FILED: NEW YORK COUNTY CLERK 06/21/2010
`NYSCEF DOC. NO. 56
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`INDEX NO. 600165/2010
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`RECEIVED NYSCEF: 06/21/2010
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`FILED: NEW YORK COUNTY CLERK 06m2010
`NYSCEF DOC. NO. 56
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`IND
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` flIV flD
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`EX NO.
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`VYSCEF:
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`600165/2010
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`06/21/2010
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`SUPREME COURT OF THE STATE OF NEW YORK
`COUNTY OF NEW YORK
`_________________________________________________________________________X
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`627 ACQUISITION COMPANY, LLC
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`Index No. 600165/10
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`-against—
`
`Plaintiff,
`
`LAS Part 49
`
`627 GREENWICH, LLC, PETER MOORE ASSOCIATES, KMG
`GREENWICH LLC,
`627 GREENWICH MANAGEMENT
`CORR, STANLEY E. KLEGER, ERIC S. GRANOWSKY,
`BURT W. MILLER, KMG PARTNERS LLC, PETER MOORE,
`GERALD BIRCH, CHRISTOPHER CAUDWELL, CWR 727
`GREENWICH STREET LLC, CONNOR DOYLE, HOWARD
`ELLINS, ADAM HAKIM, STEVEN HASKER, JON HOLDEN,
`JUDY HUDSON, MICHAEL
`SCHLEGAL,
`CYNTHLA
`SCHLEGAL, PETER SHAPIRO, SAID SUMAIDA, ALAN
`WEDDELL, MARK ZEFF, FOUNDATIONS GROUP INC.
`MIKE BURKE CONSTRUCTION INC. AM BUILDING
`
`MAINTENANCE CORP. IRON WORKS BY YSL INC, S&E
`BRIDGE AND SCAFFOLD, LLC, PERIMETER BRIDGE &
`SCAFFOLD
`CO.
`INC,
`CITY
`OF
`NEW YORK
`
`ENVIRONMENTAL CONTROL BOARD, AND “JOHN DOE
`#1” THROUGH “JOHN DOE #12” THE NAMES OF THE LAST
`AND
`
`TWELVE DEFENDANTS
`
`BEING FICTITIOUS
`
`UNKNOWN TO PLAINTIFF, PLAINTIFF INTENDING TO
`DESIGNATE THEREBY PERSON OR PARTIES HAVING OR
`
`CLAIMING TO HAVE AN INTEREST IN OR LIEN UPON THE
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`DESCRIBED PREMISES,
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`Defendants.
`
`--x
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`IVIEMORANDUM OF LAW IN SUPPORT OF CROSS-MOTION TO AMEND
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`ANSWER AND IN OPPOSITION T0 PLAINTIFF’S M TION FOR SUMMARY
`JUDGMENT
`
`KRISS & FEUERST
`
`LLP
`
`
`
` . ‘i‘xl
`
`
`By:
`David Kriss, ‘
`Jerold C. Feuersteln,
`Attorneys for Defendant, Howard Ellins
`360 Lexington Avenue, Suite 1200
`New York, New York 10017
`(212) 661-2900
`
`sq.
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`

