FILED: KINGS COUNTY CLERK 11/03/ :08 AM INDEX NO /2016 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 11/03/2016

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1 FILED KINGS COUNTY CLERK 11/03/ AM INDEX NO /2016 NYSCEF DOC. NO. 1 RECEIVED NYSCEF 11/03/2016 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF KINGS x BEIS CHASIDEI GORLITZ, Plaintiff, - against th AVENUE LLC, YEHUDA SALAMON, ETTY SALAMON and GALSTER FUNDING LLC, Defendants x TO THE ABOVE-NAMED DEFENDANT(S) Index No. / 2016 SUMMONS Plaintiff designates Kings County as the place of trial. Venue of this action is proper in this county pursuant to CPLR 503. You are hereby summoned to answer the verified complaint in this action and to serve a copy of your answer on the undersigned attorney(s) for Plaintiff within twenty (20) days after the service of this summons, exclusive of the day of service (or within thirty (30) days after service is completed if this summons is not personally delivered to you within the State of New York); and in case of your failure to appear or answer, judgment will be taken against you by default for the relief demanded in the verified complaint. Dated New York, New York November 3, 2016 HERRICK, FEINSTEIN LLP By /s/ Avery S. Mehlman Avery S. Mehlman Robert F. Sanzillo Halimah I. Famuyide 2 Park Avenue New York, NY (212) Attorneys for Plaintiff 1 of 12

2 TO TH AVENUE LLC rd Street Brooklyn, New York Yehuda Salamon rd Street Brooklyn, New York Etty Salamon rd Street Brooklyn, New York Galster Funding LLC c/o SMRC Management 80 Maiden Lane, Suite 2204 New York, New York, of 12

3 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF KINGS x BEIS CHASIDEI GORLITZ, Plaintiff, - against th AVENUE LLC, YEHUDA SALAMON, ETTY SALAMON and GALSTER FUNDING LLC, Defendants x Index No. / 2016 VERIFIED COMPLAINT Plaintiff Beis Chasidei Gorlitz ( Lender or Plaintiff ), by and through its attorneys, Herrick, Feinstein LLP, as and for its verified complaint against Defendants th Avenue LLC ( Borrower ), Yehuda Salamon ( Salamon ), Etty Salamon ( E. Salamon ) and Galster Funding LLC ( Galster Funding ), and in support of its Verified Complaint allege as follows NATURE OF THE ACTION 1. As alleged herein, this action arises from a mortgage that was recently filed and recorded on the real property located at th Avenue, Brooklyn, New York (the Property ). Lender owns and holds two Mortgages (hereinafter defined) on the Property since Defaults on the Mortgages by the Borrower caused the Lender and Borrower to enter into a forbearance agreement, dated February 21, 2010 (the Forbearance Agreement ). 2. Lender consented to the Forbearance Agreement, subject to the Borrower s adherence to the terms and conditions. Borrower agreed, inter alia, that Salamon would be removed as manager of the Borrower. Significantly, Salamon, through the Forbearance Agreement, no longer held any authority to bind the Borrower in any manner, including, but not limited to, encumbering the Property, without prior written approval from the Lender. 3 3 of 12

4 3. Indeed, upon information and belief, Salamon forged and then recorded false documents declaring that the Mortgages owned and held by Lender had been repaid, namely satisfactions of mortgage. 4. However, in or about September 2016, Salamon -- in breach of the Forbearance Agreement and allegedly as a representative and sole-member of Borrower -- fraudulently entered into a mortgage agreement with a new lender. 5. Subsequently, Salamon misrepresented his authority to bind the Borrower and used the forged documents in order to give and record a new mortgage on the Property. 6. With this action, Lender seeks to have this new mortgage, which was fraudulently obtained through the use of forged documents, deemed a nullity and removed as of record as an encumbrance and lien on the Property. THE PARTIES 7. Beis Chasidei Gorlitz is a not-for-profit organization organized under the laws of New York, having a principal place of business located in Brooklyn, New York. 8. Upon information and belief, Defendant th Avenue LLC is a New York limited liability company, with an address at rd Street, Brooklyn, New York Upon information and belief, Defendant Yehuda Salamon is an individual residing at rd Street, Brooklyn, New York Upon information and belief, Defendant Etty Salamon is an individual residing at rd Street, Brooklyn, New York Upon information and belief, Defendant Galster Funding LLC is a New York limited liability company, with a principal place of business at 80 Maiden Lane, Suite 2204, New York, New York of 12

