Guarantor's Testimony That Conflicted With Contemporaneous Communications Concerning Guaranty Does Not Create Triable Issue of Fact

On June 5, 2023, Justice Andrew Borrok of the New York County Commercial Division issued a decision in Talos Capital Designated Activity Co. v. 257 Church Holdings LLC, 2023 NY Slip Op 31918(U), granting summary judgment against a guarantor on a claim for breach of a guaranty, holding that the guarantor's and his transactional counsel's testimony about a previously-held ambiguous clause in the guaranty did not create a triable issue of fact when this testimony was contradicted by "contemporaneous communications," explaining:

The fully developed record makes clear that the Plaintiff is entitled to summary judgment pursuant to CPLR 3212. There is not a single document in the record which discusses a difference in timing between when the other LLC guarantors' obligations were due and when Mr. Ashkenazy's personal obligation was due. There also is no document acknowledging a [**3] difference in timing as to when Mr. Ashkenazy's obligation is triggered versus when it is due. The only support for Mr. Ashkenazy's current interpretation of the contract comes from after-the-fact testimony by Mr. Ashkenazy and his transaction lawyer, who have testified to a phone call between the parties (the Now Alleged Oral Agreement) where Mr. Ashkenazy's interpretation of the contract allegedly was agreed and then reflected in the contract as drafted [*4] (a document Mr. Ashkenazy testified that he never read).

Transaction counsel to the lender and the lender's principal have testified that this conversation did not occur - i.e., that they have no recollection of any such conversation when asked if they recalled this alleged conversation - and that this is not reflected in the contract. More importantly, Mr. Ashkenazy's current version of events is at odds with the contemporaneous written communications among the parties to the transaction. Those contemporaneous communications undermine Mr. Ashkenazy's after-the-fact version of events . . . .

. . .

In sum, not a single contemporaneous document or communication reflects any conversation that supports the after-the-fact version of events now offered by Mr. Ashkenazy (which after-the-fact version of events was never mentioned for the first two and half years of this pending action).

. . .

The Defendant has failed to raise a material issue of fact in its opposition papers. The record therefore firmly establishes that the Plaintiff's position as to the meaning of the contract and the timing of Mr. Ashkenazy's obligations as to principal and interest is correct and the Plaintiff [*10] is entitled to summary judgment. Based on this ruling, the Plaintiff also is entitled to judgment with respect to the payment of late and prejudgment interest, all court costs and reasonable fees of outside counsel actually incurred in the enforcement and preservation of the Plaintiff's rights, and other fees as set forth in Mr. Ashkenazy's Payment Recourse Guaranty.

This case shows that even conflicting testimony may not give rise to a triable issue of fact, especially when all the contemporaneous documentation supports only one side's testimony. Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions about summary-judgment practice in New York State court.