throbber
FILED: KINGS COUNTY CLERK 01/30/2024 11:44 PM
`NYSCEF DOC. NO. 75
`
`INDEX NO. 521852/2023
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`RECEIVED NYSCEF: 01/30/2024
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`
`
`Index No. 521852/2023
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`
`AFFIRMATION OF YORAM
`MILLER IN OPPOSITION
`TO THE ORDER TO SHOW
`CAUSE OF DEFENDANT
`BURCHELL M. MARCUS
`
`
`
`
`SUPREME COURT OF THE STATE OF NEW YORK
`COUNTY OF KINGS
`MAZAL GRAFTON BH, LLC,
`
` Plaintiff,
`
` vs.
`
`
`EARL POWER, in his individual capacity and as a
`trustee of NEXTLEVELTRUST A/K/A NEXT
`LEVEL SOLUTION A/KA/ NEXT LEVEL
`SOLUTION TRUST A/K/A NEXT LEVEL
`SOLUTIONS TRUST A/K/A NEXT LEVELS
`SOLUTIONS TRUST, MARY POWER, in her
`individual capacity and as a trustee of
`NEXTLEVELTRUST, NAFI RIVERS, in his
`individual capacity and as a trustee of
`NEXTLEVEL TRUST, BURCHELL M.
`MARCUS, in his individual capacity and as a
`trustee of the NEXTLEVEL TRUST, CAPLE
`FERNANDES SALMON, DEBT2FREEDOM LLC
`a/k/a DEBT 2 FREEDOM LLC, and JOHN DOES
`1-10, and JANE DOES 1-10,
`
` Defendants,
` and
`
`NEW YORK CITY
`DEPARTMENT OF FINANCE,
`
` Nominal Defendant.
`
`
`
`
`
`YORAM MILLER, an attorney duly admitted to practice law in the State of New York,
`
`hereby affirms under penalty of perjury as follows:
`
`1.
`
`I am a member of the Bar of the State of New York and am senior counsel with
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`the law firm of Goldberg Segalla LLP, counsel for Plaintiff Mazal Grafton BH, LLC (“Mazal”).
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`I am fully familiar with the facts and circumstances stated herein, unless otherwise indicated.
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`FILED: KINGS COUNTY CLERK 01/30/2024 11:44 PM
`NYSCEF DOC. NO. 75
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`INDEX NO. 521852/2023
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`RECEIVED NYSCEF: 01/30/2024
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`2.
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`I submit this affirmation in opposition to the Order to Show Cause of Defendant
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`Burchell M. Marcus (“Marcus”), a defendant in his individual capacity and as a trustee of the
`
`Nextlevel Trust a/k/a Next Level Solution a/k/a Next Level Solution Trust a/k/a Next Level
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`Solutions Trust a/k/a Next Levels Solutions Trust (the “Next Level Trust”). (A copy of the
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`Order to Show Cause is annexed hereto as Exhibit 1).
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`2024.
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`3.
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`4.
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`The Order to Show Cause is scheduled to be heard at 10:00 am on February 6,
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`Mazal’s pending October 6, 2023 motion for a default judgment (the “Default
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`Judgment Motion.” Motion Seq. No. 1) against Defendants Marcus, Earl Power, Mary Power
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`and Nafi Rivers, all in their individual capacities and as trustees of the Next Level Trust
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`(collectively, the “Next Level Defendants”) is also scheduled to be heard at the same time as the
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`Order to Show Cause.
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`PRELIMINARY STATEMENT
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`5.
`
`Mazal purchased the two-story, two-family home on January 29, 2020 at 277
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`Grafton Street (Brooklyn, New York 11212 (Block 3567, Lot 7, the “Property”). (A copy of the
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`referee deed into Mazal is attached as Exhibit 1 to Mazal’s First Amended Verified Complaint
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`also annexed as Exhibit 2.1/NYSCEF-54 to my October 6, 2023 affirmation in support of the
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`Default Judgment Motion (the “DJM Miller Aff.”)).
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`6.
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`Mazal commenced this Action on July 29, 2023 – four days after the Next Level
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`Defendant caused a fraudulent deed to be recorded that prevents Mazal from enforcing a warrant
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`of possession it has obtained and has put a cloud on Mazal’s title that prevents Mazal from
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`refinancing its mortgage or selling the Property.
