Court Grants Summary Judgment In Lieu Of Complaint

In a Decision and Order, dated June 23, 2023, in 2025 Note Pool LLC v. Rudich, 2023 NY Slip Op 32092(U), Justice Melissa A. Crane granted Plaintiff’s unopposed motion for summary judgment in lieu of complaint pursuant to CPLR § 3213. The Court explained:

Plaintiff has established its prima face case and entitlement to summary judgment as a matter of law under the Promissory Note and the Guaranty, that are both instruments for the payment of money within the meaning of CPLR 3213. Plaintiff has also established that its motion for summary judgment in lieu of complaint is timely under the rules governing CPLR 3213 (Docs 1, 2, 17-18).

Plaintiff demonstrates that, on August 15, 2019, it made a $5,000,000 Mezzanine Loan to Elul, which Rudich owned, and that Elul executed a Promissory Note for $5,000,000 to memorialize the Mezzanine Loan on that day. In Article I, the Promissory Note provided for monthly payments of $40,000 towards principal and accrued interest on the Mezzanine Loan through July 1, 2020. The Promissory Note also provided that a final payment of $4,908,735.86, for principal and interest, was due on the August 1, 2020 Maturity Date.

As additional security, Rudich also executed a Guaranty and agreed to be liable for the payment of all sums due under the loan agreements. Specifically, Section B(1) of the Guaranty states that Rudich

"assumes liability for, hereby guarantees to pay to [2025 Note Pool] ... and hereby indemnifies [2025 Note Pool] from and against any loss, damage, cost, expense, liability, claim or other obligation incurred by [2025 Note Pool] (including attorneys' fees, and costs reasonably incurred) arising out of or in connection with, the Guaranteed Obligations"

(Doc 7 [Guaranty Agreement]).

Plaintiff demonstrates that despite several demands, defendants failed to repay the bulk of the amounts due under the Promissory Note. Specifically, Elul only made the first five monthly payments, totaling $200,000, and defendants have not sent any other payments to plaintiff since January 2020. Thus, Defendants did not pay the outstanding Debt on or after the Maturity Date (Doc 3 [Christensen Aff.] ¶ 24; Doc 9 [Notice of Default]; Doc 10 [Final Notice of Default]; Doc 13 [Principal and Interest Calculations]).

The attorneys at Schlam Stone & Dolan frequently litigate matters where summary judgment is sought on an accelerated basis in lieu of complaint. As shown by this matter, even if unopposed, there are many technical requirements that must be met before this accelerated method may be used. Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning such issues.