FILED: NEW YORK COUNTY CLERK 01/20/2010 INDEX NO /2010

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1 - - _ - - _ L ~ ~ ~ - - ~ ~ ~ ~ ~ ~ - ~ - ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ FILED: NEW YORK COUNTY CLERK 01/20/2010 INDEX NO / _ _. NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 01/20/2010 z > L MADISON SQUARE GARDEN, L.Pe9 -against- SPONGETECH DELIVERY SYSTEMS INC. & RM ENTERPRISES INTERNATIONAL LTD., Plaintiff, Index No. SUMMONS The basis of the venue designated is: the residence of all parties To the above-named defendant Defendants. X YOU ARE HEREBY SUMMONED to answer the M tion for Summary Judgment in Lieu of Complaint in this action and to serve a copy of your answering documents on the Plaintiffs attorney within twenty (20) days after the service of this Summons, exclusive of the day of service (or within 30 days after the service is complete if this Summons is not personally delivered to you within the Sate of New York); and in the case of your failure to appear or answer, the motion may be granted against you by default for the relief demanded in the Motion for Summary Judgment in Lieu of Complaint. Dated: New York, New York January 11,2010 New York, New York *. (2 12) * w -<* ^* * Supreme Court Records OnLine Library - page 1 of 15

2 Defendants' Address: Louis Brilleman Associates 110 Wall Street New York, New York Attn: Louis Brilleman, Esq. Spongetech Delivery Systems, Inc. Suite West 3Yd Street New York, New York Spongetech Delivery Systems, Tnc. Suite West 33rd Street New.York, New York RM Enterprises International Ltd. Suite West ~ 3 Street ' ~ New York, New York RM Enterprises International Ltd. Suite West 33rd Street New York, New York Supreme Court Records OnLine Library - page 2 of 15

3 Index No. NOTICE OF MOTION IN LIEU OF COMPLAINT C 0 U N S E: I, 0 R S: PLEASE TAKE NOTICE, that upon the annexed Affirmation of Peter Sullivan, Esq. sworn to on the Sth day of January, 2010, and further upon the Affidavit of John Clark, sworn to on the Xth day of January, 2010, and the exhibits annexed thereto, Plaintiff, MADISON SQUARE GARDEN, L.P., ( MSG ), will move this Court at Motion Support Part, Room 130 at the Courthouse, located at 60 Centre Street, New York, New York, on the gth day of February, 2010 at 9:30 am., or as soon thereafter as counsel may be heard, for an Order pursuant to CPLR directing that summary judgment be entered in favor of Plaintiff against Defendants, for the relief demanded in the attached Motion for Summary Judgment in Lieu of Complaint, and for such other and further relief as the Court may deem just and proper. Supreme Court Records OnLine Library - page 3 of 15

4 8 PLEASE TAKE FURTHER NOTICE, that pursuant to CPLR 22 14(b), answering papers, if any, are required to be served upon the undersigned at least seven (7) days before the return date of this motion. Dated: New York, New York January 11,2010 SULLIVAN GARDNER PC Attorn&, for Plaintiff 475 Park Avenue South, 30th Floor New York, New York (212) TO: Louis Brilleman Associates 110 Wall Street New York, New York Attn: Louis Brillernan, Esq. Spongetech Delivery Systems, Inc. Suite West 33rd Street New York, New York Spongetech Delivery Systems, Inc. Suite 5 18 IO West 33rd Street New York, New York RM Enterprises International Ltd. Suite West 33rd Street New York, New York RM Enterprises International Ltd. Suite West 3Yd Street New York, New York Supreme Court Records OnLine Library - page 4 of 15

5 MADISON SQUARE GARDEN, L.P., Plaintiff, -against- AFFIRMATION SPONGETECH DELIVERY SYSTEMS INC. & Rh4 ENTERPRISES INTERNATIONAL LTD., Defendants. Peter Sullivan, an attorney duly admitted to practice law in the Courts of the State of New York, hereby affirms under penalties of perjury the truth of the following statements: 1. I am member of the firm of Sullivan Gardner PC, attorneys for the Plaintiff in the above-captioned matter, and as such I am fully familiar with the facts and circumstances surrounding the instant application based upon my review of the files of Plaintiff. 2. This affirmation is submitted in support of Plaintiffs motion for summary judgment in lieu of complaint seeking judgment granting payment of the sums evidenced by the following instruments for payment of money: (a) Check no. 1044, dated October 30, 2009, written by Defendant Spongetech Delivery Systems, Inc. in favor of Plaintiff in the amount of seventy thousand eight hundred and eighty dollars ($70,880) against account no at Bank of America which was returned for Supreme Court Records OnLine Library - page 5 of 15

