SUPREME COURT - STATE OF NEW YORK IAS TERM PART 23 NASSAU COUNTY INDEX NO. l&77/01 PRESENT: HONORABLE LEONARD B. AUSTIN Justice Motion RID: 8-18-03 Submission Date: g-2-03 Motion Sequence No.:002/MOT D FLEET NATIONAL BANK, Plaintiff, - against - FASHION AVENUE ENTERPRISES, BINESH SHAVOLIAN, Individually, and ROYA SHAVOLIAN, Individually. Defendants. X COUNSEL FOR PLAINTIFF Law Office of Peter Seideman 20 Vanderventer Avenue - Suite 103W Port Washington, New York 11050 COUNSEL FOR DEFENDANT Westerman, Ball, Ederer, Miller Sharfstein, LLP 170 Old Country Road Mineola, New York 4 1501 & ORDER The following papers were read on Plaintiff s motion for summary judgment dismissing Defendants counter-claims and for summary judgment against the Defendants; Notice of Motion dated July 31, 2003; Affidavit of Barbara Pietrzak sworn to on July 30, 2003; Plaintiff s Memorandum of Law. Plaintiff Fleet National Bank ( Fleet ) moves for summary judgment dismissing the Defendants affirmative defenses and for summary judgment. BACKGROUND In June, 1997, Fleet extended a line a credit to the Defendant Fashion Avenue I
a/., Enterprises, Inc. ( Fashion ). The line of credit was evidenced by a Line of Credit Promissory Note ( Note ) dated June 17, 1997. The obligations of Fashion under the terms of the Note were personally guaranteed by Defendant Binesh Shavolian ( Shavolian ) on June 17, 1997. The credit limit on the Note was $loo,ooo.oo. The interest rate on the note was the prime rate of interest plus 1%. The default rate of interest was 16% per annum. The Note also contained a provision providing for the payment of late fee of 5% of the required payment if the required payments were not made within 15 days of the due date. Both the Note and Guaranty contained provisions which provide that, in the event of a default, Fashion and Shavolian will pay all costs and expenses, including reasonable attorney s fees incurred by Fleet in enforcing the Note or Guaranty. Fashion borrowed the full credit limit on the Note - - $100,000.00. Fashion has defaulted on the payments due pursuant to the terms of the Note. Fleet seeks to recover $146,793.22 that it alleges is due on the Note as of July 30, 2003. The balance claimed is calculated as follows: principal balance due on the Note - $1 OO,OOO.OO; accrued interest - $40,816.66; and late fees - $5,976.66. Based upon Defendants default Fleet now seeks to recover interest on the principal sum at the The action against Defendant Roya Shavolian has previously been discontinued. 2
FLEET NATIONAL BANK v. FASHION AVENUE ENTERPRISES, ef al., agreed default rate of 16% per annum from July 30, 2003 to the date of the entry of judgment. Finally, Fleet seeks reasonable attorney s fees as provided for by the Note and Guaranty. Defendants, in their answer, deny the essential allegations of the complaint. They also interposed the following affirmative defenses: failure to state a cause of action, documentary evidence, performance by the Defendants, breach by Plaintiff relieving Defendants of performance, Statute of Frauds, unclean hands, unjust enrichment, non-performance by Plaintiff, anticipatory breach by Plaintiff, equitable estoppel and failure to mitigate damages. No substantive factual allegations supporting the affirmative defenses appear in the answer. Plaintiff now moves for summary judgment on the Note and Guaranty and dismissing the affirmative defenses. Defendants do not oppose the motion. DISCUSSION A. Summary Judqment - Standard Summary judgment is a drastic remedy which will be granted only when it is clear that there are no triable issues of fact. Alvarez v. Prospect HOW., 68 N.Y.2d 320 (1986); and Andre v. Pomerov, 35 N.Y.2d 361 (1974). See also Aksiezer v. Kramer, 265 A.D.2d 365 (2nd Dept. 1999). The party moving for summary judgment must make a prima facie showing of entitlement to judgment as a matter of law. Zuckerman v. Citv of New York, 49 N.Y.2d 557 (1980). Once the party seeking summary judgment has 3
