Opinion
607501/2019
09-04-2019
FURNITURE CONSULTANTS, INC., Plaintiff, v. VERDE DEMOUNTABLE PARTITIONS, LLC, Defendant.
A. Scott Mandelup, Esq. Pryor & Mandelup, LLP 674 Old Country Road Westbury, New York 11590 For Plaintiff Leo F. McGinity, Jr., Esq. McGinity & McGinity, PC 1225 Franklin Avenue, Suite 325 Garden City, New York 11530
A. Scott Mandelup, Esq.
Pryor & Mandelup, LLP
674 Old Country Road
Westbury, New York 11590
For Plaintiff
Leo F. McGinity, Jr., Esq.
McGinity & McGinity, PC
1225 Franklin Avenue, Suite 325
Garden City, New York 11530
Carmen Victoria St. George, J.
The following electronically-filed papers were read upon this motion:
Notice of Motion/Order to Show Cause 2-4, 20
Answering Papers 11-14
Reply 16, 18
Briefs: Plaintiff's/Petitioner's 5
Defendant's/Respondent's 15
Pursuant to CPLR § 3213, plaintiff seeks an Order from this Court granting it summary judgment in lieu of complaint in the sum of $500,000, together with interest thereon from January 31, 2019, at the rate of 12% per annum, reasonable attorneys' fees, costs and expenses incurred in connection with resolving this action, and reasonable attorneys' fees that may be incurred in any post-judgment proceedings necessary to enforce the judgment. Plaintiff relies upon a Settlement Agreement for the relief requested.
According to the June 24, 2019 supplemental affirmation of plaintiff's counsel with which defense counsel agrees, there has been a partial resolution of this action such that plaintiff is now seeking only the sum of $500,000.00 with the attendant interest and attorneys' fees, rather than the original sum of $1,500,000.00.
Defendant opposes the requested relief, claiming that a necessary party to the action has not been made a plaintiff, that the interest rate negotiated "shows that all parties expected that payment would not be made on January 31," that the January 31 payment date was merely a "placeholder," and that the Settlement Agreement does not qualify as an instrument for the payment of money only under CPLR § 3213 because certain outside proof is needed.
Here, plaintiff is a distributor of defendant's furniture products. The parties have engaged in business transactions in the past, and they agree to continue to do business together, albeit on different terms than in the past. They have also resolved certain issues and disputes by way of the subject Settlement Agreement that forms the basis for this action.
CPLR § 3213 provides, in pertinent part, that "[w]hen an action is based upon an instrument for the payment of money only or upon any judgment, the plaintiff may serve with the summons a notice of motion for summary judgment and the supporting papers in lieu of a complaint... If the motion is denied, the moving and answering papers shall be deemed the complaint and answer, respectively, unless the court orders otherwise." The purpose of CPLR § 3213 is "to provide quick relief on documentary claims so presumptively meritorious" that formal pleadings and the subsequent delay in moving for summary judgment are unnecessary ( Weissman v Sinorm Deli , 88 NY2d 437, 443 [1996] ).
An instrument qualifies for CPLR § 3213 treatment "if a prima facie case would be made out by the instrument and a failure to make the payments called for by its terms" ( Interman Industrial Products, Ltd. V. R.S.M. Electron Power, Inc ., 37 NY2d 151, 155 [1975] ). In that case, the moving party would be entitled to summary judgment unless the other party came forward with evidentiary proof sufficient to raise an issue of fact regarding defenses to the instrument ( Id .).
"An instrument is considered to be for the payment of money only if it contains an unconditional promise to pay a sum certain over a stated period of time" ( Lawrence v. Kennedy , 95 AD3d 955, 957 [2d Dept 2012] ). "Where the instrument requires something in addition to defendant's explicit promise to pay a sum of money, CPLR 3213 is unavailable... The instrument does not qualify if outside proof is needed, other than simple proof of nonpayment or a similar de minimis deviation from the face of the document" ( Weissman , supra at 444; see also Von Fricken v. Schaefer , 118 AD3d 869 [2d Dept 2014] ; Suozzi v. Scharf , 115 AD3d 933 [2d Dept 2014] ; Lawrence , supra ).
Settlement agreements can properly be considered as instruments for the payment of money by a party seeking summary judgment in lieu of complaint ( Krape v. PDK Labs, Inc. , 34 AD3d 751 [2d Dept 2006] ; J.D. Structures, Inc. v. Waldbaum , 282 AD2d 434 [2d Dept 2001] ; Nemiroff v. Sullivan , 2012 NY Slip Op. 31492 [U] [Sup Ct Nassau County 2012] ).
