29,2003;Affirmation of Linda Mandel Gates, Esq. dated September 9, 2003.

1

SINGH a/k/a RAJENDER SINGHand ULTRA PINK, INC.,

P.O. Box 376Great Neck, New York 11021

Defendants.X

ORDER

The following papers were read on Plaintiff ’s motion for summary judgment inlieu of complaint:

Summons dated July 23, 2003;Notice of Motion dated July 28, 2003;Affidavit of David Glickhouse sworn to on July 23, 2003;Affirmation of Linda Mandel Gates, Esq. dated July 23, 2003;Plaintiff’s Memorandum of Law;Affirmation of Robert A. Scher, Esq. dated September 2, 2003;Affidavit of Paramjit Gill sworn to on August

& Scher, PC.III Great Neck Road

AMERICAN CLOTHING CO., INC. d/b/aULTRA PINK a/k/a ULTRA PINK, INC.,SUKHJIT GILL a/k/a SUKHJIT S. GILL,RAJ

- COUNSEL FOR DefendantsScher

- against

1OOV8

& Jaslow, LLPBANK, N.A., 1065 Avenue of the Americas

Plaintiff, New York, New York

Karlin, Levine,Goldberg

9-8-03Motion Sequence No.: OOl/MOT D

XHSBC BANK USA, formerly known as COUNSEL FOR PlaintiffMARINE MIDLAND BANK, successorby conversion to MARINE MIDLAND

Platzer, Swergold,

g-8-03Submission Date:

RID:

IAS TERM PART 23 NASSAU COUNTY

PRESENT:HONORABLE LEONARD B. AUSTIN

Justice Motion

- STATE OF NEW YORK-

SUPREME COURT -

INDEXNO. 11848-03

18,1998:had

identical terms to those of the March 10, 1997 note.

The March 10, 1997 note was secured by a Loan Security Agreement of the

same date. Likewise, as each note was superceded, so too was the Loan Security

Agreement by a later one dated October 16, 1997.

The note and Loan Security Agreement provided for an interest rate 3% higher

than that contained in the note after demand for payment was made. In addition,both

the note and Loan Security Agreement contain a provision which provides for a 5%

penalty if interest is not paid within ten days after its due date.

2

16,1997 and March 18,1998. The notes of October 16,1997 and March

IO,1997 note was superceded successively by notes dated October

$4,OOO,OOO.O0 line of credit to American Clothing Co,, Inc.

(“American Clothing ”). The line of credit was evidenced by Optional Advance Time or

Demand Grid Note dated March 10, 1997. The note was payable either on demand or

92 days after the date upon which an advance was made, whichever was sooner, The

notes provided for payment of interest at the rate of Marine Midland ’s prime rate plus

2%.a

The March

HSBC BANK OF USA v. AMERICAN CLOTHING CO., INC. et al.,Index No. 11848-03

Plaintiff moves for an order pursuant to CPLR 3213 granting it summary

judgment in lieu of complaint

BACKGROUND

In February 1997, the predecessor of HSBC Bank USA ( “HSBC”), Marine

Midland Bank, extended a

to use the trade name and/or trademark Ultra Pink in connection with the sale of

women’s clothing.

? 988. In 1994, American Clothing entered into a licensing

agreement with Ultra Pink, Inc., whereby American Clothing was granted the exclusive

right

’

Ontario, Canada in

; American Clothing, Singh and Gill have not appeared or opposed the motion,

American Clothing has been named as a Defendant in this action doing business as

Ultra Pink also known as Ultra Pink, Inc. Ultra Pink, Inc., has also been named as a

Defendant separately.

Singh and Gill have been using the name Ultra Pink in connection with their

business since at least 1988. Ultra Pink,. Inc., was incorporated under the law of

$5,313,897.03.

The obligations of American Clothing under the terms of the line of credit and the

notes were personally guaranteed by Raj Singh ( “Singh”) by an Unlimited Continuing

Guaranty dated March 7, 1997. Singh ’s wife, Sukhjit S. Gill ( “Gill”) also personally

guaranteed the obligations of American Clothing under the terms of the line of credit

and notes by executing an Unlimited Continuing Guaranty on May 21, 1997 and a

second written Unlimited Continuing Guaranty dated October 16, 1997.

$84,268.10, a total sum of$1,517,898.20 and late charges in the sum of

$3,711,730.73 which is due and owing under

the line of credit and March 18, 1998 promissory note as of April 25, 2003, interest in

the sum of

al.,Index No. 11848-03

HSBC seeks to recover the sum of

HSBC BANK OF USA v. AMERICAN CLOTHING CO., INC. ef

usifig

the name Ultra Pink, Inc. This second entity is presently listed by the Department of

State as being inactive.