6 insufficient funds on or about November 3, 2009 ( $70,880 Returned Check ), annexed as Exhibit A (Clark Affidavit 7 3); and (b) Check no. 1148, dated December 4, 2009, written by Defendant RM Enterprises International Ltd. in favor of Plaintiff in the amount of three hundred and sixty thousand dollars ($360,000) against account no at TD Bank which was returned due to a stop payment order on or about December 9, 2009 ( $360,000 Returned Check ) annexed as Exhibit B (Clark Affidavit 7 4); and (c) Alternatively, if the motion herein is denied, deeming this motion for summary judgment in lieu of complaint a complaint along with leave to amend the said complaint to include other parties and matters outside the four corners of the instruments for the payment of money described herein; and (d) Granting Plaintiff such other and further relief as the Court may deem just and proper. Parties 3. At all times herein stated and hereinafter mentioned, Plaintiff, Madison Square Garden, L.P., is a limited partnership duly organized pursuant to the laws of the State of Delaware, and authorized to do business within the State of New York, maintaining a place of business at Two Perm Plaza, New York, New York At all times herein stated and hereinafter mentioned, Defendant Spongetech Delivery Systems, Inc., is a corporation duly organized pursuant to the laws Citations to Exhibits reference exhibits annexed to the Affidavit of John Clark submitted herewith. Supreme Court Records OnLine Library - page 6 of 15

7 of the State of New York, maintaining a place of business at Suite 600, 43 West 33rd Street, New York, New York Upon information and belief, at all times herein stated and hereinafter mentioned, Defendant RM Enterprises International Ltd. is a foreign corporation authorized to do business in the State of New York maintaining a place of business at Suite 600,43 West 33 d Street, New York, New York Venue 6. Pursuant to CPLR Section 503, venue for this action is in New York County as the location of the offices of all parties. Statement of Facts 7. On or about October 30, 2009, the Defendant Spongetech Delivery Systems, Inc. tendered a check, dated October 30,2009, in the amount of $70,880, in payment of a portion of the debt owed to Plaintiff. Payment on the said check was refused by the issuing bank due to insufficient funds on or about November 3,2009. The $70,880 Returned Check was drawn on the New York City bank account of Defendant Spongetech Delivery Systems, Inc. A copy of the returned check is annexed as Exhibit A ( $70,880 Returned Check ). Despite repeated demand, Plaintiff has not been paid any sum ofmoney against the $70,880 Returned Check. The $70,880 owed as evidenced by the $70,880 Returned Check remains due and owing to Plaintiff at the time of this application to this Court, (Clark Affidavit fi 3). Supreme Court Records OnLine Library - page 7 of 15

8 8. On or about December 4,2009, the Defendant Rh4 Enterprises International Ltd. tendered a check, dated December , in the amount of $360,000 in payment of a portion of the debt owed to Plaintiff. Payment on the said check was refused by the issuing bank due to insufficient funds on or about December 9,2009. The $360,000 Returned Check was drawn on the New York City bank account of RM Enterprises International Ltd. A copy of the returned check is annexed as Exhibit B ( $360,000 Returned Check ). Despite repeated demand, Plaintiff has not been paid any sum of money against the $360,000 Returned Check. The said $360,000 remains due and owing to Plaintiff at the time of this application to this Court. (Clark Affidavit 7 4). 9. Both the $70,880 Returned Check and $360,000 Returned Check are the prototypical instrument for the payment of money described in CPLR $3213. Each document constitutes a prima facie case made out by the instrument and because of a failure to make the payments called for by its terms, Plaintiff is entitled to summary judgment unless the other party came forward with evidentiary proof sufficient to raise an issue as to the defenses to the instrument. Interman Industrial Products, Ltd v. R.S. M. Electron Power, Inc., 37 NY2d 151, 155,371 NYS2d 675,680 (1975)See ulso, Weissman, v. Sinorm Deli, Inc. et al., 88 N.Y.2d 437,646 N.Y.S.2d 308; (1996). [Alssertion of defenses dehors (sic) the checks sued on does not take these prototypical example[s] of instruments for the payment of money only ( Weissman v Sinorm Deli, 88 NY2d 437,444) outside the ambit of CPLR 3213 (see, Seaman-Andwull Corp. v Wright Mach. r**461 Corp., 31 AD2d 136, 137, ufd 29 NY2d 617). Thunderball Marketing, Inc.. v. Charles Riemer, et ul., 273 A.D,2d 29, 30; 709 N.Y.S.2d 45, 46 (1 Dept., 2000). Because the instrument for payment is a bank check, even the existence of issues raised Supreme Court Records OnLine Library - page 8 of 15