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`INTRODUCTION
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`Howard Ellins (“Ellins”), at all times relevant to this action a Non-Managing Member of
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`Defendant, 627 Greenwich, LLC (“Borrower”), hereby submits this Memorandum of Law in: (a)
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`support of his Cross-Motion to Amend his Answer to assert two additional Affirmative Defenses
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`and two Counter-Claims (“Ellins Cross-Motion”) and (b) Opposition to Plaintiff’s Motion for
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`Summary Judgment (“Opposition”).
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`The factual background of this matter and pertinent documentary evidence are set forth
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`in the Affidavit of Howard Ellins (“Ellins Affidavit”) submitted in support of Ellins’ Cross—
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`Motion and Opposition. The terms defined in the Ellins Affidavit are incorporated by reference
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`herein.
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`It is respectfully submitted that Ellins’ Cross-Motion for leave to serve an Amended
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`Answer in order to assert two additional Affinnative Defenses and Counter—Claims (novation
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`and breach of contract) should be granted as such amendments have merit and Plaintiff cannot
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`legitimately claim prejudice or surprise by such amendments.
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`Plaintiff’s Motion for partial summary judgment against Ellins must be denied as Plaintiff
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`has failed to establish its prima facie. To this end, Ellins has put forth documentary evidence
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`which establishes that there are significant material differences between the Purported Guaranty
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`annexed to the Complaint and relied upon by Plaintiff, and the Original Guaranty Ellins agreed
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`to sign. The documentary evidence raises a question of fact as to whether Ellins signature page
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`was improperly attached to the Purported Guaranty. Additionally, as set forth in paragraph 22
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`of the Ellins Affidavit, there are numerous discrepancies on the face of the Purported Guaranty
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`which raise a question of fact as to its authenticity.
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`

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`Furthermore, summary judgment should be denied as Ellins has raised questions of fact
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`with respect to his other defenses,
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`including:
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`(a) whether he was fraudulently induced to
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`guaranty the loan at issue in this matter by Petra’s false representation that the execution of the
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`Guaranty by all members of the Borrower was a condition precedent to originating the loan, (b)
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`whether Plaintiff should be estopped from enforcing the Original Guaranty as Plaintiff failed to
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`satisfy a condition precedent to its effectiveness, (0) whether the execution of the Amended
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`Guaranty resulted in a novation and (d) whether Petra breached the express terms of the
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`Purported Guaranty when it entered into the Amended Guaranty without Ellins knowledge or
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`consent.
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`CROSS—MOTION TO AMEND ANSWER
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`On or about April 23, 2010, Howard Ellins interposed a Verified Answer with Seventeen
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`Affirmative Defenses.
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`in response to the 54th paragraph of the Complaint, which alleges that
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`Ellins executed the “Payment Guaranty” (referred to herein as the “Purported Guaranty”)
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`annexed to the Complaint as Exhibit “G”, Ellins admitted he signed a Guaranty and referred the
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`Court to the document for its terms. Subsequent to filing the Answer, Ellins compared the
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`Original Guaranty he agreed to sign and found that the terms differ significantly from the
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`Purported Guaranty annexed to the Complaint.
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`A significant difference between the Purported Guaranty put forth by Plaintiff and the
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`Original Guaranty is that the Purported Guaranty contains Section 2(Vi) which waives a defense
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`based on the failure of all Guarantors to sign. However, Section 2(vi) was not included in the
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`Original Guaranty Ellins agreed to sign. As such, Ellins seeks to amend his Answer to deny
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`the allegations set forth in Paragraph 54 of the Complaint in their entirety.
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`

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`Additionally, Ellins now seeks to interpose two affirmative defenses and Counter—Claims
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`to include the Affirmative Defenses of a novation and breach of contract. To this end, the
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`Amended Guaranty was entered into without Ellins knowledge or consent and in Violation of the
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`express terms of the both the Original Guaranty and the Purported Guaranty. (See Section 16(i)
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`of the Original Guaranty annexed to the Ellins Affidavit as Exhibit “D” and the Purported
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`Guaranty annexed to Plaintiff." s Complaint as Exhibit “G”). After reviewing the terms of the
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`Amended Guaranty, it is clear the parties intended this document to be a novation of the prior
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`Purported/Original Guaranty. Specifically, the Amended Guaranty, states in Section 16(i), “This
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`agreement. . .supersedes all prior agreements, whether written or oral...”
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`CPLR § 3025 provides that:
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`(a) A party may amend his pleading once without leave of court
`within twenty days after its service, or at any time before the
`period for responding to it expires, or Within twenty days after
`service of a pleading responding to it.
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`(b) A party may amend his pleading, or supplement it by setting
`forth additional or subsequent transactions or occurrences, at any
`time by leave of court or by stipulation of all parties. Leave shall
`be freely given upon such terms as may be just including the
`granting of costs and continuances.
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`In exercising its discretion to freely grant leave to amend pleadings, the court will
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`consider how long the party seeking amendment was aware of the facts upon which the motion
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`was based and whether a reasonable excuse for the delay was offered. See, Slavet v. Horton
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`Memorial Hospital, 227 A.D.2d 465 (2d Dep’t 1996 ). “[M]otions for leave to amend pleadings
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`are liberally granted in the absence of prejudice or surprise.” Breco Environmental Contractors
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`Inc. v. Town of Smithtown, 307 AD2d 330, 332 (2d Dep’t 2003).
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`

