Legum v Cairo Custom Shirts, Inc.
Annotate this CaseDecided on June 10, 2004
Supreme Court, Nassau County
STEVEN G. LEGUM, Plaintiff,
against
CAIRO CUSTOM SHIRTS, INC., IBRAHIM SADIK and MOHAMED I. SADIK, Defendants.
007783/2003
Ira B. Warshawsky, J.
The motion by defendant, Mohamed I. Sadik, for summary judgment pursuant to CPLR §3212 is determined as follows. Plaintiff, Steven G. Legum, claims that the motion should be denied because there are material facts in dispute as to what transpired between the parties.
Plaintiff commenced this action against defendants, Cairo Custom Shirts, Inc, Ibrahim Sadik, and Mohamed I. Sadik, for recovery of debt in the amount of $176,500 plus interest. This action sought compensatory damages as well from Paul Dachs, and for the defendants' fraudulent misrepresentations. The action against Mr. Dachs was dismissed by a prior order of this court dated October 1, 2003 for failure to state a claim. There was a default judgment entered against Cairo sometime before commencement of this action. However, that judgment is irrelevant to the motion before this court and the circumstances are not clear on the record. This judgment was later vacated. As a further procedural matter, pro se movant's failure to annex a copy of the pleadings is disregarded in the exercise of the Court's discretion. CPLR 2001.
Cairo Custom Shirts, Inc., owned and operated by the Sadik family, was in the business of selling high quality custom made shirts to business people. Cairo's sales strategy was to provide this service at the offices of its customers. Following September 11, 2001, this method [*2]of sale was no longer feasible as security was increased in many offices. This limited the company's accessibility to customers, and as a result, sales dramatically decreased.
The company needed to develop a new sales strategy, which required it to expend additional resources. Cairo entered into private loan agreements with two lenders, Paul Dachs and Steven G. Legum. The agreement with Dachs was entered into prior to the agreement with Legum. Legum contends that he would not have issued the money to the defendants had he known of their indebtedness to Mr. Dachs.
The court is in possession of the agreement signed by defendants, Ibrahim and Mohamed Sadik, dated September 21, in which they personally guaranteed the loan made to the company. No one denies that there is an outstanding debt owed to Mr. Legum. However, the question before this court is whether Mohamed Sadik remains liable to Mr. Legum for the debt.
All parties decided that Cairo would apply for a loan from the Small Business Administration of New York. A new agreement was entered into by Legum, Cairo, and Ibrahim Sadik on January 20, 2003, which stated that Cairo would apply for an SBA loan. This loan would be used to pay off the debt to Legum. Even if the loan was denied, the agreement provided for a method of repayment to Mr. Legum.
The agreement required that Cairo submit "an application" which was completed after two attempts. It appears however, that part of the application, the tax returns, were not identical to the forms submitted to the Internal Revenue Service. The agreement also stated that, "[i]n no event, however, shall this or prior agreements between the parties hereto give rise to liability against Mohamed I. Sadik." It is this agreement which is the focus of the court's attention.
The court is not in possession of an original copy, nor a complete one, of the January 20, 2003 agreement. However, based upon the discovery submitted thus far, there is merit to Mohamed I. Sadik's argument that the parties of the January 20, 2003 agreement intended to relieve him of the prior obligation to repay the debt.
In order for the agreement to relieve Mohamed of this debt, he must be considered a third party beneficiary of the contract because he is not a party it. See Binghamton Masonic Temple, Inc. v City of Binghamton, 213 AD2d 742, 745 (3d Dept 1995). In addition, Mohamed must be considered an intended third party beneficiary, meaning that the parties "proposed to confer benefit on that third party." Id. In order to determine the intent of the parties, the best evidence is that of the language of the contract itself. Nepco Forged Products, Inc. v. Consolidated Edison Co. of New York, Inc., 99 AD2d 508 (2d Dept 1984).
The court reviewed as much of the contract as is in its possession, and has determined that Mohamed Sadik, was a third party beneficiary because the language of the contract is a clear indication of the intent of the parties to the January 20, 2003 agreement to exonerate him from any liability.
The plaintiff argues that the agreement dated January 20, 2003 was breached because the submission of the SBA application was incomplete. The court finds that the agreement requiring that "an application" be made to the SBA, was completed on the second attempt when all necessary documents were submitted. Any defects in the application must be considered in the context of the contemporaneous circumstances.
Therefore, pursuant to CPLR §3212(c) an immediate trial is needed to introduce proof and hear testimony concerning the January 20, 2003 agreement. In the event that this document is produced, Mohamed Sadik will be exonerated from liability, and furthermore, the plaintiff's fourth cause of action will fail. The trial concerning this matter will be held on June 15, 2004 at [*3]the Nassau County Supreme Court, 100 Supreme Court Drive, Mineola, New York.
Dated: June 10, 2004
J.S.C.
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