Opinion
Index No. 655591/2021
08-19-2022
Altz Group, Inc., Plaintiff, v. Dan Kirsh, ANAT KIRSH, and CHERRY HOUSE CO., Defendants.
Malapero Prisco & Klauber LLP, New York, NY (Peter Iannace of counsel), for plaintiff. No appearance for defendants.
Unpublished Opinion
Malapero Prisco & Klauber LLP, New York, NY (Peter Iannace of counsel), for plaintiff.
No appearance for defendants.
GERALD LEBOVITS, J.
Plaintiff Altz Group, Inc., brings this unopposed motion-action under CPLR 3213 to collect on sums allegedly owed on a promissory note executed by defendants. Plaintiff has not established entitlement to the full amount it claims. Plaintiff's motion for summary judgment in lieu of complaint is granted only to the extent of awarding $9,102.90, and otherwise denied.
BACKGROUND
On October 4, 2017, the parties to this action executed a promissory note for $31,200 to resolve an earlier dispute over payment for construction work. (NYSCEF No. 5 at 1.) The note provides that the principal sum shall be paid in five payments: $15,000 due at execution, and the remainder to be paid in four monthly installments of $4,050. (Id.) The "Principal Balance of this Note shall bear interest at the rate of 16% per annum or the maximum allowed by law, whichever is greater," accruing from "3/28/16, the due date of the final payment request" in the underlying construction dispute, "to and until the Principal Amount plus interest is paid in full." (Id.)
The note further provided that if that principal balance is paid on schedule, interest is waived. (See id.) Failure to make any required payment constitutes an event of default. (Id.) Upon an event of default, plaintiff may accelerate the remaining balance in unpaid principal and interest; and defendants become responsible for "all costs of collection, including court and reasonable attorney's fees." (Id.)
Defendants timely paid the initial $15,000 and the first three monthly payments of $4,050. (See NYSCEF No. 6 at 2 [affidavit of plaintiff's principal].) The fourth payment was not made until some time in April 2018, approximately two months late. (Id.) It appears undisputed, though, that the full principal balance was satisfied at that point. (See id. at ¶ 14.)
In November 2018, plaintiff brought a CPLR 3213 motion for summary judgment in lieu of complaint in Supreme Court, New York County. (See Altz Grp., Inc. v Kirsh, Index No. 655562/2018, NYSCEF No. 2.) In that motion-action, plaintiff sought $9,102.90-apparently $6,155.40 in interest and $2,947.50 in attorney fees (supported by detailed billing records). (See id., NYSCEF No. 3 at ¶¶ 23-24 [affirmation in support of motion]; NYSCEF No. 11 [billing records].) Plaintiff requested assignment of the action to the Commercial Division of Supreme Court (id., NYSCEF No. 9)-notwithstanding the Commercial Division's $500,000 threshold. The matter was initially assigned on plaintiff's request to the Commercial Division (Joel M. Cohen, J.).
Defendants opposed plaintiff's CPLR 3213 motion. (See id., NYSCEF Nos. 14-24.) In November 2018, shortly after defendants filed their opposition papers, the matter was removed from the Commercial Division and reassigned to an IAS part of Supreme Court (Louis L. Nock, J.). (See id., NYSCEF No. 25.) Justice Nock held in July 2019 that plaintiff's motion-action was more appropriately brought in the Civil Court of the City of New York, presumably in light the small dollar amount in controversy. (Id., NYSCEF No. 27 at 1.) He therefore denied the CPLR 3213 motion without prejudice, ordered the motion-action removed to Civil Court under CPLR 325 (d), and directed plaintiff to serve notice of entry on the Clerk of the Court and assist in effectuating transfer of the action from Supreme Court to Civil Court. (Id. at 1-2.)
Plaintiff did not do so. Instead, in November 2020, plaintiff moved again for summary judgment before Justice Nock. (See id. at NYSCEF Nos. 28-38].) Plaintiff's counsel appears to have been under the misimpression that the November 2018 transfer of the motion-action from the Commercial Division to an IAS part of Supreme Court had instead been a transfer from Supreme Court to Civil Court. (See id., NYSCEF No. 41 at ¶¶ 7-12 [reply affirmation].). Counsel stated on reply on the new motion that "[t]here can be no denying that this matter was transferred to Civil Court prior to arguments and your honor's decision" on the first summary-judgment motion. (Id. at 12.) On the new motion, plaintiff now sought $18,182.50-$8,288 in interest on the original promissory note and $9,894.50 in attorney fees. (Id., NYSCEF No. 29 at ¶¶ 35-36.)
