On February 11, 2020, in J. Carlo Cannell et al. v. Grail Partners LLC, Appellate No. 2018-4352 (Index No. 652735/2018), the New York State Appellate Division, First Department, ruled unanimously in favor of Aguilar Bentley’s investment firm client, Grail Partners, holding that the lower court erred in awarding a judgment against Grail Partners for over one million dollars.
In October 2018, the trial court had issued a judgment against Grail Partners after plaintiffs filed a motion for summary in judgment in lieu of complaint, a unique procedural mechanism available in New York state court, allowing for an accelerated process to obtain a judgment in cases where an “instrument for the payment of money only” is at issue. This procedural device is often used in matters involving the enforcement of promissory notes, as was the case here. The lower court had issued a million-dollar judgment in favor of the plaintiffs four months after the motion was filed, finding that three separate promissory notes were in default.
Aguilar Bentley was retained after that judgment was entered, and filed an appeal on the grounds that the lower court had awarded damages for breaches that had occurred prior to the expiration of the six-year statute of limitations, which applies to breach of contract cases in New York. The appeal was argued in October 2019, and the unanimous reversal was granted in February 2020. The Appellate Division held that separate causes of action had accrued each time an installment payment was missed. Because six of the installment payments were missed prior to June 1, 2012 –– six years before the date plaintiffs filed their case –– those breaches were deemed time-barred, as argued by Aguilar Bentley in the appeal. Though plaintiffs had argued that their notice of acceleration of the debt in 2013 had the effect of reaching back in time to make the entire balance due, that argument was rebutted by Aguilar Bentley, which argued that acceleration only works to make the remaining balance due; it does not reset the statute of limitations for prior missed installment payments. The Appellate Division agreed, reversing the lower court’s decision and remanding the case for a recalculation of damages.
Aguilar Bentley and its client are very pleased with this decision, which has the effect of reducing damages by more than sixty-percent.