M & T Bank v Eye Catch Trading, Inc.
Annotate this CaseDecided on May 30, 2020
Supreme Court, Erie County
M & T Bank, Plaintiff,
against
Eye Catch Trading, Inc., and ISSAC FREUND a/k/a ISAAC FREUND a/k/a ISSAC FREUD, Defendants.
2019-808011
GETMAN & BIRYLA, LLP
Matthew D. Valauri, Esq., Of Counsel
Attorneys for Plaintiff
LEVENSON LAW GROUP
Scott C. Levenson, Esq., Of Counsel
Attorneys for Defendants
Timothy J. Walker, J.
Plaintiff has applied, pursuant to CPLR 3212, for and order granting summary judgment and attorney's fees and costs and dismissing Defendants' counterclaims.
This action arises out of a commercial loan transaction between Plaintiff and Defendant, Eye Catch Trading, Inc., the repayment of which was guaranteed by both Eye Catch Trading, Inc., and Defendant, Issac Freund (the "Loan").
The Court has reviewed Plaintiff's submission, including, inter alia, the Summons and Complaint, Defendants' Answer, and Plaintiff's bank records related to Defendants' account [FN1] , and [*2]has determined that Plaintiff has made a prima facie showing of entitlement to the relief requested. Accordingly, the burden has shifted to Defendants to submit evidentiary proof in admissible form to demonstrate the existence of a material issue of fact sufficient to defeat summary judgment (Villager Construction, Inc. v. J. Kozel & Son, Inc., 222 AD2d 1018 [4th Dept 1995] ).
Defendants' Twenty-Third Affirmative Defense and First Counterclaim seeks dismissal of the Complaint based upon Plaintiff's alleged "predatory lending practices" (Answer, ¶34; NYSCEF Doc. No. 10).
However, Defendants have failed to submit any evidence in admissible form to substantiate this claim. For instance, there is no evidence that Plaintiff received a kickback because of the Loan, or that Plaintiff bundled the Loan with unnecessary products; nor is there any evidence of unlawful steering or targeting. On the contrary, Defendants approached Plaintiff to seek financing.
Defendants' Twenty-Fourth Affirmative Defense and Second Counterclaim alleges that Plaintiff violated the disclosure requirements of the Truth in Lending Act (15 USC §1601, et. seq.) by, inter alia, failing to disclose the amount financed and the finance charges (Answer, ¶¶37-46; NYSCEF Doc. No. 10). However, this affirmative defense is meritless, because §1603 does not apply to the Loan (see 12 CFR 226.3 [section 1603 does not apply to extensions of credit for a "business" or "commercial" purpose]).
Defendants' Twenty-Fifth Affirmative Defense and Third Counterclaim alleges that Plaintiff violated the Deceptive Practices Act, as set forth in §349 of the General Business Law (Answer, ¶¶47-52; NYSCEF Doc. No. 10). However, Defendants have failed to describe, with any specificity, the alleged deceptive actions in which Plaintiff allegedly engaged. The terms of the Loan are expressly and sufficiently articulated in the Loan Documents and once Defendants began drawing on the line of credit, Plaintiff continuously invoiced them for in excess of three (3) years without objection (Payment History; NYSCEF Doc. No. 21)
Defendants' Twenty-Sixth Affirmative Defense and Fourth Counterclaim alleges that Plaintiff fraudulently induced Defendants to enter into the Loan (Answer, ¶¶53-57; NYSCEF Doc. No. 10). The elements of a claim for fraudulent inducement are that the defendant asserted a material fact, known to be false and intended to be relied on by plaintiff when made; plaintiff justifiably relied on the material misrepresentation; and thereby suffered damages (Braddock v. Braddock, 60 AD3d 84 [1st Dept 2009]).
Defendants contend that "Plaintiff failed to inform Defendants of the actual terms and finances that would be required [to repay the Loan]" (Attorney Aff. of Levenson, ¶16; NYSCEF Doc. No. 32). However, this contention is belied by the fact that the Loan Documents clearly and unambiguously state all of the Loan's pertinent terms, including the interest rate.
In addition, the fact that the Loan Documents do not state a monthly total that would be payable by Defendants is of no consequence. It would be impossible for the Loan Documents to contain such a statement, because the amount owed, in the context of the Loan's line of credit, [*3]was completely dependent on the amount drawn by Defendants. Moreover, because the Loan terms (including the applicable interest rate) are set forth in the Amended Note, Defendants were able to calculate a payment, based upon any hypothetical draw, by employing simple math.
