Defendant Cannot Avoid Payment of Pre-Judgment Interest

On March 15, 2023, Justice Cohen of the New York County Commercial Division issued a decision in DS 17 W. 24th St. Note Purchaser, LLC v. Hag Guyun Lee, 2023 NY Slip Op. 30771(U), holding that a defendant could not avoid payment of pre-judgment interest, explaining:

The inquest mutually requested by the parties may be completed on the papers. The first prong of Defendants’ equitable argument is easily dispensed with because there was no tender, let alone an unconditional tender, of any payment
and Plaintiff is therefore not equitably estopped from seeking damages and interest. For instance, in Koch v. Greenberg, the primary case cited by Defendants, the defendant tendered a check seeking to refund the purchase price of the offending product without any conditions. No such tender exists here – only a dispute as to the amount owed. Specifically, Defendants assert that the payoff statement provided by Plaintiff on November 27, 2017 did not reflect the proper amount to which Plaintiff was lawfully entitled to be paid to satisfy the Note and, instead, was improperly inflated. Defendants did not, however, tender any payment the claimed to be the correct amount.

The second component of Defendant’s equity argument is also unavailing. The primary case cited by Defendants for the proposition that the Court can equitably reduce contractual interest denied that relief because no wrongful conduct was found. New York courts have enforced contractual interest rates considerably higher than the 9% rate applied to judgments in the
mortgage foreclosure context.

Defendants have failed to present any evidence rebutting Plaintiff’s assertions as to damages and the Court awards pre-decision interest at the contractually agreed default rate. Defendants have offered no reason why damages cannot be ascertained from the papers alone consistent with the stipulated order.

In the context of a mortgage foreclosure, the recovery of interest is within the court’s discretion governed by the particular facts in each case. For instance, where unusual circumstances are present, the Court may reduce post-summary-judgment interest. In this case, for a variety of reasons, there was an extended delay between the decision on liability and the conclusion of the inquest on damages. In those circumstances, the Court finds it would not be appropriate to apply the high contractual default rate of interest during that period of delay. Instead, the Court holds that interest shall be calculated at the contractual rate of twenty-four percent (24%) only from October 2, 2019 through December 9, 2020 and thereafter at the statutory rate of nine percent (9%).

(Internal quotations and citations omitted).

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