Lou Halperin's Stas., Inc. v Cross Petroleum Corp. (2011 NY Slip Op 52141(U))

Lou Halperin's Stas., Inc. v Cross Petroleum Corp.

2011 NY Slip Op 52141(U) [33 Misc 3d 1227(A)]

Decided on November 9, 2011

Supreme Court, Nassau County

Driscoll, 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This opinion is uncorrected and will not be published in the printed Official Reports.

Exhibits to Notice of Motion.........................................................................x

This matter is before the Court for decision on the unopposed motion filed by Plaintiff Lou Halperin's Stations, Inc. ("Plaintiff") on September 14, 2011 and submitted onSeptember 21, 2011. For the reasons set forth below, the Court grants Plaintiff's motion and1) strikes the Answer of the Defendants Cross Petroleum Corp. and Mark Henein; 2) awards Plaintiff judgment against Defendant Cross Petroleum Corp. on the third cause of action in the Verified Complaint for account stated in the sum of $208,163.24, together with interest fromMay 13, 2010, costs and disbursements; 3) awards Plaintiff judgment against Defendants Mark Henein and Maria Henein on the fourth cause of action in the Verified Complaint, based on the guaranty executed by Defendants Mark Henein and Maria Henein, in the sum of $208,163.24, together with interest from May 13, 2010, costs and disbursements; and 4) awards Plaintiff judgment against Defendants Mark Henein and Maria Henein on the fifth cause of action in the Verified Complaint for attorney's fees incurred by Plaintiff in the prosecution of [*2]this action, pursuant to the terms of the guaranty executed by Defendants Mark Henein and Maria Henein. The determination of interest, costs, disbursements and counsel fees is referred to an inquest.

Plaintiff moves for an Order, 1) pursuant to CPLR § 3212, awarding Plaintiff summary judgment for the relief sought in the Verified Complaint ("Complaint"); 2) striking the Answer of the Defendants Cross Petroleum Corp. ("Cross") and Mark Henein ("Mark") on the ground that Cross and Mark failed to comply with the Orders of the Court dated November 24, 2010 and July 14, 2011 by wilfully failing to appear for a deposition; and 3) precluding Defendants Cross and Mark from giving evidence at the trial of the above-captioned action.

Defendants have submitted no opposition or other response to Plaintiff's motion.

The Complaint (P's Ex. 1), which contains five (5) causes of action: alleges as follow:

Between September 24, 2008 and May 13, 2010, at Cross' request, Plaintiff delivered and sold gasoline to Cross at the agreed price of $4,041,444.23, of which $208,163.24 remains unpaid. Despite Plaintiff's demand, Defendant has failed and refused to make payment. Plaintiff seeks judgment against Cross in the amount of $208,163.24, together with interest from May 13, 2010, costs and disbursements.

Plaintiff reiterates the allegations in the first cause of action, and further alleges that the fair and reasonable value of the gasoline sold by Plaintiff to Cross is $4,041,444.23, of which $208,163.24 remains unpaid despite prior demand. Plaintiff seeks judgment against Cross in the amount of $208,163.24, together with interest from May 13, 2010, costs and disbursements.

With respect to the allegations in the first and second causes of action, an account was taken and stated between Plaintiff and Cross which showed a balance of $208,163.24, as ofMay 13, 2010, due and owing by Cross to Plaintiff. Plaintiff seeks judgment against Cross in the amount of $208,163.24, together with interest from May 13, 2010, costs and disbursements.

On or about September 21, 2009, Defendants Mark and Maria Henein ("Maria") (collectively "Guarantors") entered into a written agreement ("Guaranty") (Ex. 1 to Compl.), pursuant to which they guaranteed full and prompt payment of all gasoline purchased by Cross. The balance of $208,163.24 remains unpaid by Cross as well as the Guarantors, despite due demand. Plaintiff seeks judgment against the Guarantors, Mark Henein and Maria Henein, in the amount of $208,163.24, together with interest from May 13, 2010, costs and disbursements.

