| Patton v Ferrara |
| 2007 NY Slip Op 10019 [46 AD3d 1203] |
| December 20, 2007 |
| Appellate Division, Third Department |
| Martin P. Patton et al., Appellants, v Joseph A. Ferrara, Sr. et al.,Respondents. (And a Third-Party Action.) |
—[*1] Westerman, Ball, Ederer, Miller & Sharfstein, L.L.P., Mineola (Richard Gabriele of counsel),for respondents.
Kane, J. Appeal from an order of the Supreme Court (Dowd, J.), entered October 4, 2006 inOtsego County, which denied plaintiffs' motion for summary judgment.
Plaintiffs decided to build a baseball camp on real property they owned in Otsego County. Tofinance this venture, plaintiffs negotiated with defendant Cooperstown Capital, LLC and twoother investors. The operating agreement of third-party defendant Abner Doubleday, LLC datedJune 30, 2004 indicates that plaintiffs formed that entity, transferred their land to Abner andretained a 35.01% membership interest in Abner. Cooperstown Capital paid $400,000 topurchase a 10% membership interest in Abner and purchased an additional 25% membershipinterest for $1,000,000 payable pursuant to the terms of a promissory note. Also on June 30,2004, the parties executed the operating agreement of third-party defendant Cooperstown AllStar Village, LLC (hereinafter CASV), the organization created to operate the baseball camp.Cooperstown Capital simultaneously executed a promissory note which obligated it to payplaintiffs $1,000,000 pursuant to a specified schedule. Defendant Joseph A. Ferrara Sr. signedthe note as managing member and personally guaranteed it. Both operating agreements refer tothe promissory note and those signed by the other investors as the Patton Notes.[*2]
After defendants failed to make any payments due underthe note, plaintiffs commenced this action. Defendants commenced a third-party action againstAbner and CASV, asserting that the operating agreements required those entities to pay allamounts due under the promissory note. Plaintiffs moved for summary judgment. Supreme Courtdenied the motion, prompting plaintiffs' appeal.
Reading the promissory note and operating agreements together, questions of fact existregarding defendants' obligations to pay on the note. While plaintiffs contend that the note clearlyand unambiguously requires defendants to pay, under the circumstances here we cannot read thenote in isolation. "[I]nstruments executed at the same time, by the same parties, for the samepurpose and in the course of the same transaction will be read and interpreted together"(Carvel Corp. v Diversified Mgt. Group, Inc., 930 F2d 228, 233 [2d Cir 1991]; seeNau v Vulcan Rail & Constr. Co., 286 NY 188, 197 [1941]; Grossman v LaurenceHandprints-N.J., 90 AD2d 95, 100 [1982]; Flemington Natl. Bank & Trust Co. [N.A.] vDomler Leasing Corp., 65 AD2d 29, 32 [1978], affd 48 NY2d 678 [1979]; seealso Manufacturers Trust Co. v Steinhardt, 265 NY 145, 148 [1934]; Smith v Shields Sales Corp., 22 AD3d942, 943 [2005]; In re Atlantic Computer Sys., Inc., 173 BR 844, 851 [SD NY1994]). The operating agreements and promissory note were executed on the same date, by thesame parties, for the purpose of creating or reforming Abner and CASV in the course of atransaction to begin the baseball camp. Hence, these documents must be read and interpretedtogether.
Although the promissory note requires defendants to pay plaintiffs the amounts mentionedtherein, without mentioning any obligation by Abner or CASV, the operating agreementsreference the note. Abner's operating agreement specifically mentions that Cooperstown Capitalpurchased a 25% membership interest for $1,000,000 payable pursuant to the terms of apromissory note. Both operating agreements provide that when determining the amounts ofadditional capital contributions, the members "shall consider all of the Operating Expenses (ashereinafter defined) of the Company [i.e., either Abner or CASV]," with credit to plaintiffs forcapital contributions applied as payment against the Patton Notes. The operating agreementsdefine "Operating Expenses" as "all expenditures made by the Company, including. . . payments of principal and interest due under the Patton Notes." Because thenote requires defendants to pay, but the operating agreements include payments under the note asoperating expenses of Abner and CASV, questions of fact exist concerning the breach of theagreements and the amount, if any, due under the note. Accordingly, Supreme Court properlydenied plaintiffs' motion for summary judgment.
Cardona, P.J., Crew III, Mugglin and Rose, JJ., concur. Ordered that the order is affirmed,with costs.