Spheyr, Inc. v. Brooklyn Minds Psychiatry P.C.

Background

Spheyr, Inc. sued Brooklyn Minds Psychiatry P.C. to recover money allegedly owed under a promissory note. The note, executed on September 28, 2021, stated that Spheyr had loaned Brooklyn $451,000, with interest at 6.5% per year. It provided that a change of control would constitute a default and that the interest rate would increase to 10% per year after default. Spheyr sought $464,444.53 plus interest.

At the time the note was executed, Dr. Owen Muir was a partial owner of both Spheyr and Brooklyn and signed the note for Brooklyn. Muir and Dr. Carlene MacMillan later sold Brooklyn to Dr. Amanda Itzkoff. Spheyr treated that sale as a change of control that triggered default. Brooklyn made no payment after Spheyr sent a demand letter.

Brooklyn disputed the enforceability of the note and asserted defenses including fraud and unconscionability. It also questioned whether Spheyr had advanced the full $451,000 to Brooklyn, pointing to records referring to an unidentified company called “Brooklyn Gate Bridge.” Brooklyn contended that the note was not disclosed during the sale and that it needed access to additional communications and records.

Motion and Rule 56(d)

Spheyr moved for summary judgment, which asks the court to rule without a trial when there is no genuine dispute over a fact that could affect the outcome. Brooklyn opposed the motion and requested discovery under Federal Rule of Civil Procedure 56(d). That rule allows a court to defer considering a summary-judgment motion or allow discovery when the opposing party shows, through a declaration or affidavit, that it cannot yet present facts needed to oppose the motion.

The court concluded that Brooklyn sufficiently identified information it sought and explained how that information might raise genuine factual disputes. The court specifically identified possible issues concerning whether there was consideration for the note and whether the note was wrongfully negotiated. Brooklyn also stated that no discovery had occurred and that it lacked full access to communications about the note’s negotiation and execution.

Disposition

The court deferred Spheyr’s summary-judgment motion under Rule 56(d) and directed the parties to proceed with discovery. The court stated that the motion could be refiled after discovery was completed. It ordered the parties to file a proposed discovery plan by September 4, 2023, and required discovery to be completed by March 4, 2024. The opinion did not decide whether the promissory note was enforceable, whether Brooklyn owed the claimed amount, or whether Spheyr would ultimately obtain judgment. The Clerk of Court was directed to terminate the motion from the court’s docket.