Motion for Summary Judgment in Anne E. Humphreville CFBO Anne E. Humphreville IRA v. Aeu Holdings, Llc| Trellis.Law

On May 24, 2017 a Motion-Secondary was filed involving a dispute between Anne E. Humphreville Cfbo Anne E. Humphreville Ira, and Aeu Holdings, Llc, for Commercial Division in the District Court of New York County.

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FILED: NEW YORK COUNTY CLERK 05/24/2017 04:37 PM INDEX NO. 652836/2017
NYSCEF DOC. NO. 6 RECEIVED NYSCEF: 05/24/2017

SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK

ANNE E.- HUMPHREVILLE,
CFBO ANNE E. HUMPHREVILLE IRA,
Index No. - - - - -
Plaintiff,

- against -

AEU HOLDINGS, LLC,

Defendant.

MEMORANDUM OF LAW IN SUPPORT OF PLAINTIFF'S MOTION FOR
SUMMARY JUDGMENT IN LIEU OF COMPLAIN PURSUANT TO CPLR § 3213

HOLLAND & KNIGHT LLP
31 West 52nd Street
New York, New York 10019
(212) 513-3200
Attorneys for Plaintiff

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TABLE OF CONTENTS

PRELIMINARY STATEMENT ..................................................................................................... 4

STATEMENT OF FACTS .............................................................................................................. 4

A. THE HUMPHREVILLE IRA ....................................................................................................... 4

B. THE PURCHASE AGREEMENT AND THE NOTE .......................................................................... 5

ARGUMENT ................................................................................................................................... 6

A. AEU CONSENTED TO THE JURISDICTION OF THIS COURT AND AGREED THAT NEW
YORK LA w GOVERNS THIS DISPUTE ....................................................................................... 6

B. STANDARD OF REVIEW ........................................................................................................... 6

D. AEU IS ENTITLED TO SUMMARY JUDGMENT .......................................................................... 8

CONCLUSION ................................................................................................................................ 8

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TABLE OF AUTHORITIES

Page(s)

Cases

Benne!! Hanover Assocs. v. Neilson,
215 A.D.2d 710, 627 N.Y.S.2d 439 (2d Dept. 1995) ................................................................ 7

Harris v. Miller,
136 A.D.2d 603, 523 N.Y.S.2d 586 (2d Dept. 1988) ................................................................ 7

Interman Indus. Prods., Ltd. v. R.S.M Electron Power, Inc.,
37 N.Y.2d 151, 371N.Y.S.2d675 (1975) ................................................................................. 6

Judarl L.L.C. v. Cycletech Inc.,
246 A.D.2d 736, 667 N.Y.S.2d 451 (3d Dept. 1998) ................................................................ 7

Maldonado v.Man-Dell Food Stores,
178 Misc. 2d 541, 679 N.Y.S.2d 787 (Civ. Ct. [N.Y. Co.] 1998) ............................................. 7

SCP (Bermuda) Inc. v. Bermudatel Ltd.,
224 A.D.2d 214, 638 N.Y.S.2d 2 (1st Dept. 1996) .................................................................... 7

Sun Convenient, Inc. v. Sarasamir Corp.,
123 A.D.3d 906, 999 N.Y.2d 432 (2d Dept. 2014) ................................................................ 6, 7

Statutes

New York Civil Practice Law Section 3213 ............................................................................... .4, 7

Other Authorities

CPLR 3213 ....................................................................................................................................... 7

CPLR § 3213 ................................................................................................................................ 6, 7

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Pursuant to Section 3213 of the New York Civil Practice Law and Rules ("CPLR"),

Plaintiff Anne E. Humphreville, CFBO Anne E. Humphreville IRA respectfully submits this

memorandum of law, together with the Affidavit of Anne E. Humphreville, sworn to May 24,

2017 ("Humphreville Aff.") and the Affidavit of Gary Shumm, Vice President of IRA Services

Trust Company, sworn to May 12, 2017 ("IRA Services Aff.") in support of its motion for

summary judgment in lieu of complaint.

PRELIMINARY STATEMENT

It is undisputed that Defendant AEU Holdings, LLC ("AEU") defaulted under the terms

of a promissory note it executed in favor of Ms. Humpreville's self-directed IRA account.

Plaintiff now seeks to recover from AEU the outstanding principal balance due under the

promissory note ($1,200,000.00), plus interest, which has been accruing at the rate of 10% per

annum, as well as attorneys' fees and costs.

STATEMENT OF FACTS

A. The Humphreville IRA.

Ms. Humphreville is the owner I trustee of the self-directed IRA known as the Anne E.

