SUPREME COURT - STATE OF NEW YORK IAS TERM PART 14 NASSAU COUNTY

Transcription

1 SUPREME COURT - STATE OF NEW YORK IAS TERM PART 14 NASSAU COUNTY INDEX No PRESENT: HONORABLE JPMORGAN CHASE BANK, N. - against - LEONARD B. AUSTIN Justice Motion RID: Submission Date: Motion Sequence No. : 001/MOT D Plaintiff COUNSEL FOR PLAINTIFF Pittoni, Bonchonsky & Zaino, LLP 226 Seventh Avenue, Suite 200 Garden City, New York STREETWISE PROMOTIONS, INC., CHRISTINE A. KNIGHT and JOSEPH E. CHESKIN, Defendants. COUNSEL FOR DEFENDANT Louis J. Posner, Esq. 305 Madison Avenue, Suite 1740 New York, New York ORDER The following papers were read on Plaintiff' s motion for summary judgment: Notice of Motion dated December 11, 2006; Affidavit of Daniel Madanski sworn to on December 6, 2006; Plaintiff' s Memorandum of Law. Plaintiff JP Morgan Chase Bank, N. A. (" Chase ) moves for summary judgment against Defendant Christine A. Knight ("Knight"

2 JPMORGAN CHASE BANK v. STREETWISE PROMOTIONS, INC. et at. BACKGROUND On October , Chase provided Defendant Streetwise Promotions, Inc. Streetwise ) with a $ line of credit. In connection with obtaining the line of credit, Streetwise executed a promissory note in the form of a Business Credit Application and Business Revolving Credit Account agreement (" Note 1 " In March 2001, the credit line on Note 1 was increased to $ Thereafter in March 2003, it was increased to $ Note 1 provided for payment of interest on the unpaid balance at a rate of 1 % above the Chase prime rate based upon a 360 day year. Note 1 also provides for a late charge of 5% of the payment due, if the payment is not received when due. The Business Revolving Credit Account Agreement for Note 1 provides for payment of legal fees should the note go to collection. On February , Streetwise obtained a second line of credit from Chase in the sum of $ This line of credit was evidenced by a promissory note in the form of a Business Credit Application (" Note 2" 1 Streetwise could access this line of credit by writing checks supplied by Chase. None of the papers submitted to the Court indicate the rate of interest on Note 2 whether Chase is entitled to late fees if the note is not paid timely or whether Chase could recover legal fees if Note 2 went to collection. Nevertheless, Chase avers that Although the affdavit submitted in support of this motion indicates the line of credit is for $8 000 the Business Credit Application dated February 10, 2000 indicates the line of credit is for $20,000.

3 JPMORGAN CHASE BANK v. STREETWISE PROMOTIONS, INC. et at. Note 2 provided for the payment of interest on the unpaid principal balance computed at the monthly periodic rate equal to 6 percentage points above Chase s prime rate in effect on the 15 day of the prior month, late fees and attorneys fees if the note went to collection. Knight personally guaranteed Streetwise obligations on Notes 1 and 2. Streetwise defaulted on the payment of Notes 1 and 2 by failing to make the payments due on or about July 27, By letter dated July 27, 2006, Chase advised Streetwise, Knight and Defendant Joseph Cheskin ("Cheskin ), who had also guaranteed Streetwise s obligation on the notes, of the default. The letter demanded immediate payment of the full amounts due and owing on Notes 1 and 2. When Streetwise and the guarantors did not make the payment demanded by Chase in its July 27, 2006 letter, Chase commenced this action seeking to recover the amount due on Notes 1 and 2, interest on the notes, late payment fees and attorney fees. On November 28, 2006, Chase entered a default judgment against Streetwise and Cheskin in the sum of $ Upon entry of the default judgment, the action against Knight was severed. Knight answered. Her answer contains a general denial of the complaint and asserts numerous affirmative defenses. The principal amount due on Note 1 is $91, The principal amount due on Note 2 isf $

