U.S. Bank Nat'Lass'N v. Chetty Ltd., CIVIL ACTION NO. 17-5127

U.S. BANK NATIONAL ASSOCIATION, as successor in interest to Bankof America, National Association, as successor by mergerto LaSalle Bank National Association, Trustee for the RegisteredHolders of J.P. Morgan Chase Commercial Mortgage Securities Trust2007-CIBC19, Commercial Mortgage Pass-Through Certificates,Series 2007-CIBC19 Plaintiff v. CHETTY LIMITED PARTNERSHIP Defendant

CIVIL ACTION NO. 17-5127

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA

SEPTEMBER 10, 2018

NITZA I. QUIÑONES ALEJANDRO, J.

MEMORANDUM OPINION

INTRODUCTION

Plaintiff U.S. Bank National Association, as successor in-interest to Bank of America, National Association, as successor by merger to LaSalle Bank National Association, Trustee for the Registered Holders of J. P. Morgan Chase Commercial Mortgage Securities Trust 2007-CIBC19, Commercial Mortgage Pass-Through Certificates, Series 2007-CIBC19 ("Plaintiff" or "Lender"), brought this mortgage foreclosure action against Defendant Chetty Limited Partnership ("Defendant" or "Borrower") for defaulting on a commercial loan secured by a mortgage. Plaintiff seeks an order of foreclosure on the mortgage for the amount due under the note. Before this Court is Plaintiff's fully briefed motion for summary judgment, [ECF 19], which Defendant has opposed. [ECF 21].¹ For the reasons stated herein, Plaintiff's motion is granted, and summary judgment is entered in favor of Plaintiff.

BACKGROUND

Plaintiff filed this mortgage foreclosure action against Defendant, alleging that Defendant defaulted on a commercial mortgage by failing to pay the balance due under the accompanying note on May 1, 2017, the maturity date. Discovery ensued and closed. Thereafter, Plaintiff filed the underlying motion for summary judgment. When ruling on a motion for summary judgment, a court must consider all record evidence and supported relevant facts in the light most favorable to the non-moving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986); Galena v. Leone, 638 F.3d 186, 196 (3d Cir. 2011). Here, the relevant facts are summarized as follows:²

On or about April 5, 2007, CIBC Inc. (the "Original Lender") issued a loan in the principal amount of $4,672,000 (the "Loan") to Defendant. (ECF 19-3, Pl.'s Statement of Undisputed Material Facts, ("SOF") at ¶2). Defendant used the proceeds of the Loan to refinance existing mortgage debt on two of its commercial properties: (1) the Shoppes at Smithbridge in Glen Mills, Delaware County, Pennsylvania (the "Delaware County Property"); and (ii) Longwood Corporate Park in Kennett Square, Chester County, Pennsylvania (the "Chester County Property"). (Id. at ¶3). The Loan is evidenced by a Promissory Note dated April 5, 2007, executed by Defendant in favor of Original Lender in the principal amount of $4,672,000 (the "Note"). (Id. at ¶4).

Contemporaneously with the Note, Defendant executed in favor of Original Lender a Mortgage, Assignment of Leases and Rents and Security Agreement dated as of April 3, 2007 (the "Mortgage"), with respect to theDelaware County Property, the Chester County Property, and various other enumerated property (collectively, the "Property"). (Id. at ¶5).³ The Mortgage was recorded with the Delaware County Recorder of Deeds (the "Delaware County Recorder") on April 13, 2007, as Instrument No. 2007032507, in Book 4074, Page 1928, and with the Recorder of Deeds for Chester County (the "Chester County Recorder") on April 9, 2007, as Instrument No. 10743482, in Book 7127, Page 1454. (Id. at ¶6). The Mortgage granted to Original Lender a security interest in all of Defendant's estate, right, title and interest in, to and under the Property. (Id. at ¶7).

The Loan was subsequently securitized and assigned by Original Lender to LaSalle Bank National Association ("LaSalle Bank"), as Trustee for the registered holders of JPMorgan Chase Commercial Mortgage Securities Trust 2007-CIBC19, Commercial Mortgage Pass-Through Certificates, Series 2007-CIBC19 ("Assignee No. 1") (the "First Loan Assignment"). (Id. at ¶8). In connection with the First Loan Assignment, Original Lender executed in favor of Assignee No. 1 an Allonge to Promissory Note and an Assignment of Mortgage, Assignment of Leases and Rents and Security Agreement effective June 14, 2007, which was recorded with the Chester County Recorder on March 17, 2008, as Instrument No. 10829189, in Book 7387, Page 2101, and with the Delaware County Recorder on August 28, 2017, as Instrument No. 2017046738, in Book 6052, Page 1774. (Id. at ¶¶10, 12). Effective October 17, 2008, LaSalle Bank merged into Bank of America, National Association, which succeeded LaSalle Bank as Trustee for Assignee No. 1. (Id. at ¶11).