Pursuant to the Guaranty, the Guarantors agreed to be liable to Plaintiff for all of Plaintiff's reasonable costs and expenses incurred by Plaintiff in enforcing the Guaranty. Plaintiff seeks judgment against the Guarantors for attorney's fees and disbursements incurred by Plaintiff in the prosecution of this action.

In their Answer, titled "Answer, Defence [sic], Discovery" (P's Ex. 1), Defendants Cross [*3]and Mark deny many of the allegations in the Complaint. Defendants assert, inter alia, that1) Cross has paid in full for all gasoline delivered between September of 2008 and March of 2010; 2) the balance alleged by Plaintiff is inaccurate; and 3) Defendants Cross and/or Mark have never received documentation demanding payment of the allegedly outstanding balance. Although the Answer states that "Defendants answer the complaint as follows," the Answer is not signed by Maria. It is signed by Mark in his personal and corporate capacities, and is verified by Mark.

By prior decision dated July 14, 2011 ("Prior Decision") (P's Ex. 4), the Court denied Plaintiff's motion for an Order, pursuant to CPLR § 3126, to preclude Cross and Mark from giving evidence at the trial of this action in light of their failure to appear at a deposition in violation of the November 24, 2010 Preliminary Conference Order. The Court, however, directed that the deposition of Defendant Mark shall take place, until completion, onAugust 2, 2011 at 9:30 a.m., and August 3, 2011 at 9:30 a.m. if necessary, at the Supreme Court of Nassau County, or on another date that was mutually agreeable with counsel for the parties on or before August 16, 2011. The Court further directed that if Mark failed to appear for his deposition as directed by the Court, the Court would entertain an application by Plaintiff, at the trial of this matter, for an Order precluding Defendants Cross and Mark from giving evidence at the trial of this matter. In the Prior Decision, the Court outlined the procedural history of this matter, including Defendants' failure to comply with their discovery obligations, and the Court incorporates the Prior Decision herein by reference.

In support of the instant motion, Jonathan Halperin ("Halperin"), Vice President of Plaintiff corporation, affirms the truth of the allegations in the Complaint regarding the agreement for Plaintiff to deliver gasoline to Cross, Plaintiff's delivery of that gasoline, Cross' failure to make payment pursuant to the unpaid invoices for fuel deliveries in the amount of $208,163.24 which Defendants do not dispute is due and owing, and the Guarantors' failure to make payments following Cross' default. Halperin provides copies of 1) all of Plaintiff's invoices to Cross (P's Ex. 6), 2) the Uniform Manifests for Interstate Movements of Auto Movement Fuel ("Uniform Manifests") for all fuel deliveries to Cross (id. at Ex. 7), and+3) Plaintiff's "Aging Receivables" Report (Halperin Aff. in Supp. at ¶ 10), prepared by Comptroller Robert Taddeo ("Taddeo"), which includes all deliveries to the customer, billing, payments made and amounts owed. With respect to the Uniform Manifests, Halperin affirms that 1) the Uniform Manifests were prepared and submitted by an independent trucking firm that picked the fuel up from the depot and delivered it to Cross; and 2) after each delivery, the trucking company left a Uniform Manifest with Cross and provided a copy to Plaintiff. Halperin avers that this is customary industry practice, and that the delivery of fuel, and documentation of delivery, is regulated by the United States Department of Transportation.

Halperin affirms, further, that Cross never disputed any delivery, Uniform Manifest or Invoice, and never questioned or denied that the amount of $208,163.24 is due and owing to Plaintiff. Halperin avers, further, that it was Cross' failure to make payments that prompted Plaintiff to obtain the Guaranty from Mark and Maria who are believed to be husband and wife. Mark and Maria executed the Guaranty in the presence of Halperin. Pursuant to the Guaranty, Guarantors guaranteed full and prompt payments of all gasoline that Cross purchased from Plaintiff.

