Phoenix Experiential Designs v Lerner
Annotate this CaseDecided on March 31, 2016
Supreme Court, New York County
Phoenix Experiential Designs, Plaintiff,
against
Shawn Lerner and ZIP-FLYER, LLC, Defendants.
159723/15
For plaintiff:
Mitchell M. Breit, Esq.
Simmons Hanly Conroy LLP
112 Madison Ave.
New York, NY 10016
212-784-6400
For defendants:
Alexander D. Tuttle, Esq.
Tuttle Yick LLP
220 E. 42nd St., 29th Fl.
New York, NY 10017
212- 207-4324
Barbara Jaffe, J.
Plaintiff moves pursuant to CPLR 3213 for an order granting it summary judgment in lieu of complaint. Defendants oppose.
On March 15, 2013, plaintiff and defendant Zip-Flyer, LLC entered into a contract for certain goods and services. (NYSCEF 4). After issues arose between them, they entered into a "mutual release," dated June 27, 2015, and signed by plaintiff and defendant Lerner for Zip-Flyer as the "duly authorized signatory." (NYSCEF 5).
The release provides that plaintiff and Zip-Flyer, in consideration for Zip-Flyer's payment of $43,217.12 in accordance with the "Conditions of Payment" set forth in the release, mutually release one another, from and all claims or lawsuits which they or their principals, directors, officers, or members had or may have, relating to the parties' 2013 contract, and that it is in full and final settlement of the claims. The conditions of payment provide that Zip-Flyer "shall [*2]make" three payments of $11,709.03, upon the execution of the release and on or before August 15, 2015 and September 15, 2015, and a final payment of $8,090.03 on or before October 15, 2015. The release also provides that it "shall be binding upon the parties' satisfactory completion of all of the foregoing Conditions of Payment." (NYSCEF 5).
As it is undisputed that Zip-Flyer failed to make any of the payments, plaintiff seeks here a judgment for the amount agreed to in the release. (NYSCEF 3).
Defendants argue that the release was conditional on Zip-Flyer's payment pursuant to the conditions of payment, and that therefore the release was a proposed future settlement which would only become enforceable and binding upon the payment. And, as Zip-Flyer never made the payments, the release is not binding, nor does it constitute an instrument for the payment of money only as required by CPLR 3213. They also contend that after signing the release, they learned that plaintiff had not complied with their 2013 agreement and they thereby incurred damages, which is the basis upon which they refused to make the payments and have now elected to forego the release and pursue their claims against plaintiff. Finally, Lerner argues that he may not be held liable on the release as he is not a party to it. (NYSCEF 11, 12).
In reply, plaintiff denies that the release is conditional or that it is relevant whether defendants incurred other damages, and contends that Lerner is a proper party as he signed it as a duly authorized signatory, the release binds Zip-Flyer's principals, and a shareholder who exercises complete domination and control over a corporation and abuses the privilege of doing business to perpetrate a wrong may be held individually liable. (NYSCEF 14, 15).
CPLR 3213 permits a plaintiff to serve a summons and a notice of motion for summary judgment in lieu of a complaint when the action is based on an instrument for the payment of money only. A plaintiff makes a prima facie case pursuant to CPLR 3213 by submitting evidence of an unconditional promise to pay a sum certain and the failure to pay it. (Weindorf v Wightman, 133 AD3d 822 [2d Dept 2015]).
Here, the release contains an unconditional promise by Zip-Flyer to pay $43,217.12 in four separate installment payments. Once the payments are made, the parties thereby release any claims against each other related to their contract. There is no condition precedent to payment, nor is consideration required. In essence, the release is a settlement agreement, which is enforceable as an instrument for the payment of money only. (See Krape v PDK Labs, Inc., 34 AD3d 751 [2d Dept 2006] [action qualified for treatment under CPLR 3213 where, to end dispute, parties entered into agreement containing release, and expressed intention that, in exchange for payment of sum in installments by defendant, litigation between parties would end; plaintiff made prima facie case by submitting agreement and proof of failure to make payment]; J.D. Structures, Inc. v Waldbaum, 282 AD2d 434 [2d Dept 2001] [settlement agreement is instrument for payment of money only; defendant agreed he owed money, which was to be paid in installments, and in consideration for full payment, plaintiff agreed to discontinue litigation]; Torres & Leonard, P.C. v Select Prof. Realities, Ltd., 118 AD2d 467 [1st Dept 1986] [agreement, which also provided that parties agreed to discontinue litigation between them, provided that defendant was to pay sum in installments, and upon failure to pay, court properly granted judgment pursuant to CPLR 3213 as defendant made unconditional guarantee that money would be paid to plaintiff in specific amounts and at specific times; instrument qualifies if it "requires the defendant to make certain payments and nothing else"]). .
Once the release was signed, it became a settlement agreement. Moreover, the promise to pay is not conditional, especially because it requires that Zip-Flyer make the payments. Rather, the release is conditional and is not be binding unless Zip-Flyer pays.
Defendants' interpretation of the agreement would mean that the promise to pay is conditioned on Zip-Flyer's payment of the sum, which is nonsensical, and their allegation that plaintiff failed to comply with the 2013 contract is irrelevant, as they agreed to pay plaintiff regardless of their potential claims against it.
However, as Lerner executed the release only on behalf of Zip-Flyer in his "supervisory authority," there is no basis on which to hold him personally liable. (See Trenga Realty v Tiseo, 117 AD2d 951 [3d Dept 1986] [officer of company not personally liable on contracts, where contracts identified party as company and officer signed them in capacity as officer]; compare Epstein Becker & Green, P.C. v Amersino Marketing Group, LLC, 111 AD3d 428 [1st Dept 2013] [company owner could be held personally liable for fees where he signed agreement not only as owner of company but also individually]; see also Georgia Malone & Co. v Ralph Rieder, 86 AD3d 406 [1st Dept 2011], affd on other grounds 19 NY3d 511 [2012] [court properly dismissed contract claims against individual defendant as he only signed contract once, rather than twice as is general practice when individual wishes to be personally bound]). Moreover, plaintiff's allegations regarding Lerner's domination and control over Zip-Flyer are conclusory, and unsupported by any facts or evidence. (See Am. Media, Inc. v Bainbridge & Knight Laboratories, LLC, 135 AD3d 477 [1st Dept 2016] [plaintiff's allegations that defendant company's owner ignored corporate formalities and totally dominated company conclusory and insufficient to hold owner personally liable]).
Plaintiff identifies no basis upon which to order defendants to pay its attorney fees and expenses. (A.G. Ship Maintenance Corp. v Lezak, 69 NY2d 1 [1986] [attorney fees and disbursements are incidents of litigation and prevailing party may not recover them from losing party unless award is authorized by parties' agreement or by statute or court rule]).
Accordingly, it is hereby
ORDERED, that plaintiff's motion for summary judgment in lieu of complaint is granted as against defendant Zip-Flyer, LLC only, and the Clerk of the Court is directed to enter judgment in favor of plaintiff and against defendant Zip-Flyer, LLC in the amount of $43,217.12, together with interest at the statutory rate from June 27, 2015 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 plaintiff's motion for summary judgment in lieu of complaint against defendant Shawn Lerner is denied, and the action is severed and dismissed as against defendant Lerner.
ENTER:
_______________________________
Barbara Jaffe, JSC
DATED:March 31, 2016
New York, New York
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