[*1]
| Grant Plumbing & Heating Supplies, Inc. v
Cheshmehshahi |
| 2013 NY Slip Op 52082(U) [41 Misc 3d 1238(A)] |
| Decided on December 4, 2013 |
| Supreme Court, Kings County |
| Lewis, 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| This opinion is uncorrected and will not be
published in the printed Official Reports. |
Supreme Court, Kings County
Grant Plumbing
& Heating Supplies, Inc. A/K/A Grant Electrical Company, Plaintiff,
against
Hatam Cheshmehshahi A/K/A Hatam C. Shahi, Defendant.
|
25577/08
Yvonne Lewis, J.
Plaintiff Grant Plumbing & Heating Supplies, Inc. (hereinafter "the
plaintiff" or "Grant") moves for a post-trial judgment, or judgment notwithstanding the
verdict, pursuant to CPLR 4404(b), seeking a verdict in its favor.
Background
The
plaintiff commenced the instant action by filing a summons and complaint on September
9, 2009. The complaint alleges a single cause of action for breach of guaranty against
Defendant Hatam Cheshmehshahi (hereinafter "the defendant" or "HC"). The plaintiff is
a plumbing and heating supply company seeking damages for unpaid plumbing supplies
delivered to Pacific Plumbing & Heating Corp. (hereinafter "Pacific") in 2005-2006. The
plaintiff contends that (1) HC personally guaranteed the debt obligations of Pacific; (2)
the plaintiff sold supplies to Pacific on credit; (3) Pacific failed to remit payment for said
supplies; and (4) that HC failed to make payment to satisfy Pacific's debt after demand
for payment was made.
On July 20, 2010, both parties moved for summary judgment on the issue of
liability. Justice Francois Rivera denied both motions, finding that while the plaintiff met
its prima facie burden entitling them for summary judgment on liability, the defendant's
affidavits raised triable issues of fact as to whether or not the guaranty agreement was
effective. (Grant Plumbing & Heating Inc. v. Cheshmehshahi, Sup Ct, Kings Cty,
Sept. 27, 2012 , Rivera, J., index No. 25577/08 at 5-6). Importantly, Justice Rivera found
that "the parol evidence offered by HC and Zapas may be considered to show that the
[*2]guarant[y] agreement, while valid on its face was
never intended to take effect [T]he issue is one of credibility to be resolved by the fact
finder." (Id. at 6).
The parties appeared before this court for trial on June 11, 2013. At issue
was whether or not the guaranty agreement signed by HC was effective. (Grant
Plumbing & Heating Inc. v. Cheshmehshahi, Sup Ct, Kings Cty, Sept. 27, 2012 ,
Lewis, J., index No. 25577/08 at 2). At the trial, the plaintiff introduced evidence of a
guaranty signed by HC and dated January 8, 2001, as well as, sales orders, invoices and
statements for purchases made by Pacific in August 2005. Billing statements, dated
December 31, 2005 and January 31, 2006, indicate that the balance for those purchases
remains unpaid. The parties also introduced an affidavit by John Zapas, a principal of
Pacific, in which Mr. Zapas states that the personal guaranty by HC was made in
connection with credit applications that HC made to Grant Heating in 2001. At the June
11, 2013 hearing, Mr. Zapas also testified that credit was never issued in connection with
HC's credit applications. Further, Mr. Zapas' affidavit claims that Grant issued credit to
Pacific based on his own application, and that Grant assured Mr. Zapas that HC was not
personally liable for Pacific's debt.
Upon the testimony and the evidence presented at trial, together with the law
of the case, this court found that the plaintiff did not present sufficient evidence to show
that it extended credit to Pacific in reliance on the HC guaranty. The court found that the
defendant presented sufficient rebuttal evidence through the testimony of its
vice-presidents to defeat the plaintiff's position as to the effectiveness of the guaranty.
Specifically, the defendant demonstrated that he made the guaranty in expectation of
receiving credit from the plaintiff, that the plaintiff did not provide such credit, and that
no credit was extended to Pacific until after a subsequent application by Mr. Zapas.
(Lewis Decision at 3). The court entered a verdict in favor of the defendants. (Id).
