Grossman v. Laurence Handprints-N.J., Inc.

• Decision Date: 29 November 1982
• Docket Number: HANDPRINTS-N
• Citation: 455 N.Y.S.2d 852,90 A.D.2d 95
• Parties: Martin GROSSMAN, Respondent, v. LAURENCEJ., INC. et al., Appellants.
• Court: New York Supreme Court — Appellate Division

Page 852

455 N.Y.S.2d 852

90 A.D.2d 95

Martin GROSSMAN, Respondent, v. LAURENCE HANDPRINTS-N.J., INC. et al., Appellants.

Supreme Court, Appellate Division Second Department.

Nov. 29, 1982.

Wolf, Popper, Ross, Wolf & Jones, New York City (Michael P. Fuchs, New York City, of counsel), for appellants.

Weinstein & Weinstein, Kew Gardens (Jonathan H. Weinstein, Kew Gardens, of counsel), for respondent.

Before LAZER, J.P., and THOMPSON, BRACKEN and RUBIN, JJ.

RUBIN, Justice.

The plaintiff and the individual defendants entered into an agreement in January of 1981, under the terms of which the plaintiff sold and the defendants bought all of the stock of Laurence Handprints-N.J., Inc., at an agreed price of $80,000. The contract of sale provided, inter alia, that the purchasers would give the seller a promissory note in the amount of $40,000, payable in installments, as part of the consideration. In June of 1981, the plaintiff-seller commenced this action against the defendant-purchasers by serving them with a summons and complaint, dated June 2, 1981, alleging four causes of action. The plaintiff claimed:

(1) it was owed $40,000 by reason of defendants' breach of contract in defaulting on payment of the promissory note;

(2) that defendants owed plaintiff $3,000 for wrongful possession and refusal to return to plaintiff certain of his goods and materials;

(3) that defendants should be compelled to turn over to plaintiff certain company books and records; and

(4) that defendants should be required to render an accounting of moneys collected and owing to plaintiff.

The defendants did not answer the complaint, but instead, on June 12, 1981, moved, pursuant to subdivision (a) of CPLR 7503, to compel arbitration of their differences as provided for in the contract of sale. In addition to opposing defendants' motion, the plaintiff, by cross notice of motion, dated June 26, 1981, moved for summary judgment against the defendants. By order dated October 28, 1981, Special Term ignored the issues raised by defendants' motion, and granted plaintiff's cross motion insofar as it was for summary judgment as to the first, third and fourth causes of action. The defendants moved for reargument, and by order dated December 10, 1981, Special Term granted reargument and adhered to its original determination. In both its original determination and its determination on reargument, Special Term emphasized that it was basing its decision as to the first cause of action on the promissory note primarily on the failure of defendants to provide the court with proof by persons having actual knowledge of the facts. Defendants had only submitted an affirmation by their attorney. The court cited Rubin v. Rubin, 72 A.D.2d 536, 421 N.Y.S.2d 68, and this court's decision in Valenti v. Purdy, 71 A.D.2d 1019, 1020, 420 N.Y.S.2d 406.

Summary judgment was granted on the third and fourth causes of action on the ground that they sought equitable relief, which was excluded from arbitration by the terms of the agreement. The second cause of action was referred to arbitration.

In our opinion, Special Term erred, on procedural grounds, in granting plaintiff's cross motion as well as in its factual finding, implicit in its decision, that defendants were not entitled to arbitration of the claims set forth in the first, third and fourth causes of action.

Nowhere in his notice of cross motion or in his supporting papers does counsel for the plaintiff specify the section of the CPLR under which he is seeking summary judgment. The sections dealing with summary judgment are found in CPLR 3211, 3212 and 3213.

The provisions of subdivisions (b) and (c) of CPLR 3211 are not applicable since no motion was made by the plaintiff under subdivision (b). The obvious reason is that no answer was interposed by defendants to which such a motion by plainti could be addressed. Defendants' application was to compel arbitration pursuant to CPLR 7503 prior thereto so as not to waive their alleged right to arbitration.

CPLR 3212 provides in pertinent part:

"(a) Time; kind of action. Any party may move for summary judgment in any action, after issue has been joined." (Emphasis supplied.)

In the case at bar, issue had not been joined and, therefore, the court was powerless to grant summary judgment pursuant to CPLR 3212 (see 6 Carmody-Wait 2d, N.Y.Prac., p. 458; Alro Bldrs. & Constrs. v. Chicken Koop, 78 A.D.2d 512, 432 N.Y.S.2d 2; Milk v. Gottschalk, 29 A.D.2d 698, 286 N.Y.S.2d 39). Defendants' counsel was well aware of this provision and pointed it out in his affirmation in opposition to plaintiff's cross motion. In addition, he alleged that there were disputed issues of fact arising from the financial transaction which precluded summary judgment.

