Bottone v LP Printing Corp.
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Bottone v LP Printing Corp. 2012 NY Slip Op 32645(U) October 17, 2012 Sup Ct, Suffolk County Docket Number: 35082-2011 Judge: Emily Pines 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] SHORT FORM ORDER Index No. 35082-201 I SUPREME COURT - STATE OF NEW YORK COMMERCIAL DIVISION, PART 46, SVFFOLK COUNTY Present: Motion Date: Submit Date: Motion No.: Hon. Emily Pines c 07-16-2012 07-24~2012 00] MD Justice Supreme Court [ ] Final [x 1 Non Final __________________ -X Attornev for Plaintiffs Peter D, Tamsen, Esq, 260 Montauk Highway, Suite 14 Bayshore, New York 11706 JEANETTE BOTTONE AND RICHARD DENIS, Plaintiff, Allornev lor the Ddendants Mayer Ross & Hagan PC Christopher Ross, Esq. 178 East Main Street Patchogue, New York 11772 - againstLP PRINTING CORP AND LYNN PETERSON, Defendants. X ORDERED, II, this action, inter alia, to recover on a promissory note and a persona! guaranty, the plaintiffs move for summary judgment on the complaint and dismissing the defendants' counterclaim for fraud. The defendants oppose the motion. Factual alld Procedural Background The relevant facts arc essentially undisputed. On September 2, 2008, an Agreement of Sale ,"vas entered into between non-party lMJ Printing Corp. ("JMJ"), as Seller, and "a corporation to be formed by Lynn P. Peterson," as Purchaser, for the sale of the assets of JMJ, a printing business. The purchase price of$140,OOO included a promissory note in the [* 2] amount of$90.000. The closing orthe sale occurred on October I. 2008. at which time a Note in the amount of $90.000 was given by defendant LP Printing Corp. ("Lp:·). the corporation formed by defendant Lynn Peterson ("·Peterson'·), in favorof JMJ. The Note was personally guarantecd by Pcterson. The Note required monthly payments lor a period of five vears. " PIainti ITsallege that the Notc v.... assigned to them pursuant to an ··Allongt: to Note·' as which states: "This nOle, Illade the I" day of Octo her, :2008 by LP Printing Corp. 10JMJ Pi·illting Corp .. is hereby assigned to Jeanette HO([OIK and Richcll-d Denis, as oCthe 21 ,t day ofOclobcr 2008, by 1MJ Printing Corp_" The Allonge to Note is signed by Plainliffs Jeanette Bottone ("Bottone") and Richard Denis ("'Denis') but there is no indication that such signatures were made in their capacities as the owners of JMJ. Plaintiffs commenced this action against LP and Peterson in 2011 alleging, among other things, that LP defaulted on the Note by failing to make the payment due June 1,2011, and continuing thereafter. The first cause of action seeks to recover against LP for the balance due on the Note. The second cause of action seeks to recover the assets of LP pursuant to the terms of the Note. The third cause of action seeks to recover the balance due on the Note from Peterson as the guarantor. The fourth cause of action seeks an assignment ol'the lease for the premises at which LP operates, which lease had been assigned by JMJ to LP when the sale closed in 2008. The Defendants served an answer to the complaint containing multiple affinnativc defenses as well as a counterclaim for fraud alleging, among other things, lhat the Plaintiffs "intentionally inflated, manipulated or other wise distorted the size, vHllIeand quality of the accounls" of JMl" Defcndants further allege that PlaintiflS exerted undue and improper inllucnce ovcr Payomatic Corp .. one of JMJ's customers, ~'to create a rouse that it was a valuahle and regular customer" and that after the sale of JMJ to Defendants. Payomatic terminated its business relationship with Defcndants. The PIainti rfs now move for summary judgment ·'upon the cnuse of action set forth Page 2 of 6 [* 3] in the Complaint.'