Kirzner v. Plasticware, LLC
| Decision Date | 15 April 2015 |
| Docket Number | No. 503226/2014.,503226/2014. |
| Citation | 16 N.Y.S.3d 792 (Table) |
| Parties | Ahron KIRZNER, Plaintiff, v. PLASTICWARE, LLC and Jacob Deutsch, Defendant. |
| Court | New York Supreme Court |
Mark Kranz, Esq., Suslovich & Klein LLP, Brooklyn, for Plaintiff.
Zvi Storch, Esq., Brooklyn, for Defendants.
The following e-filed papers read herein:
| Papers | Numbered |
| Notice of Motion/Order to Show Cause/Petition/Cross Motion and Affidavits (Affirmations) Annexed | 23–38 |
| Opposing Affidavits (Affirmations) | 40–41, 45, 46–48 |
| Reply Affidavits (Affirmations) | 49–52 |
| Affidavit (Affirmation) | |
| Other Papers |
In this action by plaintiff Ahron Kirzner (plaintiff) against defendants Plasticware, LLC (Plasticware) and Jacob Deutsch (Deutsch) to recover on a promissory note and guaranty, plaintiff moves, under motion sequence number two, for: (1) summary judgment in his favor as against Deutsch in the amount of $800,000, plus interest from March 27, 2008 through June 9, 2008 at the rate of 12% per annum, and interest from June 10, 2008 at the default rate of 24% per annum, together with legal fees incurred by him in bringing this action, and (2) discontinuing this action as against Plasticware.
Plaintiff loaned $800,000 to Plasticware. The terms of the loan were evidenced by a promissory note dated March 27, 2008, which was executed and given by Plasticware to plaintiff. The note provided that Plasticware promised to pay to the order of plaintiff the principal sum of $800,000, and interest at the greater of 12% per annum or prime (as published in the WSJ) plus 5%, to be paid monthly, the rate to be adjusted annually. Pursuant to paragraph 1 of the note, the loan was required to be repaid by June 9, 2008, 75 days from the date of the note. Paragraph 3 of the note provided that a default would occur if Plasticware failed to make a payment of principal or interest. This paragraph further provided that upon the occurrence of an event of default, Plasticware agreed to pay all costs and expenses, including attorneys' fees, arising in connection with any enforcement or collection action by plaintiff, and that all such costs and expenses of collection would be added to and become part of, the principal of the note, and would be collectible as part of such principal and bear interest from the date of advance until paid. This paragraph further provided that as long as an event of default continued, all outstanding obligations would bear interest at the default rate of 24%, which would apply from the demand for payment until all amounts due under the note were paid in full. In paragraph 4 of the note, however, Plasticware waived any demand or presentment for payment.
Paragraph 10 of the note stated that the note would be governed and construed in accordance with the laws of the State of New York. Paragraph 11 of the note, entitled “Beis Din,” provided that “[t]he parties agree that any conflicts of the terms of this note ... will be decided by Mechon L'Hoyroa.” Paragraph 14 of the note states: “[t]his transaction is being done within the parameters of a Heter Iska as defined in Jewish Law.”
Paragraph 15 of the note stated that Modechai E. Neustein (Neustein) and Samuel Meth (Meth) represented that they were the sole shareholders of Plasticware and were fully authorized to execute the note on behalf of Plasticware, and pledged their interests in Plasticware as collateral to the note. This paragraph further stated that by signing the note, Neustein, Meth, and Deutsch jointly and severally guaranteed the full and complete performance of Plasticware, as the borrower, under the terms of the note. The note was executed by Meth, on behalf of Plasticware, as the borrower. The note was also executed by Meth, Neustein, and Deutch, as joint and several guarantors of the repayment of the note.
