Leave to Renew or Reargue Denied Where “New Facts” Always Known or Caused By the Movant

On July 5, 2023, Justice Andrew Borrok of the New York County Commercial Division issued an opinion in Talos Capital Designated Activity Co. v. 257 Church Holdings LLC, 2023 NY Slip Op 50662(U), denying a party’s motion for leave to renew and/or reargue the Court’s Decision and Order, dated June 6, 2023 as clarified by the Supplemental Order, dated June 13, 2023, because the motion—which must be based on matters of fact or law—was based on two false premises. The Court explained:

First, it is based on the false suggestion that there are "new facts" since the briefing of the Plaintiff's motion for summary judgment such that Mr. Ashkenazy has not had a previous opportunity to brief the issue as to whether the plain language of Section 6.16 of the Payment Recourse Guaranty operated to discharge his obligation to pay the Late Payment Charge, prejudgment interest and the other charges set forth in the Judgment, dated June 13, 2023 (NYSCEF Doc. No. 390)[sic]. In fact, there are no new material facts. Rather, Mr. Ashkenazy has taken a unilateral action—long after he breached his obligations under the contract at issue—upon which unilateral action he now attempts to frame new arguments to support his interpretation of the contract. This is not grounds for renewal.

The alleged "new facts" are that Mr. Ashkenazy now has decided unilaterally to pay—some five years late (i.e., what he should have paid five years ago) — the principal amount of the Borrower's Five Year Paydown. Based on these "new facts" Mr. Ashkenazy now (and for the first time) has decided to advance the argument that his obligation to pay the Late Payment Charge and prejudgment interest was discharged and released by his unilateral late principal payment pursuant to Section 6.16 of the Payment Recourse Guaranty and that, as a result, he is not obligated to pay the Late Payment Charge or prejudgment interest.

To sustain this new argument, Mr. Ashkenazy now advances new arguments (not new facts) that (i) the business deal reflected in the plain language of the Section 6.16 of the Payment Recourse Guaranty (which three years into the litigation he admitted he never read) was that he could pay $20 million at maturity or whenever he chose to do so because he was to have the benefit of an additional five years of $20 million of equity without having to pay a late charge or any interest on that $20 million of equity that he was required to but failed to infuse when his obligation was triggered and due five years ago and (ii) the Payment Recourse Guaranty does not mean what it says — i.e., that Mr. Ashkenazy is obligated to pay "all obligations and liabilities of the Borrower to pay the Five Year Paydown" (NYSCEF Doc. No. 7, § 1.1 ) which obligations and liabilities include the Late Payment Charge and prejudgment interest on the obligation to pay $20 million, not $10 million, of principal then due. According to him, he was only ever obligated to pay the principal amount of $20 million.

First, this argument is frivolous because these are not new facts—they are new, unsupported arguments. Worse, they are new arguments that are at odds with arguments that Mr. Ashkenazy actually made when addressing this point as part of his opposition to Plaintiff's motion for summary judgment. To be clear, Mr. Ashkenazy made no mention of this newly minted argument in his opposition papers to the Plaintiff's motion for summary judgment (NYSCEF Doc. 385)—which was his opportunity to make this or similar arguments. In point of fact, and significantly, Mr.

Ashkenazy did argue in his opposition papers to the motion for summary judgment that the Late Payment Charge was not his responsibility. But, he never made these particular two new arguments. Instead, in his opposition papers, Mr. Ashkenazy chose to argue that the Late Payment Charge was not due because (i) the Plaintiff had failed to establish that the Borrower had missed any payments due under the Payment Recourse Guaranty, (ii) the Payment Recourse Guaranty did not mention the words "Payment Recourse Guaranty" specifically and (iii) that even if it is due, only $500,000 is due and not $1,000,000:

. . . .

Mr. Ashkenazy's new argument also is frivolous because these so-called "new facts" were always known to him and were in fact caused by him. It was Mr. Ashkenazy's decision not to timely honor his obligation set forth in the Payment Recourse Guaranty (which obligation was triggered and due only if [x] the Borrower did not timely pay the Five Year Paydown and [y] Mr. Ashkenazy himself caused the refinancing of the LLC Guarantors' properties (which he also controlled) such that the equity collateral supporting the requirement for additional equity during the life of the loan may not have been there for the lender to collect against). Accordingly, there are no new facts warranting renewal.

Second, Mr. Ashkenazy asserts that reargument is warranted because the Court misapprehended that the plain language of Section 6.16 of the Payment Recourse Guaranty operates to discharge in full his obligation to pay the Late Payment Charge and prejudgment interest. Once again, this simply is a new argument based on no new facts—and is an argument that Mr. Ashkenazy could have made before. As discussed above, however, Mr. Ashkenazy now simply is attempting to argue that the business deal reflected in the Payment Recourse Guaranty was that he could pay the Five Year Paydown obligation whenever he wanted to without paying the Late Payment Charge or prejudgment interest because (i) the contracting parties agreed to cap the principal amount of his personal obligation at $20 million and (ii) Section 6.16 operates to discharge his obligation pay the Late Payment Charge and prejudgment interest when he finally, five years late, made the principal payment.

As discussed below, the Court did not misapply Section 6.16 of the Payment Recourse Guaranty. Rather, the Court took this provision at face value in the context of the business deal that the parties negotiated and that both sides argued were reflected in the documents as discussed in the Prior Decision. Mr. Ashkenazy has offered no new facts to support his interpretation and, as discussed below, the other loan documents in this integrated transaction and the factual record render his proposed reading wholly without merit and entirely frivolous. Section 6.16 of the Payment Recourse Guaranty simply confirms (as does Section 6.16 of the Payment Guaranty in this integrated transaction) that were the Borrower to have timely infused capital by paying the Five Year Paydown when it was due (five years into the loan), Mr. Ashkenazy's obligation and the LLC guarantors obligations would have been automatically released and discharged and without the need for further documentation or action by the transaction parties. Thus, the motion must be denied.

Pursuant to CPLR 2221(d), a motion for leave to reargue must be based on matters of law or fact allegedly overlooked or misapprehended by the Court in determining the prior motion but shall not include matters of fact not offered on the prior motion (Oparaji v Yablon, 159 AD3d 539, 540, 70 N.Y.S.3d 44 [1st Dept 2018]). Pursuant to CPLR 2221, a motion for leave to renew must be based on new facts not offered on the prior motion that would change the prior determination or a demonstration that there has been a change in the law that would change the prior determination (id.). Renewal is not available where a party seeks to assert a new legal theory after being unsuccessful on the original application (Nassau County v Metro. Transp. Auth., 99 AD3d 617, 619, 953 N.Y.S.2d 183 [1st Dept 2012], lv dismissed and denied 21 NY3d 921, 988 N.E.2d 1288, 966 N.Y.S.2d 775 [2013]).

Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you have questions about motions for leave to reargue a prior decision of the court.