INDEX NO.

811246/2014

FILED: ERIE COUNTY CLERK 12/12/2014 01:22 PM

NYSCEF DOC. NO. 18

RECEIVED NYSCEF: 12/12/2014

STATE OF NEW YORK

SUPREME COURT : COUNTY OF ERIE
________________________________________________
PHILLIP A. DELMONT, as Administrator
of the Estate of WILLIAM A. DELMONT,
Plaintiff,
v.

Index No.: 811246/2014

SOUTH PARK AVE. PROPERTIES, LLC,

G. STEVEN PIGEON,
JOHN F. ODONNELL, JR., and
SADEQ S. AHMED,
Defendants.
_________________________________________________

DEFENDANTS MEMORANDUM OF LAW IN OPPOSITION TO

PLAINTIFFS MOTION FOR SUMMARY JUDGMENT IN LIEU OF COMPLAINT

Respectfully submitted,
PHILLIPS LYTLE LLP
Attorneys for Defendant
Sadeq S. Ahmed
One Canalside
125 Main Street
Buffalo, New York 14203
Sean C. McPhee, Esq.
- Of Counsel -

TABLE OF CONTENTS

PRELIMINARY STATEMENT .....................................................................................................1

BACKGROUND .............................................................................................................................1
ARGUMENT ..................................................................................................................................3
POINT I

PLAINTIFF MAY NOT PROCEED AGAINST MR. AHMED UNDER

CPLR 3213...............................................................................................................3
A.

Legal Standard Under CPLR 3213 ....................................................................3

B.

The Guaranty Is Not An Instrument For The Payment Of Money

Only. .................................................................................................................4

POINT II

1.

The Guaranty is Subject to a Condition Precedent Requiring

Denial of Plaintiffs Motion. ............................................................4

2.

The Need for Extrinsic Evidence Also Precludes the Use of CPLR
3213..................................................................................................6

THERE ARE GENUINE ISSUES OF MATERIAL FACT THAT

PRECLUDE SUMMARY JUDGMENT.................................................................7
A.

Plaintiffs Damage Calculation Raises Issues of Fact Requiring

Discovery ...........................................................................................................7

B.

South Park Is Entitled To An Offset For Its Counterclaims Against

Delmont Creating Issues of Fact As to the Extent of Mr. Ahmeds
Liability on the Guaranty. ..................................................................................8

C.

Plaintiffs Motion Should Also Be Denied Under CPLR 3212(f)

Because Discovery Is Needed. ...........................................................................8

CONCLUSION ................................................................................................................................9

PRELIMINARY STATEMENT
This memorandum of law is submitted by defendant, Sadeq S. Ahmed (Mr.
Ahmed), in opposition to the motion for summary judgment in lieu of complaint of plaintiff,
Phillip A. Delmont (Plaintiff), the Administrator of the Estate of William A. Delmont
(Delmont). As set forth more fully below, Plaintiff may not proceed against Mr. Ahmed under
CPLR 3213 because the instrument at issue does not qualify for the accelerated procedure
contemplated by CPLR 3213. Moreover, there are genuine issues of material fact establishing
the need for discovery. Accordingly, Plaintiffs effort to circumvent normal discovery and
judicial processes through a motion for accelerated judgment under CPLR 3213 is inappropriate
and should be denied.
BACKGROUND
In April, 2010, Delmont entered into a Stock Purchase Agreement (the
Agreement) with South Park Ave. Properties, LLC (South Park) concerning the purchase
and sale of the shares of capital stock of The Front Page Group, Inc. (The Front Page). See
accompanying Affidavit of Sadeq S. Ahmed sworn to December 8, 2014 (Ahmed Aff.) 3.
The Front Page is a newspaper that is sold and circulated primarily in Erie County. Id.
Section 2.1 of the Agreement provides
in reliance on the representations and warranties, upon the terms,
and subject to the conditions of this Agreement [South Park]
agrees to purchase and accept delivery from [Delmont], and
[Delmont] agrees to sell, assign, transfer and deliver to [South
Park] . . . all of the shares of capital stock of The Front Page
Group, Inc.
Ahmed Aff. Ex. A. 2.1. In exchange for the shares of capital stock of The Front Page, and in
reliance on Delmonts representations concerning The Front Page, South Park agreed to deliver a
promissory note in the amount of $150,000 to Delmont (the Note). Id. 2.2, 2.3.

