The opinion of the court was delivered by: William M. Skretny Chief Judge United States District Court
On December 29, 2008, Plaintiff Counsel Financial Services, LLC commenced this action against Defendants The Dobson Firm, Kenneth P. Dobson ("Dobson") and Judy Castillo Dobson ("Castillo Dobson") in the New York State Supreme Court, Erie County, pursuant to New York Civil Procedure Law and Rules § 3213,by filing a motion for summary judgment in lieu of a complaint. Therein, Plaintiff requests entry of judgment against Defendants in the amount of $427,444.92, as a consequence of Defendants' default on a Third Amended and Restated Term Promissory Note ("Note") and personal Guaranty of Payment and Performance ("Guaranty"). Plaintiff also seeks attorney's fees, costs, and disbursements.
Defendants removed this action to federal court on February 13, 2009. Presently before this Court are Defendants' Motion to Dismiss and Plaintiff's Motion for Summary Judgment. For the reasons discussed below, both motions are denied.
In adjudicating Defendants' Motion to Dismiss, this Court assumes the truth of the following factual allegations contained in the complaint. See Hosp. Bldg. Co. v. Trs. of Rex Hosp., 425 U.S. 738, 740, 96 S.Ct. 1848, 1850, 48 L.Ed.2d 338 (1976); see also Hamilton Chapter of Alpha Delta Phi, Inc. v. Hamilton Coll., 128 F.3d 59, 63 (2d Cir. 1997).
Plaintiff, a New York limited liability company, is a commercial lending institution specializing in loans to law firms. Defendant The Dobson Firm, an Oregon limited liability company with its principal place of business in Washington County, Oregon, is a law firm. (Notice of Removal, ¶5.) Both of the individual Defendants are Oregon citizens. Id.
Plaintiff alleges that it extended The Dobson Firm a credit line of $411,510.42 upon execution of the Note on July 17, 2008. ("Affidavit of Megan Brooks Payne ("Payne Aff. I"), ¶ 3.) Pursuant to the Note's terms, The Dobson Firm agreed to repay that sum to Plaintiff with interest. Id. Plaintiff also contends that, on July 17, 2008, Defendants Dobson and Castillo Dobson signed the Guaranty, personally guarantying the Note. Id. at ¶ 4.
Plaintiff asserts that The Dobson Firm defaulted on the Note, as defined by Section 1(d), by failing to pay interest for October and November 2008. (Payne Aff. I, ¶ 4; Reply Affidavit of Megan Brooks Payne ("Payne Aff. II"), ¶ 5.) Additionally, Plaintiff contends that the individual Defendants are each in default of the terms of the Note and the Guaranty.
(Payne Aff. I, ¶ 6.) Plaintiff maintains that, as of April 20, 2009, the total amount due on the instruments was $425,348.78. (Payne Aff. II, Ex. B.) This figure is the sum of $406,178.57 (principal due, pursuant to Section 3), $18,267.37 (unpaid interest for October and November 2008), and $912.84 (late fees on unpaid interest, pursuant to Section 2).*fn1 Id.
Plaintiff commenced this action in the Supreme Court of the State of New York, Erie County, via a summons and motion for summary judgment in lieu of complaint, pursuant to NY CPLR § 3213. This section provides that "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." NY CPLR § 3213. Plaintiff's motion for summary judgment in lieu of a complaint was supported by the Payne Aff. I and the Affidavit of Philip B. Abramowitz ("Abramowitz Aff."). These affidavits explain the terms of the Note and the Guaranty, the facts establishing Defendants' default, and the amounts due to Plaintiff as of December 18, 2008. (Payne Aff. I, ¶¶ 3-11; Abramowitz Aff., ¶¶ 3-6.)
On February 13, 2009, Defendants removed Plaintiff's action to this Court pursuant to 28 U.S.C. §§ 1332 and 1441. On February 18, 2009, Defendants submitted the Declaration of Kenneth Dobson ("Dobson Decl."), the Declaration of Judy Castillo Dobson ("Castillo Dobson Decl."), a Statement of Contested Facts ("Defendants' Facts"), and a Motion to Dismiss.*fn2 In response, Plaintiff filed a Motion for Summary Judgment, which was supported by the Reply Affidavit of Philip B. Abramowitz ("Reply Aff. Abramowitz"), the Payne Aff. II, a Memorandum of Law ("Plaintiff's Mem."), and a Statement of Undisputed Facts ("Plaintiff's Facts"). On July 17, 2009, Defendants filed a Response to Plaintiff's Motion for Summary Judgment in Lieu of Complaint ("Defendants' Response"). On August 3, 2009, Plaintiff filed a Supplemental Reply Affidavit ("Plaintiff's Reply Aff.").
A. Plaintiff's Summary Judgment in Lieu of a Complaint and ...