[*1]
First Sterling Fin., Inc. v Emanuel A.M.E. Dev. Corp.
2006 NY Slip Op 50262(U) [11 Misc 3d 1057(A)]
Decided on February 10, 2006
Supreme Court, Nassau County
Austin, J.
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and will not be published in the printed Official Reports.


Decided on February 10, 2006
Supreme Court, Nassau County


First Sterling Financial, Inc. and STERLING CORPORATE TAX CREDIT FUND XXIII, L.P., Plaintiff,

against

Emanuel A.M.E. Development Corporation, EMANUEL NAVE CORPORATION, NAVE ASSOCIATES, L.L.C., L'JUDIE SIMMONS and JOHN DOES ( 1-10), Defendants.




5921-05

Leonard B. Austin, J.

Plaintiff, First Sterling Financial, Inc., moves for summary judgment against Defendant L'JudieSimmons for judgment on a promissory note as alleged in the fifth cause of action of the complaint. [*2]

BACKGROUND

On April 29, 2004, Plaintiff First Sterling Financial Inc. ("First Sterling") made a loan, evidenced by a promissory note, denominated Fifth Promissory Note ("Note"), in the principal amount of $250,000.00 to Defendants L'Judie Simmons ("Simmons"), Nave Associates, LLC ("Nave"), and Emanuel A.M.E. Development Corporation ("Emanuel"). The loan principal included $65,000 already due and owing to First Sterling along with an advance of an additional $185,000.00. The Note expressly provides, "Nave, Emanuel, and Reverend Simmons are and shall be jointly and severally liable for all of the principal and interest under this Note."

The Note further provides "the entire principal balance and all interest accrued thereon shall be payable in one installment of principal and interest on the earlier of December 31, 2004 or the date of termination of the Acquisition Agreement." The Note bore interest at the variable rate based upon the prime rate of the Bank of New York, commencing on May 1, 2004. All principal and interest not paid on the maturity date "shall bear interest at the default rate of twelve percent (12%) per annum from and after the Maturity Date unless Payee [First Sterling], in its sole discretion, agrees to a postponement of the Maturity Date." The makers of the Note failed to make any payment of either principal or interest on or before December 31, 2004.

On January 11, 2005, First Sterling sent a letter via certified mail to all three makers of the Note Nave, Emanuel and Simmons, demanding payment of the entire principal amount and interest. No payment has been made by any maker of the Note.

On April 15, 2005, First Sterling commenced this action by the filing of a summons with notice. The verified complaint enumerating five causes of action is dated

May 3, 2005. Simmons answered the complaint on August 15, 2005. In her verified pro se answer, Simmons denied the essential allegations of the complaint and interposed an affirmative defense alleging that her efforts on behalf of Emanuel were uncompensated; that she was unrepresented when she executed the Note; and that she is no longer CEO and president of Emanuel.

Plaintiff thereafter moved for summary judgment on the promissory note; and a severance and hearing to determine the amount due to Plaintiff for its costs of collection.

DISCUSSION


Preliminarily, although Plaintiff moves pursuant to CPLR 3215(a), based on the pleadings, it is clear to the Court that Plaintiff seeks summary judgment pursuant to CPLR 3212. Pursuant to CPLR 2001, the motion will be treated as one for summary judgment.

Summary judgment is a drastic remedy which will be granted only when the movant establishes that there are no triable issues of fact. Andre v. Pomeroy, 35 NY2d 361 (1974); and Moseyed v. Pilevsky, 283 AD2d 469 (2nd Dept. 2001).

The party moving for summary judgment must make a prima facie showing of entitlement to judgment as a matter of law. Alvarez v. Prospect Hosp., 68 NY2d 320 (1986); and Zuckerman v. City of New York, 49 NY2d 557 (1980).

Once the party moving for summary judgment has established a prima facie entitlement to judgment as a matter of law, the party opposing the motion must come forward with proof in evidentiary form establishing the existence of triable issues of fact or must establish an acceptable excuse for its failure to do so. Id.; Davenport v. County of Nassau, 279 AD2d 497 [*3](2nd Dept. 2001); and Bras v. Atlas Construction Corp., 166 AD2d 401 (2nd Dept. 1991).

When deciding a motion for summary judgment, the court must determine if triable issues of fact exist. Matter of Suffolk County Dept. of Social Services v. James M., 83 NY2d 178 (1994); and Sillman v. Twentieth Century-Fox Film Corp., 3 NY2d 395 (1957). The motion must be denied if the court has any doubt as to the existence of triable issues of fact. Freese v. Schwartz, 203 AD2d 513 (2nd Dept. 1994); and Groger v. Morrison-Knudson Co., Inc., 184 AD2d 620 (2nd Dept. 1992).

When deciding a motion for summary judgment, the court must view the evidence in a light most favorable to the party opposing the motion and must give that party all of the favorable inferences which can be drawn from the evidence. Negri v. Stop & Shop, Inc., 65 NY2d 625 (1985); and Louniakov v. M.R.O.D. Realty Corp., 282 AD2d 657 (2nd Dept. 2001).