The Note expressly provides that it is being issued in connection with South
Parks purchase of the stock of The Front Page pursuant to the Agreement. Ahmed Aff. Ex. B.
In addition, the Note provides that it is secured by the very shares of capital stock that South
Park purchased in connection with the Agreement. Id. 6. Notably, the Note makes no mention
of any personal guaranties of South Parks obligations under the Note or Agreement. Ahmed
Aff. 5.
Mr. Ahmed signed the Agreement and Note on behalf of South Park. He, and the
other members of South Park (defendants G. Steven Pigeon and John F. ODonnell, Jr.) also
signed a guaranty. Section 4 of Mr. Ahmeds guaranty (as well as the guaranties of Mr. Pigeon
and Mr. ODonnell) expressly provides that Mr. Ahmeds obligations thereunder arise only if
South Park defaults in the payment of its Indebtedness.1 Ahmed Aff. Ex. C, 4. Moreover,
while Mr. Ahmeds Guaranty mentions the Note, neither the Note nor its terms are incorporated
by reference into the Guaranty. Id. The same is true of the guaranty executed by Mr. Pigeon and
Mr. ODonnell. Ahmed Aff. Exs. D and E.
South Park made certain payments due under the Note. However, upon
discovering that Delmont had misrepresented the level of The Front Pages circulation (as a
means of inducing South Park to enter into the Agreement), South Park ceased making further
payments. Ahmed Aff. 8. South Park then approached Delmont regarding his material
misrepresentations and Delmont agreed to forebear South Parks purported obligations on the
Note. Id. 9.
In April, 2012, Delmont passed and Plaintiff was appointed administrator of
Delmonts estate. Docket No. 7. Although Delmont had previously agreed to forebear South

The term Indebtedness is defined in the Guaranty as the amounts owed by South Park under the Note. See
Ahmed Aff. Ex. C 1.

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Parks obligations on the Note (based upon his misrepresentations as to the level of circulation of
The Front Page), Plaintiff declared an event of default under the Note and sought to accelerate
the purported indebtedness. Docket No. 8. Plaintiff then commenced this action and seeks an
accelerated judgment under CPLR 3123. Docket No. 3.
ARGUMENT
POINT I
PLAINTIFF MAY NOT PROCEED AGAINST MR. AHMED UNDER CPLR 3213
A.

Legal Standard Under CPLR 3213

CPLR 3213 is a unique and accelerated procedure, which provides, in relevant

part, that [w]hen an action is based upon an instrument for the payment of money only or upon
any judgment, the plaintiff may serve with the summons a notice of motion for summary
judgment and the supporting papers in lieu of a complaint. See CPLR 3213. Under the
statutes express terms, an instrument does not qualify for this accelerated procedure unless it is
an instrument for the payment of money only. Even then, the standard for summary judgment
must be separately satisfied. Allied Irish Banks, PLC v. Young Mens Christian Assn of
Greenwich, 36 Misc. 3d 216, 222, (Sup. Ct. N.Y. Cnty. 2012), affd, 105 A.D.3d 516 (1st Dept
2013). That is, to prevail, the plaintiff must show the lack of triable issues of fact. Id. at 222.
Moreover, the Court must view the evidence in the light most favorable to the non-moving
party . . . affording it the benefit of every favorable inference which can be drawn from the
evidence. Haseley v. Abels, 84 A.D.3d 480, 482 (1st Dept 2011) (citation omitted).
The typical example of an instrument for the payment of money is an
unconditional promise to pay a sum certain, signed by the promisor and due on demand or at a
definite time. Equator Intern., Inc. v. NH Street Investors, Inc., 43 Misc. 3d 251 (Sup. Ct. N.Y.
Cnty. 2014) citing Weissman v. Sinorm Deli, 88 N.Y.2d 437, 44344 (1996).
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To qualify under CPLR 3213, the instrument must not require additional
performance by plaintiff as a condition precedent to payment, or otherwise make defendants
promise to pay something other than unconditional. Id. quoting Stevens v. Phlo Corp., 288
A.D.2d 56, 56, 733 N.Y.S.2d 11 (1st Dept 2001) and citing Allied Irish Banks, PLC, 36 Misc.
3d at 220. In other words, where the agreement includes other conditions that are not satisfied
by the instrument itself, summary judgment is inappropriate. Id. quoting Allied Irish Banks,
PLC, 36 Misc. 3d at 220. Critically, an instruments eligibility under CPLR 3213 can never
depend upon the occurrence (or nonoccurrence) of any unrelated future event. Kerin v.
Kaufman, 296 A.D.2d 336, 338 (1st Dept 2002). Thus, where proof beyond the written
instrument is necessary, a motion under CPLR 3213 must be denied. Ljungberg v. Marino, 239
A.D.2d 952, 952, 661 N.Y.S.2d 813 (4th Dept 1997) (affirming denial of plaintiffs motion for
summary judgment in lieu of complaint where extrinsic proof was required).
B.

The Guaranty Is Not An Instrument For The Payment Of Money Only.

