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Maloul v. New Colombia Resources, Inc.

United States District Court, S.D. New York

July 13, 2017

AVNER MALOUL and ALLEN LOWY, Plaintiffs,
v.
NEW COLOMBIA RESOURCES, INC., Defendant.

          OPINION AND ORDER

          KATHERINE POLK FAILLA United States District Judge.

         Plaintiffs Avner Maloul and Allen Lowy[1] bring this case to recover from Defendant New Colombia Resources, Inc. certain funds Plaintiffs allege they are owed pursuant to five loans they extended to Defendant in 2003, 2004, and 2005. In short, Plaintiffs want their money back, with interest.

         Defendant argues that Plaintiffs' claims are time-barred under the six-year statute of limitations applicable to breach-of-contract claims under New York's Civil Practice Law and Rules, Section 213(2). The parties cross-moved for judgment on the pleadings. Because the parties submitted documentary evidence in support of their motions, the Court converted both motions into Rule 56 motions for summary judgment. For the reasons that follow, Defendant's motion is denied and Plaintiffs' motion is denied.

         BACKGROUND[2]

         A. Factual Background

         Defendant's alleged liability in this case stems from the following five transactions: First, “[i]n or about November 2003, Lowy loaned $250, 000 to [D]efendant in exchange for a Promissory Note[, ] ... which matured on November 9, 2004.” (Compl. ¶¶ 8-9). Originally, this Note “carried an interest computed from the date of the Note at the rate of twelve (12%) per annum.” (Id. at ¶ 9). However, “[u]pon maturity ..., the Note would begin to accrue a default interest at a rate of eighteen (18%) per annum ... until the obligation [was] paid in full.” (Id. at ¶ 10).

         Second, “[i]n or about October 2004, Lowy loaned an additional $50, 000 to [D]efendant, in exchange for a second Promissory Note” (Compl. ¶ 12), which like the first “carried an interest computed from the date of the Note at the rate of twelve (12%) percent per annum” (id. at ¶ 13). This Note also “[u]pon maturity, ” was to “begin to accrue a default interest at a rate of eighteen (18%) per annum ... until the obligation [was] paid in full.” (Id. at ¶ 14).

         Lowy made a third loan of $40, 000 to Defendant “[i]n or about April 2005.” (Compl. ¶ 16). This loan was “in the form of a Debenture” (id.), and “carried an interest computed from the date of the Debenture at the rate of twelve (12%) per annum” (id. at ¶ 17).

         Maloul's two loans to Defendant are the fourth and fifth transactions at issue. “In or about October 2004, Maloul loaned an additional $65, 000 to [D]efendant in exchange for a Promissory Note.” (Compl. ¶ 18). As was the case with Lowy's loans, this Note, “[u]pon maturity, ” was to “accrue a default interest at a rate of eighteen (18%) per annum ... until the obligation [was] paid in full.” (Id. at ¶ 19). And “[i]n or about April 2005, Maloul loaned an additional $100, 000 to [D]efendant in the form of a Debenture.” (Id. at ¶ 21). This “Debenture carried an interest computed from the date of the Debenture at the rate of twelve (12%) percent per annum.” (Id. at ¶ 22).

         The parties agree that each of these loans matured within approximately one year of its extension, and that not one was repaid. (See Dkt. #17; see also Compl. ¶ 1 (“Although the maturity dates and obligations to pay back the loans have passed, and despite [P]laintiffs' demand for repayment of their loans, [D]efendant has failed to return any of the monies it owes to [P]laintiffs.”)).[3]

         B. Procedural Background

         Plaintiffs filed the Complaint on November 5, 2015. (Dkt. #1). Though personal service was made on December 7, 2015 (Dkt. #7), Defendant failed to appear or respond to the Complaint. Therefore, a Clerk's Certificate of Default was issued on February 19, 2016. (Dkt. #8).

         Because Plaintiffs took no subsequent action, the Court issued an Order on April 14, 2016, directing Plaintiffs to file within 30 days either a motion for default judgment or a request to dismiss this case. (Dkt. #9). Plaintiffs moved this Court to enter a default judgment, and on May 16, 2016, the Court issued an Order directing Defendant to show cause why default judgment should not be entered against it pursuant to Federal Rule of Civil Procedure 55(b)(2). (Dkt. #11). On June 16, 2016, Defendant filed a motion that the Court construed as Defendant's opposition to the Court's May 16, 2016 Order. (Dkt. #14; see also Dkt. #17).

         On June 30, 2016, the Court held a hearing at which it discussed the possibility of a default judgment. (See Dkt. #17). Ultimately, the Court determined that the entry of default judgment was not necessary under the circumstances, which would be better addressed by lesser sanctions. (Id.). These the Court imposed, barring Defendant from contesting the Court's personal jurisdiction and the adequacy of service. (Id. (precluding Defendant from contesting personal jurisdiction or adequacy of service, in part because Defendant represented it had “no problem consenting to jurisdiction, no problem waiving personal jurisdiction”).

         On July 21, 2016, Defendant filed its Answer, in which it raised several affirmative defenses. (Dkt. #16). Plaintiffs filed their motion for judgment on the pleadings on September 22, 2016. (Dkt. #29). Defendant filed its cross-motion for judgment on the pleadings on September 26, 2016. (Dkt. #31). On October 27, 2016, Defendant filed its opposition to Plaintiffs' motion. (Dkt. #35). Plaintiffs filed their opposition to Defendant's motion on October 31, 2016 (Dkt. #36), and their reply in further support of their motion on November 7, 2016 (Dkt. #37). Defendant did not file a reply.

         Along with their briefing, Plaintiffs filed an affirmation of Plaintiff Allen Lowy, who is also Maloul's counsel, in support of Plaintiffs' motion for judgment on the pleadings (Dkt. #29-2), as well as several documents attached as exhibits (Dkt. #29-3 to 29-7). Defendant likewise attached contract documents as an exhibit to its motion. (Dkt. #31-1).

         Accordingly, on June 19, 2017, the Court issued an Order (the “June 19 Order”) indicating that it planned to convert the parties' cross-motions for judgment on the pleadings into Rule 56 motions for summary judgment. (Dkt. #39).[4] The June 19 Order directed the parties to (i) show cause, in writing, why the Court could not consider the parties' documentary evidence submitted in support of their cross-motions for judgment on the pleadings in “adjudicating the parties' motions for summary judgment”; and (ii) “submit ... any and all additional materials they wish[ed] the Court to consider” in deciding the motions. (Id.). Specifically, the Court asked “the parties to ensure that the Court ha[d] all documentation relevant to Plaintiffs' proof of the existence of the disputed loans and their duration, Defendant's proof of the loan's assignment, and Plaintiffs' arguments for equitable tolling or estoppel.” (Id.). Neither Plaintiffs nor Defendant submitted any response to the June 19 Order.

         DISCUSSION

         A. ...


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