Cohan v. Movtady

• Decision Date: 01 November 2010
• Docket Number: No. 09–CV–3094(JS)(ETB).,09–CV–3094(JS)(ETB).
• Citation: 751 F.Supp.2d 436
• Parties: Perry COHAN and Rezvan Lahiji, Plaintiffs,v.Mordechay MOVTADY, Defendant.
• Court: U.S. District Court — Eastern District of New York

751 F.Supp.2d 436

Perry COHAN and Rezvan Lahiji, Plaintiffs,

v.Mordechay MOVTADY, Defendant.

No. 09–CV–3094(JS)(ETB).

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

Nov. 1, 2010.

Daniel Gildin, Esq., Kevin M. Shelley, Esq., Kaufmann Gildin Robbins & Oppenheim LLP, New York, NY, for Plaintiff.Gary M. Kushner, Esq., Forchelli, Curto, Deegan, Schwartz, Mineo, Cohn & Terrana, LLP, Uniondale, NY, for Defendants.

MEMORANDUM & ORDER

SEYBERT, District Judge.

On June 20, 2009, Perry Cohan and Rezvan Lahiji commenced this action against Mordechay Movtady alleging that Mr. Movtady defaulted on a promissory note and two additional loans from 2007 and 2008. Mr. Cohan and Ms. Lahiji have now moved for summary judgment. For the reasons set forth below, the motion is GRANTED IN PART AND DENIED IN PART.

BACKGROUND

On or about January 1, 2007, Mr. Movtady made, executed, and delivered a Promissory Note in the principal amount of $3,335,000 (“First Loan”), which represented the cumulative amount that Plaintiff[s] loaned Mr. Movtady between 1987 and the date of the Promissory Note.¹ (Def. 56.1 Stmt. ¶¶ 1–2.) Under the terms of the Promissory Note, Mr. Movtady agreed to make interest payments of $25,195 per month through December 30, 2007 and $28,000 per month beginning on January 1, 2008 until the principal balance was repaid. (Def. Decl. Ex. B; Def. 56.1 Stmt. ¶ 4.) The balance of the loan, including all outstanding interest, was due on or before December 30, 2008. (Def. Decl. Ex. B.) In the event of default, the Promissory Note provided for Mr. Movtady's payment of reasonable attorneys' fees and a 1.5% late payment fee. (Def. 56.1 Stmt. ¶ 5.) Mr. Movtady stopped making monthly interest payments after May 2009, and has not paid any portion of the $3,335,000 due as principal. (Def. 56.1 Stmt. ¶¶ 6–7.)

In March 2007, Mr. Cohan delivered four separate checks to Mr. Movtady totaling $1,350,000 (“Second Loan”), which Mr. Movtady agreed to repay by December 31, 2007 ² with monthly interest payments at a rate of 11% per annum. (Def. 56.1 Stmt. ¶¶ 8–10, 12–14, 16–18, 20–22, 24–25.) Although Mr. Movtady later delivered to Plaintiff Cohan an undated check for $1,500,000 on which he wrote “Return of Loan 4/1/07,” the check was never deposited or cashed due to insufficient funds in Mr. Movtady's account. (Def. 56.1 Stmt. ¶ ¶ 28–29; Pl. Ex. 4 at ¶ 11.)

On October 24, 2008, Mr. Movtady received a $200,000 interest-free loan from Plaintiff Cohan (“Third Loan”), which he agreed to repay by December 1, 2008. (Def. 56.1 Stmt. ¶¶ 30–33.) On December 1, 2008, Mr. Movtady delivered to Mr. Cohan a check for $200,000 on which he wrote “Return of Loan Oct. 25, 2008” that also was never deposited or cashed. (Def. 56.1 Stmt. ¶¶ 35–36; Pl. Ex. 4 at ¶ 12.)

Plaintiffs claim that all three loans went into default on their respective maturity dates, and they commenced this action on June 20, 2009 for the unpaid principal, interest, and attorneys' fees in the amount of $5,832,444.79.

Mr. Movtady does not dispute that he has not repaid any of the principal on the Promissory Note, Second Loan, or Third Loan. (Def. 56.1 Stmt. ¶¶ 6, 11, 15, 19, 23, 37.) But Mr. Movtady asserts: (1) that the statute of limitations for recovery of the First Loan has expired, (2) that the Promissory Note is invalid and unenforceable, (3) that none of the loans are in default because the parties orally agreed to extend the maturity dates; and (4) that the Second Loan had no maturity date at all. In addition, Mr. Movtady argues that Ms. Lahiji does not have standing to bring suit because she is a citizen and resident of Iran.

DISCUSSION

I. Standard of Review

“Summary judgment is appropriate where there are no genuine disputes concerning any material facts, and where the moving party is entitled to judgment as a matter of law.” Harvis Trien & Beck, P.C. v. Fed. Home Loan Mortgage Corp. (In re Blackwood Assocs., L.P.), 153 F.3d 61, 67 (2d Cir.1998) (citing Fed.R.Civ.P. 56(c)); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

“The burden of showing the absence of any genuine dispute as to a material fact rests on the party seeking summary judgment.” McLee v. Chrysler Corp., 109 F.3d 130, 134 (2d Cir.1997). “In assessing the record to determine whether there is a genuine issue to be tried as to any material fact, the court is required to resolve all ambiguities and draw all permissible factual inferences in favor of the party against whom summary judgment is sought.” McLee, 109 F.3d at 134.

