Bershtein v Singh
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Bershtein v Singh 2012 NY Slip Op 30571(U) February 21, 2012 Sup Ct, Nassau County Docket Number: 15410-11 Judge: Timothy S. Driscoll Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. ...... ..... ..... ... [* 1] SUPREME COURT - STATE OF NEW YORK SHORT FORM ORDER Present: HON. TIMOTHY S. DRISCOLL Justice Supreme Court ------------------------------------------------------------------- x ALEXANDRA BERSHTEIN, Plaintiff TRIALIIAS PART: 16 NASSAU COUNTY Index No: 15410- Motion Seq. No: 1 Submission Date: 12/22/11 -againstIMINDER P. SINGH a/ka VICTOR SINGH, INDU SINGH and IN TOUCH CONCEPTS, Defendants. --------------------------------------------------------------------x The following papers have been read on this motion: Notice of Motion , Affidavit, Attorney s Affirmation and Exhibits.................. Affidavits in Opposition, Affirmative Defenses and Verified Co un terclaims, and Exhib its............... ................ ....... ........... Affirmation in Further Support, Affidavit in Further Support and Exhibits... This matter is before the Cour for decision on the motion fied by Plaintiff Alexandra Bershtein (" Bershtein " or " Plaintiff' ) on October 28 2011 and submitted on December 22 , 2011. For the reasons set forth below , the Court denies the motion , and deems the moving and answering papers the complaint and answer , respectively. BACKGROUND A. Relief Sought Plaintiff moves for an Order , pursuant to CPLR 3213 , granting Plaintiff Summary Judgment in Lieu of Complaint and directing the entry of judgment for the Plaintiff and against Defendants Iminder P. Singh a/k/a Victor Singh (" Victor ), Indu Singh (" Indu ) and In Touch Concepts , Inc. (" ITC" ) (collectively " Defendants [* 2] B. The Parties ' History , Victor In support of Plaintiffs motion , Bershtein affirms that on September 10, 2010 made , executed and delivered to Plaintiff an Installment Note ("Note ) in the original sum of One Milion Six Hundred Thousand ($1 600 000. 00) Dollars. The Note was personally guaranteed by ITC , and by Indu , Victor s spouse (" Guarantees the Note and Guarantees (Ex. A to Bershtein Aff. ). ). Bershtein provides copies of The Note contains an interest rate of two (2%) percent per anum. Pursuant to the terms of the Note , Defendants were required to make monthly installments in the amount of One Hundred One Thousand Four Hundred Twenty Two Dollars 2010. ($101 422. 56) and 561100 for a period of sixteen (16) months commencing on October 15 Bershtein affrms that Defendants made eleven (11) payments of principal and interest through August of 20 11 , but have failed to remit payments since that time. The unpaid principal balance on the Note , which is Five Hundred Four Thousand Five Hundred Eighty Seven Dollars ($504 587. 13) and 13/100 , is now due in full. The Note authorizes Plaintiff, upon any event of default, to declare the entire unpaid amount of principal or interest to be immediately due and payable. Plaintiff has demanded payment in full on the Note by serving a written notice to cure on Defendants via certified mail, return receipt requested , in accordance with the terms of the Note. Plaintiff provides a copy of the notice to cure (Ex. B to Bershtein Aff.. Pursuant to the Note , Plaintiff is also entitled to late fees at the rate of five (5%) percent with respect to any late payment, as well as reasonable attorney s fees and costs incurred in pursuing this action. Plaintiff submits that there is no defense to this action , and no triable issue of fact. Plaintiff affrms that, in addition to their nonpayment, Defendants are also in default of the Note because Defendants transferred shares in ITC to Ravi Batra (" Batra ) in violation of paragraph 6 of the Note which provides that the entire unpaid amount of principal and interest due shall immediately be declared due and payable upon transfer of any and all shares owned by Victor in ITC. In support , Plaintiff provides an aricle from The Indian Panorama Newspaper dated September 16 , 2011 (Ex. C to Bershtein Aff. ) which contains the caption " stockholder for lTC , a Hicksvile based 20 year old cellular company. Ravi Batri is a [* 3] Plaintiff s counsel provides an affrmation regarding the services provided by him to Plaintiff and the fees charged for those services. Plaintiffs counsel affrms that attomey s fees in the sum of $2 625. 00 were incurred by Plaintiff in prosecuting this action. In opposition , Victor affirms that until September 10 2010 , he and Plaintiff were shareholders in lTC , an entity that maintains an agency agreement with Verizon Wireless VZW" ) that permits ITC to sell VZWproducts and services. Victor and Plaintiff held all of the shares of ITC and each owned a 50% interest in ITC. On or about September 10 , 2010 Plaintiff, Victor and ITC entered into an agreement (" Agreement") delineating the terms and conditions on which Victor would acquire Plaintiffs 50% interest in ITC and become a 100% owner of ITC. Pursuant to the Agreement , 1) Defendants agreed to pay Alex the sum of $2. 