Sullivan & Cromwell, LLP v Mark Ross Servs. Corp.
Annotate this CaseDecided on July 18, 2005
Supreme Court, New York County
Sullivan & Cromwell, LLP, Plaintiff,
against
Mark Ross Services Corporation, MARK E. ROSS and MARK ROSS & CO., Defendants.
602053/2004
Richard B. Lowe, J.
Plaintiff Sullivan & Cromwell, LLP moved previously for summary judgment in lieu of a complaint, based upon two promissory notes and a Limited Guaranty. This court denied the motion, in an order dated February 8, 2005, because Sullivan & Cromwell, LLP failed to submit, with its moving papers, a sworn affidavit of Michael M. Wiseman, Esq., a witness for the firm. At that time, this court granted Sullivan & Cromwell, LLP leave to renew its motion, upon the production of a proper sworn affidavit of Mr. Wiseman. Sullivan & Cromwell, LLP has now provided an Affidavit of Michael M. Wiseman, and so, renewal is granted, in this court's discretion. See J.D. Structures, Inc. v Waldbaum, 282 AD2d 434, 436 (1st Dept 2001). Upon renewal, plaintiff's motion for summary judgment in lieu of a complaint is granted.
Background
The facts are recited in detail in the court's previous decision, dated February 8, 2005, and will only be repeated in the present motion as necessary.
Discussion
Defendants argue that Sullivan & Cromwell, LLP has failed to establish that it is the real party in interest. This argument lacks merit. A real party in interest has a real and substantial interest in the outcome of the litigation. See Reliance Ins. Co. v Info. Display Tech., Inc., 2 AD3d 701 (2nd Dept 2003). In his reply affidavit, David B. Tulchin, a member of Sullivan & Cromwell, LLP, affirms that Sullivan & Cromwell registered as a limited liability partnership, and is the successor in interest to Sullivan & Cromwell, a general partnership, effective January 1, 2003. As an attached exhibit, Tulchin submits a copy of the Certificate of Registration of Sullivan & Cromwell, LLP filed with the Secretary of State of New York. Further, in their brief defendants acknowledge that Sullivan & Cromwell, a general partnership, was the predecessor of Sullivan & Cromwell, LLP. See Defendants' Memorandum of Law in Opposition, p. 3. Thus, Sullivan & Cromwell LLP, as its successor, is the real party in interest, and has standing to bring this action.
Defendants also argue that Sullivan & Cromwell, LLP's predecessor was not the payee of the promissory notes, and thus, the alleged payee, the Sullivan & Cromwell Master Split Dollar [*2]Life Insurance Program, needs to be joined as a party. A person whose "interest may be adversely affected by a potential judgment" must be made a party to the action. See Kamel v White Plains Common Council, 284 AD2d 464, 465. However, the plain language of the promissory notes state, in part, that "Mark Ross Services Corporation promises to pay to Sullivan & Cromwell, a general partnership, as nominee for the Sullivan & Cromwell Master Split Dollar Life Insurance Program." The plain language of the promissory notes makes clear that payment was to be made to Sullivan & Cromwell, LLP, as successor to Sullivan & Cromwell, the general partnership, and not to the Sullivan & Cromwell Master Split Dollar Life Insurance Program. Thus, the Sullivan & Cromwell Master Split Dollar Life Insurance Program will not be affected by the outcome of this action, and need not be joined as a party. Defendants fail to raise a triable issue of fact as to whether plaintiff, alone, can bring this action.
The Court also finds defendants' argument that the plaintiff's Notice of Default was fatally deficient unavailing. The promissory notes do not state that the Notice of Default must be mailed separate and apart for each note and each defendant. The notes only require that the Notice be in writing to the Makers. Further, defendants do not deny that they defaulted on both promissory notes, nor do they deny liability as to those two notes.
CPLR 3213 provides that, "when an action is based upon an instrument for the
payment of money only or upon any judgment, the
plaintiff may serve with the summons a notice of
motion for summary judgment and the supporting
papers in lieu of a complaint..."
Defendants argue that plaintiff cannot obtain judgment against Mark Ross & Co. (MRC) on the Limited Guaranty because the Guaranty is not an instrument for the payment of money only, in that the obligation under the Guaranty is not unconditional.
Defendants assert that Section 10(g) of the Limited Guaranty contains a condition that MRC cannot be held liable on the Guaranty as long as any payment may be voidable or fraudulent under the bankruptcy code or comparable state law, and thus, this provision requires an additional showing of MRC's financial solvency. Defendants further assert that Section 10(g) contains another condition that any obligation of MRC may only be made from fees, commissions, and assets acquired after the date of execution, and such are future events or conditions which are not specifically identified or quantified as obligations under the Guaranty.
A guaranty, like a promissory note, must be unconditional in order to be an instrument for the payment of money only. See Weissman v Sinorm Deli, 88 NY2d 437 (1996). Here, the court agrees with plaintiff that Section 10(g)(I) limits the maximum amount payable by MRC based on its financial condition at the time the Guaranty was made. Thus, it does not require an additional showing of solvency in order to establish liability. Further, Section 10(g)(ii) limits the amount of the obligations to fees, commissions, and other assets MRC acquired since the execution of the Guaranty. This limitation would only affect the amount due. [*3]
The mere fact that defendants submit an affidavit from MRC's vice president and Chief Financial Officer, Bradley Baker, stating that MRC's indebtness exceeds its qualifying assets is not enough to raise a triable issue of fact as to MRC's liability based on the Guaranty. Although, Baker alleges that MRC provided its financial information to the NASD, which shows its indebtness, he does not allege or present proof that MRC has filed for bankruptcy. Thus, it is not insolvent under Section 10(g) of the Limited Guaranty.
Accordingly, it is
ORDERED that the motion to renew is granted and, upon renewal, it is
ORDERED that plaintiff Sullivan & Cromwell, LLP's motion for summary judgment in lieu of a complaint is granted, and the Clerk of the Court is directed to enter judgement in favor of plaintiff Sullivan & Cromwell, LLP and against defendant Mark Ross Services Corporation in the amount of $2,300,000 and against defendants Mark Ross Services Corporation, Mark E. Ross and Mark Ross & Co. in the amount of $380,000, together with interest as prayed for allowable by law [at the rate of __% per annum from the date of _________], until the date of entry of judgment, as calculated by the Clerk and thereafter at the statutory rate, together with costs and disbursements to be taxed by the Clerk upon submission of an appropriate bill of costs; and it is further
ORDERED that the Clerk is directed to enter judgment accordingly.
Dated: July 18, 2005ENTER:
________________
J.S.C.
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