confession of judgment

A confession of judgment has often been viewed as an important tool in settling a litigation or finalizing a transaction.  In 2019, the New York State Legislature made some significant amendments to the Confession of Judgment law (CPLR § 3218), particularly eliminating the ability of creditors to file confessions of judgment against non-New York residents.  As a result, the amended CPLR § 3218 provides that the confession must state the county in which “the defendant resided when it was executed,” and that the confession may only be filed in that county or, if the defendant moved to a different county within New York after signing the confession, “where the defendant resided at the time of filing.”  In a recent decision, Kings County Commercial Division Justice Leon Ruchelsman  addressed the damaging consequences of altering a confession of judgment to meet the “residency” requirements of CPLR § 3218.

Background

In Porges v Kleinman, plaintiff commenced an action stemming from a real estate investment opportunity in New Jersey.  Specifically, plaintiff alleged that defendant pressured plaintiff to obtain a high cost loan to finance the purchase of the property while not allowing plaintiff to conduct any due diligence.  Following the closing, plaintiff alleged that defendant pressured him into signing a promissory note and confession of judgment for $675,000.00.  Approximately a year after the closing, defendant commenced a separate action, which was later consolidated with the present action, to enforce the confession of judgment due to plaintiff’s alleged failure to make any payments towards the promissory note.

During the course of the litigation, plaintiff brought a motion to vacate the confession of judgment, arguing that the confession of judgment (i) did not specify the county in which plaintiff resided; and (ii) was altered by striking out “County of New York” and writing in “County of Kings” in the caption.  In opposition, defendant argued that the alteration of the caption was made at the express instruction of the Kings County Clerk’s office to allow for the confession of judgment to be filed in the appropriate venue.Continue Reading Altering a Confession of Judgment? Think Again!