425 Broadhollow Road
Suite 416
Melville, NY 11747

Freiberger Haber LLP
420 Lexington Avenue
Suite 300
New York, NY 10170


Confessions of Judgment By Out-Of-State Residents, Summary Judgment In Lieu of Complaint and Forum Selection Clauses: A Little of This and A Little of That

Print Article
  • Posted on: Oct 25 2021

By: Jeffrey M. Haber

A forum selection clause is a contractual provision that sets forth the location designated by the parties for dispute resolution. Such clauses can be found in virtually every type of contract imaginable, e.g., employment agreements, commercial contracts, and purchase and sale agreements. Parties require forum selection clauses to reduce litigation expenses, avoid adverse laws, and mitigate the risks associated with unknown foreign judges and/or juries.

In the commercial context, forum selection clauses are common because they “provide certainty and predictability in the resolution of disputes.”1 Forum selection clauses come in two forms: mandatory and permissive. In the former, the parties are “required to bring any dispute to the designated forum,” while the latter “only confers jurisdiction in the designated forum, but does not deny plaintiff his choice of forum, if jurisdiction there is otherwise appropriate.”2 

Under New York law, “parties to a contract may freely select a forum which will resolve any disputes over the interpretation or performance of the contract.”3  Such clauses “are prima facie valid” and “are not to be set aside unless a party demonstrates that the enforcement of such would be unreasonable and unjust or that the clause is invalid because of fraud or overreaching, such that a trial in the contractual forum would be so gravely difficult and inconvenient that the challenging party would, for all practical purposes, be deprived of his or her day in court.”4 

In interpreting forum selection clauses, courts apply the principles of contract construction. 

A confession of judgment is an agreement whereby a defendant or debtor agrees to the entry of judgment against him/her in an amount certain. It is a procedural device whereby the plaintiff or creditor can bypass the commencement of a lawsuit to obtain the amount “confessed.” 

Confessions of judgment are used in a variety of circumstances. For example, parties to a litigation may use a confession of judgment as part of a settlement whereby the defendant agrees to pay the plaintiff money. In that situation, the defendant agrees to the confession of judgment until he/she satisfies the payment obligations under the settlement agreement. If the defendant fails to make the agreed-upon payment(s), then the plaintiff, who typically holds the confession of judgment in escrow, can file the confession of judgment with a county clerk without having to commence an action for breach of the settlement agreement. 

Sometimes, parties to a dispute who wish to avoid the costs and burdens of litigation, will use a confession of judgment to ensure the payment(s) required by their out-of-court settlement.

In New York, confessions of judgment are governed by Section 3218 of the Civil Practice Law and Rules (“CPLR”). Under CPLR § 3218(a), 

a judgment by confession may be entered, without an action, either for money due or to become due, or to secure the plaintiff against a contingent liability in behalf of the defendant, or both, upon an affidavit executed by the defendant;

1. stating the sum for which judgment may be entered, authorizing the entry of judgment, and stating the county where the defendant resides;

2. if the judgment to be confessed is for money due or to become due, stating concisely the facts out of which the debt arose and showing that the sum confessed is justly due or to become due; and

3. if the judgment to be confessed is for the purpose of securing the plaintiff against a contingent liability, stating concisely the facts constituting the liability and showing that the sum confessed does not exceed the amount of the liability. 

However, the plaintiff or creditor cannot enter judgment against the defendant or debtor if (1) more than three years has elapsed since the defendant or the debtor signed the confession, or (2) the defendant or debtor is deceased.5

When an amount certain is confessed, the affidavit required under CPLR § 3218(a) must state the facts from which the debt arose as to demonstrate that the confessed amount is just.6 In doing so, the statute requires the affiant to “concisely” state “the facts out of which the debt arose and showing that the sum confessed is justly due or to become due.”7 This means that “there must be sufficient genuine detail to enable other creditors to investigate the claim and ascertain its validity ….”8 As the courts have noted, CPLR § 3218 “is designed for the protection of third persons who might be prejudiced in the event that a collusively confessed judgment is entered ….”9 It is “not for the protection of the defendant.”10

In 2019, the New York State Legislature amended CPLR § 3218. By the amendment, the Legislature eliminated the ability of creditors to file confessions of judgment against non-New York residents. Prior to the amendment, a creditor could file a confession of judgment and obtain judgment in either the county where the plaintiff or debtor resided or, if the debtor was a nonresident of the State, in the county in which entry of judgment was authorized in the affidavit from the defendant or debtor. When the defendant or debtor is a business entity, residency is considered to be the entity’s “place of business.” “Notably, the amendment to CPLR § 3218 uses the term ‘residence’ rather than ‘domicile’ in defining the debtors that may confess judgments under the statute. A party may have multiple residences, but only one fixed domicile to which the party always returns. Where a New York debtor has multiple residences within the state, the affidavit confessing the judgment may still be filed in any designated county where a residence exists.”11 

The foregoing principles were addressed by the Appellate Division, First Department in Express Trade Capital, Inc. v. Horowitz, 2021 N.Y. Slip Op. 05773 (1st Dept. Oct. 21, 2021) (here).

In Express Trade, the corporate defendant borrowed more than $1.4 million from the plaintiff. The individual defendants guaranteed the loan. In 2015, the corporate defendant defaulted on its payment obligations. In 2017, the parties settled their differences, executing a settlement agreement (the “Settlement Agreement”) that memorialized their agreement. 

As is relevant to the Court’s decision, the Settlement Agreement contained a forum selection clause pursuant to which each defendant expressly submitted to the jurisdiction of the courts of New York and waived any objection to New York County as the venue for any litigation. The Settlement Agreement also provided that each of the defendants would execute a confession of judgment in plaintiff’s favor for the total amount of the obligations due. The parties further agreed to an installment schedule for defendants’ payment of the settlement amount. Upon the occurrence of an event of default, such as the failure to make a timely payment, the Settlement Agreement authorized plaintiff to file one or all of the confessions of judgment. 

Sometime later, the corporate defendant defaulted on its payment obligations under the Settlement Agreement. Plaintiff filed a motion for summary judgment in lieu of complaint, based on the Settlement Agreement and the confessions of judgment. The motion court granted the motion.

Defendants moved to vacate the default judgment, claiming that the motion court lacked personal jurisdiction over them because all of the transactions between the parties took place in California, where they are residents. Defendants claimed that the forum selection clause in the Settlement Agreement was unenforceable and, therefore, New York was an inconvenient forum. The motion court rejected that contention. 

The court noted that defendants were sophisticated parties who had “engaged in a sophisticated business transaction in which they took a loan of $1.4 million from plaintiff which was not repaid.” The court explained that “[i]n settling the action, they expressly agreed, with the advice of counsel, to submit to jurisdiction in New York.” “They also expressly acknowledged that they do business in New York,” noted the court. “The fact that defendants also do business and reside in California,” held the court, “does not serve, under these circumstances, to establish that New York is an inconvenient forum.”

The motion court also rejected defendants’ contention that the confessions of judgment were unenforceable in light of the 2019 amendments to CPLR § 3128. The court noted that the affidavits were signed before the amendment (indicating that the amendment applied only prospectively). “More important,” said the court, “CPLR 3218, by its terms, sets forth a procedure for the filing of affidavits of confession of judgment with the clerk and without an action. CPLR 3218 does not govern the procedure for enforcement of a confession of judgment where there is an action.” The court agreed with plaintiff that the motion for summary judgment in lieu of complaint was the functional equivalent of an action. 

On appeal, the First Department affirmed.

The Court held that the forum selection clause was enforceable, finding that it was not “the product of fraud or overreaching” or “unfair[ness] or unreasonable[ness].”12 As such, the clause served as “a sound basis for the exercise by the court of personal jurisdiction over defendants.”13 The Court further held that since the forum selection clause was enforceable, defendants could not complaint that New York County was an inconvenient forum: “Having agreed by contract to submit to the jurisdiction of the court, defendants are precluded from attacking the court’s jurisdiction on forum non conveniens grounds.”14 “Moreover,” noted the Court, “defendants’ confessions of judgment admitted that they were doing business in New York.”15

Finally, the Court held that plaintiff did not run afoul of the amendments to CPLR § 3128. The Court explained that the amendments only “concern[] entry of a judgment against a nonresident without an action.”16 Noting that the confessions of judgment were entered in connection with the CPLR § 3213 motion, the Court found that the filing of that motion sufficed to bring the issue outside the confines of the statute: “Plaintiff filed an action under CPLR 3213, which the court correctly concluded was appropriate based on the settlement agreement and confessions of judgment.”17


The courts in New York recognize that parties to a contract may freely select a forum to resolve any disputes over the interpretation or performance of a contract.18 Although once disfavored, forum selection clauses are prima facie valid and enforceable because they provide certainty and predictability in the resolution of disputes.19 They are not set aside absent a strong showing that they are unreasonable, unjust, in violation of public policy, invalid due to fraud or overreaching, or that a trial in the selected forum would be so gravely difficult that the opposing party would, for all practical purposes, be deprived of his/her day in court.20 General allegations that the contract was induced by fraud are not sufficient to preclude enforcement of a forum selection clause. The complaint must allege that the clause itself was procured by fraud.

As noted in Express Trade, there was “no evidence that the [forum selection] clause [was] the product of fraud or overreaching or [was] unfair or unreasonable.” Accordingly, it was held to be enforceable by both the motion court and the First Department. 

Since the clause was deemed enforceable, the forum selected was held to be convenient. As the First Department noted, “[h]aving agreed by contract to submit to the jurisdiction of the court, defendants are precluded from attacking the court’s jurisdiction on forum non conveniens grounds.”21

With regard to the confessions of judgment, Express Trade is notable in that it addresses the amended version of CPLR § 3218. 

Under the amended version of CPLR § 3218, confessions of judgment executed by parties that are not New York residents are no longer enforceable in the State. The statute now provides that the confession must state the New York county in which “the defendant resided when it was executed,” and may be filed only in that county or, if the defendant moved to a different county within the State after signing the confession, “where the defendant resided at the time of filing.” 

For purposes of non-natural persons – e.g., corporations, limited liability companies, limited partnerships, etc. – residence is deemed to be “in any county where [the entity] has a place of business.” In Express Trade, defendants “admitted that they were doing business in New York.”22

Express Trade also highlights the way in which a creditor can work around the amended version of CPLR § 3218 to enforce a confession of judgment that was executed by a non-resident of the State. On its face, CPLR § 3218 applies only to confessions of judgment executed “without an action”.23 Filing a motion for summary judgment in lieu of complaint under CPLR § 3213, using the confession of judgment as an instrument for the payment only, bypasses the restriction in the statute. As both courts noted in Express Trade, the filing of the motion for summary judgment in lieu of complaint constituted an action. One must query, however, whether the Express Trade Court would have decided the issue differently if defendants did not conduct business in New York. 


  1. Boss v. American Express Fin. Advisors, Inc., 6 N.Y.3d 242, 247 (2006) (quoting Brooke Grp. Ltd. v. JCH Syndicate, 87 N.Y.2d 530, 534 (1996)).
  2. Phillips v. Audio Active Ltd., 494 F.3d 378, 383, 386 (2d Cir. 2007).
  3. Brooke Grp., 87 N.Y.2d at 534.
  4. Sterling Nat. Bank as Assignee of Norvergence, Inc. v. Eastern Shipping Worldwide, Inc., 35 A.D.3d 222 (1st Dept. 2006) (citations and quotations omitted).
  5. CPLR § 3218(b).
  6. CPLR § 3218(a)(2).
  7. Id.
  8. Princeton Bank & Trust Co. v. Berley, 57 A.D.2d 348, 354 (2d Dept. 1977) (citations omitted).
  9. Mall Commercial Corp. v. Chrisa Rest., 85 Misc. 2d 613, 614 (Sup. Ct., App. Term, 1st Dept. 1976).
  10. Id. 
  11. Practice Commentaries, C3218:1. Judgment by Confession, Generally (2019).
  12. Slip Op. at *1
  13. Id. (citing National Union Fire Ins. Co. of Pittsburgh, Pa. v. Williams, 223 A.D.2d 395, 398 (1st Dept. 1996)).
  14. Id. (citing Sterling Nat. Bank, 35 A.D.3d at 223).
  15. Id.
  16. Id.
  17. Id.
  18. Brooke Grp., 87 N.Y.2d at 534.
  19. Id.
  20. Di Ruocco v. Flamingo Beach Hotel & Casino, Inc., 163 A.D.2d 270, 271-272 (2d Dept. 1990).
  21. Slip op. at *1.
  22. Id.
  23. CPLR § 3218(a).
Freiberger Haber LLP
Copyright ©2022 Freiberger Haber LLP | Disclaimer
Attorney advertisement | Prior results do not guarantee a similar outcome.
425 Broadhollow Road, Suite 416, Melville, NY 11747 | (631) 574-4454
420 Lexington Avenue, Suite 300, New York, NY 10017 | (212) 209-1005
Attorney Website by Omnizant