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Court finds Merchant Cash Advance Agreement Not to Be an Instrument for The Payment of Money Only

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  • Posted on: Oct 26 2022

By: Jeffrey M. Haber

In past articles, we have examined a motion under CPLR § 3213 (see, e.g., here, here, here, and here). CPLR § 3213 is a procedural mechanism that allows a party to make a motion for summary judgment before filing a complaint in actions based upon “an instrument for the payment of money only or a judgment.” The purpose of the statute “is to provide an accelerated procedure where liability for a certain sum is clearly established by the instrument itself.”1 

CPLR § 3213 is a device that “for the limited matters within its embrace, melded pleading and motion practice into one step, allowing a summary judgment motion to be made before issue was joined.”2  The provision is “intended to provide a speedy and effective means of securing a judgment on claims presumptively meritorious … [and where] a formal complaint is superfluous and even the delay incident upon waiting for an answer and then moving for summary judgment is needless.”3

“The prototypical example of an instrument within the ambit of [CPLR § 3213] is of course a negotiable instrument for the payment of money – an unconditional promise to pay a sum certain, signed by the maker and due on demand or at a definite time.”4 Generally, CPLR § 3213 is used to enforce “some variety of commercial paper in which the party to be charged has formally and explicitly acknowledged an indebtedness,” so that “a prima facie case would be made out by the instrument and a failure to make the payments called for by its terms.”5 

A promissory note may qualify as such an instrument,6 so long as the plaintiff submits proof of the existence of the note and of the defendant’s failure to make payment.7 Such proof must be in admissible form sufficient to establish the absence of any material, triable issues of fact.8 However, “[w]here the instrument requires something in addition to defendant’s explicit promise to pay a sum of money, CPLR 3213 is unavailable.”9 A plaintiff’s prima facie proof “cannot be drawn from sources outside the agreement itself.”10 

Once the movant meets this burden, it becomes incumbent upon the party opposing the motion to come forward with proof in admissible form to raise a triable issue of fact.11

On October 21, 2022, the Supreme Court, New York County (Lebovits, J.), decided Irwin Funding, LLC v. Dexter Young Cattle Feeding, 2022 N.Y. Slip Op. 51035(U) (Sup. Ct., N.Y. County Oct. 21, 2022) (here), a case involving a merchant cash advance agreement. As discussed below, the court held that the agreement did not fall within the scope of CPLR § 3213.

Irwin involved an action to collect on sums allegedly owed under a merchant cash advance agreement and guarantee. Plaintiff, Irwin Funding, LLC, moved under CPLR § 3213 for summary judgment in lieu of complaint against defendants Dexter Young Cattle Feeding (“Merchant”) and Dexter Young individually (“Guarantor”). The court denied the motion, even though it was unopposed.

The court held that the merchant cash advance agreement between plaintiff and Merchant was not an instrument for the payment of money only because “[i]t impose[d] many performance obligations on Merchant, not merely an unconditional promise to pay money.”12 The court found that “plaintiff’s stated basis for relief was not a failure by Merchant to pay money as promised. Rather, it was a breach of the non-monetary contractual requirement to give advance notice to plaintiff should the funds in Merchant’s account drop too low to cover plaintiff’s daily receivables withdrawals.”13 Accordingly, said the court, “establishing plaintiff’s claim against Merchant would require proof beyond the instrument itself and simple proof of nonpayment.”14

The court also held that “Guarantor’s guarantee [was] not an instrument for the payment of money only.”15 The court found that the guarantees at issue were “not unconditional, and [made] Guarantor responsible both for payment and performance.”16 Accordingly, said the court, “Plaintiff [could not] rely on CPLR 3213 to obtain judgment based on these guarantees.”17


As noted, to obtain judgement as a matter of law pursuant to CPLR § 3213, the movant must demonstrate that its “action is based upon an instrument for the payment of money only or upon any judgment.” When the former is involved, the movant must demonstrate that the other party executed an instrument that contains an unequivocal and unconditional promise to pay the party upon demand or at a definite time and the party failed to pay according to the terms of the instrument. The instrument and evidence of failure to make payments in accordance with terms of the subject instrument constitute a prima facie case for summary judgment. Only where a defendant can raise questions of fact that the agreement or guarantee is not an instrument for the payment of money, or where the instrument requires something in addition to the defendant’s explicit promise to pay a sum of money, as in Irwin, is CPLR § 3213 unavailable.


  1. G.O.V. Jewelry, Inc. v. United Parcel Serv., 181 A.D.2d 517, 517 (1st Dept. 1992).
  2. Weissman v. Sinorm Deli, Inc., 88 N.Y.2d 437, 443 (1996). 
  3. Interman Indus. Products, Ltd. v. R.S.M. Electron Power, Inc., 37 N.Y.2d 151, 154 (1975) (citations and internal quotation marks omitted).
  4. Weissman, 88 N.Y.2d at 443-44 (citations, internal quotation marks and footnote omitted).
  5. Interman Indus. Prods., Ltd., 37 N.Y.2d at 154-155 (1975).
  6. “An unconditional guaranty is an instrument for the payment of money only within the meaning of CPLR 3213.” Cooperatieve Centrale Raiffeisen Boerenleenbank, B.A. v. Navarro, 25 N.Y.3d 485, 492 (2015).
  7. See Bonds Fin’l, Inc. v. Kestrel Techs., LLC, 48 A.D.3d 230 (1st Dept. 2008); Seaman-Andwall Corp. v. Wright Machine Corp., 31 A.D.2d 136 (1st Dept. 1968).
  8. See CPLR § 3212(b); Jacobsen v. New York City Health & Hosps. Corp., 22 N.Y.3d 824 (2014); Alvarez v. Prospect Hosp., 68 N.Y.2d 320 (1986); Zuckerman v. City of New York, 49 N.Y.2d 557 (1980).
  9. Weissman, 88 N.Y.2d at 444.
  10. Rhee v. Meyers, 162 A.D.2d 397, 398 (1st Dept. 1990); see Ian Woodner Family Collection, Inc. v. Abaris Brooks, Ltd., 284 A.D.2d 163 (1st Dept. 2001).
  11. See Alvarez v Prospect Hosp., supra; Zuckerman, supra.
  12. Slip Op. at *1.
  13. Id. at *1-*2.
  14. Id. at *2.
  15. Id.
  16. Id.
  17. Id.

Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP.

This article is for informational purposes and is not intended to be and should not be taken as legal advice.

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