Morrison Cohen Secures Accelerated Judgment for Amounts Owed Under an Unconditional Guaranty

February 12, 2021 - Business Litigation Partners Jay R. Speyer and Y. David Scharf, along with Associate Tsedey A. Bogale, were successful in persuading the Supreme Court of the State of New York to grant summary judgment in lieu of complaint in favor of our client, an equity provider, with respect to amounts due under an unconditional guaranty made by defendant, a real estate investor, in connection with a real estate venture.

The client commenced this action against the defendant for failing to make scheduled payments required under a guaranty, and separately owed pursuant to an LLC agreement of the company owned by the defendant. The action was commenced using the accelerated judgment procedure afforded by CPLR 3213, a statute permitting a party to circumvent the conventional process of commencing an action by summons and complaint, but only when the action is based upon an “instrument for the payment of money only” and when the instrument contains an “unconditional promise to pay.” 

In ruling in our client’s favor, the Court found that our client established that the personal guaranty at issue was an instrument for the payment of money and that the company had defaulted on its obligations thus triggering obligations under the guaranty. The Court rejected the defendant’s argument that the guaranty was not an instrument for the payment of money only. The Court also rejected the defendant’s argument that issues of fact existed based on a modification to the LLC agreement to which he was not a party because the defendant waived defenses relating to modifications of the LLC agreement in the guaranty. The Court awarded our client damages for the principal owed, along with interest, late fees, and reasonable attorneys’ fees.

The case is Arbor-Myrtle Beach PE LLC v. Jacob Frydman, Index No. 657133/2019,  in the Supreme Court of the State of New York, County of New York.