Opinion
No. 104546/98.
2010-09-21
DIRECT CAPITAL CORPORATION, Plaintiff(s), v. Babatunde OSUNBAYO, individually and d/b/a Babalos Enterprises., Defendant(s).
Stewart Wolf, Esq., Foster & Wolkind, P.C., New York, Attorney for Plaintiff. Babatunde Osunbayo, individually and d/b/a Babalos Enterprises, Staten Island, Defendant Pro Se.
Stewart Wolf, Esq., Foster & Wolkind, P.C., New York, Attorney for Plaintiff. Babatunde Osunbayo, individually and d/b/a Babalos Enterprises, Staten Island, Defendant Pro Se.
ORLANDO MARRAZZO, J.
Plaintiff moves for an order in pursuant with CPLR § 3212 for summary judgment, and in pursuant with CPLR § 3211 to dismiss the defendant's 2(two) affirmative defenses. As is set forth below, plaintiff's motion on default is granted in its entirety.
This action was commenced on November 13, 2008 by the filing of a summons and complaint. Issue was joined by the service of an answer by the defendant on or about December 1, 2008, which contains (2) two affirmative defenses
In this action plaintiff seeks to recover damages resulting from the defendant's breach of one written commercial equipment master lease No. 07–3156, and one schedule lease # 13764, as well as the defendant's breach of a related personal guaranty, attached as (Exhibit “B”) to plaintiff's moving papers. A copy of the personal guaranty is found attached on the third page of the master lease.
More specifically, on or about November 27, 2007, Direct Capital and the defendant entered into a Master Lease Agreement and Equipment Schedule. Pursuant to the terms of the lease, Direct Capital agreed to lease to the defendant certain equipment for an aggregate value of $21,461.40 payable in 60 (sixty) consecutive monthly installments. Each installment was set to be paid in the sun of $357.69, plus applicable taxes thereon.
On or about November 27, 2007, the equipment was delivered to the defendant in pursuant to the lease terms.
According to the delivery and acceptance certificate for the equipment which was signed by the defendant:”
“(I) The Equipment has been received in good condition and repair, has been properly installed, tested, and inspected, and is operating satisfactorily in all respects for all of the defendant's intended use and purposes;
(ii) the lessor has satisfactorily performed all covenants and conditions with respect to the Lease at the time that the Equipment was delivered;
(iii) that the lessee's obligations under the Lease become irrevocable and unconditional upon the defendant's acceptance of the Equipment;
(iv) that the defendant is “irrevocably accept[ing] the Equipment as is', where is' and without recourse, representation or warranty of any kind express or implied” and
(v) that the lessor is relying on all of these representations in purchasing the Equipment for the defendant and providing it to them pursuant to the terms of the lease.”
The defendant made 5 (five) of the 60 (sixty) payments that were required to be paid under the lease through April of 2008, but thereafter defaulted under the lease and breached the lease by failing to make the monthly payment that was due on May 26, 2008, and by failing to make any further payments thereunder through the date of this motion.
As a result of the defendant's default in pursuant to paragraph 16 (sixteen) of the lease, all of the obligations of the defendant have become immediately due and payable.
The court notes that on or about November 27, 2007, the defendant executed a personal guaranty pursuant to which Babatunde Osunbayo unconditionally agrees to pay and guarantee the payment and the performance of all the obligations under the lease
With respect to the lease which serves as the basis for this action, it is the typical equipment finance agreement governed by Article 2A of the Uniform Commercial Code (UCC) in which the plaintiff financier is asked to finance the lessee's use of certain equipment over a certain period of time, and during which time the financier remains the sole owner of the equipment and the lessee merely has the right to use the said equipment in exchange for making lease payments.
As is typical of UCC Article 2A finance leases, the plaintiff was merely a funding source and did not manufacture or agree to service, maintain or provide any warranties with respect to the equipment which is the subject of the lease.
Moreover, in pursuant to both Article 2A of the UCC and the express terms of the lease, the defendant's obligations to the plaintiff, including the obligation to make all payments due and owing thereunder, are non-cancelable, absolute and unconditional.
