Hack v. Stang

• Court: U.S. District Court — Southern District of New York
• Writing for the Court: ALISON J. NATHAN, District Judge
• Decision Date: 01 September 2015
• Docket Number: 13-cv-5713 (AJN)
• Citation: Hack v. Stang, 13-cv-5713 (AJN) (S.D. N.Y. Sep 01, 2015)
• Parties: Charles Hack, Plaintiff, v. Robert B. Stang, Defendant.

Charles Hack, Plaintiff, v. Robert B. Stang, Defendant.

13-cv-5713 (AJN)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

September 1, 2015

MEMORANDUM & ORDER

ALISON J. NATHAN, District Judge:

This case arises out of a disputed promissory note that Plaintiff Charles Hack issued to Defendant Robert Stang in June 2012. Hack now moves for summary judgment to collect the principal of the note, the accrued interest, and attorney's fees and costs spent in pursuit of this action. See Dkt. No. 34. For the reasons below, Hack's motion is GRANTED.

I. BACKGROUND

A. The Promissory Note

On June 28, 2015, Hack loaned Stang the sum of $100,000. See Def. 56.1 Statement ¶ 1. To evidence the loan, the parties executed a promissory note dated June 28, 2012 (the "First Note"). Id. ¶ 2.¹ The First Note states that Hack is the holder of the note and that it obligates Stang to repay the principal amount of $100,000 on or before July 1, 2013, in addition to making quarterly interest payments. Id. ¶¶ 4-6. The First Note provides that Stang "shall pay interest on the unpaid principal amount hereof from the date hereof until paid in full at the rate as payableby Holder under his line of credit with Sotheby's. Interest shall be payable quarterly on the first day of each quarter, commencing on October 1, 2012." See Pl.'s Ex. A-2. The First Note further contains an indemnification clause stating that "[i]n the event of a default in the payment of any principal and/or interest due under [the First Note], the Maker agrees to pay all reasonable costs and expenses incurred by the Holder hereof in enforcing [the First Note] and the collection of any principal and interest including, without limitation, reasonable attorneys' fees, disbursements and costs." Id.

Stang made the first two quarterly interest payments in a timely fashion on October 1, 2012 and January 1, 2013, respectively. See Def. 56.1 Statement 8. The subsequent quarterly interest payment was due on April 1, 2013 in the amount of $1,442.47. Id. ¶ 9. Stang did not make this payment, id. ¶ 10, nor did he make the next quarterly interest payment, due on July 1, 2013, for the sum of $1,441.21. Id. ¶¶ 11-12. On July 2, 2013, Hack served Stang with a written demand for payment of the principal and all outstanding interest due under the First Note. Id. ¶ 16.

B. Procedural History

This case was first filed in New York Supreme Court on July 18, 2013. See Dkt. No. 1. Plaintiff filed the action pursuant to N.Y. CPLR § 3213, which allows a litigant to file a motion for summary judgment in lieu of a complaint. Defendant removed the case to federal court on August 15, 2013 on the basis of diversity jurisdiction pursuant to 28 U.S.C. § 1332(a). Id. On November 27, 2013, Stang moved to have the case dismissed for lack of personal jurisdiction or, in the alternative, to have the case transferred to the District of New Jersey. See Dkt. No. 15. Stang disputed personal jurisdiction on the grounds that he was a resident of Oregon and that he had had not transacted business within New York, as required for specific jurisdiction under N.Y. CPLR § 302(a)(1). The Court rejected that argument, noting that Stang engaged in several purposeful acts in New York,including a number of meetings with Hack in New York to discuss and negotiate the terms of the note. See Dkt. No. 31 at 8. The Court similarly rejected Stang's argument that the case should be transferred to the District of New Jersey in light of allegedly related litigation between the parties in that district. Id. at 11. Hack subsequently filed this motion for summary judgment on November 18, 2014. See Dkt. No. 34.

II. LEGAL STANDARD

Summary judgment is properly granted when, after reviewing the evidence in the light most favorable to the non-moving party, "there is no genuine issue as to any material fact" and "the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c); Nabisco, Inc. v. Warner-Lambert Co., 220 F.3d 43, 45 (2d Cir. 2000). For summary judgment purposes, a genuine issue exists if the evidence is such that a reasonable jury could decide in the non-moving party's favor. Id.

In a summary judgment setting, "the burden is upon the moving party to demonstrate that no genuine issue respecting any material fact exists." Gallo v. Prudential Residential Servs., Ltd. P'ship, 22 F.3d 1219, 1223 (2d Cir. 1994). However, "[w]hen the burden of proof at trial would fall on the nonmoving party, it ordinarily is sufficient for the movant to point to a lack of evidence . . . on an essential element of the nonmovant's claim." Cordiano v. Metacon Gun Club, Inc., 575 F.3d 199, 204 (2d Cir. 2009). "Where the moving party demonstrates the absence of a genuine issue of material fact, the opposing party must come forward with specific evidence demonstrating the existence of a genuine dispute of material fact." Brown v. Eli Lilly & Co., 654 F.3d 347, 358 (2d Cir. 2011) (citations omitted). "More specifically, it must do more than simply show that there is some metaphysical doubt as to the material facts and may not rely on conclusory allegations or unsubstantiated speculation." Id. (citations omitted).

