Nexus Captial Invs, LLC v. Fleischmann, 2022 NY Slip Op 30808(U) March 10, 2022 Supreme Court, Kings County Docket Number: Index No. 512222/2021 Judge: Leon Ruchelsman is an example of what to do when the statute of limitation is approaching yet the underlying case has not concluded.  Here, “According to the complaint, on October 4, 2018 the plaintiff
loaned $5,200,000 to an entity called NY Ave Lofts LLC. The defendant David Fleischmann Esq. drafted the loan documents on behalf of the plaintiff. In connection with the loan the
borrower executed a mortgage in the amount of the loan against 132 Walnut Street, 25.-31 New York Avenue and 13-23 New York Avenue, all located in Newark New Jersey. Further, the defendant also drafted an Assignment of Leases and Rents and recorded a UCC-1 against the above named mortgaged properties. In addition, Jacob Tauber executed a guaranty concerning the outstanding loan. The borrower failed to make all the required payments and defaulted in April 2019. To avoid foreclosure of the properties Tauber requested the ability to borrow money from TBG Funding LLC to pay off the debt. Further, TBG agreed to lend additional funds, subordinate to the first loan, in efforts to develop the properties. Thus, a two tiered loan by TBG  was executed wherein the first mortgage remained a lien on the property and TBG loaned the borrower $3,000,000 as a paydown and an additional $2,470,000  in the form of a new note and mortgage which was intended to be subordinate to plaintiff’s remaining lien. Amended loan documents including an amended note and mortgage were executed reflecting a new loan balance of $2,470,000. Further, as noted, the plaintiff agreed that its mortgage would be subordinated to TBG’ s loan. According to the amended complaint ”upon receipt of the partial Payoff, Defendants, as Lender’s counsel, were  required to immediately and simultaneously satisfy the First Mortgage and record the Amended Mortgage. This arrangement would have been equivalent to a subordination agreement, providing TBG priority lien while maintaining the Lender’ s lien (as reduced by the payment)” (see, Amended Complaint, lZ2) . The amended complaint alleges the amended loan documents were never recorded. ”

“However, a dismissal of the action could forever forestall the ability to assert any malpractice claim since by the time any claim could ripen the statute of limitations could pass. In
Collins v. Felder, 251 F.Supp3d 634 [S.D.N.Y. 2017] the court was faced with this exact dilemma, balancing the retention of the action to preserve any potential claims and allowing discovery to proceed on presently unripe claims. The court denied the motion to dismiss the complaint on ripeness grounds but stc3.yed any further proceedings until a final judgement on appeal was rendered. The appeal was the basis the malpractice claim was unripe. This has the effect of preserving the allegations of malpractice but staying the burdens of discovery ±n case they prove to be unwarranted.  Therefore, the_ court hereby denies the motion seeking to dismiss the _action, however, all discovery is stayed pending the outcome of the foreclosure sale. The motion is granted to this extent. “