FILED: NEW YORK COUNTY CLERK 12/23/2013 INDEX NO /2013 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 12/23/2013

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1 FILED: NEW YORK COUNTY CLERK 12/23/2013 INDEX NO /2013 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 12/23/2013 SUPRME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK MF ACQUISITIONS, LLC., Index No.: Plaintiff, - against - LINKA LANDAU IRREVOCABLE LIFE INSURANCE TRUST, LINKA LANDAU, SHEA OSTREICHER & ISRAEL LUNGER, Defendants. MEMORANDUM OF LAW IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT IN LIEU OF COMPLAINT Garson, Segal, Steinmetz, Fladgate LLP 164 West 25 th Street Suite 11R New York, NY Telephone: (212) Facsimile: (347) rg@gs2law.com Counsel for Plaintiff Robert Garson, Esq.

2 TABLE OF CONTENTS INTRODUCTION...1 PRELIMINARY STATEMENT...1 FACTUAL BACKGROUND...3 ARGUMENT...9 CONCLUSION...9 i

3 TABLE OF AUTHORITIES Cases Page(s) Alard LLC v. Weiss, 1 A.D.3d 131, 131, 767 N.Y.S.2d 11, 12 (1st Dep t 2003)...10 Cicconi v. McGinn, Smith & Co., 35 A.D.3d 292, 292, 825 N.Y.S.2d 360, 360 (1 st Dep t 2006)...9 Commerce Bank, N.A. v. Metro- Tech Contracting Corp., No /2008, 2008 WL (Sup. Ct. N.Y. County July 29, 2008)...9 O & M Gourmet Foods, Inc. v. Marino s 184 Foods, Inc., 225 A.D.2d 340, 341, 638 N.Y.S.2d 466, 467 (1st Dep t 1996)...10 Seaman- Andwall Corp., v. Wright Mach. Corp., 31 A.D.2d 136, 137, 295 N.Y.S.2d 752, 753 (1st Dep t 1968) order aff d, 29 N.Y.2d 617, 324 N.Y.S.2d 410 (1971)...9 Statutes, Rules, Regulations & Texts Page(s) CPLR , 9, 10 ii

4 INTRODUCTION 1. Plaintiff MF Acquisitions, LLC ( Plaintiff or MF Acquisitions ), by and through its attorneys, Garson, Segal, Steinmetz, Fladgate LLP, respectfully submits this Memorandum of Law in Support of Plaintiff s Motion for Summary Judgment in Lieu of Complaint, made pursuant to Civil Practice Law and Rules ( CPLR ) 3213 against defendants Linka Landau Irrevocable Life Insurance Trust, Linka Landau, Shea Ostreicher, and Israel Lunger (collectively the Defendants ). 2. Additionally, Plaintiff relies upon the affidavit of Salvatore Mendolia, sworn to on the 17 th day of December 2013 (the Mendolia Affidavit ). 4. For the reasons more fully set forth below, Plaintiff s Motion should be granted, and this Court should grant a judgment in favor of MF Acquisitions and against the Defendants, who are individually and severally liable. PRELIMINARY STATEMENT 5. This action is based exclusively on an instrument for the payment of money. The relevant facts herein are contained in the accompanying Affidavits. 6. Succinctly stated, this action is to enforce payment of a note in the amount $1,210,085, plus interest, arising from a promissory note dated as of June 23, 2010 (the June 2010 Note ), executed by the Defendants in favor of HM Ruby Fund, LP ( HM Ruby ) and secured by a life insurance policy issued by Jefferson Pilot on the life of 1

5 Linka Landau (bearing policy number JP ), which was collaterally assigned to HM Ruby pursuant to the note. HM Ruby s right and interest in this debt was subsequently sold to MF Acquisitions via the Loan Purchase and Sale Agreement, dated as of April 10, 2013 (the Agreement ) (Mendolia Affidavit Ex. J). 7. As is more fully explained in the Mendolia Affidavit, Defendants are all in default of their obligations for payment of amounts due under the June 2010 Note. This action is based solely on an instrument for the payment of money only. 8. Due to the aforesaid monetary default, by letter dated February 23, 2011 (the February 23, 2011 Default Letter ) (Mendolia Affidavit Ex. F) and by letter June 11, 2012 (the June 11, 2012 Default Letter ) (Mendolia Affidavit Ex. I), HM Ruby defaulted Defendants. 9. MF Acquisitions now seeks recovery from the Defendants for the sum of $1,219,337, plus accrued interest, late fees, escrow reserves, attorneys fees, and other charges through November 15, 2013, as well as interest that continues to accrue thereon at the contractually mandated default rate, equal to four percent (4%) per annum. 2

