Commercial Division Blog
Posted: March 30, 2022 / Written by: Jeffrey M. Eilender, Samuel L. Butt, Joshua Wurtzel, Hillary S. Zilz /
Credit Agreement Does Not Qualify As Instrument for Payment of Money Only Under CPLR §3213
In a Decision and Order dated February 18, 2022, in Fisher v. Lovaro LLC, 2022 NY Slip. Op. 30565(U), Justice Barry Ostrager denied Plaintiff’s motion pursuant to CPLR § 3213. The Court explained:
The Credit Agreement "covers a revolving line of credit for a total principal amount" of $998,396.41. NYSCEF Doc. No. 6, ¶8. This is not an instrument for the payment of money only because it requires, among other things, proof of the amounts drawn on the credit line and proof that the defendant received such sums. Weissman v. Sinorm Deli, 88 N.Y.2d 437, 669 N.E.2d 242, 646 N.Y.S.2d 308 (1996).
The language in the Credit Agreement is vague; it allowed defendant to indebt itself to plaintiffs for the total principal amount listed but does not indicate whether defendant has actually done so. The line of credit does not contain an unconditional promise to repay $998,396.41. The promise to repay that amount is conditioned upon defendant actually drawing that amount. In support of the motion, plaintiff Stephen Miller submitted an affidavit, but like the Credit Agreement, the affidavit is vague and fails to establish proof that plaintiff had drawn the amount plaintiff seeks to recover.
Further, plaintiffs seek relief under the Credit Agreement beyond the recovery of the monetary amount allegedly loaned to defendant. Plaintiffs also seek delivery of the collateral used to secure the loan, an injunction, and an inquest hearing to determine the full extent of the collateral assets, among other things. All of the requests for relief relating to the Credit Agreement do not qualify for CPLR § 3213 relief. The motion is therefore denied insofar as it seeks monetary and other relief under the Credit Agreement, and that portion of the proceeding is converted to a plenary action.
The attorneys at Schlam Stone & Dolan frequently litigate disputes concerning credit agreements. Contact the Commercial Division Blog Committee at email@example.com if you or a client have questions concerning such disputes.