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New York's Seldom Used Expedited Money Judgment Mechanism: CPLR 3213
In the typical commercial lease transaction, a guarantor promises to pay rent and fulfill other contractual obligations on behalf of the tenant (particularly when the tenant is a foreign actor or single-purpose entity with limited assets). If the tenant does not pay rent, the landlord's chief concern is to quickly regain possession of the space and relet it while simultaneously seeking to recover the unpaid rent directly from the (hopefully credit-worthy) guarantor.
In New York state and local court cases, there is a seldom-used procedural mechanism for obtaining an expedited money judgment against a guarantor. Specifically, a landlord may move for summary judgment in lieu of complaint under CPLR 3213 against the guarantor. If successful, and assuming that the tenant does not move the action to federal court based upon diversity jurisdiction or a federal question, the landlord will be able to bypass formal pleadings, discovery, and other motion practice (which require substantial time and expense) to obtain an accelerated money judgment.
This article provides: 1) an overview of CPLR 3213 motions; 2) an update on the resolution of the split that previously existed between the New York State Supreme Court, Appellate Division, First and Second Departments regarding CPLR 3213 motions; and 3) practical guidance for transactional counsel drafting commercial leases and guaranties as well as litigators considering whether to file a CPLR 3213 motion.
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