Taddeo affirms that he is an accountant and the Comptroller of Plaintiff corporation. He provides a copy of the Aging Receivable Report (P's Ex. 8) which, he affirms, is prepared in the [*4]regular course of Plaintiff's business and was prepared by him in the regular course of Plaintiff's business. Taddeo affirms further that 1) the Aging Receivable Report accurately reflects all fuel deliveries to Cross, which is confirmed by Plaintiff, invoices and the Uniform Manifests; 2) all of Plaintiff's billing is accurately reflected in the Aging Receivable Report; 3) all payments by Cross are accurately reflected in the Aging Receivable Report; 4) Taddeo prepared the invoices to Cross as part of his duties, and these invoices were prepared by Taddeo in the ordinary course of Plaintiff's business; and 5) the outstanding balance owed by Cross for fuel deliveries by Plaintiff is $208,163.24.

Counsel for Plaintiff affirms that Maria testified at a deposition on March 3, 2011 and provides a copy of her deposition transcript (P's Ex. 2). Maria testified at her deposition, inter alia, that 1) Cross received the Uniform Manifests and Plaintiff's invoices; 2) Maria was able to confirm deliveries by using a machine that the station had, called a Veeder Root Leak detector, which measures the levels of fuel in the station tanks, allowing the station to confirm the amount of fuel delivered; and 3) Maria never compared the Plaintiff's invoices with the Uniform Manifests. Plaintiff's counsel affirms, further, that Defendants have never disputed the sum of $208,163.24 that Defendants owe to Plaintiff, and have never questioned a delivery.

Plaintiff's counsel affirms further that, in addition to Defendants' failure to comply with their discovery obligations as outlined in the Prior Decision, Mark failed to comply with the Prior Decision. Defendants' counsel has been "unable to secure [Mark's] cooperation and appearance" (Kruman Aff. in Supp. at ¶ 15), as reflected by an August 12, 2011 email from Defendants' counsel (P's Ex. 5) in which Defendants' counsel advised Plaintiff's counsel that Mark "has not committed to attending any depositions" in this matter. Plaintiff's counsel submits that summary judgment is appropriate, both in light of Plaintiff's demonstration of its right to judgment, and in light of Defendants' failure to comply with their discovery obligations.

Plaintiff submits that the Court should strike the Answer in light of the failure of Mark to comply with his discovery obligations, as outlined in prior Court orders. Plaintiff further seeks summary judgment on the grounds that it has established its right to judgment against Defendants by demonstrating that it delivered fuel to Cross for which it has not been compensated, and establishing the Guarantors' failure to make payment for those deliveries, as required by the Guaranty.

Defendants have submitted no opposition or other response to the instant motion.

CPLR § 3126 provides as follows: If any party, or a person who at the time a deposition is taken or an examination or inspection is made is an officer, director, member, employee or agent of a party or otherwise under a party's control, refuses to obey an order for disclosure or wilfully fails to disclose information which the court finds ought to have been disclosed pursuant to this article, the court may make such orders with regard to the failure or refusal as are just, among them: [*5]1. an order that the issues to which the information is relevant shall be deemed resolved for purposes of the action in accordance with the claims of the party obtaining the order; or 2. an order prohibiting the disobedient party from supporting or opposing designated claims or defenses, from producing in evidence designated things or items of testimony, or from introducing any evidence of the physical, mental or blood condition sought to be determined, or from using certain witnesses; or 3. an order striking out pleadings or parts thereof, or staying further proceedings until the order is obeyed, or dismissing the action or any part thereof, or rendering a judgment by default against the disobedient party.

The nature and degree of the penalty to be imposed pursuant to CPLR § 3126 lies within the sound discretion of the trial court. Workman v. Town of Southampton, 892 N.Y.S.2d 481, 482 (2d Dept. 2010), quoting McArthur v. New York City Hous. Auth., 48 AD3d 431 (2d Dept. 2008). The court has broad discretion to supervise disclosure to prevent unreasonable annoyance, expense, embarrassment, disadvantage or other prejudice. Eber Bros. v. Ribowsky, 266 AD2d 499, 500 (2d Dept. 1999).