By the same token, plaintiff was not entitled to move for summary judgment under CPLR 3213. The first sentence of that section reads:

"When an action is based upon an instrument for the payment of money only or upon any judgment, the plaintiff may serve with the summons a notice of motion for summary judgment and the supporting papers in lieu of a complaint." (Emphasis supplied.)

Plaintiff did not follow that statutory procedure. Instead, the plaintiff commenced his action by the service of a summons and complaint alleging four causes of action. Even assuming arguendo that the first cause of action was based on an instrument "for the payment of money only", the complaint actually pleaded three additional causes of action. In fact, plaintiff's motion for summary judgment addressed all four causes of action alleged in the complaint and not just the cause of action on the note. It follows, therefore, that the action was not one "for the payment of money only" and that summary judgment could not properly have been granted to plaintiff under CPLR 3213.

We turn now to defendants' contention that they were entitled to arbitration in accordance with the appropriate provisions of their contract of sale. As indicated above, Special Term ignored the issues raised by defendants' application and granted plaintiff's cross motion for summary judgment as to three of the causes of action, so we must assume that the court never addressed the merits of defendants' application. In granting summary judgment Special Term made a finding that plaintiff's claims, under the second cause of action, were not specific enough for summary judgment and directed that the parties proceed to arbitration on that cause of action. Thus we are now concerned only with the first, third and fourth causes of action.

Recently our Court of Appeals set forth guidelines for the courts on motions to compel, or stay, arbitration. In the case of Matter of County of Rockland (Primiano Constr. Co.), 51 N.Y.2d 1, 5, 431 N.Y.S.2d 478, 409 N.E.2d 951. Judge JONES, writing for a unanimous court, stated that on such an application there are three threshold questions to be resolved by the court:

(1) whether the parties had agreed to submit their disputes to arbitration;

(2) if so, whether the particular dispute comes within the scope of their agreement, and

(3) whether there has been compliance with any condition precedent to access to the arbitration forum.

This last criterion is not applicable to this case as there is no condition precedent to be met.

As to the first criterion, we believe it to be a fair conclusion that there was a valid agreement to arbitrate. The contract between the parties contained a very broad arbitration provision. Paragraph 17 of the contract reads:

"The parties hereto agree that any and all disputes among them, and any claim by any party that cannot be amicably resolved, shall be determined by arbitration in accordance with the rules then obtaining of the American Arbitration Association. Judgment upon an award of the arbitrator(s) shall be binding, and shall be entered in a court of competent jurisdiction. Nothing contained herein shall bar the right of any party hereto to obtain injunctive relief against threatened conduct that will cause loss or damage under the usual equity rules, including the applicable rules for obtaining preliminary injunctions, provided an appropriate bond against damages be provided."

The critical issue then is whether the note was an integral part of the agreement. The defendants argue that the promissory note is referred to several times in the context of the contract and is a part thereof. The plaintiff takes the position that the note is a separate and complete instrument.

The agreement refers to the promissory note specifying that the note is attached as exhibit "D". It states what security is provided as collateral for the note, and details a procedure "the event the PURCHASERS fail to make payment on the Promissory Note when due in accordance with the terms thereof". This procedure entails notice by the seller to the purchasers, a 30-day period to cure the default and notice to the escrow agent holding the collateral. Furthermore, paragraph (d) of the note states specifically that it forms a part of the agreement: "the Maker shall breach any of the affirmative or negative warranties, covenants, conditions * * * contained in the Agreement between the Maker and the Payee * * * of which this Note forms a part."

Thus, a reading of the note and the contract of sale together demonstrates clearly that the note was an integral part of the agreement. "It is well recognized that agreements executed at substantially the same time and related to the same subject matter are regarded as contemporaneous writings and must be read together as one" (Flemington Nat. Bank & Trust Co. v. Domler Leasing Corp., 65 A.D.2d 29, 32, 410 N.Y.S.2d 75, affd. 48 N.Y.2d 678, 421 N.Y.S.2d 881, 397 N.E.2d 393, citing Nau v. Vulcan Rail & Constr. Co., 286 N.Y. 188, 197, 36 N.E.2d 106; Restatement, Contracts 2d, § 213, subd. c; 22 N.Y.Jur.2d, Contracts, § 226).

The plaintiff refers to the following language in the note to support his...