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`In this matter, Plaintiff moved for summary judgment shortly after Ellins interposed his
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`Answer. Since only a brief period of time passed between the expiration of Ellins’ right to
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`amend his Answer without leave of Court and the filing of this Cross-Motion, Plaintiff cannot
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`allege that it has been prejudiced by the proposed amendment. Moreover, Ellins has established
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`that his proposed amendments have merit by putting forth documentary evidence showing that
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`that the version of the Original Guaranty he agreed to sign, and the Purported Guaranty relied
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`upon by Plaintiff differ. Thus, it is appropriate to allow Ellins to amend paragraph 54 of the
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`Answer to deny that the Purported Guaranty annexed to the Complaint is a true and correct copy
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`of the document he signed.
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`Furthermore, Ellins request to amend his Answer to include the Affirmative Defenses and
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`Counter—Claims of novation and breach of contract should also be granted to conform to the
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`documentary evidence. Since the express language of the Purported Guaranty relied upon by
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`Plaintiff clearly states in Section 16(i) “Any amendments or modifications herein, in order to be
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`effective, shall be in writing and executed by the parties hereto”, Plaintiff cannot claim to be
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`surprised by the interposition of an Affirmative Defense and Counterclaim based on Plaintiffs
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`breach of Purported Guaranty since any amendments to the Original/Purported Guaranty clearly
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`required Ellins’ written consent.
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`Additionally, based on the express language of the Amended Guaranty, which
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`unambiguously states that that agreement “supersedes all prior agreements, whether written or
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`oral” , Ellins should be permitted to assert the defense of novation.
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`Based on the foregoing, Ellins respectfully requests leave to serve the Amended Answer
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`annexed as Exhibit “A” to the Ellins Affidavit.
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`

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`OPPOSITION TO MOTION FOR SUMMARY JUDGMENT
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`C.P.L.R. §3212(b) provides:
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`“A motion for summary judgment shall be supported by affidavit,
`by a copy of the pleadings and by other available proof such as
`depositions and written admissions. The affidavit shall be by a
`person having knowledge of the facts; it shall recite all the material
`facts, and it shall show there is no defense to the cause of action or
`that the cause of action or defense has no merit. The motion shall
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`be granted if, upon all of the papers and proof submitted, the cause
`of action or defense shall be established sufficiently to warrant the
`court as a matter of law in directing summary judgment in favor of
`any party. Except as provided in subdivision (0) of this rule the
`motion shall be denied'if any party shall show facts sufficient to
`require a trial of any issue of fact.”
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`C.P.L.R. §3212(f), captioned, “Facts unavailable to opposing party”, states in
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`pertinent part:
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`“Should it appear from affidavits submitted in opposition to the
`motion that facts essential
`to justify opposition may exist but
`cannot then be stated, the court may deny the motion or may order
`a continuance to permit affidavits to be obtained or disclosure to be
`had and may make such other order as may be just.”
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`It is well settled that “the proponent of a summary judgment motion must make a prima
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`facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to
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`demonstrate the absence of any material issues of fact.” Alvarez v. Prospect Hosp., 68 N.Y.2d
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`320, 324 (1986). "Failure to make such showing requires denial of the motion, regardless of the
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`sufficiency of the responsive papers.” Winegrad v. New York Univ. Med. Ctr., 64 N.Y.2d 851,
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`853 (1985). When deciding a summary judgment motion, the evidence must be viewed in the
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`light most favorable to the nonmoving party. See, Russo v. YMCA of Greater Buffalo, 784
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`N.Y.S.2d 782 (4th Dep’t 2004). The court's duty is to determine whether an issue of fact exists,
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`not to resolve it. Barr v. County of Albany, 428 N.Y.S.2d 665 (1980). “Summary judgment is
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`

