CPLR 3213: The Procedural Mechanism for an Expedited Money Judgment
In the typical commercial lease transaction, a guarantor promises to pay rent and fulfill other contractual obligations on behalf of the tenant (particularly when the tenant is a foreign actor or single-purpose entity with limited assets). If the tenant does not pay rent, the landlord’s chief concern is to quickly regain possession of the space and relet it while simultaneously seeking to recover the unpaid rent directly from the (hopefully credit-worthy) guarantor.
In New York state and local court cases, there is a seldom-used procedural mechanism for obtaining an expedited money judgment against a guarantor. Specifically, a landlord may move for summary judgment in lieu of complaint under CPLR 3213 against the guarantor. If successful, and assuming that the tenant does not move the action to federal court based upon diversity jurisdiction or a federal question, the landlord will be able to bypass formal pleadings, discovery, and other motion practice (which require substantial time and expense) to obtain an accelerated money judgment.
This article provides: (1) an overview of CPLR 3213 motions; (2) an update on the resolution of the split that previously existed between the New York State Supreme Court, Appellate Division, First and Second Departments regarding CPLR 3213 motions; and (3) practical guidance for transactional counsel drafting commercial leases and guaranties as well as litigators considering whether to file a CPLR 3213 motion.
CPLR 3213
CPLR 3213 permits a party to move for summary judgment in lieu of complaint “[w]hen an action is based upon an instrument for the payment of money only or upon any judgment….” To establish that it is entitled to summary judgment under CPLR 3213 against a lease guarantor, the landlord must establish the existence of the “instrument for the payment of money” (i.e., the guaranty), the tenant’s underlying debt, and the guarantor’s failure to perform as required by the guaranty (see Cooperatieve Centrale Raiffeisen-Boerenleenbank, B.A., “Rabobank Intl., N.Y. Branch v. Navarro, 25 NY3d 485, 492 [2015] [a party moving under CPLR 3213 “must prove the existence of the guaranty, the underlying debt and the guarantor’s failure to perform under the guaranty” (quotation marks and citation omitted)]; see also 255 Barnaba Realty Group, LLC v. Solomon, 121 AD3d 730, 730 [2d Dept. 2014]).
Prior Split Between the Departments
The Appellate Division, Second Department (which encompasses the counties of Richmond, Kings, Dutchess, Nassau, Orange, Putnam, Queens, Rockland, Suffolk, and Westchester) has consistently held that a lease guaranty qualifies as “an instrument for payment of money only” under CPLR 3213 if the guaranty is absolute and there are no conditions precedent as to the guarantor’s obligation to pay (see e.g., 255 Barnaba, 121 AD3d at 730; Premium Assignment Corp. v. Utopia Home Care, Inc., 58 AD3d 709, 709 [2d Dept. 2009] [granting a CPLR 3213 motion because, among other things, “[t]he instrument at issue did not require any additional performance on the part of the plaintiff as a condition precedent to repayment…”]).
In contrast, the Appellate Division, First Department (which has jurisdiction over state court cases filed in Manhattan and the Bronx) had previously taken a different approach by holding that a guaranty of both payment and performance obligations does not qualify as an instrument for payment of money only (see Punch Fashion, LLC v. Merch. Factors Corp., 180 AD3d 520, 521[1st Dept. 2020], lv dismissed 35 NY3d 1124).
Commercial lease guaranties usually require the guarantor to both pay rents and perform other nonmonetary obligations such as obtaining insurance and removing mechanic’s liens that are filed against the building due to the tenant’s buildout work.
Given the First Department’s approach, a landlord in a case involving a Manhattan or Bronx lease and a guaranty of both payment and performance of nonmonetary obligations may have decided to forego a CPLR 3213 motion against the guarantor because there was a significant risk of having the application denied.
In contrast, if the landlord could file the CPLR 3213 motion in a Second Department court, it would have had a higher chance of succeeding. This potentially created forum-shopping issues for the landlord.
The First Department, however, recently more closely aligned itself with the Second Department’s broader interpretation of CPLR 3213. In iPayment, Inc. v. Silverman, a case involving a guaranty of both payment of rent and performance of nonmonetary obligations, the First Department held that a party was entitled to summary judgment in lieu of complaint and explained:
While a guarantee of both payment and performance does not qualify as an instrument for the payment of money only under CPLR 3213, paragraph 1 of the guaranty signed by defendants includes an unconditional obligation to pay all rent and additional rent owed under the sublease, and therefore does so qualify; it required no additional performance by plaintiff[] as a condition precedent to payment or otherwise made defendants’ promise to pay something other than unconditional.
