Commercial Division Blog
Waiver of Right to Proceed Against Debtor Did Not Waive Right to Enforce Guaranty
On October 31, 2018, the Second Department issued a decision in Pitsy, LLC v. Rindenow, 2018 NY Slip Op. 07340, holding that a plaintiff's waiver of claims against a debtor did not waive the plaintiff's claims to enforce a guaranty against the debtor's guarantor, explaining:
[T]he plaintiff demonstrated its prima facie entitlement to judgment as a matter of law by producing the subject guaranty, an affidavit and documentary evidence establishing the amount owed, and the defendant's refusal to pay. In opposition, the defendant failed to raise a triable issue of fact with respect to a bona fide defense to the claim. In this regard, the defendant's assertion that the plaintiff waived the underlying debt in the stipulation of settlement in the nonpayment proceeding is without merit, as the clear and unequivocal language of the stipulation recited that the plaintiff was waiving only its right to recover the unpaid rent from the defendant's mother, and the stipulation did not address the defendant's liability under the guaranty. Since a release of the principal debtor with the surety's consent does not discharge the surety, the plaintiff's waiver of the right to recover from the defendant's mother did not affect its right to recover pursuant to the unconditional and independent guaranty. Furthermore, contrary to the defendant's contention, no determination rendered by the District Court during the nonpayment proceeding collaterally estopped the plaintiff from seeking recovery on the guaranty.
(Internal quotations and citations omitted) (emphasis added).
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