The following papers read on this motion:Papers Numbered

Notice of Motion/Order to Show Cause/Petition/

Cross Motion and Affidavits(Affirmations)Annexed

5-9, 12-14

Opposing Affidavits (Affirmations) [*2]

17-19

Reply Affidavits(Affirmations)

20, 22

Affidavits(Affirmations)

Other Papers (Memoranda of Law)

10, 11, 15, 16, 21

Plaintiff Provident Bank ("Provident"), a New Jersey bank, brings an action to collect on two loans against defendant Nathan D. Tropp, the guarantor of the loans ("Tropp" or the "Guarantor"). Plaintiff moves for summary judgment pursuant to CPLR 3212 and defendant opposes.

On or about March 4, 2010, Provident extended a commercial line of credit to Interstate Transport, Inc. (the "Borrower" or "Interstate") in the principal amount of $500,000 with an interest rate of Wall Street Journal Prime Rate plus 1.50% percentage points. This loan was extended pursuant to a Business Loan Agreement (the "LOC Agreement") and evidenced by a promissory note (the "LOC Note"). The LOC Note required monthly payments of interest commencing April 1, 2010 until October 1, 2010, at which time full payment was due of all principal, interest, and fees. The LOC Note was extended several times until its final extension on November 1, 2011 when the LOC Note was amended to mature on January 1, 2012. To secure payment of the LOC Note, Tropp executed and delivered to Provident a personal guaranty (the "LOC Guaranty") where he guaranteed payment and all obligations of the Borrower under the LOC Note. Plaintiff alleges that the LOC Note is in default due to Borrower's failure to tender payment of the outstanding indebtedness due on the LOC Note, and therefore the defendant is in default under the LOC Guaranty.

On or about March 4, 2010, Provident extended a commercial term loan (the "Term Loan") to Borrower in the principal amount of $250,000 with an interest rate of 6%. The Term Loan was extended pursuant to a Business Loan Agreement (the "Term Loan Agreement") and evidenced by a promissory note (the "Term Note"). The Term Note required Borrower to pay principal and interest payments commencing April 1, 2010 and continuing on a monthly basis until March 1, 2015. To secure payment of the Term Note, Tropp executed and delivered to Provident a personal guaranty (the "Term Loan Guaranty") where he guaranteed payment and all of Borrower's obligations under the Term Note. Plaintiff alleges that Borrower is in default on the Term Note because Borrower failed to make payments due on January 1, 2012 and February 1, 2012, at which point all amounts owing to Provident under the Term Note became due and payable. Provident demanded immediate payment on the Term Note for full amounts outstanding on or about March 2, 2012. Plaintiff alleges that by virtue of Borrower's default on the Term Note, defendant is also in default under the Term Loan Guaranty.

As the principal of Interstate, Tropp negotiated the terms of the LOC Agreement and the Term Loan Agreement with Provident and signed both agreements and both notes as the President of Interstate. On March 30, 2012, Provident filed a complaint against Interstate in New [*3]Jersey Superior Court, Docket No. L-1676-12 (the "New Jersey Action"), to collect on the LOC Note and the Term Note. Interstate filed an Answer on August 3, 2012 in the New Jersey Action, which is virtually identical to the Verified Answer that defendant has filed in the instant action. The New Jersey Court granted summary judgment in favor of Provident and granted judgment against Interstate for the total amount outstanding on the LOC Note and the Term Note.

In order to obtain summary judgment, the movant must establish its cause of action or defense sufficiently to warrant a court's directing judgment in its favor as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact (Zuckerman v City of New York, 49 NY2d 557, 562 [1980] CPLR 3212 [b]). To establish a prima facie entitlement to judgment as a matter of law, a lender must prove the following elements: (1) an underlying credit agreement, (2) a personal guarantee of the obligations of the credit agreement signed by the defendant, and (3) failure to make payment in accordance with the terms of the credit agreement and guaranty (see Northfork Bank Co. v Graphic Forms Associates, 36 AD3d 676 [2d Dept 2007] JP Morgan Chase Bank v Gamut-Mitchell, Inc., 27 AD3d 622 [2d Dept 2006]). "On a motion for summary judgment to enforce a written guaranty, all that the creditor need prove is an absolute and unconditional guaranty, the underlying debt, and the guarantor's failure to perform under the guaranty" (City of New York v Clarose Cinema Corp., 256 AD2d 69, 71 [1st Dept 1998]). Where the proponent of the motion makes a prima facie showing of entitlement to summary judgment, the burden shifts to the party opposing the motion to demonstrate by admissible evidence the existence of a factual issue requiring a trial of the action (Vermette v Kenworth Truck Co., 68 NY2d 714, 717 [1986]). The parties' competing contentions are viewed in the light most favorable to the party opposing the motion (Marine Midland Bank, N.A. v Dino & Artie's Automatic Transmission Co., 168 AD2d 610 [2d Dept 1990]).

