Rapillo v. Citimortgage, Inc. et al

Filing 31

ORDER granting 24 Motion for Summary Judgment. For the reasons set forth in the attached memorandum and order, defendants' motion for summary judgment is granted in its entirety with respect to all of plaintiff's "causes of action. The Clerk of Court is respectfully directed to enter judgment in favor of defendants, to serve a copy of this order, the judgment, and an appeals packet on plaintiff at his address of record, to note service on the docket, and to close the case. Ordered by Judge Kiyo A. Matsumoto on 3/5/2018. (Flores, Diego)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
----------------------------------X
MICHAEL RAPILLO,
Plaintiff,
-againstCITIMORTGAGE, INC., AND FEDERAL
HOME LOAN MORTGAGE CORP. A/K/A
FREDDIE MAC,

MEMORANDUM & ORDER
15-CV-5976(KAM)(RML)

Defendants.
----------------------------------X
MATSUMOTO, United States District Judge:
Plaintiff Michael Rapillo (“plaintiff”) commenced the
instant action on September 28, 2015 by filing, together with
certain other documents, a complaint (“Compl.” or the
“complaint,” ECF No. 1-1) in the Supreme Court of New York,
Queens County (the “State Court”) against defendants
CitiMortgage, Inc. (“CMI”) and Federal Home Loan Mortgage Corp.
a/k/a Freddie Mac (“Freddie Mac,” and together with CMI,
“defendants”) seeking a declaratory judgment invalidating and
vacating (i) the non-judicial foreclosure sale and subsequent
assignment of certain cooperative shares and the related
proprietary lease, and (ii) a related notice of termination and
termination deadline. Plaintiff’s complaint also seeks an order
directing defendants to provide plaintiff with a payoff
statement pursuant to New York Real Property Law § 274-a.

On

October 16, 2015, defendants removed the instant action to this

court pursuant to 28 U.S.C. § 1441 et seq.

(See generally

Notice of Removal, ECF No. 1.)
Presently before the court is defendants’ unopposed
motion for summary judgment as to all of plaintiff’s claims.

In

support of their motion, defendants have submitted a statement
of undisputed material facts with supporting documents pursuant
to Local Rule 56.1 (“SMF,” ECF No. 24-1), a memorandum of law in
support of their motion (“Mem.” or the “memorandum,” ECF No.
27), and the declarations of Ms. Lara M. Freymuth (“Freymuth
Decl.,” ECF No. 25) and Scott B. Group, Esq. (“Group Decl.,” ECF
No. 26). 1

For the reasons set forth below, the court grants

defendants’ motion for summary judgment in its entirety.
JURISDICTION
The court has jurisdiction over the instant action
pursuant to 12 U.S.C. § 1452(f), which provides, in relevant
part, that “all civil actions to which [Freddie Mac] is a party
shall be deemed to arise under the laws of the United States,
and the district courts of the United States shall have original
jurisdiction of all such actions, without regard to amount or
value” at issue in the action.

Because certain exhibits to the Freymuth and Group declarations include
multiple documents, or are otherwise not consecutively paginated, where the
court cites specific page numbers in exhibits to the Freymuth and Group
declarations, the numbers refer to the page numbers assigned by ECF, i.e.
including the cover pages, and not to the page numbers contained in
individual documents within the exhibits.

1

2

BACKGROUND
I.

Factual Background
Because the instant action involves a cooperative

apartment and related property rights, the court briefly
explains cooperative apartment ownership, the nature of which
other courts have characterized as “sui generis.”

E.g. In re

Lefrak, 215 B.R. 930, 934 (Bankr. S.D.N.Y. 1998), aff’d, 227
B.R. 222 (S.D.N.Y. 1998); State Tax Comm’n v. Shor, 371 N.E.2d
523, 524 (N.Y. 1977).

The owner of a cooperative apartment does

not own the apartment itself.

Instead, “[t]he owner holds

shares in the corporation that owns the apartment building, and
his share ownership entitles him to a proprietary lease.”
(citations omitted).

Id.

“The shares and lease are inseparable; the

transfer of one without the other would be futile, and therefore
ineffective.”

Id. (citations omitted); see also United States

v. 110-118 Riverside Tenants Corp., 886 F.2d 514, 517 (2d Cir.
1989) (“Unlike the common understanding of the term ‘stock,’ the
shares of ‘stock’ in the Apartment Corporation are not freely
transferable, and they have no value independent of the Lease
for the Apartment.”).
With this background in mind, the following facts are
set forth in defendants’ Local Rule 56.1 statement of unopposed
and undisputed material facts, and as more fully discussed
below, are taken as true so long as “the citation to evidence in
3

the record supports the assertion.”

Vt. Teddy Bear Co. v. 1-800

Beargram Co., 373 F.3d 241, 244 (2d Cir. 2004) (citing Giannullo
v. City of N.Y., 322 F.3d 139, 143 n.5 (2d Cir. 2003)).
On April 1, 2008, plaintiff borrowed $35,000 from
defendant CMI and executed a Co-op Fixed Rate Note (the “Note”)
evidencing the debt. 2
(attaching Note).)

(SMF at ¶ 1; Freymuth Decl. Ex. A

On the same date, plaintiff and his now-

deceased mother, Teresa Rapillo (“Ms. Rapillo”), executed a
security agreement pursuant to which they pledged as collateral
for the debt their 290 shares of cooperative stock (the
“Shares”) in the Linwood Village, Sec. E Cooperative Corp., and
a proprietary lease (the “Lease”) on the property commonly known
as 89-35 115th Avenue, Unit 1F, Howard Beach, New York, 11414
(the “Unit”). 3

(SMF at ¶ 2-3; Freymuth Decl. Ex. B (attaching,

inter alia, security agreement and Lease); see also Compl. at ¶
7 (identifying Ms. Rapillo as plaintiff’s mother).)

Defendant

CMI recorded its interest in the Shares and Lease by filing a
UCC-1 financing statement and cooperative addendum (the “UCC-1”)
with the Office of the City Register of the City of New York on

The complaint alleges that the initial loan was in the amount of
$30,000, (Compl. at ¶ 8), but the Note is attached to the Freymuth
declaration and the face of the Note states that it is in the amount of
$35,000. (See Freymuth Decl. Ex. A.)
3
Plaintiff and his mother owned the Shares as joint tenants with a right
of survivorship. (SMF at ¶ 3; see Freymuth Decl. Ex. B at 8 of 16 (attaching
share certificate).)
2

4

February 19, 2008.

(SMF at ¶ 4 (citing Freymuth Decl. at ¶ 7);

Freymuth Decl. Ex. C (attaching UCC-1).) 4
Defendants have presented evidence that plaintiff
failed to make payments in accordance with the terms of the
Note.

(SMF at ¶ 6 (citing Freymuth Decl. at ¶ 11 and Group

Decl. at ¶ 6, Ex. M).)

