DocketNumber: No. 10 Civ. 4506(SAS)
Judges: Scheindlin
Filed Date: 12/20/2012
Status: Precedential
Modified Date: 11/7/2024
OPINION AND ORDER
1. INTRODUCTION
Sagi Genger (“Genger”) and TPR Investment Associates, Inc. (“TPR,” and together with Genger, “plaintiffs”) bring this action to enforce a promissory note in the amount of $1.25 million against Gilad Sharon. The lawsuit arises out of a Canadian real estate venture (the “Canadian Venture”) between Sharon and Genger’s father, Arie Genger (“Arie”).
I held a bench trial from December 3, 2012 to December 5, 2012. The parties made post-trial submissions on December 11, 2012. Pursuant to Rule 52(a) of the Federal Rules of Civil Procedure, I make the following findings of fact and conclusions of law. In reaching these findings and conclusions, I heard the evidence, observed the demeanor of the witnesses, and considered the arguments and submissions of counsel.
II. FINDINGS OF FACT
A. The Parties
1. Sagi Genger
Sagi Genger is a joint United States and Israeli citizen residing at 1211 Park Avenue, New York, New York, 10128.
2.TPR Investment Associates, Inc.
TPR is a Delaware corporation beneficially owned by the Genger family. TPR brings this action on behalf of AG Properties, which assigned all rights regarding claims against former AG Properties officers and affiliates to TPR in 2007, as consideration for TPR assuming obligations on the part of AG Holdings to repay the Gusinski loan.
3.Gilad Sharon
Third-party defendant Gilad Sharon is a citizen and resident of Israel.
B. The Canadian Real Estate Venture
Amidst a maze of backdated, incomplete and contradictory documents, and even more dubious testimony, a number of facts are undisputed. In 2001, Sharon presented Arie with an idea for a joint venture involving residential real estate investment prospects in Canada.
The two buildings were acquired for approximately twenty million Canadian dollars.
From the outset the goal in structuring the Canadian Venture was to enable a flow-through effect for the benefit of the shareholders without there being any du
C. Sharon’s Investment in AG Properties
The source of Sharon’s investment in the Canadian Venture is the crux of this litigation. Central to the agreement between Arie and Sharon was that each would have a fifty percent interest in AG Properties.
1. The Omniway Note
Omniway Limited was incorporated in Cyprus on July 6, 2001,
[a]t the same time as it executes this Note, the Maker [ (Omniway) ] deposits with or transfers to the Payee [ (AG Properties) ] or its nominee certificates representing the Shares and also delivers to the Payee a power of attorney executed in the form of the attached Schedule A, a stock transfer executed in blank in the form of the attached Schedule B ... and a copy of a resolution of the board of directors of [Omniway] substantially in the form, of the attached Schedule C.28 . ' .
The files of Raines & Fischer,- the accounting firm for the Canadian Venture, contained a sighed copy of the Omniway Note.
In October 2002, in the context of rearranging the corporate structure of the Canadian Venture, Parnés sent an email to Uri Harpaz, Sharon’s accountant, describing 'the Omniway vehicle including the $1.25 million investment sum as “50% of the liabilities of the Properties,” but noting that “[a]s of now, Omniway did not execute any of the documents it was supposed to be party to, including the Promissory Note ... and the Shareholders Agreement.”
Notes from a. series of meetings among the parties to the Canadian Venture and
The Omniway Note is not reflected in the general ledger or tax returns for AG Properties. William Fischer, the accountant for the Canadian Ventures who prepared the financial statements and tax returns, testified that had the Note been tendered to AG Properties, it would have shown up on the balance sheet and the tax return.
Lerner Manor was first registered on September 9, 2002, well after the agreements were purportedly executed.
The evidence shows that Lerner Manor ultimately held fifty percent of the shares in AG Properties for the benefit of Gilad Sharon. Fischer testified that “based upon the books and records [he] maintained at Raines & Fischer, from inception to the day [he was] discharged, that the only investment that Mr. Gilad Sharon made in AG Properties, directly or indirectly, was the $25,000 capital contribution.”
