Post on 19-Oct-2020
Bayside Carting, Inc. ( “Bayside”) and for leave to enter a
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Bayside and a default judgment against DefendantsRotondo, Rotondo Contracting and Statewide Recycling:
Notice of Motion dated October 29, 2002;Affidavit of Frank Peretore sworn to on October 30, 2002;Affidavit of Mark Bregar sworn to on October 28, 2002;Plaintiff’s Memorandum of Law.
Plaintiff moves for summary judgment against Defendants FRJ Leasing
Corporation (“FRJ”) and
42nd StreetNew York, New York 10036-6910
The following papers were read on Plaintiff ’s motion for summary judgmentagainst Defendants FRJ and
& Associates, P.C.330 West
& Peretore, P.C.110 Park StreetStaten Island, New York 10306
COUNSEL FOR DEFENDANTSRotondi
BAYSIDE CARTING, INC., FRANKROTONDO, JR., ROTONDOCONTRACTING CORP., STATEWIDERECYCLING, INC.,
Defendants.
COUNSEL FOR PLAINTIFFPeretore
-
FRJ LEASING CORPORATION,
- against
002/MOT D
AMERICAN EXPRESS EQUIPMENTFINANCE,
Plaintiff,
12-4~-02Motion Sequence No.:
5-02Submission Date:
I-1
IAS TERM PART 23 NASSAU COUNTY
PRESENT:HONORABLE LEONARD B. AUSTIN
Justice Motion R/D: 1
NEW YORK- STATE OF SUPREME COURT
10556/01INDEXNO.
*.”
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“ * * *all present and all present and futureaccounts, accounts receivable, inventoryproceeds. Chattel paper, contract rights,documents, instruments, general intangiblesand the books and records pertaining to theforegoing and the equipment containing saidbooks and records together with all moniesdeposit accounts, insurance proceeds andother rights to payment due or to become duethereunder and all repossessions and returnsthereunder * *
$3,499.69. The first payment was due on February 28, 1996 with subsequent payments
to be made on the same day of each successive month until the outstanding balance
had been paid in full.
The obligations of FRJ under the promissory note were secured by a Security
Agreement whereby FRJ pledged “1 new Komatsu WA 380 Loader, Serial Number
A46084 and
$209,981.40. The note was to be repaid in 60 equal installments of
Rockford in the
principal sum of
Rockford Industries, Inc. ( “Rockford ”).
On February 28, 1996, FRJ executed a promissory note with
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default judgment against the Defendants Frank Rotondo, Jr. ( “Rotondo ”), Rotondo
Contracting Corp. ( “Contracting ”) and Statewide Recycling, Inc. ( “Statewide ”).
BACKGROUND
Plaintiff, American Express Equipment Finance ( “American Express ”) brings this
action seeking to recover on three promissory notes and to recover the items pledged
as security for the promissory notes. American Express is the successor in interest to
AMERICAN EXPRESS EQUIPMENT FINANCE v. FRJ LEASING CORPORATION, etal.,Index No.
IO KEL Permanent Self Cleaning Overhead
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$192,936.52. The obligations of FRJ under this note were
secured by a Security Agreement dated September 20, 1996 wherein FRJ pledged as
security its interest in one Picking Station Serial Number C-96-166 and the component
parts thereof, and one Mastermag 8PCB
Rockford dated September 20, 1996
in the principal sum of
.”
This security agreement was perfected by filing same with the New York State
Departments of Motor Vehicles and State.
FRJ executed a third promissory note with
, and whether presently and/orhereinafter acquired by Debtor or in whichDebtor has and interest, and all the proceedsof the foregoing * * *
, regardlessof location
, fixtures, property,intangible property, intellectual property, andassets of Debtor [FRJ] of any kind
* in all equipment and any and allinventory, accounts, receivables, goods,machinery, furniture
“ * *
CWO75-22-3P
and
: 2WLNCCJFXTK943434 and one Atlas Roll-off Hoist, Serial Number
4864F, VIN:-
$148,962.00. The obligations of FRJ pursuant to the promissory
note were secured by a Security Agreement dated September 5, 1996 wherein FRJ
pledged as security its interest in one 1996 Western Star Tractor
Rockford
in the principal sum of
10556/01
This security interest was perfected by filing same with the New York State
Departments of Motor Vehicles and State.
On September 5, 1996 FRJ executed a second promissory note with
AMERICAN EXPRESS EQUIPMENT FINANCE v. FRJ LEASING CORPORATION, etal.,Index No.
