Opinion
7182-06.
Decided June 27, 2006.
John V. Decolator, Esq., Garden City, New York, Counsel for Plaintiff.
Plaintiff moves pursuant to CPLR 3213 for summary judgment in lieu of complaint.
BACKGROUND
East Coast Automotive and Electronics, Inc. ("East Coast") made a promissory note dated November 2004 in the principal sum of $95,000 payable to Plaintiff The Ultimate Connection Inc. ("Ultimate"). The note was payable in equal monthly installments of principal and interest of $1,882.00 with the first payment being due on December 1, 2004.The note was self-liquidating with the final payment due on November 1, 2009.
East Coast's obligations on the note were personally guaranteed by Defendant Mark Friedfertig ("Friedfertig"), its president, pursuant to the terms of a written guaranty dated November 1, 2004. The guaranty provided that Friedfertig was absolutely and unconditionally guaranteeing East Coast's obligations of the terms of an October 2004 Asset Purchase Agreement between Ultimate and East Coast and the promissory note.
Ultimate alleges East Coast made the payments due through and including December 2005. East Coast defaulted in payment of the installment due in January 2006 and on each and every installment due thereafter.
The note permits the payee to declare the entire outstanding balance on the note immediately due and payable upon ". . . (a) the failure of Maker to pay the principal of, or any interest on, this Note when due and such failure shall continue unremedied for a period of fifteen (15) days after written notice thereof." (Emphasis added.)
DISCUSSION
Although Ultimate alleges that it is suing on the note, the action is actually on the guaranty. Friedfertig is not the maker of the note. He is the guarantor. The maker of the note is East Coast, which is not a party to the action.
A guarantee is an instrument for the payment of money only for the purposes of CPLR 3213. European American Bank v. Lofrese, 182 AD2d 187 (2nd Dept. 1992); and Council Commerce Corp. v. Paschalides, 92 AD2d 579 (2nd Dept. 1983).
Plaintiff establishes a prima facie case on a guarantee by roving the existence of the underlying obligation, the guarantee and the failure of the prime obligor to make the required payments. Physicians Domain, Inc. v. Grosso, 288 AD2d 362 (2nd Dept. 2001); E.D.S. Security Systems, Inc. v. Allyn, 262 AD2d 351 (2nd Dept. 1999); and I.P.L. Corp. v. Industrial Power Lighting Corp., 202 AD2d 1029 (4th Dept. 1994).
In this case, Ultimate has established the existence of the underlying obligation and the guarantee. It has not, however, established the prime obligor's default in payment.
Plaintiff establishes a prima facie case on a promissory note by submitting proof of the existence of a promissory note executed by the Defendant, an unequivocal and unconditional obligation to repay and the obligor's default in payment. Constructamax, Inc. v. CBA Assocs., Inc., 294 AD2d 460 (2nd Dept. 2002); and Colonial Commercial Corp. v. Breskel Associates, 238 AD2d 539 (2nd Dept. 1997); See also, Seaman-Andwall Corp. v. Wright Machine Corp., 31 AD2d 136 (1st Dept. 1968), aff'd, 29 NY2d 617 (1971); Chemical Bank v. Nemeroff, 233 AD2d 239 (1st Dept. 1996); and Key Bank v. Munkenbeck, 162 AD2d 503, 162 AD2d 503 (2nd Dept. 1990).
A promissory note is construed like any other contract using the normal rules of contract interpretation. Arnav Indus. Inc. Employee Retirement Trust v. Westside Realty Assocs., 180 AD2d 463 (1st Dept. 1992).
A clear and complete written agreement should be enforced in accordance with its terms. South Road Assocs., LLC v. International Business Machines Corp., 4 NY3d 272 (2005); Greenfield v. Philles Records, Inc., 98 NY2d 562 (2002); and W.W.W. Assocs. v. Giancontieri, 77 NY2d 157 (1990). In interpreting a contract, the court must give ". . . practical interpretation to the language employed and the parties reasonable expectations." Slamow v. Del Col, 174 AD2d 725, 726 (2nd Dept. 1991), aff'd,79 NY2d 1016 (1992). See also, AFBT-II, LLC v. Country Village on Mooney Pond, Inc., 305 AD2d 340 (2nd Dept. 2003); and Del Vecchio v. Cohen 288 AD2d 426 (2nd Dept. 2001).
The court may not add or delete provisions of an agreement under the guise of interpretation nor may the court interpret the language of an agreement in such a way as would be contrary to the intent of the parties. Petracca v. Petracca, 302 AD2d 576 (2nd Dept. 2003); and Tikotzky v. New York City Transit Auth., 286 AD2d 493 (2nd Dept. 2001).
Under the specific terms of the note, East Coast would not be deemed in default permitting Ultimate to accelerate payment, unless (1) East Coast failed to make a payment of principal and interest and (2) default in payment was not cured within fifteen (15) days after East Coast was given written notice of such default in payment. While Ultimate has established East Coast is in default in payment of principal and interest, it has not established that it gave East Coast written notice of default which triggered the fifteen day cure period provided in the note.
Where a written notice of default is required and Plaintiff fails to establish that written notice has been given, Plaintiff may not sue for damages based upon the alleged default. Putnam High Yield Trust v. Bank of New York, 7 AD3d 439 (1st Dept. 2004); and I.J. Litwak and Co., Inc. v. General Signal Corp., O-Z Gedney Div., 293 AD2d 713 (2nd Dept. 2002). Ultimate has not alleged that it gave East Coast written notice of the default to satisfy the condition precedent to establish East Coast's default and Defendant's obligation as guarantor.
Ultimate has not established a prima facie case on the promissory note. Since it has not established a default by the prime obligor, it has not established a prima facie case against the guarantor.
Therefore, the motion for summary judgment in lieu of complaint must be denied.
See, Winegrad v. New York University Medical Center, 64 NY2d 851 (1985); Widmaier v. Master Products, Mfg., 9A.D.3d 362 (2nd Dept. 2004); and Ron v. New York City Housing Auth., 262 AD2d 76 (1st Dept. 1999).
Accordingly, it is
ORDERED, that Plaintiff's motion for summary judgment is lieu of complaint is denied.
This constitutes the decision and Order of the Court.