In January 2004, Fischer emailed Harpaz with information regarding Sharon’s investment. It states that a capital contribution of twenty-five thousand dollars was made in March of 2003 and that shares of the 2001 and 2002 taxable losses were retroactively attributed to Sharon as a result of this contribution.
D. Sagi Genger’s Involvement and Buyout of Sharon
Sagi Genger testified that he was not involved in the business operations of AG Properties until late 2003 or early 2004.
Genger testified that “[t]he million and a quarter dollar commitments of the Omniway note, in my mind, represented a reasonable counterbalance to the eight million dollars unsecured loan.”
III. APPLICABLE LAW
A. Prima Facie Case of Default
To establish a prima facie case of default on a promissory note under New York law,
A “holder” is defined by the New York Uniform Commercial Code (“N.Y.U.C.C”) as a “person who is in possession ... of an instrument ... drawn, issued or endorsed to him.”
A holder in due course “takes the instrument free from all defenses of any party to the instrument with whom the holder has not dealt.”
2. Burden of Establishing Signatures, Defenses and Due Course
When the effectiveness of a signature is put in issue “the burden of establishing it is on the party claiming under the signature, but [with exceptions not applicable here,] the signature is presumed to be genuine or authorized.”
B. Enforcement of a Lost or Stolen Instrument
Under the N.Y.U.C.C, “[t]he owner of an instrument which is lost, whether by destruction, theft or otherwise, may ... recover from any party liable thereon upon due proof of his ownership, the facts which prevent his production of the instrument and its terms.”
IV. CONCLUSIONS OF LAW
It is disheartening to hold a bench trial for the purpose of weighing credibility in a hotly contested factual dispute, only to be faced with layer upon layer of deceit and dysfunction necessarily leading to the conclusion that, at best, only one of five witnesses — the accountant — could possibly be deemed credible. Notwithstanding the shenanigans surrounding the Canadian Venture, this case comes down to a single, straightforward issue: Did Gilad Sharon take his fifty percent interest in the Canadian venture through Lerner Manor for twenty-five thousand dollars cash or did he buy it through Omniway with a promissory note for $1.25 million?
A. TPR’s Status with Respect to Enforcement of the Omniway Note
TPR’s rights to enforce the Omniway Note dictate plaintiffs’ burden at trial and how, if at all, Sharon’s defenses are to be evaluated. Plaintiffs’ assumption that TPR is a holder at all, let alone a holder in due course of the Omniway Note, has several deficiencies. First, plaintiffs failed to produce an original of the promissory note and only incomplete copies of the Note have been produced. Second, the Omniway Note was issued to AG Properties, and is not endorsed to TPR. Third plaintiffs had ample evidence upon discovery of the Omniway Note of the defenses to its enforceability.
The fact that no original of the Omniway Note has been located, and the fact that defendants dispute that a complete original ever existed, places plaintiffs within N.Y.U.C.C. § 3-804, meaning they must prove “ownership of the notes, the circumstances of the loss and their terms.”
B. Validity of the Note
Plaintiffs have met their burden of establishing that the original note has been lost and, in fact, have raised the inference that Sharon or his ally Arie Genger may be responsible for the absence of the original note — which Sharon has done nothing to rebut.
1. Validity of the Signature
Sharon argues that no valid, enforceable Omniway Note ever existed because “[t]he purported note is signed with an illegible scrawl, with no identification of the name, title or authority of the alleged signer,” and is “incomplete on its face, referring to attached Schedules which are either blank or missing entirely.”
Even if plaintiffs were entitled to the presumptions under section 3-307, once defendants introduce evidence calling into question the validity of the signature, plaintiffs bear the “burden of establishing the signature by a preponderance of the total .evidence.”
