Cnty. of Greene v. Chalifoux

• Decision Date: 02 April 2015
• Docket Number: 519546.
• Citation: 2015 N.Y. Slip Op. 02833,6 N.Y.S.3d 763,127 A.D.3d 1316
• Parties: COUNTY OF GREENE, Respondent, v. Mary Ann CHALIFOUX, Defendant, and Yury Kornitsky et al., Appellants.
• Court: New York Supreme Court — Appellate Division

127 A.D.3d 1316

6 N.Y.S.3d 763

2015 N.Y. Slip Op. 02833

COUNTY OF GREENE, Respondent

v. Mary Ann CHALIFOUX, DefendantandYury Kornitsky et al., Appellants.

519546.

Supreme Court, Appellate Division, Third Department, New York.

April 2, 2015.

Freeman Howard, P.C., Hudson (Paul M. Freeman of counsel), for appellants.

Edward I. Kaplan, County Attorney, Catskill, for respondent.

Before: LAHTINEN, J.P., McCARTHY, EGAN JR. and CLARK, JJ.

Opinion

McCARTHY, J.

Appeal from an order of the Supreme Court (Elliott III, J.), entered October 30, 2013 in Greene County, which, among other things, partially granted plaintiff's motion for summary judgment.

Pursuant to a loan agreement, plaintiff lent Athens on the Hudson, LLC (hereinafter the borrower) $240,000 and defendant Mary Ann Chalifoux executed a promissory note on behalf of the borrower. Defendants each personally guaranteed payment of the note. In an April 2012 letter, plaintiff notified defendants that the borrower owed $9,767.85 in arrears, declared the loan in default, accelerated the debt and demanded payment of the balance of the loan. Less than two weeks later, on May 1, 2012, the borrower paid plaintiff the amount owed in arrears. No further notices were given to defendants, nor were any further payments made toward the loan. Plaintiff commenced this action to collect on defendants' personal guarantees of the note. Plaintiff moved for summary judgment and defendants cross-moved for summary judgment dismissing the complaint.¹ Supreme Court granted plaintiff summary judgment on liability, but directed an inquest on damages. Defendants Yury Kornitsky and Inga Kornitsky appeal.

Plaintiff met its initial burden on its summary judgment motion. Plaintiff's submissions demonstrated the existence of a valid promissory note, defendants' obligation under the note through the guarantees, and the borrower's alleged default in payment (see Tosapratt, LLC v. Sunset Props., Inc., 86 A.D.3d 768, 768, 926 N.Y.S.2d 760 [2011] ; Overseas Private Inv. Corp. v. Nam Koo Kim, 69 A.D.3d 1185, 1187, 895 N.Y.S.2d 217 [2010], lv. dismissed 14 N.Y.3d 935, 905 N.Y.S.2d 557, 931 N.E.2d 541 [2010] ). The burden then shifted to defendants to raise a triable issue of fact (see Tosapratt, LLC v. Sunset Props., Inc., 86 A.D.3d at 769, 926 N.Y.S.2d 760 ; Hirsh v. Brunenkant, 51 A.D.3d 1258, 1260, 858 N.Y.S.2d 437 [2008] ).

While a guarantor is generally not liable if the principal is not bound by the contract (see Walcutt v. Clevite Corp., 13 N.Y.2d 48, 56, 241 N.Y.S.2d 834, 191 N.E.2d 894 [1963] [guarantor can raise defense that contract failed for lack of consideration]; Kosich v. Catskill Millennium Tech., Inc., 97 A.D.3d 1003, 1004–1005, 948 N.Y.S.2d 745 [2012], lv. denied 19 N.Y.3d 816, 2012 WL 5309399 [2012] [guarantor not bound where principal had not signed note] ), a guarantor can be liable, despite the principal's escape from liability, if the guarantee contains language through which the guarantor expressly waives a right or defense (see Beal Bank v. Sandpiper Resort Corp., 251 A.D.2d 360, 361, 674 N.Y.S.2d 83 [1998], lv. denied 94 N.Y.2d 756, 703 N.Y.S.2d 73, 724 N.E.2d 769 [1999] [guarantors still liable despite principal having debt discharged in bankruptcy]; First Am. Bank of N.Y. v. Builders Funding Corp., 200 A.D.2d 946, 947, 607 N.Y.S.2d 460 [1994] ; Manufacturers Hanover Trust Co. v. Green, 95 A.D.2d 737, 737, 464 N.Y.S.2d 474 [1983], appeal dismissed 61 N.Y.2d 760 [1984] ; see also Kosich v. Catskill Millennium Tech., Inc., 97 A.D.3d at 1005, 948 N.Y.S.2d 745 ). “[T]he liability of the guarantor may be broader than and exceed the scope of that of the principal where the guarantee, which is a separate undertaking,” clearly states that it is enforceable against the guarantor despite circumstances where liability would not attach to the principal (Raven El. Corp. v. Finkelstein, 223 A.D.2d 378, 378, 636 N.Y.S.2d 292 [1996], lv. dismissed 88 N.Y.2d 1016, 649 N.Y.S.2d 382, 672 N.E.2d 608 [1996] ; see International Plaza Assoc., L.P. v. Lacher, 104 A.D.3d 578, 579, 961 N.Y.S.2d 427 [2013] ).

Here, the loan agreement, note and guarantees were executed on the same day and are part of a single transaction, so these documents should be read together (see White Rose Food v. Saleh, 99 N.Y.2d 589, 592, 758 N.Y.S.2d 253, 788 N.E.2d 602 [2003] ). The loan agreement lists certain events that constitute a default, including the “[f]ailure of the ‘[b]orrower’ to pay any installment of principal and interest when due and the continuation of such default for twenty (20) business days after receipt by the ‘[b]orrower’ of written notice of such default from [plaintiff].” When a listed event of default occurs, the loan agreement provides certain remedies that plaintiff may elect, including accelerating the entire balance of the loan or commencing a collection action.

The promissory note provides that “in the event of default in the payment of any principal or interest of this [n]ote for more than thirty (30) days after written notice of such default from [plaintiff], then [plaintiff] shall seek remedy of the condition of default through the provisions of” the loan agreement. The note also states that “[t]he makers, sureties, endorsers and guarantors of this [n]ote hereby severally waive presentment for payment, notice of non-payment, protest and notice of...