The following papers numbered 1 to 13 were read on these motions:

There are two motions for summary judgment before the Court in this action arising out of a longstanding business relationship between defendants and plaintiff's father, the decedent. The first motion, filed by defendants/third-party plaintiffs, seeks (1) summary judgment dismissing the complaint; (2) summary judgment in their favor on both of the counterclaims (both involving Winter's alleged misappropriation and misuse of funds); (3) summary judgment on the first and second causes of action of the third-party complaint; and (4) summary judgment dismissing the third-party defendant's counterclaim.

The second motion, filed by plaintiff, seeks (1) summary judgment declaring defendants to be jointly and severally liable to the Estate in the amount of not less than $1,011,589.41 each, for a total of $2,023,178.81, together with interest from December 9, 2022; (2) summary judgment dismissing the counterclaims and third-party complaint; (3) summary judgment on the counterclaim asserted by Winter in the third-party answer, seeking an award of costs and attorneys' fees, as well as an award of sanctions; and (4) alternatively, if the Court does not dismiss the counterclaims and third-party complaint, an Order striking the defendants' jury demand.

The relevant facts are as follows: in 2009, decedent, defendants and others created non-party Blitman Mahopac LLC (the "LLC") to develop 29 homes in Mahopac, New York. Until April 2020, defendant Peresiper, a CPA, was the CFO of the construction manager for this project. During the course of the project, the LLC entered into several loans with Mahopac Bank (the "Bank") to finance the project. The LLC also entered into a credit line with the Bank in 2017. In connection with the credit line, decedent and defendants entered into guarantees. By August 2019, the amount of the credit line had increased to $3 million. The same three (decedent and defendants) each executed a "Commercial Guaranty" of this amount. Along with the guaranty, decedent also executed a pledge of an account that he held at Charles Schwab. It is this pledge that is the source of the controversy at issue. Defendants contend that decedent intended that the repayment of the $3 million would come from this collateral. Plaintiff, naturally, disagrees.

There is no dispute that the there is a 2018 modification agreement which acknowledges the collateral. Specifically, it states, in relevant part, that "Borrower is indebted to Lender pursuant to a Credit Line Note ('Note') dated September 14, 2017 from Borrower in favor of Lender in the original principal sum of $2,000,000.00. Borrower's obligations to Lender under the Note are secured by a Pledged Asset Account Agreement dated as of September 26, 2017 between Borrower and Lender. . . ." This agreement specifically referenced the collateral at [*2]issue, stating that "collateral" is defined as the "Continued assignment of Charles Schwab & Co., Inc. cash brokerage account no. XXXX-XXXX, in the name of Howard N. Blitman ('Pledgor')."

When they later increased the amount to $2.5 million, there was a new commitment document signed by the same three parties. It reaffirms that the collateral was still in place for the loan: "The loan shall continue to be secured by an assignment of a brokerage account in the name of Howard Blitman, held by Charles Schwab & Co." Thereafter, the amount was again increased, to the final sum of $3 million that is at issue in this litigation. The documents pertaining to this loan include a Notice to Issuer that informs Charles Schwab that "pursuant to a Pledge Agreement signed by Howard N [sic] Blitman (the 'Owner(s)'), Mahopac Bank ('Lender') has been granted a security interest in the above described security or securities (the 'Securities'), for which you are the issuer."

This collateral pledge was again reaffirmed, after decedent's death, by Winter in a 2021 agreement. After referring to all of the previous loan agreements, this document states, in relevant part, that "Borrower's obligations to Lender under the Note for Loan XXXXXXXXX are secured by a Commercial Pledge Agreement dated as of April 16, 2021 between Borrower and Lender; ('Commercial Pledge Agreement', the Note, and all other documents executed by Borrower in connection therewith are hereinafter collectively referred to as the 'Loan Documents')." The Commercial Pledge Agreement referred to an account at Wilmington Trust, which defendants "surmise" replaced the Schwab account as the collateral.

The loan became due in August 2022, but was not paid. According to an email sent by the Bank (now Tompkins Community Bank) to Winter, dated September 26, 2022, the Bank and Winter spoke on the phone about the loan being due. In the email, the Bank's representative stated, in relevant part, that "you mentioned that Blitman Mahopac LLC does not have the funds to make this payment. In this scenario, the Bank would look at its secondary source of repayment to pay this obligation which is liquidation of collateral. At this time, the Bank has an assignment of a brokerage account with Wilmington Trust as collateral for this loan. Please let me know if you would like to arrange payment prior to 9/30/2022 with funds outside of the Wilmington Trust collateral account?" Winter replied to this email, stating that "Once the guarantors receive a demand notice or notice of default requesting that the guarantors pay the outstanding indebtedness, the estate could arrange payment by September 30th."

