State of New York

Supreme Court, Appellate Division

Third Judicial Department

Decided and Entered: December 3, 2015 520978 

________________________________

ROBERT J. HAWKINS et al.,

Respondents,

v

ROXANNE LYNNE EAVES, as 

Executor of the Estate of MEMORANDUM AND ORDER

LEONARD B. WILCOX,

Deceased, and as Trustee

of the LEONARD B. WILCOX

LIVING TRUST,

Appellant.

________________________________

Calendar Date: October 22, 2015

Before: Peters, P.J., Garry, Rose and Clark, JJ.

__________

Law Office of Alfred Paniccia Jr., Binghamton (Alfred

Paniccia Jr. of counsel), for appellant.

Menter, Rudin & Trivelpiece, PC, Syracuse (Teresa M.

Bennett of counsel), for respondents. 

__________

Rose, J.

Appeal from an order of the Supreme Court (Lebous, J.),

entered October 10, 2014 in Broome County, which denied

defendant's motion to dismiss the complaint.

Plaintiff Robert J. Hawkins borrowed money from Leonard B.

Wilcox in August 2009, March 2010 and December 2010. Each loan

was secured by a separate promissory note. In January 2011,

Wilcox and Hawkins modified all three promissory notes to, among

other things, include plaintiff Hawkins Homes, LLC as an
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additional obligor. In February 2012, Wilcox made a fourth loan

to plaintiffs in exchange for another promissory note. Although 

plaintiffs repaid the December 2010 loan in full, they ultimately

defaulted on the August 2009, March 2010 and February 2012 loans,

whereupon Wilcox filed money judgments by confession against

plaintiffs and commenced a CPLR article 52 proceeding to enforce

them. In response, plaintiffs commenced this action against

defendant, who is the executor and trustee of Wilcox's estate and

living trust.1 Plaintiffs' complaint asserts, among other

things, that each of the four loans is usurious and, therefore,

void.2 Defendant then moved to dismiss the complaint, arguing,

among other things, that plaintiffs failed to state a cause of

action and certain of plaintiffs' claims are barred by the

statute of limitations. Supreme Court denied the motion in all

respects, and defendant now appeals.

Plaintiffs' first cause of action alleges that the December

2010 loan charged interest at a rate in excess of 22% per year,

making it usurious and, therefore, void as a matter of law (see

General Obligations Law § 5-501; Banking Law § 14-a; see also

General Obligations Law § 5-513; Seidel v 18 E. 17th St. Owners,

79 NY2d 735, 740 [1992]). Defendant contends, however, that this

loan was fully repaid almost three years before the commencement

of this action and, even if it was usurious, this cause of action

is time-barred. We agree. There is no dispute that the December

2010 loan was paid in full in June 2011. Further, the parties

agree that any cognizable claim that plaintiffs may have to

recover the interest they paid in excess of the legal rate is

barred by the one-year statute of limitations (see CPLR 215 [6]).

In an effort to sidestep the limitations period, plaintiffs argue

that this cause of action is not a cause of action at all. 

Rather, they contend that it is an equitable recoupment defense

1 Wilcox died in March 2014.

2 At oral argument, plaintiffs stated that they are

pursuing their demand for vacation of the judgments by confession

and the transcripts thereof in the parallel CPLR article 52

enforcement proceeding, and they are no longer seeking such

relief in this action.
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seeking only an offset against any usurious amounts that

defendant might recover in the parallel CPLR article 52

proceeding and, thus, it is timely because it was not barred at

the time that those claims were first asserted (see CPLR 203

[d]). Regardless of whether such a defense may be interposed in

that proceeding, however, plaintiffs cannot do so here because

equitable recoupment can only be asserted as a counterclaim or as

an affirmative defense (see Carlson v Zimmerman, 63 AD3d 772, 774

[2009], DeMille v DeMille, 5 AD3d 428, 429 [2004]), and defendant

seeks no recovery in this action against which their request for

an offset could be applied. 

The second and third causes of action challenge the August

2009 and March 2010 loans. Plaintiffs allege that, in both

cases, Wilcox required them to make so-called "bonus payments" in

exchange for forbearances on the loans, which, when added to the

12% interest rate appearing on the face of the notes, render the

loans usurious. Notably, defendant does not challenge the facial

sufficiency of these allegations. Instead, defendant argues that

these causes of action require dismissal because of evidence

presented by plaintiffs in opposition to her motion to dismiss,

which, in defendant's view, indicates that the bonus payments are

not calculable as additional interest. However, the record does

not reflect that this argument was made to Supreme Court, and

plaintiffs contend that they were not afforded an opportunity to

address it. Accordingly, it is unpreserved for our review (see

Anthony DeMarco & Sons Nursery, LLC v Maxim Constr. Serv. Corp.,

130 AD3d 1409, 1411 [2015]; Stein v Kendal at Ithaca, 129 AD3d

1366, 1367 [2015]), and we will not disturb Supreme Court's

denial of defendant's motion to dismiss plaintiffs' second and

third causes of action.

Plaintiffs' fourth cause of action alleges that the terms

of the February 2012 loan required plaintiffs to pay "points"

that resulted in an interest rate of 14.5% per year, in addition

to an annual interest rate of 12%. Accepting these allegations

as true and granting plaintiffs the benefit of every possible

inference, as we must at this stage of the proceedings (see EBC

I, Inc. v Goldman, Sachs & Co., 5 NY3d 11, 19 [2005]; Delaware

County v Leatherstocking Healthcare, LLC, 110 AD3d 1211, 1213

[2013]), this loan would carry a criminally usurious interest
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rate in excess of 25% (see Penal Law § 190.40). Thus, we agree

with Supreme Court's decision to deny dismissal of this cause of

action. We have considered defendant's remaining contentions and

find them to be unavailing. 

Peters, P.J., Garry and Clark, JJ., concur.

ORDERED that the order is modified, on the law, without

costs, by reversing so much thereof as denied defendant's motion

to dismiss the first cause of action; motion granted to that

extent and said cause of action dismissed; and, as so modified,

affirmed.

ENTER:

Robert D. Mayberger

Clerk of the Court