44 Wall Owner, LLC v Failla

[*1] 44 Wall Owner, LLC v Failla 2010 NY Slip Op 51925(U) [29 Misc 3d 133(A)] Decided on November 12, 2010 Appellate Term, First Department Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on November 12, 2010
APPELLATE TERM OF THE SUPREME COURT, FIRST DEPARTMENT
PRESENT: Schoenfeld, J.P., Shulman, Hunter, Jr., JJ
570454/10.

44 Wall Owner, LLC, Plaintiff-Respondent,

against

Stephanie Failla, Defendant-Appellant, -and- Robert Henry, Defendant.

Defendant Stephanie Failla appeals from an order of the Civil Court of the City of New York, New York County (Joan M. Kenney, J.), entered July 22, 2009, which denied her motion to vacate a stipulation of settlement and dismiss the complaint.

Per Curiam.

Appeal from order (Joan M. Kenney, J.), entered July 22, 2009, deemed an appeal from the ensuing judgment (Arlene P. Bluth, J.), entered September 23, 2009, and so considered (see CPLR 5520[c]), judgment affirmed, with $25 costs.

Pursuant to the governing commercial lease agreement and guaranty, defendants "unconditionally and absolutely" guaranteed, among other things, the payment of all rent, additional rent and other sums payable by the tenant, SBA Partners, Inc. (SBA). After SBA vacated the premises, plaintiff-landlord commenced this action against defendants-guarantors seeking rent arrears and other charges owed by SBA in the sum of $21,235.15 plus attorneys' fees. After interposing an answer, defendant Failla entered into a written stipulation to settle the action as against her for the sum of $2,500. The stipulation expressly provided that if Failla failed to pay this stipulated sum by a date certain, landlord could enter judgment against her for the sum of $10,000, less any payment made. The stipulation was so-ordered by the court and Failla was allocuted by the court as to the terms of the stipulation. Failla subsequently moved to vacate the stipulation and dismiss the complaint on the grounds that the action was time-barred, and plaintiff sustained no damages as a result of SBA's breach of the lease. Civil Court denied Failla's motion, and we affirm.

Failla failed to demonstrate legal cause to vacate the stipulation, e.g., fraud, collusion, mistake or accident (see Hallock v State of New York, 64 NY2d 224, 230 [1984]). Failla's belated attempt to inject into the settled litigation an (unpleaded) statute of limitations defense does not [*2]provide a proper basis to vacate the binding stipulation (see Montgomery Trading LLC v Siegel, 25 Misc 3d 128[A], 2009 NY Slip Op 52075[U] [2009]). Failla twice waived any statute of limitations defense, first by failing to raise it in her answer or in a pre-answer motion to dismiss (see CPLR 3211[e]; Horst v Brown, 72 AD3d 434 [2010]), and again when she entered into the stipulation settling the action without preserving such defense (see 433 West Assocs. v Murdock, 276 AD2d 360 [2000]; see also Goldman v Taylor, 2002 NY Slip Op 50217[U]).

Failla's present claim that the default provision in the stipulation constitutes an unenforceable penalty is unpreserved for appellate review. In any event, we reject it on the merits. A liquidated damages provision is not transformed into an unenforceable penalty merely because it secures performance by the threat of a larger payment "so long as [the liquidated sum is] not grossly out of scale with foreseeable losses" (Bates Advertising USA, Inc. v 498 Seventh, LLC, 7 NY3d 115, 120 [2006]). Here, Failla has failed to meet her burden of establishing that the liquidated sum of $10,000 was disproportionate to the amount of her potential liability under the guaranty. In this regard, we note that Failla failed to substantiate her claim that SBA's obligations under the lease terminated upon its purported vacatur of the leased premises in October 2004.

We have considered Failla's remaining arguments and find them unavailing.

THIS CONSTITUTES THE DECISION AND ORDER OF THE COURT.
Decision Date: November 12, 2010