Plaintiff commenced this action on January 26, 2010, seeking foreclosure of two separate mortgages: a consolidated mortgage and a building loan mortgage (the subject mortgages) given by defendant B & B Realty Development, LLC (B & B Realty) against three parcels of real property known as 229 Beach 99th Street, Rockaway Beach, New York, 231 Beach 99th Street, Rockaway Beach, New York, and 230-232 Beach 100th Street, Rockaway Beach, New York (the mortgaged premises), and to adjudge defendants B & B Realty, Bryan A. Wetherall and Barbara M. Wetherall (collectively, the Borrower defendants) jointly and severally liable for any deficiency remaining after the foreclosure sale of the mortgaged premises. Plaintiff alleges in his complaint that defendant B & B Realty entered into an agreement dated September 19, 2007 (the consolidation agreement), with YML NY, LLC (YML) modifying, extending and consolidating certain prior mortgages dated November 9, 2004 and September 19, 2007 and underlying notes, into a single consolidated mortgage lien, and that the consolidated mortgage secures a consolidated note, in the principal amount of $640,000.00, payable with interest. Plaintiff also alleges that defendant B & B Realty executed a building loan agreement (the building loan agreement) with Y & R Capital NY LLC (Y & R), the subject building loan mortgage, and underlying note in the amount of $1,550,000.00, or so much thereof as advanced. Plaintiff additionally alleges that as further security for the subject mortgages, defendants Bryan A. Wetherall and Barbara M. Wetherall each executed and delivered separate guaranties dated September 19, 2007, guaranteeing payment of defendant B & B Realty's obligations under the consolidated mortgage and consolidated note, and under the building loan [*2]mortgage and building loan note, respectively. Plaintiff further alleges that he is the holder of the subject mortgages and underlying notes pursuant to assignments, dated May 5, 2009, and the Borrower defendants defaulted under the terms of the consolidated mortgage, note, and related guaranties, by failing to pay the entire balance due under the consolidated mortgage and note on October 1, 2008, the consolidated mortgage due date, and under the terms of the building loan mortgage, note and related guaranties by failing to make the monthly interest payments due thereunder from and after April 19, 2009, and to pay the entire balance due on October 19, 2009, the building loan mortgage final due date. Plaintiff named Miele Associates, L.L.P. and Miele Associates, LLP (Miele Associates),^[FN1] and Hydro Mechanical Inc., and Environmental Control Board of the City of New York as party defendants alleging that such defendants' respective lien interests in the mortgaged property are subject and subordinate to the subject mortgages.

The Borrower defendants served a combined answer, asserting eleven affirmative defenses, including the doctrines of equitable estoppel and unclean hands, fraud in the inducement, failure of consideration, and breach of the implied covenants of good faith and fair dealing. The Borrower defendants interposed four counterclaims predicated upon their claims that plaintiff's assignors, YML and Y & R, made material misrepresentations to the Borrower defendants for the purpose of inducing them to rely upon them in entering into the consolidated mortgage loan and building mortgage loan, and that Y & R breached the building loan agreement by failing to fully fund the building mortgage loan, thereby causing defendant B & B Realty to default on the consolidated mortgage. The Borrower defendants seek to void the building loan agreement and consolidated mortgage, and an award of damages, and attorneys' fees. Plaintiff served a reply, denying the material allegations of the counterclaims.

Defendants Miele Associates, Hydro Mechanical Inc., and Environmental Control Board of the City of New York are in default in appearing and answering the complaint.

Plaintiff moves pursuant to CPLR 3212 for summary judgment against the Borrower defendants, to dismiss their affirmative defenses and counterclaims, for leave to enter a default judgment as against defendants Miele Associates, Hydro Mechanical Inc., and the Environmental Control Board of the City of New York, and to adjudge and decree the amount due plaintiff for principal, interest, costs and reasonable attorneys' fees, and other charges due under the notes and subject mortgages, or in the alternative, for leave to appoint a referee to ascertain and compute the sums due and owing plaintiff.

With respect to that branch of the motion by plaintiff, which is in effect, for summary judgment on the complaint and dismissing the counterclaims, it is well established that the proponent of a summary judgment motion "must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact" (Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]).

In support of his motion, plaintiff offers, among other things, a copy of the pleadings, affidavits of service, the consolidation agreement, the subject mortgages and underlying notes, the [*3]building loan agreement, the guaranties and the assignments, an affirmation of regularity of his counsel, and the affidavits of plaintiff and Yehuda Rubin, a mortgage broker for the consolidated mortgage loan and a member of Y & R.

