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Plaintiff Brings Action to Recover Money from Defendant’s Default Under Commercial Credit Line


In this action by plaintiff to recover monies based upon the default of defendants under a commercial line of credit and a concurrently executed personal guaranty, plaintiff moves, pursuant to CPLR 3212, for summary judgment in its favor as against defendants in the amount of $249,770, with accrued interest in the sum of $5,049.94, interest on $249,770 at its prime rate plus .50%, plus late fees in the sum of $1,935.25, and reasonable attorneys’ fees and expenses.

By a Business Credit Application dated October 17, 2005, defendant applied to plaintiff for a Business Revolving Credit Line in the sum of $250,000.1 The Business Credit Application set forth the business information of defendant and the personal financial information of defendants as the other president and vice-president, respectively.

Under the section, entitled “Authorizing Resolution,” as the president, stated that at a corporate meeting. it was resolved that Wood could complete the Business Credit Application and that Wood would then “be obliged to fulfill all of the terms and conditions of the respective note and Credit Account Agreement which it shall thereafter receive.” This section of the Business Credit Application was executed by both defendants on October 17, 2005.

On or about December 1, 2005, defendant’s application was approved by plaintiff for a line of credit in the sum of $250,000. The terms and conditions of the Business Revolving Credit Line are set forth in the Business Revolving Credit Account Agreement (Credit Account Agreement). Pursuant to the terms and conditions of the Credit Account Agreement, defendant was to be provided with $250,000 in business revolving credit with checks needed to access the line of credit mailed to it. The Credit Account Agreement provided that “by signing the application for a Credit Line and using the checks provided by has agreed to bound by this Credit Account Agreement.”

In support of its instant motion for summary judgment, plaintiff has annexed the Business Credit Application, the Credit Account Agreement, and the sworn affidavit of an assistant vice-president of its Portfolio Management Center. In his affidavit, attests that he has access to plaintiff’s business records, maintained in the ordinary course of regularly conducted business activity, including the business records for and relating to defendant. He asserts that he has made his affidavit based upon his review of those records relating to defendant’s loan and from his own personal knowledge of how they are kept and maintained. He explains that the loan records for defendants are maintained by plaintiff in the course of its regularly conducted business activities and are made at or near the time of the event, by or from information transmitted by a person with knowledge. He further sets forth that as to plaintiff’s business records that consist of documents created by third parties, plaintiff relies on the accuracy of such records in conducting its business and collecting loans.

On a motion for summary judgment, the movant must make a prima facie showing, by tendering evidentiary proof in admissible form, of its entitlement to judgment as a matter of law. After the movant has made this prima facie showing, the burden shifts to the opposing party to demonstrate the existence of a genuine material triable issue of fact.

In opposition to plaintiff’s motion, defendants argue that plaintiff, by its submissions, has failed to make a prima facie showing of entitlement to judgment as a matter of law, and that they also have raised defenses which give rise to material issues of disputed facts, making summary judgment inappropriate.

In support of their assertion that plaintiff has failed to make the requisite prima facie showing to entitle it to summary judgment, defendants contend that plaintiff failed to submit competent evidence in admissible form pursuant to CPLR 2309 (c). CPLR 2309 (c) provides: “(c) Oaths and affirmations taken without the state. An oath or affirmation taken without the state shall be treated as if taken within the state if it is accompanied by such certificate or certificates as would be required to entitle a deed acknowledged without the state to be recorded within the state if such deed had been acknowledged before the officer who administered the oath or affirmation.”

Defendants assert that the affidavit may not be admitted into evidence because the certificate of conformity by is defective. Specifically, they maintain that the certificate of conformity failed to state the qualification of C. Hake, and show whether he/she is qualified and authorized to make such certification. They also state that Chase has not established that she is qualified to make a certificate pursuant to Real Property Law § 239 and that she is fully acquainted with the laws of Arizona. They argue that the affidavit is, therefore, inadmissible into evidence, and the remaining evidence is insufficient to establish that there is no triable issue of material fact or that plaintiff is entitled to summary judgment as a matter of law.

