Reynoso v. Tousson

Filing 58

MEMORANDUM & ORDER, For these reasons, Tousson's motion for summary judgment dismissing Reynoso's defamation claims is denied. Her motion for summary judgment on her breach of contract counterclaim is granted as to liability and denied as to damages. So Ordered by Judge Carol Bagley Amon on 9/12/2019. (pro se receieves electronic notifications) (Lee, Tiffeny)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
X

DAVID REYNOSO,
Plaintiff,
NOT FOR PUBLICATION

-against-

MEMORANDUM & ORDER

CLEMENCE TOUSSON,

'
4-CV-3564(CBA)(JO)

Defendant.
X

AMON,United States District Judge:

Plaintiff David Reynoso filed this defamation suit against Clemence Tousson, his former
business associate, alleging that she published or caused to be published a series of defamatory

statements online that disparaged Reynoso's business practices. (D.E. # 9("Am. Compl.")

1,

16-37.) Tousson, then represented by counsel, removed the action to this Court on diversity
grounds. (D.E. #1.) Tousson filed a counterclaim for breach of contract based on Reynoso's

failure to pay Tousson the balance on two promissory notes they executed as part oftheir business
dealings. (D.E # 26 ("Answer and Counterclaim") at 12-17.) Tousson, now proceeding pro se,
moves for summary judgment dismissing Reynoso's defamation claims and granting judgment in
her favor on her breach of contract counterclaim. (D.E.# 50("Def. Mem.").) Reynoso contends

that genuine disputes of fact preclude summary judgment. (D.E. # 52 ("PI. Opp'n").) For the
reasons that follow, Tousson's motion for summary judgment is granted in part and denied in part.
BACKGROUND

In or around 2002, Reynoso and Tousson began a business relationship.' (D.E. # 52-2
("Tousson Dep.") at 16:3-19:7; D.E. # 52-1 ("Reynoso Dep.") at 9:15-10:14.) Reynoso attested

'Tousson did not submit a statement of material facts pursuant to Local Rule 56.1. "Although noncompliance with
Rule 56.1(a) is a valid basis to deny a summary judgment motion in this district, the court has discretion 'to overlook

that Tousson was an investor or lender involved in a number of his companies—including DL
Rothstein, Still Green and Growing, Brook Valley Investments, and Portfin Management—none

of which are still in operation. (Reynoso Dep. at 9:15-22:25, 70:6-9.) By contrast, Tousson said

she had limited familiarity with some of these companies; in particular, she had "nothing to do
with Brook Valley Investments" and did not really know "who or what" DL Rothstein was.
(Tousson Dep. at 16:3-17:19.) Instead, Tousson said she made an original investment in Portfin

Management, but Reynoso "[took] a lot of my money by telling me that if I gave him more, I
would get my original funds back from Portfin Management. The only investment I ever made
was in Portfin Management." (Tousson Dep. at 16:23-18:13.)

In the course of their relationship, the parties executed two promissory notes, with DL
Rothstein(owned by Reynoso)as"Maker" and Tousson as "Payee." (Def. Mem.at Ex. 1; see also

Tousson Dep. at 55:2-57:5; Reynoso Dep. at 70:23-24.) The first note was for $184,915.60(the
"First Note") and the second note was for $245,000 (the "Second Note"). (Def. Mem. at Ex. 1.)
Tousson wanted "her fimds converted from an investment into a promissory note,"(Reynoso Dep.

at 12:6-7), and the promissory notes "consolidate[d] everything that went on over the years,"

(Tousson Dep. at 56:14-15). Reynoso "obliged" because it made sense as a business decision,
since "the rate ofreturn on the promissory note was less than what we would have ended up paying
as an investment." (Reynoso Dep. at 12:6-13:9; see also id. at 46:11-18 (explaining that the
Second Note was drafted at Tousson's request and represented the "sum total of the number of

years we had done business").) Although both promissory notes are dated "April 2 2002," the

a party's failure to comply with local court rules.'" Goldstein v. Solucorp Indus.. Ltd.. No. 1 l-CV-6227(VB),2015
WL 6143813, at *4 (S.D.N.Y. Oct. 16, 2015)(citation omitted)(quoting Holtz v. Rockefeller. 258 F.3d 62, 73 (2d
Cir. 2001))(adopting Report & Recommendation). In light ofTousson's pro se status, the Court overlooks Tousson's
omission.

