Shah v Howellson Equity Partners LLC

[*1] Shah v Howellson Equity Partners LLC 2008 NY Slip Op 52085(U) [21 Misc 3d 1117(A)] Decided on October 9, 2008 Supreme Court, Nassau County Austin, J. 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 October 9, 2008
Supreme Court, Nassau County

Darshan Shah, Plaintiff,

against

Howellson Equity Partners LLC and SHARMON HOWELL, Defendants.



21621/07



COUNSEL FOR PLAINTIFF

Cordova & Schwartzman, LLP

666 Old Country Road, Suite 301

Garden City, New York 11530

COUNSEL FOR DEFENDANTS

NO APPEARANCE

Leonard B. Austin, J.

Plaintiff, Darshan Shah ("Shah"), moves for an order pursuant to CPLR 3213 granting summary judgment in lieu of complaint against Defendants, Howellson Equity Partners LLC ("Partners") and Sharmon Howell ("Howell"). [*2]

BACKGROUND

In or around June, 2007, non-party American Home Buyers Consulting Services, Inc. ("American") loaned the sum of $200,000.00 to Partners. The loan was evidenced by a Promissory Note ("Note") dated June 26, 2007. The Note was executed by Howell on behalf of Partners and was payable within ninety (90) days after execution together with 16% interest per annum.

At the time the Note was executed, Defendant executed an "affidavit for Confession on Judgment" ("Confession of Judgment").

On September 15, 2006, in an unrelated action, a judgment was entered in the Office of County Clerk for the County of Nassau in favor of Plaintiff and against American in the sum of $1,368,036.56 ("Judgment"), which remains unpaid. As a credit against the Judgment, on November 28, 2007, American entered into an Agreement with Shah to assign the Note and Confession of Judgment from Defendants to him.

Pursuant to the Note, Partners unconditionally guaranteed payment of all amounts owed pursuant to the terms of the Note to American. Upon default in payment of the Note, Partners also agreed to pay all costs, including reasonable attorney's fees, incurred with respect to enforcement and collection of the Note.

Partners appointed and authorized Deloris Johnson ElGammal Esq. ("ElGammel") as its agent to receive the service of process in the event of any legal proceedings. On December 22, 2007, ElGammel was personally served on behalf of Partners.

Defendants have not paid any portion of the Note. Thus, Shah claims that as the assignee of the American Judgment, he is entitled to commence and action pursuant to CPLR 3213 with regard to the Note inasmuch as American is entitled to enforce the Note. Maikels v. Albany Broadcasting Co., 248 AD2d 915 (3rd Dept. 1996).

Shah seeks summary judgment in lieu of complaint pursuant to CPLR 3213 for a money judgment in the amount of $200,000.00, plus interest from June 26, 2007 together with costs, including reasonable attorneys' fees pursuant to the terms of the Note.

DISCUSSION

A.Jurisdiction over the Partners

CPLR 311-a permits the service of process on a limited liability company by personally delivering process to any authorized to receive process. CPLR 308(3) permits the service of process on a natural person to be personally delivered to any agent within the state designated under CPLR 318.

The summons, notice of motion and supporting papers were duly served on Partners via its authorized agent, ElGammal, on December 23, 2007. The Note specifically stipulates that ElGammal was authorized to receive the process on behalf of the maker of the Note. Under the terms of the Note, Plaintiff was not entitled to rely on ElGammal as the agent authorized to accept service on behalf of Howell.

"Generally, the failure to give proper notice of a motion deprives the court of jurisdiction to hear the motion." Goldstein v. Staltzman, 13 Misc 3d 1023, 1027 (Sup. Ct. Nassau Co. 2006). See, Bianco v. Ligreci, 298 AD2d 482 (2nd Dept. 2002); and Golden v. Golden, 128 AD2d 672 (2nd Dept. 1987).

Partners is the only party to the Note. Howell did not personally guarantee repayment of the Note nor did he individually sign the Note. Since, Howell is not a Maker of the Note, serving ElGammal does not confer jurisdiction over Howell. [*3]

B.Promissory Note

CPLR 3213 permits a party to move for summary judgment in lieu of complaint where the action is based upon an instrument for payment of money only. Seaman-Andwall Corp. v. Wright Machine Corp., 31 AD2d 136 (1st Dept. 1968). A promissory note is an instrument for the payment of money only. Bank of Leumi Trust Co. v. Rattet & Liebman, 182 AD2d 541 (1st Dept. 1992).