On a motion for summary judgment, it is the proponent's burden to make a prima facie showing of entitlement to judgment as a matter of law, by tendering sufficient evidence to demonstrate the absence of any material issues of fact. JMD Holding Corp. v. Congress Financial Corp., 4 NY3d 373, 384 (2005); Andre v. Pomeroy, 35 NY2d 361 (1974). The Court must deny the motion if the proponent fails to make such a prima facie showing, regardless of the sufficiency of the opposing papers. Liberty Taxi Mgt. Inc. v. Gincherman, 32 AD3d 276 (1st Dept. 2006). If this showing is made, however, the burden shifts to the party opposing the summary judgment motion to produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact that require a trial. Alvarez v. Prospect Hospital, 68 NY2d 320, 324 (1986). Mere conclusions or unsubstantiated allegations will not defeat the moving party's right to summary judgment. Zuckerman v. City of New York, 49 NY2d 557, 562 (1980).

An affidavit based on documentary evidence is sufficient to support a motion for summary judgment. Barclay's Bank of New York, N.A. v. Smitty's Ranch, Inc., 122 AD2d 323, 325 (3d Dept. 1986). See also First Interstate Credit Alliance, Inc. v. Sokol, 179 AD2d 583 (1st Dept. 1992) (affidavit based on documentary evidence sufficient to comply with requirement that summary judgment motion be supported by affidavit from person having personal knowledge).

A party establishes a prima facie case for an account stated by proving that the defendants received and retained bills for services rendered to the defendants without objection. Nebraskaland, Inc. v. Best Selections, Inc., 303 AD2d 662 (2d Dept. 2003); Herrick Feinstein LLP v. Stamm, 297 AD2d 477 (1st Dept. 2002). See also Castle Oil Corp. v. Bokhari (2d Dept. 2008) (plaintiff established entitlement to judgment on cause of action for account stated by demonstrating that defendant failed to object to invoices plaintiff sent to him in ordinary course [*6]of business).

To establish an entitlement to judgment as a matter of law on a guaranty, plaintiff must prove the existence of the underlying obligation, the guaranty, and the failure of the prime obligor to make payment in accordance with the terms of the obligation. E.D.S. Security Sys., Inc. v. Allyn, 262 AD2d 351 (2d Dept., 1999). To be enforceable, a guaranty must be in writing executed by the person to be charged. General Obligations Law § 5-701(a)(2); see also Schulman v. Westchester Mechanical Contractors, Inc., 56 AD2d 625 (2d Dept. 1977). The intent to guarantee the obligation must be clear and explicit. PNC Capital Recovery v. Mechanical Parking Systems, Inc., 283 AD2d 268 (1st Dept., 2001), app. dism., 98 NY2d 763 (2002). Clear and explicit intent to guaranty is established by having the guarantor sign in that capacity and by the language contained in the guarantee. Salzman Sign Co. v. Beck, 10 NY2d 63 (1961); Harrison Court Assocs. v. 220 Westchester Ave. Assocs., 203 AD2d 244 (2d Dept. 1994).

Attorneys' fees may be awarded pursuant to the terms of a contract only to an extent that is reasonable and warranted for services actually rendered. Kamco Supply Corp. v. Annex Contracting Inc., 261 AD2d 363 (2d Dept. 1999). Provisions or stipulations in contracts for payment of attorneys' fees in the event it is necessary to resort to aid of counsel for enforcement or collection are valid and enforceable. Roe v. Smith, 278 NY 364 (1938); National Bank of Westchester v. Pisani, 58 AD2d 597 (2d Dept. 1977).