A close review of the Guaranty shows that it does not qualify as an instrument

for the payment money only for at least two reasons. First, any obligation under the Guaranty is
subject to a condition precedent (i.e. the occurrence of an uncertain, future event). Next, proof
outside of the Guaranty itself is required to evaluate whether Mr. Ahmed has any obligations
under it and, if so, when the obligations accrue and in what amount. For either reason, CPLR
3213 is unavailable and Plaintiffs motion must be denied.
1.

The Guaranty is Subject to a Condition Precedent Requiring Denial of

Plaintiffs Motion.
Under the Guaranty, Mr. Ahmeds obligations arise only if any default shall be

made in the payment of any Indebtedness. See Guaranty 4 (emphasis added). The Guarantys
use of the word if clearly creates an express condition precedent. See, e.g., MHR Capital

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Partners LP v. Presstek, Inc., 12 N.Y.3d 640, 645 (2009) (We have recognized that the use of
terms such as if, unless and until constitutes unmistakable language of condition (quoting
Oppenheimer & Co. v Oppenheim, Appel, Dixon & Co., 86 N.Y.2d 685, 691 (1995)); Tristar
Petroleum, Inc. v. RAD Energy Corp., 31 A.D.3d 437 (3d Dept 2006) (finding that a contract
provision that obligates the defendant to assume more than $350,000 in debt owed by the
plaintiffs . . . if the defendant acquires a fee simple ownership interest was a condition
precedent) (emphasis added); Carr v. Birnbaum, 75 A.D.3d 972, 973 (3d Dept 2010) (finding a
provision in a development agreement that entitled plaintiffs to payment of the sum of $102,000
. . . [i]f Carr notifie[d] Birnbaum that he intends not to exercise his option to purchase the 50%
available to him was a condition precedent (alterations in original)).
Because Mr. Ahmeds obligations under the Guaranty are tied to a condition
precedent, CPLR 3213 is not available to Plaintiff. For example, in Dubovsky & Sons, Inc. v.
Schwartz, 75 A.D. 2d 802 (2d Dept 1980), the plaintiff brought an action under CPLR 3213
seeking to recover in connection with an unconditional suretyship agreement. The trial court
granted the motion but the Appellate Division reversed, holding that the defendants continuing,
unconditional guaranty of present and future indebtedness was not an instrument for the
payment of money only because additional proof dehors the instrument will be necessary in
order for the plaintiff to prevail, as it must be established that there is an existing, unsatisfied
indebtedness of the principal debtor for which the defendant must answer. Id. at 803. The same
is true here.
Similarly, in Bonds Financial, Inc. v. Kestrel Tech., LLC, 48 A.D.3d 230 (1st
Dept 2008), the plaintiffs brought a motion under CPLR 3213 seeking to recover on a note and
credit agreement and their motion was denied. On appeal, the Appellate Division unanimously

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affirmed, holding that the plaintiffs did not establish a prima facie case since their claim is
based on an acceleration clause in a revolving credit agreement, thus requiring resort to an
external document to define an event of default under the note. Id. at 231. See also Kerin v.
Kaufman, 296 A.D.2d 336, 338 (1st Dept 2002) (in order for an agreement to qualify for this
unique form of accelerated judgment, it must conform to the statutory definition when read
immediately upon execution; terms and conditions precedent that remain unresolved within the
instrument itself cannot be satisfied by future events requiring proof dehors the agreement.)
Here, just like in Dubovsky & Sons, Bonds Financial and Kerin, Mr. Ahmeds
obligations under the Guaranty, if any, require resort to the Note (an external document) to
define an event of default triggering the Guaranty. Indeed, by its terms, the Guaranty becomes
relevant only if there is a default in South Parks payment of its Indebtedness. See Guaranty
4. Therefore, CPLR 3213 is not available to Plaintiff and his motion should be denied.
2.

The Need for Extrinsic Evidence Also Precludes the Use of CPLR 3213
Although the Guaranty references the Note, that reference alone is not sufficient