Defendants cite to the declaration of

CMI’s business manager, Ms. Freymuth, attesting that “CMI
retained the law firm of Rosicki Rosicki & Associates, P.C., as
counsel to manage the non-judicial sale process for the [Shares]
for Michael and Teresa Rapillo’s defaulted loan.”
Decl. at ¶ 11.)

(Freymuth

Thus, the non-judicial foreclosure was

commenced to pay the amounts due under the Note, even though the
Freymuth declaration does not specifically state that plaintiff
failed to make payments under the Note, or state the dates and
amount of the purportedly missed payments.

In further support

of defendants’ assertion that plaintiff missed payments,
defendants also cite an affidavit plaintiff filed in state
court, which implicitly concedes that plaintiff failed to make
payments under the terms of the Note.

(See Plaintiff’s

Affidavit in Support, Group Decl. Ex. M, at ¶ 2 (“I am in the

Defendants’ statement of material facts states that the UCC-1 was filed
on February 20, 2008 and that the addendum was filed the previous day,
February 19, 2008. (SMF at ¶¶ 4-5.) However, a review of the relevant
document indicates that the UCC-1 and addendum were filed together on
February 19, 2008. (See Freymuth Decl. Ex. C at 1 (indicating that document
was filed “02-19-2008,” stating document type is “INITIAL COOP UCC 1,” and
noting “COOPERATIVE WITH ADDENDUM”).)
4

5

process of obtaining all of the funds necessary to pay off
whatever was allegedly owed.” (emphasis added)) and ¶ 6 (“It
appears that [CMI] claimed that I did not make certain payments
on that principal.” (emphasis added)).)
On December 11, 2014, defendant CMI took the first
steps necessary to foreclose on the Shares and Lease by mailing
plaintiff and Ms. Rapillo certain notices required by New York
U.C.C. § 9-611(f).

(SMF at ¶¶ 6-7; Freymuth Decl. at ¶ 9 and

Ex. E (explaining and attaching computerized correspondence
log); Freymuth Decl. at ¶ 8 and Ex. D (identifying and attaching
copies of notices sent to plaintiff and Ms. Rapillo).)

On May

19, 2015, CMI’s attorneys advanced the foreclosure process by
mailing notices of sale of the Shares and Lease to, among
others, plaintiff and Ms. Rapillo at the Unit.

(SMF at ¶ 8;

Group Decl. Ex. I (attaching notice and affidavit of mailing).)
On June 12, 2015, an auctioneer held a public auction
sale of the Shares and Lease on the steps of the State Court,
and CMI submitted the winning bid in the amount of $42,810.68. 5
(SMF at ¶ 9; Certificate of Sale and Fact, Freymuth Decl. Ex. G,
at 2 (setting forth winning bidder and bid amount).)

CMI

The Certificate of Sale and Fact states that the sale was to the
“Secured Party,” and therefore “no money exchanged hands except for the
auctioneer’s fee and expenses of the sale. (See Freymuth Decl. Ex. G
(attaching Certificate of Sale and Fact).) It therefore appears that CMI’s
bid was a credit bid, i.e., that CMI used the value of plaintiff’s secured
debt to CMI, rather than cash, as currency for its bid.

5

6

assigned its bid to Freddie Mac on July 7, 2015, (SMF at ¶ 11;
Assignment of Bid, Freymuth Decl. Ex. H, at 2), and on August
31, 2015, Freddie Mac’s counsel executed and served a 30-day
notice of termination (the “30-Day Notice”) on plaintiff, Ms.
Rapillo, and any unknown parties in possession of the Unit.
(SMF at ¶ 12; Group Decl. Ex. K (attaching 30-Day Notice and
affidavits of service).) 6
II.

Procedural History
Plaintiff commenced the instant action by filing a

summons and complaint in the State Court on September 28, 2015,
and defendants removed the action to this court on October 16,
2015.

(See Notice of Removal; see also generally Compl.)
The complaint asserts three “causes of action,” the

first two of which seek various forms of declaratory relief, and
the third seeks injunctive relief.

Notably, nothing in the

complaint indicates that plaintiff seeks money damages.

In its

first “cause of action,” the complaint asserts that CMI’s nonjudicial foreclosure sale of the Shares and Lease was invalid
because CMI’s UCC-1 expired five years after the date it was
filed, i.e., on February 19, 2013.

(Compl. at ¶¶ 17-20.)

6
Defendants’ statement of material facts states that CMI’s counsel
executed and served the notice of termination, but a review of the underlying
documentation indicates that Rosicki Rosicki & Associates, which had
represented CMI in managing the sale process, (Freymuth Decl. at ¶ 11),
served the notice on behalf of Freddie Mac, not on behalf of CMI. (See Group
Decl. Ex. K.)

7

Therefore, plaintiff contends that CMI lacked any security
interest in the Shares and Lease at the time it provided notice
of, and conducted, its sale, and the sale is invalid.
¶¶ 20-23.)

(Id. at

Additionally, plaintiff asserts that the sale was

invalid because defendant CMI did not serve plaintiff and his
mother with the required notices, including pursuant to N.Y.
U.C.C. 611(f), (Id. at ¶¶ 24-27, 30-31), and because the sale of
the Shares and Lease was not commercially reasonable as
evidenced by the sale price.

(Id. at ¶¶ 28-29.)

Based on the

foregoing, the first “cause of action” requests declaratory
judgment that (1) CMI’s sale of the Shares and Lease was invalid
and is vacated, (2) CMI’s assignment of the Shares and Lease to
Freddie Mac is invalid, and (3) plaintiff remains the owner of
the Shares, and the lessee under the Lease.

(Id. at ¶ 32.)

The complaint’s second “cause of action” asserts that
the 30-Day Notice is invalid because it is signed by an
“alleged” agent of Freddie Mac, without proper indication of
actual agency, and not an agent of the lessor, specifically
Lindenwood Village Sec. E Cooperative Corp.

(Id. at ¶¶ 33-35.)

The complaint further asserts that the 30-Day Notice lacked
complete attachments, was not served in compliance with the law
or underlying contracts, and was not served on Ms. Rapillo’s
heirs at law.

(Id. at ¶¶ 36-39.)

Additionally, the complaint

asserts that CMI’s rights, if any, were not properly assigned to
8

Freddie Mac.

(Compl. at ¶ 40.)

Based on these assertions, the

complaint’s second “cause of action” seeks declaratory judgment
that the 30-Day Notice is “invalid in its entirety” and the
associated termination deadline is tolled and vacated.

(Id. at

¶ 41.)
The complaint’s third, and final, “cause of action”
seeks an order directing defendants to provide plaintiff with a
payoff statement pursuant to section 274-a of the New York Real
Property Law.

(Id. at ¶ 42.)

