Net Leased v Air Chef, Inc.

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Net Leased v Air Chef, Inc. 2014 NY Slip Op 31592(U) June 20, 2014 Sup Ct, New York County Docket Number: 652704/2013 Judge: Eileen A. Rakower Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various state and local government websites. These include the New York State Unified Court System's E-Courts Service, and the Bronx County Clerk's office. This opinion is uncorrected and not selected for official publication. [* 1] SUPREME COURT OF THE STATE OF NEW YORK -NEW YORK COUNTY PRESENT: Hon. PART 15 EILEEN A. RAKOWER Justice NET LEASED, REAL ESTATE PROPERTIES, OPERATING PARTNERSHIP as successors in interest of 215 AFRICAN & HISPANIC AMERICAN REALTY . OF NEW YORK LLC, 652704/2013 INDEX NO. Plaintiff, MOTION DATE ¢v ¢ MOTION SEQ. NO . 1 MOTION CAL. NO. AIR CHEF, INC., aka AIR CHEFS, LLC, and RAKESH K. AGGARWAL and SHEELI AGGARWAL, Defendants. The following papers, numbered 1 to "--._ _ were read on this motion for/to PAPERS NUMBl;RED Notice of Motion/ Order to Show Cause Answer - Affidavits - Affidavits - Exhibits ... Exhibits _ _ _ _ _ _ _ _ _ _ _ _ _ 1 2 ~ Replying A f f i d a v i t s - - - - - - - - - - - - - - - - - -~5_ _ _ _ __ Cross-Motion: X Yes - No Plaintiff, Net Leased, Real Estate Properties, Operating Partnership as successors in interest of 215 African & Hispanic American Realty of New York, LLC., ("Plaintiff'), brings this action, prose, for breach of contract based on a lease agreement (the "Lease Agreement") allegedly entered into between Plaintiff, as net lessee, and defendant, Air Chef, Inc., aka Air Chefs, LLC ("Air Chef'), as tenant, for the premises located at 102 Washington Place, New York; New York 10014, to be used as a restaurant. Plaintiff claims that Air Chef failed to pay rent, real estate taxes, water charges, and attorneys fees, costs and expenses, as required under the Lease Agreement, and further claims that Air Chefs obligations under the Lease Agreement are guaranteed by individual defendant, Rakesh K. Aggarwal ("Mr. Aggarwal"). Plaintiff also claims that Rakesh K. Aggarwal transferred his real property rights to his wife, Sheeli Aggarwal (and together with Mr. Aggarwal and Air Chef, collectively, "Defendants"). 1 [* 2] Plaintiff claims that Defendants failed to answer Plaintiffs summons and complaint by March 25, as required. Plaintiff now moves, pursuant to CPLR § 3215(a), for a default judgment on the basis of Defendants' failure to answer Plaintiffs summons and complaint. Defendants oppose. Defendants argue that, on or about March 11, 2014, Plaintiff agreed to extend the time for Defendants to respond to Plaintiffs complaint to May 5, 2014. Defendants further argue that Plaintiff filed the instant motion on March 26, 2014, before Defendants' time to serve an answer had expired. Additionally, Defendants argue that Plaintiff failed to serve individual defendant, Sheeli Aggarwal, with process. Defendants attach an email exchange between the parties confirming their , agreement to extend the time for Defendants to respond to Plaintiffs complaint through and including May 5, 14. Therefore, Plaintiffs motion for a default judgment on the basis of Defendants' failure to answer the complaint is denied. Defendants cross-move for an Order, pursuant to CPLR § 321 l(a)(5), dismissing Plaintiffs complaint on the basis of Plaintiffs failure to appear by counsel, as required by CPLR § 321(a). CPLR § 321(a) permits parties to prosecute or defend civil actions in person or by an attorney, "except that a corporation or voluntary association shall appear by attorney .... " (CPLR § 321 [a]). "When the party to an action is a fictional person-a legal entity with limited liability-the general rule is that it cannot represent itself but must be represented by a licensed practitioner, whether outside counsel or staff counsel, answerable to the court and other parties for his or her own conduct in the matter." (In re Sharon B., 72 N.Y.2d 394, 398 [1988]). "The reason corporations are required to act through attorneys is that a corporation is a hydra-headed entity and its shareholders are insulated from personal responsibility. There must therefore be a designated spokesman accountable to the court." (Austrian, Lance & Stewart, P.C. v. Hastings Properties, Inc., 87 Misc. 2d 25, 26 [Sup. Ct. N.Y. Cnty. 1976]). 