(192 AD3d 586, 587 [1st Dept 2021], lv dismissed 37 NY3d 1020).
In October 2023, the First Department issued another decision demonstrating its wholesale adoption of the Second Department’s interpretation of CPLR 3213. 45-47-49 Eighth Avenue LLC v. Conti involved a guaranty which provided that the guarantor was responsible for the tenant’s rent and nonmonetary obligations (see 72 Misc 3d 1210[A], *4 [Sup Ct, NY County 2021]). The Supreme Court, citing to Punch Fashion, found that “[a]n agreement guaranteeing both payment and performance does not qualify as [an] instrument for payment of money only” and thus denied the landlord’s CPLR 3213 motion.
The First Department reversed, holding that the landlord’s motion should have been granted because performance of nonmonetary obligations was not a condition precedent to payment:
We agree with plaintiff that the motion court should not have concluded that the parties’ guaranty was not susceptible to relief under CPLR 3213. Although defendant guaranteed both payment and certain performance obligations, this does not preclude summary judgment in lieu of complaint where, as here, performance is not a condition precedent to payment.
(220 AD3d 473 [2023]).
Although the First Department did not expressly overrule Punch Fashion, its decisions in iPayment and Conti show that the court’s view of whether a guaranty qualifies as an “instrument for payment of money only” under CPLR 3213 has changed and is now completely in line with the Second Department’s interpretation. This closed the earlier split between the First and Second Departments regarding whether a guaranty of both payment and performance constituted an instrument for the payment of money only under CPLR 3213.
Practical Takeaways
Litigators considering whether to file a CPLR 3213 motion should be mindful that even if the landlord can demonstrate that it is entitled to summary judgment based on the guaranty, the guarantor can nonetheless defeat a CPLR 3213 motion if it raises an issue of fact that precludes summary judgment (see e.g., 549 LLC v. Luna, 219 AD3d 1209, 1209 [1st Dept. 2023] [denying CPLR 3213 motion because “guarantor raised material issues of fact as to the amount owed to plaintiff…”]; 3350 BW 136 Inc. v. Perez, 218 AD3d 618, 619 [1st Dept. 2023] [same]).
Thus, in cases in which the facts and amounts owed are hotly disputed, a CPLR 3213 motion may not result in expedited judgment.
Conversely, if representing the guarantor, in addition to analyzing whether any real dispute exists over the alleged monies owed, counsel should evaluate if removing the matter from state court to federal court based on either diversity jurisdiction or federal question grounds is possible. Removing the case to federal court would often negate the landlord’s ability to pursue expedited judgment under CPLR 3213.
On the transactional side, if representing the landlord, counsel should tailor the guaranty to closely mirror CPLR 3213’s language to ensure that this mechanism for expedited judgment remains available if there is a subsequent default.
Because the First Department has not expressly overruled Punch Fashion, it may be prudent for landlords’ counsel to draft guaranties so that the guarantor’s unconditional obligation to pay rent is clearly separated in a different paragraph from its promise to perform other obligations.
In contrast, when representing the tenant or guarantor with respect to a Manhattan or Bronx lease, cross-pollinating the guarantor’s rental obligations and other non-monetary obligations could increase the chance of defeating a CPLR 3213 motion. This is because there is a chance that a motion court could apply Punch Fashion instead of the more recent First Department decisions discussed above.
Conclusion
If used appropriately, a CPLR 3213 motion for summary judgment in lieu of complaint is a useful tool that can provide a landlord with an accelerated money judgment against a guarantor without the need to engage in costly and time-consuming pleadings, discovery, and other motion practice.
Landlords evaluating whether to file a CPLR 3213 motion against a guarantor should carefully review the guaranty and consider the case’s facts and the guarantor’s potential defenses to determine the chances of the motion succeeding. Conversely, counsel for lease guarantors contending with a CPLR 3213 motion should evaluate the ability to remove the action to federal court and analyze whether legitimate defenses may be raised regarding the alleged amounts owed to defeat the motion. From a transactional perspective, depending on which side in the lease transaction counsel represents, the guaranty should be drafted to best protect their clients’ respective interests.
"CPLR 3213: The Procedural Mechanism for an Expedited Money Judgment," by Massimo F. D’Angelo and Gregory Wong was published in the New York Law Journal on February 23, 2024.
Reprinted with permission from the February 23, 2024, edition of the New York Law Journal © 2023 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited.