| Venables v Sagona |
| 2011 NY Slip Op 05261 [85 AD3d 904] |
| June 14, 2011 |
| Appellate Division, Second Department |
| Joseph Venables, Appellant, v Philip J. Sagona et al.,Respondents. |
—[*1] John J. Meglio, Flushing, N.Y., for respondents.
In an action, inter alia, to recover on a promissory note and to recover damages for breach ofcontract and fraud, the plaintiff appeals, as limited by his brief, from so much of an order of theSupreme Court, Nassau County (Lally, J.), dated April 19, 2010, as granted those branches of thedefendants' motion which were for summary judgment dismissing the first, third, fourth, and fifthcauses of action in the amended complaint.
Ordered that the order is affirmed insofar as appealed from, with costs.
The plaintiff alleged, inter alia, that the defendant Philip J. Sagona induced him to loan$160,000 to Sagona's company, the defendant Blackwood, Ltd. (hereinafter Blackwood) for thepurpose of investing those funds in a bond trading program. Blackwood, through its presidentSagona, executed a "demand note," promising to repay the principal sum of $160,000, plusinterest in the amount of $2,400,000, one year from the date of the note. When the note matured,and after Sagona allegedly made repeated unfulfilled promises to repay the loan, the plaintiffcommenced this action. The plaintiff also sought to recover funds he lost in a separate investmentwith a nonparty business venture based upon Sagona's alleged facilitation of that investment andBlackwood's subsequent promise to make the plaintiff whole for his loss.
After filing a premature motion for summary judgment on the prediscovery record (see Venables v Sagona, 46 AD3d672, 673 [2007]), the defendants again moved, upon the completion of discovery, forsummary judgment dismissing the amended complaint. In the order appealed from, the SupremeCourt granted those branches of the defendants' motion which were for summary judgmentdismissing the first, third, fourth, and fifth causes of action, and otherwise denied the motion. Weaffirm the order insofar as appealed from.
The defendants established their prima facie entitlement to judgment as a matter of lawdismissing the first cause of action seeking recovery of principal and interest payments pursuantto the demand note on the ground that the subject transaction was void and unenforceable. "Atransaction is usurious under civil law when it imposes an annual interest rate exceeding 16%,and is usurious under criminal law when it imposes an annual interest rate exceeding 25%" (Abir v Malky, Inc., 59 AD3d 646,[*2]649 [2009] [citations omitted]). A usurious contract is voidand relieves the borrower of the obligation to repay principal and interest thereon (id.).Here, the demand note at issue expressly called for repayment of the principal sum together "withinterest" at a rate far in excess of 25%.
In opposition, the plaintiff failed to raise a triable issue of fact in support of his allegationthat the subject transaction, as evidenced by the demand note, was not a loan agreement but abusiness investment in a bond trading program not subject to the usury laws (see Seidel v 18E. 17th St. Owners, 79 NY2d 735, 744 [1992]). In addition, the plaintiff did not raise atriable issue of fact as to whether the defendants should be estopped from asserting the usurydefense. Contrary to the plaintiff's contention, the evidence failed to raise a triable issue of fact asto whether the defendants took advantage of, or the plaintiff relied upon, an alleged fiduciary orconfidential relationship between the plaintiff and Sagona (cf. Abramovitz v Kew RealtyEquities, 180 AD2d 568 [1992]; Schaaf v Borsher, 82 AD2d 880 [1981]), or that theplaintiff was unschooled in financial matters and relied to his detriment on Sagona's superiorexperience and knowledge (cf. Pemper v Reifer, 264 AD2d 625, 626 [1999]; Angelov Brenner, 90 AD2d 131, 132-133 [1982]; Hammond v Marrano, 88 AD2d 758,759-760 [1982]). Therefore, the Supreme Court properly granted that branch of the defendants'motion which was for summary judgment dismissing the first cause of action.
The Supreme Court also properly granted that branch of the defendants' motion which wasfor summary judgment dismissing the third cause of action alleging breach of contract. Thedefendants established their prima facie entitlement to judgment as a matter of law by showingthat their oral or written promises to pay sums allegedly due under the usurious demand notelacked consideration, and, in opposition, the plaintiff failed to raise a triable issue of fact.Although "forbearance to do an act that a person has a legal right to do constitutes consideration"(Halliwell v Gordon, 61 AD3d932, 933-934 [2009]), the plaintiff's alleged agreement to forbear from suing the defendantsis insufficient consideration since the plaintiff cannot sustain a claim against the defendants forfailure to pay on a usurious loan. Further, the defendants established prima facie that their allegedpromises to pay the plaintiff money which was owed to him by persons or entities other than thedefendants were voluntarily made without consideration and unenforceable (see BusinessFunding Corp. v Fox Print., 243 AD2d 397, 397-398 [1997]; Loft Rest. Assoc. vMcDonagh, 209 AD2d 482, 483 [1994]; Glahm v Clark, 251 App Div 747 [1937]).
The Supreme Court properly granted that branch of the defendants' motion which was forsummary judgment dismissing the fourth and fifth causes of action alleging promissory fraud andfraud, respectively. "In order to establish a fraud claim in addition to a breach of contract claim,plaintiff must show misrepresentations that are misstatements of material fact or promises with apresent, but undisclosed, intent not to perform, not merely promissory statements regardingfuture acts" (Mora v RGB, Inc., 17AD3d 849, 852 [2005]; seegenerally Hense v Baxter, 79 AD3d 814, 816 [2010]; Fink v Citizens Mtge.Banking, 148 AD2d 578 [1989]). The defendants established their prima facie entitlement tojudgment as a matter of law dismissing the causes of action sounding in fraud by submittingevidence that they did not make knowing misrepresentations or omissions of material fact but, atmost, made promissory statements regarding future payment. In opposition, the plaintiff failed toraise a triable issue of fact as to whether the defendants intended to perform when the allegedpromises were made. Mastro, J.P., Angiolillo, Chambers and Cohen, JJ., concur.