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Dasz, Inc. v. Meritocracy Ventures, Ltd.

Supreme Court of New York, Fourth Department

July 5, 2013

DASZ, INC., PLAINTIFF-APPELLANT,
v.
MERITOCRACY VENTURES, LTD., ARTHUR N. BAILEY, U.S. COMMERCIAL HABITAT CO., DEFENDANTS-RESPONDENTS, ET AL., DEFENDANTS.

Appeal from an order of the Supreme Court, Chautauqua County (James H. Dillon, J.), entered December 14, 2011. The order denied plaintiff's motion for summary judgment.

FIDELITY NATIONAL LAW GROUP, NEW YORK CITY (VANESSA R. ELLIOTT OF COUNSEL), FOR PLAINTIFF-APPELLANT.

ARTHUR N. BAILEY & ASSOCIATES, JAMESTOWN, AND FAHRINGER & DUBNO, NEW YORK CITY (HERALD PRICE FAHRINGER OF COUNSEL), FOR DEFENDANTS-RESPONDENTS.

PRESENT: CENTRA, J.P., FAHEY, CARNI, AND SCONIERS, JJ.

It is hereby ORDERED that the order so appealed from is unanimously reversed on the law without costs and the motion is granted.

Memorandum: Plaintiff commenced this foreclosure action after Meritocracy Ventures, Ltd. (Meritocracy), Arthur N. Bailey, and U.S. Commercial Habitat Co. (Commercial Habitat) (collectively, defendants) defaulted on a note executed by Bailey in his individual capacity and as the sole shareholder of Meritocracy and on a mortgage executed by Bailey as the president and sole shareholder of Meritocracy. Meritocracy transferred the mortgaged properties to Commercial Habitat.

We agree with plaintiff that Supreme Court erred in denying its motion for summary judgment on the complaint. Plaintiff met its initial burden by submitting the note and mortgage together with an affidavit of nonpayment (see I.P.L. Corp. v Industrial Power & Light. Corp., 202 A.D.2d 1029, 1029; Rochester Community Sav. Bank v Smith, 172 A.D.2d 1018, 1019, appeal dismissed 78 N.Y.2d 909, rearg dismissed 78 N.Y.2d 1005, rearg granted and lv denied 79 N.Y.2d 887; see also Overseas Private Inv. Corp. v Nam Koo Kim, 69 A.D.3d 1185, 1187, lv dismissed 14 N.Y.3d 935).

"The burden then shifted to defendants to attempt to defeat summary judgment by production of evidentiary material in admissible form demonstrating a triable issue of fact with respect to some defense to plaintiff's recovery on the note[] and [mortgage]" (I.P.L. Corp., 202 A.D.2d at 1029; see Rochester Community Sav. Bank, 172 A.D.2d at 1019). Bailey admitted in his affidavit that he signed the note and mortgage without first reading them, but asserted that only the signature pages of the documents were made available to him on the day he signed them and that the attorney who prepared the note and mortgage fraudulently misrepresented their contents. It is well settled that " [a] party is under an obligation to read a document before he or she signs it, and a party cannot generally avoid the effect of a [document] on the ground that he or she did not read it or know its contents' " (Cash v Titan Fin. Servs., Inc., 58 A.D.3d 785, 788; see Gillman v Chase Manhattan Bank, 73 N.Y.2d 1, 11; Pimpinello v Swift & Co., 253 NY 159, 162-163). Moreover, "[a] signer's duty to read and understand that which it signed is not diminished merely because [the signer] was provided with only a signature page" (Vulcan Power Co. v Munson, 89 A.D.3d 494, 495, lv denied 19 N.Y.3d 807 [internal quotation marks omitted]; see M & T Bank v HR Staffing Solutions, Inc. [appeal No. 2], 106 A.D.3d 1498, 1499).

Defendants have failed to proffer a valid excuse as to why the complete documents could not have been procured prior to their signing, and we conclude that the failure of Bailey, who we note is an attorney and a sophisticated party, to read the note and mortgage before signing them "prevents him from establishing justifiable reliance, an essential element of fraud in the execution" (Sorenson v Bridge Capital Corp., 52 A.D.3d 265, 266, lv dismissed 12 N.Y.3d 748; see Morby v Di Siena Assoc., 291 A.D.2d 604, 605-606; see generally Verstreate v Cohen, 242 A.D.2d 862, 863; Chase Lincoln First Bank v Mark Homes, 170 A.D.2d 995, 995). In addition, we further note that the signature page of the mortgage that Bailey admits signing states that it is a mortgage (see M & T Bank, 106 A.D.3d at 1500).


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