contracts were in fact executed in June 2012—^the same month on which the sums were deemed

due. (Def. Mem. at Ex. 1; Tousson Dep. at 55:2-56:12.)
Under the First Note,"FOR VALUE RECEIVED," DL Rothstein:

hereby covenants and promises to pay Clemence Tousson ... ONE HUNDRED EIGHTY
FOUR THOUSAND NINE HUNDRED FIFTEEN DOLLARS AND 60/00 lawful money

of the United States of America, together with interest thereon computed from October
2002 until JUNE 2012, at the rate of 10 percent per annum,of which interest and principal
payment payable on JUNE 2012, on which date all outstanding principal shall then be due
and payable.
(Def. Mem. at Ex. 1.) The First Note further provides that if the Payee "must take any action to

enforce its rights hereunder. Payee shall be entitled to recover all costs incurred, including
reasonable attorney's fees." (Id.) It also provides that the agreement "shall be personally
guaranteed by David Reynoso." (Id.) Under the Second Note,"FOR VALUE RECEIVED," DL
Rothstein:

hereby covenants and promises to pay to Clemence Tousson...TWO HUNDRED FORTY
FIVE THOUSAND DOLLARS AND 00/100 lawful money of the United States of
America, together with interest thereon computed from October 2002 until JUNE 2012, at

the rate of 10 percent per annum,of which interest and principal payment payable on JUNE
2012, on which date all outstanding principal shall then be due and payable.
(Id.) The Second Note makes the same guarantees as the First Note. (Id.)

The parties dispute whether Tousson received any genuine payments on the promissory
notes. When asked whether she received approximately $44,818 in payments from Reynoso
between June 18, 2012 and November 2013, Tousson said,"That sounds about right." (Tousson

Dep. at 54:14-17.) She said the payments were "sporadic,"(id at 57:9-16), and took the form of
wire transfers into her Wells Fargo account, (id. at 54:22—24). But Tousson also believes the

payments were not genuine: "It came to my attention that various lines of credit and credit cards
were open in my name, so the payments that were supposedly paid to me, to my knowledge, it
seemed like it was money that I was responsible for due to the lines of credit open in my name."
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(Tousson Dep. at 20:22-21:4.) When asked whether he or anyone affiliated with any of his

companies ever opened a credit card or a credit line in Tousson's name, Reynoso responded
"[njever" and "[a]bsolutely not." (Reynoso Dep. at 67:12-68:6.) According to Reynoso,

payments were derived from "[pjrofit sharing"from various businesses. (Reynoso Dep. at 51:1621.) In March 2014, Tousson filed a report alleging that she had been the victim of identity theft
and fraud with the City of Galveston Police Department. (Def. Mem. Ex. 3.)

Around February 1, 2014, Tousson contracted with non-party Clients First LLC ("Clients

First")—^which she described as a"victim advocacy group"—in order to try to collect unpaid funds
from Reynoso. (Tousson Dep. at 25:19-26:15; Def. Mem. at Ex. 4.) The contract agreement

explains that Clients First "will implement . . . a comprehensive and immediate strategy for
recovery of the Client's misappropriated assets" and will use its "best professional judgment."
(Def. Mem. at Ex. 4.) The contract agreement further indicates that "[Clients First] will be

responsible for all work performed." (Id.) Tousson's primary contact at Clients First was Jack
Baugher,(Tousson Dep. 26:13-15), and she also dealt with employee James Rider,(id at 33:36). Baugher instructed her to "write a list of what happened to [her] or a letter of what happened
to [her]." (Tousson Dep. at 26:13-27:10.) Tousson did so and "everything [she] wrote in there
was truthful." (Tousson Dep. at 27:8—12.) But Tousson was "not supposed to ask about

[Baugher's]tactics,""mention his name," or mention his company's name, which "sounded a little
bit shady" and "brought up a red flag." (Tousson Dep. at 26:13-27:12.)

The Amended Complaint identifies eleven defamatory statements about Reynoso that were
ultimately published on websites such as "victimadvocates.net," "www.ripofffepairs.com,"
"www.equalizergroup.org," and "fraudandscam.com." (D.E. #9-1 ("Ex. A").)

(1) Reynoso is "a small time crook, who has ripped off tens of thousands and made up a
lot of lies as well as scams regarding his various cons he has pulled." (Ex. A at 6.)

