Opinion
510729/2019
07-24-2020
SANTANDER BANK, N.A., Plaintiff, v. RUBIN TRADING CORPORATION and Chen R. Rubin, Defendants.
Platzer, Swergold, Levine, Goldberg, Katz & Jaslow, LLP, New York City (Andrew S. Muller of counsel), for plaintiff. Jerome E. Goldman, Esq. P.C., New York City (Jerome Gold- man of counsel), for defendants.
Platzer, Swergold, Levine, Goldberg, Katz & Jaslow, LLP, New York City (Andrew S. Muller of counsel), for plaintiff.
Jerome E. Goldman, Esq. P.C., New York City (Jerome Gold- man of counsel), for defendants.
Debra Silber, J.
The Decision/Order on this application is as follows:
Plaintiff Santander Bank ("Santander") entered into an agreement with defendant Rubin Trading Corporation ("Borrower") wherein it granted Borrower a line of credit in the principal amount of $180,000. To this end, the defendant business signed a Promissory Note ("Note") dated May 5, 2015. Under the terms of the Note, the Borrower was given a revolving line of credit with Santander. The Borrower agreed to pay regular monthly payments of all accrued interest due, beginning on June 4, 2015 and subsequently. The Note provides that interest accrues at a variable rate, equal to the sum of the Prime Rate plus 6.20%, with a minimum rate of 9.45% and a reduced rate in the first year. The Note also provides for a default rate of interest if the Borrower defaults.
In connection with the Promissory Note, co-defendant Chen Rubin ("Guarantor") signed an unconditional personal guaranty on May 5, 2015, by which he agreed to assume all of the Borrower's obligations arising from the Note in the event of the Borrower's default. The guaranty states that he agrees to "guarantee and become surety for all amounts owing by Borrower to Lender under any promissory note, instrument or obligation of Borrower of whatever kind, heretofore or hereafter incurred, whether due or to become due, fixed, contingent or matured, and all interest, late charges, collection agency fees, costs and attorneys' fees."
On October 17, 2016, Santander sent the Borrower a Deferred Repayment Option Letter (Exhibit D) in which it stopped any further drawdowns by the Borrower and provided the Borrower with a repayment schedule for (presumably) the amount then due. The repayment schedule does not state what the amount due was on that date. It says that defendant shall repay the outstanding loan balance over 60 months, beginning on January 4, 2017, with monthly payments of $3,563.39 principal plus accrued interest at a rate of 7% fixed, with any remaining loan balance due on December 4, 2021. This letter was counter-signed by Chen Rubin on behalf of the Borrower on November 2, 2016 and returned to Santander. Plaintiff claims defendant defaulted on March 4, 2019, and a default letter was sent dated April 16, 2019 (Exhibit F). This letter states that on the date it was written, the sum due was $114,692.56 in principal, plus interest of $2,870.08 and late charges.
Santander then brought an action against the defendants, asserting four causes of action: Breach of Note; Account Stated; Unjust Enrichment; and Breach of Guaranty. Defendants answered the complaint and this motion followed shortly thereafter.
Santander moves for summary judgment under CPLR 3212 and argues that no triable issues of fact exist. Santander argues that all of the defendants' affirmative defenses are conclusory and are refuted by the evidence, and therefore must be dismissed. Further, Santander argues that the Guarantor waived his right to assert any affirmative defenses, as set forth in the Guaranty Agreement.
The defendants oppose Santander's motion for summary judgment and argue that Santander's evidence fails to prove that Santander had actually funded any drawdowns pursuant to the loan agreement, which was for a revolving line of credit. The Borrower contends that its signature on the documents only evidence its having opened a line of credit with Santander and does not prove that it actually received any funds, never mind the amount that Santander seeks to recover. Therefore, defendants claim that Santander has not established a prima facie case entitling them to summary judgment. Finally, the defendants point out that the documents provided by Santander have inconsistent allegations as to the amount that it is owed, thereby creating an issue of material fact that must be resolved at trial.
In its Reply affirmation, Santander asserts that the defendants' argument that the Borrower never actually received the funds lacks merit. It also explains that the Dente affidavit contains a typographical error. Ms. Dente clarifies this in her corrected affidavit in support of the motion. She states that the differing amounts in question, $114,672.56 vs $180,000, refers to the outstanding principal amount due and the amount of the Borrower's line of credit, respectively.
Defendants submitted a Sur-Reply without the court's permission. Accordingly, the Sur-Reply was not considered in reaching the court's decision.
CPLR 3212CPLR 3212 governs motions for summary judgment. CPLR 3212(b) states:
A motion shall be granted if, upon all the papers and proof submitted, the cause of action or defense shall be established sufficiently to warrant the court as a matter of law in directing judgment in favor of any party ...[while a] motion shall be denied if any party shall show facts sufficient to require a trial of any issue of fact.
