Opinion
111324/2006.
Decided April 8, 2008.
Westerman Ball Ederer Miller Shapiro, LLP, Mineola, NY, (Richard F. Harrison), for Plaintiff.
Cowan, Liebowitz Latman, P.C., New York, NY, (Eric J. Shimanoff), for Defendants.
In this action, plaintiff Mario Dell'Anno (Dell'Anno) seeks to enforce his rights pursuant to a term promissory note issued on August 24, 2004 by defendant VWM Technology LLC (VWM) in the amount of $500,000. Dell'Anno also seeks to enforce a guaranty issued by defendant Peter Molinari (Molinari) to Dell'Anno to induce the loan made to VWM. Finally, Dell'Anno seeks to enforce his rights pursuant to a demand promissory note dated July 14, 2005 in the amount of $200,000 made by Molinari.
Dell'Anno now moves for an order, pursuant to CPLR 3212, directing the entry of judgment against Molinari in the amount of $700,000, plus interest and costs, and a judgment against VWM, in the amount of $500,000, on the ground that this action is based upon instruments for the payment of money only which are now due and payable.
Molinari is President and CEO of VWM, a company that allegedly owns the technology for manufacturing lightweight high-strength materials for use in construction (Amended Complaint, ¶ 5). In June 2004, Molinari solicited a loan from Dell'Anno in the amount of $500,000 for VWM ( id., ¶ 6). On August 25, 2004, Molinari agreed to have VWM execute a promissory note that he would personally guarantee.
On August 25, 2004, Molinari signed a promissory note for $500,000 (the VWM Note) as a "managing member" of VWM, in which VWM unconditionally promised to pay the principal amount within 24 months of the date of the note (the Maturity Date) ( id., ¶ 7). The VWM Note contained "the option, at any time prior to the Maturity Date, to convert said Principal into an equity investment in [VWM]" (VWM Note, at 1 [Dell'Anno Aff., Exh A]). The VWM Note also stated that, in the event that VWM defaulted, VWM would pay "all expenses incurred by [Dell'Anno], including reasonable attorneys' fees, in enforcing and collecting this Note" ( id.). The VWM Note further provided that:
No modification, change, waiver or amendment of this Note shall be deemed to be made by [Dell'Anno] unless in writing signed by [Dell'Anno].
Id.
The VWM Note was prepared by Molinari's attorney (Dell'Anno Aff., ¶ 8). Molinari does not dispute that he signed the note as a managing member of VWM ( see Molinari Dep., at 42 [Dell'Anno Aff., Exh D]).
In conjunction with the issuance of the VWM Note, Molinari issued a personal guaranty for the loan in the amount of $500,000 (the Guaranty): In order to induce Mario Dell'Anno ("Holder") to make a loan to VWM Technology LLC in the amount of $500,000 ("Loan") and in order to induce Holder to accept and to secure the payment of the Loan, a promissory note dated as of the date hereof in the principal amount of the loan ("Note"), the undersigned, Peter Molinari ("Guarantor") hereby unconditionally guaranties to Holder that all sums of whatever character which may become payable pursuant to the Note shall be promptly paid in full when due. If for any reason whatsoever any sum hereinabove referred to or any part thereof is not paid promptly when due, Guarantor immediately shall pay the sum regardless of whether steps had been taken to enforce any rights against Maker to collect any of said sums and regardless of any other condition or contingency [emphasis added].
Guaranty, at 1 (Dell'Anno Aff., Exh B). Molinari has authenticated his signature on the Guaranty ( see Molinari Dep,. at 43).
The term of the VWM Note expired on August 24, 2006. On March 14, 2007, a demand was made to Molinari in his capacity as a managing member of VWM for VWM's repayment of the VWM Note ( id., ¶ 12; Exh F). No payment has been made by either Molinari or VWM under either the VWM Note or the Guaranty since the March 2007 demand (Dell'Anno Aff., ¶¶ 11, 12, 16).