2. Evidence that the Omniway Note Was Never Intended to Take Effect
In addition to the questionable signature and absence of written authority for Omniway to enter into the transaction at all, there are other indications that the Omniway Note never became a binding agreement between AG Properties and Sharon (through Omniway). First, although the absence of executed schedules does not render the Omniway Note invalid per se, the fact that no complete copy of the Note has been produced further weighs against finding that plaintiffs have made the necessary prima facie showing that the Omniway Note was ever fully executed.
Second, the evidence at trial demonstrates that during the relevant time period, not a single person involved — not Parnés, Fischer, Sharon, or Arie Genger— believed that the Omniway Note had ever been finalized as the vehicle through which Sharon invested in AG Properties. Parol evidence is admissible to establish that an instrument never became a binding agreement.
V. CONCLUSION
For the foregoing reasons, and notwithstanding my reservations about permitting Gilad Sharon to benefit from his own duplicitous conduct and lack of transparency throughout the Canadian Venture and at this trial, I find for defendant on the issue of the enforceability of the Omniway Note. The Clerk of the Court is directed to enter judgment in defendant’s favor and to close this case.
SO ORDERED.
. Amended Answer and Third Amended Third-Party Complaint ("Compl.”) ¶ 101; Third Party Defendant Gilad Sharon’s Proposed Findings of Fact and Conclusions of Law ("Def. Facts") at ¶ 1.
. The suit first arose when Genger was named as a defendant in a lawsuit brought by Vladimir Gusinski to recover a $2.5 million loan made to the Canadian Venture in 2001. Genger named Sharon as a third-party defendant in the case. The first-party suit with Gusinski settled and the third-party suit against Sharon for enforcement of the $1.25 million note (the "Omniway Note”) proceeded. '
. See Gusinksy v. Genger Complaint ¶ 6.
. See Plaintiffs’ Exhibit ("PX”) 32 (1/1/07 Agreement between AG Holdings and TRP Investment Associates assigning TPR the right to institute legal actions on behalf of AG Properties).
. See Amended Joint Pretrial Order ("JPTO") ¶ 12.
. For more than two decades prior to the formation of the Canadian Venture, Arie was close friends with Sharon's father, Ariel Sharon, the former Prime Minister of Israel. The families socialized together frequently. See
. See id. at 229 (Parnés) ("Each was to be a fifty percent equity shareholder or interest holder”). Accord id. at 311 (Sharon); id. at 363 (A. Genger) (“From day one, we will be 50/50 partners.”).
. See JPTO ¶¶ 1, 2.
. See id. ¶ 3. See also 12/3 Trial Tr. at 69 (Fischer) (discussing general ledger reflecting the transaction).
. See 12/3 Trial Tr. at 52-53 (Fischer). Accord PX 26 (Chart dated 9/20/01 reflecting structure of Canadian Venture with Omniway Limited); Defendants' Exhibit (“DX”) U (Chart dated 9/20/01 reflecting structure of Canadian Venture with Lerner Manor Trusteeship, Ltd.).
. See JPTO ¶ 4. AG Properties purchased each property through separate wholly owned subsidiaries, AG Land No. 1 Co. and AG Land No. 2 Co., which directly owned the two Canadian properties. See PX 17 (promissory note from AG Land No. 1 to AG Properties in the amount of $3,753,280, signed by Arie Genger).
. See 12/3 Trial Tr. at 127 (S. Genger).
. See id.
. See id.; 12/4 Trial Tr. at 377 (A. Genger). See also PX 10 (Written Consent of Directors of AG Properties to enter into a shareholders agreement with Omniway, signed by Arie Genggr). Arie testified that he "had a concern that the two and a half million dollars I Was able to secure from Mr. Gusinski, that he might require a security, at which time ... I will have to have a guarantee of a million and a quarter and then Gilad would have to do the same. As it turned out, he did not ask me for a personal guarantee, and I think he took collateral of one of the companies.” 12/4 Trial Tr. at 378-379 (A. Genger). See also PX 4 (Pledge Agreement between V. Gusinksi and AG Real Estate Partners) (in which AG Real Estate was the Pledgor and AG Land Co. 1 was the Maker, and which pledged shares of AG Land Co. as security for the loan). However, the Omniway vehicle was in consideration long after the terms of the Gusinski loan were finalized. See 12/4 Trial Tr. at 382 (A. Genger).