Bayside, Contracting, Statewide and Rotondo pursuant to three separate Unconditional
Guaranty agreements executed by Rotondo, individually, and on behalf of the corporate
guarantors simultaneously with the execution of the promissory notes and Security
Agreements.
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.”
This security interest was perfected by filing same with the New York State
Departments of Motor Vehicles State.
The obligations of FRJ under all three promissory notes were guaranteed by
* * * all equipment and any and all inventory,accounts, receivables, furniture, fixtures,property, intangible property, intellectualproperty and assets of Debtor (FRJ) of anykind, regardless of location, and whetherpresently and/or hereinafter acquired by Debtoror in which Debtor has an interest, and all theproceeds of the foregoing * * *
“
20X8HN216454 and American Roll Off Hoist Serial
Number Bl-1224 and
IXPAL
w/ 425
Caterpillar Engine VIN:
B9X2R N3492 62, one 1988 Roll Off Peterbilt Model
Number 357 w/425 Caterpillar Engine VIN: lXPALBOXOJN264066 and American Roll
Off Hoist Serial Number 806516, one 1987 Roll Off Peterbilt Model Number 357
lXP5D
B9X9R N3584 15, one 1994 Peterbilt Tractor Model
Number 379 w/sleeper cab and 425 Caterpillar Engines and Road Ranger
Transmissions VIN:
XP5D
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Magnet, Serial Number M8216 and the component parts thereof, one 1994 Peterbilt
Tractor Model Number 379 w/sleeper cab and 425 Caterpillar Engines and Road
Ranger Transmissions VI N: 1
AMERICAN EXPRESS EQUIPMENT FINANCE v. FRJ LEASING CORPORATION, etal.,Index No.
§306(b). Defendant Rotondo was served by delivering a
copy of the summons and complaint to a person of suitable age and discretion at 186
Broadway, Huntington Station, New York and by mailing a copy thereof to him at the
same address. Said address is Rotondo ’s actual place of business. CPLR 308 (2).
The Order to Show Cause seeking an Order of Seizure was served upon the
corporate Defendants and Rotondo simultaneous with the service of process. Only
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IO,2001 by filing the summons and
complaint with the County Clerk, Nassau County. At the same time, American Express
moved for an Order of Seizure. The complaint alleges six causes of action. The first
three seek recovery under the promissory notes, conversion of the chattel, breach of
warranty and unjust enrichment. As a part of the relief demanded, Plaintiff also seeks
reasonable counsel fees.
The Summons and Complaint were served on the corporate Defendants on July
16, 2001, by serving the Secretary of State as Statutory Agent for the corporations.
Business Corporation Law
$17,347.34.
This actions was commenced on July
$53,226.32 and the balance outstanding on the September 20
1996 promissory note was
$45,495.97, the balance outstanding on the September 5, 1996
promissory note was
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FRJ defaulted in payment on the promissory notes. In the event of a default in
payment, the holder of the promissory note had the right to accelerate the payments
and declare the entire outstanding balance due. American Express has chosen to do
this. As of October 28, 2002, the balance outstanding on the February 28, 1996
promissory note was
AMERICAN EXPRESS EQUIPMENT FINANCE v. FRJ LEASING CORPORATION, etal.,Index No.
Franc0 Rotondo Jr., was deposed on behalf of the appearing Defendants on
September 5, 2002. At his deposition, he testified that FRJ had sold the two 1994
Peterbilt Tractors, the 1988 Roll Off Peterbilt and the 1987 Roll Off Peterbilt which were
pledged as security in connection with the September 20, 1996 Security Agreement and
the 1996 Western Star Tractor and the Atlas Roll-off Hoist pledged as Security in
connection with the September 5, 1996 Security Agreement.
Mr. Rotondo further testified that the Komatsu Loader that was pledged as
security in connection with the February 28, 1996 Security Agreement was still in the
possession of FRJ and was located at 186 Broadway, Huntington Station, New York.
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Bayside generally deny the allegations of the complaint, interpose several affirmative
defenses and a single counterclaim which alleges that the calculation of the sums due is
incorrect. Defendants Rotondo, Contracting and Statewide have never appeared in the
action.
Bayside which
interposed an answer to the complaint dated January 8, 2002. In that answer, FRJ and
$334,000.00 within 30 days of the date of the order. American Express
never posted the bond.
The only Defendants to have appeared in this action are FRJ and
Bayside opposed that motion asserting that there was a dispute as
to the amounts due on the promissory notes.