9 by a breach of contract action does not preclude the grant of summary judgment in favor of plaintiff. Gershon v Tobacco Brokers, Inc., 47 AD2d 619, 364 NYS2d 178, (lst Dept., 1975). Background 10. The debt evidenced by the said two instruments for the payment of money arises out of agreements to purchase sponsorship benefits in Madison Square Garden ( MSG ). Defendant Spongetech Delivery Systems, Inc. ( Spongetech D S3 entered into an agreement, dated June 15, 2009, promising payment of money to Plaintiff as consideration for sponsorship benefits to be provided during sporting events occurring within the venue Madison Square Garden ( Spongetech Delivery Systems Agreement ). Annexed as Exhibit C, is a copy of the Spongetech Delivery Systems Agreement Along with the Spongetech Delivery Systems Agreement, the executing principal of Defendant Spongetech Delivery Systems, Inc., Steven Moskowitz, executed two other MSG sponsorship benefits agreements with Plaintiff on behalf of Spongetech Auto, lnc. and Spongetech Pets, Inc. ( Related Spongetech Agreements ). Annexed as Exhibit LcD77 are copies of the Related Spongetech Agreements. (Spongetech DS Agreement and Related Spongetech Agreements referred to collectively as the Spongetech Sponsorship Agreements ). Upon information and belief Defendant RM Enterprises International Ltd. is an affiliate of the Spongetech Defendants with the same principals and sharing the offices of the Defendant Spongetech Delivery Systems, Inc., Spongetech Auto, Inc. and Spongetech Pets, Inc. Supreme Court Records OnLine Library - page 9 of 15

10 12. Plaintiff has provided the sponsorship benefits required by and has not breached the terms of the Spongetech DS Agreement nor the Related Spongetech Agreements. As of December 31,2009, the first payments have been made on each of the three Spongetech Sponsorship Agreements, constituting the total sum of $102,340. The said three first payments were made by two checks drawn on a bank account of Defendant Spongetech Delivery Systems, Inc. None of the subsequent payments required by the Spongetech Sponsorship Agreements have been made. 13. Upon information and belief, the failure to honor the said two instruments for the payment of money is related to the recent announcement in the media that the two senior principals of the Spongetech entities received Wells Letters from the staff of the United State Securities and Exchange Commission stating that the SEC staff intends to recommend that the SEC bring civil injunctive actions against the principles alleging violations of federal securities laws. This announcement raises the concern that resources for payment may shortly be unavailable. See, 1/2/10, nypost.com/p/news/business/spongetech-gets - sec-notice - ZGdSpVHiKUcsVRajrGiGGL. A copy of the New York Post story is annexed as Exhibit E. 14. No prior application for the relief sought herein has been made. WHEREFORE, it is respectfully requested that the Court grant summary judgment in favor of Plaintiff: (a) in the amount of $70,880 against Defendant Spongetech Delivery Systems, Inc. and Supreme Court Records OnLine Library - page 10 of 15

11 (b) in the amount of $360,000 against Defendant RM Enterprises International Ltd.; or, alternatively, (c) if the motion herein is denied, deeming this motion for summary judgment in lieu of complaint a complaint along with leave to amend the said complaint to include other parties and matters outside the four corners of the instruments for the payment of money described herein; and (d) granting Plaintiff such other and further relief as the Court may deem just and proper. Dated: New York, New York January 11,2010 SULLIVAN GARDNER PC Attorneys for Plaintiff 475 Park Aven South New York, &ork (212) 687- By: Supreme Court Records OnLine Library - page 11 of 15

12 MADISON SQUARE GARDEN, L.P., -against- Plaintiff, AFFIDAVIT OF JOHN CLARK SPONGETECH DELIVERY SYSTEMS INC. & RM ENTERPRISES INTERNATIONAL LTD., John Clark, being duly sworn, deposes and says: 1. I am over eighteen years of age and reside in the State of New Jersey. I am employed by Plaintiff Madison Square Garden, L.P. as Vice President for Marketing Partnerships, and as such I am fully familiar with the facts and circumstances surrounding the instant application. 2. This affidavit is submitted in support of the motion for summary judgment in lieu of complaint brought by Plaintiff in this matter. 3. We come to this Court seeking payment of two checks that have been returned for insufficient funds. On or about October 30,2009, the Defendant Spongetech Delivery Systems, Inc. forwarded a check to our offices, dated October 30,2009, in the amount of $70,880, This check was tendered in payment of a portion of a debt owed to Plaintiff. Payment of the $70,880 returned check was refused by the issuing New York City bank of Defendant Spongetech Delivery Systems, Inc. A copy of the returned check is annexed as Exhibit "A" ("$70,880 Returned Check"). We have made numerous Supreme Court Records OnLine Library - page 12 of 15

