Civil Court of the City of New York, Bronx County, October 13, 2023

Law Offices of Morris Fateha (Morris Fateha of counsel) for respondent.

Florek & Counsel, LLC (Stephen A. Florek III of counsel) for petitioner.

Petitioner Williamsbridge-3067 Realty LLC (Williamsbridge) {**81 Misc 3d at 968}commenced this illegal lockout proceeding pursuant to RPAPL 713 (10) and 721 (4) and (6), alleging that it owns and was in possession of the premises located at 3067 Williamsbridge Road, Bronx, New York, until on or about March 17, 2023, when respondent Guillermo Ramos, with whom it does not have a landlord-tenant relationship, changed the locks to the premises and unlawfully excluded Williamsbridge therefrom. Williamsbridge seeks to be restored to possession and to recover treble damages and sanctions.

Ramos cross-moves to dismiss the petition pursuant to CPLR 3211 (a) (8) and (4), RPAPL 713 (5), and UCC 9-604 on the grounds that: (1) he has not been served with the petition and notice of petition; (2) he has not been served with a 90-day notice and other predicate notices; (3) Williamsbridge has not acquired or exhibited a referee's deed; (4) [*2]Williamsbridge cannot evict Ramos following a Uniform Commercial Code article 9 foreclosure sale; and (5) there is a related action pending in Bronx Supreme Court.^[FN1]

In or about March 2021, nonparty RealFi Real Estate Investment Trust LLC (RealFi) extended a $190,000.00 commercial loan to Williamsbridge, a limited liability company whose sole member at that time was Ramos. In connection with the loan transaction, RealFi, as lender, and Ramos, as pledgor, entered into a written "Ownership Interests Pledge and Security Agreement" dated March 5, 2021 (ownership pledge), executed contemporaneously with a secured promissory note, mortgage, assignment of leases and rents, and security agreement. Under the ownership pledge, Ramos irrevocably and unconditionally pledged and assigned to RealFi, as security for the loan, all his rights, title and interest in certain collateral, including all of Ramos' membership interest in Williamsbridge, of which he held a sole, 100% interest (Florek affirmation in opp to cross-mot, exhibit H [ownership pledge] ¶¶ 1, 2 [j]; 5 [d]; 6 [b] [vi]; schedule A).

The ownership pledge provides that in the event of default, RealFi "shall have the right . . . in its discretion and without notice to [Ramos], to transfer to or to register (if not already so{**81 Misc 3d at 969} registered) in the name of [RealFi] . . . any or all of the Collateral" (ownership pledge ¶ 4 [b]). Moreover, in the event of default, RealFi was expressly permitted to "file any claims or take any action or institute any proceedings that [RealFi] may reasonably deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of [RealFi] with respect to any of the Collateral" (id. ¶ 8 [c]). Paragraph 11 (a) of the ownership pledge sets forth some of the remedies available to RealFi in the event of default, and provides in relevant part that

"[i]f any Event of Default shall have occurred and be continuing, then [RealFi] may exercise in respect of the Collateral, in addition to all other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party on default under the UCC (whether or not the UCC applies to the affected Collateral), inclusive of the management rights of [Ramos] in [Williamsbridge] . . . and [RealFi] may also in its sole discretion, without notice except as specified below, sell the Collateral or any part thereof in one or more parts at public or private sale . . . for cash, on credit, or for future delivery, at such time or times and at such price or prices and upon such other terms as [RealFi] may reasonably deem commercially reasonable. [RealFi] may be the purchaser of any or all of the Collateral at any such sale . . . . Each purchaser at any such sale shall hold the property sold absolutely free from any claim or right on the part of [Ramos], and [Ramos] hereby waives all rights of redemption which [Ramos] now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted which might otherwise have been applicable subsequent to a UCC sale of the Collateral in accordance herewith. In addition, [Ramos] hereby waives all rights of stay, and/or appraisal which [Ramos] now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted. [Ramos] agrees that, to the extent notice of sale shall be required by law, at least twenty (20) days' notice to [Ramos] of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification" (ownership pledge ¶ 11 [a] [emphasis added]).{**81 Misc 3d at 970}

It is undisputed that Williamsbridge defaulted under the loan documents. As a result, RealFi enforced its rights to the collateral as discussed below.

