Queens Mall Expansion Ltd. Partnership v C-Air Trading, Inc.
Annotate this CaseDecided on October 26, 2012
Supreme Court, Queens County
Queens Mall Expansion Limited Partnership, as successor-in-interest to Macerich Queens Expansion, LLC
against
C-Air Trading, Inc. d/b/a Nathan's Famous/Arthur Treacher's, Farooq Shah, Gulshan Farooq, and CPA Associates, Ltd.
24840/2011
For the Plaintiff: Berkman, Henoch, Peterson Peddy & Fenchel, P.C., by Robert A. Carruba, Esq., 100 Garden City Plaza, Garden, City, New York 11530
For Defendants Farooq Shah and Gullshan Farooq: Karlson & Ng, P.C., by David Ng, Esq., 305 Broadway, New York, New York 10007-1170
Charles J. Markey, J.
This is an action for damages for breach of a commercial lease agreement arising from the defendants' alleged failure to pay rent and the subsequent termination of the lease. The plaintiff seeks recovery of all amounts due under the lease from the tenants, defendants C-Air [*2]Trading and CPA Associates, as well as from defendants Farooq Shah and Gulshan Farooq, guarantors pursuant to the terms of a guarantee executed on November 30, 2009.
The plaintiff, a successor-in-interest to Macerich Queens Expansion, LLC, is the owner of a shopping mall premises located at 90-15 Queens Boulevard in Queens County, New York. On or about June 7, 2002, the original owner of the subject premises entered into a written lease agreement with defendant CPA Associates wherein it leased CPA Associates approximately 362 Square feet of store floor area within the premises, which was rented as a restaurant. Subsequently, the plaintiff owner and defendant CPA assigned the lease agreement to defendant C-Air Trading pursuant to An Assignment of Lease Agreement, dated June 23, 2006. Thereafter, the plaintiff entered into a First Amendment of Lease with defendant C-Air Trading. In conjunction with the lease amendment, defendants Farooq Shah and Gulshan Farooq, who are principals of defendant tenant C-Air Trading, signed a Guarantee of Lease.
In the present case, the plaintiff seeks:
(1) a default judgment against defendants CPA Associates and C-Air Trading on the first and second causes of action asserted against them on the ground that they have failed to answer the complaint or otherwise appear in this action and
(2) an award of summary judgment in its favor on its third, fourth, and fifth causes of action against defendants Farooq Shah and Gulshan Farooq, as guarantors of the subject lease, and dismissing their affirmative defenses that the plaintiff does not have any right to collect money from them. In opposition, defendants Farooq Shah and Gulshan Farooq contend that triable issues of fact exist which preclude an award of summary judgment.
Having failed to answer the complaint or otherwise appear in this action, defendants Farooq Shah and Gulshan Farooq have defaulted and the plaintiff's motion for a default judgment against them is hereby granted (CPLR 3215). An award of damages shall be determined after an inquest to assess damages.
In support of summary judgment, the plaintiff submits a copy of the subject Lease Agreement, Assignment of Lease Agreement, First Amendment of Lease Agreement (Rent Reduction), Guarantee of Lease, and Civil Court Judgment for eviction and past due rent. Plaintiff also submits the affirmation of Mr. Jeffrey Owen, the Senior Property Manager of the Queens Center Mall. According to Mr. Owen, pursuant to the terms of the lease assignment, CPA Associates is obligated to the landlord "for the full performance of all covenants, conditions, obligations and duties required of Tenant under the lease and shall not be relieved of any such performance thereunder as a result of this Assignment." Mr. Owen [*3]explains that, pursuant to the lease agreement, which was for a term of approximately ten (10) years ending on December 31, 2013, CPA Associates and C-Air Trading were required to pay the plaintiff monthly fixed minimum rent plus percentage rent and additional rent as defined therein.
On December 7, 2009, the plaintiff entered into a First Amendment of Lease (Rent Reduction). Mr. Owen states that as an inducement for the plaintiff to enter into the lease amendment defendants Farooq Shah and Gulshan Farooq, who are principals of defendant C-Air Trading, contemporaneously signed a Guarantee of Lease. Mr. Owen avers that the guarantee unconditionally provides:
"for and in consideration of the execution of the foregoing Agreement by Landlord and as a material inducement to Landlord to execute the Agreement, Guarantors hereby jointly, severally and absolutely, presently, continually, unconditionally and irrevocably guarantee the prompt payment by Tenant of all rentals and all other sums payable by Tenant under the lease and the faithful and prompt performance by Tenant of each and every one of the terms, conditions and covenants of the Lease to be kept and performed by Tenant . . . Each Guarantor's liability under this Guarantee shall continue until all rents due under the Lease have been paid in full in cash and until all other obligations to Landlord have been satisfied."
Mr. Owen additionally states that, in or about January 2011, C-Air Trading failed and refused to timely pay rent in accordance with the terms of the lease, which constituted a default and material breach of the lease. On April 14, 2011, the plaintiff served C-Air Trading with a written Demand for Rent (Non-Payment), which it failed to cure. Thereafter, the plaintiff ultimately obtained a judgment of possession and warrant of eviction in Civil Court awarding the plaintiff possession of the premises and a monetary judgment against C-Air Trading on May 25, 2011, for rent arrears. The plaintiff and C-Air Trading then entered into an agreement in the Civil Court action whereby C-Air Trading agreed to vacate the premises within a certain time-frame and, thereafter, vacated the premises and delivered possession to the plaintiff on or about September 15, 2011.
In light of the evidence presented by the plaintiff, the Court finds that the plaintiff, upon the foregoing papers, has met its prima facie burden of demonstrating an entitlement to summary judgment on its causes of action against defendant Farooq Shah and Gulshan Farooq arising from C-Air Trading's breach of the lease agreements and based upon the subject guarantee. Thus, the burden now shifts to the defendants to raise a material triable issue of fact (see, Alvarez v Prospect Hospital, 68 NY2d 320 [1986]; Zuckerman v City of New York, 49 NY2d 557[1980]). [*4]
In opposition to summary judgment, defendant Farooq Shah submits an affidavit stating that he is the President of defendant C-Air Trading. He indicated that the rent for the subject premises was set based upon two components, a fixed minimum rent based upon increases in the Consumer Price Index and a percentage of rent based upon sales. As a result of a decline in the economy in 2008, business dropped precipitously, and the mall no longer attracted the foot traffic needed to provide a client base at the restaurant space. After several months of unsuccessful efforts to meet the lease rental payments, the parties entered into a rent reduction agreement.
According to defendant Shah, there were no guarantors of the original lease agreement. The guarantee that he and defendant Farooq signed had applied only to the reduced rent period under the First Amendment to Lease. To support his contention, he submits a copy of the subject Guarantee of Lease and points to the fact that it contains a handwritten notation indicating the guarantee applies only to the reduced rent period, which is a modification that is at odds with the copy of the agreement submitted by the plaintiff on this motion. Thus, the defendants have raised a credibility issue regarding the scope of the Guarantee of Lease, thereby requiring the denial of summary judgment (S.J. Capelin Assoc. v Globe Mfg. Corp., 34 NY2d 338 [1974]).
Accordingly, the plaintiff's motion for summary judgment against defendants Farooq Shah and Gulshan Farooq is, in all respects, denied.
Lastly, the Clerk of the Court is directed to enter a default judgment against defendants C-Air Trading, Inc. d/b/a Nathan's Famous/Arthur Treacher's and CPA Associates, Ltd., and the matter against them shall be set down for an inquest on damages.
The foregoing constitutes the decision, opinion, and order of the Court.
_______________________________
J.S.C.
Dated: October 26, 2012
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