Schwimmer v Brown
Annotate this CaseDecided on October 5, 2009
Supreme Court, Kings County
Mendel Schwimmer, Plaintiff,
against
Eric Brown and Keith Gordon, Defendants.
4495/09
Attorney for Plaintiff
Chaim Dahan, Esq.
2115 Avenue U
Brooklyn, NY 11229
By Fax: 718-891-2274
Attorney for Defendants
Russell J. Shanks, Esq.
Cyruli Shanks Hart & Zizmor LLP
420 Lexington Ave.
New York, NY 10170
Carolyn E. Demarest, J.
Plaintiff Mendel Schwimmer moves pursuant to CPLR § 3213 for an
order granting summary judgment against defendants Eric Brown and Keith Gordon for the sum
of $340,000.00 allegedly owed on a promissory note dated and executed as of October 7, 2008
(the "Note"). Plaintiff also requests an order directing judgment against the defendants in the
amount of $113,333.00, representing plaintiff's costs and attorney fees in prosecuting this action.
Regarding repayment and maturity, the Note provides:
Maker will make monthly payments on the 8th day of each month beginning on
November 8, 2008. Maker will make these payments every month until Maker has paid all
amounts due herein including any other charges described below that Maker may owe under this
Note. Maker will repay all principal and interest due hereunder in full within ninety (90) days of
Payee's Demand for payment thereof, which is called the Maturity Date.' The Maturity Date
shall be before November 30, 2008. . .Commencing on November 8, 2008 and continuing
thereafter, Maker's monthly payments will be in the amount of U.S. $3,688.33, representing
consecutive installments of interest only. All remaining principal and interest shall be due and
payable on [*2]the Maturity Date.
(Exhibit A to the Schwimmer Affidavit in Support, Promissory Note dated October
7, 2008, at 1)
Regarding late payments, the Note provides:
1.If any installment under this Note is not paid when due, the entire principal
amount outstanding hereunder and accrued interest thereon shall at once become due and
payable, at the option of the Payee. . .In the event of any default in the payment of this Note or
any other document or instrument so evidencing or securing this Note, and if the same is referred
to an attorney at law for collection or any action at law or in equity is brought with respect
hereto, Maker shall pay the Payee all expenses and costs, including, but not limited to, attorneys'
fees except due to any willful misconduct or gross negligence attributable to the Payee or its
agents.
2.. . .If any installment under this Note or any other monetary payment due under
this Note, is not paid on the date when the same is due, the outstanding principal balance of this
Note shall bear interest during the period in which Maker is in default at a rate equal to
twenty-four (24%) percent per annum.
(Promissory Note at 1).
Plaintiff claims in his affidavit that, despite repeated demands for repayment after
November 30, 2008, defendants have not made any payments under the Note and the entire
principal plus default interest from that date is now due and owing to plaintiff. Defendants claim
that they have not defaulted under the Note because (i) the terms of the Note regarding the
maturity date are inconsistent, (ii) defendants made several payments under the Note, and (iii)
defendants did not receive notice from plaintiff that the full amount of the Note was due and
payable. In support of their contention that payments have been made under the Note,
defendants' opposition papers include copies of several checks, which defendants claim represent
payments made under the terms of the Note. Defendant Keith Gordon also affirms that he
tendered $40,000 in cash to plaintiff as payment toward the principal due under the Note.
DISCUSSION
When an action
is based upon an instrument for the payment of money only, the plaintiff, pursuant to CPLR
§ 3213, may serve with the summons a notice of motion for summary judgment and the
supporting papers in lieu of a complaint. The justification for this expedited procedure is that
such obligations are presumptively valid, and holders of them, in the absence of questions of fact
as to authenticity or default, should not be subject to the delay occasioned by formal pleading
(see, e.g., Logan v Williamson & Co., 64 AD2d 466 [4th Dept 1978]).
A promissory note qualifies as an instrument eligible for treatment under CPLR
§ 3213 if the plaintiff provides proof of the note and a failure to make the payments called
for by its terms (CPLR § 3213; Seaman-Andwall Corp. v Wright Mach. Corp., 31
AD2d 136, 137 [1st Dept 1968], aff'd 29 NY2d 617 [1971]; see also Gateway State
Bank v Shangri-La Private Club for Women, 113 AD2d 791 [2d Dept 1985]; Quest Commercial, LLC v Rovner, 35
AD3d 576 [2d Dept 2006]). The usual standards for summary judgment motions apply to
CPLR § 3213 motions; once plaintiff establishes that the action is based on an instrument
for the payment of money only, and that defendant has not made payments under the terms of the
instrument, defendant must come forward with proof of evidentiary facts showing the existence
of a material issue of fact in order to defeat the motion (Gateway, 113 AD2d at 791).