Defendants’ argument is without merit. It is well established that an affidavit which lacks the certificate authenticating the authority of the notary who administered the oath, as required by CPLR 2309 (c), may be considered on a summary judgment motion despite this technical defect since it is not “a fatal defect,” but a mere defect in form which can be given nunc pro tunc effect once properly acknowledged. Moreover, it has been specifically held that when the person administering the oath for an out-of state affidavit is a notary, the affidavit does not require a certificate authenticating the notary’s authority.

Here, as noted above, the affidavit was, in fact, notarized, and it contains the signature and stamp of the notary public. Furthermore, the certificate of conformity by Esq. substantially complies with the requirements of CPLR 2309 (c).

In any event, defendants have not disputed the authority of the notary public or the truthfulness and accuracy of any of the statements made in the affidavit, nor have they demonstrated any prejudice whatsoever resulting from the purported technical defect alleged by them. Moreover, inasmuch as the content of the documents submitted, as opposed to their form, is what is critical to the determination of this motion, defendants cannot be permitted to seize upon any technical requirement of CPLR 2309 (c) to create delay and avoid summary judgment.

Defendants also argue that the affidavit does not demonstrate his personal knowledge of the matters asserted. Defendants state that he does not state that he has such personal knowledge. Defendants also claim that plaintiff should have produced affidavit since she signed the Credit Account Agreement. They also state that the affidavit is deficient because he has not attached or described any of the books and records that he may have reviewed, or rendered any such books and records which he may have reviewed admissible as evidence.

Defendants’ argument is rejected. The affidavit of a custodian of the records based on records maintained by a corporation in the ordinary course of business may constitute admissible evidence. Furthermore, “it is well settled that a business entity may admit a business record through a person without personal knowledge of the document, its history or its specific contents where that person is sufficiently familiar with the corporate records to aver that the record is what it purports to be and that it came out of the entity’s files”.

Here, as discussed above, the affiant is the assistant vice-president of the Portfolio Management Center of Chase, and he attests that he has personal knowledge of how Chase’s business records are kept, and that his affidavit is based upon his review of Chase’s business records which are maintained in the ordinary course of its business. He, thus, has demonstrated that he is sufficiently familiar with the business records submitted to aver that they are what they purport to be and that they came out of Chase’s files, thereby supporting the validity and authenticity of these documents.

Defendants additionally argue that the Business Credit Application, the Credit Account Agreement, and the Guarantee provision contained within the body of the Credit Account Agreement are not authenticated and cannot be rendered admissible as evidence. Defendants contend that they fail to contain a certificate of acknowledgment that raise a presumption of due execution. Defendants further state that CPLR 3015 (d), which provides that “unless specifically denied in the pleadings each signature on a negotiable instrument is admitted,” does not allow the admission of the signatures of defendants on the Guaranties and also does not establish their signatures as that of the borrower.

This argument is unavailing. No certificate of acknowledgment is necessary to authenticate defendant signatures or their signatures on behalf of Wood. Neither parties deny signing the Business Credit Application or that they were authorized to execute it on behalf of Wood. Moreover, it has been held that even a naked denial of execution of a guarantee is insufficient to raise an issue of fact. Therefore, defendants have failed to raise any genuine issue of fact with respect to the authenticity of the documents submitted.

Consequently, since the court thus finds that plaintiff, by its submissions, has made a prima facie showing of its entitlement to judgment as a matter of law, the burden shifted to defendants to raise a triable issue of fact with respect to their alleged defenses. A party opposing a motion for summary judgment must assemble, lay bare, and reveal its proof, and demonstrate the existence of a genuine issue of fact that requires a trial of the action. Bare unsupported denials or averments merely stating conclusions of fact or law are insufficient to defeat a motion for summary judgment.

In attempting to raise a triable issue of fact, defendants have submitted their own affidavits, in which they each claim that they, on behalf of Wood, completed the Business Credit Application only for the purpose of determining Wood’s eligibility for a loan, but that they never agreed to personally guarantee any corporate loan. They state that they chose the loan in question on the understanding that a personal guarantee was not involved. They further state that the Business Credit Application was typed in fine print, and contained complex terms which they did not fully understand, and that they, therefore, relied on Chase to properly administer any resulting loan.