Specifically, paragraph (2) two of the lease clearly states that:
“This Lease cannot be terminated or canceled by you for any reason. Your obligation to make payments due under each Schedule is absolute and unconditional under all circumstances, including, without limitation, (I) setoff, abatement, counterclaim, suspension, recoupment, reduction, recision, defense or other right that You may have against any person for any reason whatsoever, (ii) any insolvency, bankruptcy or other similar proceedings or (iii) equipment condition or operation, delivery, defect in title, or seizure of the equipment or for any reason whatsoever.”
The court notes that in pursuant to New York's UCC § 2A–407, the lessee's promises to the lessor under the lease becomes irrevocable and independent upon the lessee's acceptance of the equipment and is not subject to cancellation or modification.
LEGAL STANDARD FOR SUMMARY JUDGMENT
A motion for summary judgment serves the laudatory purpose of promoting efficient case resolution, (Dunham v. Hilco Construction Co., Inc., 89 N.Y.2d 425, 429 [1996].) “Summary judgment is a highly useful device for expediting the just disposition of a legal dispute for all parties” and to conserve limited judicial resources ( In re Suffolk Co. O/b/o Mivhael V., 83 A.D.2d 178, 182 [App.Div., 2nd Dept, 1994].)
The purpose of summary judgment is to expedite the resolution of civil cases by resolving them as a mater of law where there is no dispute of fact between the parties to a litigated matter. The movant must make a prima facie showing of entitlement to summary judgment as a matter of law.
It is well settled that a motion for summary judgment is a drastic remedy which will be granted only when it is clear that there are no triable issues of fact (Alvarez v. Prospect Hosp., 68 N.Y.2d 320 [1986];Andre v. Pomeroy, 35 N.Y.2d 361, 362 [1974]; CPLR § 3212(b).]
Once the proponent seeking summary judgment has established a prima facie showing of entitlement to summary judgment as required by CPLR § 3212; the burden shifts to the party opposing the motion for summary judgment to lay bare its proofs and to produce evidentiary proof in proper admissible form in opposition to the motion that is sufficient to establish the existence of material issues of fact which require a trial (Zuckerman v. City of New York, 49 N.Y.2d 557, 562 [1980];Davenport v. County of Nassau, 279 A.D.2d 497 [App.Div., 2nd Dept, 2001]; Maviglia v. Inapart Properties Corp., et.al., 149 A.D.2d 482 [App.Div., 2nd Dept, 1991].)
In arriving at the decision whether to grant or to deny such a motion for summary judgment, the court must view the evidence in the light most favorable to the non-moving party, which requires it to give that party all of the reasonable inferences which can be drawn from the evidence (Fundamental Portfolio Advisors, Inc., v. Tocqueville Asset Mgt., Lp., 7 NY3d 96, 105 [2006];McGill v. Bohack Corp., 69 A.D.2d 853 [App.Div. 2nd Dept, 1979]; Negri v. Stop & Shop, Inc., 65 N.Y.2d 625 [1985].) There is no question that summary judgment must be denied in the face of triable issues of fact (Freese v. Schwartz, 203 A.D.2d 513 [App.Div., 2nd Dept, 1994] .) By the same token, it must be borne in mind that conclusory and speculative allegations are insufficient to defeat a motion for summary judgment ( Maviglia v. Inapart Pproperties Corp., et.al., supra, [149 A.D.2d at., 482].)
ANALYSIS
Here, the court determines after searching the record in the light most favorable to the defendant herein that there are only issues of law and not fact before this court.
