludes by asserting that since Gro-Wit was dismissed as the nominee of the mortgage, it no longer has standing to maintain the instant foreclosure action.

In response to this letter, plaintiff's newly retained counsel submits a letter in which he contends that Mr. Finkelstein is confusing the first and second mortgages, since the November 4, 1993 agreement referred to by Mr. Finkelstein pertains to the first mortgage held by Alvin and Theodore. He further avers that Gro-Wit was formerly owned by Alvin, Theodore and their two other brothers; one of the brothers has since transferred his share to Alvin, so that Alvin is now a 50% owner.

A plaintiff in a foreclosure action has the initial burden of establishing its entitlement to judgment as a matter of law by producing the mortgage, the unpaid note, and an affidavit evidencing the mortgagee's default in the payment of the obligations under the mortgage (see e.g. Wells Fargo Bank v Karla, ___ AD3d ___, 2010 NY Slip Op 2549, *1 [2010], citing Capstone Bus. Credit v Imperia Family Realty, 70 AD3d 882 [2010]; Eastern Savings Bank v Sassouni, 68 AD3d 917 [2009]; Wells Fargo Bank v Webster, 61 AD3d 856 [2009]).

In addressing the issue of standing, it is well settled that an action to foreclose on a mortgage may not be brought by one who has no title to it and absent transfer of the debt, the assignment of the mortgage is a nullity (Kluge v Fugazy, 145 AD2d 537, 538 [1988], citing Merritt v Bartholick, 36 NY 44, 45 [1867]; Flyer v Sullivan, 284 AppDiv 697, 698 [1954]; Beak v Walts, 266 AppDiv 900 1943 [1943]; Manne v Carlson, 49 AppDiv 276, 278 [1975]). Stated differently, "[i]n order to commence a foreclosure action, the plaintiff must have a legal or equitable interest in the mortgage . . . . A foreclosure of a mortgage may not be brought by one who has no title to it'" (Wells Fargo Bank v Marchione, 69 AD3d 204, 207 [2009] [citations omitted]). In resolving the issues now before the court, it must also be recognized that " "standing requires an inquiry into whether the litigant has an interest in the claim at issue in the lawsuit that the law will recognize as a sufficient predicate for determining the issue at the litigant's request"'" (Matter of Montano v County Legislature of County of Suffolk, 70 AD3d 203, 215 [2009], quoting Wells Fargo Bank Minn. v Mastropaolo, 42 AD3d 239, 242 [2007], quoting Caprer v Nussbaum, 36 AD3d 176, 182 [2004]).

It is also well established that "[i]n an action to foreclose a mortgage, all parties having an interest, including persons holding title to the subject premises, must be made a [*6] party defendant to the action'" (Home Sav. of Am. v Gkanios, 233 AD2d 422 [1996], quoting RPAPL 1311 [1]; Polish Natl. Alliance v White Eagle Hall Co., 98 AD2d 400, 403 [1983]). Further, a plaintiff in a foreclosure action is at liberty to make senior mortgagees parties and to have the amount secured by their mortgages ascertained and determined, so that they may be paid out of the proceeds of the sale and their lien discharged, or the sale may be made subject to the known amount of their liens (see generally Quinlan v Olson Construction Co., 153 AppDiv 140 [1912]). "The absence of a necessary party in a foreclosure action leaves that party's rights unaffected by the judgment and sale, and the foreclosure sale may be considered void as to the omitted party" (Ridge Realty v Goldman, 263 AD2d 22, 26 [1999], citing Polish Natl. Alliance, 98 AD2d at 406; accord 1426 46 St. v Klein, 60 AD3d 740 [2009]). Thus, it has been held that "[i]f [a] mortgage and debt are held by more than one person all should join [in the foreclosure action]. If one of those parties refuses to join the plaintiff, he may be joined as defendant'" (Rosen v 124 State St. Corp., 141 AD2d 812, 812 [1988], quoting 2 Mortgages and Mortgage Foreclosure New York § 32:4, at 57 [rev ed]). As is also relevant herein, pursuant to CPLR 1001, necessary parties are defined as "[p]ersons who ought to be parties if complete relief is to be accorded between the persons who are parties to the action."

