Does sufficient evidence exist to prove that the individual defendant explicitly intended to bind himself, when he signed a guarantee twice, one time explicitly in his capacity as agent for a limited liability company and the second time next to the word "by," when the agreement did not specifically include his name?

This Court holds that there are genuine issues of material fact as to whether the individual defendant intended to bind himself as a surety and therefore summary judgment is inappropriate.

This matter arises out of escrow deposit bonds that were issued by the plaintiffs, as sureties, on behalf of Mansiana Ocean Residences, LLC (Mansiana) in connection with the condominium development commonly known as the Solis Resort, Spa and Residence (Solis Resort) in Florida. Pursuant to the terms of the Solis Resort condominium purchase agreements and applicable Florida [*2]Law, Mansiana was required to hold purchasers initial 10% deposit in escrow with an approved escrow agent, in this case, Fidelity National Title Company, until the closing of the units.

Under Florida Law, a developer may draw upon a purchaser's initial 10% deposit to use toward the construction of the development if the developer posts an escrow deposit bond to cover the purchaser's deposit. In order to use the purchasers' deposit funds for construction, Mansiana requested that plaintiffs post escrow deposit bonds on its behalf. The total sum of the Escrow Deposit Bonds is 13,000,000.00. Mansiana paid the bond premiums for approximately two years and allegedly defaulted in payments in November of 2008.

The General Agreement of Indemnity

A General Agreement of Indemnity (GAI) was entered into in favor of the plaintiffs. The GAI contains express language providing that the plaintiff's will be held harmless for any and all losses, costs and expenses incurred by the plaintiff by reason of their execution of the escrow deposit bonds. It is this agreement that the plaintiffs contend obligates Mr. Forkosh personally for Mansiana's default.

It is undisputed that the agreement is a pre-printed form, which contains pre-printed signature lines. Neither Mansiana nor Mr. Forkosh are explicitly named in the agreement. The general term "indemnitors" is utilized throughout. At the signature lines there are two columns. The first column is designated for addresses, the second for the "Name of Indemnitors" In the address column, two different addresses appear, one corresponds to Mansiana, in Sunny Isles, FL and the other to Forkosh in New York. Parallel to the addresses are the signature lines. The signature lines appear as follows:

Name of Indemnitors:

Mansiana Ocean Residences, LLC

A Florida Limited Liability Company

By:(L.S.)

Name, Title, Alexander Forkosh, Managing Member

By:(L.S)

Name, Individually, Alexander Forkosh

Alexander Forkosh's signature appears next to the word "by" on both lines.

As the plaintiff is an Illinois Company, Mansiana is a Florida Company, Mr. Forkosh is a resident of New York and the property is located in Florida it is imperative to determine whether a conflict of laws exists and if so, which law applies. Allstate Insurance v. Stolarz, 81 NY2d 219 [1993]. New York, Illinois and Florida law are virtually identical and therefore there is no conflict of law issue. Id. In the three states, members of a limited liability company is generally personally immune from liability for corporate debt. However, in each state a member may choose to bind themselves for a corporate debt. See i.e. New York Limited Liability Law �609, Florida Statutes 608.422, and Illinois Limited Liability Act Chapter 805.

Indemnity agreements are a special class of contracts that make one party responsible for the obligations of another. Therefore, the law is well established in New York that indemnity agreements "are to be strictly construed to avoid reading into them [*3]duties which the parties did not intend to be assumed. " Mikulski v. Adam R. West, Inc., 78 AD3d 910 [2d Dep't 2010]. Furthermore, any ambiguity is construed against the drafter. Mejia v. Trustees of Net Realty Holding Trust, 304 AD2d 627 [2d Dep't 2003].^[FN1]

Plaintiff's contends that the specific evidence which shows Mr. Forkosh's intent to bind himself individually is that he provided personal financial statements, and signed the agreement twice, the contract references indemnitors in the plural, and under Mr. Forkosh's signature the word "individually" appears.

Mr. Forkosh asserts that he never intended to bind himself to the guarantee personally, that it is normal and customary for him to provide personal financial information when preparing for a business venture, and he routinely signs a contract twice, once as a managing member of the LLC and once as an individual member.

It is rare to find a corporate officer personally liable, however where there is explicit intent to bind personally the signer may be held liable. Personal liability has been found [*4]in cases where the contract specifically names the individual signor's name within the contract, the signature lines contained only the individuals' names without the word "by" preceding the signature area and where the plaintiff had required the defendants to re-execute the contract when they had first signed and added they corporate titles. See e.g., Key Equip. Fin. v. South Shore Imaging, Inc., 69 AD3d 805 [2010].

The use of the "by" in legal documents "means through the means, act, agency, or instrumentality of,' see Black's Law Dictionary 182 (5th ed.1979) particularly when it is used preceding a signature." Lerner v. Amalgamated Clothing and Textile Workers Union, 938 F.2d 2 [1991] (applying New York law and holding that the President of a corporation was not personally bound to the collective bargaining agreement as he signed in his official capacity, his signature was proceeded by the word "by" and he was not personally named in the contract).

Personal liability was again found in the First Department where five factors were present, (1) the contract was only three pages long, (2) the paragraph that assigned personal liability was directly above the signature area, (3) that the signatories name appeared in the contract itself (4) that the parties negotiated the contract in depth and (5) that the signatory was the president and principal shareholder in the corporation. Paribas Properties, Inc. v. Benson, 146 AD2d 522 [1989].

Generally signing a contract twice is the "practice when an individual wishes to be personally bound" Georgia Malone & Company v. Rieder, 86 AD3d 406 [2011]. However, in this case Mr. Forkosh testified that he routinely signs contracts twice to show proper authority to act on behalf of the LLC, not to evidence an intent to bind himself personally.

In this matter, the confluence of several factors raises genuine issues of material fact. First, the use of the word "by" preceding the signature of Mr. Forkosh in conjunction with the dual-signature and the word "individually" beneath the signature creates ambiguities in the contract, which must be construed against the drafter, the plaintiff. Furthermore, as the contract does not specifically name Mr. Forkosh within its terms and Mr. Forkosh testified that he routinely provides personal financial data the plaintiff's have failed to prove that the plaintiff explicitly intended to bind himself personally as a guarantee.Accordingly summary judgment is denied. As to the defendant's motion to strike the note of issue, it is apparent that there is outstanding discovery and therefore it is granted and the note of issue is hereby vacated.

This constitutes the decision and order of the Court.

J.S.C.