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STUDEBAKER-WORTHINGTON LEASING CORP. v. MATCH

Supreme Court of the State of New York, Nassau County
Sep 30, 2008
2008 N.Y. Slip Op. 52326 (N.Y. Sup. Ct. 2008)

Opinion

005890/08.

Decided September 30, 2008.


This motion, by plaintiff, for summary judgment against both defendants on the first and third causes of action is granted as to liability, and also on the fourth cause of action for attorneys' fees as to liability. The matter of plaintiff's damages shall be set down for a hearing before a court attorney/referee, together with the amount of plaintiff's reasonable attorneys fees. Plaintiff's further requests for judgment (i) awarding it immediate possession of the custom-made furniture identified in Schedule A to the Equipment Lease on which the complaint is based, and (ii) dismissing defendants' answer and counterclaim, are also granted . Plaintiff's informal request for sanctions is denied .

The cross-motion, by defendants, for summary judgment dismissing the complaint against defendant Albert, and denying summary judgment against defendant Match, is denied .

The defendant Match, Inc. ("Match"), a Georgia corporation with an office in Georgia, entered into an equipment lease for four pieces of custom made furniture/millwork on January 13, 2006. Defendant Elizabeth Albert was the CEO of Match. At the time that she executed the lease on behalf of Match, the defendant Albert also executed a personal guaranty of payment of the lease. This guaranty did not identify the lessee's name.

The lessor, Diversified Capital Credit Corp ("Diversified"), then assigned the lease to plaintiff on February 2, 2006 . Plaintiff alleges that Match defaulted under the lease in March, 2008, when Match closed its doors to business. This action was commenced in April, 2008.

The complaint alleges four causes of action, namely, for breach of the lease, repossession of the subject furniture/millwork, breach of the guaranty, and attorneys fees. The defendants served their answer, containing seven affirmative defenses and one counterclaim, in early May, 2008, and plaintiff served its reply to the counterclaim in late May, 2008.

The plaintiff now moves for summary judgment. In opposition the defendant Albert states that she does not "remember signing any personal guaranties in connection with the said Finance lease" (Albert affidavit dated July 21, 2008, par. 4). Defendant Albert further insists that the guaranty is unenforceable as it does not identify the lessee.

In reply papers, plaintiff now produces a second guaranty which does specifically identify Match as the lessee. Ms. Imbriale, plaintiff's documentation manager, explains that when she received the first guaranty signed by Albert she rejected it as unacceptable. She advised Diversified, who then requested that Albert execute the second guaranty and return it by federal express. After the second guaranty was signed by Albert, and received by plaintiff, the lease for the furniture/millwork was funded by plaintiff.

The problem with the presentation of new evidence in reply papers is the lack of an opportunity for the opponent to address such evidence. However, where the opponent has had such an opportunity, the new evidence may properly be considered by the court (see Valure v Century 21 Grand , 35 AD3d 591, 2nd Dept., 2006; Hoffman v Kessler , 28 AD3d 718, 2nd Dept., 2006; Guarneri v St. John , 18 AD3d 813, 2nd Dept., 2005; Hayden v County of Nassau , 16 AD3d 415, 2nd Dept., 2005). Here, defendants had a fair opportunity to address the second guaranty in their reply papers on their cross-motion.

Accordingly, the Court will consider the second guaranty.

The production of the second guaranty also presents a pleading issue, as all of the pleadings address the first guaranty. However, the court may, sua sponte, relieve the plaintiff of its failure to amend its pleading by deeming the complaint amended to conform to the evidence presented on the motion and cross-motion for summary judgment, in the absence of a showing of prejudice to the defendants ( In re Denton , 6 AD3d 531, 2nd Dept., 2004, lv app dsmd Denton v Hyman , 3 NY3d 656, 2004, lv app den 5 NY3d 714, 2005; Cave v Kollar , 2 AD3d 386, 2nd Dept., 2003). Although Ms. Albert claims prejudice, she does so in a conclusory manner, and the Court finds that no showing of prejudice has been made. Consequently, the complaint is deemed amended to replace the first guaranty with the second guaranty.

The defendant Albert's response to the second guaranty is that she continues to have no recollection of signing any personal guaranties in connection with the lease. She accuses plaintiff of "bait-and-switch tactics", complains that she has "not had a fair and reasonable opportunity to respond to the contents of the Second Guaranty," and argues that she is not subject to the personal jurisdiction of this Court.

As to personal jurisdiction, both the first guaranty and the second guaranty contain the following language:

Guarantors consent to personal jurisdiction, venue and service as provide for in the Lease. First guaranty and second guaranty at par. 5.

The Lease contains the following choice of forum clause and consent to personal jurisdiction:

LESSEE IRREVOCABLY CONSENTS AND AGREES THAN (SIC) ANY LEGAL ACTION OR PROCEEDING AGAINST LESSEE UNDER, ARISING OUT OF, OR IN ANY MANNER RELATING TO THIS LEASE MAY BE

BROUGHT IN ANY STATE COURT OF THE STATE OF NEW YORK LOCATED IN NASSAU COUNTY OR IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW YORK. LESSEE, BY ITS EXECUTION AND DELIVERY OF THIS LEASE, EXPRESSLY AND IRREVOCABLY CONSENTS AND SUBMITS TO THE PERSONAL JURISDICTION OF ANY SUCH COURTS IN ANY SUCH ACTION OR PROCEEDING.

Lease at par. 26.