In March 2021, Justice Nock again denied the motion and dismissed the motion-action without prejudice to its renewal in Civil Court (Id., NYSCEF No. 43.) He explained that plaintiff had neither complied with the court's order directing transfer of the action to Civil Court, nor moved to reargue or otherwise to restore the action to the calendar after it had been marked disposed in July 2019. (Id. at 1-2.) The action was therefore subject to dismissal under CPLR 3404 for failure to prosecute. (Id. at 2.)
Plaintiff did not then refile in Civil Court. Instead, in September 2021, it brought the current CPLR 3213 motion-action. (See NYSCEF No. 1.) Plaintiff is now seeking $29,862.50: $19,968 in interest and $9,894.50 in attorney fees. (NYSCEF No. 2 at ¶¶ 34-37.) Plaintiff has noted in its motion papers that given the increase in accrued interest since plaintiff's claims were pending before Justice Nock, the amount in controversy in the current action exceeded Civil Court's $25,000 jurisdictional threshold. (See id. at ¶ 7.)
The motion was not fully submitted before this court until June 30, 2022, because the original motion was returned for correction by the clerk's office due to defects in the form of the motion papers; and the motion was not resubmitted until May 2022.
On commencement in September 2021, plaintiff again requested assignment of the matter to the Commercial Division. (See NYSCEF No. 12.) The General Clerk's Office denied this request because the action does not satisfy the Commercial Division's monetary threshold.
In November 2021, after plaintiff commenced this action, the voters approved an amendment to article VI, § 15 (b), of the State Constitution that raised Civil Court's constitutional monetary limit from $25,000 to $50,000. As of, the Legislature has not yet carried that increase through to the statutory monetary limit imposed by § 203 of the Civil Court Act. (See Azzat v Abudayyeh, 2022 NY Slip Op 22204, at *1-3 [Civ Ct, Richmond County July 6, 2022] [noting this point and holding that Civil Court currently lacks subject-matter jurisdiction over claims valued at $25,001 to $50,000].)
Plaintiff's CPLR 3213 motion is granted in part and denied in part.
DISCUSSION
As an initial matter, this court must consider whether plaintiff's motion warrants consideration on the merits at all. That is, plaintiff has already been told-twice-to refile this action in Civil Court rather than in Supreme Court. And yet plaintiff has returned again to Supreme Court, without seeking to explain in detail why doing so is appropriate, or even permissible.
To be sure, in this action plaintiff is now claiming an amount that exceeds the Civil Court jurisdictional limit that applied at the time this action was commenced. But this court has doubts about that claimed amount in controversy. In particular, plaintiff claimed before Justice Nock that as of November 2018, it was entitled to approximately $6,100 in interest on the underlying promissory note (see Index No. 655562/2018, NYSCEF No. 3 at ¶¶ 23-24); and that as of the end of September 2020, it was entitled to approximately $8,300 in interest on the note (see id., NYSCEF No. 29 at ¶ 33.) In the current action, plaintiff asserts that as of November 2020 it was "owed $17,499.96 [in] interest," and that as of September 2021, plaintiff is owed "interest of $19,968." (NYSCEF No. 2 at ¶¶ 34, 37.) Plaintiff does not seek to explain the discrepancy between these filings-nor its calculation in this action that interest more than doubled between November 2018 and November 2020.
Set that point aside, though. Even if this court were, in effect, to take the drastic step of formally declining to credit the jurisdictional allegations of plaintiff's initiating papers, at most that would mean that transfer to Civil Court under CPLR 325 (d) would be back on the table. But plaintiff's claim for the remaining sums owed under a five-year-old, $31,200 promissory note has now been pending, in one form or another, for four years before three different justices of Supreme Court. Directing transfer (again) of this motion-action would accomplish nothing but delay. This court will retain the case and decide the motion-action now on its merits.
A plaintiff moving under CPLR 3213 must establish that it is proceeding on an instrument for the payment of money only and that it is entitled prima facie to judgment as a matter of law. Plaintiff is seeking approximately $30,000 under a promissory note, derived from (i) interest accrued on the note ($19,968), and (ii) attorney fees incurred in trying to collect that interest ($9,894.50). The promissory note on which plaintiff relies qualifies as an instrument for the payment of money only. (See Gullery v Imburgio, 74 A.D.3d 1022, 1022 [2d Dept 2010].) But plaintiff has not established prima facie that it is entitled to the full amount it claims.
