Settlement Agreement With Installment Payment Plan Held to Be An Instrument For The Payment of Money Only

• Posted on: Apr 20 2022

By: Jeffrey M. Haber

Under well-settled principles, summary judgment in lieu of complaint is available for an instrument for the payment of money only. In considering such a motion, the courts will look at the four corners of the instrument sued upon in determining whether the instrument qualifies as one for the payment of money only.

[Ed. Note: This Blog examined the motion for summary judgment in lieu of complaint under CPLR § 3213. See, e.g., here, here and here.]

Most cases under CPLR § 3213 involve promissory notes – the type of negotiable instrument for which there is little or no debate over whether it constitutes an instrument for the payment of money only.¹ Some cases involve commercial instruments, such as a guarantee of debt, which fall within the scope of CPLR § 3213. Other cases involve agreements between the parties. These cases show that an agreement can be an instrument for the payment of money only when it “contains an unconditional promise to pay a sum certain over a stated period of time”.²  Where, however, the agreement “requires something in addition to defendant’s explicit promise to pay a sum of money, CPLR 3213 is unavailable.”³ In other words, “a document comes within CPLR 3213 if a prima facie case would be made out by the instrument and a failure to make the payments called for by its terms”.⁴ An instrument will “not qualify if outside proof is needed, other than simple proof of nonpayment or a similar de minimis deviation from the face of the document.”⁵

In Insitro, Inc. v. Cellaria, Inc., 2022 N.Y. Slip Op. 30902(U) (Sup. Ct., N.Y. County Mar. 14, 2022) (here), the court was asked to consider whether a settlement agreement constituted an instrument for the payment of money only. As discussed below, the court held that it was such an instrument.

Plaintiff moved for summary judgment in lieu of complaint based on defendant’s failure to make certain payments under an amended settlement agreement that the parties had executed in settlement of their previous litigation. The amended agreement was executed to set up a payment schedule pursuant to which defendant was to make certain scheduled payments over a truncated period (i.e., between August 3, 2021, and December 10, 2021).

Defendant agreed that each missed payment would accrue a $500 late fee for each day that defendant failed to make payment. In addition, for each payment due during or after October 2021 that was not timely made, defendant would accrue an additional payment of 25% of the sum of the missed payment. Defendant made the first scheduled payment and defaulted on the others.

Plaintiff sought judgment by filing a motion for summary judgment in lieu of complaint. Defendant did not oppose the motion.

The court granted the motion, holding that the amended settlement agreement was an instrument for the payment of money only. The court explained that amended settlement agreement contained an unconditional commitment by defendant to make certain installment payments to plaintiff over a certain period of time. As set forth in the affidavit accompanying the motion, defendant failed to make those payments, leading to further charges and late fees.

Accordingly, the court directed judgment be entered in plaintiff’s favor.

Takeaway

CPLR § 3213 provides for accelerated judgment and does so 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 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. In Insitro, the court found that the amended settlement agreement was such an instrument.

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.

References

1. Weissman v. Sinorm Deli, 88 N.Y.2d 437, 444 (1996) (noting, a negotiable instrument for the payment of money is the “prototypical example of an instrument within the ambit of the statute”).
2. Bloom v. Lugli, 81 A.D.3d 579, 580 (2d Dept. 2011) (citations omitted).
3. Weissman, 88 N.Y.2d at 444.
4. Id.
5. Id.