· In support of their motion. the Plaintiffs submit their own affidavits. as \.vcll as an affidavit from Kevin Spelman. an officer of Payomatic Corp. In her affidavit, Bottone states, among other things, that she and Denis mvned and operated JMJ and that in :2008 they decided to sell the business to Peterson for $140.000. She claims that the price ,vas based upon JMJ' s business "without . Payollwtic Corp.' invoices" and that the sale price would have double if it had included Payomatic invoices. Bottone further alleges that Peterson had counsel throughout the transaction, made a thorough investigation into the books and records of./M.I, was fully aware that Bottone's ex-husband is Spelman, an officer of Payomatic, and had a full understanding that there was no guarantee that JM.!'s clients/customers would remain j~)l1owingthe sale. Bottone contacted Peterson following Peterson's failure to make the Note payment due on June 1,201 I, at which time Peterson indicated that she was having trouble making payments as she had lost her largest client, Payomatic Corp. The aftldavit from Denis essentially repeats the statements in Bottone's affidavit. In his affidavit, Spelman states, among other things, that Payomatic had been a customer of JMJ and \vas a customer of LP for approximately six months following the sale of the business in 2008. During that time, the quality and timeliness ofLP's work declined dramatically to the point where Payomatic decided to no longer use LP to produce its printed products. Spelman states that the decision to change printing vendors had nothing to do with his divorce from Bottone or his prior relationship with JMJ. Based upon the foregoing, Plaintiffs argue that they arc entitled to summary judgment as they have provided proof of the Note and nonpayment according to its terms. Plaintiffs contend that the Note was properly assigned to them by JMJ and. as such, they are the O\vners and holders of the Note. With regard to the counterclaim, Plaintiff') contend that the evidence establishes that Peterson conducted due diligence prior to entering into the Purchase Agreement and that Spelman's atlidavit establishes that Payomatie stopped using LP because of the dramiJtic decline in the quality and timeliness ofLP's work. In opposition to Plaintiff.,,' motion, Peterson submits an arlidavit in which she states that she 'Oil-lilycitcratc[s] the positions and statements of" her attorney made on her behalf r as an individual and as President ofLP. In an Affirmation in Opposition, Peterson' s attorney Page 3 of 6 [* 4] admits the existence of the Note betv·/ccn JMJ and LP. However. Defendants make a prima facie showing of entitlement to judgment have failed to as a matter of law because the Allonge to Note. pursuant to which the Note was purportedly assigned from JMJ to Plaintirrs is defective. properly Specitically. endorsed individuals. Defcndants contend, among other things. that the Allonge is not as it docs not indicate that is only signed by Bottone and not on behalr of JMJ_. and that Plaintiffs and Denis as have not demonstrated that the 1\ Ilongc was attached to the Note. In reply the Plaintiff,; contend, through thier attorney's affirmation, that JMJ, hy its orticcrs Bottone and Denis, validly assigned the Note to Bottone and Denis. as individuals. Additionally, Plaintiffs contend that they have continuously had possession initially in their capacities as officers of 1M! and then as individuals of the Note, alter .IMJ assigned it to thclll. Finally, Plaintiffs claim that the Allonge is affixed to the Notc by staples. Discussion A party moving showing of entitlement demonstrating for summary judgment to judgment has the burden of making as a matter of la\\', offering a prima facie sufficient evidence the absence of any material issues of fact (Winegrad v. New York Univ. Med. Ctr., 64 NY2d 85 [19851; Zuckerman v. City a[New York, 49 NY2d 557 (19801). Once a prima facie showing has been made by the movant, the burden shifts to the party opposing the motion to produce evidentialY proof in admissible form sufficient to establish material issues of fact which require a trial (see, Zayas v. Hoff Hollmv Hitls Cent. School Disl., 226 AD2d 713 [2nd Dept. (9961). "[1]0 determining a motion for summary judgment, must be viewed in the light most favorable to the nonmovant" 63 I\D3d 895 [2d Dept 2009]). Since summary judgment (Pearson v Dix McBride, LLe. is the procedural triaL the motion should be denied if there is any doubt as to the existence or when a material issue of n.ct is arguable evidence equivalent ofa of a triable issue (Salina v IPT Trucking, Inc.. 203 I\D2d 352 f2d Dcpt 1994]). I\s recently set forth by the Appellate Division, Second Department v. II East 36'''. LLC (90 AD3d 70S. 