FLEET NATIONAL BANK v. FASHION AVENUE ENTERPRISES, ef al., made a prima facie showing of entitlement to judgment as a matter of law, the party opposing same must come forward with proof in evidentiary form establishing that there are triable issues of fact or demonstrate an acceptable excuse for its failure to do so. Zuckerman v. City of New York, supra; Davenport v. Countv of Nassau, 279 A.D.2d 497 (2nd Dept. 2001); and Bras v. Atlas Construction Corp., 166 A.D.2d 401 (2nd Dept. 1991). Summary judgment should be denied if there is any doubt as to the existence of a triable issue of fact. Freese v. Schwartz, 203 A.D.2d 513 (2nd Dept. 1994); and Miceli v. Purex Corp., 84 A.D.2d 562 (2 d Dept., 1984). The party seeking summary judgment must clearly establish to the court that there are no triable issues of fact. Leo v. Guqliotta, 212 A.D.2d 761 (2nd Dept. 1995); and Daliendo v. Johnson, 147 A.D.2d 312 (2nd Dept. 1987). B. The Promissory Note To establish entitlement to judgment as a matter of law on a promissory note, the Plaintiff must establish the existence of the promissory note executed by the Defendant, an unequivocal and unconditional obligation to repay and a default in payment by the obligor. Seaman-Andwall Corp. v. Wriaht Machine Corp., 31 A.D.2d 136 (lst Dept. 1968) aff d., 29 N.Y.2d 617 (1971); Chemical Bank v. Nemeroff, 233 A.D.2d 239 (lst Dept. 1996); and Kev Bank v. Munkenbeck, 162 A.D.2d 503 (2 d Dept.1990).
al., In this case, Plaintiff has established the Note signed by Shavolian on behalf of Fashion. The Note contains unequivocal, unconditional obligation to repay the outstanding balance on demand. The lender may demand payment of a promissory note payable on demand at any time after its execution. Fleet Bank v. Brobiel Marine, &., 236 A.D.2d 815 (4ht Dept., 1997). Fashion does not contest that the Note was signed by Shavolian, that he signed on behalf of Fashion, that he was authorized to sign on behalf of Fashion, that Fashion is in default under the terms of the note and that the amount demanded by Fleet constitutes the balance outstanding on the Note. Fleet has made an uncontested prima facie establishment to judgment as a matter of law on the Note. Therefore, Fleet is entitled to enter judgment against Fashion in the sum of $100,000.00 together with interest at the rate of 16% per annum on this sum from July 30, 2003 to the date of entry of the judgment, interest for the period prior to July 30, 2003 in the sum of $40,816,66 and late charges in the sum of $5976.56. C. Guaranty To establish entitlement to judgment as a matter of law on a guaranty, Plaintiff must prove the existence of the underlying promissory note or obligation, the guaranty and the failure of the prime obligor to make payment in accordance with the terms of the promissory note or obligation. E.D.S. Security Svs., Inc. v. Allyn, 262 A.D.2d 351 (2 d Dept. 1999); and I.P.L. Corp. v. Industrial Power Dept. 1994). & Lishtina Corp., 202 A.D.2d 1029 (4th
al., To be enforceable, a guaranty must be in writing executed by the person to be charged. General Obligations Law 95-701 (a)(2); and Schulman v. Westchester Mechanical Contractors, Inc., 56 A.D.2d 625 (2nd Dept. 1977). The intent to guaranty the payment of the obligation must be clear and explicit. PNC Capital Recover-v v. Mechanical Parkins Svstems, Inc., 283 A.D.2d 268 (lst Dept. 2001), app, dism., 98 N.Y.2d 763 (2002). Clear and explicit intent to guaranty the obligation is established by having the guarantor sign in that capacity and by the language contained in the guarantee. Salzman Sisn Co. v. Beck, 10 N.Y.2d 63 (1961); and Harrison Court Assocs. v. 220 Westchester Ave. Assocs., 203 A.D.2d 244 (2 d Dept. 1994). Fleet has demonstrated that Shavolian personally guaranteed the obligations of Fashion under the terms of the note. Shavolian does not deny that he signed the Guaranty. The Guaranty is a separate agreement which was executed by Shavolian individually. The Guaranty is absolute and unconditional. The Guaranty imposes, liability upon Shavolian, as guarantor, for any default by Fashion of its obligations under the terms of the Note. Shavolian concedes that Fashion is in default under the terms of the Note. He further does not contest his liability for Fashion s liability pursuant to the terms of the note or his obligations under the terms of the Guaranty. Therefore, Fleet is entitled to enter judgment against Shavolian on the Guaranty for the total sum found to be due against Fashion.