Plaintiff was initially represented, but his counsel
withdrew in June of 2016, (see Docket Order Granting Motion to
Withdraw, dated June 27, 2016), and plaintiff has not obtained
new counsel.
On February 23, 2017, the court granted defendants
leave to file the instant motion.

At the pre-motion conference,

the court advised plaintiff of the requirements for summary
judgment motion practice, including the importance of a Local
Rule 56.1 counterstatement to assert any disputed material
facts, and of submitting admissible evidence in support of any
fact asserted.
Conference.)

(Minute Entry for February 23, 2017 Pre-Motion
The court further advised plaintiff to seek the

assistance of counsel in responding to defendants’ motion for
summary judgment.

(Id.)

Defendants served the motion on

plaintiff, and plaintiff did not respond.
9

(See May 23, 2017

Letter to the Court, ECF No. 28.)

On May 23, 2017, the court,

sua sponte, granted plaintiff an extension of time until June
14, 2017 to respond to the instant motion and warned plaintiff
that if he failed to file an opposition by that date, the court
would consider defendants’ motion unopposed, but plaintiff did
not respond. 7
29.)

(See June 30, 2017 Letter to the Court, ECF No.

Accordingly, on July 6, 2017, the court deemed the motion

submitted and unopposed.

Defendants served a copy of the

court’s July 6, 2017 order deeming the instant motion submitted
and unopposed on plaintiff.

(Affidavit of Service, ECF No. 30.)

LEGAL STANDARD
I.

Motion for Summary Judgment
A.

Generally
Federal Rule of Civil Procedure (“Rule”) 56 provides

that “[t]he court shall grant summary judgment if the movant
shows that there is no genuine dispute as to any material fact
and the movant is entitled to judgment as a matter of law.”

Fed

R. Civ. P. 56(a).
B.

Unopposed Motion for Summary Judgment
Rule 56 “does not embrace default judgment principles”

and a lack of opposition does not relieve the court of its “duty
Specifically, the court entered a docket order granting plaintiff
additional time to serve and file his opposition to defendants’ motion for
summary judgment. The docket order stated that the court would provide
plaintiff with “a copy of [the docket] order and the complete docket” by mail
at his address of record.

7

10

to decide whether the movant is entitled to judgment as a matter
of law.”

Vermont Teddy Bear, 373 F.3d at 242.

In keeping with

these principles, a motion for summary judgment should not be
“granted automatically” because “there has been no response to
[it].” Champion v. Artuz, 76 F.3d 483, 486 (2d Cir. 1996).
Instead, the court may properly grant an unopposed motion for
summary judgment only where “the facts as to which there is no
genuine dispute ‘show that the moving party is entitled to a
judgment as a matter of law.’”

Id. (quoting Fed. R. Civ. P.

56(c)).
Accordingly, the court must “(1) determine what
material facts, if any, are disputed in the record presented on
the motion, and (2) assure itself that, based on those
undisputed material facts, the law indeed warrants judgment for
the moving party.”

Merrill Lynch Commercial Fin. Corp. v. RCI

Jewelry Corp., No. 09-CV-4017(DRH)(ARL), 2011 WL 710454, at *4
(E.D.N.Y. Feb. 22, 2011) (citing Champion, 76 F.3d at 486 and
Allen v. Comprehensive Analytical Grp., Inc., 140 F. Supp. 2d
229, 232 (N.D.N.Y. 2001)).

When the court evaluates which

material facts are undisputed, a party’s failure to respond to a
motion for summary judgment “may allow the district court to
accept the movant’s factual assertions as true . . . [but] the
moving party must still establish that the undisputed facts
entitle him to ‘a judgment as a matter of law,’” and the court
11

“must be satisfied that the citation to evidence in the record
supports the assertion.”

Vermont Teddy Bear, 373 F.3d at 244

(citations omitted); see also Giannullo, 322 F.3d at 143 n.5
(stating that where a statement of material fact in a Local Rule
56.1 statement rests on a “wholly unsupportive record citation,”
the nonmoving party’s failure to controvert the statement cannot
“absolve[] the district court of even checking whether the
citation supports the assertion.”).
C.

Special Considerations for Pro Se Litigants
As discussed above, plaintiff has proceeded pro se in

this action since June of 2016.

When a party seeks summary

judgment against a pro se adversary, as defendant seeks here,
Local Rule 56.2 requires that the moving party file and serve on
the pro se party a specific “Notice to Pro Se Litigant Who
Opposes a Motion for Summary Judgment.”

That notice, in

relevant part, advises the pro se party of the nature of a Rule
56 motion and his burden in responding to it.

See generally

Local Rule 56.2; see also Vital v. Interfaith Med. Ctr., 168
F.3d 615 (2d Cir. 1999); Sawyer v. Am. Fed’n of Gov’t Employees,
AFL-CIO, 180 F.3d 31, 34 (2d Cir. 1999).
Defendants here include a compliant Local Rule 56.2
notice to plaintiff as Exhibit 2 to their Notice of Motion.
(See Notice of Motion, ECF No. 24, at Ex. 2, ECF No. 24-2.)
Although defendants have not filed a separate affidavit of
12

service with respect to their moving papers, their Notice of
Motion, which is annexed to defendants’ submissions, indicates
that service of all of defendants’ motion papers, including the
Notice of Motion, the Local Rule 56.1 and 56.2 statements, their
memorandum of law, and their exhibits, was made on plaintiff by
regular and certified mail.

(Notice of Motion at 2.)

Additionally, the minute entry for the pre-motion
conference at which the court granted defendants leave to file
the instant motion states that “[t]he court advised plaintiff of
the requirements for summary judgment motion practice, including
the importance of a Rule 56.1 counterstatement to assert any
material facts that are in dispute, and submitting admissible
evidence in support of any fact asserted.”
Proceedings Held on February 23, 2017.)

(Minute Entry for

Defendants served this

minute entry on plaintiff on February 23, 2017.

(Affidavit of

Service, ECF No. 23.)
Finally, following receipt of defendants’ initial
request to deem the instant motion unopposed and fully
submitted, the court entered and served on plaintiff a docket
order that, in relevant part, reminded the plaintiff of his
obligation to serve defendants with his opposition to the
instant motion and advised plaintiff that failure to file his
opposition by June 14, 2017 would result in the court deeming

13

the motion unopposed and potentially in this action’s dismissal.
(See Docket Order dated May 23, 2017.)
In light of the foregoing, the court concludes, based
on the record before it, that plaintiff has failed to oppose
defendants’ motion for summary judgment after being given
adequate notice of the instant motion, its importance, and his
burden in responding to it.
DISCUSSION
I.

Declaratory Judgment
Plaintiff seeks declaratory relief and, as such, this

action implicates the Declaratory Judgment Act, codified at 28
U.S.C. § 2201.

