Halgene Watch Ltd., et al. v. Alex Capital Fund, LLC, et al.
Attorneys and Parties
Brief Summary
Commercial lending and enforcement of a promissory note and guaranty; interpretation of default interest provisions and compounding under Maryland law; use of summary judgment in lieu of complaint.
Granted summary judgment in lieu of complaint under Civil Practice Law and Rules (CPLR) 3213 [procedural rule allowing summary judgment in lieu of complaint to enforce instruments for the payment of money only], entering a money judgment and awarding attorneys' fees.
The money judgment, the grant of summary judgment in lieu of complaint, and the attorneys' fees judgment and order were all reversed and vacated; the stay was lifted and the case remanded to be converted to a plenary action.
Plaintiffs failed to establish a sum certain due: they did not adequately detail payments or the method of interest calculation; the court’s simultaneous-supplement procedure deprived defendants of a chance to respond to plaintiffs’ late spreadsheet; the spreadsheet used interest rates inconsistent with the note’s plain language and compounded interest in a manner impermissible under Annotated Code of Maryland, Commercial Law § 12-306(a)(6)(ii) [limits interest and prohibits certain compounding]; and it relied on prime rates that did not match actual rates for certain periods.
Background
Plaintiffs sought to enforce a $600,000 promissory note and guaranty, claiming nearly $1.2 million in accrued interest. The note set a non-default interest rate of 12% per annum and, upon default, a rate of "Lender’s Prime Rate plus 5% per annum" on principal plus accrued interest. Plaintiffs contended the default rate effectively meant prime plus 17%, compounded monthly with a 24% annual cap under Maryland law, and submitted a spreadsheet purporting to show their calculations.
Lower Court Decision
The Supreme Court, New York County, granted plaintiffs' CPLR 3213 motion for summary judgment in lieu of complaint, entering a money judgment of $841,075.43 and later awarding $37,211.87 in attorneys' fees. The court had allowed the parties to simultaneously supplement their submissions by December 2, 2024, after which plaintiffs filed, on the deadline, a spreadsheet first detailing their interest computations.
Appellate Division Reversal
The Appellate Division reversed, vacated the money judgment and fee award, lifted its March 27, 2025 stay, and remanded with directions to convert the matter to a plenary action. The court held plaintiffs did not make a prima facie showing under CPLR 3213 because they failed to prove a sum certain due: their papers lacked a clear accounting of payment timing and interest methodology, and their spreadsheet calculations were facially inconsistent with the note’s unambiguous default rate of “Lender’s Prime Rate plus 5% per annum.” The court rejected plaintiffs’ claim that a literal reading would be "absurd," enforced the contract as written, noted that even adding the 12% contract rate would not permit monthly compounding under Maryland Commercial Law § 12-306(a)(6)(ii), and observed discrepancies between the prime rates used and actual market prime rates for certain intervals. It also found the simultaneous-supplement procedure deprived defendants of the opportunity to respond to plaintiffs’ late-filed spreadsheet, reinforcing the need for discovery.
Legal Significance
The decision underscores that CPLR 3213 relief requires a strictly provable sum certain based on the instrument alone and competent proof of interest calculations. Courts will enforce the plain language of default-rate provisions and will not accept post hoc, inconsistent interest models or monthly compounding that contravenes governing law. Procedural fairness matters: when new computation evidence is introduced on a supplemental deadline, the opposing party must have a chance to respond.
To obtain summary judgment in lieu of complaint on a note or guaranty, a lender must provide a clear, contract-consistent, and law-compliant interest accounting supported by accurate rate data; courts will not rewrite unambiguous default-rate terms, will reject improper compounding under Maryland law, and will require full discovery if material interest and payment facts are disputed.