1010 Co., L.P. v M&S Mgt. Assoc.

[*1] 1010 Co., L.P. v M&S Mgt. Assoc. 2007 NY Slip Op 51189(U) [15 Misc 3d 1147(A)] Decided on June 8, 2007 Supreme Court, Nassau County Austin, J. 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 June 8, 2007
Supreme Court, Nassau County

THE 1010 COMPANY, L.P., Plaintiff,

against

M&S Management Associates, GREAT NECK MEDICAL AESTHETICS, P.C. AND ROBERT A. JASON, M.D., Defendants.



13259-06



COUNSEL FOR PLAINTIFF

Hamburger, Maxson, Yaffe, Wishod & Knauer, LLP

225 Broadhollow Road, Suite 301E

Melville, New York 11747

COUNSEL FOR DEFENDANTS

Braverman & Associates, P.C.,

331 Madison Avenue

New York, New York 10017

Leonard B. Austin, J.

Plaintiff moves for an order granting: (1) summary judgment; (2) dismissing Defendants' affirmative defenses and counterclaims; (3) finding that all Defendants are jointly and severally liable for the relief demanded in the complaint; and (4) setting the matter down for an immediate trial on the issue of damages, together with interest, reasonable counsel fees, costs of this litigation and statutory costs.

BACKGROUND

In its complaint, Plaintiff/Landlord The 1010 Company LLP ("1010") seeks damages of $275,000 for breach of the lease (first cause of action) and reasonable counsel fees and costs (second cause of action). 1010 alleges that all three Defendants are jointly and severally liable.

Defendant M&S Management Associates ("M&S") is a partnership that was the tenant on the lease. Defendant Great Neck Medical Aesthetics, P.C. ("GNMA") is a sublessee. On November 30, 2001, GNMA signed an assumption of lease, pursuant to which it assumed all of the tenant's obligations under the lease.

Defendant Robert A. Jason, M.D. ("Dr. Jason") is the individual who signed all documents on behalf of M&S and GNMA. As to M&S, Dr. Jason's signature is written underneath the title M&S. Beneath his signature are the words "General Partner." As to GNMA, his signature is written under the full title of GNMA and underneath his signature is written "Robert M. Jason, M.D., President".

On this motion, 1010 seeks summary judgment dismissing all affirmative defenses and counterclaims, as well as judgment in its favor on the issue of the joint and several liability of all three Defendants. M&S and GNMA do not raise any objection to Plaintiff's motion.

Dr. Jason vigorously objects to all claims that he is individually liable for the breach of the lease by M&S and GNMA. He insists that, at all relevant times, he was the president of Women's Care Inc., which was always the general partner of M&S.

From 1986 to 1994, Dr. Jason was the sole shareholder of Women's Care Inc. Thereafter, Dr. Keith Rawlinson and he were 50% owners of the shares of Women's Care Inc. Apparently, Dr. Jason is also the president of GNMA.

DISCUSSION

A.Summary Judgment Standard

Summary judgment is the procedural equivalent of a trial. Capelin Assoc. Inc. v. Globe Mfg. Corp., 34 NY2d 338, 341 (1974). The function of the court in deciding a motion for summary judgment is to determine if triable issues of fact exist. Matter of Suffolk County Dept. of Soc. Serv. v. James M., 83 NY2d 178, 182 (1994). The proponent must make a prima facie showing of entitlement to judgment as a matter of law. Guiffrida v Citibank Corp., 100 NY2d 72, 82 (2003); and Alvarez v. Prospect Hosp., 68 NY2d 320, 324 (1986). Once a prima facie case has been made, the party opposing the motion must come forward with proof in evidentiary form establishing the existence of triable issues of fact or an acceptable excuse for its failure to do so. [*2]Zuckerman v. City of New York, 49 NY2d 557, 562(1980).

When deciding a motion for summary judgment, the court must view the evidence in a light most favorable to the party opposing the motion and give that party all of the favorable inferences which can be drawn from the evidence. Branham v. Loews Orpheum Cinemas, Inc., 8 NY3d 931 (2007); and Schuhmann v. McBride, 23 AD3d 542 (2ND Dept. 2005).

B.Summary Judgment Against M&S and GNMA

On this record, 1010 has presented evidence of the lease between M&S and it, various extensions ending on June 30, 2007, and the assumption of the lease obligations by GNMA. 1010 has also provided evidence that M&S and GNMA vacated the premises and left their keys with the night security guard sometime in May, 2006. Under these circumstances, 1010 has established a prima facie case of breach of the lease against both M&S and GNMA. Dr. Jason does not oppose summary judgment on behalf of M&S and/or GNMA.

With regard to the affirmative defenses, the first affirmative defense, for a credit in the sum of any amounts 1010 realized as a result of reletting the premises, will be taken into account during the damages phase of this action. The second affirmative defense of waiver and the fourth affirmative defense of a 4% reduction must be summarily dismissed, as each lacks any factual basis in the record. The third affirmative defense of prematurity must be dismissed as academic given the fact that M&S and GNMA vacated the premises.

The two counterclaims concern Dr. Jason in his individual capacity; not M&S or GNMA.

Under these circumstances, where M&S and GNMA have failed to raise any triable issue of fact, 1010 is entitled to summary judgment against them on the issue of their joint and several liability on both causes of action in the complaint and dismissing their affirmative defenses.

C.Summary Judgment Against Dr. Jason, Individually

1010 also seeks summary judgment against Dr. Jason, individually, on the ground that he executed all legal documents as the "General Partner" of M&S, and the complaint contains an allegation that M&S may not have sufficient partnership assets to satisfy its obligation to Plaintiff.

