                           State of New York
                    Supreme Court, Appellate Division
                       Third Judicial Department
Decided and Entered: April 2, 2015                      519546
________________________________

COUNTY OF GREENE,
                      Respondent,
     v

MARY ANN CHALIFOUX,                          MEMORANDUM AND ORDER
                      Defendant,
     and

YURY KORNITSKY et al.,
                    Appellants.
________________________________


Calendar Date:    February 9, 2015

Before:    Lahtinen, J.P., McCarthy, Egan Jr. and Clark, JJ.

                              __________


      Freeman Howard, PC, Hudson (Paul M. Freeman of counsel),
for appellants.

      Edward I. Kaplan, County Attorney, Catskill, for
respondent.

                              __________


McCarthy, J.

      Appeal from an order of the Supreme Court (Elliott III,
J.), entered October 30, 2013 in Greene County, which, among
other things, partially granted plaintiff's motion for summary
judgment.

      Pursuant to a loan agreement, plaintiff lent Athens on the
Hudson, LLC (hereinafter the borrower) $240,000 and defendant
Mary Ann Chalifoux executed a promissory note on behalf of the
borrower. Defendants each personally guaranteed payment of the
note. In an April 2012 letter, plaintiff notified defendants
                               -2-                519546

that the borrower owed $9,767.85 in arrears, declared the loan in
default, accelerated the debt and demanded payment of the balance
of the loan. Less than two weeks later, on May 1, 2012, the
borrower paid plaintiff the amount owed in arrears. No further
notices were given to defendants, nor were any further payments
made toward the loan. Plaintiff commenced this action to collect
on defendants' personal guarantees of the note. Plaintiff moved
for summary judgment and defendants cross-moved for summary
judgment dismissing the complaint.1 Supreme Court granted
plaintiff summary judgment on liability, but directed an inquest
on damages. Defendants Yury Kornitsky and Inga Kornitsky appeal.

      Plaintiff met its initial burden on its summary judgment
motion. Plaintiff's submissions demonstrated the existence of a
valid promissory note, defendants' obligation under the note
through the guarantees, and the borrower's alleged default in
payment (see Tosapratt, LLC v Sunset Props., Inc., 86 AD3d 768,
768 [2011]; Overseas Private Inv. Corp. v Nam Koo Kim, 69 AD3d
1185, 1187 [2010], lv dismissed 14 NY3d 935 [2010]). The burden
then shifted to defendants to raise a triable issue of fact (see
Tosapratt, LLC v Sunset Props., Inc., 86 AD3d at 769; Hirsh v
Brunenkant, 51 AD3d 1258, 1260 [2008]).

      While a guarantor is generally not liable if the principal
is not bound by the contract (see Walcutt v Clevite Corp., 13
NY2d 48, 56 [1963] [guarantor can raise defense that contract
failed for lack of consideration]; Kosich v Catskill Millennium
Tech., Inc., 97 AD3d 1003, 1004-1005 [2012], lv denied 19 NY3d
816 [2012] [guarantor not bound where principal had not signed
note]), a guarantor can be liable, despite the principal's escape
from liability, if the guarantee contains language through which
the guarantor expressly waives a right or defense (see Beal Bank
v Sandpiper Resort Corp., 251 AD2d 360, 361 [1998], lv denied 94
NY2d 756 [1999] [guarantors still liable despite principal having
debt discharged in bankruptcy]; First Am. Bank of N.Y. v Builders
Funding Corp., 200 AD2d 946, 947 [1994]; Manufacturers Hanover
Trust Co. v Green, 95 AD2d 737, 737 [1983], appeal dismissed 61


     1
        According to Supreme Court's order, plaintiff withdrew
its motion with respect to Chalifoux.
                              -3-                519546

NY2d 760 [1984]; see also Kosich v Catskill Millennium Tech.,
Inc., 97 AD3d at 1005). "[T]he liability of the guarantor may be
broader than and exceed the scope of that of the principal where
the guarantee, which is a separate undertaking," clearly states
that it is enforceable against the guarantor despite
circumstances where liability would not attach to the principal
(Raven El. Corp. v Finkelstein, 223 AD2d 378, 378 [1996], lv
dismissed 88 NY2d 1016 [1996]; see International Plaza Assoc.,
L.P. v Lacher, 104 AD3d 578, 579 [2013]).

      Here, the loan agreement, note and guarantees were executed
on the same day and are part of a single transaction, so these
documents should be read together (see White Rose Food v Saleh,
99 NY2d 589, 592 [2003]). The loan agreement lists certain
events that constitute a default, including the "[f]ailure of the
'[b]orrower' to pay any installment of principal and interest
when due and the continuation of such default for twenty (20)
business days after receipt by the '[b]orrower' of written notice
of such default from [plaintiff]." When a listed event of
default occurs, the loan agreement provides certain remedies that
plaintiff may elect, including accelerating the entire balance of
the loan or commencing a collection action.

      The promissory note provides that "in the event of default
in the payment of any principal or interest of this [n]ote for
more than thirty (30) days after written notice of such default
from [plaintiff], then [plaintiff] shall seek remedy of the
condition of default through the provisions of" the loan
agreement. The note also states that "[t]he makers, sureties,
endorsers and guarantors of this [n]ote hereby severally waive
presentment for payment, notice of non-payment, protest and
notice of protest and failure of due diligence by [plaintiff] in
time of demand for payment of all or any part of said amount due
hereunder."

      The personal guarantees provide that defendants
"unconditionally guarantee" to plaintiff that all sums payable
under the loan agreement "shall be promptly paid in full . . . in
accordance with the provisions thereof, whether at maturity, by
acceleration or otherwise." The guarantees also contain a waiver
clause, stating that each defendant "hereby waives presentment,
                              -4-                519546

demand for payment by the maker or anyone else, and notice of
dishonor and all other notices and demands." This language
relieves plaintiff of the obligation to provide all notices to
defendants, including notice of default, and the note's waiver
language waives notice of nonpayment. Accordingly, the waiver
language in the note and guarantees would permit plaintiff to
collect from defendants all amounts that are currently owed on
the loan, even without having given such notice.

      The question then becomes what amount is owed, which
depends on whether the loan was properly accelerated. If it was,
then plaintiff can collect the entire balance of the loan,
whereas if it was not properly accelerated, plaintiff can only
collect the payments that are in arrears from May 2012 until the
time of judgment. While the guarantees waived notices to the
guarantors, those guarantees – as separate contracts between
plaintiff and the guarantors – did not and could not waive notice
of default in payment to the borrower. That notice must have
been provided, and the arrears unpaid for at least 20 days
following such notice, to constitute a default event under the
loan agreement that would allow plaintiff to accelerate the loan.
Because the record does not include proof of such notice to the
borrower, a question of fact exists as to whether a default event
occurred and the loan was properly accelerated (see Superior Fid.
Assur., Ltd. v Schwartz, 69 AD3d 924, 925-926 [2010]). Hence,
plaintiff was not entitled to summary judgment.

     Lahtinen, J.P., Egan Jr. and Clark, JJ., concur.
                              -5-                  519546

      ORDERED that the order is modified, on the law, with costs
to defendants Yury Kornitsky and Inga Kornitsky, by reversing so
much thereof as granted plaintiff's motion for summary judgment;
motion denied; and, as so modified, affirmed.




                             ENTER:




                             Robert D. Mayberger
                             Clerk of the Court