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`FILED: KINGS COUNTY CLERK 01/30/2024 11:44 PM
`NYSCEF DOC. NO. 75
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`INDEX NO. 521852/2023
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`RECEIVED NYSCEF: 01/30/2024
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`7.
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`Through this action Mazal is seeking, inter alia, to vacate the fraudulent deed; to
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`vacate the fraudulent UCC financing statements the Next Level Defendants prepared, signed, and
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`filed as a predicate for recording the fraudulent deed; and for compensatory damages.
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`8.
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`Mazal amended its Complaint on August 11, 2023 to include, inter alia, additional
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`information it has since discovered about Marcus’s central role in the Next Level Defendants’
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`scheme.
`
`9.
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`Service of an Amended Summons and Mazal’s First Amended Complaint upon
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`Marcus and the other Next Level Defendants was completed pursuant to CPLR 308(2) or CPLR
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`308(4) by filing the requisite affidavit of services on August 18, 2023. (Copies of those
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`affidavits of service of the Amended Summons and First Amended Complaint are attached
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`hereto as Exhibit 2 and can also be found as Exhibits 3 through 10 (NYSCEF Dkt Nos. 63 to 70)
`
`of the DJM Miller Aff.).
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`10.
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`As a result, September 27, 2023 was the deadline for the Next Level Defendants
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`to answer Mazal’s First Amended Complaint.
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`11.
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`Based upon the recitations in the Order to Show Cause, it appears that Marcus
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`filed an affidavit on September 13, 2023 seeking additional time to respond to the First Amended
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`Complaint. That came as quite a surprise when I learned of the Order to Show Cause by
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`receiving an email notice from NYSCEF.
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`12.
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`On September 13, 2023, Marcus called me and told me that he was planning to
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`seek an Order to Show Cause. On that call, Marcus assured me that he would provide me with a
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`copy of any papers he submitted to the Court. He did not sent me any papers.
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`FILED: KINGS COUNTY CLERK 01/30/2024 11:44 PM
`NYSCEF DOC. NO. 75
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`INDEX NO. 521852/2023
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`RECEIVED NYSCEF: 01/30/2024
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`13.
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`I unsuccessfully tried calling Marcus on September 14, 2023. I tried again on
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`September 18, 2023 and he answered. After I asked if Marcus had submitted papers to the
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`Court, Marcus told me that he had not moved for an Order to Show Cause.
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`14. Marcus told me that he would like 30 days from our call to file an answer. In
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`response, I explained that I would need to get Mazal’s consent to an extension and that it would
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`be easier to grant an extension of that length if he would stipulate that he would not contest that
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`he was properly served. Marcus indicated that he was not prepared to stipulate as to service at
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`that time. Despite being told no extension had been agreed to, Marcus did not call me back or
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`provide copies of any papers he submitted to the Court.
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`15. Moreover, no papers upon which the Order to Show Cause was granted have been
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`uploaded to NYSCEF or the clerk’s minutes. However, based upon the representations Marcus
`
`made in portions of the Order to Show Cause he completed, it appears his only grounds for
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`seeking more time were because he had purportedly been traveling and because he allegedly
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`wanted time to retain counsel.
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`16.
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`No defendant filed an answer or otherwise responded to the First Amended
`
`Complaint. With the exception of Marcus’ application by Order to Show Cause for an extension
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`of time to answer, none of the defendants has appeared in this Action.
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`17. Marcus’ Order to Show Cause for additional time to reply to Mazal’ s First
`
`Amended Complaint should be denied because
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`(i) Marcus failed to comply with the Court’s directive to personally serve the
` Order to Show Cause upon Mazal by December 14, 2023; and
`
` (ii) it would be unjust and inequitable to extend this litigation in which the Next
`Level Defendants have no credible defenses and thereby force Mazal to
`continue suffering the prejudice caused by the fraudulent deed and associated
`fraudulent UCC financing statements that Mazal seeks to have voided and
`annulled in this Action.
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`FILED: KINGS COUNTY CLERK 01/30/2024 11:44 PM
`NYSCEF DOC. NO. 75
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`INDEX NO. 521852/2023
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`RECEIVED NYSCEF: 01/30/2024
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`MARCUS FAILED TO PROPERLY SERVE THE ORDER TO SHOW CAUSE
`
`18.
`
`CPLR 2214(d), which governs orders to show cause, provides that the Court “in a
`
`proper case may grant an order to show cause, to be served in lieu of a notice of motion, at a
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`time and in a manner specified therein.” (CPLR 2214(d) (emphasis added).