In support of its motion, plaintiff submits the affidavit of its president, Michael Eble, and the Settlement Agreement. The Agreement's first sentence states that it is effective between the parties "as of January 1, 2019." Relying upon various paragraphs therein, plaintiff avers that the Settlement Agreement has been executed and exchanged by the parties, including plaintiff and defendant. Plaintiff further avers that defendant has not made the payment due on or before January 31, 2019 as required by paragraph 1 of the Settlement Agreement, and that defendant owes the sum of $1,500,000.00 (as modified, $500,000.00), plus interest at the rate of 12% per annum from January 31, 2019 until paid in full, reasonable attorneys' fees, costs and expenses incurred in connection with resolving this action, in addition to reasonable attorneys' fees that may be incurred in any post-judgment proceedings to enforce the judgment. The submitted Settlement agreement is signed by defendant's representative and dated January 28, 2019. Plaintiff and Michael Eble each signed the Agreement, which they have dated January 31, 2019.
"Under the general rule, attorney's fees and disbursements are incidents of litigation and the prevailing party may not collect them from the loser unless an award is authorized by agreement between the parties or by statute or court rule" ( A.G. Ship Maintenance Corp. v. Lezak , 69 NY2d 1, 5 [1986] ). In this case, however, paragraph 25 of the Settlement Agreement provides for the award of "reasonable attorney's fees, and all other cost expenses incurred in connection with settling or resolving such dispute," to the prevailing party, in addition to reasonable attorney's fees "incurred in any post-judgment proceedings to collect or enforce the judgment."
Thus, plaintiff has established its prima facie entitlement to summary judgment as a matter of law by presenting the written agreement and proof of defendant's failure to make payment according to its terms.
In opposition, defendant submits the May 23, 2019 affidavit of its president, Tracy D'Agata, a copy of a Distribution Agreement, and a February 4, 2019 letter addressed to defendant's counsel that was authored by plaintiff's counsel. Defendant's president claims that all parties to the Settlement and Distribution Agreements "were fully aware that [defendant] would not make the $1,500,000.00 payment by January 31, 2019. That is because the Agreements were not even executed and delivered until after January 31" (Affidavit of Tracy D'Agata, 10 [emphasis in original] ). Defendant relies upon the language of the February 4, 2019 letter (the letter) for its further claim that, "[t]he January 31, 2019 payment date was never intended to be a firm date," but only a "starting point for when the 12% interest would begin to accrue."
Defendant's own statement claiming that the January 31, 2019 date was a "starting point" for the accrual of interest actually supports the very terms of the Settlement Agreement that require the sum to be paid by defendant "on or before January 31, 2019," and that, "[i]n the event the payments due under paragraph[ ] ‘1’ ... [is] not paid when due, interest shall be payable, thereon at the rate of twelve (12%) percent per annum." By the terms of the Settlement Agreement, January 31, 2019 was indeed the "starting point" for the accrual of interest if the payment due on or before that date was not made by defendant.
In addition, there is no language in the letter that extends the time for payment past January 31, 2019; rather, it appears that defendant has ignored the language of the letter that clearly sets forth that the Settlement Agreement and Distribution Agreement were executed by plaintiff, and that they were enclosed with the Assignment of Membership referred to in the Settlement Agreement, to be held "in escrow pending your delivery to this office of counterparts of these ... documents fully executed by your clients together with the appropriate balance due under the Settlement Agreement . This is to further acknowledge that notwithstanding the January 31st payment deadline , if the amounts due hereunder are paid promptly, there will be no interest thereon" (emphasis added). Accordingly, plaintiff gave defendant a short opportunity to avoid the necessity of paying agreed-upon interest at the rate of 12% per annum. Defendant apparently did not avail itself of that opportunity.
Defendant's self-serving, ad hoc claim that the parties never agreed to the January 31, 2019 payment date as a "hard and fast deadline" (Defendant's Memorandum of Law, p. 3) is conclusory and unsupported by any facts. Moreover, defendant's affidavit contradicts this claim when defendant acknowledges that, "in the event the agreed sum [ ] was not paid by [defendant] on or before January 31, 2019, then interest would accrue on the unpaid amount at the rate of 12% per year" (Affidavit, 8). Defendant's next claim, that "[t]he fact that the parties negotiated a premium interest rate shows that all parties expected that payment would not be made on January 31" (Affidavit, 8) (emphasis added) is utterly nonsensical and designed to raise a feigned issue of fact. It defies logic that the parties negotiated an interest rate to be paid in the event of a default in payment, placed that rate in writing, but never intended to collect interest.
