| Craven v Rigas |
| 2010 NY Slip Op 01725 [71 AD3d 1220] |
| March 4, 2010 |
| Appellate Division, Third Department |
| J. Jeffrey Craven, Respondent, v John C. Rigas,Appellant. |
—[*1]
Cardona, P.J. Appeal from a judgment of the Supreme Court (Garry, J.), entered June 30,2009 in Tompkins County, which, among other things, granted plaintiff's motion for summaryjudgment in lieu of complaint.
In August 2000, plaintiff sold shares of stock to defendant representing a 25% equity interestin Americell, Inc. As consideration for the stock, defendant paid plaintiff $500,000 cash at thetime of the sale and also executed and delivered a promissory note in the principal amount of$850,000. Under the original terms, the note was to become due on August 31, 2004, and thegoverning law would be that of Pennsylvania. Subsequently, on November 21, 2003, the partiesexecuted an instrument, entitled "First Amendment to Promissory Note," which extended thematurity date of the note until October 31, 2005 as long as defendant paid $200,000 uponexecution of the amendment and an additional $200,000 by August 31, 2004.[FN1]Defendant paid the initial amount, but did not pay the additional $200,000 on August 31, 2004.Although plaintiff extended the date for the second payment until October 31, 2004, defendantonly paid[*2]$150,000. Defendant made no further payment onthe note.
On October 4, 2006, plaintiff sent defendant a letter advising him that the note was due andrequesting that defendant inform him of his payment intentions. Defendant did not respond andplaintiff commenced this action in September 2008 by way of motion for summary judgment inlieu of complaint pursuant to CPLR 3213. Defendant cross-moved for an order dismissing theaction. Supreme Court granted plaintiff's motion, prompting this appeal.
Initially, we do not agree with defendant's contention that plaintiff's action should have beendismissed as time-barred. According to defendant, a cause of action against him accrued onAugust 31, 2004,[FN2]when payment was not made and, therefore, plaintiff's commencement in September 2008 wasuntimely pursuant to Pennsylvania's four-year statute of limitations (see 42 Pa Cons StatAnn § 5525 [a] [7]). Defendant maintains that Supreme Court erred by ruling that NewYork's six-year statute of limitations (see CPLR 213) controls (see generally Portfolio Recovery Assoc.,LLC v King, 55 AD3d 1074, 1075 [2008], lv granted 12 NY3d 711 [2009]).Regardless of the merit of defendant's argument concerning the applicability of the Pennsylvaniastatute of limitations period, inasmuch as, for the reasons that follow, we agree with the court'salternative conclusion that plaintiff's action was timely regardless of which relevant statute oflimitations is applied, it is unnecessary to determine which limitations period governs herein.
Significantly, by its terms, the note permits plaintiff to declare the balance "immediately dueand payable" only "[u]pon the occurrence of any Event of Default." An "Event ofDefault," as relevant herein, is specifically defined in the note as occurring when "there is adefault in the payment of principal and/or interest as and when the same is or becomes duehereunder" and that "default continues for 10 days after" plaintiff gives notice of same todefendant. Thus, the note distinguishes between when it "shall be due and payable infull"—ostensibly August 31, 2004—and when an event of default occurs.Accordingly, under the specific terms of the note, plaintiff's cause of action did not accrue until10 days after plaintiff sent notice of the default to defendant in October 2006. Consequently,plaintiff's action was timely even if defendant is correct in contending that the shorterPennsylvania statute of limitations is applied.
Turning to the merits, contrary to defendant's argument, the promissory note executed bydefendant satisfies the prerequisites of CPLR 3213. The note contains an "unambiguous andunconditional promise to pay a specified sum on a specified date and is clearly an instrument forthe payment of money only" (DH Cattle Holdings Co. v Kuntz, 165 AD2d 568, 569-570[1991]; see Smith v Shields SalesCorp., 22 AD3d 942, 944 [2005]; Coneco Corp. v Atlantic Energy Servs., 270AD2d 691, 692 [2000]). Although the note references the underlying stock purchase agreement,the reference serves only to describe the security interest that plaintiff reserved in the stock anddoes not constitute a situation where proof beyond the note is necessary. Notably, the referencedoes not qualify the debt owed to plaintiff under the note (see Smith v Shields SalesCorp., 22 AD3d at 944). Moreover, the evidence of setoffs does not preclude application ofCPLR 3213. Plaintiff presented an accurate accounting of the amount due (see Quest Commercial, LLC v Rovner,35 AD3d 576, 577 [2006]), of which there is no genuine dispute.[*3]
Finally, we are unconvinced that summary judgment wasimproperly granted herein. "To prevail on his motion for summary judgment in lieu of complaintbased on a promissory note, plaintiff was required to present evidence that defendant[ ] executedthe note and defaulted thereon" (Kehoev Abate, 62 AD3d 1178, 1180 [2009] [citations omitted]). Plaintiff presented the dulyexecuted note and it is undisputed that defendant is in default. Thus, plaintiff established a primafacie case and the burden shifted to defendant to raise a triable issue of fact regarding a bona fidedefense to liability on the note (seeSecurity Mut. Life Ins. Co. v Member Servs., Inc., 46 AD3d 1077, 1078 [2007];Mastro v Carroll, 296 AD2d 802, 802 [2002]). This, defendant failed to do. As noted bySupreme Court, defendant's belated questioning of whether, in the early 1990s, plaintiff gavevalid consideration for his acquisition of the Americell stock that he eventually sold to defendantin 2000 does not create a factual issue relevant to his liability on the subject note. Thattransaction is clearly not "intertwined" with the August 2000 stock purchase agreement andpromissory note so as to render summary judgment improper (see Corvetti v Hudson,252 AD2d 787, 788 [1998]).
We have examined defendant's remaining arguments and find them to be unpersuasive.
Peters, Rose, Kavanagh and McCarthy, JJ., concur. Ordered that the judgment is affirmed,with costs.
Footnote 1: Although the payments toplaintiff described in the amended promissory note were referred to as "loans," the parties do notdispute that they constituted payments against the original note.
Footnote 2: Since defendant did not complywith the conditions precedent for extending the note's payment deadline until October 31, 2005,he maintains that the time of his default should be measured from the August 2004 date.