Defendant David Spitzer ("Spitzer") moves, by an Order to Show Cause, for an order vacating this court's December 9, 2009 order granting Plaintiff Liberty Pointe Bank ("Liberty Pointe") summary judgment, for leave to file an amended answer pursuant to CPLR 3025(b), or in the alternative, for a stay of the current proceedings.

On October 24, 2007, Haboineh LLC ("Haboineh") executed a note to Liberty Pointe, a banking corporation organized under the laws of the State of New York and authorized to do business in the Commonwealth of Pennsylvania, in the principal amount of $562,500. Defendant Spitzer, a resident of Brooklyn, New York, executed the note as principal of Haboineh. [*2]Haboineh also executed an Open-End Mortgage and Security Agreement (the "Mortgage") on October 24, 2007 and granted Liberty Pointe a mortgage lien and security interest in certain real property located at 751 Adams Avenue, Philadelphia, Pennsylvania (the "Property"). Spitzer also executed a Guaranty Agreement, personally guaranteeing payment of the note . In November of 2008, Haboineh defaulted under the note and mortgage and currently remains in default.

On March 25, 2009, Liberty Pointe commenced and action in the Court of Common Pleas of Philadelphia County, Pennsylvania seeking to foreclose on the Property. The foreclosure action was brought solely against Haboineh and did not name Spitzer as a party defendant, nor

did the foreclosure action request that a deficiency judgment be awarded against Spitzer in the event that proceeds from the foreclosure sale of the Property were insufficient to satisfy the Mortgage. On April 28, 2009, while the foreclosure action was pending in Pennsylvania, Liberty Pointe commenced the instant action against Spitzer in Kings County, New York to enforce the Guaranty Agreement, seeking the outstanding amount, $600,292.26.

On December 9, 2009, this court granted Liberty Pointe's motion for summary judgment against Spitzer as to liability of "all underlying amounts due pursuant to the Note and Mortgage executed by Haboineh LLC on October 24, 2007." The matter was referred to a Judicial Hearing Officer to conduct an inquest and compute the amounts due. On February 2, 2010, Spitzer brought the instant motion by order to show cause requesting that this court vacate its December 2009 order of summary judgment and allow him to file an amended answer raising two affirmative defenses.^[FN1] Spitzer sought to assert that Liberty Pointe was barred under New York Real Property Actions and Proceedings Law §1301 from bringing the current action based upon the Guaranty Agreement because Liberty Pointe had previously elected to commence a foreclosure action in Pennsylvania, which precluded it from commencing the instant action. Spitzer also asserts, in the alternative, that should this court choose not to vacate the December 2009 order, the court should stay this action pending the resolution of the earlier Pennsylvania foreclosure action.On March 17, 2010, this court learned of the dissolution of Liberty Pointe and issued an order adjourning the motion and staying the inquest pending plaintiff's substitution. On June 30, 2010, this court adjourned the motion once again, pending the completion of the foreclosure action in Pennsylvania. On November 3, 2010, upon learning that the foreclosure sale was scheduled for December 14, 2010, this court adjourned the motion yet again. On December 30, 2010, Haboineh filed for bankruptcy in the Southern District of New York and the Pennsylvania foreclosure sale was thereby stayed. On January 20, 2011, this court again directed plaintiff to move to substitute Valley National Bank as the new plaintiff and to amend the caption. On March 10, 2011, this court granted plaintiff's motion to amend the caption on consent and reserved decision on defendant's outstanding motion to amend the answer, vacate summary judgment and stay the action.

Although defendant has not moved to vacate this court's order pursuant to a particular CPLR provision, CPLR 5015(a) provides that upon motion by an interested party, a court may vacate its judgment or order on the grounds of:

"(1) excusable default . . . or (2) newly-discovered evidence which, if introduced at the trial, would probably have produced a different result . . . or (3) fraud, misrepresentation, or other misconduct or an adverse party; or (4) lack of jurisdiction to render the judgment or order; or (5) reversal, modification or vacatur or a prior judgment or order upon which it is based."