Williamsbridge states in its verified illegal lockout petition that nonparty RealFi acquired all rights, title, and interest in Williamsbridge through a public UCC foreclosure sale held on February 22, 2023 (petition ¶ 3; Florek affirmation, exhibit B [deed]; Mannion aff in opp to cross-mot, exhibits A [public notice of UCC sale], B [terms of sale], C [memo of sale]). From the date of the UCC sale through about March 16, 2023, petitioner Williamsbridge was in lawful possession of the premises, during which time the premises were unoccupied, vacant, and under construction by Williamsbridge's agent (petition ¶¶ 7, 13; Florek affirmation in opp to cross-mot ¶¶ 26-30; Tellone aff in opp to cross-mot ¶¶ 3-5). As both parties confirmed during oral argument, no certificate of occupancy has been issued for the property (see Florek affirmation in opp to cross-mot ¶¶ 26, 29; Tellone aff in opp to cross-mot ¶ 3).^[FN2]

On or about March 17, 2023, Ramos allegedly removed Williamsbridge's locks from the property and replaced them with new locks, forcibly excluding Williamsbridge from the property (petition ¶¶ 8-9; Tellone aff in opp to cross-mot ¶ 4). Williamsbridge sent Ramos a cease and desist letter dated March 2, 2023, but he remains in the premises, to Williamsbridge's exclusion (petition ¶ 11; Florek affirmation, exhibit C [cease and desist letter]). Williamsbridge asserts that, as the deed owner of the property, it—and not Ramos individually—had been in quiet possession of the property within the three years before Ramos' forcible entry. It, thus, concludes that it need not have served Ramos with a notice to quit and has met its prima facie burden in this lockout proceeding (petition ¶¶ 15-16, citing RPAPL 713 [10]; Florek affirmation in opp to cross-mot ¶¶ 19-20, 22, 42; Florek affirmation, exhibits A [memo of sale], B [deed]).{**81 Misc 3d at 971}

The court finds that Williamsbridge has met its initial burden under RPAPL 713 (10), by demonstrating, prima facie, that no landlord-tenant relationship exists between the parties; Williamsbridge was peaceably in actual possession of the premises when Ramos unlawfully and forcibly entered; Williamsbridge was in possession for three years before the time of Ramos' unlawful entry; and Ramos remains in possession by force and unlawful means.

Ramos responds by cross-moving pursuant to CPLR 3211 to dismiss the lockout petition on various grounds, which the court will address in turn.

On a motion to dismiss pursuant to CPLR 3211, the pleading is to be afforded a liberal construction, the facts as alleged in the complaint are deemed to be true, and the plaintiff is accorded the benefit of every possible favorable inference (Leon v Martinez, 84 NY2d 83, 87 [1994]). This standard applies equally to motions to dismiss an illegal lockout petition (see Mondrow v Days Inns Worldwide, Inc., 48 Misc 3d 95, 96 [App Term, 1st Dept 2015]).

I. Service of Process

Ramos argues that this matter must be dismissed pursuant to CPLR 3211 (a) (8), because he was never served with the petition. He claims that he does not fit the physical description in the affidavit of service: he is 48 years old, 150 lbs. and five feet, 11 inches tall, whereas the affidavit of service describes a 50-year-old man, between five feet, four inches-five feet, eight inches, weighing between 161-200 lbs. (Ramos aff ¶¶ 8, 18-19, 21-22; Fateha affirmation ¶¶ 18-19, 22, 34-41). In the alternative, Ramos seeks a traverse hearing.

[1] It is well settled that the affidavit of a process server is prima facie evidence of proper service, and a mere conclusory denial of service is insufficient to rebut the presumption of proper service (Perlbinder Holdings LLC v Patel, 202 AD3d 578 [1st Dept 2022]; Bank of Am., N.A. v Budhan, 171 AD3d 622 [1st Dept 2019]; Grinshpun v Borokhovich, 100 AD3d 551, 552 [1st Dept 2012], lv denied 21 NY3d 857 [2013]). Here, the affidavit of petitioner's process server establishes, prima facie, that on April 1, 2023, Ramos was personally served with a copy of petitioner's order to show cause, petition, and exhibits, including the memorandum of sale of the collateral, the deed, and a March 2, 2023 cease and desist letter from Williamsbridge's{**81 Misc 3d at 972} counsel to Ramos (docket No. 7). Ramos' arguments challenging service are insufficient to rebut the presumption of proper service, insofar as the differences he raises between his physical appearance and the description of the person served are so slight and immaterial as to lack legal weight. Thus, that part of respondent's motion to dismiss based on lack of service of process is denied.

II. Service of Predicate Notices

Ramos next argues that the petition should be dismissed, because he was not served with a 30-day notice to quit, 10-day notice to vacate, or 90-day notice of termination of tenancy as required under RPAPL 713 (Ramos aff ¶¶ 18, 20; Fateha affirmation ¶¶ 18, 20, 40, 42-46). This argument is unavailing.