Defendant argues that triable issues of fact exist in this case based on alleged oral discussions and communications over electronic mail that defendant had with representatives of Provident regarding refinancing of the two loans. Defendant alleges that loan officer Tom Spencer ("Spencer") and Provident vice president William S. Clement ("Clement") encouraged defendant to seek new financing and that defendant relied on their assurances in engaging an accountant to procure the new financing and paying a non-refundable good faith deposit to secure this new financing. Because the proposed new financing would not cover the entire amount due to Provident and the remaining debt due to Provident would be subordinated to the new lender, Provident had to approve the new financing. Defendant alleges that Spencer and Clement led him to believe that the proposed new financing would be approved but then inexplicably failed to tender their approval, which caused Interstate's default. Based on these alleged facts, defendant brings forth a number of affirmative defenses, including plaintiff's breach of the covenant of good faith and fair dealing, promissory estoppel, unclean hands, waiver, and others. All twelve of defendant's affirmative defenses were also raised in the New Jersey Action, where the court granted summary judgment in favor of Provident. Provident argues that the defendant is now precluded from raising the same arguments and affirmative defenses in the instant action based on the doctrine of issue preclusion or collateral estoppel.

The doctrine of collateral estoppel "precludes a party from relitigating in a subsequent [*4]action or proceeding an issue clearly raised in a prior action or proceeding and decided against that party or those in privity, whether or not the tribunals or causes of action are the same" (Ryan v New York Telephone Co., 62 NY2d 494, 500 [1984] see also Buechel v Bain, 97 NY2d 295, 303 [2001] Silverman v Leucadia, Inc., 156 AD2d 442, 443 [2d Dept 1989]). To invoke collateral estoppel, there must be an identity of issue decided in the prior action such that the issue was material to the first action and is decisive of the present action, and such that a different judgment would destroy or impair rights or interests established by the first action (see Beuchel v Bain, 97 NY2d at 303-304; see also Ryan v New York Telephone Co., 62 NY2d at 500-501). The party seeking the benefit of collateral estoppel has the burden of demonstrating the identity of the issues in the present litigation and the prior proceeding, while the party attempting to defeat its application has the burden of establishing the absence of a full and fair opportunity to litigate the issue in the prior action (see Matter of Juan C. v Cortines, 89 NY2d 659, 667 [1997]).

Plaintiff has adequately demonstrated an identity of issue between the New Jersey Action and the instant action. The New Jersey Superior Court granted summary judgment to Provident and entered judgment against Interstate for liquidated amounts of principal, interest, and late fees on the LOC Note and the Term Note. The New Jersey Court's judgment constituted a final adjudication on the merits and established the Borrower's liability to Provident on both notes.^[FN1] Interstate's Answer in the New Jersey Action raised all of the same claims and affirmative defenses that defendant is now raising in the instant action in a virtually identical Verified Answer. The New Jersey Court struck all of Interstate's defenses and found that Interstate was unable to raise any triable issue of fact such that summary judgment was warranted in favor of Provident. The final judgment in the New Jersey Action is to be given full faith and credit in this court such that issues that have already been decided in New Jersey shall not be relitigated in this state (see Luna v Dobson, 97 NY2d 178, 182-83 [2001]). Moreover, a different judgment in this court would severely impair Provident's right to collect on the LOC Note and the Term Note, which was established in the New Jersey Action.