In July 2005, Molinari sought to borrow $200,000 from Dell'Anno (Amended Complaint, ¶ 11). Molinari instructed his attorney to prepare various papers as security for the $200,000 personal loan. Molinari's attorney prepared, among other things, a demand promissory note, a security agreement, an affidavit of confession of judgment, and a UCC-1 Financing Statement with respect to Molinari's agreement to tender shares in a cooperative apartment as further security for the loan ( id., ¶ 12).
On July 14, 2005, Molinari delivered an executed promissory note in the amount of $200,000 (the Molinari Note) and a confession of judgment ( see Dell'Anno Aff., Exh H) to Dell'Anno. The Molinari Note provided:
For value received, the undersigned, Peter Molinari ("Borrower") hereby covenants and promises to pay to the order of Mario Dell'Anno ("Holder") . . . the unpaid principal balance of the amount of the note, on demand [emphasis added].
Molinari Note, at 1 (Dell'Anno Aff., Exh C). The Molinari Note further provided:
This note may not be changed orally, but only by an agreement in writing, signed by the party against whom enforcement of any waiver, change, modification or discharge is sought.
Id. at 2. The Molinari Note also provided that:
Should the indebtedness represented by this note or any part thereof be collected at law or in equity . . . the Borrower agrees to pay in addition to the principal and interest due and payable all reasonable costs of collection or attempting to collect this note including attorneys' fees and expenses.
Id. It is undisputed that Molinari signed the Molinari Note ( see Molinari Dep., at 46).
Demand for payment on the Molinari Note, which was a demand note, was made on March 27, 2006 ( see Dell'Anno Aff., Exh F). No payment has been made on the Molinari Note ( id., ¶ 26).
During his deposition, Molinari made repeated admissions as to his liability under the Molinari Note, and under his Guaranty for the VWM Note:
Now on the $200,000, there are no documents, but I never said I never owed him the money. I owed him that money and I will pay him that money. I never changed my position.
***
Q. The dispute you see yourself having with Mr. Dell'Anno is as to when the $200,000 should be repaid, not the fact that you owe it.
A. Yeah (objection by counsel for Molinari).
Molinari Dep., at 53.
Q. With respect to the $500,000 that was loaned to VWM, do you understand VWM to have an obligation to pay those monies at this point in time? . . .
A. I have to pay Mario $500,000.
Id. at 54.
Dell'Anno moves for summary judgment on his first cause of action for judgment on the VWM Note, his third cause of action for judgment on the Guaranty, and his fourth cause of action for judgment on the Molinari Note. For the reasons set forth below, Dell'Anno's motion for summary judgment with respect to these three causes of action is granted.
In an action for non-payment of loan obligations created under loan documents, a prima facie case is established through proof of an instrument requiring from the defendant the payment of money only, and a failure to make the payments called for under the instrument ( see e.g. Interman Indus. Products, Ltd. v R.S.M. Electron Power, Inc., 37 NY2d 151, 154, citing Seaman-Andwall Corp. v Wright Machine Corp., 31 AD2d 136 [1st Dept 1968], affd 29 NY2d 617; accord Banco Popular North America v Victory Taxi Mgt., Inc., 1 NY3d 381; Weissman v Sinorm Deli, Inc., 88 NY2d 437, 444). Similarly, in an action on a personal guaranty, a prima facie case is established through proof of (1) the guaranty; (2) a default on the underlying obligation secured by the guaranty; and (3) the defendant's failure to honor the guaranty ( see e.g. Valencia Sportswear, Inc. v D.S.G. Enterprises, Inc., 237 AD2d 171 [1st Dept 1997]; European American Bank Trust Co. v Schirripa, 108 AD2d 684 [1st Dept 1985]).
