FILED: NEW YORK COUNTY CLERK 09/19/ :19 AM INDEX NO /2013 NYSCEF DOC. NO. 25 RECEIVED NYSCEF: 09/19/2014

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1 FILED: NEW YORK COUNTY CLERK 09/19/ :19 AM INDEX NO /2013 NYSCEF DOC. NO. 25 RECEIVED NYSCEF: 09/19/2014 SUPREME COURT : STATE OF NEW YORK COUNTY OF NEW YORK _ TRUSTY CAPITAL INC., Plaintiff -against- Index No /2013 ATTORNEY'S AFFIRMATION JNJ ELEGANT CLEANERS INC., JAE LIN WHA IN OPPOSITION TO KYUNG SOON WHA and JAE SUN WHA, DEFENDANT S CROSS MOTION FOR SUMMARY JUDGMENT Defendants _ Morse Geller affirms as attorney and offers the following under penalty of perjury: 1. I am the attorney for the Plaintiff in the within action. As such I am fully familiar with the facts and circumstances of this matter, such as they may be. 2. This affirmation is offere d in opposition to Defendants cross-motion for summary judgment. 3. In addition to this affirmation Plaintiff also offers the affidavit of Mr. Yung Duk Hahn, CEO of the Plaintiff, Trusty Capital Inc. in support of Plaintiff s position. That affidavit is annexed hereto as Exhibit A. 3. As the Court is aware, this action has been brought to enforce several financial obligations owed by the corporate Defendant and guaranteed by the individual Defendants. The corporate Defendant defaulted upon payment on the three promissory notes executed by the corporate Defendant. All three notes were guaranteed by the individual Defendants. All parties named herein were duly served with the summons and complaint; a defense of lack of jurisdiction was waived by the expiration of the period within which to move based on a C.P.L.R defense of lack of jurisdiction. 1

2 4. The Plaintiff was placed in Receivership as per Order of the United States District Court for the Southern District of New York on January 29, A certified copy of the Order of the Court placing the Plaintiff in receivership is annexed as Exhibit B. 5. At least one payment was made to the Receiver by the corporate Defendant, JNJ Elegant Cleaners Inc., the most recent having been made on or about June 26, The check was made payable to SBA, Receiver for Trusty Capital. A copy of that check is annexed as Exhibit C. The check was in the amount of $6, Plaintiff contends that this payment, in and of itself, is sufficient to remove any issue of this action being time barred by the expiration of the six year statute of limitations. The promissory notes in question matured in Payment thereon in any amount within the six year period that followed would therefore have turned the statute over for another six years from the date of that payment. Plaintiff contends that since the payment was made in June of 2008 it follows that the statute of limitations was refreshed for another six years. Since the case now before the Court was brought in June 2013, well within the refreshed six year statute of limitations, this case is most assuredly not time barred. 6. It appears to be the Defendants contention that the affidavit of Yung Duk Hahn, as CEO of Plaintiff, in relation to the aforesaid June 2008 payment is deficient. Defendants state that because Mr. Hahn was not the direct recipient of the payment and does not claim to have had any authority with respect to negotiating for it or receiving it; therefore he cannot claim to have personal knowledge as to the circumstances underlying the payment as it relates to reviving the statute of limitations. 7. The attention of the Court is now respectfully directed to Exhibit B, the Order creating the Receivership ( Order ). Paragraph 2 of the Order states, inter alia, that [t]he Receiver shall assume and control the operation of Trusty and shall pursue and preserve 2

3 all of its claims. The language of the Order is clear, the Receiver s obligation includes pursuit of and preservation of all of Trusty Capital Inc. s claims. Plaintiff respectfully requests that the Court take note that Exhibit B has been certified by the Office of the Clerk of the United States District Court, Southern District of New York. 8. The attention of the Court is now respectfully directed to Exhibit D, the Order Approving and Confirming the Final Receiver s Report, Terminating the Receivership and Discharging the Receiver for Trusty Capital Inc. (hereinafter the Final Order ). Paragraph III.C. of the Final Order states, inter alia, that [t]he Receiver continued to maintain all of Trusty s corporate, financial and accounting records. Paragraph IV of the Final Order notes that the Receiver has entered into an Agreement with Mr. Hahn on behalf of the shareholders of Trusty for the return of the control of the corporation with its remaining assets in consideration of the payment of $15, by Mr. Hahn on behalf of the shareholders of the Receiver. Payment has been received and the Receiver is utilizing the money to close the receivership. Plaintiff respectfully requests that the Court take note that Exhibit D has been certified by the Office of the Clerk for the United States District Court for the Southern District of New York. 9. Based upon the recitation in paragraphs 6 and 7 hereof it is clear that the Receiver preserved the rights of Trusty Capital Inc. and, additionally, that the shareholders of Trusty bought Trusty out of the Receivership. Therefore it is clear that all of Trusty s rights (and obligations) and documents, whether pre-existing the appointment of the Receiver by the Order or incurred or created during the course of the Receivership, were preserved by the Receiver and transferred back to Trusty when Trusty was bought out of the receivership by its shareholders. Therefore it is also clear that any obligations owing to Trusty prior to the appointment of the Receiver were preserved and any rights 3

