ARENA INVESTORS v. [And a Third–Party Action]. (2022)

Judgment, Supreme Court, New York County (Jennifer G. Schecter, J.), entered June 10, 2021, to the extent appealed from, awarding, in Index No. 651045/21, plaintiffs Arena Investors, L.P. and Arena Limited SPV, LLC damages in the amount of $26,930,195.18 against defendant Stephen D'Angelo, and bringing up for review an order, same court and Justice, entered on or about May 6, 2021, which granted plaintiffs’ amended motion for summary judgment in lieu of complaint, unanimously reversed, on the law, the motion denied and the judgment vacated.

Plaintiffs’ motion for summary judgment should have been denied, as they did not establish as a matter of law that can enforce the guaranties independently of their co-lender, nonparty Capstone Capital Group, LLC (Capstone).  Plaintiffs and Capstone were collectively identified as “the Purchaser” in the guaranties, however only plaintiffs, the minority members of the purchaser group, sought to enforce the guaranties.  The terms of the guaranties are ambiguous as to whether the parties contemplated collective action on the part of plaintiffs and Capstone in the event of a default or whether each individual lender can bring an action to enforce the guaranties without the participation of the other (see Beal Sav. Bank v. Sommer, 8 N.Y.3d 318, 325–332, 834 N.Y.S.2d 44, 865 N.E.2d 1210 [2007];  Credit Francais Intl. v. Sociedad Fin. de Comercio, 128 Misc.2d 564, 577–582, 490 N.Y.S.2d 670 [Sup. Ct., N.Y. County 1985]).  We note that Capstone submitted an affidavit in which it stated that it purposefully did not join with plaintiffs in this action.

Plaintiffs’ contention that defendant waived any and all defenses to the enforcement of the guaranties is unavailing.  Plaintiffs may not rely on the waiver provisions in the guaranties where the guaranties are ambiguous as to whether plaintiffs can independently enforce them.

We have considered the remaining contentions and find them unavailing.