(2) "He[Reynoso] will not think twice about taking it[money] and will rip you off. This
is a true fact." (Ex. A at 6.)

(3) Reynoso is "known for ripping off women." (Ex. A at 6.)
(4) "He [Reynoso] has committed credit card fraud and ripping off women from around
the U.S." (Ex. A at 6.)

(5) "David Reynoso has committed credit card fraud and other crimes." (Ex. A at 12.)

(6) The defendant was "conned into sending [Reynoso] $25,000.00" and "the other con
was for $35,000.00." (Ex. A at 1.)

(7) The defendant was "conned into sending $65,000 to start Still Green and Growing."
(Ex. A at 1.)

(8) "$15,000.00 on August 7, 2008 when he was in a serious jam for money he owed
others." (Ex. A at 2.)

(9)

Reynoso "charged $3,700 on my Chase Card, which was automatically deducted
from my checking account. Then he went on to run up more than $10,000 which I
was responsible for(on my record)." (Ex. A at 2.)

(10) "He [Reynoso] also charged $3,823.25 on my Discover Card which was also
automatically deducted from my checking account." (Ex. A at 2.)

(11) "Reynoso talked me into withdrawing $37,950.00 from my retirement account" and
it was"money David Reynoso put in his pocket." (Ex. A at 2.)

The parties appear to agree that the challenged statements are derived, at least in part, from the
information Tousson communicated to Clients First. Tousson explained: '"Conned' is not the

word I used. The amounts are accurate. I reported the amounts that were passed along over the

year. But I did not use the word 'conned.'" (Tousson Dep. at 45:15-22.) At Reynoso's deposition,
he discussed documents apparently showing that funds were exchanged in amounts matching those
mentioned in the Internet postings—in particular, a $25,000 "bridge loan" and sum of$65,000—
but neither party has provided those documents to the Court. (See Reynoso Dep. at 56:14—58:15.)

The parties disagree about the extent of Tousson's involvement in the Internet postings.
Tousson's deposition testimony as to whether she reviewed the postings in advance was somewhat
inconsistent. When asked whether she reviewed any of Baugher's content,she said:"No. I didn't
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know—not know he was going to put them all over the Internet. And definitely not in that

language. It's not the way I would write. He used the word 'conned' over and over again."
(Tousson Dep. at 27:13-20.) When asked again whether she reviewed representations by Baugher

or Rider before they were disseminated, she neither admitted nor denied it and said:
This was later on, and I told him I didn't speak that way. I didn't like the wording. All I
can say is what happened to me. This thing about millions of women,I don't know about.
What happened to other people—I only know what happened to me. A lot of it was just
so wordy and almost bullying tactics. I told him I didn't like it. ... Again, this is not the
language I would use."

(Id. at 33:3-22.) And when asked later how she responded when Baugher provided her with certain
language prior to releasing it to any third party, she said she responded, "I told him I didn't like
it." (Id at 33:23-34:5.) Finally, when counsel asked her to confirm whether Clients First LLC

sent her language prior to them releasing it to a third party, Tousson said: "I have no idea where

they were going to release it or how they were going to release it. But he asked me to look it
over—even though he asked me to look it over, any time I said that I objected to something, he
said he didn't want to change it." (Id at 41:13-21.) She also explained that she thought the
statements would be sent "[jjust to Mr. Reynoso." (Id at 42:21-23.) And even though Tousson

admitted she thought Clients First told her to look online, she was not"Intemet-sawy" and did not

attempt to look for the statements on the Internet. (Id at 42:25-43:22.) Reynoso further discussed
a number of emails between her and Clients First—^but again, neither party provided these emails
to the Court. (See, e.g., id. at 30:6-31:13, 51:8-54:13.)

When Tousson objected to the content. Clients First told her to "go with what it is" or pay
a fee for breaking her contract, so she "felt like it was out of[her] control." (Id at 33:23-34:10.)

She further explained that Baugher told her "he's been doing this type of stufffor years and these
strategies are the ones that work and [she] shouldn't argue with him." (Id at 44:20-45:8.) When

asked whether she allowed him to continue these strategies, Tousson reiterated,"I felt like I was
in a bind, because if I broke the contract, I would have to pay the fee because it was less than six
months." (Id. at 45:9-13.) She was eventually contacted by Reynoso's attorneys about the
statements, who threatened to file suit. (Id at 31:18-32:9.) Tousson then explained: "[W]hen I

asked Jack Baugher to take down the postings, he refused. He told me he already had some other
clients coming forward and that he would not take down the postings." (Id at 32:9-13.) Tousson

ultimately terminated Clients First's services when it threatened to sue Tousson. (Id at 41:2542:4.)