In support of its motion, plaintiff has supplied the Court with a copy of the Note
signed [*3]by both defendants. The Note provides in relevant part
that the defendants, for value received, promise to pay to plaintiff the principal sum of
$340,000.00 plus interest, and that the Note "sets forth the entire agreement and understanding of
the Payee and the Maker." Defendants do not dispute that they signed the Note. Therefore,
plaintiff has met his burden to establish that the instant action is based on an instrument for the
payment of money only (Gateway State Bank v Shangri-La Private Club for Women,
113 AD2d at 791-92).
Plaintiff also bears the burden of proving default on a CPLR § 3213 motion
(Seaman-Andwall, 31 AD2d at 136). Plaintiff claims that defendants are in default by
virtue of the fact that he allegedly made demands for payment after the maturity date, which he
argues is November 30, 2008, but is yet to receive full payment under the Note. Defendants do
not directly dispute that they are in default under the Note. Instead, they argue that the terms of
the Note render it unenforceable. Specifically, defendants claim that the terms regarding the
maturity date create an ambiguity in the document making "[i]t . . . virtually impossible for
Plaintiff to declare the full principal and interest due on the Note before November 30, 2008, for
the simple reason that ninety (90) days does [not] exist between October 7, 2008 — the
date defendants executed the Note, and November 30, 2008 — the date designated. . .as
the latest possible maturity date." (Brown Affidavit in Opposition ¶ 11).
The determination of whether a writing is ambiguous, and the construction and
interpretation of an unambiguous written agreement, are issues of law within the province of the
court (Katina v Famiglietti, 306 AD2d 440, 441 [2d Dept 2003]). Whatever confusion
defendants may profess regarding the maturity date, the terms of the Note are clear. As recited
above, the Note's maturity date is no later than November 30, 2008, the full obligation being
payable within ninety (90) days thereof. Defendants do not assert that they satisfied their
obligation to plaintiff within this time period. Therefore, it is undisputed that defendants are
liable under the Note.
Defendants also claim that the outstanding principal and interest under the Note are
not currently due and payable to plaintiff because defendants never received a notice from
plaintiff of his intent to declare a Maturity Date. Apart from the clear provision in the Note that
the "Maturity Date" is no later than November 30, 2008, the Note provides:
4.Presentment, notice of dishonor, notice of default, notice of acceleration and
protest are hereby waived by Maker and all makers, sureties, guarantors and endorsers hereof. . .
11.WAIVER.The Maker waives presentment, demand for payment, notice of
dishonor and any or all notices or demands in connection with the delivery, acceptance,
performance, default or enforcement of this Note and consents to any or all delays, extensions of
time, renewals. . .and any and all waivers or modifications that may be granted or consented to
by the Payee with regard to the time of payment or with respect to any other provisions of this
Note, and agrees that no such action, delay or failure to act on the part of the Payee shall be
construed as a waiver by the Payee of, or otherwise affect, in whole or in part, its right to avail
itself of any remedy with respect thereto.
(Promissory Note at 2-3). The express terms of the Note therefore preclude
defendants' argument that plaintiff has waived the right to declare defendants' in default due to
their failure to notify defendants of their default in writing since the written terms of the
document expressly [*4]provide that defendants waive notice of
default. (See Josephthal Holdings, Inc.
v Weisman, 5 AD3d 221, 222 [1st Dept 2004]). Therefore, defendants' arguments which
attempt to render the Note unenforceable fail to raise an issue of fact.
However, questions of fact exist as to the amounts defendants have already paid towards the ultimate amount due under the Note because defendant proffers documentary proof of payment towards the Note. Annexed to their opposition papers are numerous checks which, according to defendants, show that they have paid at least $38,450.00 under the terms of the Note. In reply, plaintiff attempts to impeach the validity of the checks but never directly disputes that defendants have made some payments under the Note. Indeed, in his reply, plaintiff argues that, at the very least, partial summary judgment should be granted in his favor, suggesting that some payments were made under the Note. Therefore, drawing all reasonable inferences in favor of the non-moving defendants (see, e.g., Sosnoff v Carter, 165 AD2d 486, 492 [1st Dept 1991]), there remains an issue of fact as to the total amount currently outstanding under the Note. Plaintiff's motion for summary judgment in lieu of complaint is denied. Plaintiff is directed to file and serve a formal complaint in this action within twenty (20) days of the date of this order. Failure to file a complaint will result in dismissal of the action.
Plaintiff's request for attorney's fees is denied, with leave to renew, inasmuch as it was contingent upon plaintiff's motion for summary judgment in lieu of complaint.
The foregoing constitutes the decision and order of the Court.
ENTER
________________________
J.S.C.
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