Whiteman Osterman & Hanna, LLP v. Pres. Assocs., LLC
| Decision Date | 28 February 2019 |
| Docket Number | 906949-18 (Action No. 2),906810-18 (Action No. 1) |
| Parties | WHITEMAN OSTERMAN & HANNA, LLP, Plaintiff, v. PRESERVE ASSOCIATES, LLC and Tupper Lake Preserve LLC, Defendants. Shanley, Sweeney, Reilly & Allen, P.C., Plaintiff, v. Preserve Associates, LLC and Tupper Lake Preserve LLC, Defendants. |
| Court | New York Supreme Court |
Cullen and Dykman LLP, Attorneys for Shanley, Sweeney, Reilly & Allen, P.C. (Christopher E. Buckey, of counsel), 99 Washington Avenue, Suite 2020, Albany, New York 12210
Lippes Mathias Wexler Friedman, LLP, Attorneys for Whiteman, Osterman & Hanna, LLP, (Robert E. Ganz, of counsel), One Columbia Circle Albany, New York 12203
DeGraff Foy & Kunz, LLP, Local Attorneys for Preserve Associates, LLC and Tupper Lake Preserve LLC (George J. Szary, of counsel), 41 State Street, Albany, New York 12207
Dimas Law Group, P.C., Attorneys for Preserve Associates, LLC and Tupper Lake Preserve LLC (Simos C. Dimas, of counsel), 370 Lexington Avenue, Suite 505, New York, New York 10017
Richard M. Platkin, J.Pending before the Court are motions for summary judgment in lieu of complaint, made pursuant to CPLR 3213, in two separate collection actions brought against defendants Preserve Associates, LLC and Tupper Lake Preserve LLC.1 In Action No. 1, the law firm of Whiteman, Osterman & Hanna, LLP ("WOH") sues to recover the sum of $ 7,131,156 pursuant to a written agreement providing for the payment of past-due amounts owed for legal services rendered from 2006 through 2018. In Action No. 2, the law firm of Shanley, Sweeney, Reilly & Allen, P.C. ("SSRA") sues under a similar instrument to recover the sum of $ 667,808, representing unpaid legal fees from 2004 and 2005. Defendants oppose the motions.
Plaintiffs are law firms that rendered legal services to defendants in connection with the development of the Adirondack Club and Resort ("Adirondack Club") in Tupper Lake, New York (see NY St Cts Electronic Filing [NYSCEF] Doc No. 3 [Action No. 1], ¶¶ 2-3 ["Henry Aff."]; NYSCEF Doc No. 3 [Action No. 2], ¶¶ 2-3 ["Allen Aff."] ). The Adirondack Club project ("Project") is located on about 6,200 acres of land surrounding the former Big Tupper Ski Area, and the Project encompassed: the renovation and re-opening of the long-closed ski area; the construction of a new ski lodge, restaurant and hotel; permits for 651 building lots; development of an extensive network of cross-country and hiking trails; and the construction of a marina and clubhouse on Tupper Lake (see Henry Aff., ¶ 3).2
SSRA rendered legal services to defendants in 2004 and 2005 in connection with the real-estate development work on the Project (see Allen Aff., ¶ 2). By January 2006, defendants had fallen behind in their payments. "As an accommodation to the client, [SSRA] agreed to a forbearance in the collection of the legal bills in exchange for accruing interest and a bonus in the event that an extremely contentious permit was obtained from the Adirondack Park Agency" (id. , ¶ 4).
In January 2006, lawyers from SSRA joined WOH (see id. , ¶ 4), and WOH thereafter rendered legal services to defendants from January 2006 through October 2018 in relation to the Project (see Henry Aff., ¶¶ 2, 4-5, 10). "By 2008, the growing recession caused [defendants] to fall behind in payments due for legal fees and expenses," and WOH similarly agreed to forbear from collection in exchange for the accrual of interest and the prospect of a success fee (id. , ¶ 4; see NYSCEF Doc No. 5 [Action No. 1], pp. 3-4 ["WOH Retainer"] ).
From 2006 through 2018, plaintiffs honored the forbearance agreements while WOH "guided the project through ... the APA permit, Town of Tupper Lake rezoning and subdivision approvals, New York State Department of Environmental Conservation permits, United States Army Corps of Engineers permits, and New York State Attorney General approvals" (Henry Aff., ¶ 5). WOH's legal work also (id. ).
On June 12, 2017, each plaintiff entered into a written agreement with defendants regarding the payment of past-due amounts (see Allen Aff., Ex. A ["SSRA Agreement"]; Henry Aff., Ex. B ["WOH Agreement"] ). The agreements ("Agreements") recite that: the plaintiff-law firms rendered legal services to defendants in connection with the Project; plaintiffs agreed to accept deferred payment of such fees; defendants have acknowledged and reaffirmed their indebtedness to plaintiffs "on a generally annual basis"; the amounts due and owing to SSRA and WOH as of May 31, 2017 were $ 651,908.17 and $ 6,712,449, respectively; and defendants were to repay their entire debt to SSRA and $ 3,348,091 of the debt to WOH by September 15, 2017 (id. ). By their express terms, the Agreements constitute "unconditional instrument[s] for the payment of money only" (id. ).
