| Sin Mou Chiu v TWR Express, Inc. |
| 2006 NY Slip Op 50782(U) [11 Misc 3d 1089(A)] |
| Decided on April 19, 2006 |
| Supreme Court, Kings County |
| Demarest, 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| This opinion is uncorrected and will not be published in the printed Official Reports. |
Sin Mou Chiu (aka CHIN) and WOON PING MA, Plaintiffs,
against TWR Express, Inc., TWR AMERICA, INC. METRO SALES, INC., GROUNDLINK TRANSPORTATION, INC. JERROL CUTLER and EDUARD SLININ, Defendants. |
Plaintiffs have each independently moved for Summary Judgment against all of the defendants for the sum of $96,459.71 based upon the alleged default by the corporate defendants, TWR Express, Inc., TWR America, Inc., Metro Sales, Inc. and Groundlink Transportation, Inc. ("Corporate Defendants") in paying the balance due upon a Stock Surrender Agreement ("Surrender Agreement") which was guaranteed by the individual defendant Jerrol Cutler. Defendant Eduard Slinin also executed a "Personal Guarantee" of his own "payments owed. . . to TWR Express, Inc. and its [corporate] affiliates" which recites the obligation to Plaintiffs sued upon herein. Plaintiff Sin Mou "Chin" moves to amend the pleadings to correct the spelling of [*2]his name to "Sin Mou Chiu". That motion is unopposed and is hereby granted.
Defendants cross-move to consolidate the two actions and to transfer the consolidated action to New York County. The application to consolidate is also unopposed and is clearly appropriate as Plaintiffs are identically situated with respect to their requests for identical relief against the same defendants. Accordingly, consolidation has been granted and the action shall proceed under Index No. 23420/05. The motion to change venue has been denied for reasons recited on the record at oral argument on February 15, 2006.
The actions arise out of Stock Surrender Agreements substantially identical as to both Plaintiffs, dated October 11, 2004, pursuant to which each Plaintiff agreed to surrender his right, title and interest in TWR Express, Inc. and its affiliates, TWR America, Inc., Metro Sales, Inc. and Groundlink Transportation, Inc. to the "Corporation" upon payment of $400,000 on October 12, 2004, and additional payment of $200,000 on February 1, 2005. Jerrol Cutler was a party to the Surrender Agreements and executed them as "personal guarantor" of the terms thereof. Eduard Slinin did not execute as a personal guarantor of the terms of the Stock Surrender Agreement per se (although an unexecuted provision therefor is contained in the documents) but did execute a separate "Personal Guarantee" dated October 12 of his obligations to the Corporate Defendants under a "Purchase Agreement", also dated October 12, 2004, and a Promissory Note "executed simultaneously therewith". Such obligations, as recited in Slinin's Personal Guarantee, include the sums to be paid to Plaintiffs under the Surrender Agreements.
On October 11, 2004, both Plaintiffs, as shareholders of TWR Express, Inc. and its affiliates TWR America, Inc., Metro Sales, Inc. and Groundlink Transportation, Inc ,denominated in the Surrender Agreements as "The Corporation" (corresponding to the "Corporate Defendants") ,agreed to surrender to the Corporation all of their "rights, title and interest" to the corporate shares for the total sum of $600,000 each. Consistent with the terms, $400,000 was paid to each Plaintiff on October 12, 2004; however, the $200,000 balance due on February 1, 2005, was not paid. On March 7, 2005, each Plaintiff received a check for $103,542.29 under cover of a letter from counsel to TWR Express explaining that $47, 886.28 had been deducted as the Plaintiff's "share in the Corporation's costs and expenses incurred after October 12, 2004" and $48,571.43 had been deducted as a "pro-rata contribution" to $340,000 held in escrow upon the Purchase Agreement for the sale to Defendant Eduard Slinin of all of the assets and liabilities of TWR Express, Inc. and its affiliates (the Corporate Defendants herein) denominated in the Purchase Agreement "the Company". [FN1] The Purchase Agreement is dated October 12, 2004, which is specified as the "Effective Date" of the Agreement, and is signed on behalf of the Corporate Defendants by Defendant Jerrol Cutler as "President". Eduard Slinin signed "as Purchaser". Neither Plaintiff is a party to the Purchase Agreement.