6 FACTUAL BACKGROUND 10. As set forth in the accompanying affidavit of Lionel Mendolia, HM Ruby entered into a credit agreement (the Loan Agreement ) (Mendolia Affidavit Ex. J) with the Linka Landau Irrevocable Life Insurance Trust (the Landau Trust ), whereby HM Ruby agreed to make a loan to the Landau Trust in the amount of $653, (the Loan ), which Loan was evidenced by the note dated as of February 5, 2008, executed by the Landau Trust in favor of HM Ruby and secured by a life insurance policy issued by Jefferson Pilot on the life of Linka Landau with policy number JP (the Insurance Policy ) which was collaterally assigned to HM Ruby in consideration for the Loan. 11. In consideration for the Loan contemplated under the Agreement, Linka Landau, Shea Ostreicher and Israel Lunger, each executed documentation unconditionally guarantying HM Ruby, its successors, endorsees and assigns, the right to hold the Guarantors jointly and severally liable for all present and future obligations and liabilities of any and all kinds of the Landau Trust. Each of the three Guarantor agreements was signed and notarized on February 5, 2008, and executed simultaneously with the Agreement. (Mendolia Affidavit Ex. A). 12. By executing the Loan Agreement and accompanying notes, Defendants agreed that in the event of default, HM Ruby and its assigns may take any or all of the following actions: (i) terminate the Commitment, and thereupon the Commitment 3

7 shall terminate immediately; (ii) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other Obligations of the [Defendants] accrued [under the Loan Agreement], shall become due and payable immediately without presentment, demand, protest or other notice of any kind, all of which are [to be] waived by [the Defendants]. (Mendolia Affidavit Ex. A) 13. Pursuant to the Loan Agreement, the Defendants expressly waived and agreed not to assert by way of motion, as a defense or otherwise, in any such suit, action or proceeding any claim that it is not personally subject to the jurisdiction of the County of New York, that the suit action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper, or that any credit document or instrument referred to in the Loan Agreement may not be litigated in or by the Courts of the County of New York. The Defendants have further waived, except as prohibited by law, any right it may have to a trial by jury. (Mendolia Affidavit Ex. A) 14. On August 12, 2009, the Loan was refinanced as a response to a request from the Landau Trust resulting from the need to meet the premium payments on the Insurance Policy. A revised promissory note (the August 12, 2009 Note ) (Mendolia Affidavit Ex. B) was executed between HM Ruby and the Landau Trust, signed by Shea Ostreicher in his capacity as Trustee, under which the Landau Trust unconditionally promised to 4

8 pay the principal sum of $817,350 to the order of HM Ruby and/or its assigns, together with interest on the unpaid balance. Pursuant to the August 2009 Note, interest was to accrue on the outstanding principal amount at a rate of 12% per annum, computed on the basis of a 360-day year of twelve 30-day months. The August 2009 Note was due and payable on October 23, On December 9, 2009, the Loan was again refinanced as a response to a request from the Landau Trust resulting from the need to meet the premium payments on the Insurance Policy. A revised promissory note (the December 9, 2009 Note ) (Mendolia Affidavit Ex. C) was executed between HM Ruby and the Landau Trust, signed by Shea Ostreicher in his capacity as Trustee, under which the Landau Trust unconditionally promised to pay the principal sum of $895,023 to the order of HM Ruby and/or its assigns, together with interest on the unpaid balance. Pursuant to the August 2009 Note, interest was to accrue on the outstanding principal amount at a rate of 12% per annum, computed on the basis of a 360-day year of twelve 30-day months. The December 2009 Note was due and payable on January 23, On February 24, 2010, the Loan was refinanced for a third time, again as a response to a request from the Landau Trust resulting from the need to meet the premium payments on the Insurance Policy. A revised promissory note (the February 24, 2010 Note ) (Mendolia Affidavit Ex. D) was executed between HM Ruby and the Landau Trust, signed by Shea Ostreicher in his capacity as Trustee, under which the Landau Trust unconditionally promised to pay the principal sum of $982,117 to the 5

