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PHOENIXCOR, INC. v. PNINI

August 25, 2005.

PHOENIXCOR, INC., Plaintiff,
v.
IZZY PNINI, CMS ACQUISITION CORP., LIZZY COTTONS, INC., SEW EUROPA, INC., EURO-KNIT CORP., PBP ENTERPRISES, INC., and FPS ACQUISITION CORP., Defendants.



The opinion of the court was delivered by: LAURA TAYLOR SWAIN, District Judge

MEMORANDUM OPINION AND ORDER

Before the Court is the motion of Plaintiff Phoenixcor, Inc. ("Phoenixcor" or "Plaintiff") for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure, in this breach of contract action. Plaintiff asserts that Defendant Izzy Pnini ("Pnini" or "Defendant") defaulted on an individual guaranty by failing to pay the obligations of non-party Knitwork Productions Corp. ("Knitwork") due and owing under a certain loan agreement and promissory note.*fn1

The Court has subject matter jurisdiction of Plaintiff's claims pursuant to 28 U.S.C. § 1332(a), based upon diversity of citizenship among the parties. The Court has considered thoroughly all of the submissions related to this motion and the decision to be rendered reflects such consideration. For the following reasons, Plaintiff's motion for summary judgment against Defendant Pnini is granted.

  BACKGROUND*fn2

  The following material facts are undisputed. Plaintiff Phoenixcor, Inc. is a wholly owned subsidiary of General Electric Capital Corporation ("GECC"), which maintains operative control over Phoenixcor and services its accounts. (Affidavit of Joyce Kristoff ("Kristoff Aff."), ¶ 2.) On February 9, 1999, Phoenixcor and Knitwork entered into a Master Loan and Security Agreement ("Loan Agreement") whereby Plaintiff agreed to provide future financing to Knitwork for the purchase of certain commercial equipment. (Plaintiff's Local Rule 56.1 Statement ("PR 56.1") ¶ 1; Kristoff Aff. ¶ 7.) That same day, Knitwork executed a Promissory Note ("Note") in favor of Phoenixcor, pursuant to which Phoenixcor loaned Knitwork $450,000. (PR 56.1 ¶ 2; Kristoff Aff. ¶ 8.) Also on or about February 9, 1999, Defendant Pnini executed and delivered an individual guaranty ("Guaranty") on the Loan Agreement and the Note, in which he "absolutely and unconditionally guaranteed" payment of all debts, obligations and liabilities of Knitwork due under the Loan Agreement and the Note.*fn3 (PR 56.1 ¶ 3; Kristoff Aff. ¶ 9.) In accordance with the terms of the Guaranty, Mr. Pnini further guaranteed payment of all losses, costs, attorneys' fees and expenses incurred by Phoenixcor as a result of Knitwork's breach of the Loan Agreement, or Mr. Pnini's breach of the Guaranty. (Kristoff Aff. ¶ 10; PR 56.1 ¶ 4.) Although Defendant Pnini admits that he signed and delivered his absolute and unconditional guaranty to Phoenixcor, Mr. Pnini nevertheless denies, without any evidentiary proffer in support of the assertion, that he agreed to pay for costs, attorneys' fees and expenses as required under the terms of the Guaranty.*fn4 (DR 56.1 ¶¶ 3, 4.)

  On October 30, 2002, both the Loan Agreement and the Note were modified such that Knitwork agreed to make payments of eight monthly installments of $12,048.09 (totaling $96,384.72) to Phoenixcor commencing on January 29, 2003. (PR 56.1 ¶ 5; Kristoff Aff. ¶¶ 11-13.) Knitwork failed to make the first payment due under the modified agreement and each payment due thereafter. (PR 56.1 ¶ 6; Kristoff Aff. ¶ 12.) Phoenixcor subsequently sold the equipment to Knitwork for $15,000, leaving an unpaid balance (including $194.63 in late charges) of $81,579.35. Plaintiff seeks to recover this sum, together with $34,064.00 in costs, expenses and attorneys' fees, for a total of $116,183.35. (Kristoff Aff. ¶ 13.) Notwithstanding its demand for payment of Knitwork's obligations, Mr. Pnini has failed and/or refused to pay the amounts justly due and owing to Phoenixcor pursuant to the terms of the Guaranty. (PR 56.1 ¶ 10; Kristoff Aff. ¶ 14.)*fn5