In disposing of the instant motion, the court must also recognize that it has been held "that a mortgagor is bound by the terms of his contract as made and cannot be relieved from his default, if one exists, in the absence of waiver by the mortgagee, or estoppel, or bad faith, fraud, oppressive or unconscionable conduct on the latter's part" (Nassau Trust Co. v Montrose Concrete Products, 56 NY2d 175, 183 [1982], rearg denied 57 NY2d 674 [1982], citing Ferlazzo v Riley, 278 NY 289, 292 [1938]). The court in Nassau Trust Company went on to explain that:

"An estoppel "rests upon the word or deed of one party upon which another rightfully relies and so relying changes his position to his injury"' (Triple Cities Constr. Co. v Maryland Cas. Co., 4 NY2d 443, 448; Lynn v Lynn, 302 NY 193, 205; Metropolitan Life Ins. Co. v Childs Co., 230 NY 285, 292). It is imposed by law in the interest of fairness to prevent the enforcement of rights which would work fraud or injustice upon the person against whom enforcement is sought and who, in justifiable reliance upon the opposing party's words or conduct, has been misled into acting upon the belief that such enforcement would not be sought (White v La Due & Fitch, 303 NY 122, 128)."

(Nassau Trust Co., 56 NY2d at 184). "To apply the doctrine of promissory estoppel, a plaintiff must demonstrate: (1) a clear and unambiguous promise; (2) reasonable and foreseeable reliance by the party to whom the promise is made; and (3) an injury sustained in reliance on the promise" (NGR v General Elec. Co., 24 AD3d 425 [2005], citing Fleet Bank Pine Knoll, 290 AD2d 792, 797 [1992]; Gurreri v Associates Ins. Co., [*7]248 AD2d 356, 357 [1998]; Rogers v Town of Islip, 230 AD2d 727 [1996]; accord Freedman & Son v A.I. Credit, 226 AD2d 1002, 1003 [1996], citing Ripples of Clearview v Le Havre Assocs., 88 AD2d 120, 122 [1982], lv denied 57 NY2d 609 [1982] [to prevail on a cause of action sounding in promissory estoppel, the party advancing it must demonstrate that the opposing party made a clear and unambiguous promise, upon which the former reasonably relied, to its detriment]). Case law precedent also establishes that to apply promissory estoppel, it is necessary to establish that the injured party sustained an unconscionable injury (see generally Nassau Trust Co., 56 NY2d at 184; Fleet Bank, 290 AD2d at 797; see also River Glen Assocs. v Merrill Lynch Credit, 295 AD2d 274 [2002], citing Melwani v Jain, 281 AD2d 276 [2001] [plaintiff's claimed additional financing and other costs did not constitute an unconscionable injury warranting the application of promissory estoppel]).

In contrast, "[w]hile estoppel requires detriment to the party claiming to have been misled, waiver requires no more than the voluntary and intentional abandonment of a known right which, but for the waiver, would have been enforceable (Nassau Trust Co., 56 NY2d at 184, citing City of New York v State of New York, 40 NY2d 659 [1976]; Davison v Klaess, 280 NY 252 [1939]). In discussing a claim of waiver, the court explained in Heller Financial, Inc. v Apple Tree Realty Assocociates (238 AD2d 198, 199 [1997], lv dismissed 90 NY2d 889 [1997]) that "[w]aiver of right to foreclose under Nassau Trust Co. v Montrose Concrete Prods. Corp. . . . requires a specific, identifiable promise." As is also relevant herein, "waiver should not be lightly presumed' and must be based on a clear manifestation of intent' to relinquish a contractual protection" (Fundamental Portfolio Advisors v Tocqueville Asset Mgmt., 7 NY3d 96, 104 [2006], quoting Gilbert Frank Corp. v Federal Ins. Co., 70 NY2d 966, 968 [1988]). Further, it must be recognized that "[w]aiver is unilateral and, not being a binding agreement, can, to the extent that it is executory, be withdrawn, provided the party whose performance has been waived is given notice of withdrawal and a reasonable time after notice within which to perform'" (Madison Ave. Leasehold v Madison Bentley Assoc., 30 AD3d 1, 5-6 [2006], affd 8 NY3d 59 [2006], rearg denied 8 NY3d 867 [2007], quoting Bank Leumi Trust Co. v Block 3102, 180 AD2d 588, 590 [1992], lv denied 80 NY2d 754 [1992]), quoting Nassau Trust Co., 56 NY2d at 184).

