Esposito v. Saxon, 65 N.Y.2d 143 (1985)
A party opposing summary judgment must present specific factual allegations, based on firsthand knowledge, that directly support their defense and are not merely conclusory or speculative.
Summary
This case concerns a dispute over a promissory note and stock purchase agreement. The plaintiff moved for summary judgment to enforce the note after the defendant defaulted. The defendant opposed the motion, arguing failure of consideration, claiming the plaintiff’s decedent never owned the stock. The Supreme Court, Special Term, denied the motion, but the Appellate Division reversed, deeming the defendant’s allegations conclusory. The New York Court of Appeals reversed the Appellate Division, holding that the defendant’s detailed recitation of the negotiations, based on personal knowledge, sufficiently raised a question of fact regarding the failure of consideration, thus precluding summary judgment.
Facts
The plaintiff’s decedent (Saxon) sold shares of stock to the defendants (Esposito) in exchange for a $365,000 promissory note and a stock purchase agreement.
The defendants defaulted on the promissory note.
The plaintiff, as executor of Saxon’s estate, sued to enforce the written contract and moved for summary judgment.
The defendants opposed the motion, claiming that Saxon never owned the stock, the sale never occurred, and therefore, there was a failure of consideration.
Procedural History
The Supreme Court, Special Term, denied the plaintiff’s motion for summary judgment, finding that questions of fact existed as to the failure of consideration.
The Appellate Division reversed, holding that the defendants’ allegations were conclusory and unsupported by factual substance or documentary evidence.
The New York Court of Appeals reversed the Appellate Division’s decision.
Issue(s)
Whether the defendant’s allegations of failure of consideration, based on a detailed recitation of negotiations and firsthand knowledge, were sufficient to raise a question of fact and defeat the plaintiff’s motion for summary judgment.
Holding
Yes, because the defendant provided a detailed recitation of the negotiations based on firsthand knowledge, directly supporting his allegation that the plaintiff’s decedent did not own the subject stock, that the sale had never in fact occurred, and that the obligation to pay therefore lacked consideration.
Court’s Reasoning
The Court of Appeals found that the Appellate Division erred in deeming the defendant’s allegations conclusory. The Court emphasized that the defendant, John Esposito, provided a detailed account of the negotiations and closing, based on his firsthand knowledge. This account directly supported his claim that the plaintiff’s decedent did not own the stock, and therefore the obligation to pay lacked consideration.
The Court distinguished this case from Ehrlich v American Moninger Greenhouse Mfg. Corp., 26 NY2d 255, where the allegations were deemed insufficient. In this case, Esposito offered an explanation for the lack of documentary evidence, further bolstering his claim.
The Court reasoned that Esposito’s allegations could not be dismissed as “conclusory or speculative” because they were based on specific facts derived from his direct involvement in the transaction. This raised a legitimate question of fact that warranted a trial, precluding summary judgment. By presenting specific facts within his personal knowledge of the situation, the defendant successfully showed there was a genuine issue to be resolved.