to constitute incorporation of the Note into the Guaranty. See Arthur Pile & Foundation Corp. v.
Bonjay Housing Corp., 27 Misc. 2d 305, 825 (Sup. Ct. N.Y. Cnty. 1960) (contract did not
contain an incorporation clause stating that specific provisions of the housing agreement would
be enforceable against the subcontractor). Thus, in order to interpret the Guaranty, resort to
extrinsic evidence (i.e. the Note) is necessary, requiring denial of the motion.
Specifically, before Mr. Ahmeds obligations under the Guaranty are triggered,
there must be an event of default under the Note. Naturally, then, it is necessary to look outside
the four corners of the Guaranty (i.e. to the Note and to evidence of a default) thereby precluding
Plaintiff from proceeding under CPLR 3213. Manu. Hanover Trust Co. v. Hixon, 124 A.D.2d
488, 489 (1st Dept 1986) (reversing grant of summary judgment and holding since the note
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specifically states that reference be made to the mortgage to define default . . . resort to the
mortgage is necessary to establish a prima facie case); Ljungberg v. Marino, 239 A.D.2d 952,
952, 661 N.Y.S.2d 813 (4th Dept 1997) (affirming denial of plaintiffs motion for summary
judgment in lieu of complaint where extrinsic proof was required).
Because Plaintiff must resort to extrinsic proof in order to support his claim
against Mr. Ahmed under the Guaranty, the Guaranty cannot be considered an instrument for
the payment of money only under CPLR 3213 and the Court should deny Plaintiffs motion.
POINT II
THERE ARE GENUINE ISSUES OF MATERIAL FACT THAT PRECLUDE
SUMMARY JUDGMENT
A.

Plaintiffs Damage Calculation Raises Issues of Fact Requiring Discovery

In order to establish a prima facie case under CPLR 3213, there must be

documentary evidence or an explanation of now the indebtedness is calculated, other than in the
form of mere conclusory allegations. HSBC Bank USA, v. IPO, LLC, 290 A.D.2d 246 (1st
Dept 2002).
Here, Plaintiff offers absolutely no explanation of how the alleged indebtedness
was calculated, stating only that it allegedly consists of $125,839.08 in principal and $14,435.02
in interest. Docket No. 5 2. Similarly, the purported calculation of the outstanding balance
annexed as Exhibit A to Plaintiffs affidavit (Docket No. 6) raises more questions than it
answers. As just one example, of the $2,899.98 paid on January 13, 2011, $1,802.61 was
apparently applied to interest while $1,097.37 was applied to principal. See Docket No. 6. The
very next month, the same $2,899.98 payment allegedly consisted of $867.51 in interest and
$2,032.47 in principal. Id. The third and fourth payments (in the identical amount as the first
and second payments) allegedly applied $1,389.47 and $71.68 to interest respectively and

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$1,510.51 and $2,828.30 to principal respectively. Id. Plaintiff offers no explanation for these
glaring discrepancies and his unsubstantiated calculations and conclusory allegations regarding
amounts allegedly due create issues of fact warranting denial of Plaintiffs motion. Fisons Corp.
v. Sweeteners Plus, Inc., 258 A.D.2d 872, 872-73 (4th Dept 1999) (quoting Hourigan v.
McGarry, 106 A.D.2d 845, 845-46 (3rd Dept 1984), appeal dismissed 65 N.Y.2d 637)
(summary judgment should not be granted if there is any significant doubt as to the existence of
a triable issue, or if there is even arguably such an issue).
B.

South Park Is Entitled To An Offset For Its Counterclaims Against Delmont

Creating Issues of Fact As to the Extent of Mr. Ahmeds Liability on the Guaranty.
Even if the Court were to grant Plaintiffs motion on the issue of Mr. Ahmeds

purported liabilitywhich it should notSouth Park has asserted an offset based upon its
counterclaims for fraudulent inducement to enter into, and failure of consideration sufficient to
support, the Stock Purchase Agreement. See Affidavit of G. Steven Pigeon sworn to December
9, 2014. (Docket No. 17). As described more fully in South Parks memorandum of law in
opposition to Plaintiffs motion (Docket No. 16), these counterclaims raise genuine issues of
material fact requiring denial of Plaintiffs motion. Naturally, if South Parks indebtedness to
Plaintiff cannot be established at this stage of the proceeding, neither can Mr. Ahmeds liability
on the Guaranty. Indeed, the Guaranty is directly related to the Note and, absent liability under
the Note, there can be no liability on the Guaranty. For this additional reason, Plaintiffs motion
should be denied.
C.

Plaintiffs Motion Should Also Be Denied Under CPLR 3212(f) Because Discovery Is
Needed.
CPLR 3212(f) provides that:
Should it appear from affidavits submitted in opposition to the
motion that facts essential to justify opposition may exist but

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TO:

SHAW & SHAW, P.C.

Jacob A. Piorkowski, Esq.
Attorneys for Plaintiff
4819 South Park Avenue
Hamburg, New York 14075
Telephone No. (716) 648-3020
DeMARIE & SCHOENBORN, P.C.
Edward Betz, Esq.
Attorneys for Defendants
South Park Ave. Properties, LLC
G. Steven Pigeon and
John F. ODonnell, Jr.
403 Main Street, Suite 615
Buffalo, New York 14203
Telephone No. (716) 856-0024

Doc #01-2815780.1

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