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Capital One v York St. Check Cashers, Inc. 2013 NY Slip Op 30480(U) February 28, 2013 Supreme Court, Suffolk County Docket Number: 8967-12 Judge: Thomas F. Whelan Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication.

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INDEXNO. 8967-12

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SUPREME COURT - STATE OF NEW YORK I.A.S. COMMERCIAL PART 45 - SUFFOLK COUNTY

PRESENT:
Hon. THOMAS F. WHELAN Justice of the Supreme Court MOTION DATE 1/4/13 ADJ. DATES 2/15/13 Mot. Seq. # 001 - Mot D Preliminary Conf: 3/29/13 CDISPYN x JASPAN SCHLESINGER, LLP Attys. For Plaintiff 300 Garden City Plaza Garden City, NY 11530 SMITH, BUSS & JACOBS, LLE' Attys. For Defendants 733 Yonkers Ave. Yonkers, NY 10704
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Plaintiff, -againstYORK STREET CHECK CASHERS, INC., WILLIAM RODRIGUEZ and JOY RODRIGUEZ, :

Upon the following papers numbered 1 to 12 read on this motion for summaw iudament ; Notice of Motion/Order to Show Cause and supporting papers 1 - 4 ;Notice of Cross Motion and supporting papers ; Answering Affidavits and supporting papers 5-6: 7 ; Replying papers 8-9 Other 10 memorandum^^ (memorandum); 12 (memorandum) ; ( ) it is, 1

ORDERED that this motion (#001) by the plaintiff for summary judgment on its complaint in this action to recover monies and collateral pledged under the terms of a series of credit agreements, including seven promissory notes, written guarantees and a security agreement is considered under CPLR 3212 and 7102 and is granted only to the extent that the plaintiff is awarded summary judgment on its FIRST and SEVENTH causes of action to the extent asserted against defendants, York Street Check Cashiers, Inc. and William Rodriguez, with entry of the judgment to abide the court's determination of the plaintiffs damages hearing with proof thereof at an immediate trial to be scheduled as hereinafter set forth; and it is further, ORDERED that pursuant to CPLR 32 12(e), the claims upon which summary judgment have been awarded, namely, the plaintiffs FIRST and SEVENTH causes of action against defendants, Yoi-k Street Check Cashiers, Inc. and William Rodriguez, are severed from those unaffected by such award; and it is further ORDERED that the plaintiffs pleaded claims against Joy Rodriguez, who died prior to the commencement of this action, are dismissed and the plaintiff's application for, in effect, an order

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dropping her asa named party defendant to this action and an amendment of the caption to reflect same is considered under CPLR 10 15 and 1003 and is granted; and it is further ORDERED that pursuant to CPLR 32 12(c), a trial on the amount of the damages recoverable by the plaintiff from the corporate defendant and defendant William Rodriguez, including the amount of reasonable counsel fees to which the plaintiffmay be entitled, shall be held in accordance with the further order of the court issued after this matter has been certified as trial ready by counsel and incorporated into a certification order: and it is further ORDERED that a preliminary conference limited solely to issues concerning the amount of the damages recoverable by the plaintiff from the corporate defendant and defendant William Rodriguez shall be held on Friday, March 29,2013, in the courtroom of the undersigned located in the Supreme Court Annex Building of the courthouse at One Court Street, Riverhead, New York 1 190 1. On January 25,2005, the plaintiffs predecessor-in-interest extended a revolving credit loan to defendant York Street Check Cashers, Inc. (hereinafter "York" or corporate defendant), under the terms of a promissory note in the principal amount of $150,000.00 in favor the plaintiffs predecessor-ininterest by merger. Also executed on that date were written guarantees of the obligations of the corporate defendant by defendant William Rodriguez and named defendant, Joy Rodriguez, who died prior to the commencement of this action. As additional security for the loan, defendant York executed a security agreement wherein it pledged its assets as security for the loan while defendant William Rodriguez executed a subordination agreement in favor of the plaintiffs predecessor-in-interest. In June of 20 1 1 , defendant York executed the last of eight re-stated promissory notes by which the loan's maturity date was extended until December 1, 20 1 1. Under the terms of the June 1, 201 1 note, defendant York was required to remit monthly payments in the amount of $10,000.00 from July 1, 201 1 through December 1, 20 1 1, by automatic debit from accounts maintained by defendant York at the plaintiffs bank. The plaintiff commenced this action after York defaulted in its payment obligationunder the terms ofthe note that was due on December 1,20 I 1. The plaintiff claims that the defendants owe a principal amount of $50,000.00, together with some $82,000.00 in overdrafts on three of defendant York's bank accounts. In its complaint, the plaintiff advances six causes of action for recovery of amounts duie against the corporate defendant York and one cause of action against the remaining individual defendant Rodriguez as guarantor. The FIRST cause of action targets defendant York and sounds in breach of the Re-stated Promissory Note of June 1 , 201 1 and other loan documents whereby such defendant was required to pay overdrafts in its accounts with the plaintiff. The SECOND and THIRD causes of action also target defendant York but sound in an account stated and unjust enrichment. The FOURTH cause of action seeks the remedy of replevin with respect to the collateral pledged as security by diefendant York in the security agreement executed at the time of the loan's origination in 2005. The FIFTH and SIXTH causes of action also target York for the production of corporate books and records and financial statements which it purportedly agreed to produce under the 2005 loan documents. The SEVENTH cause of action targets the guarantors which now continues only against defendant, William Rodriguez.
Issue was joined by service of a joint answer on behalf of defendants, York and William Rodriguez. Therein, eight affirmative defenses are asserted by the answering defendants including their failures to state a claim, satisfy conditions precedent and mitigate damages. In addition the plaintiff is