706-707 [2d Depe 2011]): Page 4 oj (-j in Griffon V,LLe [* 5] "T 0 establish prima facie entitlement to j udgmcnt as a maHer of law un tile iSSLleof liability with respect tu a promissory note, a plaintiff must show the existence of<l promissory nOle executed by the defendant and the failure uflhe defendant to pay in accordance with the nOte's terms. To establish prima facie emitlcmcnt to judgment us a mutter of law on the issue of liability with respect to a guaranty, a p IJillti ff must suhmit proof of the underlying nOle. a guaranty, and the failure of the defendant to make payment in accordance with the terms of those instruments. Once the plaintiff submits evidence establishing its prima f~lcie case, the burden then shills to the defendallts to submit evidence establishing the existence or a triab Ie issue of fiKt with respect to a bona fide defense" (JIlternal citations omitted). The plaintifTs failed to establish a prima [lcie entitlement to judgment as a matter of law on the issue ofliability. Because Defendants raised standing as an affirmative defense in their answer, it is Plaintiffs' burden to prove a valid assignment of the Note in order to demonstrate their standing as a holder. The Note is a negotiable instrument which requires indorsement on the instrument itself"or on a paper so firmly affixed thereto as to become a part thereof" (UCe 3-202[2]) in order to effectuate a valid assignment of the entire instrument (see Slulsky v. Blooming Grove Inn, Inc., 147 AD2d 208, 2 J 2 [2d Dept 1989]). The Note itself was not indorsed to Plaintiffs and the Plaintiffs evidential)' submissions were insufficient to establish that the Allonge was affixed to the Note. In their affidavits submitted in support of the motion neither plaintiffstated that the Allonge was affixed to the Note and the Allonge itself was annexed as a separate exhibit to the Plaintiffs' motion papers. Thus, the Plaintiffs failed to establish that the Note was validly assigned to them by J.MJand their motion for summary judgment is denied. In any event. contrary to defendants' contention, the f:Jct that the Allonge does not contain an express indication that Bottone and Denis signed the instrument on behalfof.1MJ, rather than in their individual capacities, does not invalidate the purported assignment of the Notc. The signatures on the Allonge must be read not in isolation, but in the context of the Notc as a whole (see 150 Broadway N. Y. Assocs., L.P. v. Bodner, 14 AD3d 1 [PI Dept. 2004]). When read as a whole, it is clear that the PlaintitJs signed the Allonge in their corporate capacities as the corporation was the owncr/holder of the Note and thc only entity \-viththe right to assign it. This conclusion is confirmed by the Plaintiffs affidavits and is not rebutted hy an arndavit from the Defcndants. The Plainti/ls have also luiled to make a prima l~lcie showing of entitlement to summary judgment dismissing Defendants' counterclaim for fraud. The elements ofa cause of action seeking to recover damages for fraud arc ." a representation of material facL the l~llsityof that representation, knowledge by the party who made the representation that it was raIse when made, justifiable reliance by the plaintift~ and resulting lI1Jury Page 5 of 6 (Centro [* 6] Empresarial Ccmpresa SA. v. America Movil, SA.B. de C.V. 17 NY3d 269. 276 r::WllJ quoting Global A1ins. & Metals Corp. v. Holllle. 35 1\D3d 93. 98 fIsl Dcpt. 2006]). Ilere. the Plainti ITshave nut submitted cvidence demonstrating they did not intcntionally inflate. manipulate or othcrwise distort the size. value and quality oCthe accounts of .1M], as alleged by Defendants. regarding the representations and quality of JMJ's summary judgment as a matter of law that made to Defendants prior to the sale regarding the size. value accounts. dismissing In fact. they did n0t submit any evidence Accordingly, Defendants' that branch of Plaintiffs' counterclaim motion seeking is denied. Counsel for the parties are hereby directed to appear before the Court for a preliminary conference on November 5, 2012, at 10 a.m. This constitutes the DECISION and ORDER orthc Court. Dated: October 17,2012 Riverhead, New York [ ] Final [x ] Non Final Page 6 of 6
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