Signature Bank v. HKD Productions, Inc. et al, No. 1:2012cv06149 - Document 29 (S.D.N.Y. 2013)
Court Description: MEMORANDUM OPINION AND ORDER re: #103011 20 MOTION for Summary Judgment. Plaintiff's motion for summary judgment on the first, second, and third causes of action, is granted as to HKD Productions. The motion for summary judgment on the fourth cause of action, which is against only Day, is denied. The case against Day is stayed pending bankruptcy proceedings. filed by Signature Bank (Signed by Judge John F. Keenan on 3/18/2013) (pl) Modified on 3/19/2013 (jab).
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Case 1:09-md-02013-PAC Document 57 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ---------------------------------- X UNITED STATES DISTRICT COURT SIGNATURE BANK, : SOUTHERN DISTRICT OF NEW YORK : -----------------------------------------------------------x Plaintiff, : In re FANNIE MAE 2008 SECURITIES :: LITIGATION - against :: :: HKD PRODUCTIONS, INC. and HOWARD :: -----------------------------------------------------------x KERN DAY a/k/a HOWARD K. DAY a/k/a : Filed 09/30/10 Page 1 of 45 USDC SDNY DOCUMENT ELECTRONICALLY FILED DOC #: _________________ DATE FILED: Mar. 19, 2013 08 12 Civ. 6149 No. Civ. 7831 (PAC) (JFK) 09 MD 2013 (PAC) MEMORANDUM OPINION OPINION & ORDER AND ORDER HOWIE DAY, : : Defendants. : HONORABLE PAUL A. CROTTY, United States District Judge: ---------------------------------- X John F. Keenan, United States District Judge: BACKGROUND1 Before the Court is an unopposed motion for summary The early years of this decade saw a boom in home financing which was fueled, among judgment by Plaintiff Signature Bank ( Plaintiff or Signature other things, by low interest rates and lax credit conditions. New lending instruments, such as Bank ) in this diversity action. Plaintiff alleges that subprime mortgages (high credit risk loans) and Alt-A mortgages (low-documentation loans) Defendants HKD Productions and Howard Kern Day ( Day ) kept the boom going. Borrowers played a role too; they took on unmanageable risks on the (collectively, Defendants ) have defaulted on a $300,000 loan. assumption that the market would continue to rise and that refinancing options would always be For the reasons stated below, the motion is granted as to available in the future. Lending discipline was lacking in the system. Mortgage originators did Defendant HKD Productions, on Plaintiff s first, second, and not hold these high-risk mortgage loans. Rather than carry the rising risk on their books, the third causes of action. originators sold their loans into the secondary mortgage market, often as securitized packages I. Background known as mortgage-backed securities ( MBSs ). MBS markets grew almost exponentially. Signature Bank is a banking association located at 565 But then the housing bubble burst. In 2006, the demand for housing dropped abruptly Fifth Avenue in Manhattan, with its principal place of business and home prices began to fall. In light of the changing housing market, banks modified their in Manhattan. (Compl. ¶ 6.) HKD Productions is incorporated in lending practices and became unwilling to refinance home mortgages without refinancing. Delaware and does business as CAL Financial Group in Virginia. Day is a resident of Maine. (Id. ¶ 7.) 1 Unless otherwise indicated, all references cited as (¶ _) or to the Complaint are to the Amended Complaint, dated June 22, 2009. For purposes of this Motion, all allegations in the Amended Complaint are taken as true. 1 It is undisputed that on or about November 15, 2010, HKD Productions executed a promissory note with Signature Bank in the amount of $300,000. (Id. ¶ 9, Exh. A.) Guarantor for the loan. (Id. ¶ 2.) Day was the Pursuant to the Note, HKD Productions agreed to make monthly payments of interest until the due date of the loan, which was January 16, 2012. As collateral, HKD Productions executed a security agreement granting Signature Bank a first priority blanket security interest in, and lien upon, all assets of the borrower. (Id. ¶¶ 11-15.) Day executed a personal guaranty of the obligations of HKD Productions. (Id. ¶ 2.) It is further undisputed that to date, HKD Productions has not made any payments on the loan. On May 7, 2012, Signature Bank provided notice of default to HKD Productions and demanded payment and commenced this action on October 18, 2012. (Id. ¶¶ 17-20, Exh. B.) Plaintiff has moved for summary judgment against HKD Productions on it first, second, and third causes of action: breach of contract, account stated, and unjust enrichment. It has also moved for summary judgment on its fourth cause of action against Day: breach of guaranty. On February 25, 2013, Day filed a Chapter 7 Bankruptcy petition in the United States Bankruptcy Court for the Southern District of New York. Plaintiff