Reynoso said he first learned about the Internet postings when he was "contacted by an
individual on behalf of Ms. Tousson indicating that he represented her." (Reynoso Dep. at 5:5-

9.) The individual,"Jack Baugher or Jeff or something," called Reynoso from a blocked number
and said "in a condescending fashion, you know, I gave you a golden opportunity to resolve this

issue and you didn't; go look up your name online and have fun." (Id at 5:13-23.) Reynoso

became concerned by Baugher's threatening tone. (Id at 6:18-7:25.) After the Internet postings,
Reynoso testified he lost business and suffered reputational harm. (Id at 43:13—44:3.) He

explained that he repeatedly heard from prospective employers,"We did a search on you online
and we see that... you have some very serious problems,and we would rather you deal with those
problems before we would explore the possibility ofhiring you further." (Id at 44:4—12.) Reynoso
said he was "unemployable right now because every time a search is conducted on me,the doors
get shut instantly." (Id at 44:13-18.)

Tousson testified that she received her last payment from Reynoso "about six months"

before she contacted Clients First. (Tousson Dep. at 58:14-18.) Reynoso testified at his deposition

that he "never stopped" making payments on the promissory notes until he began receiving calls

from Baugher. (Reynoso Dep. at 48:4-19, 49:4-7.) At that point, "per my attorney's advice, I
stopped." (Id at 48:13-19.) When asked whether he acknowledged that there was still a balance
due on the promissory notes, Reynoso said,"Yes, of course." (Id at 54:18-20.)
On or about May 2, 2014, Reynoso commenced the instant action. (D.E. #1-1.) On June
6, 2014, Tousson removed the action to federal court. (D.E. #1.) On October 18, 2018, Tousson

moved for summary judgment. (Def. Mem.) The case was transferred to this Court on April 23,
2019.

STANDARD OF REVIEW

As an initial matter, both parties contend that this Court should apply New York state

procedural law: Tousson argues thatN.Y. C.P.L.R. § 3213 applies,(Def. Mem.at 3), and Reynoso
confusingly argues that N.Y. C.P.L.R. § 3212 applies but that the Court "should consider" the
standard under Federal Rule of Civil Procedure 56,(PI. Opp'n ^ 7). However,"[ujnder the Erie

doctrine,federal courts sitting in diversity apply state substantive law and federal procedural law."

Gasperini v. Ctr. for Humanities. Inc.. 518 U.S. 415,427(1996). Because the summary judgment
standard is procedural. Rule 56 alone govems. See, e.g.. Allianz Ins. Co. v. Lemer.416 F.3d 109,
118(2d Cir. 2005)("New York state procedural rules do not apply here to a federal court sitting
in diversity."); All Am. Tel. Co.. Inc. v. AT & T Corp.. 328 F. Supp. 3d 342,354(S.D.N.Y. 2018)
("CPLR § 3212 and the New York case authority interpreting and applying that standard do not
apply" when evaluating summary judgment motions.)

A court grants summary judgment under Rule 56 only when,"construing the evidence in
the light most favorable to the non-moving party and drawing all reasonable inferences in [his]
favor," Mihalik v. Credit Agricole Cheuvreux N. Am..Inc.. 715 F.3d 102,108(2d Cir. 2013),"the

movant shows that there is no genuine dispute as to any material fact and the movant is entitled to

judgment as a matter of law," id (quoting Fed. R. Civ. P. 56(a)). Because the "principles

governing admissibility of evidence do not change" at this stage,"only admissible evidence need

be considered by the trial court in ruling on a motion for summaryjudgment." Presbvterian Church
of Sudan v. Talisman Enerev. Inc.. 582 P.3d 244, 264 (2d Cir. 2009)(quoting Raskin v. Wvatt

Co., 125 F.3d 55, 65-66(2d Cir. 1977)). "Once the moving party has made a properly supported

showing sufficient to suggest the absence ofany genuine issue as to a material fact,the nonmoving

party, in order to defeat summary judgment, must come forward with evidence that would be
sufficient to support ajury verdict in his favor." Goenaea v. March ofDimes Birth Defects Found..
51F.3dl4, 18(2d Cir. 1995).

