The opinion of the court was delivered by: BAER
Defendants American Invesco Corporation ("AIC") and Realty Growth Investors, Inc. ("RGI") seek to dismiss plaintiff's complaint against them under Rule 12(b)(6) for failure to state a claim upon which relief can be granted. Moving defendants are Guarantors of Notes signed by the other two defendants in this action, Twin Rivers Inc. ("Twin Rivers") and American National Bank and Trust Company of Chicago ("ANB"). Plaintiff, City of New York Department of Finance ("City"), seeks to collect over two million dollars from defendants Twin Rivers and ANB.
Defendants AIC and RGI assert that because plaintiff has not exhausted all of its remedies against Twin Rivers and ANB, an action against the guarantors at this time is premature. The defendants' motion is DENIED.
This case arises out of the failure of an entity known as Plaza 400 Limited Partnership ("Plaza 400"), a wholly owned subsidiary of American Invesco Corporation ("AIC"), to pay the City unincorporated business taxes for the years 1981 and 1984. On July 9, 1987 the City entered into an agreement with AIC regarding the repayment of the taxes due. Pursuant to this agreement, defendants Twin Rivers and ANB executed a Note promising to pay the City $ 1,302,573.00 on or before September 15, 1989 plus interest equal to the statutory rate
and all costs of collection, including reasonable attorney's fees.
Twin Rivers and ANB also gave the Department of Finance a Mortgage and Security Agreement ("MSA") to secure payment of the Note. The MSA was secured by several parcels of land in Chicago known as the Pavilion Apartments. At the same time, defendant Realty Growth Investors, Inc. ("RGI") executed a Guarantee of Collection on the liabilities of Twin and ANB in the event the principal debtor defaulted in its payment of the amounts due under the Note. Similarly, AIC executed a Guarantee of Collection on the liabilities of Twin and ANB in the event of a default of the principal amount not exceeding $ 997,439.00.
The Department of Finance also entered into a separate Inter-Creditor Agreement with Chemical Bank on July 9, 1987. In this agreement, the Department of Finance acknowledged that its agreements with Twin Rivers, ANB, RGI and AIC were subject and subordinate to two priority mortgages securing the Pavilion Apartments which were held by Chemical.
Twin Rivers and ANB failed to make payment on their Note when it became due on September 15, 1989. Under the Inter-Creditor Agreement, the City could not declare a default until Chemical declared a default and accelerated its mortgages with the defendants. On October 28, 1992, Chemical brought a mortgage foreclosure action on the Pavilion Apartments against Pavilion Holding Corp., ANB and the Department of Finance in Cook County, Illinois. The City was represented in that action.
On December 29, 1992 a Judgment of Consent Foreclosure was entered in Chicago, Illinois. Under the Judgment, Chemical accepted a deed for the Pavilion Apartments property. The Court found that the Department of Finance had "exhausted its remedies against the defendants." The Court further found that Chemical had no right to a deficiency judgment against any mortgagor under the Chemical mortgages for the Pavilion Apartments or against any other person liable for the indebtedness secured by the mortgages. The value of the Pavilion Apartments was less than the amount due to Chemical and, at the end of the foreclosure action, the Note at issue here remained unsatisfied.
Plaintiff sent notices to Twin Rivers and ANB on September 10, 1993 and October 3, 1994 demanding payment of the Note. The City has not received any payments from either Twin Rivers or ANB. Plaintiff also sent notices to defendant RGI on these same dates. RGI has not made any payments to the Department of Finance. On February 17, 1994 plaintiff sent a notice to defendant AIC demanding payment. AIC has not made any payment to the Department of Finance.
Defendants move to dismiss the complaint against them for failure to state a claim pursuant to Fed. R. Civ. Pro. 12(b)(6). Defendants contend that the City has not satisfied the two conditions precedent necessary before an action can be commenced on the Guarantees. For the reasons which follow below, I find that the City has satisfied the two ...