Weissman v. Sinorm Deli, Inc.

Mark Weissman (plaintiff) owned a 25 percent interest in Sinorm Deli, Inc. (Sinorm) (defendant), which Weissman sold to Sinorm for $250,000 in March 1992 pursuant to a stock purchase agreement (SPA). As required by the SPA, Sinorm paid Weissman $50,000 at closing and gave Weissman a $200,000 promissory note. The note called for Sinorm to make monthly installment payments in specified amounts. In SPA §10.1, Sinorm and Sinorm’s remaining shareholders (shareholders) (defendants) agreed to indemnify Weissman for certain liabilities. Specifically, in handwritten language added to the printed SPA, Sinorm and the shareholders agreed to indemnify Weissman for all Sinorm liabilities or obligations incurred as of July 23, 1991. A separate indemnification agreement signed by the shareholders contained the same handwritten language. Sinorm defaulted on the note. Pursuant to Civil Practice Law and Rules (CPLR) § 3213, Weissman made a motion for summary judgment in lieu of a complaint against Sinorm and the shareholders, who Weissman asserted were responsible for paying him pursuant to the indemnification agreement. Sinorm did not oppose Weissman’s motion, but the shareholders cross-moved for summary judgment. In support of their cross-motion, the shareholders submitted an affidavit from their lawyer, who averred that the shareholders did not personally guarantee the note and that the indemnification agreement was meant solely to shield Weissman from personal liability due to his status as Sinorm’s former principal shareholder. The supreme court granted Weissman’s § 3213 motion. The appellate division affirmed. The shareholders appealed, arguing that (1) the indemnification agreement was not an instrument for the payment of money only, as required by § 3213, and (2) they did not personally guarantee the note.