United States District Court, S.D. New York
LORETTA C. MACKAY, Plaintiff,
MARK I. MASSAD, REGINA L. MASSAD, KELLY MASSAD INVESTMENT CO., and HERMES GROUP LLP, Defendants.
OPINION & ORDER
A. ENGELMAYER, District Judge.
diversity action, plaintiff Loretta C. Mackay seeks to
recover under a secured promissory note (the
"Note") entered into between herself and defendants
Mark I. Massad and Regina L. Massad (collectively, the
"Massads"). Mackay also sues Kelly Massad
Investment Co. ("KMI"), a guarantor on the Note,
and The Hermes Group LLP ("The Hermes Group"), a
partnership in which Mark Massad was once a member, but
neither of these corporate entities has appeared in this
action. Before the Court are cross-motions for summary
judgment on Mackay's sole claim of default under the
Note. The sole issue in dispute, and the focus of the
parties' mirror-image summary judgment motions, is
whether Mackay's claim was brought outside the six-year
statute of limitations.
reasons that follow, each party's motion for summary
judgment is denied.
A. The Parties
is the obligee under the Note. Pl. 56.1 ¶ 1; L. Mackay
Decl., Ex. C (“Note”), at 1. Mackay's late
husband Thomas C. Mackay (with Mackay, the
“Mackays”) was a party to some of the agreements
relevant to this action. L. Mackay Decl. ¶ 21. Scott
Mackay, a non-party, is Mackay's son and submitted a
declaration on her behalf. See S. Mackay Opp. Decl.
Massads are the obligors under the Note. Pl. 56.1 ¶ 2;
Note at 1.
Hermes Group, which was previously known as Kelly Massad LLP
and which has not appeared in this action, filed a Notice of
Withdrawal with the New York State Department of State,
Division of Corporations, on June 20, 2013 and is currently
in “inactive” status. L. Mackay Decl., Ex. B. The
Division of Corporations' records indicate that The
Hermes Group operated at 233 Broadway, Suite 2708, in New
York, New York. Id. Mark Massad was at one time a
partner of The Hermes Group, but his “ownership
interest and professional affiliation” was terminated
on December 31, 2007. Def. 56.1 ¶ 8. Ronald J. Sacco was
a general partner of The Hermes Group with Mark Massad. L.
Mackay Opp. Decl. ¶ 6. Mark Massad and Sacco were The
Hermes Group's only partners. L. Mackay Decl., Ex. F at
2. As discussed below, interest payments were made under the
Note by both The Hermes Group and RJSacco & Company LLP
(“RJSacco & Company”). Def. 56.1 ¶¶
8-9. The Court takes judicial notice, see Fed. R.
Evid. 201, of the publicly available “entity
information” on file with the Division of Corporations,
which shows that RJSacco & Company is currently
registered at 233 Broadway, Suite 2708.
KMI also has not filed an appearance in this action and was,
at least in 1998, a New Jersey general partnership with Sacco
and Mark Massad as general partners. L. Mackay Decl., Ex. E,
at 5. Massads' counsel has represented that both KMI and
The Hermes Group “were dissolved some time ago, and
prior to the commencement of the pending action.”
See Dkt. 21 (court order quoting an email to
8, 1998, Mackay and the Massads entered into three
Mackay and the Massads entered into the Note for $400, 000,
with the Massads' repayment due no later than December 7,
1999. Pl. 56.1 ¶ 3. The interest rate on the principal
balance was 8.5% per year from June 8, 1998 to June 7, 1999,
and then 10.5% per year from June 8, 1999 to December 7,
1999. Pl. 56.1 ¶ 6. In the event of an “Event of
Default, ” the interest rate on the principal balance
would become 16% per year until the Note was paid in full.
Note at 1. An Event of Default occurs when, inter
alia, the Massads “fail to pay in full any
installment of principal of, or interest on, this Note when
due.” Id. When an Event of Default occurs, the
unpaid principal and all accrued interest may, at
Mackay's option and upon written notice to the Massads,
become due immediately. Id. After an Event of
Default, Mackay also may seek costs of collection, including
attorneys' fees and court costs. Id. at 2. The
Note was “secured by the pledge of certain
collateral.” Id. The Note is governed by New
York law. Id. Mark and Regina Massad each signed the
the Massads, KMI, and the Mackays entered into a
“Security Agreement” dated June 8, 1998. L.
Mackay Decl., Ex. D. The collateral under the Security
Agreement is listed in an exhibit. It lists equity and member
interests in a variety of corporate entities affiliated with
the Massads, including: The Hermes Group, LLC; Hermes
Investment Group I, LLC; DDS Partners, LLC; KMI; and Kelly
Massad LLP. Id., Ex. A.
the Mackays entered into a “Guaranty Agreement”
with KMI. L. Mackay Decl., Ex. E. The agreement was signed by
Mark Massad and Sacco as general partners of KMI.
Id. at 5. KMI unconditionally guaranteed the
payments of the Note. Id. at 1.
March 1, 2004, the Massads, KMI, The Hermes Group, and the
Mackays entered into an agreement (the “March 1
Agreement”) to substitute one life insurance policy on
Mark Massad's life, which The Hermes Group had earlier
delivered to Mackay as additional security for the Note, for
a different life insurance policy. L. Mackay Decl., Ex. F.
The March 1 Agreement acknowledged that “[t]he
principal sum of the Note was to be paid in full, together
with all accrued interest, no later than December 7, 1999
(the ‘Due Date')” and that the Note
“was not paid by the Due Date.” Id. at
1. However, the March 1 ...