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`only appropriate where the movant satisfies his or her initial burden of proof and the
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`nonmovant's opposition to the motion is ‘entirely conjectural and there is no genuine issue [of
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`fact] to be resolved’” Gavrilov V. Slinim 5 Misc.3d 1021(A), 799 N.Y.S.2d 160 (Table)
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`(N .Y.Sup. 2004), citing, Cassidy v. Valenti, 211 A.D.2d 876, 877 (3d Dep’t 1995). “Summary
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`judgment, as a drastic remedy, should only be granted in cases where there are ‘no material facts
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`disputed sufficiently to warrant a trial’.” La Bier v. La Bier, 738 N.Y.S.2d 132, 134 (3d Dep’t
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`2002) quoting Matter of Patricia YY. V. Albany County Dept. of Social Servs., 656 N.Y.S.2d
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`414, 415 (3d Dep’t1997).
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`In considering a motion for summary judgment, the court's role is issue finding as
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`opposed to issue determination, and the existence of conflicting issues of fact mandates the
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`dismissal of the motion. Werfel V. Zivnostenska Banka, 287 NY. 91 (1941). Because summary
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`judgment would deny the opposing party an opportunity to present a case, all evidence must be
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`weighed in the light most favorable to the opposing party. See, AG Capital Funding Partners,
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`LP. v. State St. Bank & Trust Co., 5 N.Y.3d 582 (2005); Negri V. Stop and Shop, 65 N.Y.2d 625
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`(1985).
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`“When a prima facie case has been shown, to defeat the motion, the opposing party then
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`carries the burden to present a disputed fact that must be tried before a fact finder...
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`[T]he
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`motion shall be denied if any party shall show facts sufficient to require a trial of any issue of
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`fact (CPLR 3212 [b]). Mere conclusory allegations or defenses are insufficient to preclude
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`summary judgment absent evidentiary substantiation.” HSBC Bank USA Nat. Ass'n v. Dollar
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`Bill Boutique, Inc., 21 Misc.3d 1148(A), 875 N.Y.S.2d 820 (Table) (N .Y.Sup. 2008). When the
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`existence of an issue of fact is even arguable or debatable, summary judgment should be denied.
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`Stone v. Goodson, 8 N.Y.2d 8 (1960).
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`

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`1.
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`Plaintiff has failed to establish its primafacie case.
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`In order to establish a prima facie case on a guaranty, plaintiff must establish the
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`existence of the underlying promissory note or obligation, the guaranty, and the failure of the
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`prime obligor to make payment in accordance with the terms of the promissory note or
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`obligations. Royal Commercial Corp. v. Kotrulya, 304 A.D.2d 742 (2 Dep’t 2003). To be
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`enforceable, the guaranty must be in writing signed by the person to be charged. Schulman v.
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`Westchester Mechanical Contractors Inc., 56 A.D.2d 625 (2 Dep’t 1977).
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`Plaintiff has failed to establish its primafacie case as there is a dispute over the
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`documents upon which Plaintiff relies. Additionally, Plaintiff has failed to come forward with an
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`Affidavit from someone with personal knowledge of the facts of this case to establish that
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`Plaintiff has standing to commence this action and the authenticity of the documents attached to
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`the Complaint.
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`Plaintiff has not established its primafacie case as the Affidavit of Lance W. Haberin,
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`upon which Plaintiff relies to purportedly authenticate the Purported Guaranty does not satisfy
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`the requirement that the motion must be supported “by affidavit [from a person having
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`knowledge of the facts], by a copy of the pleadings and by other available proof, such as
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`depositions” CPLR § 3212(b). To this end, Lance W. Haberin admits that Plaintiff’s
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`predecessor-in-interest had no involvement in the underlying negotiation of the loan documents.
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`(See Amended Haberin Affidavit, 116). Further, Mr. Haberin claims to have personal knowledge
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`of the facts of this case but does not allege the basis of his knowledge. (See Amended Haberin
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`Affidavit, 116) Moreover, Mr. Haberin merely states that annexed to the Complaint are true and
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`correct copies of the “loan documents”. However, having admitted he lacks personal knowledge
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`of the facts surrounding the origination of the loan, he cannot verify whether the Purported
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`