By decision dated May 2, 2002, this Court granted American Express ’ motion for
an order of seizure on condition that American Express post a bond or undertaking in
the amount of
10556/01
Defendants FRJ and
AMERICAN EXPRESS EQUIPMENT FINANCE v. FRJ LEASING CORPORATION, etal.,Index No.
(2nd Dept., 1982).
In this case, the summons and complaint were served upon the Defendants
Contracting, Statewide and Rotondo in July, 2001. The application for a default against
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660.A.D.2d & S Beer and Soda Discounts, Inc., 91
(2nd
Dept., 1984); and Winkelman v. H
A.D.2d 951 Finan v. Queens Transit Corp., 100
3 294.
In order to avoid the automatic dismissal mandated by CPLR 3215(c), the
Plaintiff must demonstrate that the action has merit and sufficient excuse for failure to
enter a default within one year.
3rd
IOKEI that were pledged as security in
connection with the September 20, 1996 Security Agreement were also in the
possession of FRJ and were located at 1345 New York Avenue, Huntington Station,
New York.
DISCUSSION
A. Default Judqment
CPLR 3215(c) provides that a request for a default judgment must be made
within one year after default or the action shall be dismissed as abandoned. This can
be avoided on good cause shown. If the action is brought against multiple Defendants
in which some appear and some default, the Plaintiff must still seek to enter a default
judgment against the defaulting Defendants within a year of the default. The Court may
then direct that the inquest against the defaulting Defendants be held at the time of, or
after, the trial against the appearing Defendants. CPLR 3215(d). See, Siegel, New York
Practice
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The Picking Station and Mastermag 8PCB
AMERICAN EXPRESS EQUIPMENT FINANCE v. FRJ LEASING CORPORATION, etal.,Index No.
(2”d Dept., 1990).
To establish entitlement to judgment as a matter of law on a promissory note, the
Plaintiff must establish the existence of the promissory note executed by the Defendant,
an unequivocal and unconditional obligation to repay and a default in payment by the
8
A.D.2d 401,
supra; and Bras
v. Atlas Construction Co., 166
N.Y.2d 557 (1980). Once the moving party has
made a prima facie showing of entitlement to judgment as a matter of the law, the party
opposing summary judgment must come forward with proof in evidentiary form
establishing that issues of fact exist which necessitate a trial or demonstrate an
acceptable reason for failing to do so. Zuckerman v. Citv of New York,
N.Y.2d 361 (1974). The party moving for summary judgment
must make a prima facie showing of entitlement to judgment as a matter of law.
Zuckerman v. City of New York, 49
N.Y.2d 320 (1986);
Andre v. Pomerov, 35
Summarv Judament
Summary judgment is drastic remedy which will be granted only when it is clear
that, there are no issues of fact. Alvarez v. Prospect H OSP., 69
10556/01
these Defendants was not made until October, 2002, more than one year after service.
While the papers submitted to the Court in connection with this motion, in particular, the
affidavit of Mark Bregar, demonstrate a meritorious claim on the guarantee against
these Defendants, American Express has failed to make a showing or even argue that it
has a sufficient excuse for failing to enter a default against these Defendants within one
year, Therefore, the action against these Defendants must be dismissed as
abandoned.
B.
AMERICAN EXPRESS EQUIPMENT FINANCE v. FRJ LEASING CORPORATION, etal.,Index No.
A.D.2d
9
N.Y.2d 63 (1961). Clear and explicit intent to guarantee the obligation is established
by having the guarantor sign in that capacity and by the language contained in the
guarantee. Harrison Court Assocs. v. 220 Westchester Avenue Assocs., 203
(2nd Dept., 1977). The intent to guarantee
payment of the obligation must be clear and explicit. See, Salzman Sian Co., v. Beck,
IO
A.D.2d 625
$5-701(a)(2). See, Schulman v. Westchester
Mechanical Contractors. Inc., 56
(qfh Dept., 1996).
To be enforceable, the guarantee must be in writing subscribed by the person to
be charged. General Obligations Law
A.D.2d 669 Kev Bank of Maine v. Lisi, 225
(lst Dept.
1996); and
(2nd Dept., 1999); Chemical Bank v. Nemeroff, 233 A.D. 2d 239 A.D.2d 351
Allvn, 262Securitv Systems. Inc., v.
$116,069.63.
Therefore, Plaintiff is entitled to summary judgment against the Defendant FRJ in this
amount.
To establish entitlement to judgment as a matter of law on a guarantee, the
Plaintiff must establish the existence of the underlying promissory note or obligation, the
guarantee and the failure of the prime obligor to make payment in accordance with the
terms of the promissory note or obligation. E.D.S.
(2nd Dept., 1995). Plaintiff has established the existence of three promissory notes
executed by the Defendant FRJ which contain a clear and unequivocal obligation to
repay and the default of FRJ in making payment. Plaintiff has also established the
amount due on these notes which, as of the making of this motion, was
A.D.2d 601Baccarav, 214 (2nd Dept. 2001); and East New York Savinss Bank v.
2d
488
DeLuca, M.D., P.C. v. North Shore Medical lmasinq LLP, 287 A.D.
10556/01
obligor. James
AMERICAN EXPRESS EQUIPMENT FINANCE v. FRJ LEASING CORPORATION, etal.,Index No.
Duffv,
10
& (3rd Dept., 1978); General Motors Acceptance Corp. v. Berq A.D.2d 927
& Services, Inc.,
66
(I”’
Dept., 1976).
Paragraph IO of the various Security Agreements signed by FRJ grants the
secured party the right to take possession of the collateral and to sell the collateral in
such a manner as the secured party may deem appropriate. This contractual right
exists independent of, and in addition to, any rights granted to the Secured Party by the
UCC. See, General Electric Credit Corp. v. Marcella ’s Appliance Sales
A.D.2d 815
(2nd Dept. 1986); and
MGD Graphic Systems, Inc. v. New York Press Publishina, Inc., 52
9-503. See, Leban
Store Fixture Co.. Inc. v. August Properties, 117 A.D. 2d 782
§
Bayside on the guarantee.
With regard to the claims for summary judgment on the conversion cause of
action, if American Express was a secured creditor it could, upon default, take
possession of the collateral without judicial process if possession can be taken without
a breach of the peace pursuant to Uniform Commercial Code
Bayside have opposed this motion. Therefore, Plaintiff is
entitled to judgment against
Bayside. See, Yellow Book
of New York, LLP v. Platt, 2003 WL 1389103 (Dist. Ct. Nassau Co.) Plaintiff has also
established the obligations of FRJ under the promissory notes and the default of FRJ in
payment. Neither FRJ or
Bayside has guaranteed the obligations of FRJ
under the terms of the promissory notes. The guarantee is a writing which is clear and
explicit. It was signed by Frank Rotondo, Jr., on behalf of
supra.
Plaintiff has established that
(2nd Dept., 1994). See, Salzman Siqn Co., v. Beck,
10556/01
244
AMERICAN EXPRESS EQUIPMENT FINANCE V. FRJ LEASING CORPORATION, etal.,Index No.
damnum in the complaint. Where a
party seeks punitive damages, the demand for such damages should be made in the
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65,66. Since the
value of the items and the actual date of the conversion is not established, the matter
should be set down for an assessment of damages on these issues.
Plaintiff, in its papers, also seeks punitive damages on its conversion action even
though such relief is not sought as part of the ad
§§ Jur.2d, Conversion (lst Dept., 1987). See also, 23 NY A.D.2d 539
Plavinq Sessions, Inc. v. Deluxe Laboratories, Inc., 129Lonq
(2nd Dept., 1975).
American Express has established its superior right to possession of the items
pledged as security pursuant to the security agreements. It has, therefore, established
an entitlement to judgment on the issue of liability.
The measure of damages in a conversion action is the value of the goods at the
time of the conversion.
A.D.2d 352 Also Distributors, Ltd., 48
(3rd Dept., 2000); and AMF
Incorporated v.
A.D.2d 668
Rockford under the security agreement,
including the right to take possession of and sell the collateral. American Express has
not availed itself of these statutory or contractual rights notwithstanding this Courts
earlier granting of Plaintiffs motion for an order of seizure.
To establish a claim for conversion, the Plaintiff must prove that Plaintiff has legal
ownership or a superior right of possession to a specific, identifiable thing and that the
Defendant exercised unauthorized control over this specific item in contravention of
Plaintiff ’s rights. Hart v. Citv of Albanv, 272
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118 Misc. 2d 525 (Sup. Ct. Nassau Co. 1983). As the successor in interest to Rockford,
American Express obtained the rights of
AMERICAN EXPRESS EQUIPMENT FINANCE v. FRJ LEASING CORPORATION, etal.,Index No.
(3rd Dept. 1973). The matter must be set down for a hearing to
determine the fair and reasonable value of the services rendered by Plaintiff ’s attorneys.
Accordingly, it is,
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(lst Dept. 1996); and Kooperman v. Picoult, 41 A.D. 2d
980, 343 N.Y.S. 2d 732
Cardali, 225
A.D. 2d 474, 639 N.Y.S. 2d 379
(3rd Dept. 1999); In re Richard J.
v.
Maaqie ’s Tavern, Inc., 257 A.D. 2d 733
(qfh Dept.), aff’d., 241 N.Y. 593 (1925) where the counsel fee to
be awarded is based upon the time spent, the complexity of the issues presented, the
nature of the services, the amount in controversy, the professional standing of counsel
and the results obtained. Once the counsel fee is established by the Court, it is added
to the total recovery to establish Plaintiff ’s counsel ’s contingency fee. See, Wood
lslip v. Brower, 42 N.Y. 2d 471, 398 N.Y.S. 2d 815
(1977); and Gair v. Peck, 6 N.Y. 2d 97, 188 N.Y.S. 2d 491 (1959). Instead, the counsel
fee must be based on the standards set forth in the seminal case of Matter of Potts, 213
A.D. 59, 209 N.Y.S. 655
Nat’1 Bank of East
Contractinq Corp., 141 Misc. 242 (Sup Ct., Washington
Co. 1930). Since the complaint does not demand punitive damages and Plaintiff has
not moved for leave to amend the complaint to make such a demand, the request for
punitive damages cannot be properly considered.
Finally, Plaintiff requests attorney ’s fees in accordance with the terms of the
notes. The notes provide for attorney ’s fees in a reasonable amount fixed at 20% of the
amount due. The Court cannot blindly accept such an approach to a counsel fee
award. The Court has the obligation to oversee the fees charged by counsel. See,
Matter of First
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complaint. See, Rock v. Belmar
AMERICAN EXPRESS EQUIPMENT FINANCE v. FRJ LEASING CORPORATION, etal.,Index No.
14,2003 at
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Bayside Carting, Inc. on Plaintiff ’s first, second and third
causes of action is granted; and it is further
ORDERED, that Plaintiff is granted leave to enter an Order, settled on five (5)
days notice, granting Plaintiff immediate possession and title to the items pledged as
security pursuant to the security agreement; and it is further
ORDERED, that if Plaintiff takes possession of the collateral that Plaintiff dispose
of same in a commercially reasonable manner as defined in UCC Article 9 and that the
net proceeds of sale after deduction for the expense for taking possession, holding,
preparing for sale and selling the collateral be applied to the amount outstanding on the
judgment; and it is further
ORDERED, that Plaintiff ’s motion for on the issue of liability on the fourth cause
of action is granted; and its further
ORDERED, that Plaintiff ’s motion for leave to enter a default judgment against
the Defendants, Frank Rotondo, Jr., Rotondo Contracting Corp., and Statewide
Recycling, Inc., is denied and the action against said Defendants is dismissed pursuant
to CPLR 3215(c); and it is further,
ORDERED, that this matter is respectfully referred to Special Referee
Frank Schellace (Special Term Part II Courtroom, Rm 060, Lower Level) to hear and
determine all issues relating to a determination of damages on the fourth cause of
action, if any, and for an assessment of counsel fees due herein on May
10556/01
ORDERED, that Plaintiff ’s motion for summary judgment against the Defendants
FJR Leasing Corporation and
AMERICAN EXPRESS EQUIPMENT FINANCE v. FRJ LEASING CORPORATION, etal.,Index No.
2003
14
4 0 AR?
28,2003
2,2002, damages on the fourth cause of action and counsel fees and
costs and disbursements as taxed by the County Clerk.
This constitutes the decision and Order of the Court. n
Dated: Mineola, NYMarch
$116,069.63 together with interest
from October
(2), 311 (a) and file with the Clerk of the Court, a copy of the Order
with Notice of Entry, a Notice of Inquest and Note of Issue and Plaintiff shall pay all
appropriate fees for the filing thereof on or before April 21, 2002; and it is,
ORDEREQ, that upon the hearing on damages and the determination of
appropriate counsel fees by the Special Referee, the County Clerk is directed to enter
judgment in favor of Plaintiff in the principal sum of
9:30 a.m.; and it is further,
ORDERED, that counsel for Plaintiff shall serve Defendants herein pursuant to
CPLR 308 (1) or
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AMERICAN EXPRESS EQUIPMENT FINANCE v. FRJ LEASING CORPORATION, etal.,Index No.