Motion to enforce settlement; Motion for summary judgment; Temporary Restraining Order; Forgery; Lack of Capacity; Unconscionability; Undue Influence; Usury.
By: Diana Ricaurte | Staff Writer
Defendant Joseph Oscar Rubio (“Rubio”) owned 75% interest in a Nissan dealership. Plaintiff, Carmine Dell Aquila, a longtime family friend, loaned Rubio money after he was unable to repay his debt (“the first loan”). Similarly, Plaintiff lent Nissan dealership, Rubio’s son, and Rubio’s grandson a second loan (“the second loan”). Both loans imposed an interest per annum and a placement fee. In exchange for the first loan, Rubio (1) pledged his dealership interest, (2) allowed Plaintiff to serve as the dealership manager, and (3) allowed Plaintiff to serve on the board of directors. Rubio defaulted on his obligations under the first loan. As a result, Plaintiff declared the first loan in default.
Consequently, Plaintiff obtained a temporary restraining order, enjoining Rubio, Rubio’s son and grandson from selling, assigning, pledging, transferring, or encumbering any of Rubio’s stock in the dealership. Subsequently, Rubio, Rubio’s son and grandson agreed to settle. Specifically, they acknowledged their debt and transferred the shares to Plaintiff. In return, Plaintiff offered to resell two-thirds of the stock back to Rubio’s grandson, (“the settlement”). However, shortly after settling, Rubio passed away and a temporary administrator was appointed.
After Rubio’s death, cross-moving defendants –Nissan dealership and the Administrator to the Estate– refused to abide by the agreement. Plaintiff sought to enforce the agreement, vacate the temporary restraining order, direct the Administrator of the estate to release Rubio’s stocks in the dealership, and dismiss future claims between him and Rubio’s estate. Conversely, cross-moving defendants, Nissan dealership and the Administrator to the Estate, moved for summary judgment alleging Plaintiff took advantage of Rubio’s terminal illness at the time the parties entered the agreement, alleging forgery, lack of capacity, unconscionability, undue influence, and usury.
Ultimately, the Court held the settlement was enforceable because cross-moving defendants failed to provide evidence supporting the affirmative defenses raised. First, the Court held the party’s settlement was genuine. Typically, there is a strong presumption of genuineness for settlement agreements unless a party can prove by clear and convincing evidence that the notary was invalid. Here, cross-moving defendants failed to provide any evidence. Therefore, the settlement was genuine. Second, the Court found that Rubio had knowingly and freely entered the agreement, thereby invalidating any lack of capacity claims. Third, the Court rejected the unconscionability claims after the cross-moving defendants failed to provide evidence demonstrating how the settlement terms were unreasonably favorable to Plaintiff. Fourth, the Court rejected the usury allegation under both civil and criminal law because the loans annual interest rate never amounted to the requisite percentages to allege a usury violation. Fifth, the Court found the settlement remained valid notwithstanding Plaintiff’s previous employment contract because it was not a sham or a contract disguised as interest. Relying upon settled usury laws, the Court found Plaintiff’s employment contract preceded both loans, Plaintiff was not a permanent employee, and his salary was a fixed amount unrelated to any fees from the loans. Therefore, Plaintiff’s employment contract was not designed to extract an excessive interest rate from the cross-moving defendants. Sixth, the Court found the settlement was enforceable irrespective of Plaintiff’s employment contract with Rubio because his employment contract’s terms did not mirror the settlement agreement. Therefore, the Court found Plaintiff’s employment contract did not alter the agreement. Seventh, because Rubio’s settlement with Defendant Nissan’s employee superseded the agreement, the Court held the shares would be withheld from Plaintiff until that agreement was resolved. Therefore, the Court found Plaintiff’s request for the release of Rubio’s shares premature.
Accordingly, the Court denied cross-moving defendant’s cross motion and held the settlement was enforceable.
Aquila v. Rubio, Index No. 50682/2016, 05/02/16 (Emerson, J.).