Such a claim however, is specifically belied by the express terms of the Business Credit Application, which (as set forth above) explicitly stated that they “individually and personally” unconditionally guaranteed the loan to Wood by Chase, and that this personal guarantee was “an individual personal liability.”

Upon executing the written Business Credit Application, defendants became conclusively bound by its terms and the terms of the Credit Account Agreement incorporated therein. Where the intention of the parties is fully determinable from the language of the agreement and an agreement is unambiguous, extrinsic evidence is inadmissible to vary its terms.

Defendants also argue that they should not be bound by the Credit Account Agreement because when they completed the Business Credit Application, it did not contain all of the terms as expected by them, and that after its submission, plaintiff supplemented it with the terms set forth within the Credit Account Agreement which was not signed by them. They point out that the Credit Account Agreement is only signed on behalf of plaintiff, in her capacity as a first vice-president.

Defendants’ argument must be rejected since the Business Credit Application expressly provided that use of the proceeds of the loan constituted full acceptance of the terms specified in the Credit Account Agreement which they would receive, and it is undisputed that Wood used the proceeds of the loan pursuant to the Credit Account Agreement for nearly five years prior to its default. Thus, the fact that the Credit Account Agreement does not contain defendants’ signatures is of no moment since the Business Credit Application, which expressly incorporated and assented to the terms of the Credit Account Agreement, does contain their signatures.

Defendants additionally argue that they never agreed that in the event of a default, Chase could accelerate the maturity of the loan. They assert that this was not a term within the Business Credit Application, and that even if this term was in the Credit Account Agreement, they never signed the Credit Account Agreement and were not bound by it.

This argument is rejected. As set forth above, paragraph 7 of the Credit Account Agreement specifically gave Chase the right to accelerate the loans without notice of acceleration and defendants expressly waived the right to such notice. While defendants claim that this right to accelerate was not contained in the Business Credit Application, as previously noted, the Business Credit Application expressly incorporated and assented to the terms of the Credit Account Agreement, does contain their signatures.

CPLR 3212 (f) provides that if it appears from affidavits submitted in opposition to the motion for summary judgment “that facts essential to justify opposition may exist but cannot be stated, the court may deny the motion or may order a continuance to permit affidavits to be obtained or disclosure to be had and may make such other order as may be just.” However, “[m]ere hope and speculation that additional discovery might uncover evidence sufficient to raise a triable issue of fact is not sufficient” to warrant denial of a motion for summary judgment.

“A grant of summary judgment cannot be avoided by a claimed need for discovery unless some evidentiary basis is offered to suggest that discovery may lead to relevant evidence”. “A party’s mere hope that further discovery will reveal the existence of triable issues of fact is insufficient to delay determination on the issue of summary judgment”.

Here, defendants have failed to show how any such discovery could provide evidence relevant to any viable defense. Thus, postponement of plaintiff’s motion, pending discovery pursuant to CPLR 3212 (f) is not warranted.

Finally, defendants argue that plaintiff failed to serve them with the Request for Judicial Intervention along with its motion and that this warrants denial of Chase’s motion. While pursuant to Uniform Rules for Trial Courts (22 NYCRR) 202.6 (a), “a request for judicial intervention must be submitted, in duplicate, on a form authorized by the Chief Administrator of the Courts, with proof of service on the other parties to the action” except where the application is ex parte, such a technical defect, which has not prejudiced defendants in any way, does not preclude the granting of Chase’s motion for summary judgment.

Accordingly, plaintiff’s motion for summary judgment in its favor is granted for the principal amount of $249,770 and late fees in the amount of $1,935.25, plus accrued interest and reasonable attorneys’ fees and expenses incurred in this litigation, which amounts shall be determined by the court upon further affidavits and documentation, which are to be submitted by plaintiff on notice together with a proposed judgment.

If you are involved in a similar situation in the case at bar, seek the help of Stephen Bilkis and Associates. They have locations throughout New York to serve you, including offices in Manhattan, the Bronx, Brooklyn, Staten Island, Queens, Nassau County, Suffolk County and Westchester County.

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