Commercial Division Blog
Guaranty of Both Payment and Performance Did Not Qualify as Instrument for Payment of Money Only Under C.P.L.R. 3213
On May 26, 2023, Justice Margaret A. Chan of the New York County Commercial Division issued a decision in Itria Ventures LLC v. Singh Oil Corp., 2023 NY Slip Op 31809(U), denying a motion for summary judgment in lieu of complaint against guarantors on the ground that the guaranty was one of both payment and performance, and was thus not an obligation for the payment of money only, explaining:
Further, plaintiffs case against Guarantors does not qualify [*6] for CPLR 3213 treatment because the Guaranty Agreements require the performance of nonmonetary obligations in addition to payment on the Loan (see Bank of Am., N.A. v Filho, 203 AD3d 594, 162 N.Y.S.3d 722 [1st Dept 2022] [finding that CPLR 3213 does not apply to guaranties where a guarantor "shall . . . punctually perform any and all Obligations not requiring the payment of money"]; Punch Fashion, LLC v Merchant Factors Corp., 180 AD3d 520, 521, 120 N.Y.S.3d 284 [1st Dept 2020] [holding that a guarantee of both payment and performance does not qualify for CPLR 3213]).
Here, the Guaranty Agreement requires "the prompt payment and performance of all loans . . . obligations, covenants and duties owing by the Borrower to the Lender," which, according to the Loan Agreement, included several nonmonetary obligations such as furnishing plaintiff with the annual financial statements and tax returns of Borrowers and the annual personal financial statements and tax returns of Gurpreet Singh, refraining from pledging or transferring any of the collateral without plaintiffs prior written consent, and maintaining insurance with respect to Borrowers' property and business (see PDL Biopharma, Inc. v Wohlstadter, 147 AD3d 494, 495, 47 N.Y.S.3d 25 [1st Dept 2017] [finding that the guarantor's performance obligations such as furnishing plaintiff with borrower's annual and quarterly did not qualify as instruments for the payment of money only]). While plaintiff claims that the [*7] Guaranty Agreements are eligible for CPLR [**4] 3213 treatment, it does not address the performance requirement placed on the Guarantors (NYSCEF # 9 at 8).
The attorneys at Schlam Stone & Dolan regularly litigate motions for summary judgment in lieu of complaint. Contact the Commercial Division Blog Committee at firstname.lastname@example.org if you or a client have questions about whether a guaranty or other agreement qualifies for this accelerated path to judgment.