469 Columbus Retail, LLC v Biscuits & Bath Cos., LLC
Annotate this CaseDecided on June 18, 2020
Supreme Court, New York County
469 Columbus Retail, LLC, Plaintiff,
against
Biscuits and Bath Companies, LLC, JOHN ZIEGLER, and SCOTT SMITH, Defendants.
650577/2018
Gregory Kuczinski, P.C., White Plains, NY (Gregory Kuczinski of counsel), for plaintiff.
De Lotto & Fajardo LLP, New York, NY (Ed Fajardo of counsel), for defendants.
Gerald Lebovits, J.
This case arises out of a dispute over alleged unpaid rent between plaintiff, building owner 469 Columbus Retail, LLC, and defendants, tenant Biscuits and Bath Upper West Side, LLC, and guarantors John Ziegler and Scott Smith.
Plaintiff has alleged that Biscuits and Bath and the guarantors breached their contracts [*2]with 469 Columbus when Biscuits and Bath vacated the premises and ceased paying rent before the lease expired. Plaintiff brought claims against both Biscuits and Bath and the two guarantors, seeking unpaid rent, the repayment of a prior sum paid to Biscuits and Bath, and attorney fees. Defendants counterclaimed that they were constructively evicted.
Defendants now move for summary judgment under CPLR 3212 dismissing the complaint. Plaintiff cross-moves under CPLR 3212 for summary judgment in its favor.
BACKGROUND
In 2006, Biscuits and Bath entered into a 12-year lease with non-party landlord L & H Realty Associates LLC for a retail storefront located at 469 Columbus Avenue in Manhattan. (See NYSCEF No. 2.) Ziegler and Smith executed personal guarantees of Biscuits and Bath's performance and obligations under the lease, including payment of rent.
In 2011, Biscuits and Bath and L & H executed an amendment to the lease. The amended lease included a three-year rent reduction for Biscuits and Bath, conditioned on its fulfilling its obligations under the lease. The amended lease also provided that if L & H sold the premises to another party on or before June 1, 2011, L & H would pay $80,000 to Biscuits and Bath in place of the rent reduction. (See NYSCEF No. 3.) On April 4, 2011, L & H assigned the lease to 469 Columbus United LLC, which assigned the lease to plaintiff. (See NYSCEF No. 4.) L & H paid Biscuits and Bath $80,000 under the terms of the amended lease.
In November 2012, Biscuits and Bath vacated the premises and ceased paying rent. Biscuits and Bath has asserted that it was constructively evicted by 469 Columbus due to numerous and unpleasant disruptions to Biscuits and Bath's business from a construction project undertaken in the building. On the date of surrender, Biscuits and Bath gave written notice to 469 Columbus, arranged to have the keys to the premises returned, and paid rent and taxes through the surrender date.
In 2018, 469 Columbus sued both Biscuits and Bath and the two guarantors, alleging that they breached the terms of the lease and the guarantees. 469 Columbus asserted claims against all three defendants for unpaid rent and taxes and for repayment of the $80,000 previously paid to Biscuits and Bath, totaling $345,819.52 (plus interest). 469 Columbus also asserted a claim against the guarantors alone for $25,000 in attorney fees that had allegedly been incurred in enforcing the guarantee. Defendants answered and counterclaimed for constructive eviction.
Defendants now move under CPLR 3212, seeking (i) dismissal of the claims against the guarantors and (ii) dismissal of 469 Columbus's claim for repayment of the $80,000; 469 Columbus cross-moves under CPLR 3212 for judgment in its favor on its complaint.[FN1]
DISCUSSION
On a summary-judgment motion under CPLR 3212, the movant must "establish[ ] a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact." (Deleon v New York City Sanitation Dept, 25 NY3d 1102, 1106 [2015] [internal quotation marks omitted).) If the movant makes this showing, the party opposing the motion must "produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact which require a trial of the action." (Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986].)
I. Defendant's Motion for Summary Judgment
A. The Guarantor Defendants' Liability on Biscuits and Bath's Obligations
The guarantor defendants move for summary judgment dismissing 469 Columbus's claims for unpaid rent and taxes accruing after the date Biscuits and Bath surrendered the premises. The guarantors argue that under the terms of the guarantee, Biscuits and Bath's surrender cut off any further obligation of the guarantors. This court largely (but not wholly) agrees.