Plaintiff establishes a prima facie case by submitting proof of the existence of a promissory note executed by the defendant, and unequivocal and unconditional obligations to repay and the defendant's default. Constructamax, Inc. v. CBA Assoc., 238 AD2d 460 (2nd Dept. 2002); and Colonial Commercial Corp. v. Breskel Assoc., 238 AD2d 539 (2nd Dept. 1997). See also, Seaman-Andwall Corp. v. Wright Machine Corp., supra ; and Chemical Bank v. Nemeroff, 233 A.D.2d 239 (1st Dept. 1996).

Once Plaintiff has established a prima facie case, the defendant must come forward with evidence establishing the existence of triable issue of fact or a bona fide

defense. Colonial Commercial Corp. v. Breskel Assoc., supra ; and Silber v. Muschel, 190 AD2d 727 (2nd Dept. 1993).

Shah has established the existence of a promissory note executed by Partners, which contains an unequivocal and unconditional promise to repay and the default of Partners. Partners has failed to respond to the motion.

Since Shah has established a prima facie case on the Note and Partners has defaulted in opposing the application, Shah should be granted summary judgment for the amount due of the Note together with interest from June 21, 2007 and the costs incurred in enforcing the collection of the Note.

C.Confession of Judgment

Pursuant to CPLR 3218 a judgment by confession may be entered, without action, for money due upon an affidavit executed by the defendant. At any time within three years after the affidavit is executed, it may be filed with the Clerk of the County where the defendant resides or where the defendant designated in the affidavit.

Partners has executed affidavit of confession of judgment with respect to the money owed to American Home Buyers in the sum of $200,000.00 with 16% interest per annum from the date of the Note executed on June 21, 2007. Although Plaintiff alleged that both Howell and Howellson Equity Partners executed the confession of judgment in favor of American, the named parties to the confession of judgment are American, as Plaintiff, and Partners, as Defendant. Howell is not a named party in the

execution of confession of judgment. Thus, Plaintiff, Shah cannot base his claim on the confession of judgment against Howell.

However, Shah could have filed the confession of judgment against Partners in an appropriate county which is, in this case, New York County to enforce judgment. Steward v. Katcher, 283 A.D. 50, 126 NYS2d 290 (1953). The Note provides for Defendants to pay Shah's attorney fees in the event of a default. Such provisions are valid and will be enforced. Arent, Fox, Kinter, Plotkin & Kahn PLLC v. Lurzer GmbH, 297 A.D.2d 590 (1st Dept. 2002).

Legal fees are awarded on a quantum meruit basis and cannot be determined summarily. [*4]See, Simoni v. Time-Line, Ltd., 272 AD2d 537 (2nd Dept. 2000); and Borg v. Belair Ridged Development Corp., 270 AD2d 377 (2nd Dept. 2000). Therefore, the matter is referred to Special Referee Frank Schellace to hear and determine reasonable attorney's fees for Plaintiff's attorney in regard to this matter.

Accordingly, it is,

ORDERED, that Plaintiff's motion for summary judgment in favor of Plaintiff, Darshan Shah, and against Defendant, Howellson Equity Partners LLC, in the sum of $200,000.00 together with interest at the rate of 16% per annum from June 21, 2007 to the date of entry of judgment is granted; and it is further,

ORDERED, that Plaintiff's motion for summary judgment against Defendant, Sharmon Howell is denied; and it is further,

ORDERED, that the action is respectfully referred to Special Referee Frank Schellace on December 10, 2008 at 9:30 a.m. to hear and determine all issues relating to reasonable attorney's fees; and it is further,

ORDERED, that counsel for Plaintiff shall serve upon the attorney for the Defendant and file with the Clerk of this Court a copy of this Order with Notice of Entry, a Note of Issue and pay all appropriate fees on or before November 26, 2008; and it is further,

ORDERED, that the County Clerk, Nassau County is directed to enter judgment in favor of the Plaintiff and against Defendant for the amount of attorney's fees as determined by the Special Referee together with interest from the date of the Special Referee's decision to the date of entry of judgment and costs and disbursement as taxed by the Court.

This constitutes the decision and Order of the Court.

Dated: Mineola, NY_____________________________

October 9, 2008Hon. Leonard B. Austin, J.S.C.