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charged with breaches ofits obligations under the terms ofthe loan documents and with waiver, estoppel, and unclean hands. By this motion, the plaintiff seeks "summary judgment'' in its favor and an amendment of the caption to delete the pre-deceased defendant, Joy Rodriguez. The plaintiffs substantive demands for relief are opposed by the answering defendants who claim that the motion must be denied as premature pursuant to CPLR 32 12 because the plaintiff has not provided the defendants with discovery. None o f the affirmative defenses asserted in their answer were raised or otherwise asserted in opposition to this motion. For the reasons stated, the motion is granted only to the extent that: 1) Joy Rodgriquez is dropped as a party defendant and the caption is amended to reflect same; 2) partial summary judgrnent is granted to the plaintiff on its FIRST and SEVENTH causes of action, which causes of action are severed from all others pursuant to CPLR 32 12(e); and 3) a trial on the issue of damages shall abide the trial ready certification of the severed causes of action and the scheduling of such trial by further order of the court. It is well established that in an action to recover damages for breach of a promissory note, credit
or loan agreement and any written guarantees of the obligation of the obligor thereunder, a prima facie

case is made by the plaintiff upon due proof of the existence of the underlying note or credit or loan agreement and written guarantees and a failure on the part of the defendants to make payment in accordance with the terms of such note and guarantees (see Clemente Bros. Contr. Corp. v Hafner-Milazzo, 100 AD3d 677, 954 NYS2d 156 [2d Dept 20121; Valley Natl. Bank v INIHolding, LLC, 95 AD3d 1108, 945 NYS2d 97 [2d Dept 20121; Signature Bank v Galit Props., Inc., 80 AD3d 689,915NYS2d 138 [2dDept2011]; ProvidentBankvGiannasca, 55 AD3d 812,866NYS2d289 [2d Dept 20081; New York Community Bank v Fessler, 88 AD3d 667, 668, 930 NYS2d 601 [2d Dept 201 11; Verela v Citrus Lake Dev., Inc., 53 AD3d 574, 862 NYS2d 96 [2d Dept 20081). Where such a showing is made by the plaintiff on a motion for summary judgment, the answering defendants targeted by such motion must demonstrate, by due proof in admissible form, the existence of genuine questions of fact with respect to bona fide defenses to avoid the granting of the plaintiffs motion (see Imperial Capital Bank v 11-13-15 Old Fulton D , 88 AD3d 652,930 NYS2d 267 [2d Dept 201 11; JPMorgan Chase Bank, N A . v Galt Group, Inc., 84 AD3d 1028, 923 NYS2d 643 [2d Dept 201 11; Gullery v Imburgio, 74 AD3d 1022, 905 NYS2d 221 [2d Dept 20101; Quest Commercial LLC v Rower, 35 AD3d 576,825 NYS2d 766 [2d Dept 20061). Here. the plaintiff satisfied its burden on this motion by establishing the existence of the notes, the credit and security agreements, the guarantee and the defendants' defaults in payment under the terms thereof. The plaintiff thus demonstrated a prima facie entitlement to partial summary judgment om its claims for recovery of damages by reason of the defendants' breaches of their obligations to pay amounts due under the terms of the notes, the written guarantee and other loan documents. The moving papers also established the answering defendants' liability for payment of the plaintiffs reasonable counsel fees to the extent incurred in the collection of amounts owing under the terms of the note and written guarantees in view of the answering defendants' agreement to pay same under the terms of the loan documents guarantees. There was, however, a lack of due proof as to the amounts due and owing to the plaintiff, including the amount of reasonable counsel fees to which it may be entitled to collect from the defendants. A prima facie entitlement to an award ofpartial summary judgment on the plaintiffs FIRST