9 order of HM Ruby and/or its assigns, together with interest on the unpaid balance. Pursuant to the August 2009 Note, interest was to accrue on the outstanding principal amount at a rate of 12% per annum, computed on the basis of a 360-day year of twelve 30-day months. The February 2010 Note was due and payable on March 23, On June 23, 2010, the Loan was refinanced a fourth time at the request of the Landau trust. The June 2010 Note (Mendolia Affidavit Ex. E) was executed between HM Ruby and the Landau Trust, signed by Shea Ostreicher in his capacity as Trustee, under which the Landau Trust unconditionally promised to pay the principal sum of $1,085,358 to the order of HM Ruby and/or its assigns, together with interest on the unpaid balance. Pursuant to the June 2010 Note, interest was to accrue on the outstanding principal amount at a rate of 4% per annum, computed on the basis of a 360-day year of twelve 30-day months. The June 2010 Note was due and payable on July 28, It was never paid. 18. On January 10, 2011, HM Ruby sent notice to Shea Ostreicher, in his capacity as Trustee of the Landau Trust, and also to Linka Landau, a Loan guarantor and the Insured, informing the parties that the Loan was due as of July 28, 2010, and that the outstanding Loan principal and interest was $1,086,310. (Mendolia Affidavit Ex. F) 19. On January 18, 2011, notice was sent to Linka Landau to inform him that Trustee, Shea Ostreicher, had failed to comply with the reasonable demands made by 6

10 HM Ruby in the correspondence dated January 10, This letter reiterated that the amount then due on the Loan was $1,086,310. (Mendolia Affidavit Ex. G) 20. On February 23, 2011, the February 2011 Default Notice was sent to Shea Ostreicher, in his capacity as Trustee, informing him that the Loan was due on July 28, 2010; that payment had not been made; and that if the outstanding principal of $1,086,310 were not made in full by March 9, 2011, legal action would be initiated. The default notice stated further that it was imperative that all efforts be undertaken to preserve the collateral. (Mendolia Affidavit Ex. H) 21. On June 11, 2012, the June 2012 Default Notice was served upon Shea Ostreicher, in his capacity as Trustee. This letter, again, served to inform Ostreicher that payment on the Loan was due on July 28, 2010; that HM Ruby had yet to receive any payment whatsoever; that the outstanding principal and interest was $1,172,439; that it was imperative that all efforts be undertaken to preserve the collateral; and that if the Loan was not paid in full by June 30, 2012, legal action would be initiated. (Mendolia Affidavit Ex. I) 22. On April 10, 2013, HM Ruby and MF Acquisitions entered into the Agreement, under which HM Ruby transferred all of its right, title and interest in and to the Loan Agreement to MF Acquisitions. In accordance with Section 7.4 of the Loan Agreement, the provisions of the Loan Agreement are binding upon and inure to the benefit of MF Acquisitions as the assign of HM Ruby (Mendolia Affidavit Ex. J). 7

11 23. In accordance with the Section 7.3(a) of the Loan Agreement, Defendants have agreed that, [f]ollowing the Closing Date, the [Defendants] shall pay all reasonable out-of-pocket expenses incurred [HM Ruby and its assigns], including but not limited to fees and disbursements of counsel for [HM Ruby and its assigns], in connection with any amendments, modifications or waivers of the provisions thereto requested or agreed to by the [Defendants] (whether or not the transactions contemplated hereby or thereby shall be consummated), in addition or release of any Collateral or the enforcement protection of [HM Ruby and its assigns ] rights in connection with any Credit Document, including its rights under this Section in connection with the Loans made hereunder or any workout, restructuring or negotiations in respect thereof. (Mendolia Affidavit Ex. A). 24. Section 7 of the August 12, 2009 Note; December 9, 2009 Note; February 24, 2010 Note; and June 23, 2010 Note; respectively, expressly states, [i]n the event [the] Note is collected in while or in part through suit, arbitration, mediation, collection action or other legal proceeding of any nature, then and in any such case, there shall be added to the unpaid principal amount plus interest all reasonable costs and expenses of collection, including without limitation, attorney s fees. (Mendolia Affidavit Exs. B, C, D, E) 8