The consolidated mortgage requires payment in accordance with the note, which calls for monthly payments of interest only commencing on November 1, 2007, and continuing on the first day of each month thereafter, with the entire amount due thereunder, inclusive of all accrued interest and charges due under the note and consolidated mortgage, on October 1, 2008.

The building loan mortgage requires payment in accordance with its terms and the terms of the note. The building loan note calls for payment of the debt due thereunder, with interest accrued thereon from the date of each advance of monies made under the building loan note, at the prime rate, by no later than October 19, 2008. Under the note, if the loan is not paid in full by October 19, 2008, the rate of interest is to increase to the rate of prime plus 1% for six months. If the loan is not paid in full by April 19, 2009, the interest rate is to increase to 16% per annum to be paid monthly until October 19, 2009, at which time the loan is to be paid.

Plaintiff attests to the default in payment by the Borrower defendants, under the consolidated mortgage and note, on October 1, 2008, and under the building loan mortgage and note, on October 19, 2009. Plaintiff states that after the consolidated loan became due, he received four payments totaling $26,666.64, and acknowledges that the Borrower defendants are entitled to a credit in such amount towards the consolidated mortgage debt. Plaintiff also states that there are no intervening liens between the consolidated mortgage and the building loan mortgage.

Plaintiff denies that the performance of the lender's obligations under the consolidated mortgage and building loan agreement are dependent or contingent upon each other. Plaintiff asserts that any purported breach of the building loan agreement by Y & R cannot serve as a defense to the claim for foreclosure of the consolidated mortgage. Plaintiff also asserts he is the sole member of YML, and is not a member of Y & R. Plaintiff claims that he declined the opportunity to make a building loan to the Borrower defendants, and prior to the assignment of the mortgage documents to him, had nothing to do with the building mortgage loan originated by Y & R. Plaintiff denies having ever made any misrepresentation, in his capacity as the sole member of YML, or in his individual capacity, to the Borrower defendants. Plaintiff asserts that Y & R was not in default under the building loan agreement prior to the commencement of this action, and properly refused, after May 4, 2008, to advance funds to defendant B & B Realty for the purpose of construction work not yet completed, and after February 1, 2009, to advance funds for application to the consolidated mortgage debt.

In his affidavit, Mr. Rubin states he is the sole member of Y & R and that Y & R made advances to defendant B & B Realty under the building loan agreement totaling $594,111.99 prior to May 4, 2008, in installments, upon completion of specific work items. In his affidavit, Mr. Rubin indicates that, although the building loan agreement did not include a timetable or schedule for disbursements, he solicited a proposed schedule from defendant B & B Realty for the payments, and that defendant B & B Realty did not provide an acceptable one until April 2008, seven months after the closing of the building loan. He also indicates that after May 4, 2008, Y & R refused requests by defendant B & B Realty for advances because they were for work not yet completed. He further indicates, that Y & R nevertheless, made nine additional advances through February 1, 2009, which were applied towards the consolidated mortgage debt. Mr. Rubin states that Y & R made such [*4]additional advances to avoid foreclosure of the consolidated mortgage and thereby protect its junior mortgage lien (the building loan mortgage lien). Mr. Rubin also states that, as of February 1, 2009, Y & R ceased making further advances of any kind, because defendant B & B Realty had failed to perform any work on the project for approximately nine months.

These submissions establish plaintiff's prima facie entitlement to summary judgment in his favor as against the Borrower defendants and dismissing the counterclaims (see Wells Fargo Bank, N.A. v Webster, 61 AD3d 856 [2009], supra; EMC Mtge. Corp. v Riverdale Assoc., 291 AD2d 370 [2002], supra; IMC Mtge. Co. v Griggs, 289 AD2d 294 [2001]; Paterson v Rodney, 285 AD2d 453 [2001], supra). The burden shifts to the Borrower defendants to raise a triable issue of fact regarding their defenses and counterclaims (see Barcov Holding Corp. v Bexin Realty Corp., 16 AD3d 282 [2005]; EMC Mtge. Corp. v Riverdale Assoc., 291 AD2d 370 [2002], supra; First Nationwide Bank, FSB v Goodman, 272 AD2d 433 [2000]).