Humphreville IRA (the "Humphreville IRA"). Humphreville Aff., if 3. IRA Services Trust

Company ("IRA Services") is a holding company that operates as the custodian for the benefit of

Ms. Humphreville with respect to the assets of the Humphreville IRA. Id., if 4; see also IRA

Services Aff., if 3. IRA Services does not offer or provide Ms. Humphreville or the

Humphreville IRA with tax, legal, or investment advice, nor does it evaluate, recommend, or

endorse any investments. Humphreville Aff., if 5; see also IRA Services Aff., if 4. Ms.

Humphreville is the sole decision maker on all investments and actions on behalf of the

Humphreville IRA and alone manages, directs, and controls the investments of the Humphreville

IRA. Humphreville Aff., if 6; see also IRA Services Aff., if 5.

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B. The Purchase Agreement and the Note.

The Humphreville IRA and AEU entered into that certain Unsecured Convertible

Promissory Note Purchase Agreement, dated March 26, 2015 (the "Purchase Agreement"),

whereby the Humphreville IRA agreed to purchase an unsecured promissory note from AEU.

Humphreville Aff., iiii 7,8; id., Exh. A. AEU also executed that certain Unsecured Promissory

Note in favor of the Humphreville IRA (the "Note") in the original principal amount of

$1,200,000.00 (the "Indebtedness"). Id., iiii7, 9; id., Exh. B; see also IRA Services Aff., ii 6.

The Purchase Agreement and the Note are both dated March 26, 2015, involve the same parties,

and were entered into for the same purpose and in the course of the same transaction. See

Humphreville Aff., iiii 7,9.

On March 27, 2015, the Humphreville IRA wired $1,200,000.00 to AEU. IRA Services

Aff., ii 7;IRA Services Aff., Exh. A; see also Humphreville Aff., ii 13. Pursuant to the Note,

interest accrued on the Indebtedness at the rate of 10% per annum. Humphreville Aff., ii 11.

The Indebtedness and any accrued but unpaid interest became due and payable on March 18,

2016 (the "Maturity Date"). Id.; see also IRA Services Aff., ii 8. AEU failed to repay the

Indebtedness on or prior to the Maturity Date. Humphreville Aff., ii 14; see also IRA Services

Aff., ii 9.

On March 1, 2017, IRA Services made a formal demand to AEU for the repayment of the

Note. IRA Services Aff., ii 10; id., Exh. B; Humphreville Aff., ii 15. Despite the demand, AEU

failed and refused to make any payments to the Humphreville IRA. IRA Services Aff., ii 11;

Humphreville Aff., ii 16. As of May 10, 2017, AEU was liable to the Humphreville IRA for the

outstanding principal balance ($1,200,000.00) and all accrued but unpaid interest ($255,123.29)

in the total amount of $1.455,123.29, upon which interest continues to accrue in the amount of

$328.76 per day. Humphreville Aff., ii 18; see also IRA Services Aff., ii 12. In addition, AEU

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is liable to Plaintiff for all attorneys' fees and costs incurred in connection with AEU's failure to

fulfill its obligations under the Purchase Agreement and the Note . Humphreville Aff., if 19.

ARGUMENT

A. AEU Consented to the Jurisdiction of this Court and Agreed that New York Law
Governs this Dispute.

AEU expressly consented to the application of New York law to this dispute and to the

exclusive jurisdiction of courts in New York, New York. Section 4(d) of the Purchase

Agreement provides as follows:

Governing Law; Jurisdiction. This agreement and the note are governed by the
laws of the State of New York. Any action brought under this agreement or the
Note shall be heard exclusively in a court in New York, New York.

Humphreville Aff., Exh. A. Thus, there is no basis for AEU to oppose the venue of this lawsuit

or the law that should govern Plaintiffs claims.

B. Standard of Review.

"Pursuant to New York CPLR § 3213, a party may obtain accelerated relief by moving

for summary judgment in lieu of complaint, provided that the action is 'based upon an instrument

for the payment of money only or upon any judgment."' Sun Convenient, Inc. v. Sarasamir

Corp., 123 A.D.3d 906, 906, 999 N.Y.2d 432, 434 (2d Dept. 2014) (quoting Von Fricken v.

Schaefer, 118 A.D.3d 869, 870, 988 N.Y.S.2d 254 (2d Dept. 2014)). This procedural device is

intended to "provide a speedy and effective means of securing a judgment on claims

presumptively meritorious. In the actions to which it applies, a formal complaint is superfluous,

and even the delay incident upon waiting for an answer and then moving for summary judgment

is needless." Interman Indus. Prods., Ltd. v. R.S.M Electron Power, Inc., 37 N.Y.2d 151, 154,

371N.Y.S.2d675 (1975) (quotations and citation omitted).

