EXPRESS VALENTINE AUTO REPAIR SHOP INC v. NEW YORK TAXI INC (2020)

DECISION & ORDER

ORDERED that the judgment is reversed, on the law, with costs, the plaintiffs' motion for summary judgment in lieu of complaint is denied, and the order dated May 23, 2017, is modified accordingly.

On July 14, 2014, the defendant New York Taxi 2, Inc. (hereinafter New York Taxi), as purchaser, entered into an asset sale/purchase agreement with the plaintiffs, as seller, to purchase a taxi company known as Express Valentine, Inc., the predecessor corporation to the plaintiff Express Valentine Auto Repair Shop, Inc. In conjunction with the agreement, New York Taxi, by its president, the defendant Gianmarco Calderon, executed a promissory note in favor of Express Valentine, Inc., in the principal sum of $300,000.  Calderon also executed a guaranty in which he personally guaranteed “the full and prompt payment and performance of all of [the] obligations under [the] promissory note.”

In November 2016, New York Taxi allegedly defaulted on its payment obligation under the promissory note.  Thereafter, the plaintiffs commenced this action against New York Taxi, Town Taxi, Inc., doing business as New York Taxi 12–16, a successor in interest to New York Taxi, Calderon (hereinafter collectively the defendants), and Louis Rodriguez, an owner of New York Taxi, by the filing of a summons and complaint, and pursuant to CPLR 3213 by motion for summary judgment in lieu of complaint.  In an order dated May 23, 2017, the Supreme Court, inter alia, granted the plaintiffs' motion for summary judgment in lieu of complaint.  A judgment was subsequently entered upon the order enjoining the defendants and Rodriguez from, inter alia, selling or otherwise transferring any and all property held, and in favor of the plaintiffs and against the defendants in the principal sum of $178,752.56.  The defendants and Rodriguez appeal from the judgment.

Pursuant to CPLR 3213, a plaintiff demonstrates its prima facie entitlement to judgment as a matter of law with respect to a promissory note if it shows “the existence of a promissory note, executed by the defendant, containing an unequivocal and unconditional obligation to repay, and the failure by the defendant to pay in accordance with the note's terms” (Lugli v. Johnston, 78 A.D.3d 1133, 1135, 912 N.Y.S.2d 108;   see Porat v. Rybina, 177 A.D.3d 632, 111 N.Y.S.3d 625).  “Where the instrument requires something in addition to defendant's explicit promise to pay a sum of money, CPLR 3213 is unavailable” (Weissman v. Sinorm Deli, 88 N.Y.2d 437, 444, 646 N.Y.S.2d 308, 669 N.E.2d 242).  Once the plaintiff has established its prima facie entitlement to judgment as a matter of law, “the burden then shifts to the defendant to submit evidence establishing the existence of a triable issue with respect to a bona fide defense” (Jin Sheng He v. Sing Huei Chang, 83 A.D.3d 788, 789, 921 N.Y.S.2d 128;  see Porat v. Rybina, 177 A.D.3d at 632, 111 N.Y.S.3d 625;  Quest Commercial, LLC v. Rovner, 35 A.D.3d 576, 825 N.Y.S.2d 766).

Here, the plaintiffs failed to establish, prima facie, that the subject promissory note was an instrument for the payment of money only (see Bloom v. Lugli, 81 A.D.3d 579, 581, 916 N.Y.S.2d 139).  In support of their motion, the plaintiffs submitted the promissory note, which refers to the asset sale/purchase agreement and provides the defendants with “an absolute right of set-off against the entire unpaid principal balance of [the] Note based upon any and all provisions of the Asset Sale/Purchase Agreement.”  Under the circumstances, “outside proof” was required, “other than simple proof of nonpayment,” to establish the plaintiffs' prima facie case (Weissman v. Sinorm Deli, 88 N.Y.2d at 444, 646 N.Y.S.2d 308, 669 N.E.2d 242;  see Lawrence v. Kennedy, 95 A.D.3d 955, 957, 944 N.Y.S.2d 577;  see also Jason J. Weindorf, CPA, P.C. v. Wightman, 133 A.D.3d 822, 19 N.Y.S.3d 431).  The plaintiffs' failure to make a prima facie showing required the denial of its motion, regardless of the sufficiency of the opposition papers (see Winegrad v. New York Univ. Med. Ctr., 64 N.Y.2d 851, 853, 487 N.Y.S.2d 316, 476 N.E.2d 642).

Accordingly, we disagree with the Supreme Court's determination to grant the plaintiffs' motion for summary judgment in lieu of complaint.

SCHEINKMAN, P.J., RIVERA, ROMAN and COHEN, JJ., concur.