Bank of America, N.A. v. City View Blinds of N.Y. Inc.

Background

Bank of America, N.A. (BofA) sued City View Blinds of N.Y., Inc., Cosmopolitan Interior NY Corporation, JLM Decorating NYC Inc., Cosmopolitan Interior Florida Corp., and Moshe Gold over defaults under loan, security, guarantee, and commercial card agreements.

In April 2019, BofA provided the Borrowers—City View and Cosmopolitan NY—with a revolving line of credit of up to $4.8 million. The Borrowers granted BofA a security interest in specified collateral, and Gold guaranteed their loan obligations. After a default, the parties amended the loan documents in October 2020. The amendment required repayment by April 30, 2021, added guarantees by JLM and Cosmopolitan Florida, and added security interests in those companies’ assets. The defendants did not make the required payments or turn over the collateral.

The opinion states that, as of April 26, 2021, the defendants owed $4,842,632.62 in principal on the loan, plus interest and other charges. City View also defaulted on a commercial card agreement. After a partial payment, the amount stated as due under that agreement was $66,101.09 as of April 26, 2021, plus interest, fees, and other charges.

BofA moved for summary judgment—a decision without a trial when there is no genuine dispute over a material fact—and asked the court to strike the defendants’ affirmative defenses. The defendants did not file an opposition memorandum or a required factual statement and told the court they had no legal or factual basis to dispute BofA’s allegations or factual statements.

Court’s analysis

The court explained that an unopposed summary-judgment motion is not automatically granted. The court still had to determine whether BofA’s evidence established its legal entitlement to judgment. Applying New York law, the court examined each claim.

Contract and guarantee claims. The court found undisputed evidence that the parties entered the loan and commercial card agreements, that the defendants defaulted, and that the obligations remained unpaid. It also found that Gold, JLM, and Cosmopolitan Florida guaranteed the loan obligations and failed to perform under those guarantees. The court therefore granted summary judgment on the First Claim for breach of the loan agreement, the Seventh Claim for breach of the commercial card agreement, and the Sixth Claim for breach of guarantees.

Foreclosure of the security interest. The court found that BofA had a valid and perfected security interest in the collateral and that the defendants’ default was undisputed. Under the New York Uniform Commercial Code, the court concluded that BofA could foreclose on the security interest, take possession of the collateral, and dispose of it under the applicable statutory procedures. The court granted summary judgment on the Second Claim.

Replevin and conversion. Replevin is a claim seeking return of specific personal property; conversion concerns unauthorized control over property. The court denied summary judgment on the Third Claim for replevin and the Fourth Claim for conversion because BofA had shown a security interest, but had not shown that its right to possess the collateral was superior to the defendants’ rights. The court also found both claims duplicative of the foreclosure claim. The Third and Fourth Claims were dismissed.

Unjust enrichment. The court explained that unjust enrichment is an equitable claim generally used when no valid agreement governs the dispute. Because written agreements governed the loan and collateral, the court concluded that BofA could not also recover under an unjust-enrichment theory. The court denied summary judgment on the Fifth Claim and dismissed it.

Account stated. An account-stated claim concerns a debtor’s agreement to pay a stated amount after an account is presented and accepted as correct. The court found that BofA’s Eighth Claim involved the same nonpayment and damages as its Seventh Claim for breach of the commercial card agreement. Because an account-stated claim cannot be used to duplicate a contract claim based on the same allegations, the court denied summary judgment on the Eighth Claim and dismissed it.

Affirmative defenses

BofA also sought to strike the defendants’ affirmative defenses under Federal Rule of Civil Procedure 12(f). The court described striking a defense as an extreme remedy that is generally disfavored. It denied the request. As to the claims on which BofA received summary judgment, the request was moot. As to the remaining claims, BofA had not shown how the defenses would prejudice it.

Disposition

Judge Sarah L. Cave’s Opinion and Order granted BofA’s motion as to the First and Seventh Claims for breach of contract, the Second Claim for foreclosure of a security interest, and the Sixth Claim for breach of guarantees. The motion was denied as to the Third Claim for replevin, the Fourth Claim for conversion, the Fifth Claim for unjust enrichment, and the Eighth Claim for account stated; those four claims were dismissed. BofA’s request to strike the affirmative defenses was denied.

The court directed BofA to file and serve a proposed judgment containing the stated principal amounts of $4,842,632.62 for the loan agreement and $66,101.09 for the commercial card agreement, along with accrued and accruing interest and other costs and fees, supported by computations and records.