Defendants' Twenty-Seventh Affirmative Defense and Fifth Counterclaim alleges that Plaintiff violated §6 of the New York Banking Law, pertaining to "high cost" loans [FN2] (Answer ¶¶58-61; NYSCEF Doc. No. 10). However, section 6.1 applies to loans made for personal, family, or household purposes (see Banking law §6-1[e][iii]), and is therefore inapplicable to the commercial Loan in this matter.
Defendants' Tenth Affirmative Defense states that "Plaintiff's claims are barred because the agreement upon which it seeks to recover was illegal in whole or in part." Such defense appears to have been raised merely as a formulaic pleading, because Defendants have not submitted any evidence in admissible form to substantiate it; the Loan Documents are clear and unambiguous on their face; and they are not illegal and pertain to a typical commercial loan transaction between a commercial borrower (Defendant, Eye Catch Trading) and a lending institution (Plaintiff), whose payment obligations are guaranteed by both the commercial burrower and an individual guarantor (Defendant, Issac Freund). Accordingly, the Tenth Affirmative Defense is meritless on its face (see Blue Heron Constr., LLC v. Fiberglass Structures & Tank Co., 49 AD2d 1225 [4th Dept. 2008]; Kowalski v. Knox, 293 AD2d 892 [3rd Dept 2002] [a general denial of a complaint's allegations, without more, is insufficient to raise a triable issue of fact sufficient to defeat a motion for summary judgment]).
The remaining affirmative defenses, like the Tenth Affirmative Defense, are formulaic, unsupported by evidence in admissible form, and meritless on their face. For example, the First Affirmative Defense contends that the Complaint fails to state a claim upon which can be granted. Clearly, the Complaint properly states a claim for breach of contract under the terms of the Amended Note and Security Agreement. Likewise, the contention in the Second Affirmative Defense that the Court lacks personal jurisdiction over the Defendants is meritless in light of the Affidavits of Service at NYSCEF Doc. Nos. 7-9, and because Defendants bound themselves to the jurisdiction of any state court in New York under the terms of the Amended Note and Security Agreements. Nor have the Defendants moved to dismiss the action upon a defense of lack of personal jurisdiction within the requisite sixty-day period, as required by CPLR 3211(e). The Affirmative Defenses grounded in, inter alia, laches, lack of standing, and statute of limitations are similarly formulaic and meritless (see, Blue Heron Constr., supra).
Finally, Plaintiff's request for attorney's fees and costs is supported by the express terms of several of the Loan Documents.
For the Foregoing reasons, it is hereby
ORDERED, that Plaintiff's motion is granted in all respects.
This constitutes the Decision and Order of this Court. Submission of an order by the [*4]parties is not necessary. The delivery of a copy of this Decision and Order by this Court shall not constitute notice of entry.
Dated: May 30, 2020
Buffalo, New York
HON. TIMOTHY J. WALKER, J.C.C.
Acting Supreme Court Justice
Presiding Justice, Commercial Division
8th Judicial District Footnotes
Footnote 1:The bank records include the Business Access Line of Credit Note, dated May 7, 2015 (NYSCEF Doc. No. 19); Amended and Restated Business Access Line of Credit Note, dated June 30, 2015 (NYSCEF Doc. No. 20); Payment History from May 13, 2015 through September 5, 2019 (NYSCEF Doc. No. 21); Demand/Acceleration Letter, dated April 23, 2019 (NYSCEF Doc. No. 22); Loan Payoff, dated June 18, 2019 (NYSCEF Doc. No. 23); Corporate Security Agreement, dated May 7, 2016, and related UCC Financing Statement (NYSCEF Doc. No. 24); and Unlimited Individual Security Agreement, dated May 7, 2015 (NYSCEF Doc. No. 25) (collectively, the "Loan Documents").
Footnote 2:The Answer refers to Section 6 of the Banking Law, which pertains to "Investment in obligations of housing corporations indirectly guaranteed pursuant to the Servicemen's Readjustment Act of 1944," which is irrelevant to this matter. Section 6-1 of the Bank Law pertains to high-cost home loans, which the Court presumes Defendants intended to rely upon, as opposed to §6.
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