This action arises from an Equipment Promissory Note, Loan and Security Agreement, and Unconditional Guarantee of Payment and Performance (Equipment), all dated September 26, 2003, involving two (2) Ground Round Restaurants. As of the date of default, January 1, 2006, there was $544,327.55 due and owing together with interest at the default rate of 14% from the date of default until the date the debt is satisfied. Plaintiff is an Arizona corporation. Defendant Global Franchise N & S, Inc. is a New York corporation with its principal office in New York City. Defendant Pei Chen Ying is president of defendant Global Franchise and he also personally guaranteed the debt in question. Defendant Ying resides in Manhasset, New York. Venue of this action was placed in Oneida County because the equipment which is the subject of the Note and Security Agreement is presently located at 8562 Seneca Turnpike, New Hartford, as well as at a second location, 1614 State Street, Schenectady, NY.

The Complaint alleges four (4) causes of action:

1)declaratory judgment against Global Franchise - for declaration that the equipment at both locations is the property of plaintiff;

2)breach of contract against Global Franchise - for failure to make payments from January 2006 to date;

3)breach of contract against Pei Chen Ying - for failure to fulfill his obligations under the Unconditional Guarantee;

4)recovery of chattel wrongfully detained against Global - for equipment at both locations.

Defendants entered an Answer with general denials and ten (10) Affirmative Defenses:

1st Affirmative Defense - lack of subject matter jurisdiction in Oneida County;

2nd Affirmative Defense - lack of personal jurisdiction;

3rd Affirmative Defense - forum non conveniens;

4th Affirmative Defense - payment; [*2]

5th Affirmative Defense - Defendant Ying is relieved of obligation under the Guarantee by novation between plaintiff and defendant Global Franchise;

6th Affirmative Defense - offset, upon sale of collateral;

7th Affirmative Defense - Defendant Ying is relieved of personal liability under Guarantee due to laches;

8th Affirmative Defense - failure to serve predicate-notice on defendants at their New York City address;

9th Affirmative Defense - sums claimed are incorrect and unsubstantiated;

10th Affirmative Defense - failure to join as necessary parties the landlords of both premises where equipment is located, since they hold competing claims to the collateral by reason of their lease agreements.

On June 6, 2007 plaintiff served First Request for Production of Documents and First Set of Interrogatories on the defendants. Despite repeated requests, the defendants failed to respond. Thereafter, plaintiff sought Court intervention, and on November 14, 2007 this Court [Julian, J., retired] issued an Order compelling defendants to respond within ten (10) days of entry. Notice of entry was served on defendants on November 26, 2007 and defendants failed to respond. Additionally, plaintiff served First Request for Admissions on defendants on June 8, 2007, to which defendants have never responded; and those requests are deemed admitted by operation of law under CPLR §3123.

Plaintiff now seeks an Order striking all Affirmative Defenses for failure to comply with this Court's Order dated November 14, 2007, and granting summary judgment in the amount of $738,848.10 with interest at 14% from February 1, 2008 until the debt is paid. Plaintiff also seeks attorney's fees of $35,212.50, based on time-sheets showing 133.2 hours of work at the rates of $235 per hour and $305 per hour. In opposition to this motion, the defendants allege that they are in an untenable situation, because when defendant Global Franchise encountered [*3]financial difficulties, and a deteriorating relationship between its principals defendant Ying and his partner Peter Wu, defendants were evicted from both restaurants, which contain the equipment and fixtures which are the subject of this action. Defendants claim that the books and records which they need to comply with disclosure may be either at the restaurants (to which defendants have no access) or in the possession of Mr. Wu whose location is unknown. Defendants then attach proposed discovery responses to their answering papers, and ask this Court to recognize these responses dated March 25, 2008 as being timely. Defendants further claim that there are questions of fact remaining; namely, they are not sure of the accuracy of plaintiff's documents or the amount due, the landlords of both premises hold competing claims to this equipment, the Guarantee provides that guarantor/defendant Ying will submit to the jurisdiction of Arizona, and Mr. Wu may have executed a settlement agreement with plaintiff thereby discharging defendant Ying from any liability under the Guarantee.