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`Guaranty is in fact a true and authentic copy of the Original Guaranty Ellins was asked to sign.
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`See, Legion Ins. Co. V. Northeastern Plate Glass C03}, 837 N.Y.S.2d 430 (3 Dep’t. 2007).
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`(denying summary judgment finding “plaintiff failed to submit, without excuse, originals of the
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`requested documents as well as ‘affidavits of those with personal knowledge
`3”
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`[to] authenticate[
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`] plaintiffs business records...
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`) A conclusory affidavit, or an affidavit by a person who has no
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`personal knowledge of the facts, cannot establish a prima facie case. JMD Holding Corp. v.
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`Cong. Fin. Com., 4 N.Y.3d 373, 385 (2005); Castro v. N.Y. Univ., 5 AD3d 135, 136 (lst Dep’t
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`2004).
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`In addition to having different terms1 than the Original Guaranty Ellins signed, there are
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`blatant inconsistencies on the face of the Purported Guaranty which support Ellins claim that this
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`is not a genuine, authentic document. To this end, the document number reflected on Ellins’
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`signature page annexed to the Purported Guaranty is the same document number set forth on the
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`signature page that was attached to the Original Guaranty put forth by Ellins. However, the
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`document number set forth on the Managing Member signature page on the Pmported Guaranty
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`is different from the document number on the Original Guaranty. Thus, Ellins has raised a
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`triable issue of fact as to whether Plaintiff improperly appended Ellins’ signature page to the
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`Purported Guaranty. Lending further support to the merits of Ellins’ challenge to the
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`authenticity of the Ptu'ported Guaranty relied upon by Plaintiff is the fact that his signature on the
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`Purported Guaranty annexed to the Complaint is neither dated nor notarized. Davimos v. Halle
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`826 N.Y.S.2d 61 (1 Dep’t 2006) (Denying summary judgment due to substantial inconsistencies
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`in a guaranty which could not be explained as mere typographical errors.)
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`1 Also see, Section 1(b) and Section 4 of the Original Guaranty and Purported Guaranty which are also different.
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`

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`Plaintiff has also failed to establish its primafacz‘e case base because it fails to put forth
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`proof of the assignment from Petra to Petra Fund REIT Corp. on June 28, 2007 as alleged in the
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`60th Paragraph of the Complaint. In light of the admission in the Amended Haberin Affidavit
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`concerning his lack of personal knowledge of the facts surrounding the origination of the loan by
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`Petra, Plaintiff has failed to establish that it has standing to bring this action. “A party cannot
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`foreclose on a mortgage without having title, giving it standing to bring the action. (See Kigfl
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`Egg, 145 A.D.2d 537, 538, 536 N.Y.S.2d 92 (2nd Dept.1988), holding that a ‘foreclosure ofa
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`mortgage may not be brought by one who has no title to it and absent transfer of the debt, the
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`assignment of the mortgage is a nullity.” Bank of New York v. Alderazi, 900 N.Y.S.2d 821, 823
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`(N.Y.Sup., Kings Cty. 2010).
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`Based on the facts stated above, Plaintiff’s Motion must be denied, as Plaintiff has failed
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`to establish its primafacie case.
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`II.
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`Ellins Has A Meritorious Fraudulent Inducement Defense
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`In this matter, Ellins alleged the Affirmative Defense of fraudulent inducement in his
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`Answer based on the fact that he would not have signed the Original Guaranty, but for Petra’s
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`representation that it would not originate the loan if all of the other Guarantors did not sign. In
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`the Purported Guaranty relied upon by Plaintiff this defense appears to have been waived.
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`However, upon searching his records subsequent to filing his Answer, Ellins discovered that the
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`Original Guaranty that he was given to sign did not waive this defense. To substantiate Ellins
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`fraudulent inducement defense he has put forth credible evidence in the form of an email and the
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`Original Guaranty attached thereto, along with proof he delivered his signature on June 11, 2007,
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`17 days prior to the effective date of the Purported Guaranty.
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`

