United States District Court, S.D. New York
OPINION AND ORDER
PAUL OETKEN United States District Judge
Beaufort Capital Partners LLC (“Beaufort”)
initiated this action on June 1, 2016, by filing a motion for
summary judgment in lieu of complaint in New York Supreme
Court. (Dkt. No. 1 at 1.) Beaufort seeks summary judgment to
enforce amounts owed and interest on three promissory notes.
Defendant Oxysure Systems, Inc. (“Oxysure”)
removed the case to this Court on June 30, 2016.
(Id.) For the reasons that follow, Beaufort's
motion for summary judgment is granted.
following facts-which are undisputed unless otherwise
noted-are taken from the record before the Court, including
materials incorporated by reference therein. (See
Dkt. Nos. 1, 15, 16, 17.) See also Beaufort Capital
Partners LLC v. Oxysure Therapeutics, Inc., No.
652908/2016 (N.Y. Sup. Ct. 2016).
lent Oxysure a total of $330, 000 through three promissory
notes. (Dkt. No. 1-1 at 7.) On February 10, 2016, Beaufort
loaned Oxysure $150, 000 under the terms and conditions set
forth in the February 10, 2016, Promissory Note, which
provided for a maturity date of August 10, 2016.
(Id.) See Beaufort, No. 652908/2016, Doc.
No. 4 (“February Note”). On March 10, 2016, Beaufort
loaned Oxysure $30, 000 under the terms and conditions set
forth in the March 10, 2016, Promissory Note, which provided
for a maturity date of September 10, 2016. (Dkt. No. 1-1 at
7-8.) See Beaufort, No. 652908/2016, Doc. No. 5
(“March 10 Note”). And on March 17, 2016,
Beaufort loaned Oxysure $150, 000 under the terms and
conditions set forth in the March 16, 2016, Promissory Note,
which provided for a maturity date of September 17, 2016.
(Dkt. No. 1-1 at 8.) See Beaufort, No. 652908/2016,
Doc. No. 6 (“March 16 Note”). Beaufort funded the
purchase of each of the Promissory Notes. (Dkt. No. 1-1 at
the Promissory Notes provides that “[i]f any Event of
Default occurs (unless such Event of Default is waived in
writing by the Payee), the full principal amount of this Note
shall become, at the Payee's election, immediately due
and payable in cash.” (Dkt. No. 1-1 at 8.) See
February Note ¶ 3(b); March 10 Note ¶ 3(b); March
16 Note ¶ 3(b). In the list of circumstances
constituting an Event of Default, the Promissory Notes
include: “Failure to complete the preparation and
filing of the financial statements with the SEC. Beaufort
MUST be notified 7 days ahead of failure to complete the
preparation and filing of the financial statements with the
SEC in a timely manner.” See February Note
¶ 3(a)(vii); March 10 Note ¶ 3(a)(vii); March 16
Note ¶ 3(a)(vii). The Notes also provide that default
interest at the rate of 10% per year accrues beginning five
days after an Event of Default. (Dkt. No. 1-1 at 8.)
See February Note ¶ 3(b); March 10 Note ¶
3(b); March 16 Note ¶ 3(b). They further provide for
attorney's fees and costs in the event of an action to
enforce the notes. (Dkt. No. 1-1 at 9.)
March 30, 2016, Oxysure filed SEC Form 12b-25, stating that
it required additional time to file its financial statements;
Oxysure did not provide prior notice to Beaufort of its
delay. (Id. at 10.) On April 15, 2016, Oxysure filed
SEC Form 15, indicating that it was terminating its
registration of securities, and thereby its duty to file
financial reports under Section 13(a) of the Exchange Act of
1934. (Id. at 10-11.) On April 18, 2016, Beaufort
notified Oxysure that its failure to file a financial report
and the termination of its ongoing duty to do so constituted
an Event of Default under the Promissory Notes and demanded
full payment of the Notes. (Id. at 11.)
initiated this action in New York State Supreme Court under
New York's provision for summary judgment in lieu of
complaint for actions to collect money on a debt instrument.
See N.Y. C.P.L.R. § 3213. Oxysure removed the
case to this Court on June 30, 2016. Jurisdiction is proper
under this Court's diversity jurisdiction: Beaufort is a
single-member LLC whose member is a citizen of New York;
Oxysure is a Delaware corporation based in Texas; and the
amount in controversy exceeds $75, 000. (Dkt. No. 1 at 2;
Dkt. No. 9.) See 28 U.S.C. §§ 1332, 1441;
see also Beaufort, No. 652908/2016, Doc. No. 3
¶ 5 (“Marino Declaration”).
removal to federal court, a New York C.P.L.R. section 3213
motion for summary judgment in lieu of complaint is converted
to a motion for summary judgment under Rule 56 of the Federal
Rules of Civil Procedure. See Tabatznik v. Turner,
No. 14 Civ. 8135, 2016 WL 1267792, at *4 n.2 (S.D.N.Y. Mar.
30, 2016); Valley Nat'l Bank v. Oxygen Unlimited,
LLC, No. 10 Civ. 5815, 2010 WL 5422508, at *2 (S.D.N.Y.
Dec. 23, 2010).
judgment is appropriate where “there is no genuine
dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed.R.Civ.P. 56(a). In
considering a motion for summary judgment, a court must view
the evidence “in the light most favorable to the
non-moving party and draw all reasonable inferences in its
favor.” Allen v. Coughlin, 64 F.3d 77, 79 (2d
New York law, to make out a prima facie case for recovery on
a promissory note ‘a plaintiff must simply show proof
of a note and failure to make payment.'”
Tabatznik, 2016 WL 1267792, at *5 (quoting
Camofi Master LDC v. Coll. P'ship, Inc., 452
F.Supp.2d 462, 470 (S.D.N.Y. 2006)). Where a noteholder has
made out a prima facie case, the burden shifts to the payee
to prove the existence of defense against the note creating a
triable issue of fact. See id.
has adequately pleaded a prima facie case for recovery on
summary judgment in lieu of complaint. See, e.g.,
Ahmad v. Luce, No. 2014-11464, 2017 WL 601352 (N.Y.
A.D.2d Dep't Feb. 15, 2017) (“In this action to
recover on a promissory note, commenced by motion for summary
judgment in lieu of complaint pursuant to CPLR 3213, the
plaintiffs made a prima facie showing of their entitlement to
judgment as a matter of law by submitting the promissory
note, which contained an unequivocal and unconditional
obligation to pay, and proof of the defendants' failure
to make payments on the note according to its terms.”).
Beaufort has shown proof of the existence of the notes and it
has alleged a breach by Oxysure. Oxysure's failure to
notify Beaufort of its failure to complete required filings
with the SEC, and of its intention ...