. See id. at 364, Arie testified that at the beginning he was concerned that Gusinski would require security for the $2.5 million loan, in which case both he and Sharon would have had to guarantee $1.25 million, but "as it turned out he did not ask ... for a personal guarantee” but rather took collateral of one of the companies. Id. at 378.
. See 12/3 Trial Tr. at 66 (Fischer).
. Id. at 62.
. See JPTO ¶5. See also DX F (10/14/02 Email between D. Parnés and U. Harpaz) ("AG 1 and AG 2 will each transfer the property they own to a U.S. trust.”).
. See 12/4 Trial Tr. at 229 (Parnés) ("Each was to be a fifty percent equity shareholder or interest holder”). Accord id. at 311 (Sharon); id. at 363 (A. Genger) ("From day one, we will be 50/50 partners.”).
. Initially, Sharon appeared on behalf of Omniway, and then disavowed any knowledge of the company, which resulted in sanctions against Sharon and his attorneys. See Genger v. Sharon, No. 10 Civ. 4506, 2012 WL 3854883 (S.D.N.Y. Sept. 5, 2012). Throughout the litigation and at trial Sharon denied any knowledge that Omniway was ever the contemplated vehicle of his investment, which is difficult to reconcile with the documentary evidence in this case. See 12/4 Trial Tr. at 342 (Sharon) (stating that he did not make any inquiries with the directors and officers of Omniway as to whether they had ever seen the original of the purported Omniway note). In addition, he made no effort to obtain information regarding the role of Omniway in securing his interest in the Canadian Venture. See 12/4 Trial Tr. at 323-324 (Sharon) (denying any knowledge of Omniway).
. See id. at 311 (”[W]e agreed from the beginning that we will be 50/50 partners. I will give the sweat. He will take care of the finance.”).
. See Third-Party Plaintiffs’ Trial Memorandum of Law (“PI. Mem.”) ¶ 3.
. See PX 6 (Translated Hebrew document reflecting that Lerner Manor was incorporated on 9/9/02).
. See 12/4 Trial Tr. at 363 (A. Genger) (testifying that he and Sharon had an agreement that Sharon would invest the same amount of cash as Arie — $25,000).
. See PX 5 (Certificate of Incorporation for Omniway Limited).
. See PX 7 (8/29/01 Email from Lefkios Joannides of Omniway to Uri Harpaz). Uri Harpaz was Sharon's accountant and he forwarded the email from Joannides to someone who reads Hebrew with a note that said "For your information — Uri.” There is also a handwritten note in English on the document that says "Gilaed’s Company.” Id. See also 12/3 Trial
. See PX 8 (2/6/02 Signed Promissory Note from Omniway Limited (without schedules) from Raines & Fischer Files). See also PX 9 (2/6/02 Signed Promissory Note from Omniway Limited from Genger files (with blank schedules A and B)). Arie Genger testified that he "would not have askecl him for [$1.25 million] because [he] never put such money in.” See 12/4 Trial Tr. at 372 (A. Genger). But the evidence and testimony clearly show that this was, at one point, the contemplated structure of Sharon’s investment.
. See id.
. See 12/3 Trial Tr. at 29. See also PX 8 (2/6/02 Signed Promissory Note from Omniway Limited (without schedules) from Raines & Fischer Files).
. 12/4 Trial Tr. at 264 (Parnés).
. See id. See also PX 7 (8/29/01 Email from Lefkios Joannides of Omniway to Uri Harpaz).
. See PX 8 (2/6/02 Signed Promissory Note from Omniway Limited (without schedules) - from Raines & Fischer Files).
. See 12/4 Trial Tr. at 205 (S. Genger).
. See id. at 264 (Parnés).
. See id. at 205 (S. Genger) (stating that he never saw executed versions of the schedules).
. See PX 10 (Written Consent of Directors of AG Properties to enter into a shareholders agreement with Omniway, signed by Arie Genger).