Defendant has not established any grounds on which this court should vacate its December 9, 2009 order. Defendant has not defaulted nor has he alleged newly-discovered facts that would alter the outcome of this case. Defendant has not alleged fraud, misrepresentation or misconduct on the part of the plaintiffs. Further, defendant has not raised any jurisdictional objections and is a New York resident. Finally, there have not been any reversals or modifications of prior judgments upon which the December 9, 2009 order was based. Therefore, defendant's request that this court vacate its December 9, 2009 order is denied.

Defendant Spitzer's motion requesting leave to amend his original answer in order to assert an affirmative defense is likewise denied. CPLR 3025(b) states that,

"A party may amend his pleading, or supplement it by setting forth additional or subsequent transactions or occurrences, at any time by leave of court or by stipulation of all parties. Leave shall be freely given upon such terms as may be just including the granting of costs and continuances."

The Appellate Division, Second Department, has held that motions for leave to amend pleadings should be freely granted "unless the proposed amendment is palpably insufficient or patently devoid of merit" (Lucido v Mancuso, 49 AD3d 220, 222 [2d Dept 2008]; see Norman v Ferrara, 107 AD2d 739[2d Dept 1985], Sleepy's Inc. v Orzechowski, 7 AD3d 511 [2d Dept 2004]). . Leave to amend is also properly denied by the court when the non-moving party would suffer surprise or prejudice from the amendment. (See Gallo Brothers Construction, Inc. v Peccolo, 281 AD2d 811, 812 [3d Dept 2001]). "The determination whether to grant such leave is within the court's discretion, and the exercise of that discretion will not be lightly disturbed." (Voyticky v Duffy, 19 AD3d 685,685 [2d Dept 2005]). In the instant action, Spitzer filed his original answer on June 15, 2009 and did not move to amend his original answer until January 28, 2010, after summary judgment was granted against him on December 9, 2009.

In his affirmation, Spitzer stated that the reason why the affirmative defense was not raised in his original answer was because his attorney at that time was "not conversant in real estate matters." (Spitzer Aff., ¶ 21). Spitzer has since retained new counsel. Although motions to amend the pleadings are liberally granted, Spitzer's motion was made after summary judgment for all amounts due pursuant to the Note and Mortgage was already granted against him. Thus, were this court to grant Spitzer leave to amend his pleading, plaintiff would suffer prejudice and surprise as a dispositive ruling has already been issued.

Moreover, the affirmative defenses Spitzer seeks to interpose are palpably insufficient and devoid of merit. It is undisputed that Spitzer signed the Guaranty Agreement whereby he personally and unconditionally guaranteed payment of the Mortgage and Note. Amending the answer to assert his affirmative defensewould not alter the facts that the court previously relied upon when it granted Liberty Pointe's motion for summary judgment because Spitzer indeed is [*4]liable for the amounts due under the mortgage. At such a juncture in litigation proceedings, Spitzer has had a full and fair opportunity to litigate the issues and he should not be allowed to relitigate them. (See Korea First Bank v Noah Enterprises Ltd, 12 AD3d 321 [1st Dept 2004]). Spitzer did not raise the RPAPL §1301 defense in his opposition to Liberty Pointe's motion for summary judgment and as a result he cannot claim that the court should vacate its order due to a failure to address a defense that he essentially waived (First National Bank v Brookhaven, 223 AD2d 618, 621 [2d Dept 1996]).

Spitzer's NY RPAPL §1301(3) affirmative defense is also without merit. This provision "prohibits a party from commencing an action at law to recover any part of the mortgage debt while the foreclosure proceeding is pending or has not reached final judgment, without leave of the court" (First Nationwide Bank v Brookhaven Realty Assoc., 223 AD2d 618, 622 [2d Dept 1996]). Spitzer argues that RPAPL §1301(3) bars the instant action against him under the Guaranty Agreement because the foreclosure action was commenced a month earlier in Pennsylvania. Therefore, Spitzer argues that under the election of remedies principle of RPAPL §1301, Liberty

Pointe has made its decision to foreclose on the Mortgage and is not permitted to commence a second simultaneous action attempting to recover the same debt. The election of remedies principle fully applies to an action to recover under the guarantee of a note. (Resolution Trust

Corp. v J.I. Sopher & Co., 2997 US App LEXIS 4028 at *6, FN2 [1997] citing Manufacturers Hanover Trust Co. v Garden City Assocs., 150 Misc 2d 247 [1991]). Further, Spitzer contends that Liberty Pointe's complaint in the instant action is deficient under §1301(2) which states that "[t]he complaint shall state whether any other action has been brought to recover any part of the mortgage debt, and, if so, whether any part has been collected." Liberty Pointe's complaint did not mention that the foreclosure action was already pending in Pennsylvania.

