Carver Fed. Sav. Bank v V. Barile Elec. Contr. Corp.

[*1] Carver Fed. Sav. Bank v V. Barile Elec. Contr. Corp. 2012 NY Slip Op 51788(U) Decided on September 13, 2012 Supreme Court, Kings County Demarest, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 September 13, 2012
Supreme Court, Kings County

Carver Federal Savings Bank, Successor by Merger to Community Capital Bank, Plaintiff,

against

V. Barile Electrical Contracting Corp., Michael Walby, Michael Savarese, and Anthony Rosvoglou, Defendants.



24248/2011



Attorney for plaintiff:

Elena E. Lambridis, Esq.

Jaspan Schlesinger LLP

300 Garden City Plaza

Garden City, NY 11530

Attorneys for defendants:

Thomas A. Bizzaro, Jr., Esq.

Ficara & Associates, P.C.

155 Pinelawn Road, Suite 240N

Melville, NY 11747

Patrick W. Johnson, Esq.

9118 Third Avenue

Brooklyn, NY 11209

Carolyn E. Demarest, J.

In this action, for collection on a commercial loan and collateral securing such loan, plaintiff Carver Federal Savings Bank ("Carver") moves, pursuant to CPLR 3215, for default judgment on its first cause of action, for breach of a line of credit note, against non-answering defendant V. Barile Electrical Contracting Corp. ("Barile") and, pursuant to CRPLR 3212, for summary judgment on its fourth cause of action, for breach of a guaranty, against defendants Michael Walby ("Walby"), Michael Savarese ("Savarese"), and Anthony Rosvoglou ("Rosvoglou") (collectively, the [*2]"Guarantors").

BACKGROUND

On February 28, 2011, Barile, by its President Walby and Secretary Rosvolgou, signed a line of credit note in favor of Carver with a credit limit and original principal balance of $349,152.00. Pursuant to the terms of the note, Barile was to pay any accrued interest on the first business day of each month and any outstanding principal balance in full on August 31, 2011. Upon the event of default, which occurs when "Borrower fails to pay the principal or interest on this Line of Credit Note when due and payable," Section 15 provides that:

Carver may, by notice to Borrower, . . . declare this Line of Credit Note, and any other Loan Documents to be forthwith due and payable, whereupon all such amounts shall become and be forthwith due and payable, without presentment, demand, protest, or further notice of any kind, all of which have been hereby expressly waived by Borrower, . . . exercise any remedies provided in any of the Loan Documents and/or . . . exercise any rights and remedies provided by law or otherwise.

Section 16 specifies that "[a]ll notices and other communications provided for under this Line of Credit Note shall be in writing and, mailed or delivered by messenger or overnight delivery service, addressed, in the case of the Borrower to the address of Borrower specified under its signature below." Under Section 17 of the note, Barile "waives presentment, notice of dishonor, protest and any other notice or formality with respect to this Line of Credit Note." As collateral for the loan, Barile, by Walby and Rosvoglou, also executed a security agreement granting Carver a floating lien on all of its inventory, equipment, accounts, and proceeds thereof.

Plaintiff asserts that, on September 3, 2009, Savarese signed an unlimited guaranty of "all present and future liabilities and obligations" of Barile to Carver and that, on February 28, 2011, concurrently with their execution of the note, Walby and Rosvoglou signed identical guaranties. The Guarantors purportedly waived, at Section 9 (4) of the guaranties, "notices of nonpayment or nonperformance, protest, notices of protest and notices of dishonor" and, at Section 10 (9), "any defense based on . . . [a]ny failure to give or provide any notices, demands or protests." Section 18 of the guaranties contains a provision specifying the proper form and delivery of notices between Carver and the Guarantors that corresponds to that in Section 16 of the note.

Plaintiff contends that Barile defaulted on the note by failing to make interest and principal payments due on or after June 1, 2011. On September 1, 2011, Anthony G. Hood ("Hood"), Vice President of Carver, sent notice of default, via email, to Michael Walby, in his capacity as President of Barile, stating that Barile was in default on the note and demanding "monthly interest payments for June, July, August, and September 2011 for a total of $7,059.57, plus the outstanding principal balance of $349,152.00, and an accrued late charge of $17,457.60 for a total arrears of $384,067.20" (the "Default Email"). In the Default Email, Hood also asserted that "if this matter is not resolved amicably within seven (7) calendar days, . . . Carver, without further notice, will accelerate the balance due on all credit facilities" and thereafter bring suit against Barile and the Guarantors for recovery of the loan. While the Default Email lists Walby, Savarese, and Rosvoglou, as "Personal Guarantor[s]" and "C.c." recipients, the printout that plaintiff provides only lists an email address purportedly for Walby. The Guarantors all deny having received the Default Email or any other notice of Barile's default, and plaintiff offers no evidence to the contrary.

On October 25, 2011, plaintiff initiated this action, seeking, inter alia, damages for breach [*3]of the note and guaranty, replevin of Barile's assets, and access to Barile's books and records. On December 20, 2012, Michael Walby interposed an answer generally denying all of plaintiff's allegations and asserting two affirmative defenses, both of which rely upon plaintiff's failure to provide notice of default as specified in the note. On January 11, 2012, Savarese and Rosvoglou (collectively, the "S & R Defendants") interposed an answer also generally denying all of the allegations in the complaint and raising nine affirmative defenses, which all consist of short pro forma contentions unsupported by factual allegations. Barile did not file an answer or otherwise appear in this action.

Plaintiff filed the instant motion on February 23, 2012, seeking default judgment against Barile on its first cause of action, for breach of the note, and summary judgment against the Guarantors on its fourth cause of action, for breach of the guaranties. Plaintiff provides copies of the note and guaranties, which the defendants allegedly signed, along with an affidavit from Hood asserting the facts and circumstances of defendants' breach of the note and guaranty (the "Hood Affidavit"). In opposition, Savarese claims that he did not sign a personal guaranty "in February 2011 or ever in relation to Carver Federal Savings" and that the signature on the guaranty dated September 3, 2009, upon which plaintiff relies, "is not [his]," asserting that the "Bank or an interested third-party has apparently disassembled or reassembled documents to fit their own needs." Savarese points out that his guaranty was purportedly signed more than two years prior to the other guaranties and lists an address which he "was not associated with since approximately 2005" and which was crossed out and replaced with Barile's business address. Savarese also provides copies of checks to demonstrate his signature "during the time period in question." In his contradictory affidavit, Rosvoglou "do[es] not deny that the signature purportedly on the Line of Credit and security instruments is [his] signature for this bank for this loan" and admits having signed "documents in 2007 relating to a Line of Credit," but denies having signed any document relating to the instant transaction on February 28, 2011 or signing any personal guaranty in connection with the note, stating that the documents that plaintiff presents "appear[] to be a series of documents taken apart from others and put back together" and that he "would not have signed any loan related documents unless all shareholders had signed the personal guaranty."[FN1] Moreover, all of the answering defendants argue that plaintiff's motion must fail because they never received notice of Barile's default and because the Default Email, which plaintiff claims was sufficient notice, was not served in accordance with the notice provision in Section 18 of the guaranties. In reply, plaintiff contends that the S & R Defendants have not pled sufficient facts to support their claim that the signatures on the note and guaranties were forged. Moreover, plaintiff argues that the language of Section 15 of the note merely provides that Carver "may," but is under no obligation to, send notice of default, as evidenced by the notice waiver provisions in the note and guaranties, and that notice of default was nonetheless given to all defendants.

DISCUSSION

Pursuant to CPLR 3215 (a), "the plaintiff may seek a default judgment" against a defendant [*4]that "has failed to appear, plead or proceed to trial of an action reached and called for trial." "Although all allegations contained in the complaint have been admitted because of the defendants' default, the legal conclusions to be drawn from such proof are reserved for the court's determination" (Green v Dolphy Constr. Co., 187 AD2d 635, 636 [2d Dept 1992] [internal citations omitted]). To establish a prima facie case of breach of a promissory note, a plaintiff must demonstrate the existence of a note executed by the defendant, the unconditional terms of payment, and default by the defendant (see Famolaro v Crest Offset, Inc., 24 AD3d 604, 604 [2d Dept 2005]; MDJR Enters. v LaTorre, 268 AD2d 509, 509 [2d Dept 2000]; Layden v Boccio, 253 AD2d 540, 540 [2d Dept 1998]). In the case at bar, plaintiff has presented a note with unconditional terms of payment and has asserted that Barile has not made interest or principal payments on or after June 1, 2011. While Rosvoglou appears to dispute that he signed the note that plaintiff provides on February 28, 2011,[FN2] Walby does not raise such defense in his opposition to plaintiff's motion, implicitly admitting that he signed the note on behalf of the defaulting corporation. Because it is "presumed that a president of a corporation has the power to make contracts pertaining to the business of the corporation and coming within the apparent scope of his authority" (Odell v 704 Broadway Condominium, 284 AD2d 52, 57 [1st Dept 2001]; see Mike Bldg. & Contr., Inc. v Just Homes, LLC, 27 Misc 3d 833, 849 [Sup Ct, Kings County 2010]), Walby's signature alone is presumed to be sufficient to bind Barile to the terms of the note. Accordingly, plaintiff's motion for default judgment against the corporation is granted.[FN3]

Plaintiff also moves for summary judgment against the Guarantors on its fourth cause of action, for breach of the guaranties. Upon motion for summary judgment, the moving party has the initial burden to produce affidavits and documentary evidence sufficient to "warrant the court as a matter of law in directing judgment in [its] favor" (CPLR 3212 [b]; see Friends of Animals v Associated Fur Mfrs., 46 NY2d 1065, 1067 [1979]). Once the movant establishes its prima facie entitlement to judgment, the burden shifts to the opposing parties to "demonstrate by admissible evidence the existence of a factual issue requiring a trial of the action" (Zuckerman v City of New York, 49 NY2d 557, 560 [1980]; see CPLR 3212 [b]; Friends of Animals, 46 NY2d at 1067-68). While all "facts must be viewed in the light most favorable to the non-moving party'" (Vega v [*5]Restani Constr. Corp., 18 NY3d 499, 503 [2012], quoting Ortiz v Varsity Holdings, LLC, 18 NY3d 335, 339 [2011]), mere conclusory allegations or defenses are insufficient to preclude summary judgment (see Zuckerman, 49 NY2d at 562).

A plaintiff can establish its prima facie entitlement to judgment upon breach of a guaranty "by submitting proof of the note, the guarantees, and the failure to make payment in accordance with their terms" (Key Bank of Long Is. v Burns, 162AD2d 501, 502 [2d Dept 1990]; see Imperial Capital Bank v 11-13-15 Old Fulton D, LLC,88 AD3d 652, 653 [2d Dept 2011]). Here, plaintiff provided copies of the note and guaranties and the Hood Affidavit, stating that Barile failed to make payments, which is undisputed. Although the Guarantors argue that they never received notice of Barile's default and that the Default Email was insufficient to trigger their obligation to pay pursuant to Section 18 of the guaranties, the Guarantors expressly waived, at Section 9, "notices of nonpayment or nonperformance" and "notices of dishonor" and, at Section 10 (9), any defense based upon plaintiff's failure to provide any notice (see UCC 3-504 [b] [ii]). Therefore, no notice was required for plaintiff to enforce the guaranties. Because Walby does not challenge plaintiff's assertion that he signed the guaranty, plaintiff's motion for summary judgment on its fourth cause of action against him is granted.

