Summary Judgment Granted Where Defendants Fail to Rebut Prima Facie Case

In a Decision and Order, dated January 5, 2023, in Cline v. Schuster Enters., LLC, Index No. 656167/2021, Justice Joel M. Cohen of the New York County Commercial Division granted plaintiff’s motion for summary judgment where defendants did not rebut evidence that they failed to repay a loan in full by the expiration of the forbearance term. The Court explained:

"A summary judgment motion should not be granted merely because the party against whom judgment is sought failed to submit papers in opposition to the motion (i.e., 'defaulted')" (Liberty Taxi Mgt., Inc. v Gincherman, 32 AD3d 276, 277, 820 N.Y.S.2d 49, n 1 [1st Dept 2006]). Rather, the "court must still assess whether the moving party has fulfilled its burden of demonstrating that there is no genuine issue of material fact and its entitlement to judgment as a matter of law" (id. [citations omitted]).

Here, Plaintiff has established a prima facie case for summary judgment by demonstrating "the existence of a contract, the plaintiff's performance pursuant to the contract, the defendant's breach of his or her contractual obligations, and damages resulting from the breach" (Friends of Wickers Cr. Archeological Site, Inc. v Landing on the Water at Dobbs Ferry Homeowners Assn., Inc., 198 AD3d 726, 728, 156 N.Y.S.3d 227 [2d Dept 2021]). Plaintiff has submitted the Loan Documents which consist of (i) the Funding Agreement (NYSCEF 2) which provided that Plaintiff would lend Defendants the sum of one million dollars ($1,000,000.00), as short-term financing for the purchase of a parcel of real property located in Bronx County, New York; (ii) the Assignment Agreement (NYSCEF 3); (iii) the First Amendment to the Funding Agreement (NYSCEF 5) which extended Defendants' repayment date on the loan; (iv) the Second Amendment to the Funding Agreement (NYSCEF 6) which further extended Defendants' repayment date on the loan; (v) and the Forbearance Agreement (NYSCEF 7), which gave Defendants ninety days to repay the loan.

In the Forbearance Agreement, Defendants acknowledged a sum certain due and owing to Plaintiff ($1,076,666.66 plus the amount of interest of $833.33 accruing on a daily basis), and warranted that Defendants have no claims, counterclaims, causes of action, offsets, rights of recoupment, defenses or demands against Plaintiff with respect to the loan and, to the extent that there were any such rights, that Defendants expressly waived same to induce Plaintiff to forbear (NYSCEF 7 § 16(a)-(b)). Defendants also agreed to pay "any additional legal fees and other expenses reimbursable by Silverback and/or Guarantor pursuant to the Transaction Documents incurred by Cline between the date hereof and the Forbearance Termination Date, in order to satisfy the obligations of Silverback and Guarantor under the Transaction Documents in full" (NYSCEF 7 § 7).

Plaintiff submits that Defendants failed to repay the Loan in full by the expiration of the forbearance term. On or about September 2, 2021, Defendants tendered the sum of $25,000.00 to Plaintiff, representing the interest accrual for that month (see NYSCEF 35 ¶ 29 ["Cline Aff"]). According to Plaintiff, Defendants paid no further monies to Plaintiff, and as of July 1, 2022, Plaintiff is owed the sum of $1,529,998.13, plus continuing interest at the contractual rate of thirty percent (30%) per annum and fees (Cline Aff. ¶ 31-36). Defendants have not sought to rebut Plaintiff' s prima facie case for breach of contract.

The attorneys at Schlam Stone & Dolan frequently litigate dispositive motions such as motions for summary judgment. Contact our attorneys at commercialdivisionblog@schlamstone.com if you or a client have questions regarding this motion practice.