Dresdner Bank AG. v. Morse/Diesel, Inc.

115 A.D.2d 64, 499 N.Y.S.2d 703, 1986 N.Y. App. Div. LEXIS 50069
CourtAppellate Division of the Supreme Court of the State of New York
DecidedMarch 11, 1986
StatusPublished
Cited by8 cases

This text of 115 A.D.2d 64 (Dresdner Bank AG. v. Morse/Diesel, Inc.) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Dresdner Bank AG. v. Morse/Diesel, Inc., 115 A.D.2d 64, 499 N.Y.S.2d 703, 1986 N.Y. App. Div. LEXIS 50069 (N.Y. Ct. App. 1986).

Opinion

OPINION OF THE COURT

Sullivan, J.

This is an action commenced by motion for summary judgment in lieu of complaint to recover $36,971.07, plus legal fees, on an agreement which absolutely and unconditionally guaranteed both payment and performance under a construction contract. The threshold question is whether such an agreement constitutes an "instrument for the payment of money only” within the contemplation of CPLR 3213 so as to qualify for the summary procedure provided therein. We agree with Special Term that it does not, and affirm.

The facts are relatively uncomplicated. In early 1979, Dresdner Bank undertook extensive renovation work on the three office floors it occupied at 60 Broad Street in New York City. Part of the project, known as Phase I, included demolition work on two of the floors and the installation of an interior two-flight steel stairway connecting all three floors.

On May 9, 1979, Dresdner and its architect awarded the Phase I contract to Arnott-Bennis, Inc., an interior alterations contractor and wholly owned subsidiary of Morse/Diesel, Inc., conditioned upon, inter alia, the receipt, prior to commencement of the work, of a guarantee from Morse/Diesel, Inc., of "the due and timely performance by [Arnott-Bennis] of each and every obligation of [Arnott-Bennis] under [the] Agreement.” Morse/Diesel is a manager of high-rise building construction. That same day Morse/Diesel delivered to Dresdner its letter agreement guaranteeing "(i) the timely and complete [66]*66performance by [Arnott-Bennis] of all of the covenants and agreements of [Arnott-Bennis] pursuant to the [contract and (ii) the payment to [Dresdner] when due of any and all amounts, damages, costs and expenses which may become due to [Dresdner] from [Arnott-Bennis].”

Pursuant to its contract with Dresdner, Arnott-Bennis was required to complete the Phase I work within 90 days. A change order, however, extending the interior stairway to a subsequently leased fourth floor, engendered a number of design changes. Consequently, Arnott-Bennis claims, it was unable to meet its time schedule with the result that, on December 10, 1979, Dresdner terminated the contract and engaged another renovations contractor to complete the work. Dresdner, on the other hand, contends that it terminated the contract because of Arnott-Bennis’ defaults and failure to perform the renovations in a workmanlike manner.

On July 1, 1981, Dresdner commenced arbitration proceedings to recover $139,795.73 in additional costs necessarily incurred as a result of Arnott-Bennis’ breach of the Phase I contract. After hearings, the arbitrators rendered an award in Dresdner’s favor in the sum of $35,272.10. The award was subsequently confirmed and a $36,971.07 judgment, which remains unsatisfied, entered. Despite Dresdner’s demand therefor, Morse/Diesel, which was not a party to the arbitration proceedings, has refused to make any payment under its guarantee.

In opposition to Dresdner’s motion for summary judgment Morse/Diesel asserted the defense of material alteration, arguing that the change order for the third flight of stairs imposed changes so substantial in scope, design and cost that it effectively created a different contract between Arnott-Bennis and Dresdner, one not covered by the terms of the guarantee. Morse/Diesel also argued that the guarantee was not an instrument for the payment of money only. Special Term, finding that the letter agreement guaranteed performance as well as payment, agreed, and denied the motion. It also found that the question of whether the change order discharged Morse/Diesel’s obligations as a guarantor presented factual issues which barred the grant of summary judgment.

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Bluebook (online)
115 A.D.2d 64, 499 N.Y.S.2d 703, 1986 N.Y. App. Div. LEXIS 50069, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dresdner-bank-ag-v-morsediesel-inc-nyappdiv-1986.