The Court notes that plaintiff's reply papers, which include e-mails from defendant's counsel regarding the negotiations of the Settlement Agreement, including the payment date, roundly contradict defendant's present claims. Importantly, emails of December 12, 2018 and December 17, 2018 were not made a part of defendant's opposition papers, but they demonstrate that defendant and its investors set the January 31, 2019 payment deadline.
Defendant's affidavit submitted in opposition alleging the intent of the parties is inadmissible parol evidence because this Court does not find any ambiguity in the contract, especially where defendant's recent affidavit is contradicted by evidence that it participated in setting the payment date ( Schron v. Troutman Sanders LLP , 20 NY3d 430 [2013] ). Also, the Settlement Agreement in this case contains a merger clause; therefore, the Court is "obliged ‘to require full application of the parol evidence rule in order to bar the introduction of extrinsic evidence to vary or contradict the terms of the writing’ " ( Id . at 436, citing Matter of Primex International Corp v. Wal-Mart Stores, Inc. , 89 NY2d 594, 599 [1997] ).
Defendant's claim that the Settlement Agreement is not an instrument for the payment of money because it is "part of a broader series of transactions," including the delivery of releases an Assignment of membership interest and a tax document is unavailing ( Krape , supra ). Defendant does not maintain that plaintiff breached any of the terms of the Settlement Agreement, and defendant has included the February 4th letter establishing that plaintiff signed the Settlement Agreement, Distribution Agreement and Assignment of Membership. Defendant also does not dispute that the effective date of the Agreement is January 1, 2019; in fact, defendant acknowledges that the Settlement Agreement and the Distribution Agreement referred to therein, were simultaneously executed by the parties.
Defendant's additional argument that the instant motion should be denied because Michael Eble (plaintiff's president) is not joined as a party is likewise unpersuasive. Defendant does not articulate how Michael Eble would be "inequitably affected by a judgment in this action," or how complete relief could not be accorded between the parties to this action without joining Michael Eble ( CPLR § 1001 [a] ). Moreover, Michael Eble does not make any such claim, nor does he seek to be a party in this action.
Rather, the plain terms of the Settlement Agreement call for defendant corporation to pay plaintiff corporation. Michael Eble is a signatory to the Agreement individually and as president of plaintiff. Pursuant to the Agreement, Eble agreed to sell to defendant his membership interest in defendant company (Agreement, 10, 16). Notably, defendant's payment on or before January 31, 2019 is a condition precedent to Eble's sale of his membership interest in defendant. Paragraph 10 of the Settlement Agreement provides in pertinent part that, "Eble shall execute and deliver to Verde's counsel an Assignment of Membership Interest in the form annexed which may be taken by Verde from escrow upon the payment in full of the amounts required under paragraph 1 above ...." (emphasis added). Defendant does not allege that Eble has not executed that Assignment, nor could defendant make such a claim in view of the February 4, 2019 letter it submits in opposition wherein it is stated that the Assignment was enclosed therewith.
Here, defendant does not dispute the existence of the Settlement Agreement requiring payment by January 31, 2019, the Agreement's effective date of January 1, or its execution by the parties. Defendant does not submit any evidence that plaintiff breached the terms of the Agreement or of any other agreement. Defendant's attempt to inject ambiguity into this matter by its affidavit purporting to reveal the intentions of the parties that were never memorialized in writing, in the face of the Agreement's merger clause, is rejected. Defendant has failed to raise any legally cognizable defense to its payment obligation.
Accordingly, plaintiff's motion for summary judgment in lieu of complaint is granted in the sum of $500,000, together with interest thereon from January 31, 2019, at the rate of 12% per annum, reasonable attorneys' fees, costs and expenses incurred in connection with resolving this action, and reasonable attorneys' fees that may be incurred in any post-judgment proceedings necessary to enforce the judgment.
Plaintiff is directed to submit judgment on notice, accompanied by an affirmation of reasonable attorneys' fees incurred in connection with this action to date, and a bill of costs.
As to the future attorneys' fees that may be incurred in connection with enforcement of the judgment, the payment of which by defendant is provided for in the Settlement Agreement, plaintiff may make a request for reasonable attorneys' fees and submit appropriate proof at that time should enforcement proceedings become necessary.
The foregoing constitutes the Decision and Order of this Court.