`
`19.
`
`“The absence of proper service of an order to show cause is a sufficient and
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`complete excuse for a default on the motion” and defeats the motion. Crown Waterproofing, Inc.
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`v. Tadco Constr. Corp., 99 A.D.3d 964, 965 (2d Dep’t 2012).
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`20.
`
`Here, the Order to Show Cause directed Marcus to personally serve the Order to
`
`Show Cause and any supporting papers upon Mazal by December 14, 2023 as follows:
`
`[L]et personal service of a copy of this order, and the papers upon which this
`order is granted upon [Mazal] on or before the 14th day of December 2023 be
`deemed good and sufficient deemed good and sufficient.
`
`(Ex. 1 at 2). Marcus did not do so.
`
`21.
`
`As detailed in paragraph 15 of the accompanying affidavit of David Simon sworn
`
`to on January 30, 2023 (the “Simon Affidavit” of “Simon Aff.”), Mazal was not personally
`
`served with the Order to Show or any of the papers upon which it was granted. Nor was Mazal
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`otherwise served with those materials.
`
`22.
`
`Likewise, with my firm, Goldberg Segalla LLP being Mazal’s counsel of record, I
`
`checked to see if the firm was personally served with copies of the Order to Show Cause.
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`23.
`
`I was told by the firm’s filing department that nothing associated with this Action
`
`appears in the records the firm maintains of all documents personally served upon the firm as
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`well as all deliveries and mail the firm receives that pertains to a litigation.
`
`24.
`
`Nor are any of papers in support of the Order to Show Cause available on
`
`NYSCEF or the Kings County Clerk’s minutes.
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`FILED: KINGS COUNTY CLERK 01/30/2024 11:44 PM
`NYSCEF DOC. NO. 75
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`INDEX NO. 521852/2023
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`RECEIVED NYSCEF: 01/30/2024
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`25.
`
`On January 29, 2024, I again spoke to Marcus to request copies of any papers he
`
`submitted to the Court in this Action. Marcus said he believed he had sent the papers by
`
`certified mail but would not recall when or where. He indicated he would call me the next
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`morning, but did not. Nor has he answered any of my calls.
`
`26.
`
`Simply put, the Order to Show Cause should be denied because Marcus did not
`
`comply with the Court’s express direction on how the Order to Show Cause had to be served.
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`IT WOULD BE UNJUST TO NEEDLESSLY EXTEND THIS LITIGATION
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`27.
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`In addition to Marcus’ failure to serve Mazal as directed by the Court, granting
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`the Order to Show Cause would simply extent this litigation and subject Mazal to the prejudicial
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`delays.
`
`28.
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`As detailed in the Simon Affidavit, Mazal has suffer hundreds of thousands of
`
`dollars in losses as a result of the Next Level Defendants illegal actions, and will continue to be
`
`deprived of over $5,000 per month in lost rent, is incurring over $2,100 in out of pocket
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`expenses, and has no means to sell the property, refinance its mortgage, maintain the safety of
`
`the Property or even have the Property inspected.
`
`29.
`
`It is respectfully submitted that Marcus’ purported excuse in the Order to Show
`
`for wanting more time – that he was traveling and wanted time to retain counsel rings hallow –
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`as Marcus was aware of the Fist Amended Complaint, at an absolute minimum, 14 days before
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`the time to answer expire and, based upon his experience in court, clearly could have either
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`submitted an answer pro se or retained counsel.
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`30. Moreover, Marcus falsely claimed not have moved for an Order to Show Cause
`
`when asked if had done so.
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`FILED: KINGS COUNTY CLERK 01/30/2024 11:44 PM
`NYSCEF DOC. NO. 75
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`INDEX NO. 521852/2023
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`RECEIVED NYSCEF: 01/30/2024
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`31.
`
`Yet, to date – 138 days after Marcus made his application for the Order to Show
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`Cause and 116 days after Mazal filed and completed served its Default Judgment Motion – no
`
`attorney has appeared in this Action for Marcus (or any of the other defendants).
`
`32.
`
`Nor has Marcus identified any possible meritorious defense. To date, the only
`
`defense he has raised is a conclusory statement that service was defective. (Ex. 1 at 1).
`
`33.