However, Savarese argues that he did not sign the guaranties that plaintiff provides. While an unsubstantiated denial of having signed a guaranty is insufficient to preclude summary judgment (see North Fork Bank Corp. v Graphic Forms Assoc., Inc., 36 AD3d 676, 676-77 [2d Dept 2007]; JPMorgan Chase Bank v Gamut-Mitchell, Inc., 27 AD3d 622, 623 [2d Dept 2006]), Savarese has provided sufficient evidence to preclude summary judgment against him by asserting that the signature on his guaranty, which was purportedly executed in 2009, well over a year earlier than the note and other guaranties, is not his signature and that the address under his name, which was crossed out and replaced with Barile's business address, has not been his residence since 2005. Plaintiff contends that Savarese has "failed to plead any facts in support of [his] allegation[]" that his signature was forged, relying upon Banco Popular N. Am. v Victory Taxi Mgt. (1 NY3d 381 [2004]). In Victory Taxi, the Court of Appeals affirmed summary judgment granted to the lender where a guarantor, claiming that her signature was forged, merely provided the unsworn statement of a handwriting expert who was "not able to determine whether [defendant] was the signatory on the documents" and failed to "demonstrate[] that her prelitigation conduct was consistent with a denial of genuineness" (id. at 384). In the instant case, Savarese has provided his sworn affidavit not only denying that the signature on his guaranty is genuine but also disputing that he had any involvement in the negotiation and execution of the loan documents (cf. Graphic Forms Assoc.,36 AD3d at 676-77 [holding that the guarantor could not prevent summary judgment by baselessly denying that he signed a guaranty where he admitted to signing the credit agreement]). Savarese's signature does not appear on the note or on any other loan document signed contemporaneously therewith. Therefore, plaintiff's motion for summary judgment against Savarese on its fourth cause of action is denied.

Although Rosvoglou argues, like Savarese, that he did not sign the guaranty, he does admit that he signed documents pertaining to the line of credit and that the signature appearing on both the note and the security agreement "is [his] signature for this bank for this loan." Given the circumstances, Rosvoglou's ambiguous denial of having signed a personal guaranty is insufficient to prevent summary judgment (see id.; Gamut-Mitchell, Inc., 27 AD3d at 623; see also Victory Taxi [*6]Mgt., 1 NY3d at 384). Therefore, plaintiff's motion for summary judgment against Rosvoglou on its fourth cause of action is granted.

CONCLUSION

Accordingly, plaintiff's motion is granted to the extent that it seeks default judgment against Barile on its first cause of action and summary judgment against Walby and Rosvoglou on its fourth cause of action. Plaintiff's motion is denied to the extent that it seeks summary judgment against Savarese on its fourth cause of action. A preliminary conference is scheduled for this matter on October 17, 2012.

The foregoing constitutes the decision and order of the Court.

E N T E R :

__________________________________

HON. CAROLYN E. DEMAREST, J.S.C. Footnotes

Footnote 1: The S & R Defendants both deny having any involvement with V. Barile Mechanical Corp., which was also given notice of default by the Default Email. However, as plaintiff correctly notes, neither this action nor the instant motion concerns any debt incurred by V. Barile Mechanical Corp.

Footnote 2: Rosvoglou does admit, however, that he signed documents relating to a line of credit for Barile and does not dispute that the corporation received loan payments in accordance with the note.

Footnote 3: While plaintiff is entitled to default judgment due to Barile's failure to appear and raise a defense in this action, there is no evidence that plaintiff properly served the corporation with notice of default pursuant to Section 15 of the note (see Ultimate Connection, Inc. v Friedfertig, 12 Misc 3d 1175[A], 2006 NY Slip Op 51236[U], *3 [Sup Ct, Nassau County 2006]; see also Putman High Yield Trust v Bank of NY, 7AD3d 439, 439 [1st Dept 2004]; I.J. Litwak & Co. v General Signal Corp. O-Z Gedney Div., 293 AD2d 713, 713 [2d Dept 2002]). Although plaintiff contends that it did send notice, via the Default Email, such email notice was insufficient pursuant to Section 16, which states that all notices required under the note must be sent by mail, messenger service, or overnight delivery. The language of Section 15 clearly indicates that notice in compliance with Section 16 is a condition precedent to a declaration of default and legal action. In failing to answer, Barile is deemed to have waived such notice.