The Declaratory Judgment Act authorizes the

court to “declare the rights and other legal relations of any
interested party . . . whether or not further relief is or could
be sought” where there is an “actual controversy” within the
court’s jurisdiction.

28 U.S.C. § 2201(a).

Declaratory judgment is a form of relief, not a
substantive cause of action.

See Nat’l Union Fire Ins. Co. of

Pittsburgh, Pa. v. Karp, 108 F.3d 17, 21 (2d Cir. 1997) (“The
DJA is procedural in nature, and merely offers an additional
remedy to litigants.”)

Accordingly, “a court may only enter a

declaratory judgment in favor of a party who has a substantive
claim of right to such relief.”

In re Joint E. & S. Dist.

Asbestos Litig., 14 F.3d 726, 731 (2d Cir. 1993).
14

Further, the

declaratory judgment remedy is discretionary even if a party has
a substantive claim of right to the relief he or she seeks.

See

In re Orion Pictures Corp., 4 F.3d 1095, 1100 (2d Cir. 1993) (“A
district court has broad discretion to decide whether to render
a declaratory judgment.”).

In the Second Circuit, in deciding

whether declaratory judgment is appropriate, the court must
consider “(1) whether the judgment will serve a useful purpose
in clarifying or settling the legal issues involved; and (2)
whether a judgment would finalize the controversy and offer
relief from uncertainty.”

Duane Reade, Inc. v. St. Paul Fire &

Marine Ins. Co., 411 F.3d 384, 389 (2d Cir. 2005) (citation
omitted); see also Cont’l Cas. Co. v. Coastal Sav. Bank, 977
F.2d 734, 737 (2d Cir. 1992). 8
Therefore, defendants will prevail on their motion for
summary judgment if the undisputed material facts compel a
conclusion that, as a matter of law, plaintiff is not entitled
to the declaratory and other relief he seeks.

Additionally,

The Second Circuit’s 1992 decision in Continental Casualty, citing a
prior decision, states that a court “must” entertain a declaratory judgment
action when the judgment would (i) serve a useful purpose in clarifying or
settling the issues involved, or (ii) finalize the controversy and offer
relief from uncertainty. 977 F.2d at 737 (citing Broadview Chem. Corp. v.
Loctite Corp., 417 F.2d 998, 1001 (2d Cir. 1969)). Subsequent decisions from
the Supreme Court and the Second Circuit indicate that these two factors are
not mandatory. See ICBC Standard Sec., Inc. v. Luzuriaga, 217 F. Supp. 3d
733, 738 n.1 (S.D.N.Y. 2016) (citations omitted) (discussing cases decided
after Continental Casualty). Instead, these factors “guide the exercise of
discretion in Declaratory Judgment Act cases.” Id. (quoting Niagara Mohawk
Power Corp. v. Hudson River-Black River Regulating Dist., 673 F.3d 84, 105
(2d Cir. 2012)).
8

15

even if defendants’ motion for summary judgment is not granted
as a matter of law, the court may, in an exercise of its
discretion, find that declaratory judgment as to plaintiff’s
first and second “causes of action” would not be appropriate in
this case.
II.

Plaintiff’s Causes of Action
A.

Validity of the Sale and Transfer of Shares and Lease
Plaintiff contends the sale and subsequent transfer of

the Shares and Lease were improper under the New York U.C.C. and
seeks declaratory judgment invalidating the sale and the
transfer.

(Compl. at ¶¶ 17-32.)
Whether and to what extent plaintiff has a substantive

claim of right to the declaratory relief he seeks depends on the
law governing plaintiff’s rights.

With respect to plaintiff’s

first “cause of action,” which seeks declaratory judgment
regarding the sale and transfer of the Shares and Lease, the
court applies the law governing security interests in
cooperative apartment interests.
When a debtor pledges cooperative shares and a
corresponding proprietary lease as security for a debt, article
9 of the New York Uniform Commercial Code governs enforcement of
the security interest and the New York Real Property Actions and
Proceedings Law is inapplicable.

Fundex Capital Corp. v.

Reichard, 568 N.Y.S.2d 794, 795 (N.Y. App. Div. 1991) (citation
16

omitted); see also N.Y. U.C.C. § 9-109(a)(7) (stating that
article 9 applies to “a security interest in a cooperative
interest”); Bell v. Alden Owners, Inc., 199 B.R. 451, 464
(S.D.N.Y. 1996) (“Because shares in a cooperative are personal,
not real property, security interests in the Shares are governed
by UCC Articles 8 and 9.” (citations omitted)); cf. also Shor,
371 N.E.2d at 524 (“[w]here priorities of judgment creditors are
involved, the stock certificate and lease involved in the
typical co-operative apartment transaction fit better, legally
and pragmatically, . . . into the statutory framework governing
personal property.”).

Article 9 therefore defines the parties’

respective rights and remedies with respect CMI’s security
interest in the Shares and Lease.
1.

Declaratory Judgment as to Validity of Sale

As an initial matter, the court rejects plaintiff’s
argument that defendant CMI did not hold a valid, perfected
security interest in the Shares and Lease when it foreclosed on
and sold them.

Plaintiff’s argument that the UCC-1 financing

statement evidencing CMI’s security interest in the Shares and
Lease expired as of February 19, 2013 is based on his contention
that section 9-515(a) of the New York U.C.C., which limits
financing statements’ effectiveness to five years, governs the
UCC-1 here.

(Compl. at ¶¶ 18-19.)

Plaintiff, however,

overlooks section 9-515(h) of the New York U.C.C., which
17

provides that “[a]n initial financing statement covering a
cooperative interest is effective for a period of 50 years after
the date of the filing of the initial financing statement if a
cooperative addendum is filed simultaneously with the initial
financing statement or is filed before the financing statement
lapses.”
The undisputed record before the court indicates that
CMI recorded its interest in the Shares and Lease by filing the
UCC-1 with the Office of the City Register of the City of New
York on February 19, 2008.

(SMF at ¶ 4 (citing Freymuth Decl.

at ¶ 7); Freymuth Decl. Ex. C (attaching UCC-1).)

Further, the

“Recording and Instrument Cover Page” of the UCC-1 clearly
indicates that the document is an “INITIAL COOP UCC1” and
“COOPERATIVE WITH ADDENDUM,” (Freymuth Decl. Ex. C at 2-3 (page
repeated)), and the attached documents consist of a “UCC
Financing Statement,” (id. at 5), and a “UCC Financing Statement
Cooperative Addendum.”

(Id. at 6.)

Defendants therefore

complied with the provisions of New York U.C.C. § 9-515(h), the
UCC-1 covering the Shares and Lease was valid at all times
relevant to this action, and as such, the Shares and Lease were
CMI’s collateral.
New York U.C.C. § 9-610 authorizes a secured party to
dispose of its collateral, including by selling it, upon a
default by the debtor.

