On May 19, 2025, Justice Bannon of the New York County Commercial Division issued a decision in YA II PN, Ltd. v. Triller Group Inc., 2025 NY Slip Op. 31974(U), denying summary judgment in lieu of complaint where there were fact issues regarding whether a note was in default and thus accelerated, explaining:
A plaintiff may seek relief under CPLR 3213 when the action is based upon an instrument for the payment of money only. The purpose of the statute is to provide an accelerated procedure where liability for a certain sum is clearly established by the instrument itself. Under these guidelines, a promissory note may qualify as such an instrument, so long as the plaintiff submits proof of the existence of the note and of the defendant’s failure to make payment. However, where the instrument requires something in addition to defendant’s explicit promise to pay a sum of money, CPLR 3213 is unavailable. A plaintiff’s prima facie proof cannot be drawn from sources outside the agreement itself. Stated otherwise, summary judgment in lieu of complaint is not available to a plaintiff where the right to payment can not be ascertained solely from the face of the debt instruments and the note refers to other documents with regard to events of default. That is the case here.
In support of the motion, the plaintiff has submitted, inter alia, the subject Amended and Restated Secured Convertible Promissory Note (the “Note”); a Guaranty Agreement (the “Convoy Guaranty”); an Amended and Restated Guaranty Agreement, purportedly binding on the defendants Tiller Corp. and Triller Hold Co LLC (the “Triller Guaranty”) and the plaintiff’s notice of default and acceleration. In his affirmation, Troy Rillo, a principal of the plaintiff, explains that in 2024 the plaintiff advanced $8,510,000 in financing to fund Triller Group’s operations while it sought to consummate a merger pursuant to an Agreement and Plan of Merger, dated as of April 16, 2024. The financing was memorialized by a promissory note, executed by Triller Group, which was subsequently amended and restated under the Note. The Note, dated June 28, 2024, and originally due to mature June 28, 2025, is in the principal amount of $33,510,000, reflecting a second advance of $25,000,000.
The Note permits the plaintiff to accelerate the debt if any Event of Default has occurred. Relevant here are three of the twenty events of default set forth in Section 2(a). The guarantors, in addition to guarantying Triller Group’s payment obligations under the Note, guaranteed the Triller Group’s performance obligations under the Transaction Documents. Under Section 2(a)(i), an event of default would occur if the defendants failed to pay the plaintiff any amounts due under the Note or any other Transaction Document. Under Section 2(a)(xv), an event of default would occur if, essentially, the defendants failed to consummate a planned merger by a particular date. Under Section 2(a)(xvi), a default would occur if Any of the defendants shall fail to observe or perform any material covenant or agreement contained in any other Transaction Document. These Transaction Documents include the Note and the Registration Rights Agreement, among others. The Registration Rights Agreement imposed a filing deadline as the earlier of (i) the 15th calendar day following the date upon which the Company has cleared substantially all of the comments from the SEC on the preliminary proxy statement on Form 14A relating to the approval of the Merger and (ii) the 30th calendar day following the consummation of the Merger.
Rillo further represents that the planned merger was consummated in October 2024, months after the Note purportedly required, and that on November 14, 2024, the plaintiff issued a notice of default and acceleration to the defendants, demanding immediate repayment in cash of the full, unpaid principal amount of the Note. The notice of default is premised on six separate events of default arising under the three aforementioned provisions. The defendants purportedly failed to (1) timely file the registration statement within 15 days of clearing the SEC’s comments to the preliminary proxy statement, as required by the Registration Rights Agreement (Rillo avers Triller Group filed its registration statement on November 15, 2024); (2) make payment triggered by the aforementioned breach of the Registration Rights Agreement; (3) timely issue commitment shares to the plaintiff after closing the merger; (4) provide the plaintiff with notice after Triller Group undertook a stock split; (5) obtain the plaintiff’s written consent prior to undertaking two stock splits; and (6) consummate the merger by August 12, 2024. The instant motion was filed on November 26, 2024.
It is undisputed that the Note would not have yet matured if not accelerated by the events of default. The plaintiff’s right to payment therefore turns on the validity of the plaintiff’s acceleration of the debt. Because this right to payment requires an analysis of the parties’ obligations under multiple documents to determine performance and defaults, relief under CPLR 3213 in not available to the plaintiff. This is particularly true where, as here, some default events are non-monetary, or not simply based on failure to pay. The acceleration here is predicated on several events of default which are tied to separate agreements. More specifically, the plaintiff’s recovery based on the first and second events of default would require it to demonstrate that the filing of the Registration Statement in November 2024 was not timely. Such a showing would require a determination of when the defendants cleared substantially all of the SEC’s comments to the preliminary proxy statement. To the extent the plaintiff’s motion is based on the sixth event of default, which relates to the delayed merger closing, relief under CPLR 3213 is similarly unavailable as a non-monetary default that is disputed. The court notes that the plaintiff submits no proof as to the third, fourth, and fifth events of default, which relate to the issuance of shares and the defendants’ compliance with notice and consent requirements associated with the undertaking of stock split transactions, also non monetary defaults.
Contrary to the plaintiff’s contention, the outside evidence necessary here is not a de minimus deviation from the face of the document or a simple, readily verified fact, confirmed by documentary evidence in the record such as a party’s resignation date or a readily ascertainable interest rate. In that regard, the Appellate Division, First Department, recently held that a deviation is not de minimus where the subject guaranty permitted the guarantor to raise payment and performance as a defense and there is a colorable dispute as to whether the amount due has been satisfied. The facts here are even more compelling against the availability of CPLR 3213.
(Internal quotations and citations omitted).