One of the UCC Financing Statements filed by Marine Midland with the New York

Department of State in connection with the note and loan security agreement lists “Ultra

Pink a trade style of American Clothing Co., Inc., ” as the debtor.

Gill’s financial statement dated December 15, 1996 submitted to Marine Midland

lists her as a 50% owner of Ultra Pink, Inc., and lists her ownership interest in it as an

asset. The same financial statement lists her as a 100% owner of American Clothing.

HSBC seeks to enter judgment in this matter not only against American Clothing,

which is the prime obligor and against Singh and Gill, the guarantors, but also Ultra

Pink, Inc.

Indo-American is in bankruptcy.

Raj Singh was the President of lndo-American.

In June, 2002, Ultra Pink, Inc., was incorporated under the laws of the State of

New York. The address it has designated for service of process is in care of Sukhjit

Gill, 4 Boat Lane, Port Washington, New York. The records of the Department of State

list this as an active, domestic business corporation.

A second corporation was incorporated in New York in September, 2002

Indo-American Design Workshop, Inc. ( “Indo-American ”) was a

corporation organized pursuant to the laws of the State of New York in 1986. It adopted

the use of the name Ultra Pink for its business in 1988.

Indo-American Design

Workshop, Inc.

al.,Index No. 11848-03

Ultra Pink was also used as an assumed name by

HSBC BANK OF USA v. AMERICAN CLOTHING CO., INC. ef

(2nd Dept.

5

A.D.2d 351 Securitv Systems, Inc. v. Allvn, 262

Sinqh, as Guarantors

In order to establish a prima facie case a guaranty, Plaintiff must establish the

existence of the underlying promissory note or obligation, the guaranty, and the failure

of the prime obligor to make payment in accordance with the terms of the promissory

note or obligations. E.D.S.

Summan/ Judqment Aaainst Gill and

$5,313,897.03 against American Clothing.

B.

supra.

In this case, Plaintiff has established the promissory note executed on behalf of

American Clothing and American Clothing ’s failure to make the payments due pursuant

to the terms of that note. American Clothing has not appeared or contested the amount

due and owing or offered any other defense to the action. Therefore, HSBC should

recover judgment in the sum of

Baccaray, Depb 2002) and East New York Savinqs Bank v.

(2ndA.D.2d 454 Maher, 293

(2nd Dept.

1995).

In order to establish a prima facie case on a promissory note, Plaintiff must

establish the existence of the instrument and the Defendant ’s failure to make payment

pursuant to the terms of the instrument. Manaiatordi v.

A.D.2d 601 214

al,,Index No. 11848-03

DISCUSSION

A. Summary Judqment Aaainst American Clothing

CPLR 3213 permits a party to move summary judgment in lieu of a complaint

when the action is based upon an instrument for the payment of money only. A

promissory note is an instrument for the payment of money only for the purposes of

CPLR 3213.

HSBC BANK OF USA v. AMERICAN CLOTHING CO., INC. et

N.Y.2d 361 (1974). See also, Akseizer v.

6

N.Y.2d 320 (1986); and Andre v. Pomeroy 35

$5,313,897.03.

C. Summarv Judament Aaainst Ultra Pink

Summary judgment is a drastic remedy which should be granted only when it is

clear to the court that there are no triable issues of fact. Alvarez v. Prospect Hosp., 68

$2nd Dept. 1994).

Both Gill and Singh signed an “Unlimited Continuing Guaranty ” in which they

agreed to guaranteed full and prompt payment of all indebtedness of American Clothing

to Marine Midland. The guaranty was “continuing, absolute and unconditional. ” Neither

Gill nor Singh have appeared in this action. Since Plaintiff has established a prima facie

entitlement to judgment against Gill and Singh on their guarantees, HSBC should be

permitted to enter judgment against them for the sum of

A.D.2d

244

(lst Dept. 2001). Clear and explicit intent to

guarantee the obligation is established by having the guarantor sign in the capacity as

guarantor and by the language contained in the guaranty. Salzman Sian Co, v. Beck,

supra; and Harrison Court Associates v. 220 Westchester Avenue Assoc., 203

A.D.2d 268

Recoverv v. Mechanical

Parking Svstems, Inc., 283

N.Y.2d 63 (1961); and PNC Capital

(2nd

Dept. 1977). The intent to guarantee payment must be clear and explicit. Salzman

Siqn Co. v. Beck, 10

A.D.2d 625

(4” Dept.

1994).

To be enforceable, the guaranty must be in writing signed by the person to be

charged. Schulman v. Westchester Mechanical Contractors, Inc., 56

A.D.2d 1029 & Liahtins Corp., 202

HSBC BANK OF USA v. AMERICAN CLOTHING CO., INC. ef a/.,Index No. 11848-03

1999); and I.P.L. Corp. v. Industrial Power

(2nd Dept. 2001).

A.D.2d

657

N.Y.2d 625 (1985); and Louniakov v. M.R.O.D. Realtv Corp., 282

&

Shop, Inc., 65

(2nd Dept. 1984).

When deciding a motion for summary judgment, the court must view the

evidence in a light most favorable to the non-moving party and must give that party

every reasonable inference which can be drawn from the evidence. Neqri v. Stop

A.d.2d 562(2nd Dept. 1994); and Miceli v. Purex Corp., 84 A.D.2d 513

(2nd Dept. 1987). Summary judgment should be

denied if there is any doubt as to the existence of a triable issue of fact. Freese v.

Schwartz, 203

A.D.2d 312

’

Daliendo v. Johnson, 147

(2M1 Dept. 1995); andA.D.2d 761

(2nd Dept.

1991).

The party seeking summary judgment must establish to the Court that there are

no triible issues of fact, Leo v. Gusliotta, 212

A.D.2d 401 (2nd Dept. 2001); and Bras v. Atlas Construction Corp., 166

A.D.2d

497

Citv of New York, supra; and Davenport v. Countv of Nassau, 279

N.Y.2d 557 (1980). Once the party seeking summary judgment

has made a prima facie showing of entitlement to judgment as a matter of law, the party

opposing same must come forward with proof in evidentiary form establishing that

triable issues of fact exist or demonstrate an acceptable excuse for its failure to do so.

Zuckerman v.

(2nd Dept. 1999). The party seeking summary judgment must

make a prima facie showing of entitlement to judgment as a matter of law. Zuckerman

v. Citv of New York, 49

A.D.2d 365

al.,Index No. 11848-03

Kramer, 265

HSBC BANK OF USA v. AMERICAN CLOTHING CO., INC. ef

8

N.Y.S.2d 180 (Sup. Ct., N. Y.

§130.

The obligations of one corporation entity cannot be imposed upon a corporation

with the same or a similar name which is wholly distinct in the absence of a showing of

fraud or misrepresentation. Carr Bros, Inc. v. Gertner, 85

Misc.2d 349 (Sup Ct., Monroe Co.,

1990); and General Business Law

F.Supp 281 (S.D.N.Y.

1988). A trade name or style adopted by a business does not create a separate legal

entity. See, Victor Auto Parts, Inc. v. Cuva, 148

Chicaao. Ltd., 690 Academv

§125. A

trade style reflects a name adopted for use by a corporation for conducting or

transaction its business that is different from the corporate name contained in the

certificate of incorporation. See, UBS Securities, Inc. v. Tsoukanelis, 1993 WL 478366

(S.D.N.Y. 1993); and Cheever v.

Regulafion NYJur 2d Trade

Indo-American Design Workshop;

Inc., in connection with its business; and (5) as the trade name or style used by

American Clothing for manufacturing and marketing women ’s sportswear.

A trade name or style is a name adopted by business used to identify and

distinguish it from other businesses. See 104

HSBC BANK OF USA v. AMERICAN CLOTHING CO., INC. ef al.,Index No. 11848-03

In this case, questions of fact exist regarding the obligations of Ultra Pink for the

debts of American Clothing.

Ultra Pink exists as a separate legal entity or is used as a business name in at

least 5 different ways; to wit: (1) as the name of a corporation organized in Ontario,

Canada in 1988; (2) as the name of an active New York corporation incorporated in

June, 2002; (3) as the name of an inactive New York corporation incorporated in

September, 2002; (4) as the assumed name used by

(lst Dept., 1950). In this case, HSBC has not alleged a

cause of action for fraud or misrepresentation.

The December 15, 1996 financial statement submitted by Gill to Marine Midland

indicates that Ultra Pink and American Clothing are two separate and distinct legal

entities in which Gill has different equity interests. Furthermore, issues of fraud and

misrepresentation cannot be resolved summarily in connection with a motion brought on

pursuant to CPLR 3213.

If HSBC is bringing suit against American Clothing doing business as Ultra Pink,

then it is in reality one entity. A judgment can be obtained only against American

Clothing. Ultra Pink in this context is not a separate entity against which a judgment

can be entered.

If HSBC is seeking to enter judgment against either or both of the New York

corporations incorporated under the name Ultra Pink, Inc., it has failed to make a prima

facie showing of entitlement to such relief. American Clothing undertook the obligation

to make payment under the terms of the line of credit and the promissory notes. Gill

and Singh guaranteed that obligation. Neither Ultra Pink, Inc. entity was primarily liable

on the line of credit or the promissory notes. Neither Ultra Pink, Inc. entity guaranteed

the obligations of the American Clothing under the line of credit or promissory note.:

American Clothing is a separate corporation. It has not filed a certificate of

doing business under an assumed name, American Clothing marketed women ’s

aA% 277 A.D. 853 1948),

al.,Index No. 11848-03

Co.,

HSBC BANK OF USA v. AMERICAN CLOTHING CO., INC. et

Leaal Fees

The promissory note and loan security agreements executed by American

Clothing provides that American Clothing would be obligated to pay the Marine

10

Indo-American Design Workshop, Inc. Which uses the Ultra Pink name, the relief must

be denied since these corporations have not been named nor served.

There are clearly questions of fact regarding the which, if any, of the Ultra Pink

entities has any liability for the obligations of American Clothing. As such the motion

for leave to enter a judgment against Ultra Pink must be denied, and the action against

Defendant, Ultra Pink, Inc., severed.

D.

separate corporation, American Clothing, prior to Ultra Pink ’s incorporation.

If HSBC is seeking to enter a judgment against the Canadian Ultra Pink, Inc.; or

supra. The

Court questions how Ultra Pink, Inc. could be obligated to pay the debts incurred by a

& Schwartz v. Teller, Bar-t

Inc.‘s executed a written agreement obligating them to answer for the debts of

American Clothing. Nor is there any evidence that the either New York Ultra Pink, Inc.

entity had an independent obligation to make payment of this debt, this taking this

transaction outside of the Statute of Frauds. See,

(2”d Dept., 1996). Neither of the New York Ultra

Pink,

A.D.2d 630

&

Schwartz v. Teller, 228

§5-701(2). See also, Bart

al.,Index No. 11848-03

clothing using the name Ultra Pink pursuant to a licensing agreement with the

Canadian Ultra Pink, Inc. entity.

An agreement to answer for the debts of another must be in writing subscribed

by the party to be charged. General Obligations Law

HSBC BANK OF USA v. AMERICAN CLOTHING CO., INC. ef

9:30 a.m.; and

it is further,

ORDERED, that Plaintiff ’s application for counsel fees against the Defendants

American Clothing Co., Inc., Sukhjit Gill a/k/a Sukhjit S. Gill and Raj Singh a/k/a

Rajender Singh is granted; and it is further,

11

K.

Gill and Raj Sing a/k/a Rajender Singh; and it is further,

ORDERED, that Plaintiff ’s motion for summary judgment in lieu of complaint

against the Defendant Ultra Pink, Inc., is denied and the action against said Defendant

is hereby severed; and it is further,

ORDERED, that counsel for the Plaintiff and the Defendant Ultra Pink, Inc., are

directed to appear for a Preliminary Conference on January 22, 2004 at

(2nd Dept. 2000).

Accordingly, it is,

ORDERED, that Plaintiffs motion for summary judgment in lieu of complaint is

granted against the Defendants American Clothing Co., Inc., Sukhjit Gill a/Ma Sukhjit

A.D.2d

377

Ridge Dev. Corp., 270 Belair (2nd Dept. 2000); and Borq v. A.D.2d 537 L&J., 272

Simoni v. Time-Line,

HSBC BANK OF USA v. AMERICAN CLOTHING CO., INC. et a/.,Index No. 11848-03

Midland’s legal fees in the event that an action was commenced to recover the amount

due on the promissory note. The guarantees signed by Gill and Singh have similar

provisions.

Legal fees cannot be determined summarily. Therefore, the matter should be set

down for a hearing to determine legal fees due to Plaintiff. See,

8. AUSTIN, J.S.C.Ll?ONARD I

Hon. \

II,2003

12

/-‘\

Dated: Mineola, NYDecember

Cofi

25,2003 to the date of the entry of judgment, counsel fees

as fixed by the Special Referee and costs and disbursement as taxed by the Clerk.

This constitutes the decision and order of this

$5,313,897.03, together with interest at

the statutory rate from April

6’2003; and it is,

ORDERED, that upon the Special Referee determining the fair and reasonable

amount of counsel fees to be awarded to Plaintiff ’s counsel that the County Clerk,

Nassau County is directed to enter judgment in favor of the Plaintiff and against the

Defendants American Clothing Co., Inc., Sukhjit Gill a/k/a Sukhjit S. Gill and Raj Singh

a/k/a Rajender Singh for the principal sum of

9:30 a.m.; and it is further,

ORDERED, that counsel for Plaintiff shall serve counsel for Defendant and

thereafter file with the Clerk of the Court, a copy of this Order with Notice of Entry, a

Notice of Inquest and Note of Issue and pay all appropriate fees for the filing thereof on

or before January

a/.,Index No. 11848-03

ORDERED, that with regard to the assessment of reasonable counsel fees due

in the prosecution of this action, this matter is respectfully referred to Special Referee

Frank Schellace (Special Term Part II Courtroom, Room 060, lower level) to hear and

determine all issues relating thereto on January 20, 2004 at

HSBC BANK OF USA V. AMERICAN CLOTHING CO., INC. et