It is well settled that a third-party finance agreement is an agreement whereby a third party agrees to provide the financing between a supplier and a consumer (Netrix Leasing, LLC v. K.S. Telecom, Inc., 2001 WL 228362, 2001 U.S. Dist LEXIS 25402, [SD NY, Mar. 7, 2001] ). In a finance lease, the lessee negotiates directly with the supplier or manufacturer and then arranges for the lessor to buy the goods to lease them to the lessee General Elec. Capital Corp. v. National Tractor Trailer School, 175 Misc.2d 20, 27 [Sup Ct, Onondaga County, 1997], citing 2 White and Summers, Uniform Commercial Code 13–3 [Practitioner's 4th ed 1995] ). [I]n order for a lease to qualify as a third-party finance agreement, the lessor must not select, manufacture, or supply the goods (Netrix Leasing, 2001 WL 228362, 2001 U.S. Dist LEXIS 25402, citing UCC 2–A–103 [1][g] ). The transaction between the lessor and the lessee is therefore first and last a financial transaction ( General Elec. Capital Corp ., 175 Misc.2d at 27, citing 2 White and Summers, Uniform Commercial Code 13–3 [Practitioner's 4th ed 1995] ). Thus, [i]n such a situation it makes no sense to treat the lessor as a seller with warranty liability to the lessee, nor to free the supplier or manufacturer from the promises that it would have made in an outright sale to the lessee ( id.). Although statutorily defined as recently as 1995 (UCC 2A103 [1][g], as added by L 1994, ch 114, 1), it is now well settled that third-party finance agreements are given full force and effect ( see General Elec. Capital Corp. v. National Tractor Trailer School, 175 Misc.2d 20 [1997];Preferred Capital v. PBK, Inc., 309 A.D.2d 1168 [App.Div., 4th Dept, 2003]; Unistar Leasing, Div. of United Computer Capital Corp. v. Betco, Inc., 12 AD3d 1161 [App.Div., 4th Dept, 2004]; Unistar Leasing, Div. of United Computer Capital Corp. v. Lipkin, 12 AD3d 1166 [App.Div., 4th Dept, 2004]; Advanta Leasing Servs. v. Laurel Way Spur Petroleum Corp., 11 AD3d 571 [App.Div., 2nd Dept, 2004]; Canon Fin. Servs. v. Medico Stationery Serv., 300 A.D.2d 66 [App.Div., 1st Dept, 2002]; ConTel Credit Corp. v. Mr. Jay Appliances & TV, 128 A.D.2d 668 [App.Div., 2nd Dept, 1987]; Commercial Credit Corp. v. CYC Realty, 102 A.D.2d 970 [App.Div., 3rd Dept, 1984]; Leasecomm Corp. v. Datalink Resources Corp., 1 Misc.3d 11 [App Term, 2nd & 11th Jud Dists, 2003]; quoted by Direct Capital Corporation v. New ABI Inc., 13 Misc.3d 1151, 1160 [Sup Ct, Kings County.2006].)
Here, it is clear to the court that the defendant's obligations under the finance lease became irrevocable upon their acceptance of the equipment, despite what happened to the equipment thereafter. Thus the defendant became obligated to make all payments to Direct Capital as proscribed by the lease and the failure to do so constitutes a breach thereof by the defendant herein.
Moreover, it is well settled that the defendant's waiver of all defenses against the plaintiff, both by express terms of the lease and by the extrinsic representations of delivery and acceptance certificate are binding and preclude the defendant from later interposing defenses such as those which the defendant seeks to interpose (see, Wells Fargo Bank Minnesota v. CD Video, Inc., 22 AD3d 351 [App.Div., 1st Dept, 2005].)
The court notes that paragraph 3 (three) of the lease which contains this waiver of defense is clear that “You acknowledge that ... if the Equipment is not properly installed, does not operate as represented or warranted by the supplier or manufacturer or is unsatisfactory for any reason, regardless of cause or consequence, Your only remedy, if any, shall be against the supplier or manufacturer of the Equipment and not against Us.” See also ¶ 16 of the lease (the defendant “agree[s] that [his] rights and remedies are governed exclusively by this Lease and [defendant] waive[s his] rights under Article 2A of the UCC”).
In addition Paragraph 4 (four) of the master lease explicitly states that:
The Equipment is leased by Us to you “AS IS” “WHERE IS” “AND WITH ANY AND ALL FAULTS. As we did not select, manufacturer, supply or inspect the Equipment and we have no expert knowledge of it, WE MAKE NO WARRANTY OR REPRESENTATION, either express or implied as to the condition of the Equipment, its merchantability, its fitness or suitability for any particular purpose, its design, its capacity, its quality, or with respect to any characteristics of the Equipment ... You are responsible for all such matters.