The Bank sent a letter to the parties dated September 26, 2022. The letter began by reciting that the borrower had borrowed "the original principal amount of $3,000,000.00 dated August 13, 2019 . . . as the same may have been modified or amended from time to time, the 'Note [sic])." It named the guarantors as the Estate of Howard N. Blitman, MPI Development Inc. and Gary S. Peresiper, with "Commercial Guarantys by MPI Development Inc. and Gary S. Peresiper in favor of Lender dated August 13, 2019 and Unlimited Continuing Guaranty by Estate of Howard N. Blitman in favor of Lender dated April 14, 2021." It then stated "Security: Commercial Pledge Agreement by Estate of Howard N. Blitman in favor of Lender dated April 16, 2021 (the 'Pledge Agreement')". The letter further stated that "If you should fail to make the payment in full, as described above, and/or fail to comply with other terms and conditions of the Loan Documents or with the demands in this letter by Friday, September 30, 2022, Tompkins will pursue any and all legal remedies which include exercising its rights with regard to the Cash Brokerage Account number XXXXXX-XXX held by Wilmington Trust as set forth in the Pledge Agreement." On September 28, 2022, Winter paid off the loan in its entirety, from a different account — not the collateral account/Cash Brokerage Account/Commercial Pledge Agreement [*3]referenced in the letter. This action followed.

The Court begins with the request to strike the jury demand. Defendants acceded to this request in their responsive papers, so the jury demand is stricken. Next, the Court examines defendants' requests in their notice of motion seeking summary judgment in their favor on their two counterclaims and summary judgment on the first and second causes of action of the third-party complaint, for breach of fiduciary duty and faithless servant. These requests are denied. Defendants fail to mention these counterclaims and causes of action in any substantive way in any of their papers (aside from the cursory mention in the Notice of Motion). They submit to the Court no legal support for this relief. Both of these requests are thus denied.

With respect to the remaining claims, the Court begins with plaintiff's request for summary judgment in her favor. "On a motion for summary judgment, the moving party has the initial burden of coming forward with sufficient proof in admissible form to enable the court to determine that it is entitled to judgment as a matter of law. If the moving party makes a prima facie showing of its entitlement to judgment as a matter of law, the burden shifts to the opposing party to produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact which require a trial of the action." Gesuale v. Campanelli & Assocs., P.C., 126 AD3d 936, 937, 7 N.Y.S.3d 192, 193 (2d Dept. 2015).

Plaintiff has met her initial burden of proof. She is correct that defendants signed guarantees (as did decedent) and that nothing expressly states that decedent's collateral was intended to be used to pay off the debt before the Bank could collect on the guarantees. Indeed, if, as defendants contend, that collateral was intended to be a first recourse for the Bank before it sought to enforce the guarantees, there were multiple opportunities for the documents to reflect this. Yet none of them do. There is, thus, nothing that would have required the Bank to foreclose on the collateral in the first instance before proceeding to enforce the guarantees.

Instead, plaintiff was well within her rights to repay the Bank as she saw fit. Defendants' insistence that the voluntary payment doctrine applies to the repayment to absolve them of their guarantees is flawed. The voluntary payment doctrine "bars recovery of payments voluntarily made with full knowledge of the facts, and in the absence of fraud or mistake of material fact or law." Daldan, Inc. v. Deutsche Bank Nat'l Tr. Co., 188 AD3d 989, 991—92, 137 N.Y.S.3d 407, 411 (2d Dept. 2020) ("Here, the Bank concedes that its servicer paid real estate taxes and insurance on the property, but it has not alleged that it did so accidentally or mistakenly, or that it was induced to do so by fraud."). The doctrine does not apply to debts that are legitimately owed, as here.

Defendants fail to rebut plaintiff's prima facie showing because they submit to the Court no caselaw to support its position that plaintiff "paid the guaranteed loan as a volunteer," such that "the loan was extinguished by the payment for which no right of contribution exists against Defendants." This is not a situation where the repayment of the loan to the Bank was optional. The only choice that plaintiff had to make was whether to wait for contribution from defendants up front — presumably during which time interest and fees would accrue — or to pay the Bank up front and seek contribution after. There is no legal basis for the Court to second-guess plaintiff's business judgment.

Nor is there any factual basis for defendants' contentions that there is "misconduct, self-dealing and neglect of a duty owed to a co-guarantor" which so "prejudiced defendants so that the enforcement of contribution would be inequitable." As discovery is complete, and defendants have failed to present the Court with any evidence of self-dealing by plaintiff, the [*4]Court has no legal basis on which to deny plaintiff summary judgment. The Court thus grants plaintiff summary judgment in her favor, and directs her to submit a proposed Judgment, on notice to defendants via NYSCEF filing, to the Judgment Clerk in the amount of $1,011,589.41 as to each defendant, plus interest at the statutory rate from the date of entry of this Decision and Order.

As to the remaining claims, logically, the Court must deny defendants' request for summary judgment dismissing the complaint; and denies plaintiff's request for costs and attorneys' fees (which moots defendants' request to dismiss that claim). The Court finds that defendants' position was not so frivolous as to warrant sanctions.

The foregoing constitutes the decision and order of the Court.^[FN1]