Summary Judgment In Lieu of Complaint: The Most Straight Forward but Nuanced Path to Judgment

Tuesday, March 12, 2024

Creditors seeking relief against debtors for failing to uphold their payment obligations often look to expedited relief by way of summary judgment in lieu of complaint under CPLR 3213.  The statute is a means for a creditor to swiftly seek a judgment against a debtor by commencing an action via service of a summons and accompanying moving papers where the action involves an instrument for the payment of money only or a prior judgment.  The statute provides, in pertinent part, that “[w]hen an action is based upon an instrument for the payment of money only or upon any judgment, the plaintiff may serve with the summons a notice of motion for summary judgment and the supporting papers in lieu of a complaint.”  CPLR 3213. 

Although plain in its text with regard to applying to actions involving instruments for the payment of money only, the case law interpreting that portion of the statute is often nuanced and should be examined carefully before heading down this procedural path as it is largely fact dependent.  Indeed, the New York Court of Appeals acknowledged this issue and stated long ago that “[t]he question of what constitutes an ‘instrument for the payment of money only’ may appear to be a vexing problem ….”  Interman Indus. Prods. v. S.M. Electron Power, 37 N.Y.2d 151, 154 (1975).

Further clarity on this issue is provided by a recent Decision and Order issued by Hon. Andrea Masley (J.S.C.) in favor of our client Bank of Hope in the matter captioned Bank of Hope v. Livingston Electrical Associates, Inc. and Daniel Livingston, Supreme Court of the State of New York, New York County, Commercial Division, Index Number 654744/2022 [Doc. No. 34] (the “Decision”).  In the Decision, the Court awarded summary judgment in lieu of complaint in favor of Bank of Hope where Defendants defaulted under a Promissory Note, Security Agreement, Business Loan Agreement and Commercial Guaranty for a $7.5 million line of credit.

The Court determined that “[t]he Bank has satisfied its burden on this motion submitting the Note, an instrument for the payment of money promising to pay a sum certain, signed and due, the Guaranty, and the Bank’s record of money loaned and repaid, as well as the affidavit of its First Vice President and Special Assets Department Team Leader averring that defendants are in default and have failed to cure this default.”  Decision at pp. 2-3.  Additionally, quoting from European Am. Bank v. Cohen, 183 A.D.2d 453 (1st Dep’t 1992) and the record, the Court aptly rejected Defendants’ arguments and determined that “[h]ere, ‘[t]here is no merit to defendant’s contention that the note is not an instrument for the payment of money only within the meaning of CPLR 3213, containing, as it does, an unconditional promise to pay on a certain day the current balance in defendant’s line of credit,’ particularly where the amount owed is ‘readily ascertainable from plaintiff’s bank records.’”  Id. at pp. 3-4.  The Court found that “[t]his is not a case were plaintiff merely concludes how the indebtedness was calculated.”  Id. at p. 5.

Notably, the Court also rejected Defendants’ arguments that Section 3213 relief was not warranted because the Promissory Note and Guaranty require Defendants to comply with other obligations and conditions.  For example, Defendants argued, inter alia, that (a) “the Note’s provision that Borrower’s failure to comply with or perform any other ‘term, obligation, covenant or condition’ in the Note, related documents, or any other agreement qualifies as an event of default” and (b) “the Guaranty -- ‘guarantees full and punctual payment … and performance and discharge of all Borrower’s obligations under the Note and the Related Documents.’”  Id. at pp. 6-7.  Notwithstanding Defendants’ arguments, the Court held that “[h]ere, both the Note and Guaranty contain an unconditional promise by defendants to pay the Bank; neither [the Note nor Guarantee] requires additional performance by the Bank as a condition precedent to payment or otherwise made defendants’ promise to pay something other than unconditional.”  Id. at p. 6.  In coming to this portion of its holding, the Court cited to the relatively recent First Department decisions in iPayment, Inc. v. Silverman, 192 A.D.3d 586, 587 (1st Dep’t 2021) (“[w]hile a guarantee of both payment and performance does not qualify as an instrument for the payment of money only under CPLR 3213 … [it will qualify when it] …  require[s] no additional performance by plaintiff[ ] as a condition precedent to payment or otherwise ma[kes] defendant[s’] promise to pay something other than unconditional”) and 45-47-49 Eighth Ave. LLC v. Conti, 220 A.D.3d 473, 473 (1st Dep’t 2023) (“[a]lthough defendant guaranteed both payment and certain performance obligations, this does not preclude summary judgment in lieu of complaint where, as here, performance is not a condition precedent to payment”).  Id.

The foregoing Decision and underlying record form a helpful basis to creditors interested in the shortcut to obtaining a judgment offered by CPLR 3213.  Most obvious is that attention must be paid to the particular language of the subject instruments to ensure they meet the requirements of the statute.  Less obvious, but equally important, is that the facts supporting the motion for summary judgment in lieu of complaint must be presented in admissible form much like in the more common summary judgment motion pursuant to CPLR 3212.


If you would like to discuss this article, please contact Robert J. MalatakDennis A. Amore, or your Windels Marx relationship lawyer.


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