Florencia Props. LLC v Fabric & Fabric, Inc.
Annotate this CaseDecided on June 23, 2022
Supreme Court, New York County
Florencia Properties LLC, Plaintiff,
against
Fabric & Fabric, Inc. and FRED MAHRACH, Defendants.
Index No. 158128/2021
Zingman & Associates PLLC, New York, NY (Yakira Lawley of counsel), for plaintiff.
Kenneth M. Bushell, Esq., Bronx, NY, for defendants. Gerald Lebovits, J.
In this action on a commercial lease and guarantee, plaintiff, Florencia Properties LLC, moves for default judgment against the tenant, defendant Fabric & Fabric, Inc., and against the guarantor, defendant Fred Mahrach. The motion is granted in part and denied in part without prejudice.
To obtain a default judgment, the movant must establish proper service, the nonmovant's default, and the facts constituting the movant's claim. (See CPLR 3215 [f].) Here, Florencia has shown that it properly served defendants, and that they defaulted; but Florencia has not, on this record, established the facts supporting the full amount to which Florencia claims entitlement.
1. In opposing default judgment, defendants contend that service was defective because "it was sent to the wrong address, 263 West 39th Street, New York, New York which is not our [*2]address." (NYSCEF No. 26 at ¶ 2.) This contention is meritless.
With respect to Mahrach, plaintiff's affidavit of service reflects that the process server served him at 263 West 38th Street by personal delivery of the initiating papers into his hands. (See NYSCEF No. 5.) Mahrach does not dispute the veracity of that affidavit. Nor does he explain how the affidavit can be reconciled with his assertion that he "never received the summons and complaint because it was sent to the wrong address, 263 West 39th Street, New York, New York." (NYSCEF No. 26 at 2 ¶ 2 [emphasis added].) Nor, for that matter, does Mahrach explain how he "learned of the Summons and Complaint" to begin with if it had been sent only to an incorrect address.[FN1] (Id. at 2 ¶ 3.)
With respect to Fabric & Fabric, plaintiff's affidavit of service reflects that initial service was made through the Secretary of State under Business Corporation Law § 306. (See NYSCEF No. 12.) And the follow-up mailing was sent both to Fabric & Fabric at 250 West 39th Street"the address given for the corporation in its listing with the Secretary of State, of which this court takes judicial notice"and to the 263 West 38th Street address at which Mahrach had been served (not 263 West 39th Street). (See NYSCEF No. 14 at 1.)
This evidentiary showing is sufficient to establish valid service on both defendants, and to rule out defendants' proffered excuse for their default.
2. Plaintiff also must establish the facts supporting its claims against defendants. (See CPLR 3215 [f].) Plaintiff seeks to meet this burden through an attorney affirmation and an affidavit of a property manager (see NYSCEF Nos. 8, 9), supported by copies of the governing leases and guarantees and a rent ledger (see NYSCEF Nos. 16-17 [leases], 18-19 [guarantees], 20 [rent ledger].) This submission is enough only to show that plaintiff is entitled to amounts that accrued under the leases and guarantees through the end of July 2021"not the additional amounts accruing from August 2021 through January 2022 that plaintiff is also seeking on this motion.
Fabric & Fabric's lease runs through July 2022. Plaintiff represents that Fabric & Fabric stopped paying rent in January 2021; and that it vacated the premises without the landlord's consent, thereby defaulting under the governing leases, at the end of July 2021.[FN2] (See NYSCEF No. 1 at ¶ 19 [complaint]; NYSCEF No. 8 at ¶¶ 15-16 [attorney affirmation]; NYSCEF No. 9 at ¶ 9 [property-manager affidavit].) Under the leases, the landlord upon default is entitled to the then-accrued rent and additional rent (and other charges), plus liquidated damages in the amount of the difference between (i) the monthly rent owed under the leases for the balance of their terms and (ii) the amount (if any) collected by the landlord upon reletting the premises, plus attorney fees. (See NYSCEF No. 16 at ¶ 18; NYSCEF No. 17 at ¶ 18.)