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It is well settled in New York that a promissory note constitutes an "instrument for the

payment of money only" within the meaning of CPLR § 3213. See Sun Convenient, Inc., 123

A.D.3d at 906, 999 N.Y.S.2d at 434 ("A promissory note is an instrument for the payment of

money only, provided that it contains an unconditional promise by the borrower to pay the lender

over a stated period of time."); Benne!! Hanover Assocs. v. Neilson, 215 A.D.2d 710, 710, 627

N.Y.S.2d 439, 441 (2d Dept. 1995) (finding that "promissory note sued on was an instrument for

the payment of money only within the meaning of CPLR 3213 ").

To prevail under the rule, plaintiff need only show that the instrument is facially

incontestable, and that defendant has failed to make payments called for by the terms of the

instrument. Maldonado v. Man-Dell Food Stores, 178 Misc. 2d 541, 679 N.Y.S.2d 787, 789

(Civ. Ct. [N.Y. Co.] 1998) (citing Seamen-Andweall Corp. v. Wright Mach. Corp., 31 A.D.2d

136, 295 N.Y.S.2d 752 (1st Dept. 1968)).

Once plaintiff has met its burden, it is incumbent upon defendant to establish, by

admissible evidence, that a triable issue of fact exists. SCP (Bermuda) Inc. v. Bermudatel Ltd.,

224 A.D.2d 214, 216, 638 N.Y.S.2d 2 (1st Dept. 1996). But because the ability to bring an

action in this manner is limited, any response by a defendant is similarly limited to refuting

plaintiffs right to prevail on the summary judgment motion. Defenses based on facts extrinsic to

the instrument do not preclude consideration of a motion for summary judgment in lieu of

complaint. Judarl L.L.C. v. Cycletech Inc., 246 A.D.2d 736, 667 N.Y.S.2d 451, 452 (3d Dept.

1998). Likewise, counterclaims that do not themselves meet the criteria of CPLR § 3213 are not

allowed to obstruct a claim brought under section 3213. Harris v. Miller, 136 A.D.2d 603, 523

N.Y.S.2d 586, 587 (2d Dept. 1988).

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D. AEU is Entitled to Summary Judgment.

Paragraph 16(iv) of the Note provides that the failure of AEU to pay the Indebtedness

and interest thereon in full on or prior to the Maturity Date shall constitute an Event of Default

under the Note. Humphreville Aff., Exh. B. The Maturity Date set forth in the Note was March

18, 2016. Id. AEU failed to pay the Indebtedness and interest thereon in full on or prior to the

Maturity Date, thereby constituting an Event of Default and a breach of the Note. See id., ~ 14.

Based on the Event of Default, Plaintiff formally demanded that AEU pay the Indebtedness and

all interest due thereon in accordance with the terms of the Note. Despite Plaintiffs demand,

AEU has failed and refused to make any payments due under the Note to the Humphreville IRA.

Accordingly, Plaintiff is owed $1,455,123.29, plus continuing interest, costs and attorneys' fees. 1

CONCLUSION

For the foregoing reasons, Plaintiff respectfully requests an Order granting summary

judgment against AEU for:

a. The outstanding principal balance ($1,200,000.00) and all accrued but unpaid interest

($255,123.29) in the total amount of $1,455,123.29, upon which interest continues to

accrue in the amount of $328.76 per day after May 10, 2017;

b. All reasonable out-of-pocket expenses, including legal fees and disbursements,

incurred by Plaintiff in the prosecution of this lawsuit and otherwise in connection

with enforcing its rights under the Note; and

c. Such other and further relief as this Court deems just and proper.

1 The Purchase Agreement provides that AEU will indemnify Plaintiff for any and all loss, damage, liability, or

expense, including costs and reasonable attorneys' fees that may be incurred or sustained by reason of or in
connection with any failure to fulfill AEU's covenants and agreements. Evidence of attorneys' fees and costs will
be proffered in a separate fee application following the decision on this motion.

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Dated: New York, New York
May 24, 2017

HOLLAND & KNIGHT LLP
~ / ~ _,------
~.~~

A. Andre Hendrick - Pro Hae Vice to be Submitted
Holland & Knight LLP
1180 West Peachtree Street NW, Suite 1800
Atlanta, GA 30309
(404) 898-8131
andre.hendrick@hklaw.com

Attorneys for Plaintiff

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Motion-Secondary: Anne E. Humphreville CFBO Anne E. Humphreville IRA v. Aeu Holdings, Llc

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