. See PX 11 (AG Properties Shareholders Agreement Regarding Disposition of Voting Trust Certificates between AG Holdings and Omniway, dated 2/6/02). This conflicts with Parnés’ testimony that "originally Omniway was not supposed to have a stock certificate. Omniway requested that AG Holdings hold its fifty percent interest through AG Holdings. So the deal originally was that AG Holding would hold fifty percent on its own behalf and fifty percent for Omniway. So I am not sur
. See PX 26 (Chart dated 9/20/01 reflecting structure of Canadian Venture with Omniway Limited). Because no structure had been implemented as of September 2001, the obvious conclusion is that the chart was merely a possibility, not a reflection of the actual structure of the venture. There is also a substantially identical chart, also dated 9/20/01 but with Lerner Manor substituted as the investment vehicle for Sharon. See DX U (Chart dated 9/20/01 reflecting structure of Canadian Venture with Lerner Manor Trusteeship, Ltd.). As Lerner Manor did not even exist under February of 2002, there is no question that this was at best a possibility, and cannot have been the structure as of September 2001. It is also obviously backdated.
. DX A2 (2/24/03 Note from D. Parnés to E. Klimerman laying out timeline).
. Id.
. DX Al (8/6/02 Memorandum from D. Parnés and E. Klimerman to A. Genger, G. Sharon, and S. Genger, cc'ing W. Fischer re: Canadian Properties) ("Awaiting to receive from Gilad executed copies of the Shareholders Agreement and ancillary documents, by Omniway Limited (currently, the sole shareholder of AG Properties Co. Remains AG Holdings Company).”) (attaching 2/6/02 Subscription Agreement signed by AG Properties, unsigned by Omniway, and the unsigned Omniway Note).
. PX 25 (Oct.-Dec, 2002 Email chain between D. Parnés and U. Harpaz). See also DX A2 (Parnés stated that he met with Sharon in February 2002 to go over the Shareholders Agreement and ancillary documents but Gilad had certain reservations with respect to control of AG Properties).
. PX 25 (Oct.-Dec. 2002 Email chain between D. Parnés and U. Harpaz). See also 12/3 Trial Tr. at 67 (Fischer) (testifying to a conversation with Harpaz discussing that as a result of changes in the Canadian structure, there were reasons for Sharon to reconsider using a Cyprus entity to invest).
. See 12/4 Trial Tr. at 323-324 (Sharon).
. See PX 16 (Notes of D. Parties re: March 2003 meetings). In his Complaint, Genger alleges that, in 2003 Arie and Sharon agreed to substitute Lerner Manor for Omniway as a fifty percent stockholder of AG Properties for $25,000 consideration. See Compl. ¶ 104. However, the evidence, in particular, Genger's concern that there was no formalization of Sharon's fifty percent ownership as of 2003, belies this contention. See DX B (Email chain among W. Fischer, U. Harpaz, and D. Parnés from 10/23/02-2/6/03). When Fischer asked Harpaz whether Sharon or Omniway would be the beneficial owner of the trust, Harpaz responded that Sharon would be the beneficial owner, through a nominee. Fischer then requested the name of the trust through which Sharon would hold the interest. See id.
. PX 16 (Notes of D. Parnés re: March 2003 meetings).
. Id.
. Id.
. Id.
. 12/4 Trial Tr. at 307 (Parnés).
. Id. This does not, however, jibe with his contemporaneous statements in emails that the Omniway Note was never tendered. Moreover, there is no evidence that they merely "change[d] the holding” — rather it appears that the $1.25 million was abandoned entirely.
. See 12/3 Trial Tr. at 71 (Fischer). Genger, however, testified that “a stock subscription receivable may not be reflected as an asset on the balance sheet.” Id. at 130-131 (S. Genger). "[T]he proper reflection would simply be a footnote.” Id.
. Id. at 68 (Fischer).
. Mat 61.
. See PX 6.