In support of its motion, plaintiff has demonstrated the authenticity of the loan documents and guarantee to the satisfaction of the Court, and has also satisfactorily demonstrated that between November 1, 2003 and January 1, 2006, defendant Global Franchise made only 26 monthly payments on this debt leaving a principal balance of $544.327.55 at the time of default, together with 14% interest until the debt is paid and reasonable attorney's fees as set forth in the Equipment Promissory Note. Plaintiff has further demonstrated that defendant Ying agreed to satisfy all obligations of defendant Global Franchise, but has wholly failed to honor his Guarantee, and defendant Ying does not deny this claim. Plaintiff has further demonstrated that after this action was commenced, the landlords at both locations were contacted to discuss plaintiff's interest in the equipment and neither landlord asserted any claim to this equipment. Rather, both landlords permitted plaintiff access to their premises to inspect the equipment and authorized plaintiff to recover and remove said equipment. Plaintiff obtained an appraisal from a [*4]repossession/remarketing agent which found the equipment at both locations to be in poor and inoperable condition. Specifically, they found the equipment located in New Hartford to have a liquidation value of $9,000 and the equipment located in Schenectady to have a liquidation value of $4,200. Plaintiff has further demonstrated that removal, transporting and storage of the equipment will cost between $5,000 and $8,000 per location, and upon its sale, a 20% commission will be paid to the remarketing agent. Given the total value of this equipment after deducting commissions, and the costs of repossession, plaintiff decided to abandon its security interest in the equipment and notified both landlords accordingly. Plaintiff asserts that it is entitled to judgment under the Unconditional Guarantee under both New York and Arizona law. Finally, plaintiff confirms through the affidavit of Craig S. Meltz, its Senior Workout Analyst, that there has been no novation, since the plaintiff has not entered into any agreement with any person or corporation concerning this debt owed by defendant Global Franchise.

After careful review of the documents submitted on this motion, and after due deliberation, the plaintiff's motion to strike the Affirmative Defenses and for summary judgment is granted, for the following reasons:

There is no question that the defendants have failed to pay this debt, and there is no question that defendants did not comply with this Court's 10-day discovery Order dated November 14, 2007. Defendants' explanation for this failure to disclose is to merely state that the records needed to comply with discovery may be located in the two (2) restaurant locations or may be in the possession of his partner Peter Wu whose location is unknown. However, defendants do not even allege that they made any attempt whatsoever to locate those records from the restaurant-premises. It is simply not sufficient for defendants to say they don't have any documents because Peter Wu has them, and they don't know how to find Mr. Wu, particularly since this Court [Julian, J., [*5]retired] already heard and considered this argument in November 2007 before issuing his 10-day Order. Defendants ask this Court to recognize their discovery responses dated March 25, 2008 as being sufficient nunc pro tunc; however, those responses are not only untimely, but are wholly insufficient, since they repeatedly state: "defendants do not have possession or access to any such documents;" and "It is believed that Mr. Wu has personal knowledge of information responsive to this Interrogatory." Plaintiffs have demonstrated the authenticity of the loan documents and established the precise amount due and owing as of the date of default on January 1, 2006. It is insufficient to overcome plaintiff's entitlement to summary judgment for the defendants to merely state that plaintiff may be taking advantage of them because they are not sure of the amount due, particularly since defendants have never served any discovery demands to obtain documents substantiating plaintiff's claim for damages.

Moreover, defendants do not explain why they did not bring in the landlords on a third-party action if they believe that these landlords somehow belong in this lawsuit. In any event, plaintiff has demonstrated that it has abandoned any claim to this equipment because the cost to recover and sell same would only result in a negative sum which would then add to the debt currently owed by defendants. Finally, the loan documents require only that defendants agree to submit to Arizona law, but do not require that venue be placed in Arizona, which in any event would entitle the plaintiff to judgment on this Unconditional Guarantee.

In summary, the plaintiff has demonstrated its right to strike all Affirmative Defenses as well as its right to summary judgment on the Complaint, based on all papers before this Court and based on defendants' failure to comply with this Court's Order dated November 14, 2007. Defendants have presented no evidentiary proof in admissible form to overcome plaintiff's right to summary judgment on the [*6]Complaint. Accordingly, plaintiff's motion is granted in all respects, and after careful review of plaintiff's counsel's billing statement, the Court awards plaintiff reasonable attorney's fees in the sum of $31,302.00.

This constitutes the Decision of the Court, and plaintiff's counsel is directed to submit an Order for signature with this original Decision appended thereto, after submitting a copy of same to defense counsel for approval as to form.

Dated:

ANTHONY F. SHAHEEN, J.S.C.