Summary judgment is a drastic remedy because it "deprives a party of his day in court and will normally have a res judicata effect" ( Ugarriza v. Schmieder , 46 N.Y.2d 471, 474, 414 N.Y.S.2d 304, 386 N.E.2d 1324 [1979] ). Accordingly, it is only appropriate in cases where it clearly appears that no genuine material issue of fact exists ( Sillman v. Twentieth Century-Fox Film Corp. , 3 N.Y.2d 395, 404, 165 N.Y.S.2d 498, 144 N.E.2d 387 [1957] ).
If a movant successfully demonstrates its prima facie entitlement to summary judgment as a matter of law, the burden of proof then shifts to the party opposing the motion ( Winegrad v. New York Univ. Med. Ctr. , 64 N.Y.2d 851, 853, 487 N.Y.S.2d 316, 476 N.E.2d 642 [1985] ; Adler v. Ogden CAP Props., LLC , 42 Misc. 3d 613, 619–620, 976 N.Y.S.2d 857 [2013], affd 126 A.D.3d 544, 2 N.Y.S.3d 902 [1st Dept. 2015] ). A party opposing summary judgment must produce sufficient proof that there are material questions of fact which require a trial ( Alvarez v. Prospect Hosp., 68 N.Y.2d 320, 324, 508 N.Y.S.2d 923, 501 N.E.2d 572 [1986] ). "Mere conclusions, expressions of hope or unsubstantiated allegations or assertions are insufficient to defeat a motion for summary judgment" ( Zuckerman v. City of New York, 49 N.Y.2d 557, 562, 427 N.Y.S.2d 595, 404 N.E.2d 718 [1980] ).
Breach of Promissory Note
To successfully establish a prima facie claim for breach of a promissory note, a plaintiff must prove three elements: the defendant executed a promissory note, the note contained an unequivocal and unconditional obligation to repay, and the defendant failed to pay according to the terms of the instrument ( Benacquista v. Ferrantello , 19 Misc. 3d 1130(A), 2008 WL 1990947 [Sup. Ct., Nassau County 2008], citing Constructamax, Inc. v. CBA Assoc., 294 A.D.2d 460, 460, 742 N.Y.S.2d 555 [2d Dept. 2002] ). Santander has established the first two elements by providing the Promissory Note dated May 5, 2015 that was signed by the Borrower. The court notes that this analysis is typically used when the borrower receives funds simultaneously with the execution of the promissory note. As this was a revolving line of credit, it is the third element of Santander's claim for breach of promissory note which is at issue.
Santander provides a copy of a letter it sent to the Borrower (the "Default Letter"), dated April 16, 2019, alerting the Borrower of its default on its monthly repayments on or about March 2, 2019. However, the Borrower contends that this Default Letter is not sufficient to establish that the Borrower actually received any funds from Santander. Thus, it argues that Santander has failed prove, or even allege in its complaint, that it actually funded the loan in question; the signed Promissory Note only indicates that Santander gave the Borrower access to a line of credit, and does not prove that defendant received any funds from it, or if it did, how much they received and when.
It is true that Santander's complaint fails to state that the Borrower actually received any drawdowns from the line of credit, and if so, when and for how much. It only states its conclusion that the Borrower is "liable to Plaintiff ...under the Loan Documents in the principal amount of $114,672.56, accrued interest as of April 10, 2019 in the amount of $2,870.08 and accrued late charges as of April 10, 2019 in the amount of $890.63." In Urban Equity Partners, LLC., v. Aribisala , where the plaintiff also sought to recover on a claim for breach of a promissory note, and the loan was also a line of credit, the same issue was presented. The court there said "the line of credit agreement submitted by the plaintiff merely indicated that Aribisala had a line of credit that he could use to obtain cash advances from National City. The plaintiff presented no evidence that Aribisala actually received any such cash advances" ( 143 A.D.3d 887, 888, 39 N.Y.S.3d 224 [2d Dept. 2016] ). In that case, the plaintiff was denied summary judgment.
Here, while Santander references the Borrower's account records in its supporting affidavit, none of these account records are actually provided. Without these records, and without a single monthly statement, the issue becomes whether the Deferred Repayment Option Letter, Default Letter, Dente affidavit, and Muller affirmation are sufficient to establish that the Borrower actually received the sum claimed and then defaulted.