and Defendants agree that, by operation of section 362 of Title 11 of the United States Code 2 (the Bankruptcy Code), the action against Day is automatically stayed and the instant motion need not be considered as to Day. The litigation against HKD Productions is unaffected, however, so the Court will consider the instant motion for summary judgment as to HKD Productions. See Trs. of the Sheet Metalworkers Int l Ass n Local No. 38 Vacation Fund v. Hopwood, No. 09-5088, 2012 WL 4462048 at *5 (S.D.N.Y. Sept. 27, 2012) (considering summary judgment with respect to only those defendants who had not declared bankruptcy). HKD Productions has not filed any opposition papers on connection with this motion. II. Discussion Summary judgment is warranted when there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). The moving party bears the burden of demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A genuine issue exists for summary judgment purposes where the evidence is such that a reasonable jury could decide in the non-movant s favor. Beyer v. County of Nassau, 524 F.3d 160, 163 (2d Cir. 2008) (citing Guilbert v. Gardner, 480 F.3d 140, 145 (2d Cir. 2007)). Thus, when determining whether such factual issues exist, the Court must construe the facts in the light most favorable to the nonmoving 3 party and must resolve all ambiguities and draw all reasonable inferences against the movant. Dallas Aerospace, Inc. v. CIS Air Corp., 352 F.3d 775, 780 (2d Cir. 2003). Summary judgment is appropriate when the non-moving party has no evidentiary support for an essential element for which it bears the burden of proof. Celotex, 477 U.S. at 322 23. The mere existence of a scintilla of evidence in support of the [nonmovant s] position will be insufficient; there must be evidence on which the jury could reasonably find for the [non-movant]. Hayut v. State Univ. of N.Y., 352 F.3d 733, 743 (2d Cir. 2003) (alterations in original). Where, as here, a summary judgment motion is unopposed, such nonresponsiveness does not . . . mean that the motion is to be granted automatically. Champion v. Artuz, 76 F.3d 483, 486 (2d Cir. 1996); see also Vt. Teddy Bear Co. v. 1 800 Beargram Co., Inc., 373 F.3d 241, 244 (2d Cir. 2004). Instead, a court must (1) determine what material facts, if any, are disputed in the record presented on the motion; and (2) assure itself that, based on those undisputed material facts, the law indeed warrants judgment for the moving party. See Champion, 76 F.3d at 486. The motion may be denied if the movant s submission fails to establish that no material issue of fact remains for trial, Amaker v. Foley, 274 F.3d 677, 681 (2d Cir. 2001), or if the undisputed facts fail to show that the moving 4 party is entitled to judgment as a matter of law, Vt. Teddy Bear, 373 F .3d at 244. In an action based on notes and guaranties, a plaintiff may establish prima facie entitlement to summary judgment by demonstrating both the execution of the agreements at issue and nonpayment thereunder. Valley Nat l Bank v. Greenwich Ins. Co., 254 F. Supp. 2d 448, 453 (S.D.N.Y. 2003). In the instant case, it is undisputed that (i) HKD Productions executed a promissory note evidencing a loan in the principal amount of $300,000, (Compl. ¶ 9, Exh. A), and (ii) has not made the payments due under this agreement (Id. ¶¶ 17-19.) Accordingly, Signature Bank has established its prima facie case. HKD Productions has not opposed this motion for summary judgment, and as such it has failed to rebut Plaintiff s prima facie case. Even if the Court were to consider the meager affirmative defenses set forth in its Answer, however, Defendant still has not identified a genuine issue of fact. Specifically, HKD Productions first affirmative defense asserts that [t]he Complaint cannot be sustained for reason of estoppels, laches and waiver, (Ans. ¶ 40), yet it has failed to plead any facts that support this legal conclusion. It next asserts that [t]he Complaint fails to state a claim upon which relief may be granted, (Id. ¶ 41), yet the Court s discussion above demonstrates that Signature Bank has established a prima facie 5 case, thus reject this defense. As there are no genuine issues of fact precluding summary judgment on the issue of whether HKD Productions defaulted on its loan, summary judgment is appropriate as to the first, second, and third claims. III. Conclusion For the reasons stated above, Plaintiff's motion for summary judgment on the f , second, and third causes of action, is granted as to HKD Productions. The motion for summary judgment on the fourth cause of action, which is against only Day, is denied. The case Day is stayed pending bankruptcy proceedings. SO ORDERED. Dated: New York, New York March 1 2013 S, John F. Keenan United States District Judge 6
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