Block 3592, LLC v Krcista

[*1] Block 3592, LLC v Krcista 2016 NY Slip Op 51688(U) Decided on November 14, 2016 Supreme Court, Richmond County Minardo, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 November 14, 2016
Supreme Court, Richmond County

Block 3592, LLC, Plaintiff,

against

Beare Krcista and MEDAT KRICISTA, Defendants.



150623/2016
Philip G. Minardo, J.

Upon the foregoing papers, defendants' motion for an order, inter alia, dismissing the complaint pursuant to CPLR 3211(a)(1)and(5)based on the expiration of the six-year Statute of Limitations is denied, as is plaintiff's cross motion insofar as it seeks the dismissal of defendants' Third Affirmative Defense, which is denied without prejudice to renewal upon the completion of discovery. The balance of the cross motion is granted and defendants' First, Fifth and Seventh [*2]Affirmative Defenses are severed and dismissed.

This matter arises out of the alleged breach of a ten-year commercial lease agreement between the landlord, Block 3592, LLC (hereinafter "plaintiff") and the tenants, Beare and Medat Krcista (hereinafter "defendants"), who operated a pizzeria in premises located at 1141 North Railroad Avenue on Staten Island (see October 12, 2005 Lease, Defendants' Exhibit A; see also March 17, 2016 affidavit of Medat Krcista attached as Exhibit B to Defendants' Exhibit E). Along with the Lease, the parties executed a Guaranty dated October 12, 2005, wherein defendants agreed, inter alia, to "unconditionally guaranty to the Landlord the due and punctual payment, performance and compliance with all of the terms, covenants and conditions to be paid, performed or complied with by Tenant under the Lease...." (see Defendants' Exhibit A).

It appears undisputed that for approximately four years (i.e., from October/November of 2005, until December of 2009), the parties enjoyed a fruitful business relationship. However, on February 1, 2010, plaintiff served defendants with a "Notice to Cure" (see Defendants' Exhibit B), giving them until February 22, 2010 to, e.g., honor their obligation to pay rent for the months of December, 2009 and January, 2010.

When defendants failed to pay their arrears, plaintiff instituted an action in the Civil Court, Richmond County to take possession of the premises. On April 21, 2010, the parties entered into a "So-Ordered Stipulation" before the Honorable Orlando Marrazzo, Jr. (see Defendants' Exhibit C), which provided, in relevant part, that "[r]espondents [defendants herein] surrender [the] keys in open court...[and] consent that [the] landlord [plaintiff herein] shall have a final judgment of possession." The stipulation further provided that a "warrant may issue and execute...[and the] Landlord may change [the] locks forthwith." In the balance of the stipulation, (1) the tenants averred that they had already vacated the premises, and (2) the parties agreed to reserve their respective rights and defenses "under the lease and guaranty" (emphasis supplied).

Ten months later, i.e., on February 16, 2011, plaintiff instituted an action to recover rent arrears and associated costs from defendants in the Supreme Court, Kings County, under Index No. 3812/2011 [FN1] . That action resulted in the entry of a default judgment against defendants in the amount of $32,390.46 on August 15, 2011. A transcript of the judgment was subsequently filed with the Richmond County Clerk on September 21, 2011 (see Defendants' Exhibits N and P, attached to Defendants' Exhibit E).

Approximately four years later, i.e., in the Fall of 2015, plaintiff took steps to execute its judgment, by serving a restraining notice barring access to defendants' bank account at New York Community Bank. Defendants were notified of these events on or about January 16, 2016, as a result of which they brought an Order to Show Cause in Kings County on March 18, 2016 to vacate plaintiff's default judgment and to dismiss the 2011 action for lack of personal jurisdiction. In an Order dated June 13, 2016, the Honorable Richard Velasquez granted defendants' application and held, verbatim, that "(1) [p]laintiff's judgment obtained by default and entered in Kings County Clerk's office on or about August 15, 2011 in the amount of $32,390.46 is hereby vacated, and (2) [*3]because the Court found improper service and therefore no jurisdiction, the case is dismissed pursuant to CPLR 3211(a)(8)" (see Defendants' Exhibit F).

Plaintiff filed the present action in Richmond County on May 20, 2016, seeking monetary damages in the amount of $229,794.50, for (1) breach of contract and (2) rent arrears dating from May of 2010 through October of 2015 (see Defendants' Exhibit G). Defendants served their Answer containing nine affirmative defenses on June 27, 2016, four of which are the subject of plaintiff's cross motion to dismiss(see Defendants' Exhibit H)[FN2] .

In support of their position that plaintiff's action is time-barred, defendants maintain that any cause of action which plaintiff may have possessed accrued on February 1, 2010, when defendants were served with the Notice to Cure or, at the very latest, April 21, 2010, when possession of the premises was delivered to plaintiff in open court and the landlord-tenant relationship was severed. Accordingly, defendants claim the subject action, filed on May 20, 2010, was instituted 29 days after the statute of limitations had expired.

In opposition, plaintiff maintains that under the express terms of the lease [FN3] and Guaranty (see paragraph 25 at page 17 of Defendants' Exhibit A), it is entitled to recover the agreed payments from May of 2010 through October of 2015. "Although an eviction terminates the landlord-tenant relationship, the parties to a lease are not foreclosed from contracting as they please. If the lease provides that the tenant shall be liable for rent after eviction, the provision is enforceable" (Holy Props. v. Cole Prods., 87 NY2d 130, 134 [citations omitted]). However, where a tenant had been ejected in summary proceedings, the lease is at an end, and all that survives is a cause of action for damages rather than unpaid rent (see Kottler v. New York Bargain House, 242 NY 28).