[*3]
Plaintiffs have sued and are seeking summary judgment for the $96, 459.71 balance due to each of them upon the Surrender Agreements. All of the defendants served a joint Answer; however, only Defendant Slinin interposed counterclaims alleging fraud and breach of the Purchase Agreement in that, as prior shareholders, the Plaintiffs purportedly "made certain oral warranties and representations" that TWR Express, Inc. had 170 working franchisees at the time of sale, and had agreed " to satisfy"certain pre-sale liabilities and that such representations proved not to be true. It was based upon these same alleged breaches that $340,000 was retained in escrow upon the closing of the Purchase Agreement and was subsequently released to Defendant Slinin pursuant to instructions contained in a letter from TWR Express, dated March 21, 2005, to its attorneys, signed by Jerrol Cutler, as President, Ka H. Kong, as Treasurer and Kenny Chew, as Secretary. Thus Defendant Slinin has already been compensated by the Corporate Defendants for any breach of the Purchase Agreement. The Corporate Defendants and Defendant Cutler are attempting to recoup from Plaintiffs a portion of the $340,000 paid to Slinin by withholding a portion of the purchase price for Plaintiffs' stock holdings. By disclaiming liability for the balance of the purchase price of Plaintiffs' shares and asserting counter-claims against Plaintiffs, Slinin, now the beneficial owner of the assets of the Corporate Defendants pursuant to the Purchase Agreement, is seeking to retain the full $340,000 paid to him by the Corporate Defendants in consideration of those very breaches for which he has counter-claimed against Plaintiffs.
Upon a motion for summary judgment it is the duty of the court to search the record to determine whether a genuine issue of material fact is truly present. Behar v. Ordover, 92 AD2d 557 ( 2d Dep't, 1993); Hirsch v. S.Berger Import& Manufacturing Corp., 67 AD2d 30 (1st Dep't, 1979). In cases of contract interpretation, such as that at bar, where the terms of the contract are complete and clearly expressed, the interpretation of the contract is the responsibility of the court. W.W.W. Associates, Inc. v. Giancontieri, 77 NY2d 157 (1990).
The documentation upon which Plaintiffs' claims rely is unequivocal. Plaintiffs Chiu and Ma were two of the original six shareholders of the Corporate Defendants, which are in the business of providing limousine service. As reflected in the documents adduced on both sides, Defendant Jerrol Cutler was, both prior and subsequent to the events at issue, the President of "the
Corporation" (aka "the Company"). On October 11, 2004, the Plaintiffs entered into the Surrender Agreements with "the Corporation" which expressly provide:
(2)Shareholder hereby agrees that as of the Effective Date, it
shall have no remaining rights, title and interest in and to the
Corporation, and any rights, title and interest in and to the
Corporation's assets.
(3)The Corporation hereby agrees that as of the Effective Date,
the Shareholder shall not be liable pursuant to any of the
Corporation's liabilities and/or obligations accrued before or
after the Effective Date. [emphasis added]
The "Effective Date" of the Surrender Agreements, as expressly defined therein, is October 11, 2004. There is no mention of the "Purchase Agreement" in the Surrender Agreements signed by each Plaintiff and Jerrol Cutler "as personal guarantor", and Kenny Chew as secretary of the [*4]Corporation. Although the Surrender Agreements provide that Jerrol Cutler and Eduard Slinin "hereby [agree] to personally guarantee the payments set forth hereunder", only Defendant Cutler signed the Surrender Agreements on October 11, 2004. On October 11, 2004, Defendant Cutler also separately executed a "Personal Guarantee" of the payments by the Corporate Defendants to each Plaintiff in accordance with the Surrender Agreement, the first of which was made on October 12, 2004. Defendant Slinin executed his "Personal Guarantee" on October 12, 2004, in which he agreed to
personally guarantee the following payments owed by Slinin to
TWR Express, Inc., and its affiliates TWR America, Inc., Metro Sales, Inc., and Groundlink Transportation, Inc. (collectively, the "Company") under a Purchase Agreement dated October 12, 2004
and a Promissory Note executed simultaneously therewith to WOON
PING MA [SIN MOU CHIU]:[FN2]
(1) On October 12, 2004, payment in the amount of $400,000; and
(2) On February 1, 2005, payment in the amount of $200,000.