A promissory note, containing on its face an unequivocal and unconditional promise to repay the holder and setting forth all of the relevant terms of repayment, represents the "prototypical example" of an instrument for the payment of money only ( Weissman v Sinorm Deli, Inc., 88 NY2d at 444; Matas v Alpargatas S.A.I.C., 274 AD2d 327 [1st Dept 2000]). Here, the VWM Note unequivocally sets forth the 24-month term for the payment of that obligation, and all of the terms and conditions pertaining to the obligations under that note are set forth on the face of the note. The Molinari Note is a "demand note," which is equally clear and unequivocal in terms of its rights and obligations, all of which are discernable from the face of this instrument.
In addition, it is well-established that an unconditional guaranty is "an instrument for the payment of money only within the meaning of CPLR 3213" ( Smith v Shields Sales Corp., 22 AD23 942 [3d Dept 2005] [citation omitted]; European American Bank Trust Co. v Schirripa, 108 AD2d 684, supra). Thus, the unconditional Guaranty executed by Molinari is clearly an instrument for the payment of money only ( see Valencia Sportswear, Inc. v D.S.G. Enterprises, Inc., 237 AD2d 171, supra; European American Bank v Lofrese, 182 AD2d 67 [2d Dept 1992]). Submission of an unconditional guaranty along with an affidavit of nonpayment is sufficient for a judgment under CPLR 3212 ( European American Bank Trust Co. v Schirripa, 108 AD2d 684, supra).
In its moving papers, Dell'Anno established his prima facie entitlement to judgment as a matter by law by submitting the promissory notes, the Guaranty, the confession of judgment, and Dell'Anno's moving affidavit demonstrating defendants' default under the notes, and their failure to pay all amounts due thereunder ( see Solanki v Pandya, 269 AD2d 189 [1st Dept 2000]; SCP ( Bermuda) Inc. v Bermudatel Ltd., 224 AD2d 214 [1st Dept], lv dismissed 87 NY2d 1056; Bank Leumi Trust Co. of New York v Rattet Liebman, 182 AD2d 541 [1st Dept 1992]). Indeed, defendants have admitted their failure to make any payments under the notes or the Guaranty ( see Molinari Dep., at 77, 78).
Once the plaintiff has met his burden, it is incumbent upon the defendants to establish, by admissible evidence, that a triable issue of fact exists with respect to a bona fide defense ( SCP (Bermuda) Inc. v Bermudatel Ltd., 224 AD2d 214, supra; Silber v Muschel, 190 AD2d 727 [2d Dept 1993]; Bank Leumi Trust Co. of New York v Rattet Liebman, 182 AD2d 541, supra). Here, however, in response to Dell'Anno's prima facie showing, defendants' averments are insufficient to create a triable issue of fact, or to constitute a defense that would defeat Dell Anno's motion, and thus, Dell'Anno's motion must be granted ( see Lorenz Diversified Corp. v Falk , 44 AD3d 910 [2d Dept 2007]; Takeuchi v Silberman , 41 AD3d 336 [1st Dept 2007]).
First, with respect to the VWM Note, defendants argue that there is an issue of fact as to when Dell'Anno expected repayment, because they were under the impression that Dell'Anno desired to keep open his option to convert the loan into an equity investment in VWM, and that thus, the $500,000 was not yet due. However, this claim is directly contradicted by Molinari's deposition testimony in which he admits that Dell'Anno "had an option" to have stock in VWM, but that "[h]is option has expired" (Molinari Dep., at 19]). Moreover, defendants fail to point to any specific conduct on Dell'Anno's part that even remotely suggests his desire to convert the loan to equity. Indeed, Dell'Anno specifically alleges that "I never asked for stock in VWM . . . [and I] simply want my money" (Dell'Anno Aff., ¶ 28)
With respect to the Molinari Note, Molinari claims that he should be relieved of the obligation to repay the $200,000 because Dell'Anno never accepted the promissory note or the accompanying papers, and represented that the note and the papers would be discarded. Specifically, Molinari alleges that Dell'Anno's son "in my presence telephoned his father and informed Mr. Dell'Anno that VWM's future prospects seemed bright and that Mr. Dell'Anno should give me the $200,000 with no strings attached,'" i.e., without any security (Molinari Aff., ¶ 16]).
