Wietschner v 9 Vandam JV LLC

2024 NY Slip Op 31172(U)

April 5, 2024

Supreme Court, New York County

Docket Number: Index No. 655573/2023

Judge: Margaret A. Chan

Cases posted with a "30000" identifier, i.e., 2013 NY Slip

Op 30001(U), are republished from various New York

State and local government sources, including the New

York State Unified Court System's eCourts Service.

This opinion is uncorrected and not selected for official

publication.
FILED: NEW YORK COUNTY CLERK 04/05/2024 05:02 PM INDEX NO. 655573/2023

NYSCEF DOC. NO. 24 RECEIVED NYSCEF: 04/05/2024

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SUPREME COURT OF THE STATE OF NEW YORK 

COUNTY OF NEW YORK: COMMERCIAL DIVISION PART 49M 

--------------------X 

ELISA WIETSCHNER, as trustee of the WFIG Trust 

Plaintiff, 

-v9 VANDAM JV LLC, 

Defendant. 

--------------------X 

HON. MARGARET A. CHAN: 

INDEX NO. 655573/2023 

MOTION DATE 11/08/2023 

MOTION SEQ. NO. 001 

DECISION+ ORDER ON 

MOTION 

The following e-filed documents, listed by NYSCEF document number (Motion 001) 2, 16, 17, 18, 19, 

20,21,22,23 

were read on this motion to/for JUDGMENT - SUMMARY IN LIEU OF COMPLAINT 

In this action, plaintiff Elisa Wietschner (Elisa), as trustee of the WFIG 

Trust, moves for summary judgment in lieu of complaint pursuant to CPLR 3213 to 

recover sums allegedly owed by defendant 9 Vandam JV LLC on three promissory 

notes. Defendant opposes. For the reasons below, plaintiffs motion is denied. 

BACKGROUND 

This action arises from three promissory notes that plaintiff made to 

defendant in April and June 2023 in connection with a real estate project at 9 

Vandam Street, New York, NY 10013 (NYSCEF # 3 - Wietschner afO. 

Defendant partially owns the underlying property of this project through its 

subsidiary, 9 Vandam Borrower 2 LLC (Vandam Affiliate) (NYSCEF # 19- Wiener 

aff, ,i 3; NYSCEF # 21). In November 2021, Vandam Affiliate acquired the property 

with financing from non·party Maxim Credit Group, LLC (Maxim) (NYSCEF # 19, ,i 

4; NYSCEF # 20). Specifically, Maxim made Vandam Affiliate mortgage loans of $7 

million in total (NYSCEF # 21 at 1; NYSCEF # 7 at 2 - the Maxim Loans). At all 

relevant times, defendant, Vandam Affiliate, and other Vandam entities in this 

ownership structure were managed by a Manhattan-based real estate development 

company called the Arch Companies (Arch) (NYSCEF # 21; NYSCEF # 3, ,i 8). Arch, 

in turn, has been managed by non·party 608941 NJ Inc. since November 2023 

(NYSCEF # 19, ir,i 2, 8).1 

1 In a lawsuit between the members of Arch, Hon. Joel M. Cohen ordered 608941 NJ Inc. (a/k/a Oak) 

to manage Arch while the case is pending (Index No. 158055/2023, Jeffrey Simpson v Jared Chassen 

et al, NYSCEF # 418). 

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Motion No. 001 

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Plaintiffs husband, Howard Wieschner (Howard), is another investor in this 

real estate project (NYSCEF # 19, ,r 6). Howard holds membership interest in 

defendant through WI Emoticon LLC, which entity he controls as its sole member 

(NYSCEF # 21 at 8·11). Howard also has a family trust named the WFIG Trust, of 

which plaintiff serves as the trustee (NYSCEF # 3, ,r,r 1, 11; NYSCEF # 19, ,r 7). 

Around April 2023, defendant approached Howard for additional financing 

because the project needed emergency "bridge funding" (NYSCEF # 3, ,r,r 3, 9; 

NYSCEF # 19, ,r 6). Howard agreed to provide such funding as promissory notes 

and not equity investment (NYSCEF # 19, ,r 6). As such, in April and June 2023, 

the WFIG Trust made defendant three promissory notes totaling $1,049,089.55 

(NYSCEF #s 4·6 - the Notes). The Notes were signed by plaintiff in her capacity as 

trustee of the WFIG Trust (NYSCEF #s 4·6). The foregoing funding arrangement 

and ownership rights are summarized in the chart below. 