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`As set forth in the Ellins Affidavit, and confirmed by the documentary evidence, there is
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`a question of fact as to whether Ellins was fraudulently induced to Sign the Original Guaranty
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`based on Petra’s misrepresentation expressly set forth in the Original Guaranty it would not
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`originate the loan without all of the Guarantors” signatures. “The elements of a cause of action
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`for fraud in the inducement are a misrepresentation or a material omission of fact which was
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`false and known to be false by the defendant, made for the purpose of inducing the other party to
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`rely on it, justifiable reliance and damages. Lama Holdings Co. V. Smith Barney Inc., 88 N.Y.2d
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`413, 431 (1996).
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`In this matter, in both the Purported Guaranty annexed to the Complaint and the Original
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`Guaranty Ellins was asked to sign, Petra represented it would not make the loan in the absence
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`of all of the Guarantors signatures. To this end, the last “Whereas” clause on page 2 of the
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`Purported and Original Guaranty states, “the execution and delivery of this Guaranty by
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`Guarantors is a condition precedent to the making of the Loan by the Lenders...” This
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`representation is also set forth in Sections 16(b) and (q) of the Purported Guaranty and Original
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`Guarantyz.
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`Ellins reasonably relied to his detriment on Petra’s representation that it was a condition
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`precedent to originating the loan for all of the Guarantors to sign. However, according to
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`Plaintiffs evidence, the following Non-Managing Members set forth on Schedule B of the
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`Purported Guaranty did not sign the Purported Guaranty: Agua Alta Holdings Limited, CWR
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`627 Greenwich Street LLC, Greenwich Street Management Partners LLC, Neil Joffe, Mitchell
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`2 In the Recital set forth on page two of the Guaranty it states, “the execution and delivery of this
`Guaranty by Guarantors is a condition precedent to the making of the Loan by the Lenders and
`the execution and delivery by Administrative Agent and the Lenders of the Loan Agreement.”
`Additionally, the Guaranty provides in Section 16(b) that “Lenders would not make the Loan but
`for the unsecured personal liability undertaken by Guarantors herein.”
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`