. See PX 12 (AG Properties Shareholder Agreement Regarding Disposition of Shares between AG Holdings Company and Lerner Manor Trusteeships, Ltd., dated “as of” 2/6/02).
. See PX 13 (2/6/02 Executed (backdated) Subscription Agreement for Shares of AG Properties).
. 12/3 Trial Tr. at 74 (Fischer) (stating “[t]hat I certainly remember”).
. Id. at 78.
. Id. at 75. See also DX E (9/20/03 Emails between D. Parnés and W. Fischer). Fischer testified that he needed to represent ownership for the purposes of the refinancing. See id. at 76.
. DX E (9/20/03 Emails between D. Parnés and W. Fischer).
. 12/3 Trial Tr. at 75 (Fischer).
. See DX C (Email chain between W. Fischer and U. Harpaz). See also 12/3 Trial Tr. at 83 (Fischer) (testifying that as a result of his communications with Parnés, Fischer attributed to Lerner Manor its share of the losses for the calendar year of 2001-2002). The financial statements that Fischer prepared were unaudited, as opposed to audited, which means that the firm was not required to render an opinion, after undertaking a series of tests and inquiries, about whether the statements accurately depict the financial condition for a given period of time. See id. at 85-86. In contrast, an unaudited statement may simply be a compilation of the records provided by management. See id. at 86.
. See 12/4 Trial Tr. at 230 (Parnés). See also id. ("And subsequently he changed ownership, his interest, to be owned from Omniway to Lerner Manor.”).
. See id. at 233. Parties testified that the fact that he never saw the signed note was unsurprising because he always prepared documents and then sent them to Linda Rosette, Arie’s assistant. See id. at 234. However, the emails show that he dealt directly with Sharon regarding the Omniway documents, and that the documents were returned to him albeit unsigned. Today Parnés works for Sagi Genger, is the sole officer of AG Properties, his wife is an officer of TPR, and Genger helped pay for his business school. See id. at 267, 302, 307. It can hardly be said that Parnés is a neutral witness,
. Id. at 257.
. See 12/3 Trial Tr. at 96 (S. Genger). Early on in the venture, Sagi Genger was involved in a limited capacity in the structuring of the Canadian Venture — specifically he helped obtain a tranche of mezzanine financing for the purchases, transferring the properties into trusts, and refinancing the mortgages. See id. at 91.
. Id. at 108-109.
. See id. at 153. Arie did not officially resign as director of AG Holdings and AG Properties until August 2005. See PX 21 (Resignation Letter of Arie Genger from all of the Canadian Venture entities); PX 22 (Resolutions appointing Sagi Genger director of the Canadian Venture entities).
. See 12/3 Trial Tr. at 119 (S. Genger). See also PX 23 (8/16/04 Memorandum from S. Genger to G. Sharon re; "Break Up of AG Properties”) (suggesting a fair market value buy out of $1,300,417 Canadian dollars).
. 12/3 Trial Tr. at 99 (S. Genger). Genger testified that he believed the reluctance to use a Cypriot entity stemmed from the criminal investigations pending against Sharon in Israel at the time. See id.
. 12/4 Trial Tr. at 209 (S. Genger).
. PX 14 (9/21/05 Stock Purchase Agreement between AG Holdings and Lerner Manor).
. See 12/3 Trial Tr. at 105 (S. Genger). In late 2006, Genger also fired Fischer as his accountant because he “didn't feel that his behavior reflected that he was acting in [Sagi Genger’s] best interest.” Id. at 156.
. See id. at 105-106. Genger stated that he "faced the reality that on the one hand the Israeli police were in criminal investigation, that [he] had paid out a significant amount of money to Mr. Sharon, that there was a note outstanding to offset it, and that [he] didn’t do anything about it.” Id. at 106.
. Id.
. Id.
. Id. at 128-129.
. Id. at 130.