`
`However, Marcus has not denied that the Summons and First Amended
`
`Complaint were served upon a person of suitable age and discretion at the address he has
`
`admitted is an appropriate address for serving papers, that the papers were properly mailed to
`
`that address, or that the requisite affidavit was filed.
`
`34.
`
`Simply put, Marcus has not, and cannot, established any grounds that would
`
`warrant invoking the Court’s discretion to extend his time to respond to the First Amended
`
`Complaint.
`
`THE COURT SHOULD NOT PERMIT THE NEXT LEVEL DEFENDANTS TO DELAY
`THIS ACTION AND THEREBY SEVERE PREJUDICE MAZAL
`
`The full history (through the date of Mazal’s Default Judgment Motion) of the
`
`35.
`
`Next Level Defendants drawn-out, years-long, criminal scheme to allow Mary Power and Earl
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`Power to remain in the house without paying any rent, mortgage, taxes, or insurance for as long
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`as possible – now approaching a decade – despite having defaulted on their mortgage nearly a
`
`decade ago is detailed in the following papers Mazal filed in Support of its Default Judgment:
`
` Mazal’s First Amended Verified Complaint (DJM Miller Aff. Ex.
`2/NYSCEF-53) and the exhibits thereto (DJM Miller Aff. Ex. 2.1-2.9
`(NYSCEF Dkt. Nos. 54, 55, 56, 57, 58, 59, 60, 61, 62));
`
`the DJM Miller Aff. (NYSCEF Dtk. 51) and the other exhibits thereto
`(NYSCEF Dtk 52, 63, 64, 65, 66, 67, 68, 69, 70, 71);
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`
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`FILED: KINGS COUNTY CLERK 01/30/2024 11:44 PM
`NYSCEF DOC. NO. 75
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`INDEX NO. 521852/2023
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`RECEIVED NYSCEF: 01/30/2024
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`
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`
`
`the October 6 Affidavit of David Simon Affidavit of David Simon sworn
`to on (NYSCEF Dkt. No. 37) and the exhibits thereto (NYSCEF Dkt. Nos.
`38, 39, 40); and
`
`the Affidavit of Ryan Murphy sworn to on April 3, 2023 (the “Ryan Aff”)
`(NYSCEF Dkt. 41) and the exhibits thereto (NYSCEF Dkt. Nos. 42, 43,
`44, 45, 46, 47, 48, 49, 50).
`
`
`To avoid burdening the record with another set of those documents, Mazal hereby incorporates
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`them by reference.
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`36.
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`Examples of the Next Level Defendants misconduct is provided below to show
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`some of the lengths and tactics the Next Level Defendants have used to prevent first Earl
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`Power’s lender and then Mazal from exercising their lawful rights in the Property and to force
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`first the lenders and now Mazal to allow the Powers to continue to remain in the Property, all
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`paid by victims of their unlawful schemes.
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`A.
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`The Fraudulent 2019 UCC-1 Financing Statement
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`37.
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`On August 1, 2019 – four months after the Judgment of Foreclosure and Sale was
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`entered in the foreclosure proceedings, the Next Level Defendant filed their filed with the New
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`York State Department of State their first fraudulent instrument in an attempt to derail the
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`foreclosure sale: a 2019 UCC-1 Financing Statement in which Earl Power made the nonsensical
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`claim that the Powers were “Creditors” who held $3 million secured claims against their lenders
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`(the “2019 UCC-1”). (DJM Miler Aff. (NYSCEF-51) ¶¶ 24-26; Ex. 2.4 (NYSCEF-57).
`
`38.
`
`The Powers have never identified any security agreement or other document
`
`supporting their Orwellian assertion that the lender that financed their purchase of the Property
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`was actually the “Debtor” and that the borrower was actually the “Creditor” who was owed $3
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`million by his lenders And with good reason: none such agreement ever existed. (Id. ¶ 26).
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`FILED: KINGS COUNTY CLERK 01/30/2024 11:44 PM
`NYSCEF DOC. NO. 75
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`INDEX NO. 521852/2023
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`RECEIVED NYSCEF: 01/30/2024
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`39.
`
`Notwithstanding the 2019 UCC-1 Financing Statement, the foreclosure sale
`
`proceeded, presumably because the UCC-1 Financing Statement was unenforceable on face and,
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`in any event, the Referee’s Deed that Mazal obtained extinguished any conceivable security or
`
`other interest the Powers had in the Property. See DJM Miller Aff. (NYSCEF-51) ¶¶ 30-39).