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`Teller, Elad Yoran and Paul Sidney Real Estate Holdings LLC. Thus, Ellins has established that
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`Plaintiff‘s representation that it would not originate the loan in the absence of all Guarantor’s
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`signatures was false.
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`Moreover, as evidenced by the Amended Guaranty signed in December 2007, Plaintiff
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`knew the representation that it was a condition precedent to the origination of the loan for all of
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`the Guarantors to sign was false when made. To this end, the Amended Guaranty, which is
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`notably only signed by the Managing Member Guarantors, states that two Managing Member
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`Guarantors named in the recitals of the Purported Guaranty were not intended to be
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`Guarantors. Specifically, the Amended Guaranty states in the recitals on page 2 that “the
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`Original Guarantors and Administrative Agent agree that it was not the intention of the parties to
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`include KMG Greenwich and GMC as guarantors to the Original Guaranty and therefore, the
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`Original Guarantors and Administrative Agent have agreed to restate the terms of the Original
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`Guaranty to recognize that KMZ Greenwich and GMC are no longer guarantors and that KMG
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`Greenwich and GMC are released for any obligation under the Original Guaranty as of the date
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`hereof...”
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`Since both KMG Greenwich (KMG Greenwich LLC) and GMC (627 Greenwich
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`Management Corp.) are named specifically in the Recitals of the Guaranty (as opposed to Ellins
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`who is merely listed on Schedule “B” of the Guaranty and is not named anywhere in the body of
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`the Guaranty) the Amended Guaranty lends credence to the merit of Ellins’ fraudulent
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`inducement defense. By releasing the Managing Members wholly owned entities from liability
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`under the Purported Guaranty, the Managing Members of the Borrower appear to have had a
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`more favorable relationship with Petra, due to the concessions the Manager Members were
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`given. Ellins needs discovery to determine if there is evidence to support his fraudulent
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`

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`inducement defense, including but not limited to the communications between Petra and the
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`Manager Members of the Borrower to determine the facts and circumstances surrounding the
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`execution of the Original/Purported and Amended Guaranty.
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`“Summary judgment should not be granted where, as here, there are likely to be defenses
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`that depend upon knowledge in the possession of the party moving for summary judgment which
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`may be disclosed by discovery.” Gates v. Easy Living Homes, Inc., 29 A.D.3d 733, 815
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`N.Y.S.2d 683 (2 Dep’t 2006). (Denying summary judgment to lender in foreclosure action so
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`borrower could obtain discovery in connection with fraud defense.) In this case, Ellins is entitled
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`to discovery to ascertain the facts and circumstances surrounding Petra’s decision to originate the
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`loan in the absence of all of the Guarantors signatures as well as in connection with the execution
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`of the Amended Guaranty.
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`Based on the foregoing, Ellins has established his Seventeenth Affirmative Defense
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`(fi'audulent inducement) raises a traible issue of fact.
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`III.
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`Plaintiff Failed to Satisfy A Condition Precedent
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`As a Twelfth Affirmative Defense, Ellins alleged the Purported Guaranty is not effective
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`due to Plaintiff‘s failure to satisfy a condition precedent. As discussed above, both the Original
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`Guaranty and Purported Guaranty specifically state that it was a condition precedent to
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`originating the loan for all Guarantors to sign the Original Guaranty.
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`“A contract of guaranty is
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`subject to the fulfillment of any condition precedent to the liability imposed on the guarantor.”
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`Madison Ave. Leasehold, LLC v. Madison Bentley Associates LLC, 30 A.D.3d l, 811 N.Y.S.2d
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`47 (l Dep’t 2006). “If the condition precedent be not performed, then the contract will never
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`have vitality or become a binding agreement.” I_d. at 54.
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`

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`Based on Petra’s representation the Plaintiff should be estopped from enforcing the
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`Original or Purported Guaranty. “[T]he purpose of estoppel ‘is to prevent someone from
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`enforcing rights that would work injustice on the person against whom enforcement is sought
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`and who, while justifiably relying on the opposing party's actions, has been misled into a
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`detrimental change of position.” US Bank Nat. Ass'n V. 23rd Street Development, LLC
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`25 Misc.3d 1214(A), Slip Copy, 2009 WL 3337595 (Table), at *2 (N.Y.Sup.,2009). In this
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`matter, Ellins would not have signed the Original Guaranty if the lender did not represent that all
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`of the Guarantors signatures were required as a condition precedent to originating the loan. In
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`point of fact, the evidence reflects that rather than refilse to originate the loan to the Borrower,
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`Petra revised the Original Guaranty without Ellins knowledge or consent. Since Ellins was not
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`made aware of the fact that certain Guarantors refused to sign the Original Guaranty and was not
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`asked to sign a revised version of the Original Guaranty, Petra’s conduct in relying on the
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`Purported Guaranty which waives this defense warrants further investigation.
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`Since the documentary evidence confirms that not all Guarantors signed, Ellins has raised
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`a question of fact as to whether Plaintiff satisfied a condition precedent to the effectiveness of the
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`Original or Purported Guaranty.
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`IV.
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`Ellins Has A Meritorious Novation Defense
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`Ellins has also raised a question of fact as to whether the Amended Guaranty constitutes a
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`novation thereby releasing Ellins from any purported obligation under the Original or Purported
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`Guaranty. “The elements of a novation are: a previous valid obligation, an agreement by all
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`parties to a new obligation, extinguishment of the old contract, and a valid new contract.”
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`Adrian Family Partners 1, LP. V. Exxonmobil €019.23 Misc.3d 1120(A), at 21; 886 N.Y.S.2d 69
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`(Table)(N.Y.Sup.,2007). Assuming arguendo, Plaintiff is able to establish the Original Guaranty
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`