. The Court has subject matter jurisdiction over this case under 28 U.S.C. § 1332 and venue is proper. See JPTO ¶ 2. I held at the final pretrial conference that Sharon had waived the argument that the court lacked personal jurisdiction over him by failing to raise during this two year litigation and, moreover, that the New York Long Arm Statute very likely reached him anyway. See Hamilton v. Atlas Turner, Inc., 197 F.3d 58, 61 (2d Cir.1999) (holding that "delay in challenging personal jurisdiction by motion to dismiss may result in [forfeiture]” of a defense challenging application of the New York Long Arm Statute).
. Although the Omniway Note states that it shall be governed by Nova Scotia Law, see PX 9 (2/6/02 Signed Promissory Note from Omniway Limited from Genger files (with blank schedules A and B)) at 4, both parties have stipulated that New York law, which they believe is substantially similar to Nova Scotia law, should govern this Court’s decision. See 12/6 Trial Tr. at 436-437 (Closing Argument of J. Dellaportas) (noting that "neither side is arguing for the application of Nova Scotia law”).
. See Cavendish Traders, Ltd. v. Nice Skate Shoes, Ltd., 117 F.Supp.2d 394, 399 (S.D.N.Y. 2000) (citing Gateway State Bank v. ShangriLa Private Club for Women, Inc., 113 A.D.2d 791, 493 N.Y.S.2d 226 (2d Dept.1985), aff'd, 67 N.Y.2d 627, 499 N.Y.S.2d 679, 490 N.E.2d 546 (1986). "Under Article 3 of the New York Uniform Commercial Code ("N.Y.U.C.C”) a promissory note constitutes a valid negotiable instrument if it contains a an
. N.Y.U.C.C. § 1-201.
. Id. § 3-302. A holder in due course must first be a holder. Consolidated Capital Corp. v. DeSalvo, 146 Misc.2d 437, 550 N.Y.S.2d 803, 805 (Civ.Ct.N.Y.Co.1990). A purchaser has notice of a claim or defense if "(a) the instrument is so incomplete, bears such visible evidence of forgery or alteration, or is otherwise so irregular as to call into question its validity, terms or ownership ... or (b) the purchaser has notice that the obligation of any party is voidable in whole or in part, or that all parties have been discharged.” N.Y.U.C.C. § 3-304.
. N.Y.U.C.C. § 3-305. "All defenses” includes nondelivery, conditional delivery or delivery for a special purpose.... Accordingly the "conclusive presumption” of the third sentence of the original Section 16 is abrogated in favor of a rule of law cutting off the defense.” See id. (Official Comment).
. Id. § 3-306 (citing id. § 3-408).
. Id. § 3-307(1).
. Id. (Official Comment).
. Id. § 3-307(2).
. Id. § 3-307(3).
. Id. § 3-804.
. Id. (Official Comment).
. Id.
. Marrazzo v. Piccolo, 163 A.D.2d 369, 558 N.Y.S.2d 103, 103 (2d Dept. 1990) (holding that "[n]otwithstanding her failure to produce the original promissory notes, the defendant could still recover pursuant to UCC 3-804”). Accord Kraft v. Sommer, 54 A.D.2d 598, 387 N.Y.S.2d 318, 319 (4th Dept. 1976) (suit was proper under section 3-804 given "plaintiff’s inability to produce the original check”); Citicorp Int’l Trading Co., Inc. v. Western Oil & Refining Co., Inc., No 88 Civ. 5377, 1991 WL 4502, at *3 (S.D.N.Y. Jan. 16, 1991) (holding that, notwithstanding the fact that defendants had admitted they signed a copy of the note, "[a] holder's inability to produce the original note will prevent it from collecting, unless it can establish that the original note has been lost, destroyed or stolen.”). See also N.Y.U.C.C. § 1-201(20) (requiring possession of instrument to qualify as holder). Although the court in Cavendish Traders analyzed "copies of promissory notes” under section 3-307, in that case “the existence of the original writings and the authenticity and accuracy of the copies [were] not disputed.” 117 F.Supp.2d at 399 (internal quotation omitted). Where, as here, the existence and authenticity of the original note are contested, analysis under section 3-804 is proper.
