Plaintiff, MEMORANDUM OF LAW IN SUPPORT OF PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT IN LIEU OF COMPLAINT

Transcription

1 FILED: NEW YORK COUNTY CLERK 02/23/ :03 AM INDEX NO /2016 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 02/23/2016 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK x MEDALLION BANK, Index No Plaintiff, - against - BUTWIN TRANSIT INC., MASTER TRANSIT INC., KATUS TAXI INC., ISACC F. ZUBLI and AKI KATAN, Defendants x MEMORANDUM OF LAW IN SUPPORT OF PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT IN LIEU OF COMPLAINT GREENBERG TRAURIG LLP 200 Park A venue The MetLife Building New York, New York (212) Attorneys for Plaintiff Medallion Bank

2 TABLE OF CONTENTS INTRODUCTION STATEMENT OF FACTS... 2 ARGUMENT... 3 AS A MATTER OF LAW, BORROWERS ARE LIABLE TO MEDALLION FOR THE AMOUNTS DUE AND OWING UNDER THEIR RESPECTIVE LOANS GUARANTORS ARE JOINTLY AND SEVERALLY LIABLE TO MEDALLION FOR THE ENTIRE AMOUNT DUE UNDER THE LOANS....4 THE COURT SHOULD DIRECT A SEVERANCE AND INQUEST TO ASSESS MEDALLION'S COSTS AND EXPENSES OF COLLECTION... 5 CONCLUSION

3 TABLE OF AUTHORITIES State Cases Bhatara v. Futterman, 122 A.D.3d 509 (1st Dep't 2014)....4 Bronsnick v. Erisman, 819 N.Y.S.2d 492 (1st Dep't 2006) Council Commerce Corp. v. Paschalides, 92 A.D.2d 579 (2d Dep't 1983)... 5 DDS Partners, LLC v. Celenza, 6 A.D.3d 347 (1st Dep't 2004)... 4 Diversified Investors Corp. v. Diversifax, Inc., 657 N.Y.S.2d 642 (1st Dep't 1997) GSO Re Onshore LLC v. Sapir, 29 Misc.3d 1234(A), 2010 WL (Sup. Ct. N.Y. County, Nov. 24, 2010) Jason Trading Corp. v. Lason Trading Corp., 303 A.D.2d 180 (1st Dep't 2003) , 5 Orr v. Yun, 83 A.D.3d 525 (1st Dep't 2011) Seaman-Andwall Corp. v. Wright Mach. Corp., 31A.D.2d136 (1968), aff'd 29 N.Y.2d Rules CPLR passim 11

4 INTRODUCTION Plaintiff Medallion Bank ("Medallion"), by its undersigned counsel, Greenberg Traurig, LLP, submits this Memorandum of Law in support of its motion for summary judgment in lieu of complaint. Plaintiff seeks to enforce three separate promissory notes entered into between Medallion and three separate borrowers, Butwin Transit Inc. ("Butwin Transit"), Master Transit Inc. ("Master Transit"), and Katus Taxi Inc. ("Katus Taxi," and collectively, the "Borrowers") on December 24, 2012, each in the amount of $1.5 million (the "Loans"), as well as the personal guaranties of repayment by Isacc F. Zubli ("Zubli") and Aki Katan ("Katan," and collectively, the "Guarantors"), entered into on the same date. The Loans matured on December 24, 2015, but Borrowers failed to pay the principal, interest and other amounts then due pursuant to the terms of the applicable loan documents. Guarantors similarly failed to make payment in accordance with their obligations. Medallion is entitled to entry of judgment against the Borrowers and Guarantors (collectively, "Defendants") as a matter of law. There is no dispute that Defendants' repayment obligations on the Loans are due and payable and that they are in default. There is similarly no dispute about the amounts owed by Defendants. Thus, pursuant to CPLR 3213, 3212(e), and 5012, Medallion respectfully requests that this Court issue an order: (i) awarding it summary judgment against Butwin Transit and the Guarantors, jointly and severally, for the amounts due and owing to Medallion, plus all costs and expenses, prejudgment interest, and such other relief as the Court deems just and proper; (ii) awarding it summary judgment against Master Transit and the Guarantors, jointly and severally, for the amounts due and owing to Medallion, plus all costs and expenses, prejudgment interest, and such other relief as the Court deems just and proper; (ii) awarding it summary judgment against Katus Taxi and the Guarantors, jointly and severally, for the amounts due and owing to Medallion, plus all costs and expenses, prejudgment 1

