Checking an MCA Confession of Judgment Against New York Law

Find the document before forming a view

A Maryland business with a New York judgment it never litigated is almost always looking at a judgment by confession. The instinct is to ask whether it is valid. The better first step is to find the piece of paper it rests on, because New York states on its face what that paper has to say.

It will be in the original funding pack. Often it is titled affidavit of confession of judgment. Sometimes it is simply an affidavit, signed and notarised, sitting behind the agreement and the guaranty.

The four requirements, as a checklist

CPLR § 3218 permits a judgment by confession to be entered without an action, upon an affidavit executed by the defendant. Subdivision (a) says what the affidavit must do.

Take your copy and check each one:

1. State the sum for which judgment may be entered, and authorise entry. A figure, and an authorisation. Note what the figure is, and whether it bears any relationship to what was actually advanced or actually outstanding.

2. State the county where the defendant resides. Note which county it names. This is the one that matters most for an out-of-state business, for reasons in the next section.

3. Where the judgment is for money due, state concisely the facts out of which the debt arose. Note whether there is any factual recitation at all, and whether it describes the transaction you recognise.

4. Show that the sum confessed is justly due or to become due. A requirement about substance rather than form.

That is a document review, and it is one a business owner can usefully do before speaking to anybody, because it produces specific questions instead of general anxiety.

Then check where it was filed

Subdivision (b) is the geographical limit. Within three years after the affidavit is executed it may be filed — but only with the clerk of the county where the defendant's affidavit stated the defendant resided when it was executed, or where the defendant resided at the time of filing. The clerk then enters judgment in the supreme court for the sum confessed.

So there are two comparisons available to a Maryland defendant: what county the affidavit names, and what county the judgment was entered in.

What follows from a discrepancy is deliberately not stated here. It is a conclusion about a specific record, it depends on the whole file, and a page written in advance for every reader is the wrong place to reach it. That is a question for counsel with the documents in front of them — and it is a question worth asking, which is the point of the checklist.

Three years is a long time to wait

The filing window explains a lot about how these arrive. An affidavit executed when an advance funded can be filed up to three years later. From the business's side, nothing happened for two years and then a judgment appeared; from the creditor's side, an instrument was held and then used.

It also means the document may predate changes in the business — a move, a new entity, a departed co-owner — none of which the affidavit knows about.

Undoing one, and what is happening meanwhile

CPLR Rule 5015 lets the court which rendered a judgment relieve a party from it, on motion, on specified grounds, with time limits attaching to the ground relied on.

In the meantime the judgment is live, and CPLR § 5225 is one of the things it enables: on motion of the judgment creditor and notice to the debtor, where the debtor is shown to hold money or personal property in which it has an interest, the court may order it paid or delivered toward satisfying the judgment.

What to do first, from Maryland

1. Locate the affidavit in your own funding pack. Before anything else.
2. Run the four-point check above and write down what is missing or wrong.
3. Compare the county on the affidavit with the county on the judgment.
4. Take both documents to counsel admitted in New York. The conclusion belongs with someone who has read the file.

A confession of judgment covers the instrument, a restrained account covers what it does to a bank, and how an MCA lawsuit is defended covers the ordinary route.