13 attempts to obtain payment of the $70,880 debt. Despite our repeated demands, we have not been paid any sum of money against the $70,880 Returned Check. The said $70,880 owed, as evidenced by the $70,880 Returned Check, remains due and owing to Madison Square Garden L.P. 4. The second check that has been dishonored is a check in the amount of $360,000 forwarded on or about December 4,2009 by the Defendant RM Enterprises International Ltd. The check, dated December 4,2009, was forwarded as payment of a portion of the debt owed to Madison Square Garden L.P. Payment on the said check, drawn on the bank account of RM Enterprises International Ltd., was also refused by the issuing New York City bank due to insufficient funds., A copy of the returned check is annexed as Exhibit B ( $360,000 Returned Check ). Despite our repeated demands, we have not been paid any sum of money against the $360,000 Returned Check. The said $360,000 remains due and owing to Madison Square Garden, L.P. 5. The debt evidenced by the said two instruments for the payment of money is part of a larger debt that arises out of agreements to purchase sponsorship benefits in the venue Madison Square Garden ( MSG ). Defendant Spongetech Delivery Systems, Inc. ( Spongetech DS ), entered into an agreement, dated June 15, 2009, promising payment of money to Plaintiff as consideration for sponsorship benefits to be provided during sporting events occurring at MSG ( Spongetech Delivery Systems Agreement ). Annexed as Exhibit C are copies of the Spongetech Delivery Systems Agreement. 6. Along with the Spongetech Delivery Systems Agreement, the executing principal of Defendant Spongetech Delivery Systems, Inc., Steven Moskowitz, executed two other MSG sponsorship agreements with Madison Square Garden, L.P. on behalf of Supreme Court Records OnLine Library - page 13 of 15

14 t. Spongetech Auto, Inc. and Spongetech Pets, Inc. ( Related Spongetech Agreements ). Annexed as Exhibit D are copies of the Related Spongetech Agreements. (Spongetech DS Agreement and Related Spongetech Agreements referred to collectively as the Spongetech Sponsorship Agreements ). Upon information and belief Defendant RM Enterprises International Ltd. is an affiliate of the Spongetech Defendants with the same principals and sharing the offices of the Defendant Spongetech Delivery Systems, Inc., Spongetech Auto, Inc. and Spongetech Pets, Inc. 7. Plaintiff Madison Square Garden, L.P. has provided all of the sponsorship benefits it has promised and has not breached any of the terms of the Spongetech DS Agreement or the Related Spongetech Agreements. As of December 31, 2009, the first payments have been made on each of the three Spongetech Sponsorship Agreements, constituting the total sum of $102,340. The said three first payments were made by two checks drawn on a bank account of Defendant Spongetech Delivery Systems, Inc. None of the subsequent payments required by the Spongetech Sponsorship Agreements have been made. This failure of payment has occurred in the face of repeated demands that the balance be cleared. / JohnClark Sworn to before me this $& day of $anuary 2010 Notary Public State of NY No. 01 SA Qualified in Queens County Commission Expires 1 2/05/3/d Supreme Court Records OnLine Library - page 14 of 15

15 I SUPREME COURT OF THE!STAT8 OF NEW YORK ' C!OUNTY'OP NEW YORK Index No. Year 2010 MADISON SQUARE GARDEN, L.P. Plaintiff, -against- SPONGETECI DELIVERY SYSTEMS, INC. & RM ENTERPRISES INTERNATIONAL LTD., Defendants. MOTION FOR SUMMARY JUDGMENT IN LIEU OF COMPLAINT SULLIVAN GARDNER PC 475 Park Avenue South New York, New York (212) To: Attorney(s) for Petitioner(s) Service of a copy of the within is hereby admitted. Dated, Attorney(s) for Respondent(s) Sir: -- Please take notice - Notice of Entry that the within is (certified) true copy of a duly entered in the office of the clerk of the within named court on 2010 Notice of Settlement that an order settlement to the HON. of the within named court, at on 2010 at M. Dated, Supreme Court Records OnLine Library - page 15 of 15 of which the within is a true copy will be presented for one of the judges Yours, etc. SULLIVAN GARDNER pc Attorneys for Plaintiff 475 Park Avenue South New York, New York 10016