CPLR 3213 Unavailable Where Guaranty Concerns Not Only Payment But Also Performance

On June 11, 2024, Justice Joel M. Cohen denied plaintiff’s motion for summary judgment in lieu of complaint based on a guaranty. In Manhattan Real Estate Fund, LP v. Paz, Index No. 655592/2023, plaintiff sought summary judgment in lieu of complaint based on a guaranty executed by defendant. In denying the motion, the Court explained:

The Guaranty provides that "Lender is not willing to make the Loan, or otherwise extend credit, to Borrower unless Guarantor unconditionally guarantees payment to Lender of the Guaranteed Debt (as herein defined) and timely performance of the Guaranteed Obligations (as also herein defined)" (NYSCEF 4 at 1). The Guaranty goes on to provide:

Guaranty of Payment. Guarantor hereby irrevocably and unconditionally guarantees to Lender and its successors and assigns the payment and performance of the Guaranteed Debt (as herein defined) as and when the same shall be due and payable, whether by lapse of time, by acceleration of maturity or otherwise. Guarantor hereby irrevocably and unconditionally covenants and agrees that it is liable for the Guaranteed Debt as a primary obligor.

Guaranty of Performance. Guarantor hereby unconditionally and irrevocably guarantee to Lender the full, complete and timely performance of all of the Guaranteed Obligations, including, without limitation, that Borrower will duly and punctually perform, observe and comply with all of the terms, covenants and conditions of the note, the Loan Agreement, and the other Loan Documents ....

(NYSCEF 4 § 1.2, 1.3). The "Guaranteed Obligations" are defined as "the Guaranteed Debt and all other obligations, duties and liabilities of Borrower under the Loan Documents, including, by means of example only and without limitation, the maintenance of all insurance (and timely payment of all premiums thereon), all in strict accordance with the terms of the Loan Agreement and the other Loan Documents" (NYSCEF 4 at 1, § 1.1 (b) ).

While Plaintiff may ultimately establish that "[s]uch provision does not require additional performance by plaintiff as a condition precedent to payment, or otherwise make defendant's promise to pay something other than unconditional" (Stevens v Phlo Corp., 288 AD2d 56 [1^st Dept 2001]), at this stage is not clear from the face of the Guaranty that it is an instrument for the payment of money only (iPayment, Inc. v Silverman, 192 AD3d 586, 587 [1st Dept 2021] ["[A] guarantee of both payment and performance does not qualify as an instrument for the payment of money only under CPLR 3213"]; Punch Fashion, LLC v Merchant Factors Corp., 180 AD3d 520, 521 [1st Dept 2020] [finding that the "guarantee, which is a guarantee of both payment and performance does not” qualify under CPLR 3213]).

(footnote omitted).

The attorneys at Schlam Stone & Dolan frequently litigate motions for 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.