As a threshold issue, the court declines to order a traverse hearing since the affidavit of service establishes that 1080 was properly served by service upon the Secretary of State (see generally Gartner v Unified Windows, Doors & Siding, ___ AD3d ___, 2010 NY Slip Op 1759, *1 [2010] [defendant's denial of receipt of the summons and complaint was insufficient to rebut the presumption of proper service created by the affidavit of service upon the Secretary of State]; Commissioners of State Ins. Fund v Nobre, Inc., 29 AD3d 511, 511 [2006] [plaintiff established that it properly effected service upon the defendant by delivering a copy of the summons and verified [*8]complaint to the Secretary of State]).

Turning to the merits, the court finds that Gro-Wit has made a prima facie showing of the right to foreclose on its mortgage. In this regard, although Gro-Wit fails to offer an executed assignment of the mortgage from East Coast to 1080 upon which this action based, this defect shall be deemed cured since 1080 admits that it purchased 1080 Utica Avenue subject to the mortgage and that it made payments pursuant thereto for three months (see generally Citibank v Souto Geffen Co., 231 AD2d 466 [1996] [bank's motion for summary judgment in its foreclosure action was properly granted where defendants did not deny that they had not made payments of interest or principal]; Gerrity Co. v Riscica, 214 AD2d 866 [1995] [plaintiff offered evidence in admissible form sufficient to prove his prima facie entitlement to a judgment of foreclosure where he demonstrated that defendant took title to the parcel in question subject to its mortgage and that the mortgage was in default]; Greater NY Sav. Bank v 2120 Rlty., 202 AD2d 248 [1994] [plaintiff established a prima facie case of entitlement to foreclosure of the subject property and recovery of any deficiency from the guarantors based on its production of relevant documents and defendants' undisputed default on the obligation to make payments of principal and interest]; Bowery Sav. Bank v 130 East 72nd St. Rlty., 173 AD2d 364 [1991] [in an action to foreclose a mortgage, deficiencies in the moving papers were cured by defendant's admission of its obligation to pay and default in payment]).

Implicit in this holding is the finding that Gro-Wit, as the maker of the mortgage, has standing to maintain the instant action. The court therefore finds that Theodore's contention that the November 4, 1993 agreement entitles him to designate the party to whom the mortgage payments should be sent is found to be lacking in merit, since there is no reason to appoint Gro-Wit as the nominee to receive payments on a mortgage given in its name. Accordingly, it appears that this agreement pertain to the first mortgage. Further, Theodore has failed to establish that the mortgage has been assigned prior to the commencement of the action, so that Gro-Wit remains the proper party to commence an action to foreclose.

The court also finds that 1080's claim that Gro-Wit is estopped from foreclosing on its mortgage is unpersuasive, since 1080's allegations fail to establish that Gro-Wit made a clear and unambiguous promise that the it would not foreclose (see generally Nassau Trust Co., 56 NY2d at 184; NGR v General Elec. Co., 24 AD3d at 425; Fleet Bank, 290 AD2d at 797; Gurreri v Associates Ins. Co., 248 AD2d at 357; Rogers, 230 AD2d at 727; Freedman & Son, 226 AD2d at 1003, Ripples of Clearview, 88 AD2d at 122). Rather, assuming the truth of 1080's allegations for the purpose of disposing of this motion, its allegations establish that it was instead informed that it should not make any further payments until the dispute between Alvin and Theodore was resolved. Thus, this statement shall be construed as a waiver of the right to foreclose on the mortgage, which can be withdrawn (see generally Nassau Trust Co., 56 NY2d at 184; Madison Ave. Leasehold, 30 AD3d at 5-6; Bank Leumi Trust Co., 180 AD2d at 590). Accordingly, the [*9]waiver shall be deemed to have been withdrawn by the commencement of the instant action. In so holding, the court also notes that this motion was adjourned on several occasions so as to allow 1080 to bring the mortgage current, but no agreement with regard to the amount of money owed could be reached.

