Summary
This Appellate Division, First Department decision reviews a lower court order granting defendants' motion for summary judgment and denying plaintiff's cross-motion in a dispute over a promissory note. The court modified the order to reform the note to correctly name the borrower and denied summary judgment on the breach of contract claim due to ambiguity regarding the definition of a "long-term" tenant. Relying on extrinsic evidence and credibility issues surrounding the note's execution, the court held that the defendants failed to meet their prima facie burden as a matter of law. The claim for breach of the implied covenant of good faith and fair dealing was properly dismissed.
Topics
Practice areas
Questions Presented
- Whether the promissory note may be reformed to correct the erroneous borrower name.
- Whether the term "long‑term" tenant in the note is ambiguous such that summary judgment is improper.
- Whether the breach of the covenant of good faith and fair dealing claim should be dismissed.
Holdings
- The promissory note is reformed to change the borrower’s name from "39 Spring Street Holdings LLC" to "39 Spring Holdings LLC".
- The note is ambiguous as to the definition of "long‑term" tenant; defendants have not met their prima facie burden, and summary judgment on plaintiff's second cause of action is denied.
- The claim for breach of the covenant of good faith and fair dealing is properly dismissed.
Key quotations
“If there is ambiguity in the terminology used . . . and determination of the intent of the parties depends on the credibility of extrinsic evidence or on a choice among reasonable inferences to be drawn from extrinsic evidence, then such determination is to be made by the [factfinder]”
Factual background
Plaintiff Laura C. Brown sued 39 Spring Street LLC and related entities over a promissory note that mistakenly named the borrower as "39 Spring Street Holdings LLC" instead of "39 Spring Holdings LLC." The note required payment upon the procurement of a "long‑term" tenant, but the parties disagreed on the meaning of "long‑term." The note was executed without plaintiff's counsel, while the defendants' representatives were represented.
Procedural history
The Supreme Court, New York County entered an order on September 26, 2024 granting defendants' motion for summary judgment on the complaint and denying plaintiff's cross‑motion, but later modified the order to grant plaintiff's cross‑motion to reform the promissory note, deny defendants' motion on that claim, deny defendants' motion on plaintiff's second cause of action for breach of the note, and otherwise affirm the lower court's decision.