With respect to the affirmative defense asserted by the Borrower defendants based upon failure to state a cause of action, they do not cross move to dismiss the complaint on this ground (see Butler v Catinella, 58 AD3d 145, 151 [2008]), and in any event, the complaint states a cause of action against them for foreclosure, and to adjudicate them to be liable in the event a deficiency remains after the foreclosure sale.

The affirmative defense asserted by the Borrower defendants is based upon violation of Judiciary Law § 489, New York's champerty statute. The Borrower defendants have failed to demonstrate that plaintiff acquired the subject mortgages for any purpose other than to enforce legitimate claims (see Trust for Certificate Holders of Merrill Lynch Mtge. Invs., Inc. Mtge. Pass—Through Certificates, Series 1999—C1 v Love Funding Corp., 13 NY3d 190 [2009]; see also SB Schwartz & Co., Inc. v Levine, 82 AD3d 742 [2011]).

With respect to the affirmative defenses asserted by the Borrower defendants based upon the doctrine of laches, unconscionability, failure to join a necessary party, the bar of the statute of frauds, and lack of consideration for the assignment of the "mortgage," they have failed to allege or prove any facts supporting these defenses (see Glenesk v Guidance Realty Corp., 36 AD2d 852 [1971], abrogated on other grounds by Butler v Catinella, 58 AD3d 145 [2008], supra; MacIver v George Braziller, Inc., 32 Misc 2d 477 [1961]; CPLR 3018[b]).

With respect to the affirmative defenses based upon the doctrine of unclean hands, fraud in the inducement, breach of the implied covenants of good faith and fair dealing, and the counterclaims sounding in fraud, misrepresentation and breach of the building loan agreement, the Borrower defendants assert that the misconduct of plaintiff's assignors precludes his right to foreclosure of either mortgage, and that their loan and mortgage defaults were caused by Y & R's failure to provide all of the financing under the building loan agreement. The Borrower defendants contend that, in August 2007, they sought to refinance the then-existing mortgages on the subject premises, and obtain a building loan for the completion of a construction project on the mortgage premises. They also assert that they entered into negotiations with Yehuda Rubin, who they came to "understand" was the principal of the companies which would provide the financing, and who "assured" them that "he" was capable of funding the construction loan through the completion of the project. The Borrower defendants also assert they justifiably relied upon such assurance when they entered into the subject loan transactions, to their detriment. They claim that Rubin and Y & R failed to fund fully the building mortgage loan, which constituted a breach of the building loan [*5]agreement, and in turn, triggered their default in payment under the consolidated mortgage.

The Borrower defendants also claim that notwithstanding the fact that the loan documents appear, on their face, to constitute separate loans originated by separate limited liability companies, the consolidated loan and the building loan were, in actuality, a single loan originated by the same persons. The Borrower defendants contend that YML and Y & R, which were formed on the same day, were operated by plaintiff and Rubin as one entity, or as their alter egos, or in partnership with each other. As proof of such contention, the Borrower defendants point to a commitment letter dated August 31, 2007, for the construction loan, on "Y & R Capital NY LLC" letterhead, executed by plaintiff, the joint representation by counsel of YML and Y & R at the closing of the loans, and Rubin's execution of both the consolidation agreement, and assignment of the consolidated mortgage, on behalf of YML. The Borrower defendants also assert that additional discovery is needed to explore the issue of whether plaintiff and Rubin abused the "limited liability company" form, by creating two entities to shield YML (and hence plaintiff) from the consequence of any default by Y & R in performance under the building loan agreement. The Borrower defendants, therefore, argue that plaintiff should be estopped from seeking foreclosure of either mortgage due to the purported misrepresentations of Rubin on behalf of YML and Y & R, plaintiff's unclean hands, and as a consequence of the breach of the building loan agreement by Y & R.

"[A] party who signs a written contract is conclusively presumed to know its contents and to assent to them'..., and the signer is bound by its terms unless there is a showing of fraud, duress, or some other wrongful act on the part of any party to the contract" (Renee Knitwear Corp. v ADT Security Systems, 277 AD2d 215 [2000]). The Borrower defendants were under an obligation to read the loan documents before signing them, and were represented by counsel at the closing of the loan transactions. The loan documents, by their terms, make clear that the consolidated mortgage and building loan mortgage secured separate loans, originated by different limited liability companies.