4 JPMORGAN CHASE BANK v. STREETWISE PROMOTIONS, INC. et at. Chase now moves for summary judgment seeking to recover the amount due on the notes, interest in accordance with the note from the date of default to the date of the entry of the judgment, late fees in accordance with the terms of the note and attorney fees. DISCUSSION Plaintiff establishes a prima facie case on a guarantee by establishing the existence of the underlying promissory note, the guarantee and failure of the prime obligor to make payment as required by the promissory note. Royal Commercial Corp. v. Kotrulya, 304 AD. 2d 742 (2 Dept. 2003); and ED. S. Security Systems. Inc. v. Allyn, 262 AD.2d 351 (2nd Dept. 1999). Once Plaintiff establishes its prima facie entitlement to judgment as a matter of law on the guarantee, the Defendant must establish through admissible evidence the existence of triable issues of fact or the existence of a valid defense to the action on the guarantee. See Federal Deposit Ins. Co. V. Jacobs, 185 AD. 2d 913 (2 Dept., 1992). Chase has established a prima facie case on its guarantee. Knight has not opposed the motion. Her answer is verified by her attorney. An attorney verification is the equivalent of an attorney affirmation. An affirmation of an attorney who lacks personal knowledge of the facts is insuffcient to defeat summary judgment LLC v. Farris, 10 AD. 3d 708 (2nd Dept. 2004). See also Zuckerman V. City of New York 49 N.Y. 2d 557 (1980). Thus, Knight has not established the existence of a valid defense to the action.

5 JPMORGAN CHASE BANK v. STREETWISE PROMOTIONS, INC. et at. Chase has established that it is entitled to the principal amount of $ on Note 1 and $ on Note 2. A hearing is required to establish the rate of interest to be charged. Note provides for interest at the rate of prime plus 1 %. The papers do not establish what the prime rate was when Streetwise defaulted. Since none of the papers submitted to the Court establish Chase s entitlement to interest or the rate on Note 2, a hearing is required to determine these items. Chase asserts it is entitled to late fees on Note 1. The Business Revolving Credit Account Agreement for Note 1 provides for payment of a late fee of 5% of the total payment due if any principal and interest is not paid within 10 days of its due date. Although Chase seeks late fees in connection with Note 2, Chase has not placed before the Court any documents establishing its entitlement to such fees or how such late fees are to be calculated. Thus, a hearing is required to determine the amount of late fees due on Note A hearing is also required to determine whether Chase is entitled to a late fee on Note and, if so, the amount of such fee. An agreement to pay legal fees is enforceable. Arent. Fox. Linter. Plotkin & Kanh. PLLC v. Lurzer GmbH, 297 AD. 2d 590 (1st Dept. 2002). Legal fees in such cases are awarded on a quantum meruit basis. Simoni v. Time Line. Ltd., 272 AD. 537 (2 Dept. 2000); and Borg v. Belair Ridge Development Corp., 270 A. 2d 377 (2 Dept. 2000). The Business Revolving Credit Account Agreement relating to Note

6 JPMORGAN CHASE BANK v. STREETWISE PROMOTIONS, INC. et at. contains a provision obligating payment of legal fees should an action be brought to enforce the agreement. However, Chase fails to provide the court with any written agreement which obligates either Streetwise or Knight to pay legal fees should Note 2 go to collection. Therefore, a hearing is required to determine the reasonable legal fees in connection with Note 1, Chase s right to legal fees in connection with Note 2 and, if so the reasonable legal fees accruing from the breach of Note 2. Accordingly, it is ORDERED that Plaintiff's motion for summary judgment is granted; and it is further ORDERED that the matter is respectfully referred to Special Referee Frank Schellace on May 22, 2007 at 9:30 a. m. to conduct a hearing to determine the rate of interest on Note 1, Chase entitlement to interest and the rate of interest on Note 2, the penalty due on Note 1, Chase entitlement to penalty and the amount of penalty due on Note 2, Chase legal fees on Note 1 and Chase entitlement to legal fees in connection with Note 2 and the amount of those fees, if any; and it is further ORDERED, that Plaintiff' s counsel shall serve upon the attorney for the Defendant Christine A Knight and file with the Clerk of the Court a copy of this order, a Notice of Inquest or a Note of Issue and shall pay the appropriate filing fees on or before April 24, 2007; and it is further

7 JPMORGAN CHASE BANK v. STREETWISE PROMOTIONS, INC. et at. ORDERED that the County Clerk, Nassau County is directed to enter judgment in favor of Plaintiff, JP Morgan Chase Bank, N. A and against Defendant Christine A Knight on Note 1 the principal sum of $ together with interest from July at the rate as determined by the Special Referee, late fees and legal fees as determined by Special Referee, and the County Clerk, Nassau County is directed to enter a judgment in favor of the Plaintiff JP Morgan Chase Bank, N.A and against Defendant Christine A Knight on Note 2 in the principal sum of $ together with interest at the rate determined by the Special Referee from July 27, 2006, late fees and legal fees as determined by the Special Referee together with costs and disbursements as taxed by the Clerk. This constitutes the decision and Order of the Court. Dated: Mineola, NY March 29, 2007 Hon. LEONARD B. AUSTIN, J. ENTERED APR COUNTY NA5AU COUN Ct1R