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`or Purported Guaranty are enforceable, the Amended Guaranty served as a novation of the
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`original obligation.
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`To this end, the Amended Guaranty provides in Section 16 (i) that “This Agreement
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`contains the entire agreement between the parties respecting the matters herein set forth and
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`supersedes all prior agreements, whether written or oral, between the parties respecting such
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`matters.” Since the Amended Guaranty clearly states that it supersedes all prior agreements, it
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`constitutes a Novation thereby releasing Ellins from his liability. See, Leeward Isles Resorts
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`Ltd. v. Hickox 49 A.D.3d 277, 853 N.Y.S.2d 41 (1 Dep’t. 2008) (agreement which “superseded
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`and replaced” prior agreement was not a modification, but instead a novation. Therefore,
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`summary judgment is also not appropriate as Ellins has raised a triable issue of fact with respect
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`to a novation defense.
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`V.
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`Ellins Has a Meritorious Breach of Contract Defense
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`Additionally, the Amended Guaranty was also a breach of the Purported Guaranty.
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`Section 16(i) of the Purported and Original Guaranty, captioned Entire Ageement; Amendment;
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`Severability, provides in pertinent part, “Any amendments or modifications hereto, in order to be
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`effective, shall be in writing and executed by the parties hereto.” The Amended Guaranty was
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`entered into only by Managing Members, Peter Moore Associates, KMG Partners LLC (which is
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`not a party to the original Guaranty), Stan Kleger, Eric Granowsky, Burt Miller and Peter Moore,
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`without the knowledge or consent of Ellins. Thus, assuming arguendo, that the Purported
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`Guaranty is deemed enforceable, Petra breached the terms of the Purported Guaranty by entering
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`

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`into the Amended Guaranty dated December 31, 2007, without the knowledge or written consent
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`of Ellins.
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`CONCLUSION
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`In conclusion it is respectfully submitted that the Plaintiff has failed to establish its prima
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`facie case in that it has not produced an authentic copy of the Guaranty which is sought to be
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`enforced in this matter. Moreover, Plaintiff has failed to state a primafacie case because it has
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`not supported its motion with an Affidavit from someone with personal knowledge of the facts of
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`this case.
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`Additionally, summary judgment must be denied so Ellins can seek discovery with
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`respect to his affirmative defenses to this action. Ellins has put forth documentary proof to
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`sustain his defenses of fraudulent inducement, failure to satisfy a condition precedent, novation
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`and breach of contract.
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`Finally, the Court should grant Ellins’ Cross—Motion for an Order granting leave to serve
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`the Amended Answer annexed to his Affidavit as Exhibit “A” as he has requested to do so
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`promptly, the requested amendments have merit and Plaintiff cannot legitimately claim it has
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`been prejudiced by this request.
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`In addition to the defenses stated herein, Ellins incorporates by reference any and all
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`additional defenses which may be brought to light by other Guarantors in this action or that the
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`Borrower may assert in defense of this action.
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`