“Although the moving party bears the initial burden of establishing that there are no genuine issues of material fact, once such a showing is made, the non-movant must ‘set forth specific facts showing that there is a genuine issue for trial.’ ” Weinstock v. Columbia Univ., 224 F.3d 33, 41 (2d Cir.2000) (internal quotations and citations omitted). “Mere conclusory allegations or denials will not suffice.” Williams v. Smith, 781 F.2d 319, 323 (2d Cir.1986).

In an action on a promissory note, summary judgment is appropriate if there is “ ‘no material question concerning execution and default’ of the note.” Merrill Lynch Commercial Fin. Corp. v. All State Envelopes Ltd., No. 09–CV–0785, 2010 WL 1177451, at *2 (E.D.N.Y. Mar. 24, 2010) (internal citations and quotations omitted).

This Court will address the merits of each of Mr. Movtady's defenses.

II. Standing

Standing is “the threshold question in every federal case,” and implicates the Court's subject matter jurisdiction. Ross v. Bank of America, N.A. (USA), 524 F.3d 217, 222 (2d Cir.2008). Thus, the Court must consider standing-related issues first.

A. The Trading With The Enemy Act

Mr. Movtady contends that Ms. Lahiji lacks standing because, as an Iranian resident and citizen, she is an enemy alien who lacks the power to sue in United States courts. In this regard, Mr. Movtady relies on the Trading With The Enemy Act of 1917. See 50 U.S.C.App. § 7(b) (“Nothing in this Act ... shall be deemed to authorize the prosecution of any suit or action at law or in equity in any court within the United States by an enemy or ally of enemy prior to the end of the war ....”); see also The Santa Lucia, 44 F.Supp. 793, 794 (S.D.N.Y.1942). But Mr. Movtady's reliance is misguided.

Under the Trading with the Enemy Act, an “enemy” is defined as “[a]ny individual ... of any nationality, resident within the territory (including that occupied by the military and naval forces) ... of any nation with which the United States is at war.” 50 U.S.C.App. § 2 (emphasis added). The United States has not declared war against Iran. Therefore, although Iran may be regarded as an enemy of the United States for some purposes,³ it is not an enemy under the statute. It follows then that the Trading with the Enemy Act does not preclude Ms. Lahiji's suit.

B. Contractual Standing

The parties did not brief any standing-related issue other than the Trading With The Enemy Act. But, because standing goes to the Court's subject matter jurisdiction, the Court must sua sponte consider any standing-related problem that appears on the face of the parties' papers. Here, the Promissory Note, the Second Loan, and the Third Loan all raise potential standing problems.

1. The Promissory Note

The Complaint and Plaintiffs' summary judgment motion seeks to recover on the Promissory Note on both Mr. Cohan's and Ms. Lahiji's behalf. This poses certain difficulties. The Promissory Note identifies both Mr. Cohan and Ms. Lahiji as “Lender.” But the Promissory Note then goes on to say that Mr. Movtady “promise[s] to pay to the order of REZVAN LAHIJI” the amount due. Conversely, the Promissory Note contains no promise to pay Mr. Cohan anything.

Because Mr. Cohan is listed as “Lender,” and signed the Promissory Note in that capacity, he might be a party to the contract for some purposes. But, because the Promissory Note does not vest him with any right to the money owed, he lacks standing to collect on it. Zarintash v. Boffa, 98–CV–2696, 1999 WL 155991, at *2 (S.D.N.Y.1999) (“As the note names only Bergmann as payee—for whatever reasons—Zarintash cannot claim to have suffered an injury from the note having gone unpaid”). And Mr. Cohan has put forth nothing to suggest that he has standing on other grounds, such as an assignee. Thus, the Court must sua sponte dismiss Mr. Cohan's Promissory Note claim for lack of standing. Only Ms. Lahiji's Promissory Note claim can proceed.

2. The Second and Third Loans

Ms. Lahiji's claim based on the Second and Third Loans suffers from the same standing defect as Ms. Cohan's Promissory Note claim. The parties agree that these Loans came from Mr. Cohan, not Ms. Lahiji.⁴ And the parties have submitted nothing to indicate that Ms. Lahiji otherwise has a right to collect on them. Thus, the Court must sua sponte dismiss Ms. Lahiji's loan-based claims for lack of standing. See Premium Mortg. Corp. v. Equifax, Inc., 583 F.3d 103, 108 (2d Cir.2009) (“A non-party to a contract governed by New York law lacks standing to enforce the agreement in the absence of terms that clearly evidence[ ] an intent to permit enforcement by the third party in question”) (internal quotations and citations omitted). Only Mr. Cohan's claims to collect the Second and Third Loans can proceed.

III. Statute of Limitations for Recovery of the First Loan

New York imposes a six year statute of limitations for breach of contract. N.Y.C.P.L.R. 213(2). Mr. Movtady argues that because six years have passed since he received the First Loan, the statute of limitations for recovering those funds has expired. (Def. Mem. at 3.) He is wrong. Ms. Lahiji is not suing to enforce the oral agreements that comprised the First Loan. She is suing to enforce the Promissory Note that superseded those agreements. ⁵

Ms. Lahiji's claim to enforce the Promissory Note is separate and distinct from any claim she might have to enforce the antecedent oral agreements, because the Promissory...