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Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: April 12, 2021

Waiver of Defenses in Guaranty Prevented Guarantor From Asserting Affirmative Defenses to Guaranty’s Enforcement

On March 31, 2021, the Second Department issued a decision in Capital One Taxi Medallion Fin. v. JEB Mgt. Corp., 2021 NY Slip Op. 01960, holding that the waiver of defenses in a guaranty prevented the guarantor from asserting affirmative defenses to the guaranty’s enforcement, explaining:

On a motion for summary judgment to enforce a written guaranty, all that the creditor need prove is an absolute and unconditional guaranty, the underlying debt, and the guarantor’s failure to perform under the guaranty. Here, the plaintiff established its prima facie entitlement to judgment as a matter of law through its submission of the loan agreements, the guaranties, and evidence that the defendant failed to make payment in accordance with the terms of those instruments. Once the plaintiff establishes, prima facie, its entitlement to judgment as a matter of law, the burden shifts to the defendant to establish, by admissible evidence, the existence of a triable issue with respect to a bona fide defense.

The Supreme Court properly determined that the defendant waived the defenses to the enforcement of the guaranties. The guaranties contained an absolute, continuing and unconditioned guaranty of payment in which the defendant agreed to remain liable even where he would otherwise be entitled to an equitable or legal discharge of his obligations. Moreover, the guaranties provided that the defendant would remain liable for Obligations of Borrower created or arising before termination and all renewals extensions, refinancings and other Liablities arising out of same. By their terms, the guaranties were absolute and unconditional and foreclosed the defendant from raising the defenses of collusion and fraudulent inducement. In any event, the defendant failed to demonstrate the existence of a triable issue with respect to these defenses.

(Internal quotations and citations omitted).

We have substantial experience in helping judgment creditors collect on judgments and search for and attach assets worldwide. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client need help collecting on a judgment.

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