III. DISCUSSION

Hack seeks to recover the principal sum of the First Note in addition to the interest that has accumulated on the note since Stang first ceased paying the quarterly interest installments on April 1, 2013. He further seeks attorneys' fees pursuant to the terms of the note. The Court first addresses Hack's claims under the note before turning to his request for fees.

A. Hack Has Established a Prima Facie Case of Default on The First Note

To establish a prima facie case of default on a promissory note under New York law, a plaintiff must provide proof of a valid note and of defendant's failure, despite proper demand, to make payment. See Cavendish Traders, Ltd. v. Nice Skate Shoes, Ltd., 117 F. Supp. 2d 394, 399 (S.D.N.Y. 2000) (citing Gateway State Bank v. Shangri-La Private Club for Women, Inc., 113 A.D.2d 791 (N.Y. App. Div. 1985), aff'd, 67 N.Y.2d 627 (1986)). See also Exp.-Imp. Bank of U.S. v. Agricola Del Mar BCS, 536 F. Supp. 2d 345, 349 (S.D.N.Y. 2008) aff'd 334 F. App'x 353 (2d Cir. 2009).

Once the plaintiff has made out a prima facie case of default, "it [becomes] incumbent on the defendant to establish, by admissible evidence, that a triable issue of fact exist[s]." Inner City Telecommunications Network, Inc. v. Sheridan Broad. Corp., 10-cv-3567 (LAP), 2010 WL 2835559, at *2 (S.D.N.Y. July 13, 2010) (quoting Silber v. Muschel, 190 A.D.2d 727, 728 (N.Y. App. Div. 1993)). See also In re RMM Records & Video Corp., 372 B.R. 603, 609-10 (Bankr. S.D.N.Y. 2007) ("When a note holder has established a prima facie claim, the burden shifts to the defendant to prove the 'existence' of a triable issue of fact in the form of a bona fide defense against the note. . . . It is well settled under New York law that conclusory allegations as to the defenses do not suffice to defeat a summary judgment motion for payment of a promissorynote.") (internal citations and quotations omitted); Money Store of New York, Inc. v. Kuprianchik, 240 A.D.2d 398, 399 (N.Y. App. Div. 1997) ("The plaintiff established a prima facie case that it was entitled to summary judgment by proving the existence of the note, the defendant's guaranty of the note, and the defendant's default in payment of the note after due demand. The defendant's conclusory and speculative assertions that the underlying loan was discharged or modified, thereby negating his guarantee, were insufficient to raise a triable issue of fact and defeat the plaintiff's motion.")

There is no genuine dispute of fact that Hack has made out a prima facie case of default on the First Note. There is no genuine dispute of fact that a valid note exists, that Hack is the holder of the note, and that the note obligated Stang to make certain payments to Hack. See Def. 56.1 Statement ¶¶ 1-2, 4-5; Pl.'s Ex. A-2. Further, there is no dispute of fact that on July 2, 2013, Hack issued a written demand for payment to Stang. See Def. 56.1 Statement ¶ 16; Pl.'s Ex. A-5. Stang does not dispute that he has failed to pay back the principal sum of the note or that he ceased making quarterly interest payments as of April 1, 2013. See Def. 56.1 Statement ¶¶ 6, 9-12. "This Court has little difficulty finding that Plaintiff[] ha[s] met their burden of showing there can be no material factual dispute as to any of these elements, and that they are therefore entitled to judgment as a matter of law." Genesi v. Int'l Portfolio, Inc., 12-cv-5462 (RA), 2012 WL 5964391, at *3-4 (S.D.N.Y. Nov. 29, 2012) (granting summary judgment under § 3213 where plaintiff established existence of the note, demand for payment, and failure of defendant to pay). Hack has met his "initial burden of demonstrating entitlement to recovery of the note" and the burden has therefore "shifted to defendant[] to demonstrate" why Hack is not entitled to enforce the First Note. Carlin v. Jemal, 68 A.D.3d 655, 656, 657 (N.Y. App. Div. 2009).

B. Stang Has Failed to Raise a Triable Issue of Fact Concerning the Enforceability of the First Note

Stang asserts that summary judgment must be denied because there are two questions of fact relating to the enforceability of the First Note. First, he contends that there are possible fact questions about payment or setoff. See Opp. ¶ 1. Second, Stang argues that there are outstanding questions concerning the calculation of interest on the note. Id. As the Court explains, neither of these arguments is compelling.

1. Stang's Claimed Right of Setoff Does Not Create a Triable Issue of Fact

"The common law doctrine of setoff allows entities that owe each other money to apply their mutual debts against each other, thereby avoiding the absurdity of making A pay B when B owes A." Cohen v. Elephant Wireless, Inc., 03-cv-4058 (CBM), 2004 WL 1872421, at *3 (S.D.N.Y. Aug. 19, 2004) (quoting In re Malinowski, 156 F.3d 131 ...