The Agreements were amended by writings executed on or about November 29, 2017 to update the amount of defendants' indebtedness and/or modify the payment terms. Specifically, the SSRA Agreement was amended to increase defendants' stated indebtedness to $ 667,808 (see Allen Aff., Ex. B ["SSRA Amendment"] ), and the WOH Agreement was amended to: (i) increase defendants' total debt to $ 7,131,156; (ii) extend defendants' time to make payment of $ 3,348,091 until November 30, 2017; and (iii) provide that defendants' total indebtedness shall be immediately due and payable upon a default (see Henry Aff., Ex. C ["WOH Amendment"] ).
According to plaintiffs, they did not receive any payments from defendants pursuant to the amended Agreements,3 and they issued notices of default and demands for immediate payment-in-full to defendants on October 19, 2018 (see Allen Aff., Ex. C; Henry Aff., Ex. D). Upon defendants' failure to comply with the demands, plaintiffs commenced these collection actions.
A. Plaintiffs' Prima Facie Case Under CPLR 3213
On a motion for summary judgment in lieu of complaint pursuant to CPLR 3213, a plaintiff "establishe[s its] prima facie entitlement to judgment as a matter of law by demonstrating the existence of the 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" ( Kim v. Il Yeon Kwon , 144 A.D.3d 754, 755, 41 N.Y.S.3d 68 [2d Dept. 2016] ; see Craven v. Rigas , 71 A.D.3d 1220, 1222-1223, 896 N.Y.S.2d 504 [3d Dept. 2010], lv denied 14 N.Y.3d 713, 2010 WL 2365465 [2010] ).
A threshold issue on such a motion is whether the instrument sued upon is "for the payment of money only" ( CPLR 3213 ). "If an instrument contains an unconditional promise to pay a sum certain over a stated period of time, it is considered an instrument for the payment of money only" ( Bloom v. Lugli , 81 A.D.3d 579, 580, 916 N.Y.S.2d 139 [2d Dept. 2011] [citations omitted] ). ( Weissman v. Sinorm Deli , 88 N.Y.2d 437, 444, 646 N.Y.S.2d 308, 669 N.E.2d 242 [1996] [internal quotation marks and citations omitted] ).
Here, each of the Agreements sets forth the unconditional promise of defendants to pay a specified sum at a prescribed time or upon default. The plaintiff-law firms do not owe any executory performance to defendants, and no proof outside of the Agreements is needed to establish defendants' defaults or the amounts owed to plaintiffs. Moreover, the instruments themselves include defendants' explicit agreement and acknowledgment that the Agreements are "unconditional instrument[s] for the payment of money only" (SSRA Agreement, ¶ 4; WOH Agreement, ¶ 4 [a], WOH Amendment, ¶¶ 2-3; see SCP [Bermuda] v. Bermudatel Ltd. , 224 A.D.2d 214, 216, 638 N.Y.S.2d 2 [1st Dept. 1996] ).
Defendants insist, however, that the Agreements are not instruments for the payment of money only. In particular, defendants argue that "none of the alleged outstanding invoices for [legal] services rendered have been submitted for review by this Court, making it impossible for the Court to determine the propriety of the amounts claimed due" (Opp. Mem. [Action No. 2], p. 5). Defendants further contend that "none of the [case] authority relied upon by [plaintiffs] concerns payment of legal fees" (id. ). In addition, defendants argue that the WOH Agreement is not an instrument for the payment of money only because the "bonus" is an unliquidated sum, payable as a percentage of future lot sales (see WOH Agreement, ¶ 3 [b] ). Thus, defendants argue that, since they "have not acknowledged the reasonableness, or propriety, of the amount of the attorney's fees, costs, interests, and ‘bonus’ claimed due, which are matters that should not be determined summarily" (id. ), plaintiffs' motions must be denied.
The Court does not find defendants' arguments persuasive and, instead, concludes that the Agreements are "instrument[s] for the payment of money only and [plaintiffs are] entitled to the expedited procedure set forth in CPLR 3213" ( Couch White v. Kelly , 286 A.D.2d 526, 527, 729 N.Y.S.2d 206 [3d Dept. 2001] ). Under the SSRA Agreement, defendants were obliged to pay $ 667,808 to SSRA on or before September 15, 2017. The WOH Agreement, as amended, made the sum of $ 7,131,156 immediately due and payable upon defendants' default in making the November 30, 2017 payment.4 Thus, both Agreements contain unambiguous and unconditional promises to pay specified sums at prescribed times.
Further, while defendants emphasize that the case authorities cited by plaintiffs...
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