FORT CRE v Karasick - Appellate Division Ruling on Guaranty Enforcement

New York Appellate Division

Filed March 3rd, 2026

Detected March 4th, 2026

Summary

The Appellate Division of the Supreme Court of New York reversed a lower court's decision to grant a stay in a guaranty enforcement action. The court ruled that defenses to a related Minnesota foreclosure action are irrelevant to the enforcement of absolute and unconditional guaranties of payment.

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What changed

The Appellate Division of the Supreme Court of New York, First Department, reversed an order that had granted defendants' motion for a stay pending resolution of a related Minnesota foreclosure action. The court found that defenses to the underlying foreclosure action were irrelevant to the current action, which seeks to enforce absolute and unconditional guaranties of payment. The court emphasized that the guaranties expressly waived any right to assert such defenses and were not contingent on the exhaustion of remedies against the borrower or collateral.

This ruling has significant implications for lenders seeking to enforce payment guaranties. It clarifies that such enforcement actions can proceed independently of related litigation concerning the underlying debt, particularly when the guaranties are absolute and unconditional and contain broad waiver provisions. Regulated entities, specifically lenders and their legal counsel, should review their existing guaranty agreements to ensure they contain similar robust language to facilitate enforcement and avoid potential delays caused by parallel proceedings. The decision vacates the stay, allowing the enforcement action to proceed.

What to do next

Review existing guaranty agreements for absolute and unconditional payment language and broad waiver provisions.
Assess the impact of this ruling on any pending or future guaranty enforcement actions.
Consult with legal counsel regarding strategy for enforcing guaranties in light of this decision.

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March 3, 2026 Get Citation Alerts Add Note

FORT CRE 2022-FL3 Issuer LLC v. Karasick

Appellate Division of the Supreme Court of the State of New York

Citations: 2026 NY Slip Op 01160
Docket Number: Index No. 654803/24; Appeal No. 5995; Case No. 2025-03509
Opinion
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Combined Opinion

FORT CRE 2022-FL3 Issuer LLC v Karasick (2026 NY Slip Op 01160)
| FORT CRE 2022-FL3 Issuer LLC v Karasick |
| 2026 NY Slip Op 01160 |
| Decided on March 03, 2026 |
| Appellate Division, First Department |
| Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. |
| This opinion is uncorrected and subject to revision before publication in the Official Reports. |

Decided and Entered: March 03, 2026
Before: Webber, J.P., Shulman, Higgitt, Rosado, Hagler, JJ.
Index No. 654803/24|Appeal No. 5995|Case No. 2025-03509|

*[1]FORT CRE 2022-FL3 Issuer LLC, et al., Plaintiffs-Appellants,

Mark Karasick et al., Defendants-Respondents.**

Thompson Coburn LLP, New York (Zachary G. Newman of counsel), for appellants.

Nutter McClennen & Fish LLP, New York (Christopher J. Sullivan of counsel), for respondents.

Order, Supreme Court, New York County (Margaret A. Chan, J.), entered on or about May 30, 2025, which granted defendants' motion for a stay, pursuant to CPLR 2201, pending resolution of a related Minnesota foreclosure action, unanimously reversed, on the law, without costs, the motion denied, and the stay vacated.

We reject the argument by defendants, guarantors of the loan that is the subject of a pending foreclosure action in Minnesota, that this action to enforce the guaranty should await a determination as to the merit of any defenses presented in the other action. In addition to having been waived in the relevant guaranties, defenses to the underlying foreclosure action are irrelevant to this action, which seeks only to enforce absolute and unconditional guaranties of payment (not collection) (see generally Cooperatieve Centrale Raiffeisen-Boerenleenbank, B.A., "Rabobank Intl.," NY Branch v Navarro, 25 NY3d 485, 493-95 [2015]).

The subject guaranties expressly provide that they are guaranties of payment and not of collection; that exhaustion of remedies as against the borrower or the collateral are not necessary preconditions to enforcement; that "Guarantor shall remain liable hereon regardless of whether Borrower or any other Person shall be found not liable on the Guaranteed Obligations or any part thereof for any reason"; that Guarantor's obligations "shall not be reduced, discharged or released because or by reason of any existing or future right of offset, claim or defense of Borrower . . . against Lender . . . or against payment of the Guaranteed Obligations . . . , whether such right of offset, claim or defense arises in connection with the Guaranteed Obligations (or the transactions creating the Guaranteed Obligations) or otherwise"; and that any rights Guarantors might otherwise have with respect to these events and circumstances are "waive[d]." This language is sufficiently broad to foreclose challenges even to post-execution misconduct (see DB 232 Seigel Mezz LLC v Moskovits, 223 AD3d 610, 611 [1st Dept 2024]; Fortress Credit Corp. v Hudson Yards, LLC, 78 AD3d 577, 577 [1st Dept 2010]; Hotel 71 Mezz Lender LLC v Mitchell, 63 AD3d 447, 448 [1st Dept 2009]).

The "actual losses, actual damages" language in the free-standing paragraph of § 1.2 of the Payment Guaranty does not transform that guaranty into a conditional guaranty of collection. This paragraph provides that Guarantor shall be liable for not just "actual losses" and "actual damages," but also "liabilities, claims, actions, judgments, court costs, and legal and other expenses incurred by the Lender as a direct or indirect consequence of the matters set forth therein." At most, this implies a limitation to the outstanding amount of unpaid debt. It does not at any rate apply to § 1.2(a) (the sole section on which plaintiffs rely in this action) but only to § 1.2(b).

In light of our disposition of the appeal based on the guaranties themselves, we need not reach plaintiff's arguments with respect to substantial identity of the parties, prejudice, and the effect of Real Property Actions and Proceedings Law § 1301(3).

THIS CONSTITUTES THE DECISION AND ORDER OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

ENTERED: March 3, 2026