To the extent the Borrower defendants assert an affirmative defense and counterclaims based upon fraudulent inducement and misrepresentation, they have failed to allege or prove that plaintiff or Rubin ever misrepresented that YML and Y & R were the same entity, or comprised of the same members. The August 31, 2007 commitment letter lacks any indication as to the capacity by which plaintiff allegedly signed it, and furthermore, plaintiff denies it is his signature, and that he had any involvement in Y & R. More importantly, the Borrower defendants fail to allege that plaintiff or Rubin ever represented that YML would make advances under the building loan agreement in the event Y & R was unable, or refused, to do so. The Borrower defendants also fail to allege plaintiff or Rubin ever represented that YML would waive payment under the consolidated mortgage, or forbear from seeking foreclosure of the consolidated mortgage, in the event Y & R failed to make any advance under the building loan agreement.

The building loan agreement provides that the building loan was to be advanced "at such times and in such amounts as Lender may approve, provided, in the judgment of its appraiser, [B & B Realty] is entitled to an advance ..." (Plaintiff's Exhibit "J" at paragraph no. 8). It also provides that in the event of any certain specified contingencies, including "if the buildings are not erected with reasonable speed and in workerlike manner ...," "the mortgages shall be due on demand at the option of Lender and no further advances need to made by Lender, unless Lender shall otherwise elect ...." (Plaintiff's Exhibit "J" at paragraph no. 10[f]).

The Borrower defendants have failed to raise a genuine issue of material fact with respect [*6]to whether Y & R improperly refused to advance funds for completed work items prior to May 4, 2008. To the degree the Borrower defendants claim that Y & R bounced a check dated May 1, 2008, made payable to "ALLIED BLDG CORP OZON-2008" in the amount of $10,000.00, they have failed to demonstrate the payment was for completed construction which had been approved by Y & R's appraiser. Nor have they raised a triable issue of fact as to whether Y & R improperly refused to pay for construction materials from Miron Lumber Corp. They have failed to show those materials were utilized in a completed portion of the work approved by Y & R's appraiser. In addition, the Borrower defendants have failed to demonstrate a question of fact exists as to whether Y & R improperly concluded that construction was not progressing with reasonable speed and in "workerlike" manner during the period from May 4, 2008 through February 1, 2009. Again, to the extent the Borrower defendants assert windows were installed at the building after May 1, 2008, they have failed to show they met the contractual conditions for payment of the advance.

Although the building loan agreement allowed the lender to require application of building loan proceeds for the payment of any existing mortgage or lien, it did not require the lender to advance funds for such purpose (Plaintiff's Exhibit "J" at paragraph no. 11]) (see North Fork Bank & Trust Co. v Romet Corp., 192 AD2d 591 [1993]). Y & R's failure to make further advances towards the payment of the consolidated mortgage loan after February 1, 2009, thus, did not constitute a breach of the building loan agreement.

The Borrower defendants have failed to raise a triable issue of fact as to their defenses based upon the doctrine of unclean hands, fraud in the inducement, breach of the implied covenants of good faith and fair dealing, or in relation to their counterclaims sounding in fraud, misrepresentation and breach of the building loan agreement. They also have failed to show that facts essential to justify opposition to the motion may emerge upon further discovery. "A grant of summary judgment cannot be avoided by a claimed need for discovery unless some evidentiary basis is offered to suggest that discovery may lead to relevant evidence (see Auerbach v Bennett, 47 NY2d 619, 636 [1979]; Ruttura & Sons Constr. Co. v Petrocelli Constr., 257 AD2d 614, 615 [1999], lv dismissed 93 NY2d 956 [1999])" (Bailey v New York City Tr. Auth., 270 AD2d 156 [2000]). As a consequence, plaintiff is entitled to summary judgment in his favor as against them, and dismissing the counterclaims (see Fed. Home Loan Mtge Corp. v Karastathis, 237 AD2d 558 [1997]; DiNardo v Patcam Serv. Station, 228 AD2d 543 [1996]). Those branches of the motion by plaintiff seeking to strike the affirmative defenses and counterclaims asserted by the Borrower defendants, and for summary judgment in his favor as against them are granted.

Plaintiff is directed to amend the caption to delete reference to Miele Associates, LLP. The registered name of defendant Miele Associates, L.L.P. includes periods in its title.^[FN2]

That branch of the motion seeking leave to enter a default judgment against defendants Miele Associates, Hydro Mechanical Inc., and Environmental Control Board of the City of New York is granted.

That branch of the motion for leave to appoint a referee is granted.

Settle order. [*7]

J.S.C.