I reject this argument. The Molinari Note plainly states that it could not be modified except upon a signed writing by the holder:
This Note may not be changed orally, but only by an agreement in writing, signed by the party against whom enforcement of any waiver, change, modification or discharge is sought.
Molinari Note, at 2. Dell'Anno alleges that he never agreed in writing to waive the Molinari Note (Dell'Anno Aff., ¶ 36). Indeed, Molinari testified that Dell'Anno never gave him anything in writing signed by him saying that he does not have to pay either note:
Q. Mr. Molinari, did Mario Dell'Anno ever give you anything in writing signed by him that says you do not have to repay the $200,000.
A. No, why would he?
Q. Did he ever give you anything signed in writing that says VWM does not have to pay the $500,000?
A. No.
Q. Did Mario Dell'Anno ever give you anything signed in writing that releases you from the guaranty you signed in connection with the $500,000 loan to VWM?
A. No.
Molinari Dep., at 110.
Accordingly, Dell Anno's motion for summary judgment on the VWM Note, the Guaranty and the Molinari Note is granted.
Dell'Anno is also entitled to recover his costs, expenses and attorneys' fees. Pursuant to the VWM Note, defendants expressly agreed to pay "all expenses incurred by [Dell'Anno], including reasonable attorneys' fees, in enforcing and collecting this Note" (VWM Note, at 1). Pursuant to the Molinari Note, Molinari agreed "to pay, in addition to the principal and interest due and payable hereon, all reasonable costs of collection or attempting to collect this note including attorneys' fees and expenses" (Molinari Note, at 2). Such language "is broad enough to encompass liability for the plaintiff's attorney's fees" ( Chase Manhattan Bank, N.A. v Marcovitz, 56 AD2d 763, 763 [1st Dept], appeal denied 42 NY2d 807; accord International Business Machines Corp. v Murphy O'Connell, 183 AD2d 681 [1st Dept 1992], appeal dismissed 81 NY2d 783; CMI II, LLC v Interactive Brand Dev., Inc. , 13 Misc 3d 1214 [A], 2006 NY Slip Op 51818[U] [Sup Ct, NY County 2006]). Because no evidence has been submitted on this issue, the determination of the amount of such costs and attorneys' fees will be referred to a Special Referee to hear and report.
However, Dell'Anno's motion for summary judgment on his second and fifth causes of action for money had and received is denied. A cause of action for money had and received "requires a showing that: (1) defendant received money belonging to plaintiff; (2) defendant benefitted from the receipt of the money; and (3) under principles of good conscience defendant should not be allowed to retain that money" ( Insurance Co. of State of Pa. v HSBC Bank USA , 37 AD3d 251 , 255 [1st Dept 2007], revd on other grounds 10 NY3d 22). "An action for money had and received does not lie where there is an express contract between the parties" ( Fesseha v TD Waterhouse Investor Services, Inc., 305 AD2d 268, 269 [1st Dept 2003]; see also Parsa v State of New York, 64 NY2d 143, 148 [money had and received is an "obligation which the law creates in the absence of an agreement"]; Phoenix Garden Rest., Inc. v Chu, 245 AD2d 164 [1st Dept 1997]). Dell'Anno bases his money had and received claims on the fact that defendants have failed to repay any amount of the loans memorialized by the VWM Note and the Molinari Note. Thus, Dell'Anno's money had and received claims must be dismissed as redundant of his claims under the promissory notes.
I have considered the remaining claims, and I find them to be without merit.
Accordingly, it is
ORDERED that plaintiff's motion for summary judgment is granted as to his first, third, fourth causes of action, and denied as to his second and fifth causes of action, and the issue of plaintiff's costs and attorneys' fees in connection with the promissory notes at issue is referred to a Special Referee.