While Ramos strenuously attempts to reframe this proceeding as a holdover, it is, in fact, an illegal lockout proceeding, not dependent or premised on the existence of a landlord-tenant relationship between the parties (see RPAPL 713 [10]; Fateha affirmation ¶ 3; Fateha reply affirmation ¶ 15).^[FN3] RPAPL 713 (10), pursuant to which Williamsbridge brings this proceeding, expressly provides that "no notice to quit shall be required in order to maintain a proceeding under this subdivision," and the court discerns no basis for the service of any other predicate notices here. Dismissal on this ground is, accordingly, denied.

III. Whether Petitioner Must Acquire and Exhibit a Referee's Deed

Ramos insists that the lockout petition must be dismissed because Williamsbridge failed to acquire and exhibit a referee's deed following a real estate foreclosure sale, as required under RPAPL 713 (5) (Fateha affirmation ¶¶ 47-58; Fateha reply affirmation ¶ 17). This argument also fails. Again, Ramos is attempting to paint himself as a tenant facing eviction following a real estate foreclosure, which is inaccurate. Williamsbridge brought this lockout proceeding under RPAPL 713 (10) following a UCC article 9 foreclosure sale of Ramos' membership interest in Williamsbridge, and not under RPAPL 713 (5) following a real estate foreclosure. The court denies dismissal on this basis.{**81 Misc 3d at 973}

IV. The Propriety of the UCC Article 9 Sale

Ramos' main argument is that Williamsbridge cannot evict him following a UCC article 9 sale, because such sale does not implicate real property and should not be the basis for interfering with his alleged right to enjoy and remain in the premises. Ramos, therefore, urges that the petition be dismissed (Fateha affirmation ¶¶ 59-70). That request is denied.

As discussed, Ramos specifically agreed in the ownership pledge that, in the event of default under the loan documents, RealFi would have "all the rights and remedies of a secured party on default under the UCC (whether or not the UCC applies to the affected Collateral)," including the power to assume or sell Ramos' interest in Williamsbridge (ownership pledge ¶ 11 [a]).^[FN4]

[2] UCC article 9, part 6, governs default and enforcement of secured interests. More particularly, UCC 9-604 (a) (1) provides that if a security agreement covers both personal and real property, "a secured party may proceed . . . under this part as to the personal property without prejudicing any rights with respect to the real property." Ramos errs in his application of this provision insofar as he views the foreclosed collateral as real property; it is not. The collateral Ramos pledged as security for the loan to Williamsbridge was Ramos' membership interest in Williamsbridge, which is personal property subject to the foreclosure processes set forth in the UCC (see 893 4th Ave. Lofts LLC v 5AIF Nutmeg, LLC, 2020 NY Slip Op 33902[U], *1 [Sup Ct, Kings County 2020] [rejecting argument that ownership in an entity that owns property is considered an interest in real property]; see also Hotel 71 Mezz Lender LLC v Falor, 14 NY3d 303, 307 n 1 [2010] [a mezzanine loan generally "is secured not by the real property itself, but by stock of some ownership interest in the company that owns the real property"]). Under analogous circumstances, shares of stock issued in connection with cooperative apartments, offered to secure a loan, have been found to be personal property subject to the UCC article 9 procedures for enforcement of a security interest, rather than to the procedures to enforce a security interest in real property set forth in the RPAPL (see Walsh v Ocwen Loan Servicing, LLC, 217 AD3d 802, 804 [2d Dept 2023]; Matter of Chase v Wells Fargo Bank, N.A., 135 AD3d 751, 753 [2d Dept 2016]).

Here, Williamsbridge provides proof that the UCC sale of its membership interests comported with the parties' agreement{**81 Misc 3d at 974} (ownership pledge ¶ 11 [a]), as well as with the UCC itself (UCC 9-604, 9-607, 9-609, 9-610, 9-612). Williamsbridge published notice of the sale in various publications, including the Wall Street Journal and the Daily News, at least 20 days before the sale took place on February 22, 2023 (Florek affirmation in opp to cross-mot, exhibit B). Thereafter, the UCC sale took place and caused Ramos' entire pledged interest in Williamsbridge to transfer to RealFi, and permitted RealFi to exercise its ownership and control of the premises through Williamsbridge (id., exhibits B-C).^[FN5]

Ramos' efforts to portray himself as having an individual right to remain in the property, [*6]separate from his prior membership interest in Williamsbridge, is entirely unsupported and rejected by the court. Neither is the court moved by Ramos' vague attempt to claim that he had been living at the premises prior to the lockout: he merely states that he "moved in and out [of the premises] freely with [his] family, accepted mail, and made payments to the NYC Water Board and other utilities" (Ramos aff ¶ 6). This unsupported assertion, even if true, is insufficient to rebut Williamsbridge's compelling proof that the premises were empty and under construction at the time of the lockout (see Tellone aff).^[FN6]

Accordingly, dismissal based on the UCC foreclosure sale is denied.