2 [* 3] Professional corporations of attorneys are exceptions to the general rule against corporate self-representation. "This reasoning [for requiring corporation to act through attorneys] does not apply in the case of a professional corporation where personal liability attaches and each member ... is qualified to appear before the court and argue its case." (Austrian, Lance & Stewart, P.C. v. Hastings Properties, Inc., 87 Misc. 2d 25, 26 [Sup. Ct. N.Y. Cnty. 1976; see also Gilbergv. Lennon, 212 A.D.2d 662, 664 [2d Dep't 1995]). Furthermore, if a corporation assigns its cause of action to an individual, the non-corporate assignee may represent itself, and need not appear by an attorney. (Kinlay v. Henley, 57 A.D.3d 219 [1st Dep't 2008] [finding corporation's assignment of its claims to individual plaintiff, "admittedly to evade CPLR § 321(a), [to be] a perfectly legitimate tactic."]; Medical Facilities, Inc. v. Pryke, 568 N.Y.S.2d 406 [1st Dep't 1991]). An LLC, like a corporation, shields its members from liability and, once formed, is a legal entity distinct from its members. (LLC §§ 102[m], 203[d]). It follows that, consistent with the "general rule" against corporate self-representation, an LLC may not represent itself in a civil action under CPLR § 321(a). (Michael Reilly Design, Inc. v. Houraney, 40 A.D.3d 592 [2d Dep't 2007] [finding that CPLR 321(a)'s prohibition against corporate self-representation extends to LLC's]). A partnership, on the other hand, does not necessarily shield its individual partners from personal responsibility. Rather, unless the partnership is a registered limited liability partnership, all partners are liable "jointly and severally for everything chargeable to the partnership under sections twenty-four and twentyfive" of the New York's Partnership Law, and "jointly for all other debts and obligations of the partnership." (P'ship Law § 26[a][1]-[2]). Moreover, unlike a corporation, a partnership is not a legal entity separate and distinct from the partners therein. (Jn re Peck, 206 N.Y. 55, 60 [1912]). Thus, a partnership that is not a registered limited liability partnership may appear prose in a civil action. (Walker & Bailey v. We Try Harder, Inc., 123 A.D.2d 256, 257 [1st Dep't 1986] [citation omitted] [partnership of attorneys]). Here, Plaintiff is not a corporation or a voluntary association. Rather, Plaintiffs complaint alleges that Plaintiff is "an operating partnership appearing Pro Se as successors in interest for 215 African & Hispanic American Realty of New York, LLC" ("215 African"). Plaintiffs complaint does not plead the nature of 3 [* 4] Plaintiffs business, or identify any individual members of Plaintiff entity. Nor does Plaintiffs complaint plead the circumstances whereby Plaintiff allegedly succeeded in interest to 215 African's claims. However, accepting Plaintiffs allegations as true, "[t]he plaintiff partnership is not subject to. the rule against corporations a.nd voluntary associations appearing prose in civil actions set forth in CPLR section 321(a)." (Gilberg v. Lennon, 212 A.D.2d 662, 664 [2d Dep't 1995]). ORDERED that Plaintiffs motion is denied; and it is further ORDERED that Defendants' cross motion is denied; and it is further ORDERED that Defendants shall file and serve an answer within 20 days of receipt of a copy of this Order with Notice of Entry thereof. This constitutes the decision and order of the court. All other relief requested is denied. DATED: June w, 2014 EILEEN A. RAKOWER, J.S.C. Check one: X NON-FINAL DISPOSITION FINAL DISPOSITION Check if appropriate: 0 DO NOT POST 0 4 REFERENCE

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