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contract for the sale of busiwas not intertwined with the promissory note and personal guaranty

Reversing Supreme Court, the Second Department determined the contract for the sale of plaintiff’s one-half share of a business to defendant was not intertwined with the promissory note and personal guaranty executed by the defendant in connection with the sale. Therefore plaintiff was entitled to summary judgment in lieu of a complaint based upon defendant’s default:

The plaintiff made a prima facie showing of his entitlement to judgment as a matter of law by submitting the promissory note, which contained an unequivocal and unconditional obligation to pay, the personal guaranty, and proof of the defendants’ failure to make payments on the note according to its terms … .

In opposition, the defendants failed to raise a triable issue of fact as to a bona fide defense … . “[T]he general rule is that the breach of a related contract cannot defeat a motion for summary judgment on an instrument for money only unless it can be shown that the contract and the instrument are intertwined and that the defenses alleged to exist create material issues of triable fact” … .

Here, contrary to the Supreme Court’s determination, the evidence submitted by the defendants failed to establish that the agreement and the promissory note were intertwined, such that any breach of the related agreement by the plaintiff may create a defense to payment on the note. Chervinsky v Rezhets, 2015 NY Slip Op 07463, 2nd Dept 10-14-15

 

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