Various provisions within article 9
18

govern such dispositions.

For instance, section 9-610(b)

requires that “[e]very aspect of a disposition of collateral . .
. be commercially reasonable,” and other sections speak to the
secured party’s notification obligations to the debtor and to
parties with an interest in the collateral.
9-611, 9-612, 9-613.

See N.Y. U.C.C. §§

Two sections of the New York U.C.C. are

particularly relevant to the remedies that may be available to a
debtor where a secured party does not comply with the New York
U.C.C.’s provisions regarding the disposition of collateral.
The first of these, section 9-617, provides, in
relevant part, that a secured party’s disposition of collateral
after a default “transfers to a transferee for value all of the
debtor’s rights in the collateral.”

N.Y. U.C.C. § 9-617(a)(1). 9

CMI gave value in exchange for the Shares and Lease at the
foreclosure sale, and as such acceded to all of plaintiff’s
rights in the Shares and Lease under New York U.C.C. § 9617(a)(1).

(See Certificate of Sale and Fact, Freymuth Decl.

Ex. G at 2 (stating that the Shares and Lease were “sold unto
[CMI] for the sum of $42,810.68”).)
Additionally, if a transferee takes in good faith,
that is, with “honesty in fact in the transaction or conduct
concerned,” N.Y. U.C.C. § 1-201(20), the transferee will take
Where, as here, the collateral is disposed of through a public sale,
the transferee may be the secured party itself. See N.Y. U.C.C. § 9610(c)(1).

9

19

free and clear of any of the debtor’s rights in the collateral,
regardless of whether the secured party complied with article 9
of the New York U.C.C. or the requirements of any judicial
proceeding in disposing of the collateral.
617(b).

N.Y. U.C.C. § 9-

The New York U.C.C. therefore expressly provides that a

disposition of collateral that does not comply with the
requirements of article 9 is nevertheless valid so long as the
transferee takes in a manner that is “honest in fact.”

However,

if the transferee does not take in good faith – with good faith
defined as “honesty in fact” – the transferee takes subject to
the debtor’s rights in the collateral.

N.Y. U.C.C. § 9-

617(c)(1).
Here, the complaint alleges, with varying degrees of
specificity, various instances of defendants’ failure to comply
with article 9, but does not allege in form or in substance that
any of defendants’ conduct was not honest in fact.
at ¶¶ 13-32.)

(See Compl.

Therefore, even if plaintiff is correct that CMI

failed to comply with the provisions of article 9, he has not
alleged that CMI acted other than in good faith in its capacity
as transferee of the Shares and Lease at the foreclosure sale.
See N.Y. U.C.C. § 1-201(20) (defining good faith as “honesty in
fact in the transaction or conduct concerned”).

Furthermore,

even if CMI had taken in bad faith, the record does not enable
the court to determine what rights plaintiff would have had in
20

the collateral at the time of the foreclosure sale.

As such,

plaintiff has not alleged any basis on which the court could
conclude that he retains rights in the Shares and Lease under
New York U.C.C. § 9-617.
The second New York U.C.C. section relevant to
plaintiff’s potential remedies is section 9-625, which governs
remedies when a secured party does not proceed in accordance
with article 9’s provisions, and applies regardless of the
transferee’s good faith, i.e., its “honesty in fact.”
9-625 provides for injunctive and monetary relief.

Section

With respect

to injunctive relief, “[i]f it is established that a secured
party is not proceeding in accordance with [article 9], a court
may order or restrain . . . disposition of collateral on
appropriate terms and conditions.”

N.Y. U.C.C. § 9-625(a).

As

to money damages, New York U.C.C. § 9-625(c)(1) provides that a
debtor may recover, subject to certain limitations, “damages in
the amount of any loss caused by a failure to comply with
[article 9],” N.Y. U.C.C. § 9-625(b), as well as statutory
damages.

N.Y. U.C.C. § 9-625(e)-(f).
By its plain terms, in order for an aggrieved party to

obtain injunctive relief, section 9-625(a) requires that the
secured party presently be proceeding in a manner that is not in
accordance with article 9.

Here, however, plaintiff alleges

that defendants undertook actions that did not comply with
21

article 9 several months prior to the initiation of this action.
Section 9-625(a) is therefore inapplicable, and injunctive
relief is not available to plaintiff.

Plaintiff’s only

recourse, therefore, is to seek money damages under section 9625(b) of the New York U.C.C.

See In re Enron Corp., No. 01-BK-

16034(AJG), 2005 WL 3873890, at *10 (Bankr. S.D.N.Y. June 16,
2005) (“Under a plain meaning of the statute, [New York U.C.C. §
9-625(a)] would be applicable in circumstances where the secured
party is proceeding to dispose of the collateral and not in a
situation where the disposition of the collateral has already
occurred.

Therefore, since the [collateral sale] has already

occurred, [the aggrieved party’s] remedy, if it were shown that
[the secured party] did not comply with the requisite provisions
of [a]rticle 9, would be an action for damages under section 9–
625(b) of the U.C.C. and not an invalidation of the sale.”
(emphasis in original)), and at *10 n.14 (discussing language
similar to N.Y. U.C.C. § 9-625(a) in prior codification of N.Y.
U.C.C. and noting that official comment to prior statutory
language stated that “[t]his remedy will be of particular
importance when it is applied prospectively before the
unreasonable disposition has been concluded.”

(citations

omitted).)
Although plaintiff styles his “causes of action” as
seeking declaratory relief, his first “cause of action” appears
22

ultimately aimed at obtaining injunctive relief with respect to
the foreclosure sale of the Shares and Lease.

In particular,

plaintiff seeks declaratory judgment that CMI’s foreclosure sale
of the Shares and Lease “is invalid and is vacated in its
entirety,” and “that plaintiff remains the owner of the [S]hares
. . . and remains the lessee [under the Lease].”
32.)

(Compl. at ¶

Thus, plaintiff’s request for declaratory relief is

clearly aimed at providing a basis for restoring plaintiff’s
possession of the Shares and status as lessee under the Lease.
Additionally, nothing in the complaint suggests that plaintiff
seeks money damages or even that plaintiff is inclined to seek
money damages based on the alleged liability of defendants.
As the court has discussed, however, injunctive relief
restoring plaintiff’s possession of the Shares and status as
lessee under the Lease is not available to plaintiff as a matter
of law.

Additionally, the only practical effect of a

declaratory judgment that plaintiff owns the Shares and remains
the lessee under the Lease could be to serve as a basis for
injunctive relief that is unavailable as a matter of law.
Therefore, the court will grant defendants’ motion for summary
judgment on plaintiff’s claims to the extent the claims seek
injunctive relief restoring plaintiff to possession of the
Shares and reinstating him as lessee under the Lease.
Furthermore, because plaintiff may not obtain injunctive relief
23

with respect to the foreclosure sale of the Shares and Lease, a
declaratory judgment that the sale is “invalid and is vacated in
its entirety,” and that “plaintiff remains the owner of the
[S]hares . . . and [L]ease,” would serve no “useful purpose.”
Duane Reade, 411 F.3d at 389.