. See Consolidated Capital Corp., 550 N.Y.S.2d at 805 (holding that where the notes were not issued or endorsed to plaintiff, plaintiff was not a holder) (citing cases). Because the absence of the original of the Omniway Note forecloses plaintiffs’ ability to take advantage of the presumptions to which a holder is entitled, it is unnecessary to evaluate what TPR's rights on behalf of AG Properties would be if it did have the original note.
. See N.Y.U.C.C. § 3-302 ("A holder in due course ... takes the instrument without notice that it is overdue or has been dishonored or of any defense against or claim to it.”).
. See 12/6 Trial Tr. (Closing Argument of J. Dellaportas) ("Omniway has refused to turn over its files, and we’ve had all sorts of shenanigans. And with regard to our electronic files, they were spoliated.”).
. Rule 1003 of the Federal Rules of Evidence states: "A duplicate is admissible to the same extent as an original unless (1) a genuine question is raised as to the authenticity of the original or (2) in the circumstances it would be unfair to admit the duplicate in lieu of the original.” Plaintiffs admit that they do not have the original note. However, "identical executed copies of the [N]ote have been found in the files of both AG Properties, which was the note holder, and Raines & Fischer, which was the company’s outside accountant.” 4/10/12 Hearing Tr. at 4. Sharon has failed to raise a genuine doubt that the copy accurately reflects the original note.
. The purported Omniway Note contains a valid waiver of the right to demand notice of non-payment and such waivers are enforceable. See PX 8 (2/6/02 Signed Promissory Note from Omniway Limited (without schedules) from Raines & Fischer Files); Cavendish Traders, 117 F.Supp.2d at 399.
. Def. Mem. at 2-3.
. N.Y.U.C.C. § 3-804 (Official Comment). In contrast, revised U.C.C. Section 3-309, which New York has not adopted, allows a party entitled to enforce a lost instrument both to acquire holder status and to avail itself of the presumptions concerning signatures.
. Compare PX 10 (Written Consent of Directors of AG Properties to enter into a shareholders agreement with Omniway, signed by Arie Genger). See also 12/4 Trial Tr. at 261 (Parnés) (acknowledging that in order for a promissory note to have legal effect, you need a board resolution authorizing someone to sign it).
. See 12/4 Trial Tr. at 264 (Fames).
. N.Y.U.C.C. § 3-307.
. See 12/4 Trial Tr. at 261 (Parnés).
. See American Inv. Bank, N.A. v. Dobbin, 209 A.D.2d 780, 617 N.Y.S.2d 999, 1000 (3d Dept. 1994) (holding on summary judgment because "[t]he purported copy of the original promissory note is incomplete” and did not show evidence of execution, "plaintiff has not satisfactorily shown that it has possession of the note upon which it seeks to recover”).
. See Polygram Holding Inc. v. Cafaro, 42 A.D.3d 339, 839 N.Y.S.2d 493, 493 (1st Dept. 2007) (holding that "parol evidence may be offered to show that a writing, although purporting to be a contract, is, in fact, no contract at all” and denying summary judgment because questions of fact existed as to whether note was a “sham transaction”); Dayan v. Yurkowski, 238 A.D.2d 541, 656 N.Y.S.2d 689, 690 (2d Dept. 1997) ("the parol evidence offered by the defendant may be considered to show that the note, while valid on its face, was never intended to take effect”); Greenleaf v. Lachman, 216 A.D.2d 65, 628 N.Y.S.2d 268 (1st Dept.1995) (parol evidence admissible to show that note was a "sham” to defeat tax liability). See also Belknap v. Dean Witter & Co., Inc., 92 A.D.2d 515, 517, 460 N.Y.S.2d 1005 (1st Dept.1983) (an incomplete contract falls within one of the limited exceptions to the parol evidence rule).
.In contrast to the Omniway Note, the Lerner Manor agreement, while backdated, has no other indicia of invalidity. It is signed by Lerner, as manager, and stamped with the company’s registration. The note is complete. Furthermore, the fact that it is backdated, including one date which says "as of” February 6, 2002, is consistent with the expía