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Commercial Division Blog

Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: September 9, 2019

Court Denies Summary Judgment in Lieu of Complaint Because Contract Included More Obligations than the Payment of Money

On August 26, 2019, Justice Sherwood of the New York County Commercial Division issued a decision in Dragons 516 Ltd. v. GDC 138 E 50 LLC, 2019 NY Slip Op. 32566(U), denying a motion for summary judgment in lieu of complaint because the contract upon which the motion was based included more obligations than the payment of money, explaining:

CPLR ยง 3213 provides for accelerated judgment where the instrument sued upon is for the payment of money only and where the right to payment can be ascertained from the face of the document without regard to extrinsic evidence, other than simple proof of nonpayment or a similar de minimis deviation from the face of the document. An action on a promissory note is an action for payment of money only.

While the Facility Agreement is an agreement for the payment of money, it is not an agreement for the payment of money only. The Facility Agreement is approximately 70 pages long, and contains a variety of obligations for Borrower, including those which plaintiff claims Borrower breached. Further, the motion is not one where the right to payment can be ascertained from the face of the Facility Agreement without regard to extrinsic evidence, other than simple proof of nonpayment or a similar de minimis deviation from the face of the document.

The cases offered by plaintiff as example of exceptions to this simple rule are inapposite. Four of the cited cases involve written guarantees of payment where there were no triable issues of fact as to the asserted defenses. In Webster Business Credit Corp. v Durham, 29 Misc 3d 1206[A] (Sup Ct, NY County 2010), the principal case relied on by plaintiff, Justice Fried granted a motion for summary judgement in lieu of complaint where defendant argued that it was impossible to ascertain the amounts allegedly due without resort to extrinsic documents. He distinguished cases that denied the motion where, as here, extrinsic evidence was needed to determine whether the defendants had actually defaulted. This case is not appropriate for disposition pursuant to CPLR 3213.

(Internal quotations and citations omitted) (emphasis added).

Cases in the Commercial Division of the New York courts usually involve a motion to dismiss at the outset and then a motion for summary judgment at the close of discovery, so such motions are a big part of our practice. The decision above is about a special procedure in New York for quickly resolving claims relating to unpaid notes or similar documents allowing the plaintiff to move for summary judgment at the beginning of an action. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have questions about seeking or opposing a motion for pre-trial dismissal or judgment of a commercial lawsuit.

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