MLS Funding Corp. v Comprehensive Cardiac Servs. of N.Y., P.C.

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MLS Funding Corp. v Comprehensive Cardiac Servs. of N.Y., P.C. 2018 NY Slip Op 30317(U) January 25, 2018 Supreme Court, Suffolk County Docket Number: 12-02081 Judge: Arthur G. Pitts Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. [* 1] SHORT FORM ORDER COPY INDEX No. 12-02081 CAL. No. 16-02129CO SUPREME COURT- STATE OF NEW YORK I.AS. PART 43 - SUFFOLK COUNTY PRESENT: Hon. ARTHUR G. PITTS Justice of the Supreme Court ---------------------------------------------------------------)( MLS FUNDING CORP., Plaintiff, MOTION DATE 4-13-17 ADJ. DA TE 6-29-l 7 Mot. Seq.# 004 - MD JACK N. POSNER. ESQ. Attorney for Plaintiff 1100 Franklin Avenue, Suite 305 Garden City, New York 11530 - against COMPREHENSIVE CARDIAC SER VICES OF NEW YORK, P.C .. ZAHEED TAI, SUDHESH SRIVASTAVA and HUL GUAN . RUSKIN MOSCOU FALTISCHEK, P. C. Attorney fo r Defendants 1425 RXR Plaza. 15th Floor Uniondale. New York 11556 Defendants. ---------------------------------------------------------------)( Upon the following papers numbered I to 25 read on th is motion for summarv judgment : Notice of Motion/ Order to Show Cause and suppo1 1ing papers J..:.!.i..; Notice of Cross Motion and supporting papers_; Answering Affidavits and suppo1 1ing papers~ 23 : Replying Affidavits and supporting papers 24-25; Other Defendants' Memorandum of Law: (,11 1 after hear i11g eouusel i11 suppo11 d a11d oppose: cl to ti 1e 11 1etio11 ) it is. ORDERED that the motion by defendant Comprehensive Cardiac Services of New York. P.C. for sum mat)' judgment dismissing the complaint against it is denied. PlaintiffMLS Funding Corp. (MLS'') allegedly entered an agreement in December 2005 whereby it financed the lease of certain diagnostic medical equipment, including an ultrasound machine. on behalf or defendant Comprehensive Cardiac Services of New York , P.C. Com prehensive's members, defendants Zaheed Tai. Sudhcsh Srivastava. and Hui Guan, were required to execute documents personally guaranteeing the lease ("'herein collectively refened to as "Comprehensive"). Shortly alter executing the lease linance agreement and personal guarantees. MLS allegedly assigned its rights under the agreement, including its right to receive the remaining monthly finance payments. to nonparty General Electric Capital Corporation r·GECC .. ). The alleged assignmenc was memorialized by a notice of assignment forwarded to Comprehensive. and an assignment contract executed by the pa11ics. Sometime nearing the end of the lease term. in a letter dated December 7. 20 I0, GECC purportedly sold the ultrasound machine to Comprehensive. [* 2] MLS Funding,. Comprehensive Cardiac Services Index No . 12-02081 Page No. 2 Subsequently. YILS commenced this action for breach of contract. asserting that it remained the lessor of record at the end of the lease term. and that Comprehensive breached the lease agreement when it retained the ultrasound machine and ceased making lease payments in December 20 I 0. Comprehensive joined issue. denying MLS's claims and asserting various afiirmative defenses, including lack of standing. On December 10, 20 13, MLS moved for summary judgment in its favor on the issue of liability. By order dated April 23 . 2014. this court denied MLS' motion. finding. inter alia. that discovery was incomplete, and that preliminary documentary evidence provided by the parties provided conflicting evidence as to the ownership of the equipment in question. The parties subsequently filed the note of issue on December 12. 2016. Comprehensive now moves for summary judgment dismissing the complaint against it on the grounds MLS lacks standing to bring the action, as it assigned a11 of its rights under the lease to GECC, and that Comprehensive. through its exercise of a purchase option offered by G ECC at the end oCthe lease, purchased the ultrasound machine free and clear of any alleged residual interests retained by MLS under the lease agreement. MLS opposes the motion on the grounds triable issues exist as to whether it retained all its other interests under the lease when it assigned GECC the right to receive payments under the lease and, if so, whether GECC, having only been assigned the right to collect such payments, had the right to sell the ultrasound machine at the end of the lease. Additionally, MLS asserts that GECC's offer to sell the ultrasound machine to Comprehensive was invalid. as the lease exp ressly forbids oral modifications of the agreement such as the purchase option GECC allegedly offered to Comprehensive. Paragraph 11 through 13 of the lease agreement between MLS and Comprehensive states in pe11inent part. as follows: The Equipment is. and shall remain, the property of Lessor, and Lessee shall have no right title. or interest in the Equipment except as expressly set fo11h in this Lease ... By this Lease. Lessee acquires no ownership right in the Equipment, and has no option to purchase the same. Upon the expiration, or earlier termination or cancellation of this Lease. or in the event of a default under Paragraph 20, hereof, Lessee, at its expense, shall return the Equipment in good repair, ordinary wear and tear resulting from proper use thereof a lone excepted. by de! ivering it. packed and ready for s hipment, to such place or carrier as Lessor may specify. . . At the expiration of the lease, Lessee shall return the Equipment in accordance with Paragraph 12, hereof. At Lessor's option. this Lease may be continued on a month-to-month basis until 30 days after Lessee returns the Equipment to Lessor. In the event Lease is so continued. Lessee shall pay to Lessor rentals in the same periodic amounts indicated under ''Amount of Each Payment" above. Paragraph 24 through 25 of the lease agreement further states: This instrument constitutes the entire agreement bet\\'een Lessor and Lessee. No provision of this Lease shall be modified or rescinded unless in writing signed by a representative of Lessor. Waiver by Lessor of any provision hereof in one instance shal I not constitute waiver as to any other instance ... This Lease is intended to constitute a valid and enforceable legal instrument, and no provision of this Lease that may be deemed unenforceable shall in any wa) invalidate any other provision or provisions hereo[ all of \Vhich shall remain in full force and effect. [* 3] MLS Funding \' Comprehensive Cardiac Services Index No. 12-02081 Page No. 3 The notice and ackno"' ledgment of assignment form for\\'ardcd to Comprehensi\'e states as follows: Please be advised that. effective December 22. 2005. MLS has assigned to General E lectri c Capital Corporation ("GECC .. ) all of MLS ·s right. title and interest in and to the above described agreement (the .. Agreement) and the related equipment. You sho uld send a ll future payments under the Agreement to GECC at the address set fo1th below... Please be advised that GECC is only being assigned the rights to payments under your agreeme nt and is not unde11aking any obligations MLS (if any). MLS and/or the manufacturer. as applicabl e. remain so lely liable for all performance obligations as the renter under the Agreement ... *Upon payment of all of Lessee·s obligations pursuant to any such lease assigned GECC will promptly reassign to MLS Funding Corp. all rights of GECC under the Lease, including but not limited to the transfer of title to the subject leased equipment and any unexercised purchase options and/or agreements relating to the leased equipment* T he assignment contract executed by the parties further provides. in pertinent part, that: I. For val ue received. Assignor hereby unconditiona lly a nd irrevocably assigns and transfers to Assignee. its successors and assigns all of Assignor's right. title and interest in and to the following: (a) the Con tracts ... annexed hereto and made a part of this Assignment by reference ... (b) the payments due and to become due under each assigned contract (.. Payments'"); (c) Assignor's security interest in the equipment subject to such Assigned Contracts ('"Equipment") ... 3. Assignee a nd Assignor intend for the assignment of all payments and other contract rights under each Assigned Contract pursuant to thi s A ssig nme nt to be a true sale of such Payment and contract rights and not as a loan from Assignee to Ass ignor. .. Assignor grants Assignee a security interest in the Assigned Contracts, the Payments and all proceeds of each. Assignor hereby authorizes Assignee to file (a) a ll Uniform Commercial Code (.. UCC) financing Statements with respect to any security interest granted by Customers to Assignor under the Assigned Contracts ... (b) any and all UCC Financing Statements that Assignee deems appropriate in order to perfect the securi ty interest granted by the Assignor to Assignee under this Assignment. It is well settled that on a motion for summary judgment the function of the court is to determine whether issues ot fact exist. not to resolve issues o1 fact or determine matters ot credibility (see Ferrallte v American Lung Assn., 90 NY2d 623. 665 NYS2d 25 [1997]: Sil/mall v Twelltietll Century-Fox Film Corp .. 3 NY2d 395. 165 NYS2d ..J.98 [ 1957] ). A party moving for summary judgment must make a prima facie showing of entitlement to judgm ent as a matter of law offering sufficient evidence to demonstrate the absence of any material issues of fact (see Alvarez v Prospect Hosp .. 68 NY2d 320, 508 NYS2d 923j19861: Z uckerman v City oj New York, 49 NY2d 557. 427 NYS2d 595 (1980]). The failure to make such a prin'la fac ic showing requires the denial of the motion regard less of the sut1iciency of the opposing papers (see Wiuegrad v New York Uni. Med. Cir .. 64 NY2d 851, -+8 7 NYS2d 316 [ 1985)). [* 4] MLS Funding v Comprehensive Cardiac Services Index No. 12-02081 Page No. 4 ··[Wlhen interpreting a contract. the court should arrive at a construction which will give fair meaning to all of the language employed by the parties to reach a practical interpretation of the expressions of the paities so that their reasonable expectation will be realized.. (John E. A ndrus 'Jl1emorial Home v De B110110. 260 AD2d 635. 688. 688 NYS2d 687 [2d Dept 1999]; see Herifeld v Her:/eld. 50 AD3d 851. 851, 857 NYS2d 170 [2d Dept 20081: McCabe v Wittei•ee11. 34 AD3d 652. 825 NYS2d 499 [2d Dept 2006]). Whi le a determination of the intent of the parties to a contract can be made as a matter of law where their intent is disce rnable within the four co rners of an unambiguously worded agreement (see Nappy v Nappy. -W AD3d 825. 836 N YS2<..I 256 [2d Dept 2007] L where a contract clause is ambiguous, and the determination or the parties· intent depends on the credibility of extrinsic evidence or a choice among inferences to be drawn from extrinsic evidence, then the interpretation of such language is a matter for trial (see Amusement Bus. Underwriters v American Intl. Group, 66 NY2d 878, 880, 498 NYS2d 760 [ 1985] ; Brook Sltopping Ctrs. v Allied Stores Gen. Real Estate Co.. 165 AD2d 854, 560 NYS2d 317 [2d Dept 1990]). The test fo r determining whether contract language is ambiguous is .. ,.vhethcr the agreement on its face is reasonably susceptible of more than one interpretation·· (Cltimart Anoe. v Pa11I. 66 NY2d 570, 573, .+98 NYS::!d 344 [1986]: see Sasson v TLGAcquisitio11 LLC, 127 AD3d .+80, 9 NYS3d 2 [1st Dept 2015]) . ..An assignment is a transfor or setting over of property. or of some right or interest therein. from one person to another. and unless in some way qualified, it is properly the transfer of one whole interest in an estate. or chattel. or other thing" (Griffey v New York Ce11t. l11s. Co. , 100 NY 4 17. 