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Current Developments in the Commercial Divisions of the
New York State Courts
Posted: July 3, 2014

Summary Judgment In Lieu of Complaint Available Even When There Are Conditions Beyond Failure to Pay

On June 19, 2014, Justice Scarpulla of the New York County Commercial Division issued a decision in CF Notes, LLC v. Johnson, 2014 NY Slip Op. 31598(U), granting summary judgment in lieu of complaint on a note.

In CF Notes, the plaintiff moved for summary judgment in lieu of complaint on a note signed by an employee that was made due on demand in the event of one of several conditions occurring and was only payable if the defendant failed to meet certain conditions. The court nonetheless granted summary judgment in lieu of complaint, explaining:

[The plaintiff] makes its prima facie showing that it is entitled to summary judgment on the note. To establish a prima facie case, plaintiff must present an instrument for the payment of money only and evidence of a failure to make the payment called for by its terms. [The plaintiff] submitted a copy of note annexed to its moving papers, which is for the payment of money only. Moreover, by its terms, [the defendant] acknowledges that this Note is an agreement for the payment of money only subject to enforcement pursuant to NY CPLR § 3213.

For evidence of [the defendant’s] failure to make the payment called for by the note, [the plaintiff] submits the Kofsky affidavit, in which Kofsky states that on or about May 17, 2013, [the defendant] resigned . . . . This, by the terms of the note, caused the sum owed under the note to become immediately due and payable. Kofsky further states that [the defendant] did not earn $5 million in gross revenue . . . , such that the Net Loan Amount would have been forgiven. Kofsky also states that [the defendant] has not made any payments against the sums due under the loan. [The plaintiff] therefore makes its prima facie showing that [the defendant]failed to repay the amounts owed under the note.

(Internal quotations and citations omitted).

This decision shows that summary judgment in lieu of complaint is not limited to simple promissory notes, where the only condition is timely payment.

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