HJA Holdings, Inc. v. Esquire Deposition Services, LLC

Order, Supreme Court, New York County (Harold B. Beeler, J.), entered April 18, 2005, which granted defendant’s motion for summary judgment dismissing the complaint and denied plaintiffs cross motion for summary judgment, unanimously modified, on the law, to declare in defendant’s favor that it owns the disputed assets free and clear of any right or interest therein on the part of plaintiff, and otherwise affirmed, without costs.

Defendant purchased collateral, including the court reporting business formerly owned by plaintiff, from a senior secured lender that had acquired the collateral in foreclosure. Under the circumstances and the provisions of Illinois law applicable in this matter, defendant was a good faith purchaser and took the collateral free and clear of any rights and interests therein subordinate to those of the senior secured lender (see Ill Rev Stat, *1761991, ch 26, ¶ 9-504; Continental Bank of Buffalo Grove, N.A. v Krebs, 184 Ill App 3d 693, 698, 540 NE2d 1023, 1026 [1989]). Whether defendant had, or somehow could have had knowledge of plaintiffs subordinate claim with respect to the collateral is not relevant to the dispositive issue of whether defendant acted in good faith, which it did (see Northwest Equip. Sales Co. v Western Packers, Inc., 623 F2d 92, 95 [1980]). Contrary to plaintiffs contention, the court reporting business was expressly included in the assets sold to defendant pursuant to the foreclosure sale agreement. Nor, contrary to plaintiffs argument, is it of consequence in this litigation that no certificate was filed in New York reflecting the merger of the court reporting business with other entities, since the senior secured lender had a security interest in both the subject court reporting business and the entity into which it merged.

We modify the disposition of this action seeking declaratory relief only to declare in defendant’s favor (see Lanza v Wagner, 11 NY2d 317, 334 [1962], cert denied 371 US 901 [1962]). Concur—Sullivan, J.P., Ellerin, Williams, Gonzalez and McGuire, JJ.