Apparently, Defendant Slinin, whose interest in the Corporation prior to the closing on the Purchase Agreement on October 12, 2004 is unclear (though Plaintiffs' counsel suggests in his Affirmation in support of the Motion (para.13) that Slinin was and remains a shareholder of the Corporate Defendants), was unwilling to guarantee payment by the Corporate Defendants to Plaintiffs of the compensation for "the Corporation's" purchase of the Plaintiffs' shares of the various Corporate Defendants which was effective on October 11, 2004. However, the clear intent of the Surrender Agreements is that the Corporate Defendants would and did buy out all interest of each Plaintiff and severed the interest and liability of each Plaintiff effective October 11, 2004, prior to concluding the Purchase Agreement for the sale of the assets of the Corporate Defendants to Defendant Slinin on October 12, 2004. The relevant documents establish that the Corporate Defendants acquired all of the Plaintiffs' rights and interest prior to contracting to sell their own assets to Defendant Slinin, free of any claims of Plaintiffs, and that the Corporation, and its president Cutler, as guarantor, are unequivocally liable to pay for Plaintiffs' shares under [*5]the terms of the Surrender Agreements.
There is no basis for Defendant Slinin's contentions that Plaintiffs have any liability to him for any deficiency in the consideration transferred to Slinin under the terms of the Purchase Agreement. Neither Plaintiff was a party to the Purchase Agreement, nor does either Plaintiff's name or any mention of the Stock Surrender Agreements appear anywhere in the Purchase Agreement. The Purchase Agreement, which is "Effective" on October 12, 2004, subsequent to Plaintiffs' transfer of all of their rights, title and interest to the Corporation and the express termination of any liability they might have had for the obligations of the Corporation, provides in bold caps (Section 3.13) that all representations and warranties are set forth in the Agreement and "ARE EXCLUSIVE". Any other oral, written or express or implied representations made by the Company or "ANY SERVANT OR AGENT THEREOF" is expressly disclaimed. The Agreement is entire on its face and supercedes any prior agreement or understanding, written or oral (Section 10.7). The representation that the Company has "no less than one hundred seventy (170) active franchisees" is expressly set forth (Section 3.12), but there is no mention of either Plaintiff in the entire body of the Purchase Agreement or in any of the exhibits thereto. The contracting parties to the Purchase Agreement are the Corporate Defendants, collectively identified as "the Company" or "Owner" (Management Agreement) and Eduard Slinin, "Purchaser" or "Manager". The Promissory Note (Exhibit C to the Purchase Agreement), which appears to be that referenced in the "Personal Guarantee" of Eduard Slinin annexed to Plaintiffs' Surrender Agreements, was executed by Eduard Slinin both personally as guarantor and as president of NYC Two-Way International, Ltd. and Aristacar and Limousine, Ltd., "collectively as Obligor", exclusively to TWR Express, Inc. [FN3]
An analysis of the Surrender Agreements reveals, however, that Defendant Slinin, while declining to become a direct guarantor of the Corporate Defendants' obligations to Plaintiffs, nevertheless did personally guarantee performance of his own obligations to the Corporate Defendants under the Purchase Agreement and the Promissory Note executed simultaneously therewith for the benefit of the Plaintiffs, probably in consideration of their surrender of their interests so as to facilitate Slinin's purchase. Reading the various documents in pari materia, it appears that it was anticipated that Plaintiffs Chiu and Ma would be paid by the "Corporation" for their shares out of the proceeds of the Purchase Agreement with Slinin. Under the terms of the Purchase Agreement and the Promissory Note, and according to Slinin's Affidavit in Opposition, following the first- stage closing on October 12, when two million dollars was paid to the Corporate Defendants, an additional payment of one million dollars was due upon the second-stage closing on February 1, 2005, with the remaining balance of the Note ($1,200,000) to be paid off monthly, concluding with a final payment on December 5, 2007.
