Opinion
4495/09.
Decided October 5, 2009.
Chaim Dahan, Esq., Brooklyn, NY, Attorney for Plaintiff.
Russell J. Shanks, Esq., Cyruli Shanks Hart Zizmor LLP, New York, NY, Attorney for Defendants.
Plaintiff Mendel Schwimmer moves pursuant to CPLR § 3213 for an order granting summary judgment against defendants Eric Brown and Keith Gordon for the sum of $340,000.00 allegedly owed on a promissory note dated and executed as of October 7, 2008 (the "Note"). Plaintiff also requests an order directing judgment against the defendants in the amount of $113,333.00, representing plaintiff's costs and attorney fees in prosecuting this action.
Regarding repayment and maturity, the Note provides:
Maker will make monthly payments on the 8th day of each month beginning on November 8, 2008. Maker will make these payments every month until Maker has paid all amounts due herein including any other charges described below that Maker may owe under this Note. Maker will repay all principal and interest due hereunder in full within ninety (90) days of Payee's Demand for payment thereof, which is called the Maturity Date.' The Maturity Date shall be before November 30, 2008. . .Commencing on November 8, 2008 and continuing thereafter, Maker's monthly payments will be in the amount of U.S. $3,688.33, representing consecutive installments of interest only. All remaining principal and interest shall be due and payable on the Maturity Date.
(Exhibit A to the Schwimmer Affidavit in Support, Promissory Note dated October 7, 2008, at 1)
Regarding late payments, the Note provides:
1.If any installment under this Note is not paid when due, the entire principal amount outstanding hereunder and accrued interest thereon shall at once become due and payable, at the option of the Payee. . .In the event of any default in the payment of this Note or any other document or instrument so evidencing or securing this Note, and if the same is referred to an attorney at law for collection or any action at law or in equity is brought with respect hereto, Maker shall pay the Payee all expenses and costs, including, but not limited to, attorneys' fees except due to any willful misconduct or gross negligence attributable to the Payee or its agents.
2. . . .If any installment under this Note or any other monetary payment due under this Note, is not paid on the date when the same is due, the outstanding principal balance of this Note shall bear interest during the period in which Maker is in default at a rate equal to twenty-four (24%) percent per annum.
(Promissory Note at 1).
Plaintiff claims in his affidavit that, despite repeated demands for repayment after November 30, 2008, defendants have not made any payments under the Note and the entire principal plus default interest from that date is now due and owing to plaintiff. Defendants claim that they have not defaulted under the Note because (i) the terms of the Note regarding the maturity date are inconsistent, (ii) defendants made several payments under the Note, and (iii) defendants did not receive notice from plaintiff that the full amount of the Note was due and payable. In support of their contention that payments have been made under the Note, defendants' opposition papers include copies of several checks, which defendants claim represent payments made under the terms of the Note. Defendant Keith Gordon also affirms that he tendered $40,000 in cash to plaintiff as payment toward the principal due under the Note.
DISCUSSION
When an action is based upon an instrument for the payment of money only, the plaintiff, pursuant to CPLR § 3213, may serve with the summons a notice of motion for summary judgment and the supporting papers in lieu of a complaint. The justification for this expedited procedure is that such obligations are presumptively valid, and holders of them, in the absence of questions of fact as to authenticity or default, should not be subject to the delay occasioned by formal pleading ( see, e.g., Logan v Williamson Co., 64 AD2d 466 [4th Dept 1978]).
A promissory note qualifies as an instrument eligible for treatment under CPLR § 3213 if the plaintiff provides proof of the note and a failure to make the payments called for by its terms (CPLR § 3213; Seaman-Andwall Corp. v Wright Mach. Corp., 31 AD2d 136, 137 [1st Dept 1968], aff'd 29 NY2d 617; see also Gateway State Bank v Shangri-La Private Club for Women, 113 AD2d 791 [2d Dept 1985]; Quest Commercial, LLC v Rovner , 35 AD3d 576 [2d Dept 2006]). The usual standards for summary judgment motions apply to CPLR § 3213 motions; once plaintiff establishes that the action is based on an instrument for the payment of money only, and that defendant has not made payments under the terms of the instrument, defendant must come forward with proof of evidentiary facts showing the existence of a material issue of fact in order to defeat the motion ( Gateway, 113 AD2d at 791).
In support of its motion, plaintiff has supplied the Court with a copy of the Note signed by both defendants. The Note provides in relevant part that the defendants, for value received, promise to pay to plaintiff the principal sum of $340,000.00 plus interest, and that the Note "sets forth the entire agreement and understanding of the Payee and the Maker." Defendants do not dispute that they signed the Note. Therefore, plaintiff has met his burden to establish that the instant action is based on an instrument for the payment of money only ( Gateway State Bank v Shangri-La Private Club for Women, 113 AD2d at 791-92).
Plaintiff also bears the burden of proving default on a CPLR § 3213 motion ( Seaman-Andwall, 31 AD2d at 136). Plaintiff claims that defendants are in default by virtue of the fact that he allegedly made demands for payment after the maturity date, which he argues is November 30, 2008, but is yet to receive full payment under the Note. Defendants do not directly dispute that they are in default under the Note. Instead, they argue that the terms of the Note render it unenforceable. Specifically, defendants claim that the terms regarding the maturity date create an ambiguity in the document making "[i]t . . . virtually impossible for Plaintiff to declare the full principal and interest due on the Note before November 30, 2008, for the simple reason that ninety (90) days does [not] exist between October 7, 2008 — the date defendants executed the Note, and November 30, 2008 — the date designated. . .as the latest possible maturity date." (Brown Affidavit in Opposition ¶ 11).
The determination of whether a writing is ambiguous, and the construction and interpretation of an unambiguous written agreement, are issues of law within the province of the court ( Katina v Famiglietti, 306 AD2d 440, 441 [2d Dept 2003]). Whatever confusion defendants may profess regarding the maturity date, the terms of the Note are clear. As recited above, the Note's maturity date is no later than November 30, 2008, the full obligation being payable within ninety (90) days thereof. Defendants do not assert that they satisfied their obligation to plaintiff within this time period. Therefore, it is undisputed that defendants are liable under the Note.
Defendants also claim that the outstanding principal and interest under the Note are not currently due and payable to plaintiff because defendants never received a notice from plaintiff of his intent to declare a Maturity Date. Apart from the clear provision in the Note that the "Maturity Date" is no later than November 30, 2008, the Note provides:
4.Presentment, notice of dishonor, notice of default, notice of acceleration and protest are hereby waived by Maker and all makers, sureties, guarantors and endorsers hereof. . .
11.WAIVER.The Maker waives presentment, demand for payment, notice of dishonor and any or all notices or demands in connection with the delivery, acceptance, performance, default or enforcement of this Note and consents to any or all delays, extensions of time, renewals. . .and any and all waivers or modifications that may be granted or consented to by the Payee with regard to the time of payment or with respect to any other provisions of this Note, and agrees that no such action, delay or failure to act on the part of the Payee shall be construed as a waiver by the Payee of, or otherwise affect, in whole or in part, its right to avail itself of any remedy with respect thereto.
(Promissory Note at 2-3). The express terms of the Note therefore preclude defendants' argument that plaintiff has waived the right to declare defendants' in default due to their failure to notify defendants of their default in writing since the written terms of the document expressly provide that defendants waive notice of default. ( See Josephthal Holdings, Inc. v Weisman , 5 AD3d 221, 222 [1st Dept 2004]). Therefore, defendants' arguments which attempt to render the Note unenforceable fail to raise an issue of fact.
However, questions of fact exist as to the amounts defendants have already paid towards the ultimate amount due under the Note because defendant proffers documentary proof of payment towards the Note. Annexed to their opposition papers are numerous checks which, according to defendants, show that they have paid at least $38,450.00 under the terms of the Note. In reply, plaintiff attempts to impeach the validity of the checks but never directly disputes that defendants have made some payments under the Note. Indeed, in his reply, plaintiff argues that, at the very least, partial summary judgment should be granted in his favor, suggesting that some payments were made under the Note. Therefore, drawing all reasonable inferences in favor of the non-moving defendants ( see, e.g., Sosnoff v Carter, 165 AD2d 486, 492 [1st Dept 1991]), there remains an issue of fact as to the total amount currently outstanding under the Note. Plaintiff's motion for summary judgment in lieu of complaint is denied. Plaintiff is directed to file and serve a formal complaint in this action within twenty (20) days of the date of this order. Failure to file a complaint will result in dismissal of the action.
Plaintiff's request for attorney's fees is denied, with leave to renew, inasmuch as it was contingent upon plaintiff's motion for summary judgment in lieu of complaint.
The foregoing constitutes the decision and order of the Court.