Santander argues in its Reply that the Deferred Repayment Option Letter, which was signed by the Borrower, constitutes an acknowledgment by the Borrower that it had in fact received the full amount of the line of credit, even though this document has no indication of the total amount due. In relevant part, this letter states:
The Bank will offer to you an option of repaying the outstanding Loan balance over 60 months beginning 01/04/2017 (the "Deferred Repayment Option") as follows:
1) $3,563.39 level principal (monthly); and
2) accrued interest at the interest rate of 7.00% Fixed; plus
3) on 12/04/2021, any remaining loan balance owed.
Even if Santander is correct that the Borrower's signature on this letter constitutes an acknowledgement of its having received the full proceeds of the line of credit of $180,000, issues of material fact still remain. Sixty payments of $3,563.39 in principal come to $213,803.40, more than the total amount of the line of credit, without any explanation. If 26 payments were made, 34 would be due, or $121,155.26 in principal, at the time of the default letter. The Default Letter states the principal due on March 2, 2019 was $114,672.46.
Counsel's affirmation also references the unsubmitted records as evidence of the Borrower having received the full proceeds of the loan. An affirmation by a party's counsel cannot, by itself, sustain a plaintiff's prima facie cause of action; in Saunders v. J.P.Z. Realty, LLC , the court, held that an affidavit by an individual who lacks personal knowledge of the facts of the case is not sufficient to establish a prima facie cause of action entitling a plaintiff to summary judgment ( 175 A.D.3d 1163, 1164, 109 N.Y.S.3d 244 [1st Dept. 2019] ).
The Dente affidavit, from a bank employee, alleges that the Borrower owes Santander $114,672.56, plus interest and late charges, pursuant to the Promissory Note. However, the Dente affidavit similarly fails to state that the Borrower received any drawdowns from the loan, and if so, when and how much.
In its Reply, Santander's counsel claims that the defendants "failed to provide an affidavit of Borrower's representative wherein it is asserted that Borrower never received the proceeds of the loan." However, the burden is on the moving party to establish a prima facie showing of entitlement to summary judgment (see Ayotte v. Gervasio , 81 N.Y.2d 1062, 1062, 601 N.Y.S.2d 463, 619 N.E.2d 400 [1993] ["(T)he proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law"]; Winegrad , 64 N.Y.2d at 853, 487 N.Y.S.2d 316, 476 N.E.2d 642 ["Failure to make such showing requires denial of the motion, regardless of the sufficiency of the opposing papers."] ) Santander has not met its burden of proof because it has failed to provide any evidence demonstrating that the Borrower actually received any advances pursuant to the Note. Thus, Santander has failed to sufficiently establish the third element of its cause of action for breach of promissory note. Summary judgment cannot be granted on this claim ( Chi Wei Chan v. 2368 W. 12th St. LLC , 25 Misc. 3d 823, 826, 884 N.Y.S.2d 834 [2009] ).
Account Stated
An account stated refers to "an agreement between parties to an account based upon prior transactions between them with respect to the correctness of the account items and the balance due" ( Stephan B. Gleich & Assoc. v. Gritsipis , 87 A.D.3d 216, 223, 927 N.Y.S.2d 349 [2d Dept. 2011] ). A prima facie account stated claim consists of three elements: (1) evidence of an account (a bill), based on a prior transaction between the parties, which was presented by one party to another; (2) the recipient accepted the account (bill) as correct, either expressly or implicitly by failing to object to the amount stated therein within a reasonable timeframe; and (3) evidence the recipient had promised to pay the amount stated (e.g. National Commerce Exch. of Long Is., Inc. v. Cosmopolitan Coach, Ltd. , 120 A.D.3d 1208, 1209, 992 N.Y.S.2d 309 [2d Dept. 2014] ).
As Santander has failed to submit any billing statements at all, the court is left with Ms. Dente's affidavit to support the account stated claim, the Dente affidavit states:
Each month during the term of the Loan, Plaintiff sent Borrower monthly statements ("Statements") which set forth the amounts due for the particular installment payment, interest charges, and other fees and charges incurred and due Plaintiff ... Borrower has never raised any issue with Plaintiff concerning the amounts due Plaintiff on account of the Loan or how charges were incurred or how payments were applied. Borrower remitted payments to Plaintiff under the Loan Documents for many years following execution of the Loan Documents.
The court notes that the Borrower denied receipt of the monthly statements in its answer. A motion for summary judgment places the burden on the movant to produce evidence sufficient to eliminate all triable issues of material fact ( Winegrad , 64 N.Y.2d at 853, 487 N.Y.S.2d 316, 476 N.E.2d 642 ). If the moving papers fail to produce such evidence, then summary judgment must be denied, regardless of whether the opposing party responded with evidentiary proof. Id.