5 interest, and such other relief as the Court deems just and proper;; and (iii) directing an inquest to assess and determine Medallion's costs and expenses of collection, including attorneys' fees and court costs. STATEMENT OFF ACTS The undisputed facts on which this motion is based are set forth in the accompanying affirmation of William H. Osborn, III, dated February 22, 2016 (the "Osborn Aff."), and the exhibits thereto. The Loans were made pursuant to three distinct security agreements dated December 24, 2012 (the "Security Agreements"), and evidenced by three separate promissory notes, each in the original principal amount of $1.5 million (the "Promissory Notes"). (Osborn Aff. ~ 2.) The payment obligations of the Security Agreements and Promissory Notes (collectively, the "Loan Documents") are clear and unambiguous, and require the Borrowers to immediately pay all "outstanding principal, accrued interest and any other related charges thereon" upon the occurrence of the Maturity Date. (See Osborn Aff., Exh. B at 1; see also Exhs. H, N at 1.) If Borrowers fail to submit full payment on the Maturity Date, Medallion is entitled to accelerate the entire unpaid principal balance and charge interest at the highest rate permitted by law. (See Osborn Aff., Exh. A at 6, 27; see also Exhs. G, Mat 6, 27.) In order to induce Medallion to enter into the Loans, and for other good and valuable consideration, on or about December 24, 2012, Guarantors executed three guaranty agreements (the "Guaranties"), pursuant to which they "irrevocably" and "unconditionally" guaranteed to Medallion the full and prompt payment of the entire debt due under the Loans upon the occurrence of an Event of Default or the Maturity Date. (See Osborn Aff., Exh. C at 1; see also Exhs. I, 0 at 1.) The Guaranties also provide that Guarantors will pay "all costs and expenses, 2

6 including filing fees and attorney's fees" incurred by Medallion in collecting monies due and owing under the Loans and enforcing the Guaranties. (Id. at 3.) By their terms, the Loans matured on December 24, 2015, at which time the entire outstanding principal balance of the Loans, together with accrued and unpaid interest, became due and payable. (Osborn Aff. il 2.) Borrowers, however, defaulted under the Promissory Notes by failing to pay the outstanding principal balance of the Loans or accrued interest on the Maturity Date. (Osborn Aff. il 4.) Per Section 6 of the Security Agreements, Borrowers' failure to "pay when due, any... part of the Indebtedness or any other amount payable upon or in connection with the Indebtedness or any part thereof," or their failure to "perform and/or a breach by the Borrower oft] any of the terms, covenants or conditions of the Agreement or the Note," constitutes an Event of Default. (Osborn Aff., Exh. A 6(b)-(c); see also Exhs. G, M 6(b)-(c).) As a result of Borrowers default, Guarantors' irrevocable and unconditional obligations to repay the Loans are due and payable. (Osborn Aff. ilil ) Guarantors have failed to pay any part of their obligations to satisfy the Loans. (Osborn Affil 87.) ARGUMENT Under CPLR 3213, a plaintiff may move for summary judgment in lieu of serving a complaint when the action "is based upon an instrument for the payment of money only." CPLR Where it is "incontestable that plaintiff would prove a prima facie case by proof of the [instrument] and a failure to make the payments called for by its terms," a motion for summary judgment in lieu of complaint is appropriate. Seaman-Andwall Corp. v. Wright Mach. Corp., 31 A.D.2d 136, 137 (1968), aff'd 29 N.Y.2d

7 AS A MATTER OF LAW, BORROWERS ARE LIABLE TO MEDALLION FOR THE AMOUNTS DUE AND OWING UNDER THEIR RESPECTIVE LOANS Promissory notes, like that executed by Borrowers here, are a "typical example" of a negotiable instrument for the payment of money only. DDS Partners, LLC v. Celenza, 6 A.D.3d 347, 348 (1st Dep't 2004). A plaintiff establishes a prima facie case for its right to judgment under CPLR 3213 by presenting proof of the instrument and defendant's failure to make the payments required under the instrument. Bhatara v. Futterman, 122 A.D.3d 509, 510 (1st Dep't 2014) ("Plaintiff made a prima facie showing of his entitlement to summary judgment in lieu of complaint by producing the note executed by defendant for a $200,000 loan and proof of defendant's failure to pay in accordance with the note's terms."); see also Orr v. Yun, 83 A.D.3d 525 (1st Dep't 2011) ("Plaintiff established his entitlement to judgment as a matter of law by producing the promissory note executed by defendants and demonstrating that they failed to pay.") No issues of fact exist here. It is undisputed that the Loan Documents were executed by Borrowers, and that their obligations thereunder are plain and unambiguous. (See Osborn Aff., Exhs. A, B, G, H, M, N.) It is similarly undisputed that each of the Loans matured without being repaid by Borrowers. (Osborn Aff. ~~ 2-6.) As the Promissory Notes are instruments for the payment of money only and Borrowers' defaults are incontrovertible, Medallion is entitled to an award of summary judgment in lieu of complaint against each of the Borrowers for the amounts due under their respective loans, plus all costs and expenses, prejudgment interest, and such other relief as the Court deems just and proper. GUARANTORS ARE JOINTLY AND SEVERALLY LIABLE TO MEDALLION FOR THE ENTIRE AMOUNT DUE UNDER THE LOANS Courts have similarly recognized that the unconditional guaranty of a loan "is an instrument for the payment of money only within the meaning of CPLR " Jason Trading 4