`
`B.
`
`The Next Level Defendants File and Seek to Exploit the Fraudulent 2020 UCC-3
`
`40.
`
`After Mazal purchased the Property, the Next Level Defendants shifted their
`
`target to Mazal. On March 23, 2020, two months after the Foreclosure Sale extinguished any
`
`possible interest the Powers had in the Property, the Next Level Defendants prepared and filed a
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`UCC-3 Financing Statement purporting to amend the 2019 UCC-1 to be filed with the New York
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`State Department of State (the “2020 UCC-3”). (DJM Miller Aff. Ex. 2.5. (NYSCEF-58)).
`
`41.
`
`The 2020 UCC-3 fraudulently listed more than 20 new parties who the Powers
`
`claimed to be secured creditors, including Mazal and one of its principals. (Id.).
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`42.
`
`The Powers have never even attempted to explain how they purportedly obtained
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`security interests in the Property for $3,000,000 from over 20 individuals and entities. They
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`have never had any such interests.
`
`43.
`
`The fraudulent 2020 UCC-3 is, like the 2019 UCC-1, patently unenforceable for
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`numerous reasons including – in addition to the obvious point that the Powers were never
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`secured creditors of Mazal or the lenders who foreclosed upon the Property – (i) any interest the
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`Powers had in the Property was extinguished by the Judgement of Foreclosure and Sale pursuant
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`to which the property was sold to Mazal and the Referee’s Deed Mazal received from the Sale,
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`UCC financing statements do not create security interests in real property, and the UCC
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`financing statements were not filed in the land records. (Id.).
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`FILED: KINGS COUNTY CLERK 01/30/2024 11:44 PM
`NYSCEF DOC. NO. 75
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`INDEX NO. 521852/2023
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`RECEIVED NYSCEF: 01/30/2024
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`44.
`
`After it became apparent a trial was about to be scheduled in a Kings County
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`Housing Court proceeding captioned Mazal Grafton BH LLC v. Mary Power and Earl Power,
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`Index No. LT-320242-22 (Civ. Court Kings Co.) and a related action at which Mazal was likely
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`to obtain possession of the Property (the “Holdover Proceeding”), the Powers commenced a
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`patently frivolous action captioned Mary Power & Earl Power v. Mazal Grafton BH LLC,
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`802/2022 (Kings Co. Supreme).
`
`45.
`
`In the Power v. Mazal Action, Mary and Earl Power filed a baseless Order to
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`Show seeking to stay actions pending in Housing Court through which Mazal sought to gain
`
`possession of the Property (the Power v. Mazal OSC) and then used the pendency of the Order to
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`Show Cause to try to stay the Holdover Proceeding. (A copy of that Order to Show Cause is
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`annexed as Exhibit 3).
`
`46.
`
`Through a series of dilatory tactics and perjurious statements described in my
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`May 10, 2023 letter to the Court attached as Exhibit 4, the Powers were able to avoid having
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`their Order to Show Cause heard for months (and thus denied) and to stall a motion that Mazal
`
`filed to dismiss the Power v. Mazal Action. Those efforts including obtaining an adjournment
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`from December 19, 2022 to April 14, 2023 by claimed an attorney who had not appeared
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`represented them. Then, at the April 14, 2023 calendar call, Mary Power obtained another
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`adjournment to May 10, 2023 by claiming that an attorney had retained who had a family
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`emergency. No attorney had appeared for the Powers in the case. The hearing on the Power
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`OSC was adjourned a further month to May 10, 2023 and scheduled to be heard at the same time
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`as a motion to dismiss that Mazal had filed. (Id.).
`
`47.
`
`Then, at the May 10, 2023 hearing, Mary Power falsely claimed to have
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`personally served the Power v. Mazal OSC by the Court’s extended May 2, 2023 deadline. As
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`FILED: KINGS COUNTY CLERK 01/30/2024 11:44 PM
`NYSCEF DOC. NO. 75
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`INDEX NO. 521852/2023
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`RECEIVED NYSCEF: 01/30/2024
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`the exhibits to my letter to Justice Edwards indicate, the affidavit that the Powers filed on May 2,
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`2023 showed that Mazal had not been served.
`
`48.
`
`Through their dilatory tactics the Powers were able to put off the Power v. Mazal
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`OSC and Mazal’s motion to dismiss for months, leaving the motions sub judice to this day.