4 pertaining to Trusty as of the commencement of the Receivership were also preserved. The attention of the Court is respectfully directed to the Certification provided by the Office of Clerk of the United States District Court, Southern District of New York which Certificate is attached to Exhibits B and D. 10. The attention of the Court is also respectfully directed to CPLR 4520 which states that [w]here a public officer is required or authorized, by special provision of law, to make a certificate or an affidavit to a fact ascertained, or an act performed by him in the course of his official duty, and to file or deposit it in a public office of the state, the certificate or affidavit so filed or deposited is prima facie evidence of the facts stated. The Receiver appointed by a Judge of the United States District Court of the Southern District of New York to oversee the affairs of Trusty Capital Inc. was the public officer required/authorized to make an affidavit to a fact ascertained, or an act performed by him in the course of his official duty, and to file or deposit in a public office of the state as contemplated by the CPLR. The Receiver was authorized and required to handle the affairs of Trusty Capital Inc. and to file his reports concerning those affairs. The Receiver did just that. The final report that he filed is therefore prima facie evidence of the facts stated in his report which states, inter alia, that the corporate Defendant herein, JNJ Elegant Cleaners Inc., made the payments that the Receiver states were made, to wit, in the amount of $44, Your affirmant notes for the Court, in passing, that CPLR 4540(a) also states that [a]n official publication, or a copy attested as correct by an officer or a deputy of an officer having legal custody of an official record of the United States or of any of its courts is prima facie evidence of such record. Clearly, the Receiver s Reports and the Orders, duly filed in the United States District Court of the Southern District, certified by the Office of the Clerk of that Court, must be ac- 4

5 cepted by this Court as prima facie evidence of the facts contained in those documents. Therefore, the payment made by the corporate Defendant to the Receiver in the amount of $6, must be accepted as having been made within the statute of limitations that was applicable following the maturity date of the promissory notes (April of 2004). 10. Paragraph II.B. of the Final Order, titled Loans Receivable provides a summary of the status of the loan portfolios as of the date of this Third and Final Report. Under sub-section 2, entitled Past Due Notes Some Payments Received the report notes a. JNJ Elegant Cleaners, Inc. ( JNJ ). Amount Loaned: $50,000; $75,000; $125,000, Maturity Date of Notes: All due April Sub-section 2 notes that the Receiver collected $44,904 on the JNJ Notes during the period of the receivership. 11. It may well be that initially, during the period of the Receivership, the record of the receipts of the Receiver, including the $44,904 in payments made by JNJ Elegant Cleaners Inc., were the property of SBA. However, the records of the SBA relating to the period during the Receivership were transferred back to Trusty Capital Inc. as per the terms of the buy back as recorded in the Final Order. 12. The records of the Receiver, now those of Trusty Capital Inc., are clear. JNJ Elegant Cleaners Inc. made payments totaling $44,904 to the Receiver during the Receivership. That period lasted from January 29, 2007 through May 3, In short, JNJ made payments to Trusty Capital Inc. during the period of January 29, 2007 through May 3, These payments included one payment in the amount of $6, on June 26, Any or all of these payments were sufficient to turn over the statute of limitations and ensure that this action is not barred by the statute of limitations. No foundation need be laid insofar as the Final Report discusses the payments and lays the matter 5

