First Department Holds That Note And Guaranty Stating They Are “Instrument[s] For The Payment Of Money Only” Allows Use Of Summary Judgment In Lieu Of Complaint Without Further Inquiry

On March 5, 2024, the Appellate Division, First Department, unanimously reversed a lower court decision denying summary judgment in lieu of complaint on claims to recover on a note and guaranty. In Marjan International Corporation v. Lillian August Designs Inc., Case No. 2021-04798, the Court relied on language from the note and guaranty stating that the defendant “acknowledges and agrees that this Note is an instrument for the payment of money only within the meaning of the CPLR 3213 and expressly waives any right and hereby agrees not to assert that this Note is not such an instrument.” This language was dispositive, the Court said, and obviated the need to further consider whether the note and guarantee fell within the expedited procedure of CPLR 3213. The Court explained:

We need not determine whether the note and guaranty would be considered instruments for the payment of money only under applicable case law, because the note executed by LADI provides that LADI “acknowledges and agrees that this Note is an instrument for the payment of money only within the meaning of the CPLR 3213 and expressly waives any right and hereby agrees not to assert that this Note is not such an instrument,” and the guaranty executed by Weiss contains similar waiver language. Absent any contention that the waivers were not valid, the note and guaranty are subject to collection pursuant to the expedited procedure provided by CPLR 3213.

The attorneys at Schlam Stone & Dolan frequently litigate cases involving summary judgment in lieu of complaint. Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning such issues.