On April 5, 2024, Justice Chan of the New York County Commercial Division issued a decision in Wietschner v. 9 Vandam JV LLC, 2024 NY Slip Op. 31172(U), holding that questions of fact regarding whether a note was in default precluded a motion for summary judgment in lieu of complaint, explaining:
CPLR 3213 permits actions based upon an instrument for the payment of money only to be commenced with a motion for summary judgment rather than a complaint. To establish prima facie entitlement to summary judgment in lieu of complaint on a promissory note, a plaintiff must show that the instrument sued upon contains an unconditional promise to pay a sum certain due on demand or at a definite time.
An instrument does not qualify for CPLR 3213 treatment if outside proof is needed, other than simple proof of nonpayment or a similar de minimis deviation from the face of the document. Outside evidence that can be considered a de minimis deviation includes readily ascertainable interest rate, or other simple, readily verified fact, confirmed by documentary evidence in the record. In contrast, summary judgment in lieu of complaint is not available where a note referred to other documents with regard to events of default.
Evidence presented on a summary judgment motion are examined in the light most favorable to the non-moving party. A triable issue of material fact precludes summary judgment under CPLR 3213.
Under these standards, plaintiff’s motion for summary judgment in lieu of complaint is denied. At the outset, the Notes are not instruments for the payment of money only that qualify for CPLR 3213, because they referred to other documents with regard to events of default and therefore plaintiffs right to payment could not be ascertained solely from the face of’ the Notes. It is undisputed that the Notes have not matured if not accelerated by an event of default. Plaintiff nevertheless claims that payments under the Notes have been due and outstanding since October 2023 because defendant has allegedly admitted in writing its inability to pay, its debts by virtue of Simpson’s email to Howard on September 28, 2023.
To evaluate whether such an admission has occurred would require the court to look beyond the four corners of not just the Notes but also Simpson’s email, in which the Notes were not explicitly mentioned, and Simpson did not expressly hold himself out as defendant’s representative. Determining whether Simpson acted on behalf of defendant in the email would entail examination of extrinsic evidence on Arch’s management roles in this real estate project. And assessing whether the Notes were within the scope of the email would require outside proof as to the ownership structure and financing arrangements of the Vandam entities.
The extrinsic evidence needed for these determinations would far exceed in breadth and complexity the kind of simple, readily verified fact that are only a de minimis deviation from the face of the debt document. Because plaintiffs claim for relief requires consideration of outside proof, the claim is not based on an instrument for the payment of money only within the meaning of CPLR 3213.
Plaintiff relies on Shearson Lehman Hutton, Inc. v Myerson & Kuhn to argue that the Notes qualify for CPLR 3213 treatment, even though they refer to outside documents for the definition of default. This reliance is misplaced. In Shearson, the default is entirely monetary and the reference beyond the four corners of the instrument is merely repetitive of terms already contained within the instrument. Whereas here, the alleged default is not a simple failure to pay but an email discussing the financial difficulties faced by Arch, without directly referring to defendant. The email is not repetitive of any terms already contained in the Notes and the email’s meaning cannot be precisely ascertained without more extrinsic evidence on the real estate project. Accordingly, plaintiff is not entitled to summary judgment under CPLR 3213.
(Internal quotations and citations omitted).