6 to rest. Additionally, the Final Report is a matter of public record, being found on the docket of the Receivership case, copy annexed as Exhibit C. 13. Defendants cite Cadlerock Joint Venture II LP v Singh, 2014 N.Y. Slip Op (U)(Sup. Ct. NY County 2014) as authoritative. However, that case is inapplicable to this one. In that case the affidavit submitted by the Plaintiff was executed by a corporate officer who apparently had little or no acquaintance with his employer s case nor was there an indication of that witness familiarity with the business or record-keeping of his employer (the Plaintiff in that case). That case is inapplicable because that Plaintiff s evidence was truly insufficient if not inadmissible. In the case now before this Court Plaintiff s evidence including, inter alia, the $6, payment is completely admissible as explained above. Once the proof of that payment is admitted as evidence the statute of limitations is no longer an issue in this case and it is therefore no wonder that Defendants seek to have the payment barred. However, its is quite clear from the foregoing and as will demonstrated below that the payment is quite admissible as evidence. 14. Defendants also cite Flynn v Flynn 175 A.D. 2d 51, 572 N.Y.S.2d 307 (1 st Dept. 1991) for the proposition that part payment of a debt does not, by itself, toll the Statute of Limitations, but the burden rests upon the creditor to show that it was a portion of the admitted debt paid to and accepted by him as such, accompanied by circumstances amounting to an absolute and unqualified acknowledgement by the debtor of more being due, from which a promise may be inferred to pay the remainder. Id at 51. Again, the principle cited by Defendants is not relevant to the matter now before the Court. What could constitute a more absolute and unqualified acknowledgement by the debtor of more being due, from which a promise may be inferred to pay the remainder than the 6

7 payments made by the corporate Defendant to the Receiver, the last of which was made on June 26, 2008, and which totaled $44,904? 15. The Receiver s Final Report states that the notes in question matured in April of The June 26, 2008 payment was made well within the statute of limitations and, in fact, turned over the statute of limitations. The statute then had another six years to run, through June 25 of The action now before the Court was commenced in 2013, within five years of the June 26, 2008 payment. The case is therefore within the statute of limitations. This fact is indisputable. The Defendant s payments is a matter of public record. No further foundation need be laid to permit the admission of these facts into evidence. 16. Defendants additionally cite Shelley v Bodian, 2008 N.Y. Misc. Lexis 10446, 2008 Slip Op (U) as standing for the proposition that [c]ircumstances of a partial repayment of a debt may be proven by extrinsic evidence, such as the books and records of the debtor, admission of the debtor, and testimony of persons having direct knowledge of the circumstances of debt repayment. Id at 13. This is exactly the case in the matter before the Court. The Receiver had direct knowledge of the circumstances of the debt repayment. That repayment is recorded and contained in the Final Report, a matter of public record and specifically admissible before this Court as per CPLR 4520 and No further evidence or foundation concerning the payment and the issue of the statute of limitations is or should be required. 17. Defendants cite various cases for various propositions that all go to the same concept to avoid Defendant having further liability for the debt represented by the three notes that it defaulted on (and which the guarantors defaulted on) which in the aggre- 7

8 gate had a face value of $250, and were due upon maturity which the Receiver s Final Report cites was as of April The Defendants, cross-movant, cites Glen Oaks Club Inc. v Glen Oaks Holding, 194 Misc. 206, 86 N.Y.S. 2d 568 (1948), aff d 275 A.D N.Y.S. 2d 257 (2d Dept. 1949), app. Den. 275 A.D. 782, 89 N.Y.S. 2d 228, as standing for the proposition that where the debtor is liable on two debts to the same creditor, and pays without specifying which debt is being paid, the payment does not toll the statute or revive outlawed debt, unless such intent is so manifested to apply to one debt or the other (affirmation of Mr. Morgenstern,, pp. 6, 7). Notwithstanding the possibility that that concept is correct, Plaintiff maintains that that principle is wholly inapplicable to the case now before the Court. The Defendant/Mortgagor had two separate financial obligations to the Plaintiff; one a mortgage, the other as separate account. The mortgage was executed in 1927 and through a series of assignments and extensions, continued in full force and effect to 1938 when the Defendant apparently defaulted on the obligation of payment. The Court acknowledged that unless the action was taken out of the statute by reason of the payment in question, the action would have been barred after September 1, The action to enforce the obligation imposed by the mortgage was commenced on April 23, In 1945 defendant Glen Oaks Holding Co. made a payment to the Plaintiff s assignor (of the mortgage obligation). Glen Oaks Holding Co. also owed on the second account in the amount of $23, That payment was made inside the statute of limitations for the second obligation. The payment, made by check, had no notation indicating for which obligation the payment was made. The trial Court found after a review of evidence that the payment operated to save this mortgage from the bar of the statute of limitations (emphasis added). That case was affirmed on appeal and a further ap- 8

