The following e-filed documents, listed by NYSCEF document number (Motion 001) 3, 4, 5, 6, 7, 8, 9, 10, 11, 12 were read on this motion for SUMMARY JUDGMENT IN LIEU OF COMPLAINT.
This is an action to collect on sums allegedly owed under a merchant-cash-advance agreement and guarantee. Plaintiff, Irwin Funding, LLC, moves under CPLR 3213 for summary judgment in lieu of complaint against defendants Dexter Young Cattle Feeding (Merchant) and Dexter Young individually (Guarantor). The motion is denied.
CPLR 3213 applies only if the movants claim is based on an “instrument for the payment of money only.” As a result, “where the instrument” relied on by the movant “requires something in addition to defendants explicit promise to pay a sum of money, CPLR 3213 is unavailable.” (Weissman v Sinorm Deli, Inc., 88 NY2d 437, 444 [1996].) For example, “if outside proof is needed” of the entitlement to relief beyond the instrument itself and “simple proof of nonpayment or a similar de minimis deviation from the face of the document” (such as referring to a commonly available interest rate), a movant may not rely on CPLR 3213. (Id.)
Here, the merchant-cash-advance agreement between plaintiff and defendant Merchant is not an instrument for the payment only: It imposes many performance obligations on Merchant, not merely an unconditional promise to pay money. (See e.g. NYSCEF No. 6 at §§ 1.1, 1.10, 1.12.) If Merchant breaches the agreement, at that point it will be responsible for paying plaintiff a specified sum of money. But that is true of any contract with, for example, a liquidated-damages provision. And plaintiffs stated basis for relief was not a failure by Merchant to pay money as promised. Rather, it was a breach of the non-monetary contractual requirement to give advance notice to plaintiff should the funds in Merchants account drop too low to cover plaintiffs daily receivables withdrawals. (See NYSCEF No. 5 at 4-5.) For that reason, establishing plaintiffs claim against Merchant would require proof beyond the instrument itself and simple proof of nonpayment.
Similarly, defendant Guarantors guarantee is not an instrument for the payment of money only. Guarantees qualify for CPLR 3213 treatment only if they are unconditional guarantees of payment, not also guarantees of performance. (See iPayment, Inc. v Silverman, 192 AD3d 586, 587 [1st Dept 2021].) The guarantees, each titled “Guarantee of Performance,” are not unconditional, and make Guarantor responsible both for payment and performance. (NYSCEF No. 6 at 9; NYSCEF No. 8 at 9.) Plaintiff cannot rely on CPLR 3213 to obtain judgment based on these guarantees.
Given the unavailability of CPLR 3213 relief, this court converts this motion-action into a plenary action, in which plaintiffs motion papers shall be deemed the complaint and exhibits. Ordinarily, in this scenario, the opposition papers would be deemed an answer and exhibits. Defendants have not, however, opposed the motion. Defendants will be afforded the opportunity to file an answer; should they fail to do so, plaintiff may then move for default judgment.
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Accordingly, it is
ORDERED that plaintiffs CPLR 3213 motion for summary judgment in lieu of complaint is denied; and it is further
ORDERED that plaintiffs CPLR 3213 motion-action is converted into a plenary action, with plaintiffs motion papers deemed a complaint and supporting exhibits; and it is further
ORDERED that defendants shall, within 30 days of service of notice of entry of this order, file answering papers, or be deemed in default; and it is further
ORDERED that plaintiff shall serve a copy of this order with notice of its entry on defendants by certified mail, return receipt requested, directed to defendants’ last-known addresses.
FOOTNOTES
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. For the parties’ reference going forward, this court notes that $121,862.78 of the total claimed sum of $322,887.23 is described as attorney fees and collection costs, purportedly assessed at 30% of the outstanding receivables amount at the time of default as provided for in the contracts. (See NYSCEF No. 5 at 2 ¶ 7, 3 ¶ 14, 4 ¶ 19, 5 ¶ 28, 6 [affidavit of plaintiffs principal]; NYSCEF No. 6 at 3 § 1.12 [first agreement]; NYSCEF No. 8 at 3 § 1.12 [second agreement].) These claimed fees and costs would appear to be in the nature of liquidated damages. Plaintiff has not yet explained, however, how these claimed liquidated damages are a reasonable advance estimate of difficult-to-calculate damages—particularly given that the contracts also expressly provide for plaintiffs right to recover reasonable attorney fees in any collection action, as indeed plaintiff has sought here. (See NYSCEF No. 6 at 3 § 1.12; NYSCEF No. 8 at 3 § 1.12 [attorney-fee provisions]; NYSCEF No. 4 at 4 [attorney affirmation requesting reasonable attorney fees].)
Gerald Lebovits, J.