Opinion
10 Civ. 3567 (LAP).
July 12, 2010
MEMORANDUM AND ORDER
Plaintiff Inner City Telecommunications Network, Inc. ("Plaintiff") brings this action against Defendants Sheridan Broadcasting Corporation ("SBC") and Sheridan Broadcasting Network, Inc. ("SBN") (collectively, "Defendants"), alleging that Defendants breached the terms of the parties' Secured Promissory Note (the "Note") when, inter alia, Defendants failed to submit a payment that was due in November 2009. Plaintiff now moves for summary judgment [dkt. no. 1] seeking the outstanding balance due under the Note. For the reasons set forth herein, Plaintiff's motion is GRANTED.
I. BACKGROUND
A. The Parties
Plaintiff is a New York corporation with its principal place of business in New York. SBC is a Pennsylvania corporation with its principal place of business in Pittsburgh. SBN is a Delaware corporation with its principal place of business in Pittsburgh. These parties have a decades-long history of litigation, settlements, and breached settlement agreements.
B. The Promissory Note
On or about February 9, 2007, the parties executed the Note in connection with the settlement of the litigation in docket no. 04 Civ. 5911. (See Cooper Aff. ¶ 6.) Pursuant to the Note, Defendants agreed to pay Plaintiff the principal amount of $2,800,000 at an annual interest rate of 9%. (See id. Ex. A, at 1.) Instead of promising to make payments on a fixed schedule, Defendants were to assign to Plaintiff 30% of the partnership distributions they received from American Urban Radio Networks ("AURN"), a partnership in which both SBC and SBN were partners. (See id.; see Cooper Aff. ¶ 7.) Defendants promised to pay Plaintiff the full outstanding balance, if any, in one lump sum on February 8, 2012. (See Cooper Aff. Ex. A, at 1.)
The Note provides: "The AURN distribution relates solely to partnership distributions by AURN to [Defendants], and not to the reimbursement of operating expenses by AURN to [Defendants]. AURN shall not pay any portion of the remaining 70% due to [Defendants] unless AURN simultaneously pays the AURN distribution due to [Plaintiff] hereunder." (Cooper Aff. Ex. A, at 2.)
The Note provides that if Defendants fail to pay any amount when due, that failure must be cured within ten days of Defendants' receipt of written notice thereof. (See id.; Cooper Aff. ¶ 11.) The parties refer to such failure as a "breach." (Cooper Aff. ¶ 14; Davenport Aff. ¶ 18.) A default occurs if Defendants fail to cure the breach within ten days of receiving the written notice. (See Cooper Aff. Ex. A, at 1.) A default entitles Plaintiff to immediate payment of all unpaid principal and interest in one lump sum. (See id.) It also increases the interest rate, as of the date of the default, from 9% to 11%. (See id.; Cooper Aff. ¶ 18.) Finally, the Note provides that, in any proceeding relating to the Note, the prevailing party is entitled to reimbursement of its reasonable attorney's fees and expenses by the non-prevailing party. (See Cooper Aff. ¶ 11; id. Ex. A, at 2.)
C. The Course of Performance
Between March 16, 2007 and July 31, 2009, Defendants paid Plaintiff a total of $955,485.00. (See Cooper Aff. ¶ 10.) Plaintiff received its last payment in July 2009. (See id. ¶ 13; Cooper Aff. Ex. B, at 1.) In January 2010, Plaintiff learned that Defendants had received two payments from AURN in November 2009 and January 2010 in the amount of $102,000 and $255,000, respectively. (See Cooper Aff. ¶ 13; Davenport Aff. ¶ 14.) On February 2, 2010, Plaintiff sent Defendants a letter informing Defendants that they had breached the Note by, inter alia, failing to assign Plaintiff 30% of the payment they had received from AURN in November 2009. (See id.) The letter further stated that Defendants' failure to cure the breach within ten days would result in their default, thereby entitling Plaintiff to immediate payment of the balance of the Note. (See id.) Plaintiff received no response to the letter. (See id. ¶ 16.)
Accordingly, in a letter dated February 16, 2010, Plaintiff notified Defendants that they were in default and declared the entire balance immediately due. (See Cooper Aff. Ex. D, at 1.) On or about March 25, 2010, Plaintiff received a check from Defendants dated March 17, 2010 (the "March Check") containing the memo "NOV DISTRIBUTION." (Cooper Reply Aff. ¶ 2; id. Ex. E.) The check was in the amount of $36,000, exactly 30% of the November 2009 payment AURN allegedly sent to Defendants. (See Cooper Reply Aff. ¶ 2.) Plaintiff never deposited the March Check. (Id. ¶ 6.)