Defendants and Theodore, however, have raised sufficient issues of fact to warrant denial of plaintiff's motion. Most significantly, the affidavits, affirmations and documents before the court establish that the subject property is encumbered by three mortgages. Although plaintiff does not discuss the issue of the priority of these mortgages, he admits that the mortgage at issue herein is a second mortgage subordinate to the first mortgage held by him and his brother. The proof before the court also establishes that a purchase money mortgage is held by East Coast, who has already been joined as defendant.^[FN3] Inasmuch as it has been held that " [t]he rights, interests and equities of all of the parties claiming an interest in the mortgaged premises, and the respective priority of their liens thereon, should be settled and determined before any judgment of foreclosure and sale is entered'" (Quinlan, 153 AppDiv at 142 [citations omitted]), Theodore must be joined as a party defendant so that all of the parties having an interest in the subject property and the mortgages encumbering it are before the court so that the priority of the liens can be established and complete relief can be afforded (see generally Whipple v Edelstein, 148 Misc 681, 685 [1933]). Theodore has also made it clear that he wishes to be heard in this action, since he has contacted the court and submitted opposition to the motion, albeit in the form of a letter. If Theodore is to be bound by any judgment entered herein, however, he must be joined as a party defendant. In addition, the court notes that although Alvin alleges that he is not seeking to foreclose first the mortgage held by him and his brother because Theodore will not cooperate, case law precedent establishes that he can interpose a demand to foreclose on that mortgage in this action, without Theodore's consent, by joining him as a party defendant (Rosen, 141 AD2d at 812).

In addition, an issue of fact is raised with regard to who is authorised to commence an action to foreclose the action on behalf of Gro-Wit and/or who is entitled to receive the payments due under the mortgage, which issues must also be resolved before the court orders the property to be sold to satisfy the debts. 1080's failure to ascertain the dollar amount of the outstanding principal of the mortgages that it assumed and/or to execute a written assignment when it purchased the subject property raises another issue of fact, i.e., the amount of the debt owed to Gro-Wit, which issue similarly cannot be determined on the papers now before the court. Issues of fact also exist with regard to whether 1080 is in default in the payment of the purchase money mortgage held by East Coast. In [*10]addition, 1080 may have a claim against East Coast if the facts reveal that the mortgages were not current when it purchased the property, as was allegedly represented to it at the time of the purchase. In the interest of judicial economy, all of these issues should be resolved in this action.

Accordingly, since an order directing the sale of the subject property would be improper until the above discussed issues are resolved, plaintiff's motion for summary judgment is denied.

The court declines to address the request made by the East Coast defendants to amend their answer and plaintiff's request to impose sanctions against 1080, since neither of these demands was properly interposed pursuant to a notice of motion or cross motion (see generally CPLR 2214 and 2215; Chun v North American Mtge. Co., 285 AD2d 42 [2001]; Bauer v Facilities Dev., 210 AD2d 992 [1994]; Guggenheim v Guggenheim, 109 AD2d 1012 [1985]; Braver v Nassau County Office of Administrative Servs., 67 Misc 2d 120 [1971]). The parties are therefore granted leave to renew their respective requests for relief upon proper papers, if so advised. Any motion made by the East Coast defendants to amend their answer shall also include a copy of the proposed amended answer (see generally Fernandez v HICO, 24 AD3d 110, 111 [2005]; Battle v Brookhaven Nursing Home, 7 AD3d 553, 554 [2004]).

For the above stated reasons, plaintiff's motion for summary judgment is denied. Defendant is ordered to join Theodore Wittlin as a party defendant within 30 days of service upon him of a copy of this order with notice of entry or the court will entertain a motion to dismiss the action made by any of the defendants. Plaintiff is also directed to serve an amended complaint that properly addresses the interests and priority of all mortgages and mortgagees if he wishes to proceed in this action. If Theodore wishes to participate in this action in the future, and Alvin does not join him as a party defendant as directed above, Theodore is directed to make a formal motion seeking leave to intervene or he will not be heard in any future proceedings herein. All other requests for relief are denied.

The foregoing constitute the order, decision and judgment of this court.

E N T E R

J. S. C.