With respect to interest, the promissory note is ambiguous about how interest should be computed should the note not be fully repaid on schedule. The note provides that its "Principal Balance... shall bear interest" (NYSCEF No. 5 at 1), which would indicate that interest accrues only on that part of the note's face value of $31,200 that remains outstanding. That same section of the note, however, also provides that the "Principal Balance" will bear interest "to and until the Principal Amount plus interest is paid in full," which might be read to suggest that the full amount of the note bears interest until that amount plus all accrued interest is fully repaid. (Id. [emphasis added].) The note does not define "Principal Balance" or otherwise clarify whether that term is equivalent to or different from "Principal Amount."
This amount would be readily calculable, because the note provides that interest accrues daily.
As far as this court can determine, it is undisputed that the $31,200 principal amount of the note was fully repaid no later than April 2018; and also that the interest that had accrued to that point has yet to be repaid. So defendants owe some amount of accrued interest. How much interest is owed, though-indeed, whether interest continued to accrue at all after April 2018-remains unclear. Given the ambiguities in the promissory note, this court can conceive of several possible methods of computing interest. Plaintiff's papers do not supply the interest calculations on which it relies, nor discuss how those calculations are properly grounded in the language of the note.
(1) Defendants could owe the interest on the full note amount of $31,200, accruing each day through the date in April 2018 when full repayment occurred; (2) they could owe the interest that accrued each day on the balance on the note remaining on that day, running through the April 2018 date of full repayment; (3) they could owe interest on the full note amount of $31,200, continuing to accrue through the present; (4) they could owe interest solely on the amount that had accrued under method one, but continuing to accrue through today (i.e., a kind of quasi-compound interest); or (5) they could owe the same quasi-compound measure of interest as in method four, but based instead on the amount that had accrued under method two.
With respect to attorney fees, the amount claimed in fees is the same amount that plaintiff sought in its second summary-judgment motion made before Justice Nock. (Compare NYSCEF No. 2 at ¶ 36, with Index No. 655562/2018, NYSCEF No. 29 at ¶ 35.) In that prior summary-judgment motion, though, plaintiff did not attempt to support its contention that the $9,894.50 claimed constituted its reasonable attorney fees. Rather, plaintiff submitted only a bottom-line fee statement of fees, unaccompanied by time records or invoices. (See Index No. 655562/2018, NYSCEF No. 38.) Plaintiff has not provided even that document on the current motion. And although plaintiff's affirmation on this motion cautions that the $9,894.50 does not include attorney fees incurred since November 2020 (see NYSCEF No. 2 at ¶ 37), plaintiff does not specify the amount of those additional fees (or provide any supporting documentation).
In short, plaintiff appears entitled to some amount of money from defendants in accrued interest and attorney fees. It would therefore be inappropriate either to deny the CPLR 3213 motion without prejudice to give plaintiff a fourth bite at the apple, or to dismiss the motion-action altogether in light of the repeated procedural and evidentiary shortcomings of plaintiff's repeated motions.
This court concludes instead that the best course is to award plaintiff the $9,102.90 ($6,155.40 in interest and $2,947.50 in attorney fees) that it sought on the first summary-judgment motion before Justice Nock. Taking that approach gives effect to the parties' agreement in the note that defendants should be responsible for interest accruing on the note should they fail to repay timely its principal amount (as proved to be the case). It awards plaintiff the amount in attorney fees that plaintiff has properly supported with billing records. And it does not give plaintiff the benefit of any promissory-note interest and attorney fees that accrued during the course of plaintiff's repeated, failed attempts to obtain a judgment from Supreme Court rather than from Civil Court.
Accordingly, it is
ORDERED that plaintiff's motion under CPLR 3213 for summary judgment in lieu of complaint is granted in part and denied in part; and it is further
ORDERED that plaintiff is awarded a judgment against defendants, jointly and severally, of $9,102.90, with prejudgment interest running from September 22, 2021 (a reasonable intermediate date under CPLR 5001 [c]), plus costs and disbursements to be taxed by the Clerk on the submission of an appropriate bill of costs; and it is further
ORDERED that plaintiff serve a copy of this order with notice of its entry on all parties and on the office of the County Clerk, which shall enter judgment accordingly.