Following Plasticware's failure to make any payments on the note, plaintiff served a notice of intention to arbitrate, dated July 18, 2013, on Deutsch, Meth, Plasticware, and Neustein. This notice provided that pursuant to the terms of the note, plaintiff intended to conduct an arbitration of the conflict between him and them in connection with their obligations to repay the loan before the Rabbinical Court of Mechon L'Hoyroa. The notice further provided that, pursuant to CPLR 7503(c), unless Plasticware, Meth, Neustein, and Deutsch applied for a stay of arbitration within twenty days, they would, thereafter, be precluded from objecting that a valid agreement was not made or has not been complied with, and from asserting in court the bar of a limitation of time. Certified mail receipts indicate service on July 19, 2013 on Plasticware, Meth, Neustein, and Deutsch, of the notice of intention to arbitrate, together with a cover letter from plaintiff's counsel. On October 8, 2013, Plasticware, Meth, and Neustein executed an agreement to submit their dispute to binding arbitration before three arbitrators of the Rabbinical Court of Mechon L'Hoyroa and proceeded to arbitration. Deutsch, however, did not respond or apply to stay arbitration pursuant to CPLR 7503(b). On October 17, 2013, after hearing testimony and considering the evidence presented, the arbitrators rendered an award, which provided that Plasticware, Neustein, and Meth were required to pay plaintiff the sum of $800,000, and that each of them was personally responsible for this entire sum. On August 14, 2014, plaintiff brought a proceeding, pursuant to CPLR 7510, to confirm the October 17, 2013 arbitration award (Kirzner v. Neustein, Sup Ct, Kings County, index No. 507442/2014). By an order dated November 12, 2014, the court granted plaintiff's petition confirming the arbitration award in its entirety, and granted a judgment against Neustein, Meth, and Plasticware jointly and severally in the amount of $800,000 plus interest at the statutory rate of nine percent from October 17, 2013, plus the costs and disbursements of that action. The November 12, 2014 order directed the Kings County clerk to enter a judgment forthwith and for plaintiff to have execution therefor.
On April 14, 2014, plaintiff filed this action against Deutsch and Plasticware. Plaintiff's complaint alleges that Plasticware failed to pay him any portion of the principal amount of $800,000 or the accrued interest when due, and that, after demand for payment was made to Plasticware, it failed to pay the amounts due. Plaintiff's complaint, in its first cause of action, alleges that there is due and owing to him from Plasticware, under the note, the principal sum of $800,000 plus interest due from March 27, 2008 through June 9, 2009 at the rate of 12% per annum, and, thereafter, at the default rate of 24% per annum. Plaintiff's second cause of action alleges that Deutsch, as a guarantor of the note, was summoned to the Rabbinical Court of Mechon L'Hoyroa to arbitrate this dispute, but did not appear, and that the above principal sum plus interest is owed by Deutsch. Plaintiff's third cause of action seeks the recovery of his attorney's fees and expenses as provided by paragraph 3 of the note. This action has not been brought as against Neustein or Meth, the other two guarantors of the note, due to their participation in the arbitration.
On June 10, 2014, Leopold Gross PLLC (Gross) appeared as the attorneys of record for Deutsch in the present action and entered into a stipulation with plaintiff's counsel extending Deutsch's time to answer. On July 10, 2014, Gross moved, by order to show cause, under motion sequence number one, pursuant to CPLR 321(b)(2), to withdraw as attorneys for Deutsch, and, pursuant to CPLR 2201, for a stay of all proceedings for 30 days in order to afford Deutsch the opportunity to obtain substitute counsel. By order dated July 23, 2014, the court granted Gross' order to show cause and stayed this case until September 10, 2014 except that Deutsch was directed to answer the complaint by September 3, 2014, and was further directed to appear on September 10, 2014 with new counsel.
On September 3, 2014, Deutsch served a pro se answer by both e-mail and regular mail on plaintiff's counsel, Mark M. Kranz, Esq. (Kranz), which contained general denials. On September 10, 2013, Deutsch did not appear before the court with new counsel, which was noted on the record.
Thereafter, Deutsch retained Zvi A. Storch, Esq. (Storch) to represent him in this action, and, on September 22, 2014, Storch filed and served upon Kranz a notice of appearance in this action, an amended answer on Deutsch's behalf, and a notice to take the deposition of plaintiff. Defendant's amended answer contains general denials, and asserts 19 affirmative defenses. By letter dated September 23, 2014, Kranz rejected Deutsch's amended answer, asserting that Deutsch was already in default. Thereafter, Storch served Kranz with discovery demands, dated September 29, 2014, consisting of combined demands and interrogatories.
On October 20, 2014, plaintiff e-filed his instant motion, seeking a default judgment, pursuant to CPLR 3215, against Deutsch, or, in the alternative, summary judgment, pursuant to CPLR 3212, for the sums due under the note. On January 6, 2015, Deutsch e-filed a cross motion (motion sequence number three), for an order, pursuant to CPLR 3012(d), compelling plaintiff to accept his amended answer, and, pursuant to CPLR 3124 and 3212(f), compelling plaintiff to respond to his discovery demands and to set a time for a deposition. At oral argument on January 14, 2015, the court denied plaintiff's motion insofar as it sought a default judgment, granted Deutsch's cross motion compelling plaintiff to accept Deutsch's amended answer, and reserved decision on plaintiff's motion insofar as it sought summary judgment. Presently before the court is plaintiff's motion for summary judgment, to be decided in light of Deutsch's amended answer.1 Plaintiff also raises, in reply, the argument that the court should alternatively compel Deutsch to submit this dispute to binding...
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