Without any account statements to demonstrate that the Borrower received any advances pursuant to the Loan, never mind to indicate the changes in the adjustable rate of interest, Santander cannot demonstrate, based solely on the Promissory Note and the Dente affidavit, that the Borrower had promised to pay the amount sued for. Further, without providing these statements, Santander cannot establish that Santander actually sent them, and that the Borrower actually received them and did not object to them (see Banco Popular N. Am. v. A and A Brass Co. LLC [Sup. Ct., Queens County 2012] [denying summary judgment for account stated where documents established "the creation of a Line of Credit" but movant had "failed to submit any documentary evidence to establish the amounts advanced ...on the line of credit"]; see also e.g. Brooklyn Union Gas Co. v. Platinum Plus Energy Resources, Inc. , 169 A.D.3d 634, 636, 93 N.Y.S.3d 421 [2d Dept. 2019] [failing to submit invoices directed to the defendant required denial of summary judgment on account stated claim]; American Exp. Centurion Bank v. Cutler , 81 A.D.3d 761, 762, 916 N.Y.S.2d 622 [2d Dept. 2011] [finding no prima facie case for account stated where the movant's submissions did not include the underlying billing statements or invoices]; cf. also Law Offices of David J. Sutton, P.C. v. NYC Hallways and Lobbies, Inc. , 105 A.D.3d 1010, 1011, 963 N.Y.S.2d 392 [2d Dept. 2013] [prima facie case established where submissions included evidence that invoices were received and retained by the defendant]; Fia Card Services, N.A. v. Siddique [Sup. Ct., Queens County 2014] [prima facie entitlement established as to line of credit where submissions included years of monthly statements that contained "the outstanding balance due and reflect(ed) the partial payment made ... towards the balance"] ).
Since Santander has failed to establish a prima facie case for its account stated claim, the burden of proof does not shift to the opposing party, and it is not necessary to examine the sufficiency of the Borrower's opposition ( Greenberg v. Manlon Realty, Inc. , 43 A.D.2d 968, 968, 352 N.Y.S.2d 494 [2d Dept. 1974] ). For these reasons, summary judgment must be denied on Santander's account stated claim. Unjust Enrichment
To establish a prima facie claim for unjust enrichment, a plaintiff must affirmatively prove that the defendant was enriched at the plaintiff's expense, and that the principles of equity and good conscience necessitate the plaintiff's recovery ( Alan B. Greenfield, M.D., P.C. v. Long Beach Imaging Holdings, LLC , 114 A.D.3d 888, 889, 981 N.Y.S.2d 135 [2d Dept. 2014] ). Because Santander has neither alleged nor proven that the Borrower received any advances pursuant to the line of credit, or the amount of such advances, it has not established entitlement to summary judgment on this claim as a matter of law.
Further, unjust enrichment is essentially a quasi-contractual claim where the law creates a contract in the absence of any agreement (see Goldman v. Metropolitan Life lns. Co. , 5 N.Y.3d 561, 807 N.Y.S.2d 583, 841 N.E.2d 742 [2005] ). A plaintiff may state alternative causes of action for breach of contract and unjust enrichment which are predicated on the same facts only where there is a bona fide dispute as to the existence of a contract or where the contract does not cover the dispute in issue (e.g. Modern Art Services, LLC v. Financial Guar. Ins. Co., 161 A.D.3d 618, 620, 79 N.Y.S.3d 4 [1st Dept. 2018] ).
Here, the facts and damages alleged in connection with plaintiff's unjust enrichment claim are precisely the same as those alleged in plaintiff's breach of Note cause of action and the parties agree that the parties' relationship is controlled by the underlying agreements. Accordingly, the court exercises its power under CPLR 3212 (b) and, upon searching the record, awards summary judgment in favor of the Borrower dismissing the unjust enrichment claim (see e.g. Green Complex, Inc. v. Smith , 107 A.D.3d 846, 849, 968 N.Y.S.2d 128 [2d Dept. 2013] [dismissing unjust enrichment claim as duplicative of breach of contract claim] ).
Breach of Guaranty
On a motion for summary judgment to enforce an unconditional guaranty, the creditor must prove the existence of the guaranty, the underlying debt, and the guarantor's failure to perform under the guaranty ( Davimos v. Halle , 35 A.D.3d 270, 826 N.Y.S.2d 61 [1st Dept. 2006] ). Again, Santander's motion for summary judgment on its breach of guaranty claim must be denied, since Santander has failed to prove the amount of the debt owing by the Borrower to the Plaintiff.
Accordingly, it is
ORDERED that the motion is denied; and it is further
ORDERED that partial summary judgment is granted in favor of defendants against plaintiff to the extent that the third cause of action in the complaint for unjust enrichment is dismissed.
This constitutes the Decision and Order of the Court.