The plaintiff then moved for judgment notwithstanding the verdict, pursuant
to CPLR 4404(b), as in its opinion, the evidence presented supports a finding that credit
was extended in connection with the HC guaranty, thus supporting a verdict in the
plaintiff's favor.
In support of its motion to set aside the verdict in favor of the defendant, the
plaintiff contends that failure of consideration is an affirmative defense. The plaintiff
claims that it has met its prima facie burden by presenting evidence of the existence of a
debt obligation, a guaranty agreement, and a failure on the part of the debtor or the
guarantor to pay the amounts due. (see Kensington House Co. v. Oram, 293
AD2d 304 [1st Dept 2002]). Thus, the burden of proof is on the defendant, not the
plaintiff, to show that the guaranty lacked consideration. The plaintiff also posits that the
fact that the court found there was "no evidence" that credit was ever extended, indicates
that the defendant has failed to meet his burden. In opposition to the motion, the
defendant argues that he did meet his burden of proving that the guaranty was
ineffective. Testimony and documentary evidence indicate that Grant did not rely on the
HC guaranty in its decision to extend credit to Pacific. The defendant argues that the
plaintiff's reliance on Justice Rivera's summary judgment decision is misplaced as it
overlooks Justice Rivera's finding that the guaranty may not be effective if it was found
to be part of a credit application that was denied. (Rivera Decision at 6).
Discussion
CPLR
4404(b) states, inter alia, that "[a]fter a trial not triable of right by a jury, upon the
motion of any party the court may set aside its decision or any judgment entered thereon.
It may make new findings of fact or conclusions of law, with or without taking additional
testimony, [or] render a new decision and direct entry of judgment...."The standard for
setting aside the verdict after a bench trial is more flexible than for a jury verdict. "When
it sets aside its own decision on a CPRL 4404 motion, the court can render a different
decision on the same record, take new testimony and re-decide the case, etc." (David D.
Seigel, Practice [*3]Commentaries, McKinney's Cons
Laws of NY, Book 7B, CPRL C4404:6). The decision to set aside or modify a verdict
rests entirely in the trial court's discretion, and will not be overturned on appeal unless it
obviously could not be supported by any fair interpretation of the evidence. (Stinton v. Robin's Wood, Inc.,
45 AD3d 203, 207 [2d Dept 2007]; Pangia & Co., CPAs, P.C. v. Diker, 302
AD2d 506 [2d Dept 2003]).
The plaintiff's reliance on the argument that they met their prima facie
burden under the summary judgment standard does not support their present motion to
set aside the verdict. The court's role at the summary judgment phase is one of issue
finding, not issue determination. (Celardo v. Bell, 222 AD2d 547 [2d Dept
1995]). While the plaintiff may have met its prima facie burden to survive summary
judgment, the defendant's evidence at trial demonstrating a lack of consideration defeats
the plaintiff's claim for enforcement of the guaranty. "Under suretyship principles, a
guarantor relationship arises when one party becomes bound to satisfy an obligation
owed by another a suretyship or other contract is not a guaranty unless there is a primary
or principal obligation to which the surety's agreement is collateral.'" (Anti-Hydro
Co., Inc. v. Castaglia, 92 AD2d 741 [4th Dept 1983], citing 57 N.Y.Jur.,
Suretyship and Guaranty, § 15, pp. 206—207). Here, although The plaintiff
provided evidence that it extended credit to Pacific subsequent to the execution of the
guaranty, the defendant rebutted that claim with evidence that the credit was not
extended in connection with the HC guaranty. The defendant offered credible evidence
that the guaranty was signed in conjunction with a credit application made by HC in
2001, which was denied. The defendant further demonstrated that the 2005-2006 grant of
credit to Pacific was in fact in reliance on an application made by Mr. Zapas, and not in
reliance on the HC guaranty. Because the evidence indicates that credit was not extended
to Pacific in reliance on HC's application, the guaranty lacks consideration and is not
effective.
The plaintiff's post-judgment motion to set aside the verdict and enter a
verdict in its favor is denied. This constitutes the decision and order of this Court.
E N T E R
_____________________________
yvonne lewis, J.S.C.