However, Spitzer's arguments fail as RPAPL §1301 is not applicable to actions where the property is located outside of the state of New York. (Wells Fargo Bank Minnesota N.A. v Cohn, 4 AD3d 189 [1st Dept 2004]; Federal Deposit Ins. Corp. v De Cresenzo, 207 AD2d 823, [2d Dept 1994]; Fielding v Drew, 94 AD2d 687 [1st Dept 1983]). In the present action, the Property securing the Mortgage, and subject to Liberty Pointe's foreclosure action, is located in Pennsylvania, thus precluding the application of RPAPL §1301. Due to RPAPL §1301's inapplicability to the instant action, Spitzer'sproposed amendment is without merit and as a result would not be sustained upon a motion to dismiss under CPLR 3211(a)(7) (see Lucido v Mancuso, 49 AD3d at 225). Therefore, the motion to amend in order to assert the RPAPL §1301 affirmative defense is denied.

Moreover, although New York is the selected forum due to Spitzer's New York residency, the Guaranty Agreement states that it shall be governed by Pennsylvania law. While New York law prohibits simultaneous actions in both law and equity to recover under the note and foreclose the mortgage, it does not appear that Pennsylvania law bars such simultaneous actions. (See Meritor Sav. Bank v Peppertree Assoc., Ltd.,1991 WL 91562, US Dist Ct, ED PA, 90 Civ 2137, Waldman, J., 1991; The Sams Corp. v Garin, 352 Pa Super 105, 108 [Super Ct 1984]). Therefore, Liberty Pointe was entitled to commence the instant action against Spitzer as guarantor while the foreclosure action was pending in Pennsylvania.

Spitzer's motion to stay all proceedings in this action until the resolution of the foreclosure proceedings pending in Pennsylvania is also denied. Although defendant does not cite a particular CPLR provision, CPLR §2201 provides that, "the court in which an action is [*5]pending may grant a stay of proceedings in a proper case, upon such terms as may be just." Thus, the issuance of a stay is within the discretion of the court. (Salerno v Salerno, 154 AD2d 430, 430 [2nd Dept. 1989]). The moving party carries the burden of establishing the necessity of a stay in order to avoid prejudice (Robert Stigwood Org., Inc. v Devon Co., 44 NY2d 922, 923 [1978]).

The instant action against Spitzer is for the payment of amounts due under the Guaranty Agreement for repayment of a loan which, as stated therein, would not have been made without such guaranty. Defendant has not established facts showing that absent a stay of the instant action, he would be prejudiced. Instead, the facts reveal that granting a further stay may prejudice the plaintiffs. On December 30, 2010, Haboineh filed for bankruptcy in the Southern District of New York. As a result of this bankruptcy filing, the Pennsylvania foreclosure action has been stayed. In fact, the instant action has been effectively stayed since December 9, 2009, though the delay was not entirely due to defendant. The language of the Guaranty Agreement, executed by defendant in his individual capacity, states that the lender would not be required to wait until recovery via a foreclosure action or sale before it could pursue payment from Spitzer as guarantor. The purpose of the Guaranty Agreement was to protect plaintiff's right to recover its loan to the LLC upon the LLC's default. Where the LLC has entered bankruptcy and effectively suspended a foreclosure proceeding, the plaintiff is entitled to obtain compensation from defendant guarantor. This court has already determined that defendant is liable to plaintiff under the terms of the Guaranty Agreement, yet plaintiff remains unable to recover. Further stay of the matter would be prejudicial to plaintiff. Defendant's motion to stay these proceedings until the resolution of the Pennsylvania foreclosure action is denied.

Defendant's motion by Order to Show Cause to vacate the December 9, 2009 order of summary judgement, to amend its answer in order to include certain affirmative defensives and to stay the current action until resolution of the foreclosure proceedings in Pennsylvania is denied in its entirety.

This case is referred to a court referee to hear and report upon the damages due to plaintiff.

This constitutes the decision, order, and judgment of the court.

E N T E R,

J. S. C.