JESIOLOWSKI ENTERPRISES INC v. DATA KEY HOLDINGS LLC (2017)

In this commercial transaction Judy Flanagan and Carol Jesiolowski were the owners and operators of Data Key Communications, Inc. and sold the assets of this business to defendants William Brod and Data Key Holdings, Inc. (DKH) pursuant to an Asset Purchase Agreement (APA). Simultaneously with this APA, an Independent Contractor Agreement (ICA) was entered into wherein Flanagan and Jesiolowski through Social Business, Inc. agreed to consult for Brod and DKH for two years.

As a result of transactional and financial obligations in conjunction with the APA, plaintiff commenced this action seeking payment from defendants of $93,149 pursuant to a promissory note and guaranty executed as part of the APA.

Thereafter, the defendants interposed an answer with twelve affirmative defenses and eight counterclaims to which plaintiff has entered a reply.

Plaintiff now moves pursuant to CPLR § 3212 for summary judgment for the relief sought in its complaint and to dismiss the counterclaims asserted by defendants in their answer. The defendants oppose this motion.

In a motion for summary judgment the initial burden rests on the moving party to come forth with evidence in admissible form to show entitlement to judgment as a matter of law. The burden next shifts to the non-moving party to likewise come forth with evidence in admissible form to establish the existence of a factual issue so as to avoid summary judgment. In such motions the Court must view all of the evidence so submitted in the light most favorable to the non-moving party. Zuckerman v. City of New York, 49 NY2d 557 (1980).

The plaintiff contends that it has established all of the elements of the defendants' breach of the APA and default in the payment of the promissory note by defendants.

Defendants maintain that their affirmative defenses have merit, and as there has been no discovery in this matter, plaintiff's motion for summary judgment is premature.

While the Court is mindful that defendants have been lax in pursuing discovery, it must agree with defendants that in the absence of discovery, plaintiff's motion is premature. Therefore, that branch of plaintiff's motion is denied without prejudice to refile upon completion of discovery.

In that regard the Court will forward the standard commercial scheduling order for counsel to circulate and then the Court will schedule a scheduling conference.

As to that branch of plaintiff's motion seeking to dismiss defendants' counterclaims as time-barred by the one year limitation period set forth in the APA, that branch of plaintiff's motion is also denied.

Although parties to a contract may agree to limit the period of time within which an action must be commenced to a shorter period than that provided by the applicable statute of limitations, the intent to abbreviate the limitation period must be set forth in a clear and unambiguous manner. Moreover, the abbreviated period must not be unreasonably short or unfair. Batales v. Friedman, 144 AD3d 849 (2d Dept. 2016); Fitzpatrick and Weller, Inc. v. Miller, 309 AD2d 1273 (4th Dept. 2003); Matter of Incorporated Village of Saltaire v. Zagata, 280 AD2d 547 (2d Dept. 2001).

Here the APA and the ICA must be read and interpreted together as they were executed contemporaneously and are both integral and non-dispensable instruments of the transaction. When doing so, the two year duration period set forth in the ICA renders the one year shortened limitation period provided for in the APA as ambiguous, unreasonably short, and, therefore, unenforceable.

Anthony J. Paris, J.