6 milion in exchange for all of her interest in ITC; 2) Defendants were required to pay, and did pay, Plaintiff $1 milion at closing via two bank checks (Ex. 2 to Batra Aff. in Opp. ); 3) Defendants executed the Note in which they agreed to pay $1. 6 milion to Plaintiff in monthly installments of $101,422. 56; 4) the Note was secured by a mortgage (" Mortgage ) on the home of Victor and Indu; and 5) the Mortgage was to be held in escrow until a default. On or about September 10 2010, " (hJoping to obtain a better purchase price " (Victor Aff. in Opp. at 11), Victor paid Plaintiff an additional $645, 000. Victor affirms that this payment was used only as an advance payment towards his obligations on the Note , as the purchase price for Plaintiffs share of stock in ITC was not reduced. Victor alleges that he obtained these fuds by taking loans from people he knew , and provides copies ofthe checks representing these alleged loans. Victor affirms that , beginning in October of2010 , the Defendants made eleven (11) installment payments on the Note totaling $1 115 648. 16 and provides documentation corroborating those installment payments. Victor submits that he has overpaid his obligations to Plaintiff by not less than $150 000. In support , he contends that 1) Defendants ' total obligations to Plaintiff were $2. 6 milion; 2) Defendants ' total obligations to Plaintiff on the Note were $1.6 milion; 3) Defendants have paid Plaintiff a total of $2 760 648.16 consisting of payments of$l milion , $645 000 and $1 115 648. 16. Thus , Victor contends , Defendants are not in default of their obligations and Plaintiff " apparently failed to credit ITC and myself with the $645 000. [* 4] in payments on the installment note that were made in advance of the first installment payment on the note being due " (Victor Aff. in Opp. at ~ 22). Victor avers that on or about September 20 , 2011 , during a luncheon meeting Meeting ), Plaintiff promised to refrain from claiming any default on any part of the Note and Agreement in exchange for consideration of $40 000 that she claimed was otherwise due her , but which she could not prove. Victor alleges that he paid Plaintiff $40 000 in exchange for her forbearing on claiming any default on the Note and Agreement and provides a copy of check dated September 20 2011 , payable to Plaintiff in the amount of $40 000. Victor submits that the instant action lacks merit because Alex was paid in full. He contends that Defendants ' alleged overpayment to Plaintiff " was an error on my par which was induced , in large par , by the extreme stress ofVZW' s July 26 2011 threatened termination of lTC' s Master Agency Agreement" (Victor Aff. in Opp. at 9 31). Batra affirms that he is counsel for Defendants and , as of September 14 , 2011 , a nonvoting minority shareholder , Chairman and General Counsel ofITC. Until September 10 2010, Victor and Plaintiff were shareholders in lTC, an entity that maintains an agency agreement with Verizon Wireless (" VZW" ) that permits ITC to sell VZW products and services. Victor and Plaintiff held all Qfthe shares ofITC. On or about September 10 2010 , Plaintiff, Victor and ITC entered into the Agreement which delineated the terms and conditions on which Victor was acquiring Plaintiffs 50% interest in ITC and becoming a 100% owner ofITC. Batra affirms inter alia that 1) the Agreement was prompted by Plaintiffs alleged diversion ofITC funds for her own use; 2) VZW , aided by certain of its subagents , was involved in fraudulent activity including the arificial inflation of the number of accounts by fraudulently activating prepaid cellular service in the names of phantom customers; 3) to cover up its own misconduct, VZW conducted a " sham " investigation (Batra Aff. in Opp. at ~ 48) and' concluded that ITC was involved in misconduct , resulting in the termination ofITC's Master Agency agreement on or about July 26 2011 , to become effective Januar 31 2012; and 4) subagents Reachout Wireless and American Candy, whom Defendants claim were also involved in fraudulent activity with VZW , fied a putative class action lawsuit against Defendants in New York County seeking to hold the Defendants liable for what Defendants contend was the plaintiffs ' own fraudulent activities (" Related Action [* 5] Batra affrms that he was present at the Meeting in September of 2011 which was also attended by Plaintiff, her son- in- law who is an attorney, and Victor. The participants discussed the July 2011 termination of the Master Agreement " at length" (Batra Aff. in Opp. at ~ 50). Batra affirms that Plaintiff agreed to their suggestions that 1) Plaintiff forbear on collection of any remaining portions of the Note pending the resolution ofITC' s disputes with VZW which might necessitate litigation; 2) ITC seek injunctive relief against VZW; and 3) Batra assume a minority non-voting ownership interest in ITC and assume the role of Chairman and General