Schneider v. OG & C CORP.

• Decision Date: 24 May 1988
• Docket Number: No. 87 Civ 7828 (KC).,87 Civ 7828 (KC).
• Citation: 684 F. Supp. 1269
• Parties: Lawrence SCHNEIDER and Philip Sassower, Plaintiffs, v. OG & C CORPORATION, Leslie Mersky, and Arthur Tuchinsky, Defendants.
• Court: U.S. District Court — Southern District of New York

684 F. Supp. 1269

Lawrence SCHNEIDER and Philip Sassower, Plaintiffs, v. OG & C CORPORATION, Leslie Mersky, and Arthur Tuchinsky, Defendants.

No. 87 Civ 7828 (KC).

United States District Court, S.D. New York.

May 24, 1988.

Herman Sassower, Bell, Kalnick, Berkman, Klee & Green, New York City, for plaintiffs.

Arthur Tuchinsky, Narberth, Pa., Leslie Mersky, Les Mersky Associates, Philadelphia, Pa., for defendants.

CONBOY, District Judge:

This action, brought under the grant of diversity jurisdiction, 28 U.S.C. § 1332(a)(1) (1982), involves a default on a loan made by the plaintiffs to defendant OG & C Corporation ("OGC").¹ Defendants Leslie Mersky and Arthur Tuchinsky co-guaranteed the loan to the corporation.² On October 20, 1987, plaintiffs' counsel made a written demand of the corporate borrower, and a written demand of Mersky and Tuchinsky, in accordance with their respective personal guaranties. None of the defendants paid plaintiffs. The action is before the court on plaintiffs' motion, pursuant to Fed.R.Civ.P. 56, for summary judgment against the individual defendants, as guarantors.

LEGAL ANALYSIS

Preliminarily, the court rejects plaintiffs' assertion that "the Second Circuit and this Court have held that the failure of a party opposing summary judgment to submit a statement of material facts in issue, pursuant to Civil Rule 3(g) of the Local Rules For the United States District Courts For the Southern and Eastern Districts of New York, in direct violation of the local rule, mandates granting of a motion for summary judgment." Plaintiffs' Reply Memorandum of Law in Support of Partial Summary Judgment at 3. The cases cited by plaintiffs support only the more limited proposition that under such circumstances all of the facts set forth in the Rule 3(g) statement³ of the party moving for summary judgment must be deemed admitted. See Dusanenko v. Maloney, 726 F.2d 82, 84 (2d Cir.1984) (per curiam); Woods v. New York, 469 F.Supp. 1127, 1129 n. 2 (S.D.N.Y.), aff'd mem., 614 F.2d 1293 (2d Cir.1979); Katz v. Realty Equities Corp., 406 F.Supp. 802, 804 (S.D. N.Y.1976); Blossom Farm Prods. Co. v. Amtraco Commodity Corp., 64 F.R.D. 424, 428 (S.D.N.Y.1974). The court must then determine whether those facts are sufficient to warrant the grant of summary judgment. See Maloney, 726 F.2d at 84; Woods, 469 F.Supp. at 1129-34.⁴

The court declines to decide the question, apparently left open, whether this rule can be applied to parties appearing pro se⁵ who might be unaware of the local rule. See SEC v. Research Automation Corp., 585 F.2d 31, 32, 34 (2d Cir.1978) (noting only that the pro se party submitting an affidavit in opposition to a motion for summary judgment failed to file the statement required by the local rule, and that "there was every indication that he could not have" met the obligation to raise material facts creating a genuine issue for trial); Woods, 469 F.Supp. at 1128 n. 1 (holding attorney appearing pro se "to the same standards as other attorneys appearing before the Court"); cf. Sellers v. M.C. Floor Crafters, Inc., 842 F.2d 639, 642-43 (2d Cir.1988) (reversing grant of summary judgment against pro se litigant because the district court failed to advise him "of the nature, procedures and consequences of a motion for summary judgment"). The point is moot, because plaintiffs have submitted documentary evidence of the facts they seek to have deemed true.

The following facts are established by the evidence presented: First, that on July 22, 1987, OGC executed and delivered to plaintiffs in New York a promissory note and security agreement. The promissory note, in the amount of $275,000.00, was made payable to the order of plaintiffs jointly on the ninetieth day from the date of the note, October 20, 1987. See Affidavit of Philip Sassower, executed Jan. 29, 1988, at Exhibit D. Second, that on July 23, 1987, and July 22, 1987, Mersky and Tuchinsky, respectively, each executed a personal continuing guaranty of the corporation's note. The guaranties state that they "shall be governed by the internal laws of the State of New York without regard to any conflicts of law provisions of that State." See generally id. Exhibits E & F. Third, that on July 22, 1987, plaintiffs executed checks totalling the amount of the loan in favor of OGC. See id. Exhibit G. Fourth, that on October 20, 1987, plaintiffs duly demanded payment of the note from OGC. See id. Exhibit H. Fifth, that on October 20, 1987, plaintiffs duly demanded payment from the guarantors, Mersky and Tuchinsky, pursuant to the terms of their guaranties. See id. Exhibit I. Sixth, that the plaintiffs have sued the guarantors for sums due pursuant to their guaranties, and that the guarantors deny that they owe the plaintiffs any money. See id. Exhibit A; Exhibit B at para. 6; Exhibit C at para. 6. Other facts are discussed as necessary.