The court therefore grants

defendants’ motion for summary judgment as to plaintiff’s
declaratory judgment claim that the sale is invalid and should
be vacated and that plaintiff remains the owner of the Shares
and Lease.
The court emphasizes that its construction of
plaintiff’s first “cause of action” as one ultimately aimed at
obtaining injunctive relief is critical to the court’s
disposition of plaintiff’s claim for a declaratory judgment that
the foreclosure sale is “invalid and is vacated in its
entirety.”

The court does not decide whether CMI’s disposition

of the Shares and Lease actually complied with the requirements
of article 9 of the New York U.C.C., because even if the
foreclosure sale did not comply with article 9’s requirements,
plaintiff’s only recourse would be to money damages under New
York U.C.C. § 9-625(b), which plaintiff does not seek here.
Therefore, nothing in this order should be construed as a

24

conclusion that the foreclosure sale was actually effected in a
commercially reasonable manner. 10
2.

Declaratory Judgment as to Transfer of Rights

Plaintiff’s first “cause of action” also seeks
declaratory judgment that “to the degree [CMI] transferred any
rights to Freddie Mac, that assignment is invalid,” (Compl. at ¶
32), but plaintiff does not expressly assert any basis for such
a declaration, and has presented no evidence suggesting the
invalidity of the assignment.
As discussed above, CMI’s security interest in the
Shares and Lease was valid at all relevant times.

Further, the

complaint does not allege that CMI acted other than with
“honesty in fact,” and as such does not allege a lack of good
faith on the part of CMI as transferee of the collateral at the

It appears to the court that there may be genuine issues of material
fact as to whether the foreclosure sale of the Shares and Lease was
commercially reasonable. For instance, New York U.C.C. § 9-613(c) provides
that the contents of a notification of disposition are sufficient as a matter
of law if the notification includes all information set forth in New York
U.C.C. § 9-613(a)(1)-(5). The Notice of Sale attached as Exhibit I to the
Group declaration, however, does not, in form or substance, “state[] that the
debtor is entitled to an accounting of the unpaid indebtedness and . . . the
charge, if any, for an accounting,” as set forth in New York U.C.C. § 9613(a)(4). “Whether the contents of a notification that lacks any of the
information specified in [section 9-613(a)] are nevertheless sufficient is a
question of fact.” N.Y. U.C.C. § 9-613(b). Additionally, the weight of
authority indicates that, at least in the article 9 context, “the primary
focus of commercial reasonableness [of a sale of collateral] is not the
proceeds received from the sale but rather the procedures employed for the
sale.” In re Zsa Zsa Ltd., 352 F. Supp. 665, 671 (S.D.N.Y. 1972), aff’d 475
F.2d 1393 (2d Cir. 1973). The record here establishes that the sale took
place at a public auction but is otherwise silent as to the procedures
employed for the sale. Regardless of the foregoing, the court need not, and
does not, actually determine whether genuine issues of material fact exist as
to the commercial reasonableness of the foreclosure sale.

10

25

foreclosure sale.
faith”).

See N.Y. U.C.C. § 1-201(20) (defining “good

Consequently, when the foreclosure sale closed, all of

plaintiff’s rights in the Shares and Lease were extinguished
because section 9-617 of the New York U.C.C. provides that upon
a secured party’s disposition of collateral, a transferee that
acts in good faith takes “free and clear” of any interest the
debtor may have in the collateral even if the secured party
failed to comply with the requirements of article 9.

See N.Y.

U.C.C. § 9-617(a)-(b).
Furthermore, the undisputed facts establish that CMI
was a transferee for value, and as such “all the debtor’s rights
in the collateral” were transferred to CMI upon sale.

N.Y.

U.C.C. § 9-617(a)(1) see also N.Y. U.C.C. § 9-610(c)(1)
(providing that a secured party may purchase its collateral at a
public disposition).

On the record before the court, plaintiff

cannot establish cognizable direct interest in the property that
CMI assigned to Freddie Mac.
Additionally, the court is not aware of any legal
authority that imposes any obligations on CMI as assignor, or on
Freddie Mac as assignee, with respect to plaintiff in order to
merely effectuate the assignment.

More generally, plaintiff

does not allege that the assignment harmed him in any way and,
to the extent he could allege harm, he would seek to assert
rights of others to protect his own interests.
26

Plaintiff

therefore lacks constitutional and/or prudential standing to
challenge the assignment.

See, e.g., Rajamin v. Deutsche Bank

Nat. Tr. Co., 757 F.3d 79, 84-92 (2d Cir. 2014) (discussing, and
finding without merit, theories of constitutional and prudential
standing where borrowers sought to challenge mortgage
assignments).
The undisputed material facts therefore establish that
plaintiff lacks any interest in the Shares and Lease that would
enable him to challenge the assignment of the Shares and Lease
from CMI to Freddie Mac.

The court need not determine whether

injunctive relief might be available to a party seeking to
challenge an assignment of property rights because even if it
were, plaintiff’s lack of standing to challenge the assignment
precludes the existence of an “actual controversy,” which the
Declaratory Judgment Act requires as a predicate for declaratory
relief.

28 U.S.C. § 2201(a); see MedImmune, Inc. v. Genentech,

Inc., 549 U.S. 118, 126-27 (2007) (“[T]he phrase ‘case of actual
controversy’ in the [Declaratory Judgment] Act refers to the
type of ‘Cases’ and ‘Controversies’ that are justiciable under
Article III [of the United States Constitution].” (citation
omitted)); see also Lujan v. Defs. of Wildlife, 504 U.S. 555,
560, (1992) (“[T]he core component of standing is an essential
and unchanging part of the case-or-controversy requirement of
Article III.” (citation omitted)).
27

Plaintiff’s lack of standing

also precludes him from establishing any entitlement to
injunctive relief.
Therefore, the court grants summary judgment to
defendants with respect to plaintiff’s claim for declaratory
judgment that the transfer of the Shares and Lease from CMI to
Freddie Mac is invalid and vacated.
B.

Validity of 30-Day Notice
Plaintiff’s second “cause of action” seeks declaratory

judgment that the 30-Day Notice served on him on August 31, 2015
is “invalid in its entirety and that the September 30, 2015
termination deadline set forth in the [n]otice is tolled and
vacated.”

(Compl. at ¶ 41.)

The 30-Day Notice itself indicates

that it is a notice pursuant to New York Real Property Law §
228, which governs the termination of tenancies at will or by
sufferance.