Terms of the Notes 

The Subject Loan 

($1 Million) 

Maxim Credit Group, LLC 

(non-party) J The Ma.;m Loan 

($7 Million) 

The Notes plaintiff issued to defendant have substantially the same terms 

except for their principal amounts2 and maturity dates (NYSCEF #s 4-6). The Notes 

were all signed by Jeffrey Simpson (Simpson) from Arch as defendant's authorized 

signatory (NYSCEF #s 4·6). The Notes define an "Event of Default" to include a 

2 The first note dated April 21, 2023 has a principal amount of $349,089.55 (NYSCEF # 4). The 

second note dated June 2, 2023 has a principal amount of $400,000.00 (NYSCEF # 5). The third note 

dated June 7, 2023 has a principal amount of $300,000.00 (NYSCEF # 6). 

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Motion No. 001 

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situation where the defendant "admits in writing its inability to pay, its debts as 

they become due" (NYSCEF #s 4·6, § 3.1 [c] [emphasis added]). The Notes also 

contain an acceleration clause stating that "after [plaintiff] becomes aware of the 

occurrence of any Event of Default that is continuing, [plaintiff] may accelerate this 

Note by written notice to [defendant], with the outstanding principal balance of this 

Note becoming immediately due and payable in cash" (NYSCEF #s 4·6, § 3.2). 

As to maturity date, the promissory note dated April 21, 2023 provides that 

its entire amount outstanding are due "on the earlier of (i) April 20, 2024 or (ii) the 

date on which that certain loan made by [Maxim] to [Vandam Affiliate] is fully 

satisfied" (NYSCEF # 4, § 1). In contrast, the other two promissory notes dated 

June 2 and June 7, 2023, do not have an April 20, 2024 benchmark date and simply 

define their maturity date to be "the date on which that certain loan made by 

[Maxim] to [Vandam Affiliate] is fully satisfied" (NYSCEF #s 5, 6, § 1). 

Vandam~ Default Under the Maxim Loans 

On September 28, 2023, Maxim sent Vandam Affiliate a notice of default 

under the Maxim Loans, alleging that Vandam Affiliate "failed to make a timely 

interest payment under the [Maxim Loans] for the month of September, 2023" 

(NYSCEF # 7 at 3 - the Maxim Default Notice). The Maxim Default Notice was also 

sent to Arch, as guarantor of the Maxim Loans (id. at 2). Later that day, Arch 

emailed the Maxim Default Notice to Howard, noting: 

Please see attached default notice just received on Vandam. 

The lender has expressed their willingness to work with us 

and come up with a structure, but they need their interest paid 

in order to continue discussions. 

(NYSCEF # 7 at 1). 

Minutes later, Howard wrote back: "Thanks · I presume by your note that 

you will not be paying the interest?" (NYSCEF # 8 at 1). Simpson then responded: 

(id.). 

As we have told you, we have overextended ourselves on this 

project. We cannot find more capital at this time without 

participation. I told you about the interest payment before the 

default letter, multiple times. I took you up on your offer to 

send cash to move this project along, that went backwards. 

The staff has been furloughed, and there is minimum coverage 

there for the moment since there is no money to proceed at this 

time. If the purpose of your dialogue is to be constructive, 

please advise. If it is not, we will defer to counsel. 

The record contains no more email exchanges on this subject. A few days 

later, on October 3, 2023, plaintiff sent a default notice under each of the Notes to 

defendant, care of Arch, stating in bold capitalized letters that "[defendant] is in 

default of its obligations under the note due to managing member of [defendant] 

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Motion No. 001 

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acknowledging that [defendant] cannot pay its debts when due as further evidenced 

by [the Maxim Default Notice]" (NYSCEF #s 9·11 -the Default Notices; NYSCEF # 

3, ,r 13). The Default Notices stated that the sums due under the Notes had become 

immediately due and payable (NYSCEF #s 9·11). However, plaintiff alleges that 

defendant has not made any payments under the Notes (NYSCEF # 3, ,r 15). 

Procedural History 

On November 8, 2023, plaintiff commenced this action and moved for 

summary judgment in lieu of complaint under CPLR 3213, seeking principal 

payments under the Notes totaling $1,049,089.55 plus interest and costs and 

expenses incurred in this action, including reasonable attorneys' fees (NYSCEF #s 

1, 2). Defendant opposes (NYSCEF # 22 - MOL Opp). 

In support of this motion, plaintiff alleges that defendant has defaulted on 

the Notes because Simpson's email on September 28, 2023, constitutes a written 

admission of defendant's inability to pay its debts, which is an event of default 

(NYSCEF # 12- MOL at 6). Plaintiff interprets Simpson's email to mean that "Arch 

and the entities under its management and control, which includes defendant, are 

unable to pay their debts" (id). Plaintiff adds that such an event of default has 

triggered the Notes' acceleration clause and caused payments under the Notes to be 

due immediately (NYSCEF # 23 - Reply at 6). 