By their answers to the complaint, Mersky and Tuchinsky raise, generally, two types of defenses. First, they challenge the validity of the obligation of the principal debtor, OGC. See Sassower Jan. 29 Aff. Exhibits B & C (interposing defenses of lack of good faith, failure of consideration, fraud, breach of the loan agreement, and material alteration of the original obligation). Second, they challenge the validity of their own obligations. See id. (interposing defenses of fraud, failure of consideration, discharge, failure to name co-guarantor, and release).

The guarantors also submitted affidavits in opposition to plaintiffs' summary judgment motion. The affidavits⁶ stress plaintiffs' alleged fraudulent misrepresentations to OGC and the guarantors during the negotiations between the parties. In substance, defendants assert that plaintiffs defrauded the corporation and the guarantors by stating falsely that they were not negotiating⁷ simultaneously with a competitor of OGC, New Park Resources, Inc., for a business deal similar to one plaintiffs were negotiating with OGC.⁸ The proposed, purportedly exclusive, deal motivated the making of the loan to OGC.

As to the defenses involving the validity of OGC's obligation as principal debtor, the guaranties state unequivocally that

the liability of the guarantor shall not be affected by (i) any lack of enforceability of any of the Obligations of the principal debtor, ... (IV) release of any obligor or guarantor, whether signatory hereto or otherwise, ... and (vii) any other circumstance which might constitute a defense available to, or a discharge of, the Debtor or of any other obligor or guarantor with respect to any of the Obligations under the promissory note and security agreement.

....

This Guaranty shall be construed as a continuing, absolute and unconditional guaranty of payment without regard to the validity, regularity or enforceability of any of the Obligations of the principal debtor,....

Sassower Jan. 29 Aff. Exhibits E at 2-3 & F at 2-3. By the unqualified language of the guaranties given by Mersky and Tuchinsky, even if OGC is able to escape liability for the principal debt, the guaranties are still enforceable against Mersky and Tuchinsky.⁹ See Manufacturers Hanover Trust Co. v. Green, 95 A.D.2d 737, 737, 464 N.Y.S.2d 474, 475-76 (1st Dep't 1983) (mem.); Bank of N. Am. v. Shapiro, 31 A.D.2d 465, 466, 298 N.Y.S.2d 399, 401 (1st Dep't 1969).

Mersky and Tuchinsky also allege defenses that pertain to their guaranties, rather than OGC's obligations. The defenses of failure to join the co-guarantor, Willis, and release are rejected as meritless. The defendants specifically waived those defenses in their guaranties. See supra at 1272 (quoting the guaranties).

The defendants emphasize the defense of fraudulent inducement in their papers in opposition to plaintiffs' summary judgment motion. Plaintiffs rely on Citibank, N.A. v. Plapinger, 66 N.Y.2d 90, 485 N.E.2d 974, 495 N.Y.S.2d 309 (1985), for the proposition that the guarantors are foreclosed from asserting fraud in the inducement. In Plapinger, the New York Court of Appeals stated that

fraud in the inducement of a guarantee ... is not a defense to an action on the guarantee when the guarantee recites that it is absolute and unconditional irrespective of any lack of validity or enforceability of the guarantee, or any other circumstance which might otherwise constitute a defense available to a guarantor in respect of the guarantee, those recitals being inconsistent with the guarantors' claim of reliance upon an oral representation....

Id. at 92, 485 N.E.2d at 974, 495 N.Y.S.2d at 309 (emphasis added); see also id. at 95, 485 N.E.2d at 977, 495 N.Y.S.2d at 312 (quoting the guaranty). Plaintiffs contend the language of Mersky and Tuchinsky's guaranties is similar, so that they are foreclosed from offering the defense. The court cannot agree.

The First Department of the Appellate Division distinguished Plapinger in a 1986 decision. See Goodridge v. Fernandez, 121 A.D.2d 942, 945, 505 N.Y.S.2d 144, 147 (1st Dep't) (mem.) ("the guarantee here, in sharp contrast to the guarantee in Citibank, contains no specific disclaimer of defenses available to the guarantor with respect to the guarantee"), motion for reargument or leave to appeal denied, No. M-4091, slip op. (1st Dep't Sept. 25, 1986). The language of the guaranty that the court relied on in Fernandez mirrors the language of the guaranties at issue in this action. Compare Fernandez, 121 A.D.2d at 946, 505 N.Y.S.2d at 147-48 (Kupferman, J., dissenting) (emphases deleted, ellipsis in original):

This Guarantee shall be construed as a continuing, absolute and unconditional guarantee of payment without regard to (i) the validity, regularity or enforceability of the principal obligations, ... (iv) any defense, setoff or counterclaim which may at any time be available to or asserted by the debtor against the creditors, or (v) any other circumstance whatsoever (with or without notice to or knowledge of the debtor or the Guarantor) which constitutes, or might be

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