| Security Mut. Life Ins. Co. v Member Servs., Inc. |
| 2007 NY Slip Op 09857 [46 AD3d 1077] |
| December 13, 2007 |
| Appellate Division, Third Department |
| Security Mutual Life Insurance Company, Respondent, v MemberServices, Inc., et al., Appellants. |
—[*1] Hinman, Howard & Kattell, L.L.P., Binghamton (Albert J. Millus of counsel), forrespondent.
Lahtinen, J. Appeals (1) from an order of the Supreme Court (Relihan, Jr., J.), enteredDecember 13, 2006 in Broome County, which granted plaintiff's motion for summary judgmentin lieu of complaint, and (2) from the judgment entered thereon.
Plaintiff, a life insurance company, entered into an agreement with defendants, MemberServices, Inc. (hereinafter MSI) (an insurance agency) and Roger D. Banks (MSI's owner),regarding the marketing and sale of insurance. The basic terms of the agreement—set forthin a letter of intent in January 2003 and a letter agreement signed by the parties in February2003—included several "advance[s]" of funds from plaintiff to MSI to be backed bypromissory notes from defendants with repayment to begin in approximately eight months. Aseries of such advances, totaling $334,400, were made between January 2003 and May 2003 andeach was backed by a separate promissory note executed by defendants and set forth a scheduleof payments as well as a waiver of the right to interpose any setoff or counterclaim. The businessrelationship deteriorated and, as the payments came due on the notes, defendants made nopayments.
Thereafter, plaintiff commenced this action for money due under the promissory notes [*2]by serving a motion for summary judgment in lieu of a complaintpursuant to CPLR 3213. Arguments asserted by defendants in opposition thereto included thatthe parties had embarked on a joint venture and under the terms thereof the funds were intendedas advances to be repaid out of future commissions. Defendants also alleged fraudulent conductby plaintiff aimed at stealing defendants' trade secrets and commenced an action against plaintiffin federal court. Supreme Court granted plaintiff's motion. Defendants appeal.
Plaintiff established a prima facie case by producing the promissory notes that were signedby defendants and showing that defendants were in default under the terms of the notes (seeNewcourt Small Bus. Lending Corp. v Grillers Casual Dining Group, 284 AD2d 681, 683[2001]; Friends Lbr. v Cornell Dev. Corp., 243 AD2d 886, 887 [1997]). As such,plaintiff is entitled to summary judgment "unless defendants can 'prove the existence of a triableissue of fact in the form of a bona fide defense against the note' " (Cape Vincent Milk Producers Coop., Inc. vSt. Lawrence Food Corp., 43 AD3d 606, 607 [2007], quoting Couch White vKelly, 286 AD2d 526, 527 [2001]). Defendants' contention that the amounts paid to themwere advances to be repaid out of commissions is not set forth in any writing between the parties.Such contention is inconsistent with the terms of the promissory notes, which set forth specificpayment schedules. Also, while the notes permit plaintiff to take an offset from commissionswhen the notes are not paid, the language granting such action expressly provides that this in noway limits plaintiff's other rights under the notes (see Scuderi v Aiello, 300 AD2d 1107,1107-1108 [2002]). Defendants' assertion that the payments were capital contributions to a jointventure and not loans is not supported by the language of the notes or the parties' writtenagreement and, accordingly, does not provide a ground to avoid judgment (see J.L.B. Equitiesv Mind Over Money, 261 AD2d 510, 511 [1999]).
Defendants' various other allegations regarding plaintiff involve "issues which are separateand severable from plaintiff's claim under the notes and do not serve to defeat CPLR 3213summary judgment treatment" (Mitsubishi Trust & Banking Corp. v Housing Servs.Assoc., 227 AD2d 305, 306 [1996]; see Judarl v Cycletech, Inc., 246 AD2d 736, 737[1998]).
Crew III, J.P., Spain, Carpinello and Rose, JJ., concur. Ordered that the order and judgmentare affirmed, with costs.