5 JURISDICTION AND VENUE 12. This Court has jurisdiction over the Defendants pursuant to New York Civil Practice Law and Rules ( CPLR ) 301 and 302. In addition, Defendants are subject to jurisdiction in the State of New York because the written agreements at issue were negotiated and agreed upon in the State of New York and contain New York choice of law provisions, and the Property is located in the State of New York. 13. Venue of this action is proper in this county pursuant to CPLR 503. BACKGROUND FACTS Lender and Borrower Enter into Mortgage and Loan Agreements 14. In or about May 2006, Lender and Borrower came to an agreement where Lender would loan a total of $2,500,000 to Borrower. 15. On or about May 4, 2006, Salamon, as a member of Borrower, executed two promissory notes (i) the Building Loan Mortgage Note; and (ii) a Consolidation and Restated Mortgage Note (together the Notes ). (True and correct copies of the Notes are attached hereto as Exhibits A and B, respectively.) 16. Simultaneously, on or about May 4, 2006, Lender and Borrower (with Salamon as signatory), executed two mortgage agreements, namely (i) Building Loan Mortgage in the principal sum of $1,200,000 which was recorded on May 23, 2006 in the Office of the City Register of Kings County as CRFN ; and (ii) Consolidation, Modification and Extension Agreement in the principal sum of $1,300,000 which was recorded on May 23, 2006 in the Office of the City Register of Kings County as CRFN (together the Mortgages ). (True and correct copies of the Mortgages are attached hereto as Exhibits C and D, respectively.) 5 5 of 12

6 17. The Mortgages cover the real property located at th Avenue, Brooklyn, New York (the Property ). 18. Lender has at all times held and owned the Notes and the Mortgages. 19. Upon information and belief, there came a time when Borrower defaulted under the terms of the Notes and the Mortgages. 20. Notwithstanding the default, Borrower, Salamon, and E. Salamon, requested that Lender forbear from exercising its rights and remedies available as a result of the default. The Parties Enter into a Forbearance Agreement 21. Consequently, on February 21, 2010, Borrower and Lender entered into a Forbearance Agreement. (A true and correct copy of the Forbearance Agreement is attached hereto as Exhibit E.) 22. Salamon personally executed the Forbearance Agreement as a guarantor. 23. E. Salamon personally executed the Forbearance Agreement as an additional guarantor (together with Salamon, the Guarantors ). 24. Lender consented to the request of limited forbearance, subject to the execution of the Forbearance Agreement and the Borrower s adherence to the terms and conditions set forth in the Forbearance Agreement. 25. Specifically, Borrower agreed that Salamon would be removed as manager of the Borrower and that Salamon would not have the authority to bind the Borrower in any manner without prior written approval from the Lender Borrower shall modify its organizational documents and operating agreement to appoint Mr. Fishel Wislicki, as the manager of the Borrower 6 6 of 12