12 ARGUMENT 25. Immediate summary judgment is appropriate in this action. CPLR 3213 provides, in relevant part, that [w]hen an action is based upon an instrument for the payment of money only or upon any judgment, the plaintiff may serve with the summons a notice of motion for summary judgment and the supporting papers in lieu of a complaint. To state a prima facie case under CPLR 3213, a plaintiff need only demonstrate (i) the existence of an instrument for the payment of money only and (ii) the defendant(s) s failure to make the payments called for by its terms. See, e.g., Cicconi v. McGinn, Smith & Co., 35 A.D.3d 292, 292, 825 N.Y.S.2d 360, 360 (1 st Dep t 2006) ( Plaintiff made a prima facie case for a right to payment by proof of the note and the debtor s failure to may the payments called for therein. ) Here, both of these elements are satisfied. 26. First, there is no question that the Loan Agreement is an instrument for the payment of money only, as required by CPLR As New York courts have consistently held, a promissory note is precisely the kind of instrument lawmakers had in mind when they enacted CPLR See, e.g., Commerce Bank, N.A. v. Metro-Tech Contracting Corp., No /2008, 2008 WL (Sup. Ct. N.Y. County July 29, 2008) ( [I]n this jurisdiction, a note qualifies as an instrument for payment of money only. ) (citing cases); see also Seaman-Andwall Corp., v. Wright Mach. Corp., 31 A.D.2d 136, 137, 295 N.Y.S.2d 752, 753 (1st Dep t 1968) (holding that a promissory note is an instrument for the payment of a sum of money only ), order aff d, 29 N.Y.2d 617, 324 N.Y.S.2d 410 (1971). 9

13 27. As for the second element, there is no dispute that the Defendants have failed to make the payments called for by the terms of the Note. See e.g. Seaman-Andwall Corp., 31 A.D.2d at 137, 295 N.Y.S.2d at As stated in the Mendolia Affidavit, the Defendants have not paid any of the Principal Amount. (Mendolia Affidavit, 15). 28. Furthermore, upon information and belief, the Defendants have failed to maintain the collateral as mandated by the Loan Agreement. 29. Because Plaintiff has set forth the necessary elements of a claim to enforce a promissory note, judgment should be entered for the full amount due. See, e.g. Alard LLC v. Weiss, 1 A.D.3d 131, 131, 767 N.Y.S.2d 11, 12 (1st Dep t 2003) (by demonstrating Defendant s execution of the note and default in payment Plaintiff made out a prima facie case pursuant to CPLR 3213); O & M Gourmet Foods, Inc. v. Marino s 184 Foods, Inc., 225 A.D.2d 340, 341, 638 N.Y.S.2d 466, 467 (1st Dep t 1996) (holding that summary judgment in lieu of complaint was properly granted where the subject notes were for sums of money only, and were executed by the [defendant] parties, who defaulted in their obligations to pay ). CONCLUSION 30. For the foregoing reasons, Plaintiff s Motion for Summary Judgment in Lieu of Complaint should be granted in all respects, and this Court should order that the Clerk of the Court issue a judgment in favor of MF Acquisitions against Defendants, for all 10

14 amounts due under the June 2010 Note as set forth in the Mendolia Affidavit, plus interest, and attorneys fees, together with costs and disbursements. Dated: New York, New York December 23, 2013 GARSON, SEGAL, STEINMETZ, FLADGATE LLP Attorneys for Plaintiff By: /s/ Robert Garson Robert Garson, Esq. 164 West 25 th Street, Suite 11R, New York, New York Tel: (212) Fax: (347) To: The Linka Laundau ILIT c/o Shea Ostreicher 1A Bush Lane, Spring Valley, NY The Linka Laundau ILIT c/o Shea Ostreicher 401 Ogden Ave., Jersey City, NJ Israel Lunger 94 Washington Ave., Spring Valley, NY Linka Landau 12 Elvon Road, Monsey NY

15 With Copy To: Milton Landau 10 W Maple Ave., Monsey, NY