The terms of a guarantee must be strictly construed to limit the obligations of a guarantor to the express terms set out in the guarantee. (Wesselman v Engel Co., 309 NY 27, 30 [1955]; Levine v Segal, 256 AD2d 199, 200 [1st Dept 1998].)
The guarantee here provides that the guarantors are liable for "the payment of any and all Base Rent and Additional Rent" due under the lease for "any period . . . in which Tenant shall not have surrendered possession of the Premises to Landlord." (See NYSCEF No. 5. at 1.) The tenant "shall be deemed to surrender possession of the Premises" when it has "vacate[d] the Premises," "surrender[ed] the same in the condition required by the Lease upon expiration thereof," and "delivered to Landlord the keys to the Premises and a written statement executed by Tenant stating that it has surrendered possession." (Id.)
Biscuits and Bath undisputedly vacated the premises on November 26, 2012, paid both rent and taxes up to the date of surrender, returned the keys, and gave plaintiff a written surrender letter. (See NYSCEF No. 31.) These undisputed facts establish as a matter of law that the guarantors are not liable for rent or additional rent owed after the surrender date of November 26, 2012.
Plaintiff argues that Biscuits and Bath left the premises in poor condition and therefore that Biscuits and Bath's surrender of the premises did not cut off the guarantors' liability. This court disagrees. The guarantee expressly provides that should the tenant fail to surrender the premises in proper condition, the remedy would be limited to "the cost incurred by Landlord to cure such failure"—not continued liability for rent and additional rent after surrender. (See [*3]NYSCEF No. 5 at 1.) The guarantors are thus entitled to summary judgment except as to liability for post-surrender cleaning costs, and corresponding liability for a portion of 469 Columbus's attorney fees incurred in enforcing the guarantee.[FN2]
B. Defendants' Liability under the Amended Lease on the $80,000 Payment
Defendants also move for summary judgment on plaintiff's claim for repayment of the $80,000 paid to Biscuits and Bath in 2011 in place of the conditional rent reduction. The amended lease provided that "any obligation by Tenant to repay . . . as per the above [lease] provisions shall be limited to the first thirty-six months." (NYSCEF No. 3 at 3.) Defendants argue that plaintiff waited more than 36 months after Biscuits and Bath's surrender of the premises to assert a claim for repayment of the $80,000, rendering this claim time-barred. This limitations defense, however, was not raised in defendants' answer or a pre-answer motion to dismiss as required under CPLR 3018 (b) and 3211 (e). The defense is waived.
Contracting parties may agree to impose shorter limitations periods for contractual remedies than those provided for by statute, if the contract expresses that agreement clearly and unequivocally.. (See Protter v Nathan's Famous Sys, Inc. 246 AD2d 585, 586 [2nd Dept 1988]; Nassau Ch. Civ. Serv. Empls. Assn., Local 830, AFSCME, Local 1000, AFL-CIO v County of Nassau, 154 Misc 2d 545, 550 [1992].) Contract-based limitation defenses are treated identically to statute-based defenses for waiver purposes. (See Tilbury Fabrics v Stillwater 81 AD2d 532, 533 [1st Dept 1981], aff'd 56 NY2d 624, 626 [1982].) These defenses must be raised either in the answer or a pre-answer motion to dismiss. (See CPLR 3211 [e].)
Defendants did not file a pre-answer motion to dismiss. They also did not assert a limitations defense as to the $80,000 payment in their answer (though they did raise two other affirmative defenses). (See NYSCEF No. 8) This limitations defense therefore is waived and may not be asserted at summary judgment. The branch of defendants' motion seeking dismissal of 469 Columbus's claim for the $80,000 is denied.
II. 469 Columbus's Cross-Motion for Summary Judgment
469 Columbus cross-moves for summary judgment in its favor on the complaint (but not for summary judgment dismissing Biscuits and Bath's counterclaim). The motion is granted in part and denied in part.
A. Biscuits and Bath's Liability
The branch of 469 Columbus's motion seeking summary judgment on the complaint as against Biscuits and Bath is granted.