Because Tousson appears pro se, the Court construes her submissions liberally to raise the

strongest arguments they suggest. Warren v. Colvin. 744 F.3d 841, 843 (2d Cir. 2014), and
"examine[s] every claim or defense with a view to determining whether summary judgment is
legally and factually appropriate," Jackson v. Fed. Express. 766 F.3d 189, 198(2d Cir. 2014).
DISCUSSION

Tousson moves for summary judgment dismissing Reynoso's defamation claims and

granting judgment in her favor on her breach of contract counterclaim. Reynoso argues that there
are genuine disputes of material fact that preclude summary judgment on both claims.
I.

Defamation Claims

"Defamation,consisting ofthe twin torts of libel and slander, is the invasion ofthe interest

in a reputation and good name." Albert v. Loksen. 239 F.3d 256, 265 (2d Cir. 2001)(citation
omitted). "Generally, spoken defamatory words are slander; written defamatory words are libel."
Id. at 265. "The elements of a cause of action for defamation are a false statement, published

without privilege or authorization to a third party, constituting fault asjudged by, at a minimum,a
negligence standard, and it must either cause special harm or constitute defamation per se."
9

Kamchi v. Weissman. 1 N.Y.S.3d 169, 180(2d Dep't 2014)(citation omitted): see also Lan Sang

V. Ming Hai. 951 F. Supp. 2d 504, 517(S.D.N.Y. 2013)(citation omitted)(same). "Since falsity
is a necessary element ofa defamation cause ofaction and only 'facts' are capable of being proven
false, 'it follows that only statements alleging facts can properly be the subject of a defamation
action.'" Gross v. New York Times Co.. 623 N.E.2d 1163, 1167(N.Y. 1993)(citation omitted).

Thus,"expressions of an opinion 'false or not, libelous or not, are constitutionally protected and

may not be the subject of private damage actions.'" Steinhilber v. Alnhonse. 501 N.E.2d 550,550

(N.Y. 1986)(citation omitted). In general,statements are defamatory perse ifthey "tend to injure
the plaintiff in his or her trade, business or profession." Albert. 239 F.3d at 271.

Tousson argues that Reynoso cannot state a claim of defamation because(1)he did in fact

default on the promissory notes, there is a "verifiable pattern offraud across multiple states," and
the Internet postings are verifiably accurate; (2) there is evidence of "no significant loss in

[Reynoso's] earnings" during the period when Clients First published the statements; and
(3) Tousson is the wrong party because

Clients First is contractually responsible for the

statements. (Def. Mem. at 3.)

Tousson's first argument amounts to a claim that the challenged statements are true.

Because falsity is a required element,"[tjruth provides a complete defense to defamation claims."
Cain V. Atelier Esthetioue Inst. of Esthetics Inc.. 733 F. App'x 8, 11 (2d Cir. 2018) (citation
omitted). The Court cannot determine, on this record, that any of the challenged statements are
indisputably true.

The fact that Tousson filed a report of credit card fraud against Reynoso,(Def. Mem. at
Ex. 3), and that others also filed complaints against him,(see, e.g.. Def. Mem. at Ex. 8), does not
establish the truth of the first five statements, which generally state that Reynoso "ripped off

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women and "committed credit card fraud and other crimes." And the Court cannot determine that

the other six statements describing payments Tousson was persuaded to send to Reynoso are, in
fact, accurate: the only evidence Tousson proffers is the Internet postings themselves—^which are

hearsay, when offered for the purpose of establishing that the statements are true—and her
testimony that the amounts are accurate. Tousson has not proffered,for example, bank statements
or other evidence of payments.

Tousson's second argument, that Reynoso has not been harmed by the challenged

statements, is not persuasive. The challenged statements are defamatory per se because, by
portraying Reynoso as a con artist, they "tend to injure the plaintiff in his ... trade, business or
profession." Albert. 239 F.3d at 271. Thus,"proof of special harm is unnecessary." Id.: see also
Kamchi. 1 N.Y.S.Sd at 182(where statements would tend to injure plaintiff in his trade, business,

or profession, "the plaintiffs were not required to allege or prove special damages, as the law
presumes that damages will result"). Tousson argues that"affirmative evidence ofno special harm
... negates the a priori assumption of harm to Plaintiff," citing documents that apparently prove

Reynoso was awarded government contracts after the statements were made. (Def. Reply at 8;
Def. Mem.at Exs. 7g,7h, 7i.) But the fact that Reynoso may have performed some work does not

negate the possibility that he was deprived of other work based on reputational harm. The law
presumes that Reynoso was damaged. And in any event, Reynoso has created at minimum a
dispute offact, because he specifically testified that he suffered damage to his business based on
the challenged statements. (See Reynoso Dep. at 43:20—44:18.)