`
`49. Mazal is deeply concerned that the Next Level Defendants will use similar
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`excuses to delay the judgment in this Action despite having no viable defenses.
`
`C.
`
`The Next Level Defendants File and Seek to Exploit the Fraudulent 2020 UCC-3
`
`50.
`
`Notwithstanding the pendency of the Power v. Mazal Action, on July 7, 2023, the
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`trial was held in the Holdover Proceeding. As it looking increasingly clear that the Powers had
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`no defense and that the 2020 UCC-3 would not prevent Mazal from gaining possession of the
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`Property, Marcus made the ominous treat to David Simon, one of Mazal’s principals, during a
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`recess in the trial that the Next Level Defendants are going to “take this to the ‘next level’.”
`
`(Simon Aff. ¶ 7).
`
`51.
`
`On July 25, 2023, the meaning of Marcus’ comment became clear as the Next
`
`Level Defendants caused the a deed Earl Power signed as the grantor on behalf of Mazal as a
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`self-proclaimed “Secured Party (UCC -9-607(A)(3)” purporting to transfer the Property to the
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`Nextlevel Trust for no apparent consideration. (Ex. 2.8 (NYSCEF-61).
`
`52.
`
`As detailed in the DJM Miller Aff., the Fraudulent Deed is not only criminal, it is
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`facially defective because nothing in the UCC authorizes a purported secured creditor (real or in
`
`this case someone falsely claiming to be one) to invoke Article 9’s extra-judicial remedies to
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`transfer real property without first obtaining a court order. (DJM Miller Aff. (NYSCEF-51) ¶¶
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`47-50).
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`FILED: KINGS COUNTY CLERK 01/30/2024 11:44 PM
`NYSCEF DOC. NO. 75
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`INDEX NO. 521852/2023
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`RECEIVED NYSCEF: 01/30/2024
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`53.
`
`Nonetheless, the Next Level Defendants are using the Fraudulent Deed to prevent
`
`Mazal from gaining possession of the Property in numerous ways, including:
`
`
`
`
`
`
`
`54.
`
`Although Mazal obtained a judgment of possession and a warrant of
`execution against the tenant in the second floor of the Property (Mindy
`Dei) following the July 2023 trial, they have not been able to serve the
`warrant due to the existence of the Fraudulent Deed in the land records.
`
`Mazal has been prevented by the Fraudulent Deed from remedying a
`defect in its claims against the Powers in the Holdover Proceeding or from
`commencing a new holdover proceeding against them in Housing Court.
`
`Mary Power filed an answer on October 30, 2023 in another action
`pending in Kings County Civil Court against her on others captioned
`Mazal Grafton BH LLC v. Heather Baker, et.al. (LT-302894-20/K)
`invoking the Fraudulent Deed as a defense to Mazal’s claims.
`
`Simply put, until Mazal is able to have this Action adjudicated and the Fraudulent
`
`Deed as well as the fraudulent 2019 UCC-1 and 2023 UCC-3, it will continue to be severely
`
`prejudiced by the Next Level Defendants’ fraudulent and illegal machinations.
`
`55. Mazal respectfully requests that the Court not permit the Next Level Defendants
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`to needlessly drag out this litigation.
`
`CONCLUSION
`
`56.
`
`For the reasons set forth above and in the accompanying affidavits of David
`
`Simon and Ryan Murphy, Mazal respectfully requests that the Court grant its Motion for a
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`default judgment against the Next Level Defendants in its entirety.
`
`Dated: January 30, 2024
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`__________________________________
`YORAM MILLER
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`39148529.v7
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`12
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`12 of 13
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`FILED: KINGS COUNTY CLERK 01/30/2024 11:44 PM
`NYSCEF DOC. NO. 75
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`INDEX NO. 521852/2023
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`RECEIVED NYSCEF: 01/30/2024
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`WORD COUNT CERTIFICATION
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`I, Yoram Miller, an attorney admitted to practice before the Courts of the State of New
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`York, hereby certify that this affirmation complies with the word count limits contained in Rule
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`202.8-b of the Uniform Rules for the Supreme Court because it contains 3372 words, excluding
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`the parts of the affirmation excluded by Rule 202.8-b. In making this certification I have relied
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`upon the word count of the word-processing system used to prepare the affirmation.
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`Dated: January 30, 2024
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`By: . /s/ .
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`Yoram Miller
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`39148529.v7
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`13
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`13 of 13
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