In opposition, defendant argues that summary judgment is precluded by 

questions of fact as to whether Simpson in his email admitted that defendant-as 

opposed to Vandam Affiliate-could not satisfy its debts (NYSCEF # 22 at 5, 8). 

According to defendant, Simpson's email only concerned Vandam Affiliate's inability 

to pay interest under the Maxim Loans, not defendant's inability to pay under 

plaintiffs Notes (id at 3·4, 8). Defendant asserts that payments under the Notes 

are not due until the satisfaction of the Maxim Loans, and plaintiff should not be 

able to "jump the line" and collect payments before Maxim (id at 1, 8). Defendant 

also contends that summary judgment under CPLR 3213 is inappropriate here 

because the alleged default is not a failure to pay, but an "non-monetary default 

that requires significant proof from extrinsic evidence" (id at 6·7). 

On reply, plaintiff avers Simpson's email indicated that the entire real estate 

project was stalled and nothing in the email limited its scope to Vandam Affiliate 

and the Maxim Loans (NYSCEF # 23 at 3, 6). 

DISCUSSION 

CPLR 3213 permits "actions based upon an instrument for the payment of 

money only to be commenced with a motion for summary judgment rather than a 

complaint" (Banco Popular N. Am. v Wctory Taxi Mgt., Inc., 1 NY3d 381, 383 

[2004]). To establish prima facie entitlement to summary judgment in lieu of 

complaint on a promissory note, a plaintiff must show that the instrument sued 

upon contains "an unconditional promise to pay a sum certain ... due on demand or 

at a definite time" ( Weissman v Sinorm Deli, Inc., BB NY2d 437, 444 [1996]). 

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An instrument does not qualify for CPLR 3213 treatment "if outside proof is 

needed, other than simple proof of nonpayment or a similar de minimis deviation 

from the face of the document" (id; see Maglich v Saxe, Bacon & Bolan, P. C, 97 

AD2d 19, 21 [1st Dept 1983] ["[w]here proof outside the instrument is necessary to 

establish the underlying obligation, the CPLR 3213 procedure does not apply'']). 

Outside evidence that can be considered a "de minimis deviation" includes readily 

ascertainable interest rate ( Weissman, 88 NY2d at 444), a line of credit statement 

(Counsel Fin. II LLC v Bartnick, 214 AD3d 1388, 1390 [4th Dept 2023]), or other 

"simple, readily verified fact, confirmed by documentary evidence in the record" 

(Nimble Ventures, LLC v Graves, 192 AD3d 514, 516 [1st Dept 2021]). In contrast, 

summary judgment in lieu of complaint is not available where a note "referred to 

other documents with regard to events of default" (Matter of Estate of Peck, 191 

AD3d 537 [1st Dept 2021]). 

Evidence presented on a summary judgment motion are examined "in the 

light most favorable to the non-moving party'' (Schmidt v One New York Plaza Co. 

LLC, 153 AD3d 427, 428 [2017]). A triable issue of material fact precludes summary 

judgment under CPLR 3213 (see Matter of Estate of Peck, 191 AD3d at 537). 

Under these standards, plaintiffs motion for summary judgment in lieu of 

complaint is denied. At the outset, the Notes are not instruments for the payment of 

money only that qualify for CPLR 3213, because "they referred to other documents 

with regard to events of default" and therefore plaintiffs "right to payment could 

not be ascertained solely from the face of' the Notes (Matter of Estate of Peck, 191 

AD3d at 537). It is undisputed that the Notes have not matured if not accelerated 

by an event of default (NYSCEF #s 4-6, § 1 [the maturity date the Notes is either 

the date that the Maxim Loans are fully satisfied or April 20, 2024]). Plaintiff 

nevertheless claims that payments under the Notes have been due and outstanding 

since October 2023 because defendant has allegedly "admit[ted] in writing its 

inability to pay, its debts" by virtue of Simpson's email to Howard on September 28, 

2023 (NYSCEF #s 4-6, § 3.1 [c]). 

To evaluate whether such an admission has occurred would require the court 

to look beyond the four corners of not just the Notes but also Simpson's email, in 

which the Notes were not explicitly mentioned, and Simpson did not expressly hold 

himself out as defendant's representative (NYSCEF # 8 [Simpson's email signature 

only identified him as managing partner of Arch]). Determining whether Simpson 

acted on behalf of defendant in the email would entail examination of extrinsic 

evidence on Arch's management roles in this real estate project. And assessing 

whether the Notes were within the scope of the email would require outside proof as 

to the ownership structure and financing arrangements of the Vandam entities. 

The extrinsic evidence needed for these determinations would far exceed in 

breadth and complexity the kind of "simple, readily verified fact" that are only a "de 

minimis deviation from the face of the [debt] document" (see Weissman, 88 NY2d at 

444; cf. Nimble Ventures, LLC, 192 AD3d at 516). Because plaintiffs claim for relief 

requires consideration of outside proof, the claim is not based on an instrument for 

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the payment of money only within the meaning of CPLR 3213 (see Mesaha Serv. & 

Supply Co. v R. Freedman & Son, Inc., 111 AD2d 985, 986 [3d Dept 1985] ["[s]ince 

proof beyond the written instrument is necessary to substantiate the underlying 

obligation, resort to CPLR 3213 was inappropriate"]; see also Spheyr, Inc. v Mind 

Centers, Inc., 2022 WL 17553613 [Sup Ct, New York County 2022]). 

Plaintiff relies on Shearson Lehman Hutton, Inc. v Myerson & Kuhn to argue 

that the Notes qualify for CPLR 3213 treatment, even though they refer to outside 

documents for the definition of default (197 AD2d 410 [1st Dept 1993]; NYSCEF # 

12 at 7). This reliance is misplaced. In Shearson, the default is "entirely monetary" 

and the reference beyond the four corners of the instrument is "merely repetitive of 

terms already contained within the instrument" (Shearson Lehman Hutton, Inc., 

197 AD2d at 410). Whereas here, the alleged default is not a simple failure to pay 

but an email discussing the financial difficulties faced by Arch, without directly 

referring to defendant. The email is not repetitive of any terms already contained in 

the Notes and the email's meaning cannot be precisely ascertained without more 

extrinsic evidence on the real estate project. Accordingly, plaintiff is not entitled to 

summary judgment under CPLR 3213. 

In any event, there exists a question of fact as to whether defendant has 

defaulted on the Notes. The Notes define an event of default to include a written 

admission by defendant as to defendant's debts, not other Vandam entities' debts 

(NYSCEF #s 4·6, § 3.1 [c]). However, the record is not clear on that. While plaintiff 

alleges that Simpson's email constituted a written admission of defendant's 

inability to pay its debt, the communication between Howard and Arch before and 

after Simpson's email appears to suggest otherwise. Notably, Simpson's email was 

sent on the same day and under the same email thread that Arch forwarded the 

Maxim Default Notice to Howard (NYSCEF # 7). And even the Default Notices 

plaintiff issued in response to Simpson's email mentioned nothing other than the 

Maxim Default Notice and Simpson's email as evidence of defendant's default 

(NYSCEF #s 9· 11). Viewing these facts in the light most favorable to defendant and 

reading Simpson's email in these contexts, a reasonable jury may read the email as 

limited to the Maxim Loans only. 3 

As such, the record here at least raises a question of fact as to whether 

Simpson's email was a written admission of defendant's inability to pay the Notes 

or not. This is a material issue of fact that precludes summary judgment under 

CPLR 3213 (see Ian Woodner Family Collection, Inc. v Aharis Books, Ltd, 284 

AD2d 163, 164 [1st Dept 2001] [material issues of fact as to whether there was 

default precluded summary judgment in lieu of complaint on a promissory note]). 

Accordingly, plaintiffs motion for summary judgment in lieu of complaint is denied. 

3 Further, Simpson's email mentioned that he "took [Howard] up on [Howard's] offer to send cash to 

move this project along, that went backwards" (NYSCEF # 8 at 1). Considering that Howard was 

defendant's co-investor in this project, and he previously provided emergency bridge funding to the 

project, it is possible that Simpson's email was more of a request for additional funding from Howard 

than an admission of defendant's inability to pay the Notes. 

655573/2023 WIETSCHNER, ELISA vs. 9 VANDAM JV LLC Page & of 7 

Motion No. 001 

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CONCLUSION 

Based on the foregoing, it is 

ORDERED that the motion for summary judgment in lieu of complaint made 

by plaintiff Elisa Wietschner, as trustee of the WFIG Trust, is denied; and it is 

further 

ORDERED that this proceeding is converted into a plenary action and 

parties' moving and answering papers shall be deemed the complaint and answer 

respectively. 

04/05/2024 

DATE 

CHECK ONE: 

APPLICATION: 

CHECK IF APPROPRIATE: 

~ CASE DISPOSED 

GRANTED 0 DENIED 

SETTLE ORDER 

INCLUDES TRANSFER/REASSIGN 

655573/2023 WIETSCHNER, ELISA vs. 9 VANDAM JV LLC 

Motion No. 001 

MARGARET A. CHAN, J.S.C. 

NON-FINAL DISPOSITION 

GRANTED IN PART 

SUBMIT ORDER 

FIDUCIARY APPOINTMENT 

□ OTHER 

□ REFERENCE 

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