Opinion
Index No. 650723/2022
06-27-2022
United Teletech Financial Federal Credit Union, Plaintiff, v. Ting-Kwok Lau, Defendant.
Vedder Price P.C., New York, NY (Mitchell D. Cohen and Jean Occhiogrosso of counsel), for plaintiff. No appearance for defendant.
Unpublished Opinion
Vedder Price P.C., New York, NY (Mitchell D. Cohen and Jean Occhiogrosso of counsel), for plaintiff.
No appearance for defendant.
GERALD LEBOVITS, J.
This unopposed CPLR 3213 motion for summary judgment in lieu of complaint is brought by United Teletech Financial Federal Credit Union against Ting-Kwok Lau to collect on a loan that United Teletech purchased from Lau's original lender (First Jersey Credit Union). But the document evidencing a loan from First Jersey to Lau, and the document evidencing the sale of a loan from First Jersey to United Teletech, pertain to different loans. As a result, United Teletech has not (yet) established the existence of an unrepaid loan on which United Teletech has standing to collect through this CPLR 3213 motion-action. United Teletech's motion is denied without prejudice.
DISCUSSION
A promissory note qualifies as an instrument for the payment of money only within the meaning of CPLR 3213. But to have standing to sue to collect on the note a party must establish at least that it is the holder, transferee, or assignee of the note. (See Carlin v Jemal, 68 A.D.3d 655, 655-656[1st Dept 2009].)
United Teletech contends that it has been assigned the note on which it sues from the note's original holder, First Jersey. This contention is supported by an affidavit of United Teletech's chief financial officer. (See NYSCEF No. 4.) According to that affidavit, Lau originally executed a promissory note in favor of First Jersey in connection with a loan that First Jersey made to him; First Jersey later assigned a 90% interest in the loan (along with the right to collect) to United Teletech (see id. at ¶¶ 7-8); and the loan has gone unpaid despite due demand (see id. at ¶¶ 12-14, 16). Attached to the affidavit are, among other things, a copy of a note (see NYSCEF No. 5), a copy of a loan-purchase agreement (see NYSCEF No. 6), and a payment history for a loan that reflects a substantial outstanding balance (see NYSCEF No. 8). Ordinarily, these documents would be sufficient to entitle United Teletech to summary judgment. The difficulty here, though, is that the affidavit and supporting documents do not all refer to the same loan and note.
With respect to the loan itself, the affidavit states that "in connection with a loan in the original principal amount of $646,400.00," Lau executed a promissory note in favor of First Jersey in that amount "on or about January 24, 2013." (NYSCEF No. 4 at ¶ 7.) Attached to the affidavit is a copy of a promissory note, dated January 24, 2013, in the amount of $646,400.00, with interest accruing at 4.5% annually, and a maturity date of February 1, 2016. (See NYSCEF No. 5.)
To prove the assignment of the loan and note from First Jersey and United Teletech, the affidavit states that pursuant to a "Master Loan Participation Agreement" between First Jersey and United Teletech, "dated February 13, 2013" and "amended as of September 27, 2013," First Jersey assigned to United Teletech a 90% interest in the January 2013 loan for $646,000. (NYSCEF No. 4 at ¶ 8.) Attached to the affidavit is a copy of a "Master Loan Participation Agreement." (See NYSCEF No. 6.) The agreement reflects that it applies to loans identified in Addendums B and C. (See id. at 2.) But Addendums B and C do not mention a $646,000 loan. Instead, they identify a different loan to Lau-one with a principal balance of $815,000, made on October 3, 2013 (not January 24, 2013), with a maturity date of November 1, 2016 (not February 1, 2016). (See id. at 11, 13.) The Master Loan Participation Agreement and its addendums do not attach a copy of the note corresponding to that $815,000 loan.
The affidavit also states that as of October 31, 2021, the amount due and outstanding under the note is at least $768,000: approximately $744,000 in principal, and approximately $24,000 in unpaid interest accruing at 3.00% (not 4.5%). (See NYSCEF No. 4 at ¶ 16.) Similarly, the affidavit states that under "the express terms of the Note, interest accrued on the outstanding principal balance at the rate of three (3.00%) per annum" (not 4.5% annually). (Id. at ¶ 10.) To support these statements, the affidavit attaches a payment history reflecting an initial loan balance of $815,000-not $646,000. (See NYSCEF No. 8 at 2.)
In short, United Teletech has established the terms and conditions of Promissory Note A (the $646,000 January 2013 note); and it has established that it has a right to collect on the outstanding balance under Promissory Note B (the $815,000 note that was presumably executed in October 2013). But it has not established both the terms and conditions of a note and the right to collect on that note. If Promissory Note A is taken to be the governing instrument, United Teletech's motion-action is subject to dismissal for lack of standing. If Promissory Note B is taken to be the governing instrument, United Teletech's motion-action is subject to dismissal for lack of a cause of action, given the absence of the instrument on which the motion-action is premised.
This CPLR 3213 motion must therefore be denied. Ordinarily, the proper course would be to convert this proceeding into a plenary action, deeming United Teletech's motion papers to be a complaint and supporting exhibits. But CPLR 3213 confers discretion on the motion court to "order[] otherwise" in an appropriate case. (See Schulz v Barrows, 263 A.D.2d 565, 571 [3d Dept 1999] [discussing alternative treatments of a CPLR 3213 motion-action upon the denial of the initial summary-judgment motion].) Here, a reasonable possibility exists, given the documentation submitted on this motion, that United Teletech purchased an interest in the January 2013 loan from First Jersey to Lau, as well as in the October 2013 loan. It may well be, therefore, that United Teletech may properly collect on each loan, once all of the proper paperwork is assembled and put before this court. The appropriate course is to deny the CPLR 3213 motion without prejudice to its renewal with proper documentary support. (See TCA Global Credit Master Fund, L.P. v Puresafe Water Sys., Inc., 151 A.D.3d 1098, 1098, 1099 [2d Dept 2017] [affirming motion court's denial of plaintiff's CPLR 3213 motion without prejudice to renewal].)
Accordingly, it is
ORDERED that United Teletech's CPLR 3213 motion for summary judgment in lieu of complaint is denied without prejudice to its renewal upon proper documentary support; and it is further
ORDERED that if United Teletech does not seek renewal within 45 days of entry of this order, the motion-action will be administratively dismissed; and it is further
ORDERED that United Teletech serve a copy of this order with notice of its entry on defendant Lau at his last-known address by certified mail, return receipt requested.