Assignee No. 1 subsequently assigned the Loan to Plaintiff pursuant to an Ominibus Assignment of Loan Documents (the "Second Loan Assignment"). (Id. at ¶13). In connection with the Second Loan Assignment, Assignee No. 1 executed in favor of Plaintiff an Allonge to the Note and an Assignment of Mortgage, Assignment of Leases and Rents and Security Agreement and Other Loan Documents, which was recorded with the Delaware County Recorder on November 16, 2017, as Instrument No. 2017061268, in Book 6089, Page 2284, and with the Chester County Recorder on November 13, 2017, as Instrument No. 11577069, in Book 9649, Page 36. (Id. at ¶¶14-15).

The operative Note provides, in relevant part, that "[o]n the Maturity Date," which is defined as May 1, 2017, "the entire outstanding principal balance hereof, together with all accrued but unpaid interest thereon and all other sums due hereunder, shall be due and payable in full." (Id. at ¶16). The Note further provides that "no grace period is provided for the payment of principal and interest due on the Maturity Date." (Id. at ¶17). Defendant has admitted that it did not pay all sums due under the Loan by the Maturity Date. (Id. at ¶18).

The Loan Documents provide that Defendant's failure to pay the outstanding principal balance of the Note, together with accrued but unpaid interest thereon, on or before the Maturity Date of May 1, 2017, constitutes an "Event of Default." (Id. at ¶19). Defendant also admits that its failure to pay the Loan at maturity is an Event of Default. (Id. at ¶20). Defendant's default caused the servicing of the Loan for Lender to be transferred to the Special Servicer for the Trust, LNR Partners ("LNR"). (Id. at ¶21). By letter dated May 8, 2017, LNR provided a Notice of Default to Defendant on Plaintiff's behalf. (Id. at ¶22).

The Note further provides that "[i]n the event that any payment is not received by Lender [Plaintiff] on the date when due . . ., then in addition to any default interest payments due hereunder, Borrower [Defendant] shall also pay to Lender [Plaintiff] a late charge in an amount equal to five percent (5.0%) of the amount of such overdue payment." (Id. at ¶23). The Note provides for the payment of interest at the Note Rate of 5.94% per annum. (Id. at ¶24). The Note also provides that:

So long as any Event of Default exists hereunder . . . and at all times after maturity of the indebtedness evidenced hereby (whether by acceleration or otherwise), interest shall accrue on the outstanding principal balance of this Note at a rate per annum equal to four percent (4.0%) plus the interest rate which would be in effect hereunder absent such default or maturity, or if such increased rate of interest may not be charged or collected under applicable law, then at the maximum rate of interest, if any, which may be charged or collected from Borrower [Defendant] under applicable law (the "Default Interest Rate"). (Id. at ¶25).

The Mortgage provides that "[i]f there shall occur an Event of Default under this Mortgage, then the Property shall be subject to sale and this Mortgage shall be subject to foreclosure, all as provided by law, and Lender may," inter alia, "immediately commence an action to foreclose this Mortgage." (Id. at ¶27). The Mortgage also provides that "[i]n the event foreclosure proceedings are filed by Lender [Plaintiff], all expenses incident to such proceedings, including, but not limited to, attorneys' fees and costs, shall be paid by Borrower [Defendant] and secured by this Mortgage and by all of the other Loan Documents securing all or any part of the indebtedness evidenced by the Note." (Id. at ¶28).

Accounting for all payments received from Defendant through March 2018, the total amount due and owing on the Loan as of March 30, 2018, is $4,528,586.55. (Id. at ¶29).

LEGAL STANDARD

Federal Rule of Civil Procedure 56 provides that summary judgment is warranted "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). A factual dispute is material if it might affect the outcome of the suit under the applicable law, and it is genuine only if there is a sufficient evidentiary basis that would allow a reasonable fact finder to return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986). At summary judgment, the inquiry is whether the evidence presents a sufficient disagreement to require submission to the jury or whether it is so one-sided that one party must prevail as a matter of law. Id. at 251-52. In making this determination, the Court must "consider all evidence in the light most favorable to the party opposing the motion." A.W. v. Jersey City Pub. Schs., 486 F.3d 791, 794 (3d Cir. 2007).

The moving party has the initial burden of identifying evidence that it believes shows an absence of a genuine issue of material fact. Conoshenti v. Pub. Serv. Elec. & Gas Co., 364 F.3d 135, 145-46 (3d Cir. 2004). Once the moving party has shown that there is an absence of evidence to support the non-moving party's claims, "the non-moving party must rebut the motion with facts in the record and cannot rest solely on assertions made in the pleadings, legal memoranda, or oral...