7 Ex. E, p. 3, 7a. [Salamon] shall not have signing authority on any bank account of the Borrower (i.e. relating to th Avenue), may not incur any debt on behalf of the Borrower or the Building, and may not sign any documents on behalf of the Borrower for any purpose, without the written consent of Lender. (emphasis added.) 26. The Borrower and Guarantors further acknowledged that the Notes and Mortgages are each the valid, binding and enforceable obligation of the Borrower, enforceable against it in accordance with their respective terms, without offset, defense or counterclaim, and that the total debt owed to Lender was $5,194,948.99, as of January 15, 2010, without defense, counterclaim, exception or offset. Ex. E, pp. 2-3, 2, Moreover, the Borrower and the Guarantors acknowledged that interest on the unpaid principal balances of the Loans 1 continues to accrue at the rate of 14% per annum until the Loans and accrued interest are paid in full. Ex. E, p. 3, The Forbearance Agreement gave the Lender the right to demand a deed in lieu of foreclosure from the Borrower at any time Ex. E, p. 7, 12. Lender shall have the right at any time, whether or not the Borrower and/or the Guarantor is in default hereunder, to demand a deed in lieu of foreclosure from the Borrower. The Manager will be specifically authorized to deliver such deed to the Lender or its designee without the consent of [Salamon]. Salamon Prepares and Causes to be Filed Forged Satisfactions of Plaintiff s Mortgages 29. Upon information and belief, Salamon forged the signature of Rabbi Isaac B. Jungreis, as a representative of Lender, on two satisfaction of mortgage documents, dated August 25, 2016 (the Forged Satisfactions of Mortgage ). 1 The term Loans is defined in the Forbearance Agreement as the principal sum that Borrower is indebted to Lender, plus interest and rollover fees. See Ex. E, p of 12

8 30. Salamon fraudulently caused to be filed the Forged Satisfactions of Mortgage in the Office of the Register of the City of New York. (True and correct copies of the filed Satisfactions of Mortgage are attached hereto as Exhibit F and G.) not been paid. 31. To date, the Mortgages have not been satisfied and the debt owed to Lender has Salamon Executes a New Mortgage in Breach of the Forbearance Agreement 32. Upon information and belief, Salamon presented the Forged Satisfactions of Mortgage to Galster Funding for the purpose of securing a loan and encumbering the Property with a new mortgage. 33. Upon information and belief, on or about August 30, 2016, Borrower, in breach of the Forbearance Agreement, entered into a mortgage agreement with Galster Funding to secure a $6.5 million loan (the Galster Mortgage ). 34. Salamon, in breach of the Forbearance Agreement, executed and delivered the Galster Mortgage as the sole member of Borrower. 35. The Galster Mortgage was recorded on September 28, 2016 in the Office of the City Register of Kings County as CRFN (A true and correct copy of the filed Galster Mortgage is attached here to as Exhibit H.) AS AND FOR A FIRST CAUSE OF ACTION (Breach of Contract Against Borrower, Salamon and E. Salamon) 36. Plaintiff repeats and realleges each of the allegations contained in paragraphs 1 through 35 above as if set forth in full herein. 37. A valid contract -- the Forbearance Agreement -- existed between the Lender and Borrower, in which Salamon, E. Salamon acted as guarantors. 38. Lender performed under the terms of the Forbearance Agreement. 8 8 of 12

9 39. Borrower breached the Forbearance Agreement by, inter alia, failing to make requisite payments described in the Forbearance Agreement and by incurring debt (i.e. the Galster Mortgage) without written approval from the Lender. 40. Salamon breached the Forbearance Agreement by, inter alia, representing that he had authority to bind the Borrower and executing legal documents (i.e. the Forged Satisfactions of Mortgage) on behalf of the Borrower without written approval from the Lender. 41. E. Salamon breached the Forbearance Agreement by, inter alia, failing to make certain requisite payments. 42. Lender has been damaged due to the numerous breaches of the Forbearance Agreement. In order to make Lender whole, the Court should order specific performance of the Forbearance Agreement by issuing Lender a deed in lieu of foreclosure. 43. Additionally, the Galster Mortgage should be deemed a nullity and removed as of record as an encumbrance and lien on the Property. AS AND FOR A SECOND CAUSE OF ACTION (Declaratory Judgment) 44. Plaintiff repeats and realleges each of the allegations set forth in paragraphs 1 through 43 above as if set forth in full herein. 45. Salamon forged the signature of Lender s representative, Rabbi Isaac B. Jungreis, on the Forged Satisfactions of Mortgage. 46. Borrower, with Salamon acting as its representative, then fraudulently filed and recorded the Forged Satisfactions of Mortgage, thereby materially misrepresenting that Borrower had satisfied its debt with Lender. 47. Upon information and belief, Galster Funding in reliance on the Forged Satisfactions of Mortgage, entered into the Galster Mortgage. 9 9 of 12