As a threshold matter, this Court notes that defendant Albert is not a resident of New York and did not execute either guaranty or the lease in New York. Match was a Georgia corporation, and both the lease and the guaranties were signed in Georgia. On this record there is no other basis for this Court to exercise personal jurisdiction over either defendant other than through enforcement of the above-quoted lease paragraph that is clearly set forth in both of the guaranties.

It is well settled that parties to an agreement may consent in advance to submit to the jurisdiction of a court which would otherwise not have personal jurisdiction over them ( National Equipment Rental v Szukhent , 375 US 311, 316, 1964; Banco do Commercio e Industria de Sao Paolo SA v Esusa Engenharia e Construcoes SA , 173 AD2d 340, 1st Dept., 1991). Furthermore, personal jurisdiction over a non-domiciliary guarantor is proper where the guarantee incorporates terms of an underlying agreement including a consent to jurisdiction ( State Bank of India v Taj Lanka Hotels Ltd. , 259 AD2d 291, 1st Dept., 1999). Based on the foregoing, the Court finds that both defendants consented to the personal jurisdiction of this Court.

Summary judgment is the procedural equivalent of a trial ( S.J. Capelin Associates Inc. v Globe Mfg Corp. , 34 NY2d 338, 341,1974). Mere conclusions and unsubstantiated allegations are insufficient to defeat summary judgment ( Alvarez v Prospect Hosp. , 68 NY2d 320, 324, 1986).

The plaintiff has established its entitlement to summary judgment on the issue of liability by proof of the lease with Match, the assignment of the lease, Match's default on the lease payments, the second guaranty executed by Ms. Albert, and the default by Ms. Albert under the second guaranty (see North Fork Bank v ABC Merchant Services, Inc. , 49 AD3d 701, 2nd Dept., 2008; Advanta Leasing Services v Laurel Way Spur Petroleum STUDEBAKER-WORTHINGTON LEASING CORP. Index no. 005890/08 Corp. , 11 AD3d 571, 2nd Dept., 2004; Wilshire Credit Corp. v 14 First Street Corp ., 273 AD2d 464, 2nd Dept., 2000). Defendants' conclusory objections fail to raise a triable issue of fact. The Lease plainly provides that plaintiff's remedies upon default include both acceleration of the entire balance due and repossession of the furniture/millwork.

Review of the defendants' affirmative defenses fails to reveal any meritorious opposition to the plaintiff's claims. The first affirmative defense of failure to state a cause of action may not be interposed in an answer ( Jacobowitz v Leak , 19 AD3d 453, 2nd Dept., 2005; Citibank, N.A. v Walker , 12 AD3d 480, 2nd Dept., 2004).

The second affirmative defense of improper service is waived if the pleader does not move for dismissal within 60 days [CPLR 3211(c)]. In any event, plaintiff has submitted the affidavits of service showing service at Match's place of business, in accordance with the lease and the guaranties, and there has been no showing by defendants that the address where service was made was incorrect.

The third affirmative defense of improper venue is undermined by the express provisions of the lease and guaranties .

The fourth affirmative defense of failure of consideration based on the nonexistence of a valid lease is flatly contradicted by the record. The plaintiff has submitted evidence of the consideration paid for the lease.

The fifth affirmative defense of failure to comply with the statute of frauds may apply to the first guaranty, but not to the lease or the second guaranty.

The sixth affirmative defense of assumption of risk is not applicable in this breach of contract action.

The seventh affirmative defense of expiration of the statute of limitations plainly lacks merit, as the lease and guaranties at issue were executed in 2006 and this lawsuit was commenced in 2008.

Likewise, defendants' counterclaim for attorneys fees and costs for defense against a frivolous lawsuit fails to pass muster on this record and is summarily dismissed .

Based on the foregoing the plaintiff is entitled to summary judgment on the issue of liability on its first and third causes of action for breach of the lease and guaranty, respectively. It is unclear exactly how plaintiff calculated the balance due under the lease, and for this reason, the amount of damages due to plaintiff under the lease and guaranty shall be set down for a hearing before court attorney/ referee Thomas Dana on November 6, 2008 at 10:00 a.m. in room 206.

Plaintiff is also entitled to its attorneys fees, as requested in its fourth cause of action, pursuant to the express provisions of the lease and guaranty authorizing the recovery of such fees. In recognition of the courts' inherent power to supervise the charging of fees for legal services rendered ( Matter of First Nat. Bank of East Islip v Brower , 42 NY2d 471, 474-474, 1977; Key Equipment Finance, Inc. v South Shore Imaging, Inc. , 39 AD3d 595, 2nd Dept., 2007), the amount of plaintiff's reasonable attorneys' fees shall also be determined at the hearing.

Finally, plaintiff is also entitled to summary judgment awarding it possession of the furniture/millwork as alleged in its second cause of action, as provided in the lease.


Summaries of

STUDEBAKER-WORTHINGTON LEASING CORP. v. MATCH

Supreme Court of the State of New York, Nassau County
Sep 30, 2008
2008 N.Y. Slip Op. 52326 (N.Y. Sup. Ct. 2008)
Case details for

STUDEBAKER-WORTHINGTON LEASING CORP. v. MATCH

Case Details

Full title:STUDEBAKER-WORTHINGTON LEASING CORP., Plaintiff, v. MATCH, INC. AND…

Court:Supreme Court of the State of New York, Nassau County

Date published: Sep 30, 2008

Citations

2008 N.Y. Slip Op. 52326 (N.Y. Sup. Ct. 2008)