a/., D. Leaal Fees The Note and Guaranty both provide for the payment of Fleet s legal fees if an action against Fashion and/or Shavolian to enforce their obligations thereunder became necessary. Such provisions are valid and will be enforced. Fashion and Shavolian are responsible for the reasonable counsel fees incurred by Fleet in the prosecution of this action. See, Arent Fox Kinter Plotkin & Kahn, PLLC v. Lurzer GmbH, 297 A.D.2d 590 (lst Dept. 2002). Legal fees are awarded on a quantum meruit basis and cannot be determined summarily. See, Simoni v. Time-Line, Ltd., 272 A.D.2d 537 (2nd Dept. 2000); and m v. Belair Ridqe Development Corp., 270 A.D.2d 377 (2nd Dept. 2000). See also, 7 NY Jur 2d Atiorneys at Law 216. Thus, a hearing is necessary to determine Plaintiff s reasonable counsel fees. E. Defendants Affirmative Defenses Defendant has the burden of pleading and proving its affirmative defenses. See, Fleminq v. Ponziani, 24 N.Y.2d 105 (1969); Siegel, New York Practice 3ti 223; and CPLR 3018(b). Defenses which merely plead conclusions of law without supporting facts are insufficient and should be stricken. Petracca v. Petracca, 305 A.D.2d 566, 567 (2nd Dept. 2003). See also, Bentiveqna v. Meenan Oil Co., 126 A.D.2d 506 (2nd Dept. 1987).
a/., In this case, all of Defendant s affirmative defenses plead nothing more than conclusions of law. There is not a single factual allegation plead in the answer which supports any of the affirmative defenses. The Defendants did not submit affidavits, documents, deposition transcripts or any other evidentiary material which demonstrates that there is a factual basis for, or merit to, any of their affirmative defenses. The affirmative defenses are insufficient, as a matter of law, and should be stricken. It is, therefore, ORDERED, that Plaintiff s motion for summary judgment against the Defendants Fashion Avenue Enterprises, Inc., and Binesh Shavolian is granted; and it is further, ORDERED, that Plaintiff s motion to strike Defendants affirmative defenses: is granted and the affirmative defenses are hereby stricken; and it is further, ORDERED, that the matter is referred to the Special Referee Frank Schellace on November 13, 2003 at IO:00 a.m. to hear and determine all issues relating to the assessment of counsel fees; and it is further, ORDERED, that counsel for the Plaintiff shall serve upon counsel for said Defendants pursuant to CPLR 2103(b)(2) and then file with the Clerk of the Court, a copy of this Order with Notice of Entry, a Notice of Inquest and a Note of Issue and pay all appropriate fees for the filing thereon on or before October 30, 2003; and it is further, ORDERED, that upon the Special Referee s determination of a reasonable value of counsel fees to be awarded to Plaintiff herein that the County Clerk is directed to 8
a/., enter judgment in favor of Plaintiff and against the Defendants Fashion Avenue Enterprises, Inc., and Binesh Shavolian as follows: a. the principle sum due of $100,000.00; b. interest from the date of default through July 30, 2003 in the sum of $40,816.66; c. Interest at the rate of 16% per annum from July 30, 2003 to the date of the entry of the judgment as calculated by the Clerk; d. late charges in the sum of $5,976.56; e. reasonable counsel fees as awarded by the Special Referee; and f. cost and disbursements as taxed by the Clerk. This constitutes the decision and Order of the Dated: Mineola, NY October 15,2003