(See Group Decl. Ex. K at 2 (stating that Freddie

Mac is “the owner entitled to possession [of the Unit] pursuant
to N.Y. Real Property Law § 228”).)

Freddie Mac apparently

treated plaintiff’s possession of the Unit as a tenancy at will
or by sufferance.
As an initial matter, Freddie Mac’s treatment of
plaintiff as a tenant at sufferance was appropriate.

As

discussed above, on the undisputed record before the court, no
reasonable finder of fact could conclude that any interest
plaintiff may have had in the Shares and Lease survived the
28

foreclosure sale.

Further, Plaintiff does not allege that,

following the foreclosure sale, he had a sublease or any other
arrangement with CMI or Freddie Mac that would give rise to a
leasehold or other interest in the Unit.

Therefore, if

plaintiff remained in possession the Unit, his interest was at
most that of a tenant at will or at sufferance.

See, e.g.,

Fisher v. Queens Park Realty Corp., 339 N.Y.S.2d 642, 645 (N.Y.
App. Div. 1973) (“[A] tenant in possession under an invalid
lease is a tenant at will and is entitled to the notice required
by section 228 of the Real Property Law before he can be
removed.” (citation omitted)); Mastas v. Extra Closet, Inc., 553
N.Y.S.2d 582, 583 (N.Y. Civ. Ct. 1990) (“The common-law
characterization of a person coming to an estate by the act of a
party and then holding over is that of a tenant at sufferance.
This includes a sublessee holding over after the expiration of
the lessor’s term.” (internal quotation marks, citations, and
alterations omitted)); cf. also Boyar v. Goodman, 609 N.Y.S.2d
279, 280 (N.Y. App. Div. 1994) (concluding that, upon death of
life tenant, life tenant’s lessee became tenant at sufferance
because his lease and right to possession terminated); but cf.
Drost v. Hookey, 881 N.Y.S.2d 839, 840-44 (N.Y. Dist. Ct. 2009)
(concluding property owner’s co-habiting girlfriend was a
licensee only entitled to a 10-day notice to quit because, in
part, her permission to use the property did not include
29

exclusive dominion and control over a specifically identified
part of the premises).
Under the New York Real Property Law, “[a] tenancy at
will or by sufferance, however created, may be terminated by a
written notice of not less than thirty days given in behalf of
the landlord, to the tenant, requiring him to remove from the
premises.”

N.Y. Real Prop. Law § 228.

The notice must be

delivered to the tenant or to a resident of the premises of
suitable age and discretion, or “affix[ed] to a conspicuous part
of the premises, where it may be conveniently read.”

Id.

Here, the undisputed record includes a copy of the 30Day Notice, which was executed by Mark Antos, Esq., who was
identified as an affiliate of Rosicki, Rosicki & Associates P.C.
and as “Attorney-in-Fact for [Freddie Mac].”
at 2.)

(Group Decl. Ex. K

The notice was directed to plaintiff, Ms. Rapillo, and

any “John Doe(s)” or “Jane Doe(s)” occupying the Unit ,
identified Freddie Mac as “the owner entitled to possession [of
the Unit] pursuant to N.Y. Real Property Law § 228,” and stated
that Freddie Mac “hereby elects to terminate as of September 30,
2015, your tenancy of the premises.”

(Group Decl. Ex. K at 2.)

The record also includes eight affidavits of service,
which establish that on August 31, 2015, a licensed process
server served the 30-Day Notice and certain attachments on
plaintiff, Ms. Rapillo, and any unidentified parties occupying
30

the Unit “by affixing a true copy to each door of [the Unit],”
and by mailing it via Certified and First Class Mail.
Decl. Ex. K at 3-10.)

(Group

The affidavits of service also indicate

that the attachments to the 30-Day Notice included an original
attorney-certified copy of the Certificate of Sale and Fact, a
Notice of Sale, an Affidavit of Publication, an original
attorney certified copy of the Assignment of Bid, and a copy of
a Limited Power of Attorney.

(Group Decl. Ex. K at 3-10.)

Although these attachments are not included in the same exhibit
as the 30-Day Notice and the affidavits, three that are critical
to assessing the validity of the 30-Day Notice are included in
other exhibits before the court: the Certificate of Sale and
Fact, (Freymuth Decl. Ex. G), the Assignment of Bid, (Freymuth
Decl. Ex. H), and the Limited Power of Attorney.

(Group Decl.

Ex. J.)
As discussed above, the Certificate of Sale and Fact
indicates that the auction sale of the Shares and Lease took
place, that CMI placed the winning bid, and that no cash changed
hands because CMI was the secured creditor.
G at 2.)

(Freymuth Decl. Ex.

The Assignment of Bid indicates that CMI transferred

its interest in the Shares and Lease to Freddie Mac as of July
6, 2015.

(Freymuth Decl. Ex. H at 2.)

Finally, the Limited

Power of Attorney executed by an officer of Freddie Mac in

31

Freddie Mac’s name expressly authorizes Rosicki, Rosicki, &
Associates, P.C., among others, to
perform, through [its] licensed attorneys . . .
on behalf of Freddie Mac . . . any and all lawful
acts . . . in connection with the foreclosure . .
., eviction, sale and disposition of real
property and shares in cooperative housing
corporations located within the State of New York
held or owned by Freddie Mac.
(Group Decl. Ex. J at 3-4.)
Additionally, the nonexclusive list of acts that the
Limited Power of Attorney authorizes to be undertaken on Freddie
Mac’s behalf includes “execut[ing], endors[ing], acknowledg[ing]
and hav[ing] served any and all notices of any kind associated
with the foreclosure, recovery, eviction, and sale of . . .
cooperative interests.”

(Id. at 4.)

Taken together, the affidavits of service, the 30-Day
Notice, and the attached documents establish that the 30-Day
Notice was served on all required parties in full satisfaction
of New York Real Property Law § 228.

Specifically, the

Certificate of Sale and Fact and Assignment of Bid establish
that Freddie Mac was the landlord with respect to plaintiff, 11
Because Freddie Mac was the landlord with respect to plaintiff, it is
irrelevant that an agent of the Linwood Village, Sec. E Cooperative Corp. did
not sign the termination notice. Although the cooperative corporation may
have been the lessor under the Lease, the foreclosure sale extinguished
plaintiff’s rights as lessee under the Lease, and CMI acceded to those rights
and transferred them to Freddie Mac. Cf., e.g., ARSR Sols., LLC v. 304 E.
52nd St. Hous. Corp., 48 N.Y.S.3d 510, 511 (N.Y. App. Div. 2017) (affirming
lower court determination that cooperative housing corporation must recognize
plaintiff’s ownership of shares and issue lease where plaintiff’s predecessor
conducted foreclosure sale as to shares and purchased them at the sale).

