Opinion
Index No. 654474/2024 Motion Seq. No. 001
12-10-2024
TPCAF I, LLC, Plaintiff, v. HICHAM ABOUTAAM, Defendant.
Unpublished Opinion
Motion Date 10/21/2024
PRESENT: HON. NANCY M. BANNON, Justice
DECISION + ORDER ON MOTION
HON. NANCY M. BANNON, JUSTICE
The following e-filed documents, listed by NYSCEF document number (Motion 001) 2, 21,22 were read on this motion to/for JUDGMENT - SUMMARY IN LIEU OF COMPLAINT.
In this action seeking to recover $9,899,242.68 for breach of a guaranty, the plaintiff, TPCAF I LLC, moves pursuant to CPLR 3213 for summary judgment in lieu of a complaint. The defendant guarantor, Hicham Aboutaam, representing himself pro se, opposes the motion. The motion is granted.
A plaintiff may seek relief under CPLR 3213 "[w]hen [the] action is based upon an instrument for the payment of money only." See HSBC Bank USA v Community Parking Inc., 108 A.D.3d 487 (1st Dept. 2013); Allied Irish Banks, P.L.C. v Young Men's Christian Assn, of Greenwich, 105 A.D.3d 516 (1st Dept. 2013); German Am. Capital Corp., v Oxley Dev. Co., LLC, 102 A.D.3d 408 (1st Dept. 2013). "An instrument does not gualify as an instrument for the payment of money under CPLR 3213 if extrinsic proof is needed to establish the debt and its non-payment." Weissman v Sinorm Deli, 88 N.Y.2d 437 (1996). In order to establish a prima facie entitlement to summary judgment in lieu of a complaint, a plaintiff must produce an instrument containing an "uneguivocal and unconditional obligation to repay" (Zyskind v FaceCake Mktg. Tech., Inc., 101 A.D.3d 550, 551 [1st Dept. 2012]), one which by its terms is for the payment of money only over a stated period of time (see Bloom v Lugli, 81 A.D.3d 579,580 [2nd Dept. 2011]), and establish that the defendant failed to pay in accordance with those terms. See Zyskind v FaceCake Mktg. Tech., Inc., supra; Rhee v Meyers, 162 A.D.2d 397 (1st Dept. 1990). More specific to this case, it has been held that an unconditional guaranty under a lease may fall within the parameters of CPLR 3213. See Cooperative Centrale Raiffeisen-Boerenleenbank, B.A., 25 N.Y.3d 485 (2015); Springprince, LLC v Elie Tahari, Ltd., 173 A.D.3d 544 (1st Dept. 2019); Board of Mgrs. of the Saratoga Condominium v Shuminer, 148 A.D.3d 609 (1st Dept. 2017). Further, it is well settled that the proponent of a motion for summary judgment must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient proof in admissible form to eliminate any triable issues of fact. See Winegrad v New York Univ. Med. Ctr., 64 N.Y.2d 851 (1985). In opposition, the nonmoving party must demonstrate by admissible evidence the existence of a triable issue of fact. See Alvarez v Prospect Hospital, 68 N.Y.2d 320 (1986); Zuckerman v City of New York, 49 N.Y.2d 557 (1980).
Here, the plaintiff, TPCAF I, LLC, seeks to recover on an agreement signed by the defendant, Hicham Aboutaam, and the plaintiff's predecessor in interest, TPC Art Finance LLC ("Lender") to guaranty payment under a Loan Agreement between the Lender and Petrarch, LLC (the "Borrower"). Aboutaam also signed the Loan Agreement on behalf of the Borrower, in his capacity as its President.
In support of the motion, the plaintiff submits, among other things, an affirmation of Michael Hansen, the Manager of the plaintiff company and Chief Operating Officer of the Lender. Hansen avers that the plaintiff is the successor in interest to the Lender under the express terms of the loan documents. The plaintiff also submits the subject guaranty, by which the defendant unconditionally guaranteed the loan between the Lender and Borrower, as well as any interest due. Section 5 provides that the defendant remains liable even if the Loan Agreement is amended, which may increase the interest rate or extend the time of payment. Section 15 states that the guaranty is binding on the Lender and the defendant, as well as their respective successors in interest. The guaranty also includes a waiver clause, by which the defendant waives any available defenses.
The plaintiff also submits the subject Loan Agreement between the Lender and the Borrower, dated September 21,2020, by which the Lender agreed to loan the Borrower up to $9,900,000. The plaintiff also submits a promissory note, by which the Borrower promised to pay that amount. The plaintiff also submits seven amendments to the Loan Agreement. Notably, the first amendment states that the plaintiff is the successor in interest to the Lender under the Loan Agreement and is signed by Aboutaam as Borrower's president and Hansen as plaintiff's manager. The second through seventh amendments, signed by the same parties, list the plaintiff as the lender under the Loan Agreement.