9 peal was denied. Therefore, notwithstanding that Defendants cite this case in support of their case, Glen Oaks Club Inc. v Glen Oaks Holding stands for the proposition that an unspecified payment does not necessarily avoid the statute of limitations. 19. Notwithstanding Defendant s reliance upon Glen Oaks Club Inc. and notwithstanding that that case is wholly inapplicable to Defendants case and is, in fact, supportive of Plaintiff s case, the case now before the Court is rather different. First of all, the obligations involved were not executed years apart and were not of vastly different character (in Glen Oaks Club Inc. one obligation was a mortgage obligation and the other appears to have been an unsecured debt, the two obligations presumably having been executed at different times and for different reasons). In the case now before the Court the corporate Defendant obligated itself to three separate obligations but all of which were executed within a few weeks of each other, one on April 13, 1999, one on April 19, 1999 and the third on April 28, The language of all three promissory notes is virtually identical and are for the same purpose - loans of money to the corporate Defendant all guaranteed by the three individual Defendants. There is no difference among the notes except for the amount of the obligation recited in each one. 20. The payment made by the corporate Defendant on June 26, 2008 was within the statute of limitations (maturity date for all three notes was in April 2004 as recited in the Receiver s Final Report). The payment was made to the Receiver, appointed by Order of a Judge of the United States District Court for the Southern District of New York. There can be no confusion as to the purpose of the payment, to whom the payment was made or for what purpose it was made. Therefore the Defendants argument about the expiration of the statute of limitations and the inability of the payment to take the case outside the statute is illusory. Defendants cite case after case all of which are either not 9

10 persuasive because they are easily distinguished or that are not supportive of their cause at all. Such being the case it is clear that the Defendants argument fails. The statute of limitations does not bar Plaintiff s action; Defendants cross-motion for summary judgment must therefore be denied. 21. Based upon all of the foregoing it is clear that Plaintiff has met its burden on its motion for summary Judgment on all counts and that the Defendants motion for summary Judgment cannot be permitted to stand. The June 28, 2008 payment is admissible as evidence as per CPLR 4520 and 4540 as recited in paragraphs and hereof. It is also clear that the June 28, 2008 payment is easily attributable to the three promissory notes executed by the corporate Defendant and guaranteed by the individual Defendants. What other reason could the Defendants have had for making that payment except because a substantial sum of money was owed by the Defendants to the Plaintiff herein and the Receiver would compel them to make good on those obligations. 22. The individual Defendant, Jae Lin Wha, formerly president of the corporate Defendant, notes, inter alia, in his affidavit offered in support of the cross-motion for summary judgment, that JNJ was unable to satisfy the three promissory notes when they came due in April When the SBA took over a Receiver, it could only afford about $2,300/month, which just about covered the interest accruing on the note4s. That was followed by a few monthly payments in 2008 of $6,000, ending on or about June JNJ lost its lease around that time and ceased operating. Here then is Defendant s admission, by its own President and owner, that the debt(s) owed to the Plaintiff were acknowledged and that payments were made as late as June 2008, sufficiently recent to turn over the statute of limitations. By implication this is Defendant s 10

11 acknowledgement that there was a debt and that there was an ongoing obligation that the Defendant intended to satisfy. 23. Finally, a word is necessary about Mr. Jae Lin Wha s affidavit offered by Defendants in support of their motion for summary judgment. The Defendants have raised the issue of whether or not a payment must be absolute, and whether it must be unqualifiedly acknowledged by the Defendant that a balance is due from which a promise may be inferred to pay the remainder. Even if such a standard actually could be said to exist, and Plaintiff does not acknowledge that there is such a standard, the circumstances of this case and the Receivership case clearly indicate that no other facts can be inferred from the $6, payment paid from the corporate Defendant to the Receiver except that the payment was made with the intent of more payments to come. The Receiver s report also states that payments of approximately $40, were made during the course of the three plus years that Trusty Capital Inc. was in Receivership. Plaintiff contends that nothing other than an intention on the part of the corporate Defendant to pay and keep paying can be inferred from those payments. 24. Mr. Jae Lin Wha, also states in his affidavit that they (the corporate Defendant) could not satisfy the three promissory notes when they came due in April When the SBA took over as Receiver, it could only afford about $2,300/month, which just about covered the interest accruing on the notes. That was followed by a few monthly payments in 2008 of $6,000.00, ending on or about June, JNJ lost it lease around that time and cased operating. The corporate Defendant therefore admits in its own officer s affidavit that it acknowledged the obligation to Trusty Capital Inc., that it made payments to the Receiver on account of that obligation and that it would have made more payments but that it lost its lease and ceased operating. The inference that 11

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13 Counsel for Plaintiff, Trusty Capital Inc. 277 Sycamore Street West Hempstead, N.Y (516)