The amount of attorneys' fees awarded pursuant to a contractual provision is within the court's sound discretion, based upon such factors as time and labor required. SO/Bluestar, LLC v. Canarsie Hotel Corp., 33 AD3d 986 (2d Dept. 2006); Matter of Ury, 108 AD2d 816 (2d Dept. 1985). Legal fees are awarded on a quantum meruit basis and cannot be determined summarily. See Simoni v. Time-Line, Ltd., 272 AD2d 537 (2d Dept. 2000); Borg v. Belair Ridge Development Corp., 270 AD2d 377 (2d Dept. 2000). When the court is not provided with sufficient information to make an informed assessment of the value of the legal services, a hearing must be held. Bankers Fed. Sav. Bank v. Off W. Broadway Developers, 224 AD2d 376 (1st Dept. 1996).

In light of Mark's failure to submit to a deposition, as required by the Prior Decision, as well as his prior failures to comply with his discovery obligations as outlined in the Prior Decision, the Court grants Plaintiff's application to strike the Answer of Cross and Mark.

The Court grants Plaintiff's motion for summary judgment against Defendants Cross, Mark and Maria based on the Court's conclusion that 1) Plaintiff has demonstrated its right to judgment against Cross on the third cause of action, alleging account stated, by proving that Cross received and retained bills, sent to Cross in the ordinary course of business for the gasoline that Plaintiff delivered to Cross, without objection; 2) Plaintiff has demonstrated its right to judgment against Mark and Maria on the fourth cause of action by proving the existence of Cross' underlying obligation to Plaintiff, the guaranty, and Cross' failure to make payment in accordance with the terms of its obligation to Plaintiff; and 3) Plaintiff has demonstrated its right to judgment against Mark and Maria on the fifth cause of action, pursuant to the terms of the Guaranty, for attorney's fees incurred by Plaintiff in prosecuting this action. As the Court has an insufficient record on which to base a counsel fee award, that matter is referred to an inquest. The Court also refers the determination of interest, costs and disbursements to an inquest.

ORDERED, that the motion of Plaintiff Lou Halperin's Stations, Inc. is granted; and it is further

ORDERED, that the Answer of Defendants Cross Petroleum Corp. and Mark Henein is stricken; and it is further

ORDERED, that Plaintiff shall have judgment against Defendant Cross Petroleum Corp. on the third cause of action in the Verified Complaint in the sum of $208,163.24, together with interest from May 13, 2010, costs and disbursements; and it is further

ORDERED, that Plaintiff shall have judgment against Defendants Mark Henein and Maria Henein on the fourth cause of action in the Verified Complaint in the sum of $208,163.24, together with interest from May 13, 2010, costs and disbursements; and it is further

ORDERED, that Plaintiff shall have judgment against Defendants Mark Henein and Maria Henein on the fifth cause of action in the Verified Complaint; and it is further

ORDERED, that this matter is respectfully referred to Special Referee Frank N. Schellace (Room 060, Special 2 Courtroom, Lower Level) to hear and determine all issues relating to the computation of attorney's fees, interest, costs and disbursements to be awarded to Plaintiff on December 13, 2011 at 9:30 a.m.; and it is further.

ORDERED, that Plaintiff shall serve upon counsel for Defendants, by regular mail, a copy of this Order with Notice of Entry, a Notice of Inquest or a Note of Issue and shall pay the appropriate filing fees on or before November 29, 2011; and it is further

ORDERED, that the County Clerk, Nassau County is directed to enter a judgment in favor of Plaintiff Lou Halperin's Stations, Inc. and against Defendants Cross Petroleum Corp., Mark Henein and Maria Henein in accordance with the decision of the Special Referee.

Counsel for the parties shall not be required to appear before the Court for the previously scheduled conference on December 13, 2011 at 9:30 a.m. Counsel for the parties are reminded of the inquest scheduled before Referee Frank N. Schellace onDecember 13, 2011 at 9:30 a.m., as directed herein.