Katzen v Balaj

[*1] Katzen v Balaj 2004 NY Slip Op 51256(U) Decided on September 6, 2004 Supreme Court, Bronx County Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on September 6, 2004
Supreme Court, Bronx County

MORTIMER J. KATZEN, Plaintiff(s),

against

LINA BALAJ, ZEF BALAJ ASSOCIATES, 782 P.P.S. CORPORATION and 3444 KNOX REALTY CORPORATION, Defendant(s)



18702/96

Stanley Green, J.

The motion by plaintiff for an order striking defendant's jury demand is granted. The cross-motion by defendants for an order quashing two subpoenas served upon defendants' attorneys and the cross-motion by plaintiff to quash, in part, the subpoena served on plaintiff's counsel are reserved for the trial judge as directed by Hon. Vincent Vitale, the referee appointed to supervise discovery.

On November 19, 1993, plaintiff loaned defendants Lina Balaj and Zef Balaj one hundred twenty five thousand dollars in exchange for a promissory note in the amount of $125,000.00 plus interest at the rate of 10% per year. The loan was being used to purchase a building located at 782 Pelham Parkway South, Bronx, New York (the premises). The loan was behind a $2.1 million dollar first and second mortgage on the premises. As security for the payment of the note, defendants, who were the sole shareholders of Balaj Associates, gave plaintiff a stock certificate for ten percent of the outstanding stock of Balaj Associates.

Plaintiff's complaint alleges, inter alia, that defendants defaulted in payment of the note on July 30, 1996 and fraudulently transferred the premises from Balaj Associates to 782 PPS Corp. for the purpose of denying plaintiff his collateral security interest in the property. The first cause of action seeks a money judgment in the amount of $71, 414.14 plus interest at the default rate of 16% per annum, costs, disbursements and reasonable attorneys' fees. The second cause of action, which alleges that defendants fraudulently transferred the property known as 782 Pelham Parkway South to 782 PPS Corp., seeks a lis pendens on the defendants' right, title and interest in the premises and a money judgment in the amount of five hundred thousand dollars, plus reasonable costs, disbursements and attorney's fees. The third and fourth causes of action seek money judgments for fuel and the installation of a boiler against properties owned and/or managed by defendants, plus costs, disbursements, reasonable attorney's fees and interest.

Defendants' answer to plaintiff's amended verified complaint contains five affirmative defenses, including that plaintiff is barred by the doctrines of unclean hands and estoppel from bringing and/or maintaining this action, and two counterclaims. The first counterclaim, entitled: "Sixth Affirmative Defense and First Counterclaim", alleges, inter alia, that defendants tendered all sums due to plaintiff but plaintiff refused tender unless defendants recognize him as a ten percent shareholder of Balaj Associates, Inc. and 782 PPS Corp. and that plaintiff's claim that he [*2]is a ten percent shareholder of 782 PPS Corp. renders the loan usurious. The relief sought by defendants is a judgment declaring that any stock in any corporation that defendants gave plaintiff was given as collateral security only and paragraph "29" of defendants' answer provides that "Defendants have no adequate remedy at law."

By order dated December 2, 2003, the Appellate Division, First Department granted plaintiff partial summary judgment against the individual defendants on the issue of their liability on the promissory note pleaded in the first cause of action and remanded the matter for an inquest with respect thereto. The order states: "At inquest, the burden will be on plaintiff to establish the amount that was due on the note's maturity date, or any extension thereof. Once that amount is ascertained, a determination can be made as to plaintiff's entitlement to any interest and attorneys' fees, based on whether defendants can show that they made valid tender of the amount due." An inquest was scheduled to be held on June 7, 2004.

On May 4, 2004, defendants filed a jury demand.

Plaintiff seeks an order dismissing defendant's jury demand on the ground that they are not entitled to a jury trial because they interposed an equitable counterclaim.

Defendants contend that the jury demand is proper because the inquest is on the promissory note, which was ordered to be tried separately from plaintiff's other claims, and the defense of tender as alleged by defendants is an affirmative defense, not a counterclaim.

The determinant as to whether a claim is at law or at equity is the nature of the relief, which, under the facts alleged, could fairly compensate the party bringing the claim (Murphy v. American Home Prods. Corp., 136 AD2d 229). If money damages alone could achieve that end, the action is generally at law Motor Vehicle Mfrs. Assn. v. State of New York, 75 NY2d 175).

Pursuant to CPLR § 4101, equitable defenses and equitable counterclaims shall be tried by the court. Where a plaintiff brings a claim triable by jury and the defendant interposes both equitable defenses and counterclaims arising from the same transaction, the defendant waives a jury even on the main, legal, claim (Hudson View II Associates, et al., v. Gooden, 222 AD2d 163).

While defendants contend that the counterclaims in their answer are actions at law, rather than equity, the relief sought cannot be satisfied with money damages alone. For example, defendants' "Sixth Affirmative Defense and First Counterclaim", (paragraphs "16-29") allege not only that defendants are entitled to repayment of the sums paid on the loan, with interest, but also that: "...judgment of this Court is necessary declaring that: (a) any stock in any corporation which Defendants Lina Balaj and Zef Balaj caused to be given to Plaintiff...was given as collateral security only... (c) Plaintiff... is not a shareholder or otherwise holds equity in any Defendant entity and (d) the Loan, the Note and all instruments executed and delivered thereunder to any defendant entity are null, void and of no force and effect." The equitable nature of the relief sought is apparent from Paragraph "29," which alleges that: "Defendants have no adequate remedy at law." Although the inquest involves only one of the plaintiff's causes of action, by asserting a related counterclaim not triable by jury, defendants have waived a jury trial in all respects, including on the main claim (Hudson View Assocs., supra) Accordingly, defendants' jury demand is stricken.

The cross-motion by defendants to quash the subpoenas served by plaintiff and the cross-motion by plaintiff to quash, in part, the subpoenas of defendant is reserved for the trial judge. Although it does not appear that defense counsel's invoices, statements, billings for attorneys, [*3]legal and professional services furnished to the defendants from January 1, 1999 through June 7, 2004 are material and necessary to the prosecution of plaintiff's case, plaintiff's counsel's affirmation indicates that Hon. Vincent Vitale, (the referee appointed to supervise discovery) directed the parties to raise issues of subpoenas with the trial judge as opposed to further motion practice. Accordingly, the cross-motions for an order quashing the subpoenas served by plaintiff and quashing, in part, the subpoena served by plaintiff are reserved for the trial judge.

This constitutes the decision and order of the court.

Dated: September 6, 2004 ________________________________

STANLEY GREEN, J.S.C.