| Kamp v Fiumera |
| 2010 NY Slip Op 00429 [69 AD3d 1168] |
| January 21, 2010 |
| Appellate Division, Third Department |
| Gerard Kamp, as Trustee for the Frank X. Kamp Trust, Appellant,v Frank G. Fiumera, Individually and Doing Business as FGF Stables and Another,Respondent. |
—[*1] Hickey, Sheehan & Gates, P.C., Binghamton (Dennis P. Sheehan of counsel), forrespondent.
Stein, J. Appeal from an order of the Supreme Court (Lebous, J.), entered September 12,2008 in Broome County, which, among other things, denied plaintiff's motion for summaryjudgment.
Plaintiff, individually, entered into a stock purchase agreement with defendant, wherebydefendant agreed to sell his 50 shares of stock in American-Sino Processing, Inc. (hereinafterASPI) to plaintiff for $175,000 (hereinafter the ASPI agreement). To satisfy the purchase price,plaintiff executed a promissory note (hereinafter the first promissory note) to pay defendant suchamount over time with interest. Subsequently, defendant executed a promissory note (hereinafterthe second promissory note) to pay the Frank X. Kamp Trust, of which plaintiff is the trustee, thesum of $50,000, also to be paid over time with interest. According to plaintiff, the secondpromissory note was executed by defendant in connection with a loan made to defendant toenable him to take advantage of a business opportunity. Both parties subsequently defaulted inmaking the payments on their respective notes. Plaintiff, as trustee for the trust, commenced thisaction seeking recovery of the outstanding balance due under the second promissory note andsubsequently moved for summary judgment. Supreme Court denied that motion, prompting thisappeal.[FN1]
We affirm. Inasmuch as plaintiff met his initial burden of establishing a prima facie case bydemonstrating that defendant executed the second promissory note and defaulted thereon(see CPLR 3212 [b]; Mastro v Carroll, 296 AD2d 802, 802 [2002]), the burdenshifted to defendant to demonstrate the existence of a triable issue of fact (see Alvarez vProspect Hosp., 68 NY2d 320, 324 [1986]; Zuckerman v City of New York, 49NY2d 557, 562 [1980]; Friends of Animals v Associated Fur Mfrs., 46 NY2d 1065,1067-1068 [1979]). To that end, defendant submitted evidence that the second promissory notewas not intended to be an obligation enforceable against him, but instead was given by plaintiffas collateral against plaintiff's debt under the first promissory note. According to defendant,plaintiff provided security in the form of a $50,000 check from the trust, but requested thatdefendant sign the second promissory note which would appear as a loan from the trust becauseplaintiff did not want the payment to appear as security for his personal debt.
In addition to his own affidavit, defendant submitted the affidavits of Steven Cantella andXibai Gao, the general manager and in-house counsel, respectively, for another corporationformerly owned by plaintiff and defendant, jointly.[FN2]Both Cantella and Gao attested that defendant refused to proceed with the ASPI agreementunless plaintiff provided him with some collateral to cover the amount owed under the firstpromissory note. In addition, defendant submitted copies of e-mail exchanges between himselfand plaintiff in which he demanded that plaintiff provide him with collateral for the ASPIagreement. Supreme Court correctly found that this evidence was sufficient to raise a triableissue of fact as to whether the parties ever intended the second promissory note to be anobligation enforceable against defendant.
Although "the parol evidence rule [generally] precludes [a party] from offering any evidencethat contradicts [or modifies] the apparently complete written contract" (W. L. Christopher,Inc. v Seamen's Bank For Sav., 144 AD2d 809, 810 [1988]; see Marine Midland Bank-S.v Thurlow, 53 NY2d 381, 387 [1981]; Polygram Holding, Inc. v Cafaro, 42 AD3d 339, 340 [2007]), parolevidence may be offered to demonstrate "that what purports to be a binding contract is, in fact,no contract at all" (Jurkiewicz vZechewytz, 15 AD3d 721, 721 [2005]; see DeVito v Benjamin, 243 AD2d 600,601 [1997]). Here, contrary to plaintiff's argument otherwise, "[t]he evidence submitted by[defendant] . . . was intended not merely to contradict the express terms of the note,but was properly offered to demonstrate that the note was never intended to be an obligationenforceable against [him]" (DeVito v Benjamin, 243 AD2d at 602; see Lombard &Co. v De La Roche, 235 AD2d 333, 334 [1997]; Adirondack Bank v Simmons, 210AD2d 651, 654 [1994]; Paolangeli v Cowles, 208 AD2d 1174, 1175 [1994]).
Plaintiff argues, for the first time on appeal, that even if the evidence was sufficient to raisean issue of fact as to the existence of an oral security agreement, it was still insufficient to defeathis motion for summary judgment because the alleged agreement was not valid under UCCarticle 9. Specifically, he contends that, in order for an oral security agreement to be valid, thesecured party must have possession of the collateral. He further argues that the collateral herewas the actual $50,000 check and, inasmuch as defendant admittedly negotiated the check,defendant did not retain possession of the collateral. On the other hand, defendant argues that theparties intended the collateral to be the $50,000 represented by the check and alleges that he hasretained possession thereof. Inasmuch as plaintiff failed to make this argument before SupremeCourt, it was not preserved for our review. Furthermore, the issue of whether the intendedcollateral was the check (as urged by plaintiff) or the funds represented by the check (asdefendant contends) is itself a question of fact requiring a trial—not an issue of law thatwe could address even if raised for the first time on appeal (see Lischinskaya v Carnival Corp., 56 AD3d 116, 120-121 [2008],lv denied 12 NY3d 716 [2009]; Bender v Peerless Ins. Co., 36 AD3d 1120, 1121 [2007];Matter of Town of Minerva v Essex County Indus. Dev. Agency, 173 AD2d 1054, 1055[1991], lv denied 78 NY2d 857 [1991]).
Peters, J.P., Lahtinen, Malone Jr. and Kavanagh, JJ., concur. Ordered that the order isaffirmed, with costs. [Prior Case History: 2008 NY Slip Op 32495(U).]
Footnote 1: Defendant also commenced anaction seeking recovery of the outstanding balance due under the first promissory note bymoving for summary judgment in lieu of complaint pursuant to CPLR 3213, which motion wasdenied by Supreme Court. Defendant withdrew his cross appeal from that part of the orderdenying his motion.
Footnote 2: In a separate transaction,defendant purchased plaintiff's shares of stock in that corporation and paid him in full.