DB AURARIA LLC v. NELSON (2024)

Order, Supreme Court, New York County (Melissa A. Crane, J.), entered on or about May 8, 2023, which granted plaintiff's motion for summary judgment in lieu of complaint, unanimously affirmed, with costs.

Plaintiff satisfied its burden on its CPLR 3213 motion for summary judgment in lieu of complaint.  Plaintiff submitted the guaranty executed by defendants, the underlying loan agreement, the assignment of the loan agreement and accompanying documents to plaintiff, and evidence establishing the borrower's default and defendants’ failure to perform under the guaranty (see BBM3, LLC v. Vosotas, 216 A.D.3d 403, 403–404, 188 N.Y.S.3d 39 [1st Dept. 2023];  see also Simon v. Industry City Distillery, Inc., 159 A.D.3d 505, 72 N.Y.S.3d 76 [1st Dept. 2018]).

Defendants failed to raise a triable issue of fact.  Contrary to their contentions, the guaranty here is an instrument for the payment of money only as it unconditionally guarantees the borrower's obligation to pay its debt (see DB 232 Seigel Mezz LLC v. Moskovits, 223 A.D.3d 610, 204 N.Y.S.3d 469 [1st Dept. 2024];  27 W. 72nd St. Note Buyer LLC v. Terzi, 194 A.D.3d 630, 632, 150 N.Y.S.3d 34 [1st Dept. 2021], lv denied 37 N.Y.3d 913, 2021 WL 4782862 [2021]).  Defendants’ reliance on the loan agreement's reference to certain “Other Obligations” to show that the guaranty required performance is unavailing as the loan agreement imposes these obligations on the borrower and not on defendants as the guarantor (see DB 232 Seigel Mezz LLC, 223 A.D.3d at 611, 204 N.Y.S.3d 469).  Defendants’ argument that plaintiff's parent company breached its duty of good faith and fair dealing by reneging on its promise in a “term sheet” to provide funding is also unavailing as defendants’ unconditional and absolute guaranty precludes such defenses (see Great Rock Capital Partners Mgt., LLC v. Wingtip Communications, Inc., 224 A.D.3d 442, 445, 205 N.Y.S.3d 21 [1st Dept. 2024];  see also DB 232 Seigel Mezz LLC, 223 A.D.3d at 611, 204 N.Y.S.3d 469).  In any event, the term sheet, which expressly stated that it was nonbinding, has no bearing on the guaranty or the underlying loan agreement.

The motion court properly determined that interest should be calculated from the date of the first event of default, which occurred when a mechanic's lien was placed on the property on December 9, 2020.  It is undisputed that the uncured mechanic's lien is an event of default under the terms of the loan agreement and that plaintiff is entitled to default interest dating back to the first event of default (see e.g. Coffey v. Tretola, 179 A.D.3d 889, 890, 119 N.Y.S.3d 179 [2d Dept. 2020]).