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Promissory Notes and Summary Judgment in Lieu of A Complaint

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  • Posted on: Mar 8 2021

“Summary judgment is a judgment entered by a court for one party and against another party without a full trial.” (Here.) The motion is designed to avoid unnecessary trials – that is, its purpose is to avoid a trial where there are no material issues of fact to be decided by the trier of fact (e.g., the judge or the jury). Summary judgment motions can also simplify a trial (known as a motion for partial summary judgment) because it can dispense with issues or claims for which there are no material issues of fact. A decision on a motion a motion for summary judgment is a final judgment from which the losing party may appeal.

How A Summary Judgment Motion Works

In New York, summary judgment motions are governed by CPLR §§ 3212 and 3213 (discussed below).  When a party makes a summary judgment motion under CPLR § 3212, it is typically made after the close of discovery, though sometimes a party will file the motion before discovery is complete. 

A court will grant a motion for summary judgment if, upon all the papers and evidence submitted, the cause of action or defense is established sufficiently to warrant directing judgment in favor of the moving party as a matter of law. CPLR § 3212(b); Gilbert Frank Corp. v. Federal Ins. Co., 70 N.Y.2d 966, 967 (1988); Zuckerman v. City of New York, 49 N.Y.2d 557, 562 (1980). The function of the court when presented with a motion for summary judgment is one of issue finding, not issue determination. Sillman v. Twentieth Century-Fox Film Corp., 3 N.Y.2d 395 (1957); Weiner v. Ga-Ro Die Cutting, Inc., 104 A.D.2d331 (1st Dept. 1985).

To prevail on a motion for summary judgment, the movant must make a prima facie showing of entitlement, submitting sufficient admissible evidence, such as affidavits of persons with first-hand knowledge of the matter, documentary evidence, and testimonial evidence, to demonstrate the absence of any material issues of fact. Jacobsen v. New York City Health and Hosps. Corp., 22 N.Y.3d 824 (2014); Alvarez v. Prospect Hosp., 68 N.Y.2d 320 (1986). The movant’s initial burden is a heavy one; on a motion for summary judgment, facts must be viewed in the light most favorable to the non-moving party. Jacobsen, 22 N.Y.3d at 833. If the moving party fails to make its prima facie showing, the court is required to deny the motion, regardless of the sufficiency of the non-movant’s papers. Winegrad v. New York Univ. Med. Center, 4 N.Y.2d 851, 853 (1985). 

If the movant meets its initial burden, then the burden shifts to the party opposing the motion to demonstrate by admissible evidence the existence of a factual issue requiring a trial of the action or advance an acceptable excuse for the failure to do so. Zuckerman, 49 N.Y.2d at 560. However, bare allegations or conclusory assertions are insufficient to create genuine, bona fide issues of fact necessary to defeat such a motion. Rotuba Extruders, Inc. v. Ceppos, 46 N.Y.2d 223, 231 (1978).

Summary Judgment in Lieu of Complaint

CPLR § 3213 provides for accelerated judgment, just like CPLR § 3212. The difference between CPLR § 3212 and CPLR § 3213 is the latter permits a summary judgment motion at the outset of the litigation. There are no pleadings, and there is no discovery when a movant seeks summary judgment under CPLR § 3213. 

To be entitled to 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. Mirham v. Awad, 131 A.D.3d 1211 (2d Dept. 2015). 

An action on a promissory note is an action for payment of money only. The instrument and evidence of failure to make payments in accordance with its terms constitute a prima facie case for summary judgment. Only where a defendant can raise questions of fact that the note is not an instrument for the payment of money will the court deny a motion for summary judgment under CPLR § 3213. Farca v. Farca, 216 A.D.2d 520 (2d Dept. 1995).

The standards for summary judgment under CPLR § 3212 apply to a motion under CPLR § 3213.

Cross River Bank v. Haber

[Ed. Note: We are unaware of any familial relationship between the defendants in Cross River Bank and the founding partner of Freiberger Haber LLP.]

In Cross River Bank v. Haber, 2021 N.Y. Slip Op 30583(U) (Sup. Ct., Kings County Feb. 25, 2021) (here), the Court granted a motion for summary judgment under CPLR § 3213 because the facts and evidence demonstrated that the promissory note at issue satisfied the requirements of the statute: it was an instrument for money only and defendants defaulted on their payment thereunder.

Cross River Bank involved a two million loan to Fragments Holding LLC (“Fragments”) for which a promissory note (the “Note”) requiring monthly payments was issued and signed. The Note was guaranteed by Phillip Frankenberg, Claudia Frankenberg, Maurice Haber and Esther Haber. The guarantee provided that the obligations thereunder were “joint and several” as to each of them. 

Fragments made payments for almost three years and then defaulted. Philip Frankenberg and Claudia Frankenberg filed for bankruptcy. Plaintiff moved for summary judgement in lieu of a complaint against defendants, asserting there were no factual issues that required resolution.

Defendants opposed the motion, arguing that Fragments did not borrow the full amount available under the loan, and that, even if it did, the promissory note was not an instrument for money only because it referenced other agreements, including “a contemporaneously executed Business Loan Agreement, Security Agreement, Mortgage, and Trademark Security Agreement” (“Business Agreements”). The Court rejected both arguments.