  DISCUSSION

  Summary judgment shall be granted in favor of a moving party where "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 the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). A genuine issue of material fact exists when the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). The moving party bears the initial burden of establishing the absence of a genuine issue of material fact. Id. at 256. If the moving party satisfied its burden, the nonmoving party then must meet a burden of coming forward with "specific evidence showing that there is a genuine issue for trial." Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). In deciding a motion for summary judgment, the Court "must view the evidence in the light most favorable to the nonmoving party and draw all reasonable inferences in its favor." Am. Cas. Co. of Reading, Pennsylvania v. Nordic Leasing, Inc., 42 F.3d 725, 728 (2d Cir. 1994). The nonmovant, however, cannot create a genuine issue of fact through "conclusory allegations, conjecture and speculation." Kerzer v. Kingly Mfg., 156 F.3d 396, 400 (2d Cir. 1998).

  Breach of Contract Claim

  To succeed on a claim for a breach of contract under New York law, a plaintiff must prove (1) the existence of a contract; (2) its own performance of the contract; (3) breach of the contract by the defendant; and (4) damages. See Rexnord Holdings, Inc. v. Bidermann, 21 F.3d 522, 525 (2d Cir. 1994). In the instant case, Plaintiff's evidence is sufficient to establish all elements of its breach of contract claim. Mr. Pnini entered into the Guaranty with Phoenixcor, and Phoenixcor has performed its obligations thereunder. (PR 56.1 ¶ 3; DR 56.1 ¶ 3; Kristoff Aff. ¶ 16.) Knitwork defaulted on its obligations under the Loan Agreement. Phoenixcor then demanded payment from Mr. Pnini of Knitwork's outstanding obligations pursuant to the terms of the Guaranty, but Mr. Pnini failed to comply with this demand. (Kristoff Aff. ¶ 14.) Mr. Pnini breached the terms of the Guaranty and, as a result, Plaintiff suffered damages in the amount of $116,183.35. (Id. ¶ 13.) Mr. Pnini has not proffered any competent evidence to dispute the existence of a valid contract or to raise genuine issues of material fact as to his liability thereunder for the amounts sought by Plaintiff. The Court, therefore, finds that Defendant has breached the parties' contract, and that Phoenixcor is entitled as a matter of law to recover its damages pursuant to the modified Loan Agreement and the Guaranty.

  Defendant's principal argument against summary judgment is that the affidavit of Joyce Kristoff, a GECC employee, provided in support of the instant motion, raises a genuine issue of material fact as to Phoenixcor's standing to bring this suit. (Affidavit of Izzy Pnini ("Pnini Aff.") ¶¶ 7, 8.) Defendant's argument is frivolous.

  Kristoff's affidavit, which is made on personal knowledge as required by Rule 56(e) and accompanied by documentary evidence, proffers undisputed evidence that, as explained above, establishes Phoenixcor's right to relief. The fact that she is a GECC employee is irrelevant, under these circumstances, to Phoenixcor's standing as a party plaintiff.

  Defendant also argues that Plaintiff's failure to include the loan modification agreement as an exhibit to the Complaint and to produce the document as part of its Rule 26(a)(1) disclosures precludes reliance on that document to establish Phoenixcor's right to recover damages. Rule 8 of the Federal Rules of Civil Procedure does not require that all relevant documentation be appended to a pleading; accordingly, the failure to annex the agreement to the Complaint is no barrier to consideration of the agreement in connection with the instant motion practice. Rule 37(c)(1) of the Federal Rules of Civil Procedure does authorize such preclusion where the failure to produce under Rule 26(a) is not "harmless" and is without justification. Here, the document in question is a loan modification agreement apparently bearing Defendant Pnini's signature as an officer of the signatory company. Pnini has neither proffered evidence calling into question the genuineness of the document nor asserted that he lacked prior knowledge of the existence of the document. Accordingly, the Court finds that the failure to produce the document was harmless and that no sanction is warranted. Damages and Attorneys' Fees

  Defendant contends that the discrepancy between the amount of unpaid installments alleged in the Second Amended Complaint ($91,868.88), and the amount sought in Plaintiff's Rule 56.1 Statement and Ms. Kristoff's affidavit ($96,384.72), raises a genuine issue of material fact precluding summary judgment. The Court finds that Plaintiff has proffered sufficient evidence to satisfy its burden of demonstrating that it has suffered damages in the claimed ...


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