Tousson's third argument is that Clients First was responsible for the statements. Under

New York's republication liability standard, as articulated by the Court of Appeals, "one who
utters a slander, or prints and publishes a libel, is not responsible for its voluntary and unjustifiable

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repetition, without his authority or request, by others over whom he has no control and who thereby
make themselves liable to the person injured ...

Geraci v. Probst. 938 N.E.2d 917, 921 (N.Y.

2010)(citation omitted). The underlying principle is the "settled rule of law that no man is bound
for the tortious act of another over whom he has not a master's power of control." Giufffe v.

Maxwell. No. 15-CV-7433,2017 WL 1536009, at *2(S.D.N.Y. Apr. 27,2017)(internal quotation

marks omitted)(quoting Davis v. Costa-Gavras. 580 F. Supp. 1082, 1096 (S.D.N.Y. 1984)). At
the same time, however, an individual may be held liable if she "intended and authorized the

republication of the allegedly defamatory content." Lew v. Smith. 18 N.Y.S.3d 438, 439 (2d
Dep't 2015); see also Restatement (Second) of Torts § 576 cmt. c(Am. Law Inst. 1977)("If the
repetition is authorized or intended by the originator ofthe defamation, he is liable for the harmful
effects of the actions of the person or persons to whom the authorized or intended repetition is

made."); id. § 577 cmt. f("One is liable for the publication of defamation by a third person whom
as his servant, agent or otherwise he directs or procures to publish defamatory matter.").
In this case, viewing the facts in the light most favorable to Reynoso, a reasonable jury
could infer that Tousson "intended and authorized" the publication of the challenged statements.

Lew. 18 N.Y.S.3d at 439. Tousson specifically contracted with Clients First to attempt to collect

unpaid funds from Reynoso, she communicated her complaints about Reynoso to Clients First,
and her deposition testimony could be interpreted to suggest that she reviewed the representations
in advance of their dissemination. Tousson argues that she "felt like" the postings were "out of

[her] control" because, if she objected, she would have had to pay a fee to terminate her contract
with Clients First. (Tousson Dep. at 33:23-34:10.) But economic hardship does not mean that
Tousson "ha[d] no control" over Clients First's publication decisions under agency principles.
Geraci. 938 N.E.2d at 921 (citation omitted). Indeed, Tousson ultimately did terminate Clients

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First's services when it threatened to sue her. (Tousson Dep. at 41:25-42:4.) Tousson also argues

that Clients First refused to take the postings down. (Id at 32:9-13.) But that does not
conclusively prove that she did not"intend[] and authorize[]" their publication in the first instance.
Lew. 18 N.Y.S.3d at 439. Tousson remains free to argue before a jury that she did not authorize
and lacked control over the Internet postings. But the Court cannot conclude at this juncture that
no reasonable jury would find in Reynoso's favor.
IL

Breach of Contract Claim

The "essential elements" of a breach of contract action under New York law are "the

existence ofa contract,the plaintiffs performance pursuant to the contract, the defendant's breach

of his or her contractual obligations, and damages resulting from the breach." Dee v. Rakower.

976 N.Y.S.2d 470,474(2d Dep't 2013); see also Naf1 Mkt. Share. Inc. v. Sterling Nat. Bank. 392
F.3d 520, 525 (2d Cir. 2004)("To establish a prima facie case for breach of contract, a plaintiff
must plead and prove:(1)the existence ofa contract;(2)a breach ofthat contract; and(3)damages
resulting from the breach.").

