Catskill Watershed Corp. v Kamp

[*1] Catskill Watershed Corp. v Kamp 2006 NY Slip Op 52349(U) [13 Misc 3d 1245(A)] Decided on November 30, 2006 Supreme Court, Delaware County Lebous, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on November 30, 2006
Supreme Court, Delaware County

Catskill Watershed Corporation, Plaintiff,

against

Gerard J. Kamp, Defendant.



2005-1124



APPEARANCES:

COUNSEL FOR PLAINTIFF:

TIMOTHY E. COX, ESQ.

OFFICE & POST OFFICE ADDRESS

905 MAIN STREET

P.O. BOX 569

MARGARETVILLE, NY 12455

COUNSEL FOR DEFENDANT:

HINMAN, HOWARD & KATTELL, LLP

BY:HARVEY D. MERVIS, ESQ., OF COUNSEL

OFFICE & POST OFFICE ADDRESS

700 SECURITY MUTUAL BUILDING

P.O. BOX 5250

BINGHAMTON, NY 13902

Ferris D. Lebous, J.

Plaintiff, Catskill Watershed Corporation, moves for the second time for an order granting summary judgment (CPLR § 3212). Defendant, Gerard J. Kamp, opposes the motion.

BackgroundThis is an action to recover monies due for the nonpayment of two loans secured by personal guarantees. The facts are not disputed. On August 24, 2001, plaintiff loaned Indian Country, Inc. the amount of $90,000. Approximately a year later, on or about August 7, 2002, plaintiff loaned Indian Country, Inc. the amount of $650,000. At the time of both loans defendant, individually and as trustee of the Kamp Family Trust, had an ownership interest in Indian Country, Inc. Based on said interest, defendant executed a personal guaranty with respect to each loan. Indian Country, Inc. is now in default on both loans.

Plaintiff filed a Summons and Complaint on November 3, 2005 in the Delaware County Clerk's Office seeking damages for the combined total principal due of $679,974.05, together with interest, late fees, costs and disbursements and attorney's fees. Plaintiff seeks to collect said sums from the defendant based upon the personal guarantees he executed with respect to each loan. Defendant filed a Verified Answer dated December 15, 2005 containing one affirmative defense stating that "[u]pon information and belief, a third party has agreed to assume all debts and liabilities of the Defendant and is therefore obligated to indemnify Defendant for any judgment obtained against him in this action" (Plaintiff's Exhibit 3, ¶ 19).

Plaintiff moved for summary judgment, but the motion was denied due to plaintiff's failure to submit a copy of the pleadings and the alleged notes and guarantees (Catskill Watershed Corp. v Gerard J. Kamp, Sup Ct, Delaware County, September 7, 2006, Lebous, J., Index No. 2005-1124). By way of this second motion, plaintiff once again seeks summary judgment but has now included the proper papers thereby allowing the court to address the merits of the motion.

DISCUSSION

It is well-settled that plaintiff's burden on this motion for summary judgment is to establish a prima facie case by presentation of the unpaid promissory notes, together with unconditional guarantees of payment, notice, presentation or demand (Batinkoff v Batinkoff, 173 AD2d 929, 930 [1991]). Plaintiff has submitted copies of the pleadings and subject note and guarantees. Thus, the court finds that plaintiff has established a prima facie case by said proof and a default in payment thereof thereby shifting the burden to the defendant to demonstrate the existence of a triable issue of material fact with respect to some bona fide defense (Fidelty New York, FSB v Hanover Companies, Inc., 148 AD2d 577 [1989]; Ihmels v Kahn, 126 AD2d 701 [1987]).

In opposition, defendant submits his own affidavit averring that SHF II, LLC (Stonehill Financial) became the owner of Indian Country, Inc. in 2004. As part of the ownership transfer, defendant, individually and as trustee of the Kamp Family Trust, executed a Stock Transfer and Release Agreement (hereinafter "Stock Agreement") with SHF II, LLC. The terms of said Stock [*2]Agreement state, among other things, that SHF II, LLC agreed to use its best efforts to cause Indian Country to "[s]ecure the release of Kamp as a guarantor of indebtedness owing from the Company to...Catskill Watershed Corporation" (Defendant's Exhibit A, ¶ 7 [e], pp 5-6). Defendant avers that he has filed an third party action seeking indemnification from SHF II, LLC due to its failure to secure his release from said debts. Defendant seeks denial of plaintiff's motion for summary judgment based thereon or, in the alternative, a stay on any judgment awarded to plaintiff pending discovery by plaintiff against SHF II, LLC in the third party action.

Plaintiff contends that defendant's affirmative defense is barred by the terms of the personal guarantees at issue. More specifically, each of the personal guarantees state, in pertinent part, as follows:

Guarantor shall immediately effect such payment or performance and (without release of Debtor) Guarantor shall be primarily and directly liable to Secured Party for the complete payment and performance as set forth in the Loan Documents.

***

[t]he Guarantor absolutely, unconditionally and irrevocably waives any and all rights to assert any defense, setoff, counterclaim or cross-claim of any nature whatsoever with respect to this Guarantee or the liabilities of the Guarantor under this Guarantee or the obligations of any other person or party (including, without limitation, the Obligations of the Debtor) relating to this Guarantee or the liabilities of the Guarantor hereunder or otherwise with respect to the Obligations of the Debtor, in any action or proceeding brought by the Secured Party or other holder hereof to collect the Obligations or any portion thereof, or to enforce the liabilities of the Guarantor under this Guarantee.

(Plaintiff's Exhibit 2 B, §§ 2.1 [c] & 2.2).

The court finds that defendant is barred from asserting his first affirmative defense as a matter of law based upon the absolute and unconditional disclaimer and waiver contained in the personal guarantees which specifically preclude the guarantor from raising any defenses or counterclaims relating to the underlying debt (Citibank, N.A. v Plapinger, 66 NY2d 90, 94-95 [1985], rearg denied 67 NY2d 647 [1986]; Raven v Finkelstein, 223 AD2d 378 [1996], lv denied 88 NY2d 1016 [1996]). Based on the foregoing, the court finds defendant has failed to demonstrate the existence of a triable issue of material fact with respect to a bona fide defense. Nor has defendant offered any basis on which to grant a stay on the execution of any judgment awarded plaintiff pending discovery in the third party action.

CONCLUSION

For the reasons stated, plaintiff Catskill Watershed Corporation's motion for an order granting summary judgment against defendant, Gerard J. Kamp, is GRANTED for the amounts requested in plaintiff's motion papers, with interest, late fees, attorney's fees, costs and disbursements.

This decision constitutes an order of the court. The mailing of a copy of this Decision [*3]and Order by this court shall not constitute notice of entry.

It is so ordered.

Dated: November 30, 2006

Binghamton, New York

s/ Ferris D. Lebous

Hon. Ferris D. Lebous

Justice, Supreme Court

ALL PAPERS SUBMITTED IN CONNECTION WITH THIS MOTION HAVE BEEN FILED, ALONG WITH THE ORIGINAL DECISION AND ORDER, WITH THE DELAWARE COUNTY CLERK