Plaintiff asserts that as of February 28, 2010, the outstanding principal amount due on the Note was $2,421,221.00, plus $141,400.00 in unpaid interest (see Cooper Aff. ¶ 17), while Defendants contend that as of April 30, 2010, the outstanding balance on the Note was $1,813,404.26 plus $664,359.26 in unpaid interest (see Davenport Aff. ¶ 20.)
D. Procedural History
On March 26, 2010, Plaintiff filed a motion for summary judgment in lieu of complaint in the New York State Supreme Court pursuant to N.Y. C.P.L.R. § 3213. On April 29, 2010, Defendants removed the case to this Court pursuant to 28 U.S.C. § 1441. The Court, in its discretion, has deemed the moving and opposition papers to be the Complaint and Answer. The Court now considers Plaintiff's motion for summary judgment [dkt. no. 1].
"When an action is based upon an instrument for the payment of money only or upon any judgment, the plaintiff may serve with the summons a notice of motion for summary judgment and the supporting papers in lieu of a complaint." N.Y. C.P.L.R. § 3213 (2010).
When an action brought under N.Y. C.P.L.R. § 3213 is removed to federal court, the district court may, in its discretion, "deem the moving and answering papers already submitted to be the complaint and answer." Com/Tech Commc'ns Techs. v. Wireless Sys., 163 F.3d 149, 151 (2d Cir. 1998).
II. SUBJECT MATTER JURISDICTION
Pursuant to 28 U.S.C. § 1332(a)(2), this Court has subject matter jurisdiction because the parties are diverse and the amount in controversy exceeds $75,000.
III. ANALYSIS
A. Legal Standard for Summary Judgment
As this is a motion for summary judgment, Plaintiff will prevail only "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that [Plaintiff is] entitled to judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (quoting Fed.R.Civ.P. 56(c)). "An issue of fact is 'genuine' if 'the evidence is such that a reasonable jury could return a verdict for the non[-]moving party.' A fact is 'material' for these purposes if it 'might affect the outcome of the suit under the governing law.'" Overton v. New York State Div. of Military and Naval Affairs, 373 F.3d 83, 89 (2d Cir. 2004) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). In assessing whether a genuine issue of material fact exists, a court must examine the evidence in the light most favorable to the non-moving party. Lucente v. IBM Corp., 310 F.3d 243, 253 (2d Cir. 2002).
B. Application to Plaintiff's Motion
Under New York Law, a plaintiff seeking to show a prima facie entitlement to summary judgment on a promissory note must establish four elements: "execution, delivery, demand, and failure to pay." Soloman v. Langler, 885 N.Y.S.2d 904, 904 (1st Dep't 2009). "To preclude the plaintiff from enforcing the terms of the note, it [becomes] incumbent on the defendant to establish, by admissible evidence, that a triable issue of fact exist[s]." Silber v. Muschel, 593 N.Y.S.2d 306, 307 (2d Dep't 1993).
Here, Plaintiff has demonstrated a prima facie entitlement to summary judgment. First, Defendants admit that, on or about February 9, 2007, they executed the Note and delivered it to Plaintiff. (Davenport Aff. ¶ 6.) Thus, there is no dispute of fact regarding the elements of "execution" and "delivery."
Second, Plaintiff has shown that it demanded payment. In the letter dated February 2, 2010, Plaintiff notified Defendants that they were in breach of the Note, alleging, inter alia, that Defendants had failed to submit a payment due in November 2009. (See Cooper Aff. Ex. C, at 1.) The letter stated Plaintiff's demand that Defendants cure their alleged breach by remitting the delinquent payment within ten days. (See id. Ex. C, at 2.) The letter also stated that Defendants would be in default if they failed to pay the amount due within ten days. (See id. Ex. C, at 2.) Plaintiff has also proffered a receipt showing that Defendants received and signed for the letter on February 4, 2010. (See id. Ex. C, at 3.) Therefore, Plaintiff has demonstrated that it demanded payment from Defendants.