As to liability, Tousson has proffered undisputed evidence of(1)the existence of contracts
(the two promissory notes),(2) her performance under those contracts (provision of funds) and
Reynoso's breach of those contracts (his admitted failure to pay the balance on the notes), and

(3)damages(the unpaid balances on the notes). (See Def. Mem.Ex. 1.) Reynoso does not dispute
the existence or validity of the contract. (See, e.g.. Reynoso Dep. at 45:19-50:14 (affirming that
his notarized signature appears on both contracts).) He does not dispute that he received funds
from Tousson and that he stopped making payments on the promissory notes. (See id. at 12:6-7
("[Tousson] wanted her funds converted from an investment into a promissory note, and we

obliged."); id. at 48:4-51:15 (explaining that he stopped making payments when he began
receiving phone calls from Baugher).) And he does not dispute that there is an unpaid balance on
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both promissory notes. (See id. at 54:18-20("Q: You acknowledge that still a balance is due under
the promissory notes? A: Yes, of course.").)

Reynoso attested that he "withheld" payment when he began receiving threatening phone
calls from Baugher, "per [his] attorney's advice." (Id, at 48:13-19, 50:25-51:6.) But Reynoso
has not articulated any basis for why Baugher's phone calls relieved him from his duty to perform

under the promissory notes. And although Reynoso listed eleven affirmative defenses in his
answer to the counterclaim, (see D.E. # 29 ^ 29-50), he has not asserted, let alone proffered

evidence to support, any of these defenses on summary judgment.^ (See generallv PI. Opp'n.
29-70.) Once Tousson came forward with sufficient evidence to establish Reynoso's breach of

contract, Reynoso was obligated to "come forward with evidence that would be sufficient to
support a jury verdict in his favor" as to liability. Goenaea. 51 F.3d at 18. He failed to do so.

Reynoso argues that there are disputes about the parties' business relationship, which is the
"bedrock foundation" for the counterclaim, (PI. Opp'n ^ 33), but it is not apparent why these

disputes are material to the question of whether Reynoso failed to perform in accordance with the
valid Promissory Notes. He also argues that there are disputes about the amount owed, but those
are relevant to the amount, and not the existence, of damages. Accordingly, Reynoso is liable for
breach of contract on the promissory notes as a matter of law.

However, the Court concludes that disputes of fact preclude summary judgment on the

amount of damages. First, the parties dispute the calculation of interest and, consequently, the
total sum owed. Tousson argues that interest accrual is ongoing, citing a provision in the

^ The eleven affirmative defenses are(1)failure to state a claim,(2)lack of subject matter jurisdiction,(3)laches,(4)
unclean hands,(5) documentary evidence barring the counterclaim,(6) failure to mitigate damages,(7) accord and
satisfaction,(8) doctrine of offset,(9) unjust enrichment,(10) prevention of performance,(11) improper notice of
breach. (D.E. # 29 29-50.) At Reynoso's deposition, the attorneys discussed the tenth affirmative defense based
on Tousson's refusal to accept payments. (See Reynoso Dep. at 53:7-25.) But no testimony on that subject was
elicited from Reynoso, and of course,the attorneys' conversations are not evidence.
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promissory notes providing that the notes "shall be extended at the discretion ofthe borrower who
will in turn pay the lender a fee in advance ofthe extension year of 10% pr. year for each additional

year of nonpayment of principal." (Def. Reply at 4; Def. Mem. at Ex. 1.) Reynoso argues that the
contract only allows for interest computed from October 2002 until June 2012. (PI. Opp'n H 64.)
Second, the record is unclear as to the amounts already paid, and the parties dispute whether any

payments were genuine. When asked whether she received approximately $44,818 in payments
from Reynoso between June 18, 2012 and November 2013, Tousson said, "That sounds about

right." (Tousson Dep. at 54:14-17.) But she argues that the payments were derived from
fraudulent lines of credit opened in her name and filed a police report alleging she had been the

victim ofidentity theft and fraud. (Tousson Dep. at 20:22-21:4; Def. Mem.Ex. 3.) Reynoso could
not recall how much he had paid on the notes. (Id at 47:12-16, 50:19-21.) But he denied ever

opening a credit card or credit line in Tousson's name and said the payments came from profit
sharing from various businesses. (Reynoso Dep. at 67:12-68:6, 51:16—21.) Given the lack of
clarity on the proper calculation of interest, the amounts already paid, and the validity of those

payments,summaryjudgment on the amount ofdamages due to breach ofcontract is inappropriate.

CONCLUSION

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For these reasons, Tousson's motion for summary judgment dismissing Reynoso's

defamation claims is denied. Her motion for summary judgment on her breach of contract
counterclaim is granted as to liability and denied as to damages.
SO ORDERED.

Dated: September 1^2019
s/Carol Bagley Amon

Brooklyn, New York

Carol Bagley
United States

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