IN RE: WINSTON CAPITAL (2010)

Judgment, Supreme Court, New York County (Alice Schlesinger, J), entered September 8, 2008, dismissing the petition brought pursuant to CPLR article 52 seeking an order cancelling the sheriff's levy and voiding the execution notices with respect to apartment 6X at 400 Central Park West and apartment 18X at 392 Central Park West, unanimously reversed, on the law, without costs, the petition reinstated and the matter remanded for further proceedings consistent herewith.

In this special proceeding to prevent execution against properties and rents subject to a mortgage, petitioners established their prima facie entitlement to judgment as a matter of law by demonstrating their prior, recorded mortgage against the subject apartments and rents derived therefrom (see Dime Sav. Bank of N.Y. v. Roberts, 167 A.D.2d 674, 675-676 [1990], lv dismissed 77 N.Y.2d 939 [1991] ). In opposition, respondents raised a triable issue as to petitioners' good faith in entering into the mortgage, including facts suggesting that petitioner mortgage broker, Winston Capital, LLC, and its general counsel participated with petitioner judgment debtor in a sham conveyance of an apartment to the judgment debtor's wife (see Debtor and Creditor Law § 273-a). Given the existence of genuine factual disputes that could not be resolved on the papers, Supreme Court, rather than dismissing the proceeding, should have ordered disclosure and a trial (see e.g. People v. Zymurgy, Inc. 233 A.D.2d 178 [1996]; Matter of General Motors Acceptance Corp. v. Norstar Bank of Hudson Val., 156 A.D.2d 876 [1989]; CPLR 5239).