469 Columbus has made a prima facie showing that Biscuits and Bath failed to pay any rent (or additional rent in the form of taxes) after surrendering the premises in November 2012. 469 Columbus also has made a prima facie showing that Biscuits and Bath's surrender of the premises did not satisfy the requirements of the lease. In particular, § 24 of the lease provides that any surrender of the premises must be accepted "in writing signed by Owner." The delivery of the keys to an employee or agent of 469 Columbus "shall not operate as a termination of the lease or a surrender of the demised premises." (NYSCEF No. 24 at 5 § 24.) Defendants do not attempt to rebut this prima facie showing as to Biscuits and Bath's post-November 2012 liability for rent and additional rent.
469 Columbus has also made a prima facie showing that Biscuits and Bath is required to repay the $80,000 paid to it in place of the conditional rent reduction. The payment of the $80,000 was made conditional on the tenant's complying with its obligations under the lease, including payment of rent. It is undisputed that Biscuits and Bath did not satisfy that obligation. Biscuits and Bath, in opposing this claim, argues only that the claim is time-barred for not being raised within 36 months. As discussed above this defense was waived.
B. The Guarantors' Liability
The branch of 469 Columbus's motion seeking summary judgment on the complaint as against the guarantor defendants is granted in part and denied in part. 469 Columbus contends that the guarantors are liable under the guarantee for Biscuits and Bath's post-November 2012 obligations to pay base and additional rent. As set forth above, this court concludes that the guarantors are not liable for that obligation except as to post-surrender cleaning costs, if any.
469 Columbus also argues that the guarantors are liable under the guarantee for reasonable attorney fees incurred in enforcing the guarantee's terms. The complaint alleges that 469 Columbus's reasonable attorney fees equal $25,000. This court concludes that 469 Columbus is entitled to summary judgment on its claim for attorney fees—subject, however, to a reduction to reflect 469 Columbus's limited success on its claims under the guarantee.
Accordingly, it is
ORDERED that the branch of defendants' motion under CPLR 3212 seeking dismissal of 469 Columbus's claims against the guarantors is granted as to the guarantors' liability for rent and unpaid rent after the surrender date, and otherwise denied; and it is further
ORDERED that the branch of defendants' motion under CPLR 3212 seeking dismissal of 469 Columbus's claim for repayment of the $80,000 is denied; and it is further
ORDERED that the branch of 469 Columbus's cross-motion under CPLR 3212 seeking summary judgment as to Biscuits and Bath's liability for rent and unpaid rent is granted; and it is further
ORDERED that the branch of 469 Columbus's cross-motion under CPLR 3212 seeking summary judgment as to Biscuits and Bath's liability on the $80,000 payment is granted; and it is further
ORDERED that the branch of 469 Columbus's cross-motion under CPLR 3212 seeking summary judgment as to the guarantors' liability for Biscuits and Bath's obligations is granted only to the extent that the guarantors are liable for 469 Columbus's post-surrender cleaning costs (if any) and to an increment of 469 Columbus's reasonable attorney fees incurred in enforcing the guarantee; and it is further
ORDERED that a Judicial Hearing officer (JHO) or Special Referee shall be designated to hear and report on (i) the amount of 469 Columbus's post-surrender cleaning costs, if any; and (ii) the appropriate amount of 469 Columbus's reasonable attorney fees incurred in enforcing the guarantee, as reduced from the claimed $25,000 to reflect 469 Columbus's limited success on its guarantee claims; and it is further
ORDERED that 469 Columbus shall serve a copy of this order with notice of its entry on all parties, on the Special Referee Clerk in the General Clerk's Office (60 Centre Street, Room 119, 646-386-3028 or spref@nycourts.gov), who is directed to place this matter on the calendar of the Special Referee's Part for the earliest convenient date; and it is further
ORDERED that the parties shall confer regarding whether defendants wish to continue to assert their constructive-eviction counterclaim, and if so how the parties intend to proceed in litigating that claim, shall notify the court as to their joint conclusions on these issues by e-filed letter, and shall provide notice to the court of the filing of that letter by calling chambers at (646) 386-3074.
FootnotesFootnote 1: 469 Columbus does not seek summary judgment dismissing Biscuits and Bath's constructive-eviction counterclaim.
Footnote 2: The guarantors also argue that 469 Columbus's claims against them should be dismissed in their entirety as barred by laches. But a breach-of-contract claim for money damages is not equitable. Laches is therefore not available as a defense to this claim. (See Garber v Stevens 94 AD3d 426, 427 [1st Dept. 2012].)
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