Finding Fraud to Fend Off Motions for Summary Judgment in Lieu of A Complaint Under CPLR 3213


Defendants facing motions for summary judgment in lieu of a complaint, pursuant to CPLR 3213, are limited in the approaches they can take to mount a successful defense.  After all, once a plaintiff establishes prima facie entitlement to judgment as a matter of law with respect to an instrument for the payment of money only (typically, a promissory note or guaranty) by showing that the instrument was executed by the defendant, that it contains an unequivocal and unconditional obligation to pay, and that the defendant failed to pay in accordance with the instrument’s terms, a defendant is put to the considerable task of raising a triable issue of fact with respect to a bona fide defense.

Raising a successful defense, however, is not impossible.  Toward the end of last year, the First and Second Departments of the Appellate Division issued two decisions, in close proximity, affirming the proposition that, where a defendant can raise a triable issue of fact concerning whether the defendant executed the instrument, summary judgment must be denied.  See Goldberger v. Magid, 133 A.D.3d 546 (1st Dep’t 2015); Kitovas v. Megaris, 133 A.D.3d 720 (2d Dep’t 2015).  In those cases, the Courts held that the defendants had proffered sufficient evidence, suggesting forgery, sham transactions and/or possible criminal activity, to defeat the plaintiffs’ motions for summary judgment pursuant to CPLR 3213.  See id.

Specifically, in Kitovas, the Second Department explained that, although “[s]omething more than a mere assertion of forgery is required to create an issue of fact contesting the authenticity of a signature,” 133 A.D.3d at 720, quoting, Banco Popular N. Am. v. Victory Taxi Mgt., 1 N.Y.3d 381, 383-84 (2004), summary judgment should not be granted because “in addition to his own affidavit, the defendant submitted a copy of his driver license as an example of his signature, and an affidavit from the individual who allegedly witnessed execution of the note.”  Id.  The Court added that “[r]eview of the defendant’s signature on his driver license and the signature on the note reveal some difference to the untrained eye.  More importantly, the individual who is identified as the witness on the note stated in his affidavit that he had no recollection of witnessing the defendant signing the note, and that he believed that his own signature thereon was forged.”  Id.  In order to raise a triable question, an expert opinion was not required.  See id., citing, Banco Popular N. Am., 1 N.Y.3d 381, 384.

Although the Court, in Kitovas, explained that there was no “presumption of due execution” because the signature on the note at issue was not notarized, see id., in Goldberger, the fact that the signature had been notarized did not raise any presumption sufficient to undermine the defendant’s argument that there was an issue of fact regarding whether the signature had been forged.  133 A.D.3d at 546.

The Goldberger and Kitovas decisions give defendants, facing summary dismissal pursuant to CPLR 3213, some glimmer of hope.  Although instances of fraud and forgery may yet be relatively limited in commercial practice, a lack of ubiquity should not be overestimated and defense counsel should examine carefully the facts and circumstances surrounding the execution of the instrument at issue.  A plaintiff looking for quick and easy relief may find that questions regarding the genuineness of that execution require a court to engage in a more lengthy and time-consuming process – a process that ultimately may get the defendant “off the hook.”

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Aldous PLLC is a law firm located in mid-town Manhattan and Westchester, New York, dedicated to providing quality and cost-effective legal services to its clients.  The Firm provides trusted advice and legal strategy to international companies and select individuals, facing issues with legal, financial and reputational ramifications.  Aldous PLLC’s founding member, Kenneth E. Aldous, is an experienced lawyer, qualified to practice in both the U.S. and UK, who has represented a broad range of diverse interests in complex litigation before various federal and state courts, as well as in domestic and international arbitration.

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