8 Corp. v. Lason Trading Corp., 303 A.D.2d 180 (1st Dep't 2003); accord Council Commerce Corp. v. Paschalides, 92 A.D.2d 579 (2d Dep't 1983) ("A personal guarantee qualifies as an instrument for the payment of money only."); GSO Re Onshore LLC v. Sapir, 29 Misc.3d 1234(A), 2010 WL , at *4 (Sup. Ct. N.Y. County, Nov. 24, 2010) ("One party's guaranty of another's payment obligations is clearly an instrument for the payment of money only upon which a motion pursuant to CPLR 3123 may be brought.") (internal quotations and citations omitted). Here, there is no question that Medallion is entitled to proceed under CPLR 3213 to enforce its rights under the Guaranties. As set forth in the Osborn Aff. and exhibits thereto, Borrowers defaulted on the Loans by failing to pay the principal, interest, and other amounts due upon maturity, and such default triggered Guarantors' payments obligations under the Guaranties. (Osborn Aff. ~~ ) Guarantors failed to make such payments, and are in default. (Id. at~ 87.) Thus, Guarantors are thus jointly and severally liable to Medallion for the amounts due on each of the Borrowers' loans, plus all costs and expenses, prejudgment interest, and such other relief as the Court deems just and proper. THE COURT SHOULD DIRECT A SEVERANCE AND INQUEST TO ASSESS MEDALLION'S COSTS AND EXPENSES OF COLLECTION In addition to the outstanding principal balance and interest due pursuant to the Loan Documents, Defendants are obligated to pay Medallion's costs of collection, including their attorneys' fees with interest thereon from the date such expenses were incurred. (See Osborn Aff. ~~ 34, 56, 89.) Pursuant to CPLR 3212(e) and 5012, after a finding of liability on one or more causes or parts of a cause of action, this Court is authorized to direct a severance and an assessment of damages on the balance thereof. Such severance is routinely ordered, even where judgment on one of the claims is awarded by motion in lieu of complaint pursuant to the 5

9 expedited procedure of CPLR See, e.g., Bronsnick v. Erisman, 819 N.Y.S.2d 492 (1st Dep't 2006) (affirming decision awarding summary judgment in lieu of complaint and referring issue of attorneys' fees to a special referee); Diversified Investors Corp. v. Diversifax, Inc., 657 N.Y.S.2d 642, 643 (1st Dep't 1997) (affirming summary judgment in lieu of complaint and directing severance and assessment of attorneys' fees). Per the terms of the Promissory Notes, in the event that the principal balance and accrued interest was not paid when due, Borrowers agreed to pay "all costs of collection, including reasonable attorneys' fees and disbursements." (See Osborn Aff., Exh. Bat 2; see also Exhs. H, Nat 2.) Furthermore, in executing the Guaranties, Guarantors agreed to pay, without limitation, all "costs and expenses, including filing fees and attorneys' fees, incurred by [Medallion]... in seeking to enforce any of the liabilities or obligations of the undersigned." (See Osborn Aff., Exh. C at 3; see also Exhs. I, 0 at 3.) As set forth above, both Borrowers and Guarantors have breached their obligations to pay Medallion the amount due and owing on the Loans. Consequently, Medallion has incurred, and will continue to incur, costs and expenses until the entry and enforcement of a final judgment. Therefore, this Court should direct that an inquest be held to determine the amount of costs and expenses to be awarded to Medallion. CONCLUSION For the foregoing reasons, Medallion's motion for summary judgment in lieu of complaint should be granted in its entirety and the Court should direct the parties to participate in an inquest, either before the Court or a special referee, to determine the amounts due Medallion for principal, interest and costs of collection and expenses. 6

10 Dated: New York, New York February 22, 2016 GREENBERG TRAURIG, LLP By: --=-=c~~~ --=---=--- Steven Sinatra, Esq. Dale R. Goldstein, Esq. 200 Park A venue New York, New York (212) Attorneys for Medallion Bank 7