To establish a prima facie entitlement to judgment as a matter of law on a promissory note, plaintiff must submit proof of the existence of a promissory note executed by the defendant containing an unequivocal and unconditional obligation to repay and the defendant's failure to make payment in accordance with its terms. Constructamax, Inc. v. CBA Assocs., Inc., 294 AD2d 460 (2nd Dept. 2002); and Colonial Commercial Corp. v. Breskel Associates, 238 AD2d 539 (2nd Dept. 1997). See also, Seaman-Andwall Corp. v. Wright Machine Corp. 31 AD2d 136 (1st Dept. 1968), aff'd, 29 NY2d 617 (1971); Chemical Bank v. Nemeroff, 233 AD2d 239 (1st Dept. 1996); and Key Bank v. Munkenbeck, 162 AD2d 503 (2nd Dept. 1990).

Once plaintiff has established a prima facie case, the defendant must come forward with evidence establishing the existence of triable issues of fact or a bona fide defense. Colonial Commercial Corp. v. Breskel Associates, supra; and Silber v. Muschel, 190 AD2d 727 (2nd Dept. 1993).

First Sterling has established its prima facie entitlement to summary judgment by submitting proof of the Fifth Promissory Note executed by Simmons, as Maker of the Note, on April 29, 2004. The Note contained an unequivocal and unconditional promise to repay. See, DeLuca v. North Shore Medical Imaging, LLP, 287 AD2d 488 (2nd Dept. 2001). The Note matured on the earlier of December 31, 2004 or the termination of the Acquisition Agreement, unless First Sterling agreed to postponement of the maturity date. Simmons failed to establish the Acquisition Agreement was terminated or that First Sterling postponed the maturity date. Thus, the Note matured on December 31, 2004.

No payment of principal or interest on the Note has been made by any of its Makers. The rate for post-default interest was set in the Note at rate 12% per annum. The Note is unclear as to how interest prior to maturity was to be calculated. While the Note does provide that interest between May 1, 2004 and December 31, 2004 is to be "at the variable rate of the Prime Rate' of the Bank of New York", there was no evidence offered as to what the prime rate of the Bank of New York was between May 1, 2004 and December 31, 2004 nor when and how the variable rate would change. Accordingly, a hearing must be held to determine the interest rate between May 1, 2004 and the maturity date, December 31, 2004.

There are no triable issues of fact as to the principal balance owed on the Note and the post-maturity interest rate. Defendant admits executing the Note, and that no payment of principal or interest has been made. Further, Defendant Simmons raises no viable affirmative [*4]defense. The fact is she signed the Note individually without any limitations based on her status and employment with Emanuel.

Therefore, Plaintiff should be awarded summary judgment on the Note in the principal sum of $250,000.00 together with interest from May 1, 2004 to December 31, 2004, at a rate of interest to be determined by the Special Refereee, and interest from January 1, 2005 to the date of entry of judgment at the rate of 12% per annum.

While First Sterling's motion seeks summary judgment, it is clear from a reading of the papers that summary judgment is only sought on the fifth cause of action of the complaint with regard to the promissory note. Accordingly, the first four causes of action sounding in breach of contract specific performance (first cause of action); breach of contract damages (second cause of action); breach of fiduciary duty damages (third cause of action); and breach of covenant of good faith and fair dealing damages (fourth cause of action) must be severed and continued pursuant to CPLR 3212(e)(1).

Plaintiff also seeks legal fees in accordance with the terms of the Note. Such provisions are valid and will be enforced. Arent, Fox, Kinter Plotkin & Kahn PLLC v. Lurzer GmbH, 297 AD2d 590 (1st Dept. 2002). Legal fees are awarded on a quantum meruit basis and cannot be determined summarily. See, Simoni v. Time-Line, Ltd., 272 AD2d 537 (2nd Dept. 2000); and Borg v. Belair Ridged Development Corp. 270 AD2d

377 ( 2nd Dept. 2000). See also, 7 NY Jur2d Attorneys-at-Law § 216. The Note expressly provides "should this promissory note or any part of the indebtedness evidenced hereby be collected by law or through an attorney-at-law, the Payee shall be entitled to collect all costs of collection including, but not limited to reasonable attorneys fees." Therefore, a hearing must be held to determine the reasonable attorney's fees to which Plaintiff is entitled for prosecution of this action.

Accordingly, it is,

ORDERED, that Plaintiff's motion for summary judgment is granted with regard to liability on the principal sum of $250,000.00 against Defendant L'Judie Simmons; and it is further,

ORDERED, that the matter is respectfully referred to Special Referee Thomas V. Dana on March 10, 2006 at 10:00 a.m. to hear and determine all issues relating to the rate of interest to be applied from May 1, 2004 to December 31, 2004 and all issues relating to the award of reasonable attorney's fees for Plaintiff's attorney; and it is further,

ORDERED, that upon the Special Referee determining both the reasonable counsel fees to be awarded herein and the rate of interest between May 1, 2004 and December 31, 2004, the County Clerk, Nassau County is directed to enter a judgment in favor of the Plaintiff and against Defendant L'Judie Simmons in the sum of $250,000.00, together with interest accrued between May 1, 2004 and December 31, 2004, at the rate as determined by the Special Referee and with interest at the rate of 12% per

annum from January 1, 2005 to the date of entry of judgment herein together with attorneys fees as determined by the Special Referee and costs and disbursements as taxed by the Clerk.

This constitutes the decision and order of the Court.

Dated: Mineola, NY____________________________

February 10, 2006 Hon. LEONARD B. AUSTIN, J.S.C.