The court concludes that based upon the express waivers in the language of the lease and the delivery and acceptance certificate, the defendant is precluded from interposing this defense in this action. Further, the court emphasizes that the plaintiff only entered into this transaction and financed the defendant's acquisition of the equipment upon the express condition that the defendant would execute the guaranty and his promise to unconditionally personally guaranty all payment obligations pursuant to the schedule under the master lease.
Thus, plaintiff is entitled to all payments due and owing from the defendant. Accordingly, the court grants summary judgment in plaintiff's favor.
AFFIRMATIVE DEFENSES
The court rejects the defendant's first affirmative defense that the court lacks personal jurisdiction.
The affidavit of service attached to plaintiff's motion as (Exhibit “C”) demonstrates that the defendant was properly served with process pursuant to CPLR § 308(1) by serving a copy of the summons and complaint upon the defendant personally.
The affidavit of service before the court constitutes prima facie evidence of proper service, and absent the defendant's failure to adequately dispute the veracity or content of the affidavit of service, the court must conclude that service of process was proper (see, Genway Corp. v. Eileen Elgut, 177 A.D.2d 467 [App.Div., 2nd Dept 1991] see also, Hanover Ins., Co., v. Cannon Express Corp., 1 AD3d 358, 359 [App.Div., 2nd Dept, 2003]; Irwin Mortgage Corp., v.. Devis, 72 AD3d 743 [App.Div., 2nd Dept, 2010].)
Most importantly, CPLR § 3211(e) clearly states that “an objection that the summons and complaint ... was not properly served, is waived if, having raised such an objection in a pleading, the objecting party does not move for judgment on that ground within sixty days after receiving the pleading.” (See also, Wade v. Byung Yang Kim, 250 A.D.2d 323, 325 [App.Div., 2nd Dept, 1998]; Alaska Seaboard Partners, Limited Partnership v. Anninos, 259 A.D.2d 572, 573 [App.Div., 2nd Dept, 1999]; Amerasia Bank v. Saiko Enterprises, Inc., 263 A.D.2d 519, 520 [App.Div., 2nd Dept, 1999]; Federici v. Metropolis Night Club, Inc., 48 AD3d 741, 742 [App.Div., 2nd Dept, 2008].)
The court notes that the defendant's answer having been served on or about December 1, 2008, more then 60 (sixty) days have passed since the defendant objected to the personal jurisdiction of the court in his answer. Clearly, the defendant has failed to make the requisite motion within the time frame specifically enumerated by the CPLR. Thus, the court strikes the defendant's affirmative defense of improper service and the lack of personal jurisdiction.
The court strikes the defendant's second affirmative defense that the vendor of the equipment, a corporation known as ProTec International failed to disclose certain information about the equipment.
As previously discussed, the plaintiff herein only arranged for the financing and in no way guaranteed the equipment. This case involves a finance lease, in which the lessee negotiated directly with the supplier/manufacturer and then arranged for the lessor plaintiff to buy the goods to lease them to the lessee. Here, the lessor plaintiff is not really an ordinary buyer from the supplier or manufacturer, since it had no part in the selection of the goods: the transaction between the lessor and the lessee is therefore first and last a financial transaction, and in this situation it makes no sense to treat the lessor plaintiff as a seller with warranty liability to the lessee.
It is further clear to the court that had the plaintiff not arranged for the financing then the defendant herein would not otherwise had acquired the equipment from the manufacturer. Thus clearly, the lease between the parties herein is a finance lease as defined in UCC 2–A–103 (g), and the plaintiff is not responsible for any possible alleged manufacturer defects or warranties.
Accordingly, this issue of the disclosure of certain information about the equipment has no bearing on this lawsuit between the parties herein.
Accordingly, the court awards a judgment to the plaintiff against all the defendants herein in the sum of $18,304.74, with interest from May 26, 2008, together with costs and disbursements.
This constitutes the decision and order of the court.