the structure, negotiation and closing of sophisticated transactions,
including acquisitions, divestitures and ventures both international and
national in scope. He has represented clients on diverse transactional
matters in Central and South America, Europe and Asia.
focuses on commercial litigation and arbitration as well as
employment law.
425 Park Avenue
New York, New York 10022
212.421.4300 Phone
212.421.4303 Fax
HCB@kbg-law.com
JBK@kbg-law.com
www.kbg-law.com
to draft a separate promissory note
evidencing the debt created in a
transaction. New York State offers an
attractive expedited procedure for
collecting on such a note, and also
for domesticating and collecting on a
foreign default judgment, that could
be of interest to attorneys from other
jurisdictions.
In many jurisdictions, collecting on
an instrument for money owed, such
as a promissory note, can be a lengthy
process. In addition to the delays and
inefficiencies inherent in all litigation,
when a defendant indisputably owes
money on an unambiguous note, his only
"defense" may be to delay collection
in hopes that the creditor will grow
frustrated and agree to compromise on
the amount owed or, worse, so that he
can secrete assets.
Typically, the first step in collecting
on a note is to prepare a summons and
complaint and attempt to effect service
if the defendant chooses to be evasive.
After service is effected, the defendant
typically has between 20 and 60 days
to respond to the complaint. The initial
response may be a dilatory tactic, such
as a request for more time to respond,
or a meritless motion to dismiss that
nevertheless delays matters while the
court sorts out the issues raised in the
motion. And although many jurisdictions,
in theory, permit the plaintiff to move
for summary judgment at any time,
the reality is that many judges are
loath to entertain summary judgment
motions before the defendant has had an
opportunity to conduct discovery, even if
his defenses are highly dubious.
New York provides an attractive
alternative to this morass. Briefly stated,
pursuant to Section 3213 of New York's
Civil Practice Law and Rules ("CPLR
3213"), if an action is based upon an
"instrument for the payment of money
only" or upon a judgment, the plaintiff
moving for summary judgment on the
instrument or judgment. Thus, instead of
preparing a formal complaint, the plaintiff
files and serves a summons and motion
for summary judgment. The defendant
then is required to submit opposition to
the motion as his initial response. The
judges who sit in New York's commercial
parts are familiar with this procedure,
and generally will not permit a defendant
to delay judgment by raising spurious
defenses in opposition. Furthermore, even
if the court does deny the motion, the
moving and answering papers generally
are treated as the complaint and answer,
so the case can proceed as an ordinary
action even if the motion fails.
This procedure can be particularly
useful if you wish to domesticate a default
judgment against a debtor that has a bank
account or other attachable assets in
New York, as many commercial firms do.
Saving time in those circumstances can
be the difference between collecting on
a judgment, and having a defendant who
has rendered himself judgment proof.
If you will be suing on an instrument,
the question of whether the action is
based upon an instrument for the payment
of money only is crucial. The plaintiff
must be able to establish the elements
of its case by proving only, first, the
existence of the instrument and, second,
the amount of money owed. If anything
Collecting on a Note or Default Judgment