Was Guarantee An Instrument For the Payment of Money?
Kitchen Winners NY, Inc. sought summary judgment in lieu of complaint pursuant to CPLR 3213 against David Triptow and TT Red Solutions. LLC. In support of the motion, a representative of KWNY averred that Triptow and TT Red had executed a guaranty, pursuant to which they promised to repay a $450,000 deposit paid by KWNY pursuant to a purchase agreement KWNY entered into with nonparties Humpf (Chengdu) Industrial Co. Ltd. and Legend Sport Limited—HK, in the event that the goods that were the subject of the purchase agreement, namely, disposable medical gloves, were not delivered.
KWNY’s representative further averred that the gloves were not delivered by the date set forth in the purchase agreement for such delivery, triggering Triptow’s obligation under the guaranty to repay the deposit, and Triptow had remitted only $50,000 of the $450,000 owed.
In further support of the motion, KWNY submitted a copy of a guaranty executed by Triptow and others as “Guarantors,” and KWNY as “Buyer,” dated February 8, 2021. The guaranty, among other things, referenced and incorporated the terms of a separate “pro forma invoice” between “TT Red” as seller and KWNY, for the purchase of gloves, dated January 17, 2021. The guaranty stated that pursuant to the invoices KWNY was required to pay a deposit of $453,000 for delivery of the gloves and that, as a condition of entering the transaction, KWNY “requires Guarantor to guarantee repayment of the Deposit . . . in the event TT Red as the seller fails to deliver the [gloves] or otherwise perform its obligations under the [invoices].” KWNY’s representative averred that, although the guaranty referenced a deposit in the amount of $453,000, the actual amount of the deposit paid by KWNY was $450,000.
In further support of the motion, KWNY also submitted a copy of a purchase and sale contract, entered into by KWNY, Humpf, and Legend, executed by the KWNY on January 19, 2021, and by Humpf and Legend on January 21, 2021. The purchase and sale contract provided that KWNY would pay $450,000 for a certain shipment of medical gloves that was to be delivered by February 12, 2021, with payment to be made in the form of a “20% deposit” and the “balance at inspection.” KWNY also submitted a copy of an email reflecting that TT Red Solutions, LLC, had wired $50,000 to KWNY’s attorney on March 22, 2021.
Triptow and TT Red opposed KWNY’s motion and cross-moved pursuant to CPLR 2201 to stay the action pending final resolution of a pending legal proceeding in China. In support of their cross-motion, Triptow and TT Red submitted documents reflecting that, in the proceeding in China, an entity named T-Z Cargo Company Limited obtained a judgment against an entity named Xingfu (Mianyang) Textile Printing and Dyeing Co., Ltd. in the amount of $407,974, plus costs and interest, in an action arising from Xingfu’s failure to pay T-Z Cargo pursuant to a “Refund Agreement,” dated May 6, 2021, which was intended to refund the purchase price for gloves that were purchased by TT Red in January 2021 from an entity named Hanfu (Chengdu) Industrial Co., Ltd., but not delivered.
Supreme Court granted the KWNY’s motion for summary judgment in lieu of complaint and denied the cross-motion of Triptow and TT Red to stay the action. Triptow and TT Red appealed.
Pursuant to CPLR 3213, when an action is based upon an instrument for the payment of money only or upon any judgment, the plaintiff may serve with the summons a notice of motion for summary judgment and the supporting papers in lieu of a complaint. Generally, a guaranty is an instrument that qualifies for relief pursuant to a motion for summary judgment in lieu of a complaint. However, the instrument does 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.
Here, Supreme Court erred in granting the motion for summary judgment in lieu of complaint, as KWNY failed to show that the guaranty met the threshold requirement of CPLR 3213. To determine Triptow and TT Red’s obligations to KWNY, more than “simple proof of nonpayment” or a mere “de minimis deviation from the face” of the guaranty was required. The guaranty referenced a deposit amount which differed from the amount demanded by KWNY and the guaranty did not establish the date upon which the repayment obligation was triggered. Even assuming without deciding that the purchase and sales contract submitted with the motion constituted the underlying invoice which was referenced in the guaranty, that contract sets forth a different deposit amount than the one set forth in the guaranty and, therefore, also did not conclusively establish the repayment obligation. Since outside proof beyond simple proof of nonpayment was required to determine the obligation of Triptow and TT Red to KWNY, relief pursuant to CPLR 3213 was unavailable.
CPLR 2201 allows a court to stay a proceeding “in a proper case, upon such terms as may be just.” To impose a stay in one action pending the resolution of a related action, there must be a complete identity of parties, claims, and reliefs sought in the two actions. And a court has broad discretion to grant a stay in order to avoid the risk of inconsistent adjudications, application of proof and potential waste of judicial resources.
Supreme Court providently exercised its discretion in denying the cross-motion to stay the action pending final resolution of the proceeding in China. The CPLR 3213 action and the proceeding pending in China did not share complete identity of parties, claims, and reliefs sought. The assertion by Triptow and TT Red that T-Z Cargo was KWNY’s proxy in the proceeding in China was unsubstantiated.