In his affirmation, Hansen further states that the Borrower defaulted on the loan on May 11,2024, by failing to make its $117,548.25 interest payment within ten days after the April 30, 2024, due date. The plaintiff's proof also includes an invoice sent to the Borrower on July 11, 2024, for interest payments due under the Loan Agreement. The invoice shows that $117,548.25 was due for the month of April 2024, and no payments were made after that. This invoice states that the total principal balance due is $9,735,762.99, with an accrued contractual interest of $163,479.69, for a total of $9,899,242.68.
By this proof, the plaintiff has established an "unequivocal and unconditional obligation to repay" (Zyskind v FaceCake Mktq. Tech., Inc., supra) a sum over a stated period of time (see Bloom v Luqli, supra) and the defendant's failure to pay in accordance with the terms of the agreement. See Bonds Financial, Inc, v Kestrel Technologies, LLC, 48 A.D.3d 230 (1st Dept. 2008); Zyskind v FaceCake Mktq. Tech., Inc., supra. The plaintiff further establishes a clear and unambiguous guaranty signed by the defendant with language that conclusively binds the defendant guarantor to its terms (see Citibank, N.A. v Uri Schwartz &Sons Diamonds Ltd., 97 A.D.3d 444, 446-447 [1st Dept. 2012]) such that enforcement of the guaranty is warranted. Specifically, the defendant is liable for the amounts owed by the Borrower under the Loan Agreement and its seven amendments, as Section 5 of the guaranty provides that the defendant's liability continues notwithstanding any modification or amendment to the Loan Agreement. Furthermore, the first amendment to the Loan Agreement, signed by the Borrower and Lender, assigned the Lender's rights to the plaintiff.
In opposition, the defendant does not dispute the plaintiff's factual allegations, or the amount sought by the plaintiff. Indeed, in his purported affirmation in opposition, the defendant essentially admits that the Borrower defaulted on the loan, and that it did so due to "current market conditions" and "slow to no business" in the art industry. While the court is sympathetic to the defendant's current unfortunate financial circumstances, the inability to pay is not a defense to this action, particularly as the guaranty contains broad and unconditional language holding the defendant liable for the Borrower's default under the Loan Agreement. See 1029 Sixth, LLC v Riniv Corp., 9 A.D.3d 142 (1st Dept. 2004); see also Fifty States Mqt. Corp., v Pioneer Auto Parks, Inc., 46 N.Y.2d 573 (1979), Chelsea 19 Assoc, v James, 67 A.D.3d 601 (1st Dept. 2009). In any event, the parties are free to enter into any stipulation of settlement of the judgment, and the court encourages them to do so.
The defendant also represents that the plaintiff is in possession of collateral, artworks pledged by the Lender to secure the loan, and argues that the plaintiff is wrongly seeking "double recovery" in moving for summary judgment. The defendant opines that the plaintiff should instead sell the collateral to satisfy the debt. This argument is without merit, as a lender may choose to proceed against a borrower or guarantor on a note and is not obligated to sell the collateral it retains under such a note. See First Intern. Bank of Israel, Ltd, v L. Blankstein & Son, Inc., 59 N.Y.2d 436 (1983); Marine Midland Bank v Hakim, 247 A.D.2d 345 (1st Dept. 1998); Chern. Bank v Alco Gems Corp., 151 A.D.2d 366 (1st Dept. 1989). In any event, there has been no recovery, much less double recovery.
Finally, the plaintiff seeks attorney's fees and costs. It is well settled that attorneys' fees are recoverable where, as here, there is a specific contractual provision for that relief. See Flemming v Barnwell Nursing Home and Health Facilities, Inc., 15 N.Y.3d 375 (2010). Paragraph 12 of the guaranty provides for such relief. However, the plaintiff has not submitted any proof of the amount of fees and costs incurred, such as an affirmation and billing records. The plaintiff may submit such supplemental proof within 30 days.
Accordingly, upon the foregoing papers, it is, ORDERED that the plaintiff's motion for summary judgment in lieu of a complaint (CPLR 3213) is granted, and it is further, ORDERED that the Clerk shall enter judgment in favor of the plaintiff, TPCAF I, LLC, and against the defendant, Hicham Aboutaam, in the sum of $9,899,242.68, plus statutory interest from May 11,2024, and it is further
ORDERED that the plaintiff may file supplemental papers, within 30 days of the date of this order, to establish the amount of its attorneys' fees and costs incurred, and the plaintiff shall provide notice to the court of any such filing by emailing the Part 61 Clerk at SFC-Part61-Clerk@nycourts.gov; and it is further,
ORDERED that the Clerk shall mark the file accordingly.
This constitutes the Decision and Order of the court.