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An Unconditional Guaranty of Payment of a Another’s Obligations Is Enforceable by Summary Judgment In Lieu of a Complaint In New York, Even In the Face of an Allegation the Underlying Judgment Was the Result of Collusion and Fraud

The Court of Appeals, in a full-fledged opinion by Judge Rivera, determined an unconditional guaranty (re: payment of corporate debts) was a proper basis for summary judgment in lieu of a complaint, notwithstanding defendant’s (unsupported) allegation the underlying judgment was the result of collusion and fraud.  An unconditional guaranty is enforceable in New York, even where it is alleged the guaranty itself was the product of fraud:

Guarantees that contain language obligating the guarantor to payment without recourse to any defenses or counterclaims, i.e., guarantees that are “absolute and unconditional,” have been consistently upheld by New York courts * * *.

This Court has acknowledged the application of these absolute guarantees even to claims of fraudulent inducement in the execution of the guaranty … .* * *

Here, defendant personally guaranteed the obligations owed by Agra Canada under the Purchase Agreement, as well as obligations owed by Agra USA. Moreover, defendant specifically agreed that his “liability under this Guaranty shall be absolute and unconditional irrespective of (1) any lack of validity or enforceability of the agreement; . . . or (iv) any other circumstance which might otherwise constitute a defense available to, or a discharge of, the Seller (Agra Canada) or a guarantor.” By its plain terms, in broad, sweeping and unequivocal language, the Guaranty forecloses any challenge to the enforceability and validity of the documents which establish defendant’s liability for payments arising under the Purchase Agreement, as well as to any other possible defense to his liability for the obligations of the Agra businesses. Cooperatieve Centrale Raiffeisen-Boerenleenbank, B.A. v Navarro, 2015 NY Slip Op 04753, CtApp 6-9-15

 

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