In other words, plaintiff's claim for post-surrender rent and additional rent (and other [*3]applicable charges) is in the nature of liquidated damages. As a result, the burden is on plaintiff to establish the amount of those damages to which it is entitled. That amount, in turn, depends on whether or not plaintiff relet the premises after Fabric & Fabric vacated at the end of July 2021; and, if plaintiff did find a new tenant, what rent it has collected from that tenant over the balance of the original Fabric & Fabric lease term. But neither plaintiff's complaint nor its papers in support of the current motion address whether plaintiff ever relet the premises between August 2021 and when it filed this motion in January 2022. This court thus lacks sufficient information to determine what amount in liquidated damages plaintiff is entitled to for the post-surrender portion of the lease term, if any.
Plaintiff's claim for pre-surrender rent, additional rent, and charges, on the other hand, is sufficiently supported by its submissions on this motion. The rent ledger provided by plaintiff reflects that for the period of January 2021 through July 2021, Fabric & Fabric owes $200,631.67 in rent and additional rent, plus a late fee of 10% of that amount, for a total of $220,694.84, with interest on that sum at the contract default rate of 24% annually. On this record, plaintiff has proven its entitlement at least to that sum from Fabric & Fabric.
With respect to defendant Mahrach, plaintiff concedes that under New York City Administrative Code § 22-1005 it cannot collect on his guarantees with respect to the lease defaults by Fabric & Fabric that occurred between March 2020 and June 30, 2021.[FN3] Thus, at least on this motion, the only sum for which Mahrach can be liable is the total amount in rent, additional rent, and late charges that accrued in the month of July 2021. That sum is $38,627.88 (plus interest).
Accordingly, for the foregoing reasons, it is
ORDERED that plaintiff's motion for default judgment is granted in part and denied in part; and it is further
ORDERED that plaintiff is awarded a judgment against defendant Fabric & Fabric Inc. in the amount of $220,694.84, with interest running at the contract default rate of 24% annually from August 1, 2021, plus costs and disbursements to be taxed by the Clerk upon the submission of an appropriate bill of costs; and it is further
ORDERED that plaintiff is awarded a judgment against defendant Mahrach in the amount of $38,627.85, with interest running at the contract default rate of 24% annually from August 1, 2021, plus costs and disbursements to be taxed by the Clerk upon the submission of an appropriate bill of costs; and it is further
ORDERED that plaintiff may obtain a supplemental judgment through filing another motion in this action seeking the total amount of (i) Fabric & Fabric and Mahrach's obligations under the leases and guarantees from August 1, 2021, through the date of entry of this order; and (ii) plaintiff's reasonable attorney fees under the leases and guarantees; and it is further
ORDERED that plaintiff serve a copy of this order with notice of its entry on all parties and on the office of the County Clerk, which shall enter judgment accordingly.
DATE 6/23/2022 FootnotesFootnote 1:The affidavits of additional service of the summons and complaint on the defendants for purposes of CPLR 3215 (g), and the affidavit of service of the default-judgment motion, reflect mailing to the same addresses at which service was initially made. (See NYSCEF Nos. 12-14, 21.)
Footnote 2:Plaintiff has represented that at the time of the surrender of the premises Fabric & Fabric owed significant amounts in rent and additional rent that have still gone unpaid. The surrender thus did not terminate defendant Mahrach's obligations under his guarantees. (See NYSCEF No. 18 at ¶ 1 [c]; NYSCEF No. 19 at ¶ 1 [c].)
Footnote 3:Given this concession, there is no merit to Mahrach's argument that he has a meritorious defense to plaintiff's claims based on "the law passed by Mayor De Blasio forgiving guaranteed rents during the time of the Covid epidemic." (NYSCEF No. 26 at ¶ 5.)
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