In fact, the second-stage closing was delayed and did not take place until March 1, 2005 when Slinin paid $1,647,656.63. How this purported "overpayment" will affect Slinin's further [*6]obligations under the Note cannot be ascertained on the record. Since this was a closing on real property, the purported "overpayment" may have been adjustments which will not alter the sums due under the Note. Nor is it known what payments have been made to the present. While the Slinin Guarantee does not guarantee direct payment to Plaintiffs of the payments due them from the Corporate Defendants, it is possible that Slinin may yet be liable to Plaintiffs upon his co-defendants' further default. Plaintiffs may have rights, pursuant to the Slinin Guarantee annexed to their Surrender Agreements, to seek recovery from Slinin for any sums due upon the Promissory Note payable to Defendant TWR Express. Clearly, upon the judgment herein granted against the Corporate Defendants, Plaintiffs may seek to levy against Slinin's future payments due under the Note. Additional discovery will be necessary to establish Plaintiffs' rights as to Defendant Slinin and Plaintiffs' action against Slinin is therefore severed.
Clear and complete writings are to be enforced in accordance with their terms. South Road Associates, LLC v. International Business Machines Corp., 4 NY3d 272 (2005); W.W.W. Associates, Inc. v. Giancontieri, supra. Where no ambiguity exists, extrinsic parol evidence may not be introduced so as to create issues that are not supported by such writings. Id. See Uribe v. Merchants Bank of New York, 91 NY2d 336, 341 (1998), quoting Lublow, Inc. v. Employers' Liability Assurance Corp. Ltd., 57 NY2d 872, 877, to the effect that the plain meaning of a contract is "not to be subverted by straining to find an ambiguity which otherwise might not be thought to exist." With the exception of Defendant Slinin's defenses, there is nothing in any of the written documents submitted by any party hereto to support the arguments of Defendants in opposition to Plaintiffs' motion or the counterclaims interposed on behalf of Defendant Slinin in the Amended Answer. It is noted that the Surrender Agreements, which contain an unconditional promise to pay, were drafted by Defendants' attorneys for execution by Plaintiffs without the advice of an attorney. In such circumstances, they must be construed against the drafter. Jacobson v. Sassower, 66 NY2d 991 (1985); Bernstein v. Sosnowitz, 198 AD2d 204 (2d Dep't, 1993).
Upon the unequivocal documentary evidence, Plaintiffs are entitled to summary judgment against the Corporate Defendants and the personal guarantor Jerrol Cutler for the balance remaining on the purchase price of their shares, without deduction for subsequent costs incurred or any adjustments the Corporate Defendants may have made pursuant to the Purchase Agreement with Slinin. Plaintiffs' motions for Summary Judgment in the sum of $96, 459.71 with interest from February 1, 2005, together with the costs and disbursements of this action, are granted as to each Plaintiff against TWR Express, Inc., TWR America, Inc., Metro Sales, Inc. Groundlink Transportation, Inc and Jerrol Cutler. Plaintiffs may enter judgment accordingly. Exercising the Court's inherent power to grant summary judgment where warranted upon the record,( Goldstein v. County of Suffolk, 300 AD2d 441 (2d Dep't, 2002)), summary judgment is granted dismissing the counterclaims of Defendant Eduard Slinin based upon the Purchase Agreement. Plaintiffs' action against Defendant Slinin is severed. The caption is hereby amended to correct the spelling of Plaintiff Chiu's name. The cross-motion, previously addressed on the record, is granted to the extent that the
two actions are consolidated under Index No. 23420/05. The cross-motion to change venue is denied. The parties shall appear for conference before this Court at 10 a.m. on June 1, 2006, unless this matter is otherwise resolved and such resolution is communicated to the Court.
The foregoing constitutes the decision and order of the Court.
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J.S.C.