Opinion
12-28-2023
9-11 STANTON STREET REALTY CORP., Plaintiff–Appellant, v. STANTON ST. CLEANERS, INC. doing business as Stanton St. Cleaners Corp. et al., Defendants–Respondents.
Kucker Marino Winiarsky & Bittens, LLP, New York (Andrew D. Cassady of counsel), for appellant. Trivedi Law Group, P.C., Jericho (Nirav Y. Shah of counsel), for respondents.
Kucker Marino Winiarsky & Bittens, LLP, New York (Andrew D. Cassady of counsel), for appellant.
Trivedi Law Group, P.C., Jericho (Nirav Y. Shah of counsel), for respondents.
Manzanet–Daniels, J.P., Webber, Friedman, Shulman, Rosado, JJ.
Order, Supreme Court, New York County (Paul A. Goetz, J.), entered March 18, 2022, which, to the extent appealed, denied plaintiff landlord’s motion for summary judgment against defendant Umar Hayat and declined to grant plaintiff attorneys’ fees, unanimously reversed, on the law, the motion granted, and the matter remanded for a hearing to determine reasonable attorneys’ fees.
Defendant Stanton St Cleaners (tenant) entered into a 10–year lease expiring in August 2023, and defendant Hayat (guarantor) provided a good guy guaranty, which provided that he "unconditionally, irrevocably and as a primary obligor" guaranteed the "full and faithful performance and observance" by the tenant of all the terms and conditions of the lease. The guaranty provided that guarantor would be released from his obligations if the tenant "duly surrendered" the premises by delivering the keys to the landlord, vacating the premises, and delivering a "written declaration to Owner which shall state that Tenant has surrendered to Owner all of Tenant’s right, title and interest in this Lease." The tenant vacated the premises and delivered its keys to the landlord in October 2020, but did not provide a written declaration. Landlord commenced this action against the tenant for non-payment under the lease and against Hayat based on the guaranty. Landlord sought to recover $46,733.52 for rent due as of the date of the complaint, $155,223.69 in accelerated damages for rent and other payments due through the end of the lease term in July 2023, and attorney’s fees against the tenant.
The tenant answered, asserting affirmative defenses based on the Covid–19 pandemic starting in March 2020, including frustration of purpose, impossibility and force majeure; harassment; surrender of the premises in accordance with the guaranty, and the guaranty law (Administrative Code of City of N.Y. § 22–1005).
The landlord moved for summary judgment on its claims against the tenant in the total amount of $193,809, plus interest, costs, and fees dismissing the affirmative defenses, and setting the matter down for determination of reasonable attorneys’ fees. The landlord argued that summary judgment was warranted on its claim against the tenant because it established the tenant’s nonpayment under the lease. The landlord also argued that Hayat unconditionally guaranteed all of the tenant’s payment obligations. Supreme Court granted the landlord’s motion as against the tenant for breach of the lease and denied the landlord’s motion for summary judgment against Hayat and Soho.
[1] Defendants have not appealed from the order of Supreme Court’s granting the landlord summary judgment against the tenant, finding it liable for rent through the date it vacated the premises ($46,-733.52) and for rent through the remainder of the lease ($155,223.69). Since the landlord prevailed on its central claim of breach of lease against the tenant, it was entitled to recover attorneys’ fees pursuant to the lease (see Sykes v. RFD Third Ave. I Assoc., LLC, 39 A.D.3d 279, 280, 833 N.Y.S.2d 76 [1st Dept. 2007]).
[2, 3] We find that Supreme Court should have granted the landlord’s motion for summary judgment against defendant guarantor. Defendants failed to raise any valid defense to guarantor’s obligation as to the $46,733.52 in rent that had accrued up to the time the tenant vacated the premises. Defendants’ claim that the landlord orally agreed to modify the amount of rent due is inconsistent with the lease which requires any modification to be in a writing signed by the landlord, and there is no claim of partial performance or equitable estoppel (Joseph P. Day Realty Corp. v. Jeffrey Lawrence Assoc., Inc., 270 A.D.2d 140, 141, 704 N.Y.S.2d 587 [1st Dept. 2000]; see also General Obligations Law § 15–301[1]). Although the tenant lost business during the Covid–19 pandemic, it did not demonstrate that the purpose of the contract had been completely thwarted, and thus the defenses of frustration of purpose, force majeure and impossibility of performance are inapplicable, even assuming guarantor can rely on them here (Valentino U.S.A., Inc. v. 693 Fifth Owner LLC, 203 A.D.3d 480, 160 N.Y.S.3d 858 [1st Dept. 2022]; 558 Seventh Ave. Corp. v. Times Sq. Photo Inc., 194 A.D.3d 561, 561–562, 149 N.Y.S.3d 55 [1st Dept. 2021], appeal dismissed. 37 N.Y.3d 1040, 154 N.Y.S.3d 564, 176 N.E.3d 301 [2021]).
[4–6] As for guarantor’s continuing obligation after the tenant vacated the premises, the landlord demonstrated that the tenant did not comply with the requirement to deliver a written declaration of surrender, as required by the lease and guaranty, and defendants did not submit evidence sufficient to raise an issue of fact (see Empire LLC v. Sharapov, 192 A.D.3d 417, 418, 139 N.Y.S.3d 797 [1st Dept. 2021]). While defendants contend that there are issues of fact as to surrender by operation of law, such surrender "occurs when the parties to a lease both do some act so inconsistent with the landlord-tenant relationship that it indicates their intent to deem the lease terminated" (Riverside Research Inst. v. KMGA, Inc., 68 N.Y.2d 689, 691–692, 506 N.Y.S.2d 302, 497 N.E.2d 669 [1986]). Here, the landlord denied that it accepted the tenant’s surrender of the lease and defendants did not present any evidence that the landlord acted in a manner inconsistent with the tenant’s lease or acted in any way that indicated its intention to deem the lease terminated (see Connaught Tower Corp. v. Nagar, 59 A.D.3d 218, 218, 873 N.Y.S.2d 553 [1st Dept. 2009]). Defendants fail to identify what discovery they need from the landlord on the issue, and how that discovery could disclose facts supporting a claim that the landlord acted in a manner consistent with a surrender by operation of law (see CPLR 3212[f]; FGP 1, LLC v. Pirogova, 217 A.D.3d 602, 603–604, 194 N.Y.S.3d 3 [1st Dept. 2023]; cf. University Sq. San Antonio, TX. LLC v. Mega Furniture Dezavala, LLC, 198 A.D.3d 1284, 1286, 155 N.Y.S.3d 252 [4th Dept. 2021]).