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Posted: October 27, 2017

Summary Judgment in Lieu of Complaint Precluded by Evidence of Lack of Consideration and Fraud

On October 11, 2017, the Second Department issued a decision in Denjonbklyn, Inc. v. Rojas, 2017 NY Slip Op. 07107, holding that a motion for summary judgment in lieu of complaint was properly dismissed because of questions of consideration and fraud in the inducement, explaining:

CPLR 3213 provides a means of obtaining an accelerated judgment where a defendant’s liability is premised upon an instrument for the payment of money only, such as an unconditional guaranty. Here, the plaintiff established its prima facie entitlement to summary judgment by proving the existence of the guaranty, the underlying debt, and the defendant guarantor’s failure to perform under the guaranty. However, as the Supreme Court correctly determined, the defendant raised a triable issue of fact regarding his defense of partial lack of consideration by submitting admissible evidence of the plaintiff’s failure to convey certain assets of the business as promised.

Furthermore, the defendant raised a triable issue of fact as to whether he was induced to execute the guaranty by certain fraudulent representations made by the plaintiff’s president, a defense which the defendant may assert because it is personal to him and because he is the sole owner and principal of OGT. Additionally, the defendant’s guaranty did not contain broad, sweeping language waiving any and all defenses, and thus, did not bar the assertion of defenses herein. Likewise, the plaintiff’s contentions that the proffered defenses are barred by the parol evidence rule and by the presence of a merger clause in the underlying asset purchase agreement are unpersuasive, especially in view of the plaintiff’s failure to provide the court with the various exhibits and schedules that were appended to the agreement.

(Internal quotations and citations omitted).

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