Kenneth R. Fields, New York, for appellant.
Kevin Kerveng Tung, P.C., Flushing (Ruofei Xiang of counsel), for respondents.
Tom, J.P., Mazzarelli, Moskowitz, Gische, JJ.
Order, Supreme Court, New York County (Joan M. Kenney, J.), entered August 23, 2012, which, to the extent appealed from as limited by the briefs, dismissed the complaint against defendant Yan, denied plaintiff's motion to dismiss defendants' affirmative defenses alleging the statute of frauds and Yan's lack of personal liability, failed to award interest against defendant PA Estate, LLC at the contractual rate of 10% per annum for the period from November 16, 2011 through August 21, 2012, and failed to refer the issue of the amount of plaintiff's collection costs and expenses to the Special Referee, unanimously modified, on the law, to reinstate the claims against Yan, to award plaintiff interest at the rate of 10% per annum through the date of the order (August 21, 2012), and to refer the matter of collection costs to the Special Referee, and otherwise affirmed, without costs.
Tony Yan, the individual defendant, is the principal of defendant PA Estate LLC (the LLC). On October 18, 2009, Yan affixed his signature to a promissory note in favor of plaintiff Eugenie Chen which stated:
"For value received, the undersigned hereby jointly and severally promise to pay to the order of the lender Eugenie Chen, the sum of... $50, 000.00... together with interest thereon at the rate of 10% per annum on the unpaid balance... The term of this investment loan is for 12 months. As a result, the undersigned borrower will be required to repay the entire principal. The lender has no obligation to refinance this loan at the end of its term. Provided, 6 months written advance notice given by either party to the other for termination or willing to refinance."
The signature page of the note had two signature lines, each next to the word "Borrower, " and one on top of the other. Underneath the top line was typed the words "Tony Yan (Owner), " and Tony Yan's signature appeared above that line. Stamped immediately below the typed words "Tony Yan (Owner), " and covering the area immediately above and below the bottom signature line was a stamp stating: "E/I#20-3529181 PA Estate LLC 264-29 Grand Central PKWY. Little Neck, NY 11362-2526." On the same signature page was a section titled "Guaranty, " but the two signature lines over the word "Guarantor" were left blank. A notary's signature and stamp were affixed at the bottom of the signature page, under the words "For Tony Yan."
On or about July 9, 2010, plaintiff delivered a termination notice to Yan in which she informed him that she did not wish to extend the loan and in which she demanded repayment of the principal amount of the loan together with interest by December 31, 2010. In November 2011 plaintiff commenced this action, in which she asserted that defendants failed to repay the loan and that they were jointly liable to her. Plaintiff further alleged that defendants fraudulently induced her into extending the loan by representing to her that they would pay the balance if she terminated the loan on six months notice. Finally, plaintiff sought an award of her attorneys' fees, pursuant to a provision in the note providing for same in the event of a default.
Defendants filed an answer in which they denied the material allegations in the complaint and asserted 11 affirmative defenses. The first nine defenses were lack of jurisdiction based on improper service of the summons and complaint; failure to state a cause of action; estoppel; waiver; unclean hands; lapse; failure to mitigate damages; statute of frauds; and the parol evidence rule. The tenth defense asserted that Yan merely signed the note in his capacity as the manager of the LLC, and bore no personal liability to plaintiff. Finally, the eleventh defense alleged that in August 2011 plaintiff agreed to forbear her right to enforce the note in exchange for defendants' promise to repay the principal amount upon the sale of certain real property.
Plaintiff moved to dismiss all of the affirmative defenses. With respect to the tenth defense, which sought to shield Yan from personal liability, she argued that the note was ambiguous because Yan signed in the space designated for the borrower, and because his signature was notarized. She asserted that Yan prepared the note, so any ambiguities are required to be construed against him. She pointed to evidence that Yan acknowledged personal liability, including an email dated December 9, 2010, in which Yan stated that he would begin paying her back when he received income from a food sales job, and further asserted:
"Please think of the negative way, if you loan to some other guy and he/she is dis-appeared, what would you do? At least, I am still here facing to you and keep telling you my situation, admitting to owe you money and still accepting to pay you back."
Yan submitted an affidavit in opposition to the motion in which he stated that he "signed the promissory note, clearly and unequivocally in [his] capacity as owner of [the LLC]." Yan attached a copy of the check representing the loaned funds, which shows that it was made payable to "PA Estate LLC/Tony Yan." The memo line of the check states "PA Estate, LLC." Yan further explained that all written correspondence between himself and plaintiff concerning the loan was made through the LLC's email account or under its letterhead. Yan also pointed out that there was no signature in the guaranty section of the note, so he could not be said to have personally guaranteed the LLC's debt to plaintiff.
The court struck the first, second, third, fourth, fifth, sixth, seventh, ninth and eleventh affirmative defenses as to both defendants, based on their failure to address those defenses on the merits. However, the court upheld the eighth defense (statute of frauds) and the tenth defense (asserting that Yan was not personally liable on the note), and sua sponte dismissed the complaint against Yan. The court stated:
"Tony Yan... is not personally liable for the repayment of the note (the 10th affirmative defense) as he neither signed a guaranty. Nor would an e-mail 'acknowledging' the debt constitute personal liability in this case where it is clear that the emails were in furtherance of the corporate defendant's business relating to the promissory note. Moreover, the lack of ...