On October 23, 2024, Justice Chan of the New York County Commercial Division issued a decision in Vaster Sub II, LLC v. Safdieh, 2024 NY Slip Op. 33808(U), holding that a guaranty covering both payment and performance was not an instrument for payment of money only for purposes of a motion for summary judgment in lieu of complaint, explaining:
A party may seek summary judgment in lieu of complaint pursuant to CPLR 3213 to recover an amount based on an instrument for the payment of money only. In particular, a party is entitled to relief if a prima facie case would be made out by the instrument and a failure ·to make the payments called for by its terms. But the remedy is not available where there are other issues and considerations presented by the writing, such as where the liabilities and obligations can only be ascertained by resort to evidence outside the instrument, or if more than simple proof of nonpayment or a de minimis deviation from the face of the document is involved.
Here, although defendant does not challenge any of the underlying facts, plaintiffs motion nevertheless fails for a variety of reasons. Chief among them: the Guaranty is not an instrument for the payment of money only. While it is true that generally, an unconditional guaranty qualifies as an instrument amenable to CPLR 3213 treatment, the documents here guarantee not only payment’ but also performance of the borrower’s obligations.
Per the Guaranty, defendant absolutely, irrevocably and unconditionally Guaranteed the payment and performance of the Obligations as and when the same shall be due and payable. Notably, the Guaranty does not directly define the Obligations, but instead states that capitalized terms not otherwise defined herein shall have the meanings given to such terms in the Loan Agreement. The Loan Agreement in turn defines the Obligations as having the meaning set forth in the Mortgage. Finally, the Mortgage defines the Obligations as:
the obligations under the Note, and any extensions and renewals of the same, and further the performance of the· covenants, conditions, and agreements hereinafter set forth and set forth in the Loan Documents, and to secure all other indebtedness of every description of Borrower to Lender in connection with the Loan, including, without limitation, all Future Advances (as defined in Section 4.I) that may subsequently be made to Borrower by Lender, evidenced by any other promissory notes, and all renewals and extensions thereof, and all charges and expenses of collection incurred by Lender, including, without limitation, court costs, and reasonable attorney’s fees.
Thus, the Obligations refer to the various covenants set forth in the loan documents.
This definition compels the first reason to deny the motion: it is unclear what documents are included in the definition of Loan Documents, and by extension, what may properly be considered an Obligation under the Guaranty. The Mortgage states that the term Loan Documents is defined below. However, because the Mortgage does not contain a dedicated definitions section, and because plaintiff did not file a searchable PDF or provide a pincite, that promised definition remains elusive. While plaintiffs brief defines Loan Documents as the Note, the Loan Agreement, and the Guaranty, this says nothing about how the Mortgage itself defines the term. This alone requires denial of the motion because it is not clear what documents-and therefore what Obligations-are being guaranteed.
Assuming the Loan Documents include the Loan Agreement, Note, Mortgage, and Guaranty, the covenants making up the Obligations require performance beyond the mere payment of money. For instance, those covenants include a covenant to procure, deliver to Lender, and maintain in effect at all times while Borrower is indebted·to Lender various types of insurance for the Property or construction thereupon; maintenance of books and records and production of such records if demanded by plaintiff; and even maintaining the Property in compliance with all applicable laws and regulations, including zoning, building codes and the Americans with Disabilities Act and regulations thereunder. And those are just the covenants from the Loan Agreement. There are further terms from both the Mortgage and the Note that place additional obligations on 58 Ocean, and by extension, defendant.
While plaintiff may ultimately establish that such provisions do not require additional performance by plaintiff as a condition precedent to payment, or otherwise make defendant’s promise to pay something other than unconditional, at this stage it is not clear from the face of the Guaranty that it is an instrument for the payment of money only.
(Internal quotations and citations omitted).