First-Citizens Bank & Trust Company v County of Suffolk
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Attorneys and Parties
Brief Summary
This is a commercial equipment leasing and assignment dispute involving whether a bank, as alleged assignee and successor by merger, had standing to enforce a master use agreement and collect unpaid lease payments from a county.
The Supreme Court, Suffolk County, denied the plaintiff's motion for summary judgment on the complaint and to dismiss the defendant's affirmative defenses, and later denied leave to reargue and renew.
The Appellate Division modified the May 6, 2024 order by dismissing the defendant's fifth, sixth, seventh, thirteenth, and sixteenth affirmative defenses, but otherwise affirmed the denial of summary judgment. It also dismissed the appeal from the December 2, 2024 order.
The plaintiff did not make a prima facie showing of standing because its own proof, including a 2021 invoice issued by Carousel Industries of North America, Inc. after the alleged 2016 assignment, left a triable issue as to whether Carousel had actually been divested of all control over the assigned contract. However, under CPLR 3211(b) [a party may move for judgment dismissing one or more defenses, on the ground that a defense is not stated or has no merit], the plaintiff showed that several specific affirmative defenses did not apply under the facts of the case.
Background
The County of Suffolk entered into a master use agreement (MUA) with Carousel Industries of North America, Inc. on December 2, 2014 to lease equipment, and the parties also executed an equipment schedule. In June 2016, Carousel and the County entered into a letter agreement modifying the annual payments due under the MUA and equipment schedule. First-Citizens Bank & Trust Company later sued in October 2022 for breach of contract and account stated, alleging that Carousel had assigned the MUA and all related rights to CIT Bank, N.A., and that First-Citizens, as successor by merger to CIT Bank, N.A., became the holder and owner of the agreement. The plaintiff alleged the County defaulted by failing to make required payments. The County answered and asserted multiple affirmative defenses, including lack of standing.
Lower Court Decision
The Supreme Court denied the plaintiff's motion for summary judgment on the complaint and to dismiss the defendant's affirmative defenses. The same court later denied the plaintiff's motion for leave to reargue and renew that motion.
Appellate Division Reversal
The Appellate Division dismissed the appeal from the December 2, 2024 order because no appeal lies from denial of reargument, and the renewal issue was abandoned on appeal. As to the May 6, 2024 order, the court held that summary judgment was properly denied because the plaintiff failed to eliminate factual issues regarding standing as assignee. The court relied on the rule that a valid assignment requires the assignor to be divested of all control over the thing assigned, and found that a 2021 invoice from Carousel to the County undermined the plaintiff's claim that Carousel had fully assigned away its rights in 2016. The court nevertheless modified the order to dismiss the County's fifth, sixth, seventh, thirteenth, and sixteenth affirmative defenses because those defenses had no merit under CPLR 3211(b) [a party may move for judgment dismissing one or more defenses, on the ground that a defense is not stated or has no merit].
Legal Significance
The decision highlights that an alleged assignee seeking summary judgment on a contract claim must establish standing with clear proof of a complete and valid assignment. Evidence suggesting the original contracting party continued to act as if it retained rights under the agreement can create a triable issue of fact defeating summary judgment. The case also shows that even where a plaintiff cannot obtain summary judgment on liability, it may still succeed in striking affirmative defenses that are legally inapplicable.
In New York, a plaintiff suing as an assignee must show that the assignor gave up all control over the assigned contract rights; contradictory documents can defeat summary judgment on standing. But unsupported or inapplicable affirmative defenses may still be dismissed separately.