Finally, Plaintiff has shown that Defendants failed to pay. Plaintiff proffers three relevant documents: a letter notifying Defendants of their default (see id. Ex. D), a schedule of accounts receivable from Defendants (see id. Ex. B), and the March Check (see Cooper Reply Aff. Ex. E). The letter notifying Defendants of their default states that Defendants did not cure the breach within ten days. (See Cooper Aff. Ex. D, at 1 ("More than 10 days has passed since [n]otice was given of a breach of the [s]ettlement [a]greement and Note. [Defendants have] failed to cure these breaches.").) The schedule of accounts receivable indicates that Plaintiff received no payments from Defendants after July 2009. (See id. Ex. C.) And the March Check was labeled "NOV DISTRIBUTION," indicating that that the payment sent in March satisfied an obligation that arose in November 2009. (See Cooper Reply Aff. Ex. E.) Together, these three documents show that Defendants failed to pay. Accordingly, Plaintiff has demonstrated a prima facie entitlement to summary judgment, and the burden shifts to Defendants to raise a genuine issue of material fact.
Defendants raise two arguments in opposition to Plaintiff's motion, but neither argument carries Defendants' burden. First, Defendants contend that William Davenport's affidavit raises a genuine issue of material fact. The affidavit states that Defendants' failure to pay was due to an "accounting error" that Defendants "recognized and corrected" in March 2010. (Davenport Aff. ¶ 15.) It provides no further factual detail supporting this conclusory, self-serving characterization. (See Davenport Aff.) The law, however, is settled that conclusory assertions in affidavits are "not sufficient to oppose summary judgment where the moving party's evidence establishes entitlement to judgment."Imperial Veal Lamb Co. v. Caravan Refrigerated Cargo, 554 F. Supp. 499, 501 (S.D.N.Y. 1982); see Kerzer v. Kingly Mfg., 156 F.3d 396, 400 (2d. Cir. 1998) ("Conclusory allegations, conjecture, and speculation . . . are insufficient to create a genuine issue of fact."); see also, Miller v. Steloff, 686 F. Supp. 91, 95 n. 3 (S.D.N.Y. 1988) (granting plaintiff's motion for summary judgment where defendants, in their legal memoranda submitted in opposition, asserted only that there was no consideration for the parties' promissory note and did not set forth any further factual detail supporting that conclusion). Because Davenport's affidavit does not set forth any facts or exhibits supporting his conclusion that the November 2009 AURN payment was an accounting error, it does not raise a genuine issue of material fact. Compare Bickerstaff v. Vassar College, 196 F.3d 435, 451-52 (2d. Cir. 1999) (holding that the district court properly disregarded an affidavit as conclusory where the affiant "[failed] to offer a single act, statement, or admission . . . by anyone . . . to support his allegation that [the plaintiff] was denied promotion to full professor because of her race"), with Danzer v. Norden Sys., 151 F.3d 50, 57 (2d Cir. 1998) (finding "no evidentiary infirmity in [the plaintiff's] detailed affidavit, which chronicles in depth the various episodes giving rise to his suit"). Therefore, Defendants' first argument fails.
Second, Defendants contend that no default occurred because they did not have actual knowledge that any payment was due. In a telephone conference the Court held on June 9, 2010, defense counsel amplified the assertions in the Davenport Affidavit, stating that Defendants sent the March Check to Plaintiff as soon as they realized that there had been an accounting error. (Cf. Davenport Aff. ¶¶ 15, 19 (stating that the "error was recognized and corrected in March 2010").) Even accepting counsel's hearsay factual assertions as part of the record, Defendants' argument still fails to raise a genuine issue of material fact. To the extent it addresses the "failure to pay" element, Defendants' argument is belied by the March Check, which acknowledges an obligation from November 2009 and was issued after the ten-day period in which Defendants could have cured their breach. (See Cooper Reply Aff. Ex. E.) To the extent it addresses the "demand" element, Defendants' argument implies a misconstruction of the legal standard. New York law requires only that Plaintiff prove it put Defendants on notice of the breach by making a demand for payment; it does not require that Plaintiff prove anything about Defendants' mental state regarding the breach. See Soloman v. Langler, 885 N.Y.S.2d 904, 904 (1st Dep't 2009) (stating that plaintiff need only prove that it made a demand for payment). As stated above, the letters notifying Defendants of the breach and default (see Cooper Aff. Ex. C, at 1-2; Ex. D, at 1), together with the receipts indicating that Defendants actually received those letters (Cooper Aff. Ex. C, at 3; Ex. D, at 3), show that Plaintiff made a demand for payment. Accordingly, Defendants have failed to raise a genuine issue of material fact, and so Plaintiff's motion must be GRANTED.
IV. CONCLUSION
For the foregoing reasons, Plaintiff's motion for summary judgment [dkt. no. 1] is GRANTED. The Clerk of the Court shall mark this case CLOSED and all pending motions DENIED as moot.
SO ORDERED: