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June 8, 2001


The opinion of the court was delivered by: Hurley, District Judge.


Pending before the Court is the motion of plaintiff Philip Aaron ("plaintiff") for summary judgment, pursuant to Rule 56 of the Federal Rules of Civil Procedure. For the reasons set forth below, the motion is denied.


Defendant has not made any payments on the promissory note. (Aaron Aff.Supp. ¶ 10.) On March 1, 1999, the promissory note was assigned by Barry Carus P.C., Phillip Irwin Aaron, P.C.'s successor in interest, to plaintiff. (Id. ¶ 9, Ex. A.) On March 16, 1999, plaintiff provided defendant with written notice of the latter's alleged default and advised him that, under the terms of the note, the entire unpaid balance of principal and interest would be accelerated unless defendant cured the alleged default within ten days. (Id. ¶ 11, Ex. B.) Upon defendant's failure so to do, plaintiff filed the present complaint, on May 11, 1999, wherein he demanded judgment against defendant "in the sum of $80,644.31" — the sum of the principal and the interest that had accrued to that point — "together with accrued interest thereon from May 5, 1999 to the date of payment." (Id. ¶ 12, Compl. at 2.) Plaintiff now moves for summary judgment, alleging that no triable issues of fact exist, and that he is entitled, as a matter of law, to all the relief requested in the Complaint. (Def.'s Mem. at 4.)


The legal principles employed by the Court when ruling upon a motion for summary judgment are well established. Summary judgment may be granted only when it is shown "that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); see Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Donahue v. Windsor Locks Bd. of Fire Comm'rs, 834 F.2d 54, 57 (2d Cir. 1987). The moving party bears the initial burden "of showing the absence of a genuine issue as to any material fact." Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970). The substantive law governing the case will determine those facts that are material, and "[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

Once the moving party has come forward with support demonstrating that no genuine issue of material fact remains to be tried, the non-moving party "must come forward with affidavits, depositions, or other sworn evidence as permitted by Fed.R.Civ.P. 56, setting forth specific facts showing that there exists a genuine issue of material fact." Rule v. Brine, Inc., 85 F.3d 1002, 1011 (2d Cir. 1996). In reviewing these materials, the Court "is required to draw all factual inferences in favor of, and take all factual assertions in the light most favorable to, the party opposing summary judgment." Id.

Nevertheless, "the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson, 477 U.S. at 247-48, 106 S.Ct. 2505 (emphases omitted). Moreover, "[c]onclusory allegations will not suffice to create a genuine issue. There must be more than a `scintilla of evidence,'" Delaware & Hudson Ry. Co. v. Consol. Rail Corp., 902 F.2d 174, 178 (2d Cir. 1990) (quoting Anderson, 477 U.S. at 252, 106 S.Ct. 2505), and "more than `some metaphysical doubt as to the material facts.'" Aslanidis v. United States Lines, Inc., 7 F.3d 1067, 1072 (2d Cir. 1993) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)). Put another way, "[t]he non-movant cannot escape summary judgment merely by vaguely asserting the existence of some unspecified disputed material facts, . . . or defeat the motion through mere speculation or conjecture." Western World Ins. Co. v. Stack Oil, Inc., 922 F.2d 118, 121 (2d Cir. 1990) (citations and internal quotations omitted). "When no rational jury could find in favor of the nonmoving party because the evidence to support its case is so slight, there is no genuine issue of material fact and a grant of summary judgment is proper." Gallo v. Prudential Residential Servs., 22 F.3d 1219, 1224 (2d Cir. 1994).


Defendant raises three affirmative defenses in his Answer, the last of which reads: "[i]f in fact there was a loan by Plaintiff to Defendant, same is void by reason of usury." (Answer ¶ 6.)

Although defendant admits that he executed the promissory note and that he has not made the required payments, the Court concludes that a question of fact surrounding defendant's usury defense precludes summary judgment.

Both parties agree that the promissory note in question arises out of a prior debt owed to Philip Irwin Aaron, P.C., with an unpaid principal balance of $50,000 and unpaid interest of $16,000. (Aaron Aff. Reply ¶ 5, Ex. F.; Mattikow Aff. Opp'n ¶ 6.) Both parties also agree that the rate of interest on this prior loan was 24% per annum. (Aaron Aff. Reply Ex. F.; Mattikow Aff. Opp'n ¶ 5.) They disagree, however, over whether that prior loan was made to defendant personally or to Maypat with defendant's personal guarantee. (Aaron Aff. Reply ¶ 11; Mattikow Aff. Opp'n ¶ 5.) If the loan was made to Maypat, the loan would not be usurious, since Maypat is a corporation and a corporation may only raise the defense of usury if the interest rate exceeds the criminal usury rate, 25%. N.Y.Gen.Oblig.L. § 5-521 (McKinney 1989). If, on the other hand, the prior loan was made to defendant personally, then such loan would be usurious, since it would have been made to an individual in excess of the statutorily permitted rate of 16%. Id. § 5-501. In that case, the usury would taint the current promissory note, thereby rendering it unenforceable. 72 N.Y.Jur.2d Interest and Usury 147 (1988) (citing Nat'l Bank of Auburn v. Lewis, 1878 WL 14028, 75 N.Y. 516 (1878), adhered to, 81 N.Y. 1-5 (1880)).

As proof that the loan was made to Maypat and not defendant personally, plaintiff has submitted an assignment from defendant to Philip Irwin Aaron, P.C., that references the alleged loan between Philip Irwin Aaron, P.C., and Maypat. (Aaron Aff. Reply Ex. F.) Nevertheless, recognizing that the parties may have had an incentive to mask the true nature of their earlier transaction by falsely identifying the obligor as a corporation, the Court finds that defendant's statements in his ...

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