The following papers numbered 1 to 4 read on this motion:

Papers Numbered

Notice of Motion/Order to Show Cause/

Petition/Cross Motion and

Affidavits (Affirmations) Annexed1-2, 3-4

Opposing Affidavits (Affirmations)

Reply Affidavits (Affirmations)

Affidavit (Affirmation)

Other Papers 1/13/12 and 2/24 oral arguments transcripts, 3/26/12 hearing transcript [*2]

Upon the foregoing papers, and after oral argument and a hearing before the court, plaintiff Golden Gate Holdings, LLC (Golden Gate) moves for an order: (1) directing defendant PS Buildings, LLC (PSB) to execute all transfer documents required for Golden Gate to record the previously executed deed from PSB to Prestige Financial, LLC (Prestige) on real property known as Block 1307, Lot 54, commonly known as 229 Empire Boulevard, Brooklyn, New York (the premises or the building); (2) directing the Registrar of the City of New York, County of Kings to accept and record the deed

without the signature of PSB on the accompanying transfer documents in the event PSB fails to execute the transfer documents; and (3) directing PSB to immediately cease collecting any rent generated from the premises and to forward any rent it has collected since November 17, 2011 to Prestige. PSB moves for an order authorizing the court appointed receiver, Bruno Codispoti, to execute all documents necessary to effectuate the closing and refinancing of the premises and, upon the tendering and payment of $1.1 million to plaintiffs, directing that this action be discontinued with prejudice.

In or about 2005, PSB executed and delivered to Greenpoint Mortgage Funding, Inc. a promissory note in the principle amount of $1.5 million. The note was secured by a mortgage on the premises, which was also delivered to Greenpoint. Thereafter, the mortgage and note were assigned to Golden Gate. On February 10, 2010, Golden Gate commenced the instant action against PSB to foreclose upon the mortgage. While the action was pending, the parties entered into settlement negotiations.

On August 19, 2011, the parties entered into a written settlement agreement whereby PSB was to pay Golden Gate $1.1 million in exchange for Golden Gate's discontinuance of this foreclosure action. The agreement contemplated that PSB would obtain the $1.1 million settlement amount through the refinancing of the premises with an outside lender. In this regard, the agreement provided that "[PSB] shall pay Golden Gate . . . in full and [PSB] shall close within 90 [ninety] days after this Settlement Agreement and Release is . . . fully executed, but in no event later than Nonmember 17, 2011." Further, the agreement provided that "[t]ime is of the essence for the closing" and that "[i]f [PSB] fail[s] to perform at closing, then [PSB] shall immediately sign over and deliver the subject deed to Golden Gate . . . but in no event later than November 17, 2011."

After entering into the settlement agreement, PSB obtained a written commitment from a lender, BRT Realty Trust, for the loan. Although the loan was scheduled to close on November 17, 2011 and representatives from PSB, Golden Gate, and BRT did in fact appear for a closing on that date, the loan did not close at that time. Accordingly, PSB delivered the deed to the premises to Golden Gate.^[FN1] However, PSB refused to execute certain transfer documents which were necessary in order for Golden Gate to record the [*3]deed. Moreover, shortly after the failed closing, BRT agreed to reschedule the closing.

On December 27, 2011, Golden Gate made the instant motion seeking an order directing that PSB execute all the transfer documents necessary to record the deed. On the January 6, 2012 return date for the motion, PSB's counsel indicated that his client was prepared to comply with the terms of the settlement agreement by delivering to Golden Gate a check for $1.1 million. At that point, the court adjourned the matter to January 13, 2012 with the understanding that PSB would turn over to Golden Gate a check for $1.1 million and execute the required transfer documents, thereby settling the matter. Due to a misunderstanding regarding the return date, Golden Gate did not appear in court on January 13th. Thereafter, Golden Gate notified PSB that the settlement agreement specifically required that the closing take place no later than November 17, 2011, that PSB failed to comply with this requirement, and that therefore, Golden Gate would not accept the $1.1 million check. Subsequently, PSB made the instant motion seeking an order, in effect, directing that Golden Gate accept the $1.1 million payment and that the action be discontinued with prejudice. This motion, as well as Golden Gate's prior motion, were returnable before the court on February 24, 2012.

On the February 24th return date, oral argument was held on the record before the court. At this argument, the court inquired as to whether PSB failed to comply with the terms of the settlement agreement by closing on the loan on November 17, 2011. At that point, PSB's owner, Vishau Singh, alleged that Golden Gate's principal, Yaron Hershco, knew the lender BRT Realty Trust, and "[t]hey made sure they contact the lender and made sure that the loan didn't close that day." Counsel for PSB also represented that his client was fully prepared to close on November 17, 2011, that at the "11th hour," BRT refused to go through with the closing, and that the next day (i.e., November 18th, 2011), BRT contacted him and indicated that it would go through with the closing. The court then set the matter down for a hearing on the issue of whether or not Golden Gate had colluded with the lender BRT so as to frustrate PSB's ability to perform under the settlement agreement.

On March 26, 2012, the parties appeared for a hearing before the court. At the hearing, Marc Burton, a commercial finance broker, as well as Mr. Singh himself, testified regarding the attempt to secure a loan from BRT, as well as the circumstances surrounding the failed closing. This testimony indicated that Mr. Singh contacted Mr. Burton on or about August 19, 2011 in an effort to obtain a $1.1 million loan; that Mr. Burton contacted various lenders regarding the loan, including BRT Realty Trust; that during the first week of November, 2011, BRT requested that PSB provide it (through Mr. Burton) with various financial records and documents including tax returns, authorizations for credit reports, and information regarding the building's cash flow; that this documentation was provided and, on or about November 10, 2011, BRT issued a commitment letter for the $1.1 million loan; that PSB provided BRT with a $22,000 deposit as good faith security on the loan, that BRT performed an inspection of the [*4]building; and that a closing was scheduled for November 17, 2011.

With respect to the closing itself, Mr. Burton testified that "everything had been cleared up that needed to be." When asked what his understanding was as to why the loan did not close, Mr. Burton testified that there was a credit issue regarding Mr. Singh's co-signing for a loan that was unrelated to the subject premises. In addition, Mr. Burton testified that day after the failed closing, he was informed by a BRT representative that it was willing to move forward with the loan and to reschedule the closing. Finally, Mr. Burton testified that he had no knowledge as to whether or not Mr. Hershco interfered with the closing of the loan.

For his part, Mr. Singh testified that he was told that the loan did not close because of a personal judgment against him on his credit record. Mr. Singh also testified that his attorney brought documentation to the closing which indicated that this judgment had been satisfied. Finally, Mr. Singh testified that he did not know whether or not Mr. Hershco prevented the loan from closing.

Also testifying at the hearing was Jonathan Hoffman, who served as BRT's counsel at the failed closing. According to Mr. Hoffman, the closing did not go through because BRT obtained several credit searches on the day of the closing which indicated numerous judgments against individuals with the same name as Mr. Singh. Mr. Hoffman further testified that BRT had certain concerns regarding the fact that the court appointed receiver had not been discharged at the time of the closing and the fact that Mr. Singh provided BRT with copies of tax returns that had not been filed.

The final witness to testify at the hearing was Mr. Hershco, who testified that he did not interfere in any way with PSB's attempt to obtain a loan from BRT and that at no point did he tell Mr. Singh that BRT would not fund the loan.

Both Golden Gate and PSB's respective motions seek to enforce the August 19, 2011 settlement agreement. However the parties disagree as to how the agreement should be enforced. Specifically, Golden Gate points to the fact that the agreement called for PSB to close on the $1.1 million loan by November 17, 2011, and in the event that the loan did not close on that date, PSB was to sign over the deed to the premises. Thus, Golden Gate concludes that the agreement clearly contemplated that PSB's failure to close on November 17, 2011 would result in the transfer of the title to the premises to Golden Gate. Golden Gate further contends that this necessarily included the requirement that PSB execute all transfer documents necessary for the recording of the deed. Under the circumstances, Golden Gate maintains that, given the fact that the loan did not close on November 17, 2011, the settlement agreement should be enforced so as to require that PSB sign all required transfer documents necessary for the recording of the title. In the alternative, Golden Gate requests that the settlement agreement be disregarded and that the matter be permitted to proceed to foreclosure.

For its part, PSB seeks to enforce that part of the settlement agreement which calls [*5]for it to pay, and Golden Gate to accept, $1.1 million in exchange for Golden Gate's discontinuance of the lawsuit and all claims and liens against PSB. With respect to the issue of the failed closing, while conceding that it cannot prove that Mr. Hershco interfered with its ability to close on November 17, 2011, PSB nevertheless asks that the court draw its own conclusions from the suspicious circumstances surrounding the closing including PSB's willingness to give the loan as evidenced by its commitment letter and the scheduling of the closing, the failure for the closing to go through on November 17, 2011, and PSB agreeing to loan the money and to schedule a new closing the day after the failed closing. Alternatively, PSB argues that Mr. Singh did all that was required of him in terms of securing the loan and scheduling a timely closing, and that the failure of the loan to close on November 17, 2011 was not the fault of Mr. Singh or PSB. Accordingly, PSB maintains that a balancing of the equities weighs in favor of enforcing the agreement so as to allow it to settle the matter for the $1.1 million set forth in the agreement.

"Stipulations of settlement are favored by the courts and not lightly cast aside" (Hallock v State of New York, 64 NY2d 224, 230 [1984]). Thus, "[o]nly where there is cause sufficient to invalidate a contract, such as fraud, collision, mistake or accident, will a party be relieved from the consequences of a stipulation made during litigation" (id. at 230; see also Davis v New York City Hous. Auth., 300 AD2d 531, 532 [2002]).

The underlying agreement provided that the settlement of the case for $1.1 million was contingent upon PSB's closing on the loan no later than November 17, 2011. Here, it is undisputed that the loan did not close in a timely manner. Further, by its own admission, PSB cannot prove that Mr. Hershco colluded with the lender BRT so as to frustrate PSB's ability to close on November 17, 2011. Under the circumstances, BRT's motion for an order directing that the matter be discontinued with prejudice upon its tendering and payment of $1.1 million to Golden Gate must be denied.

With respect to Golden Gate's motion, the testimony at the hearing before the court revealed that Mr. Singh was diligent in his attempts to secure the loan and that Mr. Singh and PSB were not responsible for the failed closing. Further, while no evidence has been presented which indicates that Mr. Hershco interfered with the closing, the circumstances surrounding the failed closing are troubling. In particular, BRT committed to making the loan and scheduled the closing. Moreover, the witnesses before the court offered different explanations as to why the loan failed to close on November 17, 2011. Finally, the day after the failed closing, BRT suddenly and inexplicably changed its position and was willing to proceed with the loan and schedule a new closing. However, by that time, the deadline set forth in the settlement agreement had passed. Under these circumstances, the court finds that the equities weigh against ordering the transferring of title to Golden Gate through the execution of the transfer documents.

Accordingly, Golden Gate and PSB's motions are both denied. The settlement agreement is vacated and the deed is to be returned to defendant PSB. The matter is to

proceed on the court's foreclosure calendar.

This constitutes the decision and order of the court.

E N T E R,

J. S. C.