The Court held that “the evidence sufficiently demonstrate[d] all the funds available were borrowed.” Even if that had not been the case, said the Court, there was no issue of fact as to whether Fragments “receive[d] [all] of the sums contained in the promissory note.” Slip Op. at *3. The Court held that defendants’ argument was based on “conclusory assertions” rather than any evidence in the record. Id.  

In so holding, the Court relied on Federal Deposit Insurance Corp. v. Silvers, 177 A.D.2d 266 (1st Dept. 1991), in which the First Department held that conclusory allegations of not receiving the consideration in question were insufficient to defeat a motion for summary judgment. There, like Cross River Bank, the defendant argued that “the note was unenforceable because he had never received any money or other kind of consideration for the note.” That assertion, said the First Department, was “barren of any elaboration of the circumstances under which said defendant executed the $100,000 promissory note,” and was, therefore, “a mere conclusion, insufficient to defeat plaintiff’s summary judgment motion.” Id.

With regard to the Note itself, the Cross River Bank Court held that mere reference to other documents in the Note did not mean that the Note was not an instrument for money only. Id. at *3-*4. In so holding, the Court relied on three decisions that it considered to be “instructive” and on point. Id. (discussing Kim v. II Yeon Kwon, 144 A.D.3d 754 (2d Dept. 2016); Mehta v. Mehta, 168 A.D.3d 716 (2d Dept. 2019); and Margarella v. Ullian, 164 A.D.3d 898 (2d Dept. 2018)).

In Kim, the defendant executed a promissory note and failed to pay pursuant to its terms. The plaintiffs commenced the action by summons and notice of motion for summary judgment in lieu of complaint to recover the money owed on the note. The defendant opposed the motion, arguing that an issue of fact arose with regard to the payment obligation because the payment obligation was dependent upon a partnership agreement that the plaintiff breached. The court rejected that argument, finding that it was an invalid defense. Specifically, the court held that the mere breach of a separate agreement without presenting any evidence challenging the validity of the agreement or without evidence of fraud in inducing the defendant to enter the transaction pursuant to which the note was issued was an insufficient basis to raise any questions of fact regarding the promissory note’s unconditional obligation to pay. 144 A.D.3d at 756. 

In Mehta v. Mehta, 168 A.D.3d 716 (2d Dept. 2019), the court held that “extrinsic matters predating the execution of the note were not relevant to the issue” of liability on the note.

In Margarella v. Ullian, 164 A.D.3d 898 (2d Dept. 2018), the plaintiffs entered into a “Building Loan Agreement” with Ponquogue Manor Construction, LLC (“Manor”) to loan $1.5 million toward Manor’s project to develop a condominium complex on its property in Hampton Bays. Simultaneously, the defendant, individually and on behalf of Manor as its managing member, executed a promissory note and a personal guaranty of Manor’s obligations under the note. Manor defaulted on the note, and the plaintiffs commenced the action to recover on the note and guaranty by motion for summary judgment in lieu of complaint pursuant to CPLR § 3213. 

The court held that the plaintiffs “established their prima facie entitlement to judgment as a matter of law through their submission of the promissory note, which contained an unequivocal and unconditional obligation to pay, the guaranty, and evidence that the defendant failed to make payment in accordance with the terms of those instruments.” The court also held that “the promissory note was not ‘inextricably intertwined’ with certain other allegedly related agreements the parties entered into, such that any breach of the allegedly related agreements by the plaintiffs [could] create a defense to payment on the promissory note”. Id. at 899. The court explained this was true because the obligations under the note were “absolute and unconditional”, therefore, the promissory note was enforceable regardless of any other agreements that were entered into between the parties. Id. at 899-900.

Based upon the foregoing authorities, the Cross River Bank Court held that defendants “failed to present any evidence challenging the underlying debt owed.” Slip Op. at *5. Therefore, the Court granted the motion for summary judgement in lieu of a complaint.


A promissory note qualifies as an instrument for the payment of money only, so as to permit the plaintiff to file a motion for summary judgment in lieu of complaint pursuant to CPLR § 3213, where, as in Cross River Bank, the note contains “an unconditional promise by the borrower to pay the lender over a stated period of time”, and no “outside proof” is needed, “other than simple proof of nonpayment” to establish the plaintiffs’ prima facie case. Kim, 144 A.D.3d at 755 (citations and external quotation marks omitted).

The breach of a related contract cannot defeat a motion for summary judgment on an instrument for money only unless it can be shown that the contract and the instrument are “intertwined” and that the defenses alleged to exist create material issues of triable fact. See New York Community Bank v. Fessler, 88 A.D.3d 667, 668 (2d Dept. 2011) (quoting Mlcoch v. Smith, 173 A.D.2d 443, 444 (2d Dept. 1991)). In Cross River Bank, defendants failed to demonstrate with admissible evidence that the Business Agreements were “inextricably intertwined” with the Note. As such, defendants were unable to raise a triable issue of fact with respect to the payment obligations under the Note. 

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