Counsel. The paries allegedly reached an agreement which involved Plaintiffs promise to refrain from claiming any default relating to the Agreement and , in exchange , Victor agreed to pay Plaintiff the sum of $40, 000 that she claimed was owed to her , although she could not substantiate that alleged debt. Victor paid the $40 000 to Plaintiff but Plaintiff, in contravention of the paries ' agreement , nonetheless issued default notices and sought acceleration of payment. Upon receiving Plaintiff s default notice, Batra sent a letter to Plaintiffs counsel in which he mentioned the Meeting, the promises allegedly made by Plaintiff at the Meeting and the $40 000 paid by Victor to Plaintiff. Plaintiffs counsel did not respond to Batra s letter. Batra avers further that Victor recently reviewed the books and records of ITC. That review , which is stil ongoing, revealed malfeasance by Plaintiff including her failure to verify billngs received as accounts payable which resulted in improper credit card payments Batra affirms that Plaintiff cashed the $645 000 in checks provided to her by Victor (Ex. 3 to Batra Aff. in Opp. ). Defendants submit that Plaintiff has failed to credit those payments and, therefore , is seeking payments to which she is not entitled. Defendants contend that they have overpaid their obligations to Plaintiff, and are owed a refud. In reply, Plaintiff denies Defendants ' allegations regarding her diversion of funds but submits that those allegations are irrelevant to the instant motion. She describes as " ridiculous (P' s Reply Aff. at ~ 9) Defendants ' assertion that Victor pre- paid $645 000 of the $2. 6 millon before the closing. Plaintiff affrms that the checks provided relate to a separate transaction between Victor and Plaintiff involving the sale of shares and retail stock of thirteen (13) stores including but not limited to Zcom of Woodbury, Inc. and Zcom of Carle Place , Inc. In support she provides documentation (Ex. D to P' s Reply Aff. ), consisting of corporate resolutions and Plaintiff s resignation from those entities. [* 6] Plaintiff affirms that Victor s $40 000 payment to her constituted his final payment on the sale of Zcom ofNHP , Inc. and Zcom of Greenvale , Inc. They entered into a handwritten final payment agreement dated March 26 2011 (Ex. E to P' s Reply Aff. which provided that the was due within six months , or October 1 par of 2011. Thus , the $40 000 payment was never the sale of ITC. In addition , while Plaintiff admits attending the Meeting, she affrms that she . never agreed to defer Victor s payment obligations under the Note, or to add Batra as a shareholder. Plaintiff also submits that the VWZ termination letter (id. at Ex. G) related solely to Victor s personal interactions with subagents , and improper payments by him, and did not involve Plaintiff. C. The Paries ' Positions Plaintiff submits that it has demonstrated its right to judgment by producing the Note and . Guarantees, and demonstrating Defendants ' failure to make required payments pursuant to those , and no triable issue of instruments. Plaintiff also contends that there is no defense to this action fact exists. Defendants oppose Plaintiff s motion , submitting that 1) Plaintiff has failed to credit Defendants with the $645 000 in payments, allegedly towards their obligations on the Note; 2) Plaintiff is estopped from pursuing this action in light of her alleged promise at the Meeting to forbear any default against the Defendants pending the resolution of their issues with VZW, and Defendants ' payment of $40 000 to Plaintiff; 3) there are issues of fact regarding whether Plaintiff fraudulent induced Defendants into entering the Agreement by withholding information from Victor regarding lTC' s allegedly fraudulent conduct with VZW; and 4) in light of the , the Court should issues raised by Defendants regarding their alleged overpayment to Plaintiff exercise its discretion to dismiss this action. In reply, Plaintiff submits that 1) Victor and Batra have accepted and acknowledged the debt owed by Defendants to Plaintiff based on Victor s default on the Note; 2) Victor had the opportunity, and obligation , to conduct due diligence prior to entering into the Agreement with Plaintiff; 3) many of Batra s statements are hearsay statements that the Court should disregard; 4) Batra s assertions regarding improper conduct by ITC subagents are irrelevant to the instant sumar judgment; motion and do not create an issue of fact defeating PlaiI\tiff s right to 5) with respect to the Meeting, Defendants have only established that Plaintiff agreed to ITC' [* 7] proposed litigation strategy and have not demonstrated Plaintiffs assent to deferring Defendants ' default on the Note; 6) Defendants ' assertion that the $645 000 payment to Plaintiff prior to execution of the Note , was a pre- payment on the Note is " an absurdity" (Cohn Reply Aff. at ~ 14); rather , the $645, 000 was a payment for a separate transaction , specifically the sale of 13 stores; and 