The Partnership Law imposes joint liability upon partners for debts and obligations of the partnership. Partnership Law §26 (2); and United States Trust Co. of NY v Bamco 18, 183 AD2d 549 (1st Dept. 1993). Individual partners may be jointly liable for debts chargeable to the partnership when the partnership property is insufficient to pay partnership debts. See, 111-115 Broadway Ltd. Partnership v. Minter & Gay, 281 AD2d 153 (1st Dept. 2001). The partner should be named as a party in the action and personally served. See, Vets North, Inc. v. Libutti, 278 AD2d 406 (2nd Dept. 2000); and Propoco, Inc. v. Birnbaum, 157 AD2d 774 (2nd Dept. 1990). 1010 named Dr. Jason herein. There have been no issues raised as to service. 1010 [*3]

relies upon Partnership Law §27 to establish, as a matter of law, that Dr. Jason is a partner by estoppel of M&S.

One who makes, and consents to, continued representations that a partnership exists is estopped to deny the existence of the partnership in an attempt to defeat the claim of a creditor. Partnership Law §27; and Royal Bank and Trust Co. v. Weintraub, Gold & Alper, 68 NY2d 124, 129 (1986). While partnership by estoppel is not to be lightly invoked and generally raises issues of fact, summary judgment is available where the evidence presented leaves no question for trial. Fleet Bank NH v. Royall III, 218 AD2d 727 (2nd Dept. 1995). See, Royal Bank and Trust Co. v. Weintraub, Gold & Alper, supra.

Here, Plaintiff alleges that although its general practice was to obtain a personal guaranty to secure a lease agreement, it did not require a personal guaranty from Dr. Jason because he signed the Lease as the "General Partner" of M&S. Furthermore, for more than a decade, Dr. Jason repeatedly signed on behalf of M&S as the "General Partner" or "GP," including on a stipulation of settlement of a summary proceeding against M&S by 1010.

Dr. Jason states that he "fully believed and it was my complete intention to be signing those documents as President of Women's Care Inc, M&S' General Partner." He further points to various Amended Certificates of Limited Partnership recorded in the County Clerk's office as evidence of the corporate nature of M&S' General Partner. Dr. Jason claims that "due to the perpetuation of a drafting error that initially occurred in 1986," the documents "mistakenly reflect" that he signed as General Partner of M&S. He contends that the existence of a "scrivener's error" does not create a partnership by estoppel, and that issues of fact abound as to Plaintiff's knowledge of Dr. Jason's status vis-a-vis M&S.

Both counterclaims seek reformation of the lease documents. The first is on the ground of mutual mistake because it was agreed that Dr. Jason "was to sign the lease as President of Women's Care, Inc., the General Partner."The second is on the ground that Plaintiff knew Dr. Jason's "signing capacity was misrepresented in the lease it drafted" and is "attempting to take advantage of the mistake of the parties."

Dr. Jason's opposition fails to raise any triable issues of fact. He has presented no documentary evidence that Plaintiff was ever advised or independently knew that Women's Care Inc. was the general partner of M&S. One who holds himself out as a partner cannot avoid liability on the ground that a recorded instrument would show he had no interest in the partnership. Sitchenko v. DiResta, 512 F. Supp. 758, 762 (E.D.NY 1981). The multitude of documents executed by Dr. Jason under the name M& S with the description as "General Partner" renders his explanation of a "drafting error" or "scrivener's error" disingenuous inasmuch as such "error" was compounded and adopted by him for so long.

Indeed, Dr. Jason drafted his own brief letter dated November 30, 2000 addressed "to whom it may concern, " to advise that M& S was exercising an option to extend the lease. He signed his own letter as "General Partner." Drawing, as the Court must, all favorable inferences in favor of Dr. Jason, the best that can be said of this letter is that it is on the letterhead of an entity identified as "Great Neck Women's [*4]Medical Care", which is of no relevance herein. However, the content of the letter leaves no doubt but that shows Dr. Jason holding himself out as a general partner of M&S.

In sum, no triable issue of fact has been raised as to either of the counterclaims, which must be dismissed. This record compels an award of summary judgment on the issue of Dr. Jason's joint liability for the damages sought in both causes of action in the complaint.

Accordingly, it is,

ORDERED, that Plaintiff's motion to dismiss Defendants' affirmative defenses and counterclaims is granted except with regard to the first affirmative defense which is referred to the damages trial; and it is further,

ORDERED, that Plaintiff's motion for summary judgment on the issue of joint and several liability on both causes of action against all Defendants is granted against Defendants M&S Management Associates and Great Neck Medical Aesthetics, P.C., and is granted as to joint liability against Defendant Robert A. Jason, M.D., individually, and it is further,

ORDERED,that this matter having been certified ready for trial and counsel for the parties herein having agreed to have all outstanding issues in this case heard and determined by a Special Referee of this Court pursuant to CPLR 4317(a) and (b), this matter is respectfully referred to Special Referee Thomas V. Dana (Room 2026) to hear and determine all remaining issues in this matter as provided herein on July 26, 2007 at 10:00 a.m.; and it is further,

ORDERED, that counsel shall appear before said Special Referee on June 27, 2007 at 10:00 a.m. to schedule compliance with the Commercial Division Rules relating to pretrial submissions; and it is further,

ORDERED, that Plaintiff shall file a Note of Issue and provide proof of same prior to the pre-trial conference before Special Referee Thomas V. Dana.

This constitutes the decision and Order of the Court.

_____________________________

HON. LEONARD B AUSTIN, J.S.C.

Dated: June 8, 2007

Mineola, NY