Carter Ledyard helped one of its merchant cash advance clients prevail in a litigation in which a merchant sought to vacate a judgment entered against it by our client based on an affidavit of confession of judgment. Confessions of judgment are commonly used in New York state to ensure a party’s performance of its obligations by authorizing entry of judgment against that party in a designated county if the party fails to perform, thereby avoiding the need for time-consuming litigation. The merchant here was based outside of New York and asserted that the affidavit of confession of judgment was invalid because it provided that it could be entered in any county in New York state instead of designating a single county. In one of the first New York state decisions on the issue, the court held that an out-of-state defendant’s designation in an affidavit of confession of judgment of multiple counties for entry of judgment does not preclude enforcement of the confession of judgment. The court also found that it could not inquire into the bona fides of the underlying transaction that was secured by the confession of judgment on a motion to vacate the judgment. The decision clarifies an emerging area of law at a time when the use of (and challenges to) affidavits of confession of judgment are becoming increasingly frequent. Carter Ledyard attorneys Jacob H. Nemon and Jeffrey S. Boxer drafted the successful opposition papers.
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