| Gera v All-Pro Athletics, Inc. |
| 2008 NY Slip Op 09955 [57 AD3d 726] |
| December 16, 2008 |
| Appellate Division, Second Department |
| Harbans Lal Gera, Respondent, v All-Pro Athletics,Incorporated, Appellant, et al., Defendant. |
—[*1] Capell Vishnick, LLP, Lake Success, N.Y. (Andrew A. Kimler of counsel), forrespondent.
In an action, inter alia, to recover intangible personal property allegedly due under a guaranty andsecurity agreement, the defendant All-Pro Athletics, Incorporated, appeals, as limited by its brief, fromso much of an order of the Supreme Court, Suffolk County (Emerson, J.), dated July 25, 2007, asgranted that branch of the plaintiff's motion which was for summary judgment on the first cause of actiondeclaring that he is entitled to the intangible personal property that it pledged as security under theguaranty and security agreement and directing the defendant Dervinder Singh, as escrowee, to releasethat property to him.
Ordered that the order is reversed insofar as appealed from, on the law, with costs, and thatbranch of the plaintiff's motion which was for summary judgment on the first cause of action declaringthat he is entitled to the intangible personal property that the defendant All-Pro Athletics, Incorporated,pledged as security under the guaranty and security agreement and directing the defendant DervinderSingh, as escrowee, to release that property to him, is denied.
On October 30, 2003 the plaintiff purchased a 30% interest in nonparty Baseball Heaven, LLC(hereinafter BBH), and loaned BBH the sum of approximately $2.3 million. As of that date, BBH'smembers were nonparty Andrew Borgia, who held a 40% interest and was also BBH's chief executiveofficer, the plaintiff, and the defendant All-Pro Athletics, Incorporated (hereinafter All-Pro), which, likethe plaintiff, also held a 30% interest in BBH. As part of the plaintiff's approximately $2.3 million loan toBBH, All-Pro executed, inter alia, a pledge agreement in which it pledged its 30% membership interestin BBH as security for BBH's repayment of up to 70% of the principal and interest due under certainpromissory notes executed in connection with the transaction. [*2]Alsoas part of the loan, Borgia, BBH's chief executive officer, and Paul Corace, All-Pro's owner, executeda security agreement in which they personally guaranteed repayment of 70% of the principal andinterest due on the notes executed in connection with the transaction. BBH later defaulted on itsobligation under the notes and the plaintiff commenced this action seeking, in his first cause of action, ajudgment declaring that he is entitled to All-Pro's pledged membership certificates and directing thepledge agent, the defendant Dervinder Singh, as escrowee, to release All-Pro's pledged certificates tohim. After joinder of issue, but before any discovery commenced, the plaintiff moved for summaryjudgment on the complaint, inter alia, declaring that he is entitled to the disputed membershipcertificates. All-Pro opposed the motion, arguing that summary judgment was premature and that, inany event, on this record, issues of fact existed. The Supreme Court, inter alia, awarded the plaintiffsummary judgment on his first cause of action. We reverse the order insofar as appealed from.
In order to establish its entitlement to judgment as a matter of law in an action to recover under aguaranty, a movant must submit proof of the existence of the loan, promissory notes, and guaranty, andproof of default (see Suffolk County Natl.Bank v Columbia Telecom. Group, Inc., 38 AD3d 644, 645 [2007]; Quest Commercial, LLC v Rovner, 35AD3d 576 [2006]). Similarly, in an action to foreclose a security agreement, the movant mustsubmit proof of the existence of the loans, notes, and security agreement, and proof of default (seeFirst City Natl. Bank & Trust Co. v Heaton, 165 AD2d 710, 712 [1990]). Here, in support of hismotion, the plaintiff submitted evidence of the existence of the loan agreement, a pledge agreementexecuted by All-Pro, and the promissory notes, and evidence of BBH's default. Accordingly, theplaintiff met his initial burden (see Suffolk County Natl. Bank v Columbia Telecom. Group, Inc.,38 AD3d at 645; Quest Commercial, LLC v Rovner, 35 AD3d at 576; First CityNatl. Bank & Trust Co. v Heaton, 165 AD2d at 712).
However, under the circumstances, including the fact that All-Pro has thus far been deprived of anopportunity to review BBH's records, awarding the plaintiff summary judgment on his first cause ofaction was premature, since discovery may disclose that issues of fact exist as to whether, for example,BBH paid the loans in whole or in part (see CPLR 3212 [f]; Salm v Feldstein, 20 AD3d 469[2005]; Morris v Goldstein, 223 AD2d 582 [1996]; cf. Hanneford Circus v Cabar CircusPromotions, 201 AD2d 456, 457 [1994]). Skelos, J.P., Santucci, McCarthy and Dickerson, JJ.,concur. [See 2007 NY Slip Op 32344(U).]