11

32

and the Limited Power of Attorney establishes that the attorneys
of Rosicki, Rosicki & Associates, P.C. were authorized to act on
Freddie Mac’s behalf, in each case with respect to the Unit.
The 30-Day Notice itself states that it was sent on behalf of
Freddie Mac, and that the tenancies of plaintiff, Ms. Rapillo,
and any other persons in possession of the Unit would be
terminated effective September 30, 2015.

The affidavits of

service establish that the 30-Day Notice was served on
plaintiff, Ms. Rapillo, and any others in possession of the
Unit, in relevant part, by posting it on each door of the Unit.
The 30-Day Notice was therefore “affix[ed] to a conspicuous part
of the premises” where plaintiff and any other occupant could
easily read it.

The affidavits of service also establish that

the 30-Day Notice was served 30 days before September 30, 2015.
Consequently, all requirements of New York Real Property Law §
228 were satisfied, and plaintiff’s tenancy, as well as that of
any other who may have had possession of the Unit at the time,
was terminated as of September 30, 2015.
Accordingly, plaintiff’s contention that the 30-Day
Notice was improper because it was “not signed by an agent of
the proprietary lessor of the [Unit] with an indication of the
agent’s power,” (Compl. at ¶ 39), is unfounded, as the
undisputed material facts establish that Freddie Mac was the
landlord, the attorneys of Rosicki, Rosicki & Associates P.C.
33

were its agents, proof of agency was served together with the
30-Day Notice, and the 30-Day Notice clearly indicated that it
was sent on behalf of Freddie Mac.

See N.Y. Real Prop. Law §

228 (requiring that notice be “given in behalf of the landlord”
(emphasis added)); compare Siegel v. Kentucky Fried Chicken of
Long Island, Inc., 492 N.E.2d 390, 391 (N.Y. 1986) (affirming
lower court determination that where lease required notice of
cancellation specifically from landlord, notice from agent
without evidence of authority was insufficient) with Kwong v.
Eng, 583 N.Y.S.2d 457, 459 (N.Y. App. Div. 1992) (“There is no
written lease between the parties requiring that the demand be
signed by the landlord, as in [Siegel].

[The applicable

statute] does not require that the demand be signed by the
landlord. Therefore, the three-day demand notice in the case at
bar was not rendered legally insufficient because it was signed
by the landlords’ attorney and not by the landlords.”)
Plaintiff’s contention that the 30-Day Notice lacked
complete attachments is similarly unfounded because the
Affidavit of Service indicates that the 30-Day Notice was served
together with all attachments necessary to give the notice
force.

Similarly, plaintiff’s contention that the 30-Day Notice

is invalid because it was not served on Ms. Rapillo’s heirs at
law is unfounded because the undisputed Affidavit of Service
indicates it was served on all occupants of the Unit, and as
34

such was served on all potential “tenants” at will or by
sufferance within the meaning of New York Real Property Law §
228 (and, in any event, as discussed above, plaintiff cannot
assert the rights of others to protect his own interests).
Finally, plaintiff’s contention that the 30-Day Notice is
invalid because CMI did not properly assign its rights to
Freddie Mac is unfounded because, as discussed above, plaintiff
lacks standing to challenge the assignment, and even if he did
have standing, he does not assert any viable basis for finding
the assignment invalid.
Plaintiff, therefore, has no substantive right to a
judgment that the 30-Day Notice was invalid, and defendants’
motion for summary judgment is granted as to plaintiff’s second
“cause of action.”
C.

Applicability of N.Y. Real Property Law § 274-a
Plaintiff’s third “cause of action” seeks an order

directing defendants to provide plaintiff “with an[] immediate
payoff statement for the subject loan compliant with [New York
Real Property Law] [s]ection 274-a.”

(Compl. at ¶ 42.)

By its

own terms, section 274-a of the New York Real Property Law
applies to “[t]he holder of a mortgage upon real property.”
N.Y. Real Prop. Law § 274-a(1).

However, when shares in a

cooperative housing corporation and the related proprietary
lease are pledged as security for a debt, they are treated as
35

personal property and not real property for purposes of
enforcing the security interest.

E.g., Fundex Capital Corp.,

568 N.Y.S.2d at 795; Bell, 199 B.R. at 464.

Accordingly, the

security interest at issue here is not a “mortgage on real
property.” 12

Even assuming that the court could grant injunctive

relief ordering compliance with New York Real Property Law §
274-a in the manner plaintiff seeks, the provision of law is
inapplicable here, and defendants are entitled to summary
judgment.
III. Summary
As set forth above, on the undisputed record here,
defendant is entitled to summary judgment to the extent
plaintiff seeks injunctive relief vacating the foreclosure sale,
and to the extent plaintiff seeks declaratory relief as a
predicate to unavailable injunctive relief.

The court notes that although the New York Court of Appeals has
indicated that there may be some “special purposes” where the “real property
aspect” of a proprietary lease may predominate, Shor, 371 N.E.2d at 524-25,
the court is unaware of any precedent indicating that the application of
section 274-a is such a “special purpose.” Moreover, the commercial
reasonableness requirement of New York U.C.C. § 9-610 generally and the
notice language set forth in New York U.C.C. § 9-613(a)(4) specifically serve
the same interest as New York Real Property Law § 274a: ensuring that the
debtor or mortgagor has an opportunity to redeem his collateral. See
Beninati v. FDIC, 55 F. Supp. 2d 141, 147 (E.D.N.Y. 1999) (stating purpose of
commercial reasonableness requirement); compare N.Y. U.C.C. § 9-613(a)(4)
(stating that notice should advise debtor of his right to, and charge for, an
accounting) with N.Y. Real Prop. Law § 274-a(1) (requiring that mortgage
holder deliver to owner of real property a statement of principal due,
interest paid, and itemized account of principal and interest claimed
unpaid). Plaintiff’s recourse with respect to the alleged failure to offer
or provide him an accounting is to proceed with a claim for damages under
section 9-625(b) of the New York U.C.C., rather than the relief he seeks in
his third “cause of action.”
12

36

Additionally, defendants are entitled to summary
judgment with respect to plaintiff’s second “cause of action”
which seeks to have the 30-Day Notice invalidated and the
termination date tolled and vacated.

Defendants are also

entitled to summary judgment with respect to plaintiff’s third
“cause of action,” which seeks an order directing defendants to
provide plaintiff with a payoff statement under New York Real
Property Law § 274-a.
CONCLUSION
For the foregoing reasons, defendants’ motion for
summary judgment is granted in its entirety with respect to all
of plaintiff’s “causes of action.”
The Clerk of Court is respectfully directed to enter
judgment in favor of defendants, to serve a copy of this order,
the judgment, and an appeals packet on plaintiff at his address
of record, to note service on the docket, and to close the case.
SO ORDERED.
Dated: Brooklyn, New York
March 5, 2018
________/s/
____________
KIYO A. MATSUMOTO
United States District Judge
Eastern District of New York

37