Key Points

  • A promissory note that recites it was given to pay the balance of a pledge agreement remains an instrument for the payment of money only under CPLR 3213.
  • A clause stating that the note and the pledge agreement are the parties' entire understanding does not incorporate the pledge agreement into the note.
  • The note's clause making payment obligations unconditional and not subject to any defense barred the defendant's fraud defense.
  • The fraud defense independently failed because it rested only on alleged breach of the pledge agreement, was supported by a conclusory affirmation, and did not show fraudulent intent at the time the representations were made.
  • The First Department granted the foundation summary judgment in lieu of complaint and remanded for further proceedings, including a hearing on attorneys' fees and costs.

A New York appeals court ruled Tuesday that The Cura Foundation is entitled to summary judgment in lieu of complaint on a promissory note Stephen Shaya signed to pay off a pledge, rejecting his contention that the note incorporated the underlying pledge agreement.

A five-justice panel of the Appellate Division, First Department, unanimously reversed Justice Melissa A. Crane of Supreme Court, New York County, who had denied the foundation's motion for summary judgment in an order entered on or about Dec. 5, 2025. The unsigned decision granted the motion outright and remanded the matter for further proceedings, including a hearing on attorneys' fees and costs.

The foundation sought summary judgment in lieu of complaint under CPLR 3213, which reaches "an instrument for the payment of money only." The ruling holds that a note keeps that status even when it recites the pledge it pays off and states that the note and the pledge agreement are the parties' entire understanding. The panel also enforced the note's waiver of defenses against Shaya and found his fraud defense insufficient on its own terms.

The note "contains an unconditional promise to pay a sum certain, and specifies definite times when amounts are due," the court wrote. One provision states that Shaya "is providing this . . . Promissory Note to pay the balance due of the Irrevocable Pledge Commitment made between the [parties]." That recital, the panel held, "does not remove it from the ambit of CPLR 3213."

For that point the court relied on its own 1968 decision in Seaman-Andwall Corp. v. Wright Machine Corp., later affirmed by the Court of Appeals, which rejected the argument "that, as the note was given as one factor in a transaction embracing other features, proof dehors the instrument must be given."

Shaya had argued that the note incorporated the pledge agreement. The note says that it and the pledge agreement "constitute the entire understanding of [the parties] with respect to the matters discussed . . . , and supersede all prior and contemporaneous discussions, agreements, and representations." The panel disagreed. "Contrary to defendant's contentions, the note does not incorporate the pledge agreement wholesale," the court wrote. "Rather, it merely says that the pledge agreement and the note represent the parties' entire understanding."

The court pointed to two earlier First Department rulings. In Lyons v. Cates Consulting Analysts, a 1982 decision, a note that said it was subject to the terms of a shareholders' agreement still qualified, because "(t)he promissory note . . . is self-standing." In Blumenstein v. Waspit Group, Inc., a 2016 decision, a note executed "pursuant to" a deed of settlement qualified because "(n)othing in the deed affect(ed) the value of the principal due under the note or otherwise alter(ed) defendants' obligations to pay under the note."

Nor did the prospect of a contested defense change the outcome. "The possibility that defendant might advance defenses that would raise issues outside the note does not change the note's character as one for the payment of money only," the court wrote.

The foundation made its initial showing by producing the note Shaya signed and proof that he failed to make payments as the note required, the panel held. In opposition, the court concluded, Shaya failed to raise a triable issue of fact.

Shaya raised a fraud defense. The court found that he had waived it, because the note provides that his "payment obligations . . . are unconditional and absolute and are not subject to any defense, offset or counterclaim of any kind whatsoever for any reason." The panel wrote, "We have enforced such a provision," citing its 1996 and 1997 decisions in SCP (Bermuda) v. Bermudatel Ltd.

The court went on to hold that the fraud defense would have failed even without the waiver. Shaya contended that the foundation "engaged in fraud . . . by representing that [it] was complying with the Pledge's promises when it was not." The panel wrote that the claim was legally insufficient "because the only fraud alleged relates to a breach of the pledge agreement," citing the court's 1991 decision in Sanyo Electric v. Pinros & Gar Corp.

Shaya's sworn statement also fell short. He attested that he signed the note "[i]n reliance on [plaintiff]'s representations that it would continue adhering to its performance obligations under the Pledge Agreement," but the court found that "his affirmation provides no details about the alleged representations" and called it conclusory.

The panel further held that Shaya had not shown fraudulent intent on the foundation's part when it made the alleged representations. He contended that the foundation had promised to establish what the decision calls the ADEL fund and never did. "Even if, as defendant contends, plaintiff promised to establish the ADEL fund and failed to do so, that does not establish that, at the time the parties entered into the pledge agreement, plaintiff had no intention of establishing the fund," the court wrote.

The panel answered Shaya's separate argument, that the foundation breached the pledge agreement, in a single sentence: "the note does not expressly state that it is subject to the terms of the pledge agreement." The decision does not state the amount of the note or of the pledge.

The panel consisted of Justices Webber, who presided, Kennedy, Gesmer, Michael and Chan. The court reversed "on the law, with costs."

Thomas E. Butler of White and Williams LLP represented the foundation. Shaya was represented by Daniel Gorman of Troutman Pepper Locke LLP.

The case now returns for further proceedings, including a hearing on the attorneys' fees and costs the foundation seeks.