Defendant contends that he is not precluded from asserting his defenses in the instant action because he was not a party or in privity with a party of the New Jersey Action. However, the court finds that as the principal of Interstate and the guarantor of the LOC Note and the Term Note, defendant is in privity with Interstate, the defendant in the New Jersey Action, such that the doctrine of collateral estoppel applies. "In the context of collateral estoppel, privity does not have a single well-defined meaning. Rather, privity is an amorphous concept not easy of application and includes those who. . . control an action although not formal parties to it, [and] those whose interests are represented by a party to the action" (Beuchel v Bain, 97 NY2d at 304 [internal quotation marks omitted]). In considering the issue of privity, courts must analyze whether the party sought to be bound and the party against whom the litigated issue was previously decided have a relationship that would justify preclusion (Id. at 304-305). "[A] nonparty to a prior litigation may be collaterally estopped by a determination in that litigation by [*5]having a relationship with a party to the prior litigation such that his own rights or obligations in the subsequent proceeding are conditioned in one way or another, or derivative of, the rights o f the party to the prior litigation" (Matter of Juan C. v Cortines, 89 NY2d at 667).

Although Tropp was not named as a defendant in the New Jersey Action, he is the sole principal and President of Interstate, leaving no doubt that Tropp is in privity with Interstate. New York courts have found that controlling status over a corporation constitutes privity as a matter of law (see Specialty Restaurants Corp. v Barry, 236 AD2d 754 [3d Dept 1997] (finding that defendant's status as president, shareholder, and director of corporation constituted privity as a matter of law); Briggs v Chapman, 53 AD3d 900 [3d Dept 2008] (defendant corporation in privity with and bound by prior determination against officers, shareholders and owners of the corporation)). Tropp had control over the litigation and Interstate's defense in the New Jersey Action, which is evidenced by the fact that the Answer filed by Interstate in the prior proceeding is identical to the Verified Answer in the instant action, and that all of Tropp's arguments and allegations of fact are the same in the instant action as in the New Jersey Action. Moreover, as guarantor of all of Interstate's debts and obligations to Provident, Tropp's own rights and obligations were conditioned on the outcome of the New Jersey Action, giving Tropp a full and fair opportunity, as well as the incentive, to fully litigate the determination which is now asserted against him (see Ryan v New York Telephone Co., 62 NY2d 494, 501 [1984]).

As a further example, in Beuchel v Bain, defendants were two partners in a law firm that had entered into a business transaction and fee arrangement with the plaintiff (97 NY2d 295 [2001]). The plaintiff had previously brought an action against a third partner of the law firm where the court had ruled that the fee arrangement was invalid (id.). In the subsequent action, the court found that the defendants were precluded from relitigating the validity of the fee arrangement because they were in privity with the partner from the prior proceeding (id.). The court held that the defendants' interests were aligned with those of the partner from the earlier action, giving them an incentive to participate in that earlier proceeding, and therefore it was appropriate to bind them to the earlier judgment (id.). Similarly in this case, Tropp's interests are entirely aligned with Interstate's interests such that he should be bound to the judgment in the New Jersey Action.

Resultantly, the defendant here is precluded from relitigating the issue of Interstate's liability to Provident on the LOC Note and the Term Note. Plaintiff has successfully demonstrated a prima facie entitlement to judgment as a matter of law by demonstrating the existence of a valid guaranty, the underlying debt, and failure to perform under the terms of the guaranty. As defendant is unable to raise any triable issue of fact, summary judgment in favor of the plaintiff is warranted for the undisputed total amount of $751,798.82, comprising principal, interest, and late fees on the LOC Note (principal of $499,824.77, interest of $55,963.02, and late fees of $623.54) and the Term Note (principal of $167,945.50, interest of $20,335.83, and late fees of $7,106.16). Additionally, the terms of the LOC Note and the Term Note provide that the Borrower is responsible for attorneys fees and expenses if the Borrower does not pay his obligations. Plaintiff has provided appropriate documentary support for its attorneys fees, which has not been challenged by the defendant, and this court finds to be reasonable, in the amount of

$67,726.06. Accordingly, judgment shall enter for the plaintiff in the total amount of [*6]$820,076.57.

Accordingly, plaintiff's motion for summary judgment is granted. The Clerk is directed to enter judgment in favor of the plaintiff in the amount of $820,076.57, plus pre-judgment interest at the statutory rate from November 12, 2013, the date of entry of the New Jersey Judgment, to the date of entry in the instant matter.

This constitutes the decision and order of the court.

J.S.C.