V. Whether This Proceeding is Duplicative of the Supreme Court Action

Finally, Ramos moves to dismiss the lockout petition pursuant to CPLR 3211 (a) (4), arguing that this case and a related Supreme Court case both involve the same parties, share a common nucleus of operative facts, and address the "fraudulent" transfer of the premises. Ramos maintains that Supreme Court, unlike Civil Court, has jurisdiction to render all the relief the parties seek (Fateha affirmation ¶¶ 7, 24-33).

The related Supreme Court case Ramos refers to is Realfi Real Estate Inv. Trust LLC v Williamsbridge-3067 Realty LLC{**81 Misc 3d at 975}(index No. 807994/2022E), pending in Bronx Supreme Court since 2022. There, RealFi, as lender, sues Williamsbridge, as borrower, and Ramos, as guarantor, to enforce its rights under the loan documents following Williamsbridge's default.^[FN7] RealFi asserts four causes of action to: (1) enforce a 2020 consolidated note and consolidated mortgage ($383,869.24); (2) enforce a 2021 note and second position mortgage ($208,385.62); (3) obtain possession of the premises as provided for under the consolidated mortgage and second position mortgage; and (4) foreclose on the mortgages and obtain possession of the property.

Williamsbridge opposes, asserting that the identity-of-claims requirement of CPLR 3211 (a) (4) is not satisfied (Florek affirmation in opp to cross-mot ¶¶ 43-48). Specifically, Williamsbridge maintains that Ramos has not shown that this lockout proceeding and the Supreme Court case both involve the same causes of action, arise out of the same set of facts, seek substantially the same relief, or are brought in the same capacity for the same purpose (id.).

[3] Courts have broad discretion to dismiss an action on the ground that another action is pending between the same parties arising out of the same subject matter or series of alleged wrongs (Shah v RBC Capital Mkts. LLC, 115 AD3d 444, 444-445 [1st Dept 2014]; CPLR 3211 [a] [4]). Here, the court declines to exercise its discretion to dismiss this illegal lockout proceeding in favor of the pending Supreme Court action for several reasons. First, there does not exist the requisite substantial identity of parties between the two cases, insofar as there is no overlap in plaintiffs (Sprecher v Thibodeau, 148 AD3d 654, 656 [1st Dept 2017]; Mason ESC, LLC v Michael Anthony Contr. Corp., 172 AD3d 1195, 1196 [2d Dept 2019]). Second, the subject matter of the two suits, although related, is not sufficiently similar to merit dismissal (Sprecher v Thibodeau, 148 AD3d at 656). Further, the relief sought in the two cases is not the [*7]same or substantially the same (Anonymous v Anonymous, 136 AD3d 506, 507 [1st Dept 2016]). Finally, while New York courts generally follow the "first-in-time" rule (Syncora Guar. Inc. v J.P. Morgan Sec. LLC, 110 AD3d 87, 96-97 [1st Dept 2013]; see also Resorts Group, Inc. v Cerberus Capital Mgt., L.P., 213 AD3d 621, 622 [1st Dept 2023]), the fact the Supreme Court case was first-filed is not dispositive, particularly{**81 Misc 3d at 976} given that Ramos has yet to be served in that case (E D & F Man Sugar Ltd. v Gellert, 202 AD3d 475, 475-476 [1st Dept 2022]). Accordingly, that part of Ramos' motion seeking dismissal under CPLR 3211 (a) (4) is denied.

Although the court questions Ramos' good faith in bringing his motion to dismiss, in which he asserts numerous unsupported, flimsy arguments, the court denies Williamsbridge's request for sanctions at this time (see 22 NYCRR 130-1.1).

Finally, because no damages have been assessed in this proceeding, petitioner's request for treble damages is denied without prejudice (Mayes v UVI Holdings, 280 AD2d 153, 161 [1st Dept 2001]; cf. Hood v Koziej, 140 AD3d 563, 566 [1st Dept 2016]; RPAPL 853).

Accordingly, it is hereby ordered that respondent Ramos' motion to dismiss the illegal lockout petition is denied; and it is further ordered that petitioner Williamsbridge's illegal lockout petition is granted and petitioner is hereby restored to possession forthwith; and it is further ordered that the clerk issue a warrant of eviction forthwith, execution forthwith, earliest execution on October 27, 2023.