422. 3 NE 309 ri 885]). "No particular words are necessary to effect an assignment: it is only required that there be a perfected transaction between the assignor and assignee. intended by those parties to vest in the assignee a present right in the things assigned" (lV/.atterofStralem. 303 AD2d 120. 122. 758 NYS2d 345 [2d Dept 2003]. quoting Leo11 v Martinez. 84 NY2d 83, 88. 614 NYS2d 972 [1994]). While an ass ignment at law requires that an assignor must be ··divested of all control over the thing assigned" (Coastal Commercial Corp. v Kosoff & Sons. 10 AD2d 3 72. 3 76. 199 NYS2d 852 [4th Dept 1960]: see 1 l1<1tter oj Stralem. supra), New York also recognizes the conditional assignment of a collateral security interest meant to secure an underlying debt or loan (see Agristor Leasing v Barlow, 180 AD2d 899, 901 , 579 NYS2d 476 (3d Dept 1992): Soutltem Assoc. v United Bmnds Co.. 67 AD2d 199, 204, 414 NYS2d 560 [1st Dept 1979]: Fif~F States Mgt. Corp. v Pioneer Auto Parks.44 AD2d 887, 888, 355 NYS2cl 856 [4th Dept 1974]). When parties agree to a conditional assig nment for security purposes only. the assignor is permitted to re ta in title in the col lateral w hile giving a security interest to the assignee for future claims (see 1 l1il/er v Wells Fargo Bank J11tematio11al C01p.. 540 F2d 548. 559 l2d Cir 1976]). As a result. the putative assignor under such an agreement will not be depri ved of its standing to maintain an action in lieu of its rights to underlying collateral (see N. Picco & Sons Con tr. Co., Inc. v Board of Ed11c. of tlte Bronxville Sc/tool, 71 AD3d 851, 895 NYS2d 881 (2d Dept 2010]: Agristor Leasing 1• Barlow, supra; Fifty States Mgt. Corp. v Pioneer Auto Parks. supra). Here. Comprehensive did not meet its prim facie burden on the motion. as it failed to eliminate triable issues relating to v\·hcther the purported assignment was a conditional lease made for security purposes only and. if so. whether MLS retained an interest in the title of the ultrasound machine sufficient to give it standing to commence the mstant action (see Almrez v Prospect Hosp .. supra: Winegrml 1• New York Un i. Med. Ctr .. supra: see also 1 \'. Picco & Sons Co11tr. Co., Inc. v Board of Educ. of tlte Bronxville Sc/tool. supra: Agristor Leasing v Bar/0 1L suprn). And. as the lease agreement. notice of assignment. and assignment contract contain ambiguous language as to whether GECC was only assigned the right to receive payments due under the lease. and that MLS retain collateral ri ghts to the ultrasound machine. including the right to insist that GECC re-assign it the machine at the end oJ the lease. an issue ot fact is presented which may on ly be resolved at trial (see Amusement Bus. Underwriters 11 America11 Intl. Group, supra; Slterif.f O.fficers Assu., Jue. v County of Nassau , 69 AD3d 921, 893 NYS2d 260 [2d Dept 201 OJ). Significantly, the lease agreement expl icitly states that GECC is only assigned the [* 5] MLS Funding v Comprehensive Cardiac Services Index No. 12-02081 Page No. 5 right to collect lease pa)'ments due under the agreement. Furthermore. while the assignment contract purports to di\'est MLS of all its rights to the leased equipment. it also states that upon the exhaustion of all pa) ments under the lease. "GECC will promptly reassign to MLS [... J all rights of GECC under the Lease. including but not limited to the transfer ot title to the subject leased equipment and any unexercised purchase options and/or agreements relating to the leased equipment. .. Accordingly. the motion by Comprehensive Cardiac Services ofNew York. P .C. for summary judgment dismissing the complaint against it is denied. <:-=--- ~ Dated: Riverhead, New York January 25, 2018 - ~b ,IJ -,,/.~-- ARTHUR G. PITTS, J.S.C. FINAL DISPOSITION X NON-FI NAL DISPOSITION

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