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and SEVENTH causes of action only with respect to the issue of the defendant's liability for sums owing to the plaintiff under the terms of the loan documents and written guarantee. The moving papers failed, however, to demonstrate the existence of the elements of an account stated against the corporate defendant that is the subject of the plaintiffs SECOND cause of action (see Branch Services, Inc. v Cooper, 102 AD3d 645,2013 WL 85916 [2d Dept 20131; Raytone Plumbing Specialities, Inc. v Sano Constr., 92 AD3d 855, 939 NYS2d 116 [2d Dept 20121; Digital Ctr., S.L v Apple Indus., Inc., 94 AD3d 571,942 NYS2d 488 [lst Dept 20121). The moving papers also failed to establish the plaintiffs prima facie entitlement to summary judgment on the THIRD, FOURTH, FIFTH and SIXTH causes of action against the corporate defendant (see generally Zuckerman v City ofNew York, 49 NY2d 557,562,427 NYS2d 595 [ 19801). It was thus incumbent upon the defendants to demonstrate their possession of some bona fide defense to the plaintiffs breach of contract claims that presents at least one genuine issue of fact, thereby precluding the granting of any type of accelerated judgment in favor of the plaintiff. A review of the opposing papers reveals, however, that no question of fact was raised with respect to the issue of the defendants' liability to the plaintiff under the loan documents. As indicated above, the opposing papers submitted by the defendants are limited to the procedural challenge that the motion is premature due to the plaintiffs failure to provide documentation of amounts due, including the history of the accounts which are purportedly overdrawn from which payments of amounts due and owing under the loan documents were to be withdrawn and credited as paid by defendant York. To the extent that the defendants' opposition may be read as a request for a denial of this motion so as to afford the defendants the opportunity to engage in discovery as contemplated by CPLR 32 12(f), it is denied. The rule at CPLR 32 12(f) provides that "should it appear from affidavits submitted in opposition to the motion that facts essential to justify opposition may exist but cannot then be stated, the court may deny the motion or may order a continuance to permit affidavits to be obtained or disclosure to be had and may make such other order as may be just". Appellate (case authorities have long instructed that to avail oneself of the safe harbor this rule affords, the claimant rnust "offer an evidentiary basis to show that discovery may lead to relevant evidence and that the facts essential to justify opposition to the motion were exclusively within the knowledge and control of the plaintiff' (Martinez vKreychmar, 84 AD3d 1037,923 NYS2d 648 [2d Dept 201 11; seeseaway Capital Corp. v 5OOSterling Realty Corp., 94 AD3d 856,941 NYS2d 871 [2d Dept 20121). The "`mere hope or speculation that evidence sufficient to defeat a motion for summary judgment may be uncovered' by further discovery is an insufficient basis for denying the motion" ( Woodard v Thomas, 77 AD3d 738 at 740,913 NYS2d 103 [2d Dept 20101, quotingLopezv WSDistrib.,Inc., 34 AD3d 759,760,825 NYS2d 516; see Friedlander Org., LLC vAyorinde, 94 AD3d 693, 943 NYS2d 538 [2d Dept 20121). Here, the defendants' claims that issues offact exist that preclude an award of summaryjudgnient in favor of`the plaintiff, are rejected as unmeritorious. The defendants advanced not one challenge to plaintiffs claims that the defendants' defaulted in payment under the terms of their written contracts and none of the documentation to which the defendants claim they are entitled in order to amount a defense to the damages claimed by the plaintiff are limited to the issue of damages. However, the court finds that due to the absence of proof in admissible form sufficient to establish as a matter law the amounts claims

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as due and owing by the plaintiff, issues of fact exist with respect to the amounts due under the terms of the note and the accounts allegedly overdrawn by the corporate plaintiff. In addition, the calculation o f interest and late fees and the amount of counsel fees to which the plaintiff is entitled were not established by the papers submitted by the plaintiff in support of its motion. The court has thus limited its award of summary judgrnent to the award of partial summary judgment on the issue of the defendants' liability under the FIRST and SEVENTH causes of action set forth in the complaint (see CPLR 3212[e]). `Thecourt further finds that the defendants should be afforded the opportunity to engage in limited discovery with respect to the amounts claimed as due by the plaintiff, prior to the scheduling of a trial on the limited issue of the plaintiffs damages that is the subject of CPLR 321 l(c). Accordingly, a preliminary conference limited to the issue of the plaintiffs damages shall be held herein on Friday, March 29, 2012 in the courtroom of the undersigned in the Supreme Court Annex Building of the courthouse located at One Court Street, Riverhead, New York 11901.

DATED:



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