It is well settled that on a CPLR 3211(a)(5) motion to dismiss based on the running of the statute of limitations, the defendant bears the initial burden of proving that the action is untimely. Moreover, in deciding such a motion, the court is enjoined to consider all of the allegations in the complaint as true, resolve all relevant inferences in plaintiff's favor, and must afford plaintiff's submissions in response to the motion "their most favorable intendment" (Benn v. Benn, 82 AD3d 548, 548 [1st Dept 2011]).

Pursuant to CPLR 213(2), an action based on a contractual obligation or liability must be commenced within six years of accrual, which, for these purposes, begins to run when the contract is breached, e.g., when one party fails to perform a contractual obligation. Nevertheless, the rule in New York applicable to a cause of action for the breach of a contract payable in installments, is that the non-payment of each installment is deemed to accrue separately for purposes of the statute of limitations (see Khoury v. Alger, 174 AD2d 918, 919; see also A & I Realty Corp. v. Kent Dry [*4]Cleaners Inc., 61 Misc 2d 887, 890 [Dist. Ct. 2d Dist]). As a result, "where a lease requires the payment of rent in installments the statute of limitations begins anew with each separate installment" (J.C. Penney Corp. v. Carousel Ctr. Co., 635 FSupp2d 126, 131-132 [NDNY 2008]). Accordingly, here where the obvious intent of the parties was that the rent would be payable in monthly installments, the landlord, for purposes of the statue of limitations, would accrue a separate cause of action for each month's rent as it became due. Thus, while plaintiff in the present action would be statutorily barred from collecting any rents more than six years in arrears, defendants have failed to show that the plaintiff/landlord's claim for the unpaid rent from May of 2010 through October 2015 is statutorily barred. As previously stated, the fact that the landlord-tenant relationship ended on or about April 21, 2010 has no bearing on defendants' obligation to pay rent under the lease and guaranty.

"When defendant [at bar] abandon[ed] the leased premises prior to [the] expiration of the lease, the landlord [had] three options: (1) it could do nothing and collect the full rent due under the lease (see e.g., Becar v. Flues, 64 NY 518); (2) it could accept the tenants' surrender, reenter the premises and relet them for its own account, thereby releasing the tenant from further liability for rent; or (3) it could notify the tenant that it was entering and reletting the premises for the tenant's benefit...[As a result,] once the tenant abandoned the premises prior to the expiration of the lease,...the landlord was within its rights under New York law to do nothing and collect the full rent due under the lease" (Holy Props. v. Cole Prods., 87 NY2d 130, 134). In point of fact, the clause in the lease expressly providing that the tenant shall be liable for all rent due or to become due after eviction, may be enforced as written with the identical results (see International Publs. v. Matchabelli, 260 NY 451, 454; Hall v. Gould 13 NY 127, 133-134)[FN4] .

Accordingly, defendants' motion to dismiss the complaint in its entirety must be denied.

Turning to plaintiff's cross motion, it is clear from paragraph 16 of defendants' reply affirmation that the Fifth and Seventh Affirmative Defenses have been "withdrawn." That leaves for adjudication defendants' First Affirmative defense, which must be stricken for the reasons set forth above, and their Third Affirmative defense, which may remain at this juncture in the absence of any proof that plaintiff either waived defendants' rent obligations or consented to their nonpayment. In the opinion of this Court, the determination of this issue will likely depend on the existence of facts presently unavailable to defendants which may be revealed during discovery (see CPLR 3211[d]). Thus, that branch of plaintiff's motion which seeks the dismissal of defendants' Third Affirmative Defense is denied with leave to renew after discovery is complete.

Accordingly, it is

ORDERED, that the defendants' motion to dismiss the complaint and for an award of attorneys fees is denied in its entirety, and it is further

ORDERED, that the plaintiff's cross motion to dismiss the First, Third, Fifth and Seventh Affirmative Defenses is granted except as to defendants' Third Affirmative Defense, which is denied without prejudice to renewal when discovery is complete.

This constitutes the Decision and Order of the Court.

ENTER,

Dated: November 14, 2016

/s/ Philip G. Minardo

J.S.C. Footnotes

Footnote 1:It is conceded that Kings County bore no connection to the case, and that plaintiff instituted the action in Kings County pursuant to CPLR 509 which provides that "[n]otwithstanding any other provision of this article, the place of trial of an action shall be in the county designated by the plaintiff."

Footnote 2:For ease of reference, the affirmative defenses which are the subject of plaintiff's cross motion are the "First", "Third", "Fifth" and "Seventh", which allege, respectively, (a) the six-year Statute of Limitations; (b) waiver, consent and estoppel; ( c ) res judicata, and (d) "the entire controversy doctrine".

Footnote 3:Paragraph 25 of the October 12, 2005 Lease reads, in pertinent part: "Survival of Lessee's Obligations and Damages '[n]o expiration or termination of the Lease Term pursuant to this Lease...shall relieve Lessee of Lessee's obligations or liabilities hereunder, all of which shall survive such expiration, termination, or repossession'"...

Footnote 4:In any and all events, the landlord's right to recover a tenant's rent arrears would be subject to the Statute of Limitations, as provided in CPLR 213(2).