7) Defendants ' estoppel arguments are an attempt " to create , out of whole cloth , a legal theory of estoppel since the Note itself required a writing which doer s J not exist" (id. at ~ 21). RULING OF THE COURT A. Summar Judgment in Lieu of Complaint CPLR ~ 3213 provides as follows: 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 summar judgment and the supporting papers in lieu of a complaint. The summons served with such motion papers shall require the defendant to submit answering papers on the motion within the time provided in the notice of motion. The minimum time such motion shall be noticed to be heard shall be as provided by subdivision (a) of rule 320 for making an appearance , depending upon the method of service. If the plaintiff sets the hearing date of the motion later than the minimum time therefor , he may require the defendant to serve a copy of his answering papers upon him within such extended period of time , not exceeding ten days , prior to such hearing date. No default judgment may be entered pursuant to subdivision (a) of section 3215 prior to the hearing date of the motion. If the motion is denied , the moving and answering papers shall be deemed the complaint and answer , respectively, unless the court orders otherwise. The purose of CPLR 9 3213 is to provide a speedy and effective means of securing a judgment on claims that are presumptively meritorious. JD. Structures, Inc. v. Waldbaum 282 A.D. 434 (2d Dept. 2001). A motion for summary judgment in lieu of a complaint in an action on a negotiable instrument wil be granted only presented when it is clear that no triable issue or real question of fact is First International Bank, Ltd. v. L. Blankstein Son, Inc. 59 N. Y.2d 436 (1983), when the defense raised is unrelated to the plaintiffs cause of action 2d 543 (1st Dept. 1982), or when the defense is clearly without merit Parry v. Goodson, 89 Gateway State Bank v. Shangri-La Private Club for Women, Inc. 113 A.D.2d 791 , 792 (2d Dept. 1985). [* 8] B. Promissory Note To establish prima facie entitlement to judgment as a matter of law with respect to a , executed by the promissory note , a plaintiff must show the existence of a promissory note defendant , containing an unequivocal and unconditional obligation to repay, and the failure by the defendant to pay in accordance with the note Y.S. 2d 504 505 (2d Dept. 2011), quoting Lugli s terms. v. v. American Realty Corp. Johnston 78 A.D. 3d 2010). Once the plaintiff submits evidence establishing these elements 1133 , Sukhu , 934 1135 (2d Dept. , the burden shifts to the defendant to submit evidence establishing the existence of a triable issue with respect to a bona 83 A.D. 3d 788 , 789 (2d Dept. 2011). v. Sing Huei Chang, Jin Sheng He Id. citing fide defense. Application of these Principles to the Instant Action The Cour denies Plaintiff s motion. Plaintiff has demonstrated her entitlement to C. , which contains judgment by showing 1) the existence of the Note, executed by the Defendants their obligation to repay, and 2) the Defendants ' failure to pay in accordance with the Note terms. Defendants, however , have submitted evidence in support of their defense which includes their contention that the payments of $645 000 were intended to be credited towards their obligations on the Note. The Cour is mindful that most of these payments preceded the execution of the Note , and has considered Plaintiffs argument regarding the implausibility of Plaintiff Defendants ' contention that those payments were intended to be applied to the Note. contends that those payments were for separate transactions , specifically the sale of 13 stores and has provided corporate resolutions and other documents in support of that assertion. , the Although most of the checks are cashier s checks which do not contain a memo line personal check from Satnam K. Oberoi to Plaintiff in the amount of $50, 000 contains no information in the memo portion regarding the purose of that check. Under all the reject Defendants circumstances , and at this early stage of the litigation, the Court canot inappropriate at defense as a matter of law. The Court also concludes that summar judgment is , 1) Plaintiff s alleged this juncture in light of other issues raised including, but not limited to Plaintiffs alleged promise at the Meeting to defer Defendants ' default on the Note, and 2) consent to Batra becoming a shareholder in lTC , notwithstanding the terms of the Note. [* 9] In light of the foregoing, the Court denies Plaintiffs motion and deems the moving and answering papers to be the complaint and answer , respectively. All matters not decided herein are hereby denied. This constitutes the decision and order of the Cour. The Court directs counsel for the parties to appear for a Preliminar Conference before the Cour on March 27 2012 at 9:30 a. ENTER DATED: Mineola, NY Februar 21 , 2012 HON. TIMOTHY S. DRI SC LL ENTERED FEB 2 9 2012 NASSAU COuNTY COUTY CLIRK" OffICE
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