10 48. As such, the Galster Mortgage should be deemed a nullity and removed as of record as an encumbrance and lien on the Property. 49. Moreover, even if the Forged Satisfactions of Mortgage do not contain forged signatures (they do), Salamon committed fraud by executing the Galster Mortgage on behalf of the Borrower when he did not have authority to do so. 50. Accordingly, Lender is entitled to a declaratory judgment deeming the Galster Mortgage a nullity and removed as of record as an encumbrance and lien on the Property because (i) Salamon forged the Satisfactions of Mortgage; (ii) Borrower fraudulently filed and recorded the forged Satisfactions of Mortgage; and (iii) the Galster Mortgage is unenforceable because Salamon did not have the authority to bind the Borrower. AS AND FOR A THIRD CAUSE OF ACTION (Declaratory Judgment) 51. Plaintiff repeats and realleges each of the allegations set forth in paragraphs 1 through 50 above as if set forth in full herein. 52. Salamon forged the signature of Lender s representative, Rabbi Isaac B. Jungreis, on the Forged Satisfactions of Mortgage. Accordingly, the Court should declare the Forged Satisfactions of Mortgage as nullities and have them removed as of record. AS AND FOR A FOURTH CAUSE OF ACTION (Accounting Against Borrower, Salamon and E. Salamon) 53. Plaintiff repeats and realleges each of the allegations set forth in paragraphs 1 through 52 above as if set forth in full herein. 54. Borrower and Guarantors, as parties to the Forbearance Agreement, owe a duty to Lender. Borrower and Guarantors have a duty to account and have failed and refused to do so, deliberately withholding financial information from Lender of 12

11 55. As a result of the foregoing, Lender has suffered and will continue to suffer irreparable harm and injury. 56. Lender has no adequate remedy at law. WHEREFORE, Plaintiff demands judgment as follows (a) as to its First Cause of Action (Breach of Contract), ordering order specific performance of the Forbearance Agreement by issuing Lender a deed in lieu of foreclosure and deeming the Galster Mortgage a nullity and removed as of record as an encumbrance and lien on the Property; (b) as to its Second Cause of Action (Declaratory Judgment Based on Fraud), deeming the Galster Mortgage a nullity and removed as of record as an encumbrance and lien on the Property; (c) as to its Third Cause of Action (Declaratory Judgment), declaring the Forged Satisfactions of Mortgage as nullities and have them removed as of record; (d) as to its Fourth Cause of Action (Accounting), entitling the Plaintiff to an adequate accounting of the Borrower s and Guarantor s financial books and records. (e) award Plaintiff such other relief as the Court deems proper. Dated New York, New York November 3, 2016 HERRICK, FEINSTEIN LLP By /s/ Avery S. Mehlman Avery S. Mehlman Robert F. Sanzillo Halimah I. Famuyide 2 Park Avenue New York, NY (212) Attorneys for Plaintiff of 12

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FILED: NEW YORK COUNTY CLERK 10/19/ /24/ :33 02:50 PM INDEX NO /2016 NYSCEF DOC. NO. 17 RECEIVED NYSCEF: 10/19/2016

FILED: NEW YORK COUNTY CLERK 10/19/2016 10/24/2016 01:33 02:50 PM INDEX NO. 655524/2016 NYSCEF DOC. NO. 17 RECEIVED NYSCEF: 10/19/2016 10/24/2016 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK