Opinion
Index No. 652213/2023
05-23-2024
721 Borrower LLC, Plaintiff, v. Premier Digital Equipment Services Inc., SANFORD SCHNEIDERMAN, and RHONA SCHNEIDERMAN, Defendants.
Charles E. Boulbol, Esq., New York, NY, for plaintiff. Allen J. Bodner, Esq., New York, NY, for defendants.
Unpublished Opinion
Charles E. Boulbol, Esq., New York, NY, for plaintiff.
Allen J. Bodner, Esq., New York, NY, for defendants.
Gerald Lebovits, J.
The action arises from commercial lease agreement between plaintiff, 721 Borrower LLC, and defendant Premier Digital Equipment Services Inc. (tenant). Defendants, Sanford and Rhona Schneiderman (guarantors), signed a guaranty through which they agreed to pay any rent that Premier fails to pay. (NYSCEF No. 10.)
The lease was signed by tenant and Rock-Seventh Avenue, Inc., plaintiff's predecessor-in-interest.
The guaranty was signed by guarantors and 721 Realty Associates, LLC, another predecessor-in-interest to plaintiff.
Plaintiff raises three causes of actions based on the lease and the guaranty. In the first cause of action, plaintiff seeks monetary damages of $533,423.35 for unpaid rent and other sums accrued through July 2022. (NYSCEF No. 2 at ¶ 18.) In the second cause of action, plaintiff seeks $1,201,436.15 for unpaid rent and other sums accrued through February 2023-including the sums sought in the first cause of action. (NYSCEF No. 2 at ¶ 28). The first and second causes of action sound in breach of contract and breach of guaranty. In its third cause of action, plaintiff seeks attorney fees. (NYSCEF No. 2 at ¶ 41.)
Defendants raise three affirmative defenses: breach of the covenant of repair, breach of the covenant of quiet enjoyment, and tenant harassment. (NYSCEF Nos. 18 at ¶¶ 43-45 [Premier and Mr. Schneiderman's answer]; 37 at ¶¶ 43-45 [Ms. Schneiderman's answer].) Defendants counterclaim that plaintiff did not maintain the building in good repair and that the building conditions adversely affected defendants' business. (NYSCEF No. 18 at 5-6; NYSCEF No. 37 at 5-6.) Defendants allege they have suffered $1,500,000 in damages. (NYSCEF No. 18 at 6; NYSCEF No. 27 at 6.)
In motion sequence 001, plaintiff moves under CPLR 3212 for summary judgment on its complaint against Premier and Sanford Schneiderman and on those defendants' affirmative defenses and counterclaims. In motion sequence 002, plaintiff moves for summary judgment on its complaint against defendant Rhona Schneiderman and to dismiss her affirmative defenses and counterclaims. The two motions involve the same issues and are considered together.
Plaintiff's requests for summary judgment on its claims against tenant and against guarantors are granted as to liability and otherwise denied without prejudice. The branches of plaintiff's motions seeking dismissal of defendants' affirmative defenses are granted. The branches of plaintiff's motions seeking dismissal of defendants' counterclaims are denied.
DISCUSSION
I. Plaintiff's Requests for Summary Judgment on Its Claims and for Summary Judgment Dismissing Defendants' Affirmative Defenses
A party moving for summary judgment "must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact from the case." (Winegrad v New York Univ. Med. Ctr., 64 N.Y.2d 851, 853 [1985].) If the movant meets this burden, the non-moving party must then establish the existence of material issues of fact. (See Alvarez v Prospect Hosp., 68 N.Y.2d 320, 324 [1986].)
The parties do not dispute that plaintiff established its prima case- i.e., that neither tenant nor guarantors paid rent and other sums owed to plaintiff, as required under the terms of the lease and guaranty. The question is instead whether defendants have raised disputed issues of fact.
Defendants' argument, at its core, is that their failure to pay rent and other sums was justified. Defendants contend that plaintiff breached the covenant of quiet enjoyment contained in the lease and that plaintiff is guilty of tenant-harassment. Defendants provide evidence-Mr. Schneiderman's affidavit-indicating that building conditions such as a broken freight elevator, trash accumulation, and lack of security impacted defendants' ability to run their business and forced them to close the business. (NYSCEF No. 56 at 2-3.) This court concludes, for the reasons set forth below, that defendants' argument is unavailing.
A. Tenant's Defenses to Summary Judgment
Plaintiff argues that tenant's proffered breach-of-quiet-enjoyment defense is insufficient to defeat summary judgment. This court agrees.
In 2020, tenant fell behind on rent, in part due to the effects of the COVID-19 pandemic. In August 2020, plaintiff and tenant entered into an agreement related to these arrears. The agreement reduced to an extent tenant's overdue rent obligations and set a schedule for tenant to become current on rent. It also provided that if plaintiff brought an action claiming that tenant had defaulted on its obligations under the agreement, tenant would "waive[] all defenses except payment." (NYSCEF No. 8 at ¶ 11.) This provision precludes tenant from raising here a breach-of-quiet-enjoyment defense to plaintiff's claim for amounts owed by tenant under the August 2020 agreement.
Plaintiff is also entitled to summary judgment against tenant with respect to plaintiff's claim for rent and additional rent accruing after the August 2020 agreement. The lease provides that "upon Tenant paying the rent and additional rent... Tenant may peaceably and quietly enjoy the premises." (NYSCEF No. 4 at ¶ 23.) Thus, tenant's payment of rent is a condition precedent to its right to quiet enjoyment; and its "failure to pay rent foreclose[s] its claims under the breach of quiet enjoyment provision of the lease." (Cafe Lughnasa Inc. v A & R Kalimian LLC, 176 A.D.3d 523, 524 [1st Dept 2019].)
Regardless, tenant's evidence is insufficient as a matter of law to support a breach-of-quiet-enjoyment defense. Tenant does not dispute that it "remained in full possession of the leased premises." (Intl. Dev. Inst., Inc. v Westchester Plaza, LLC, 194 A.D.3d 411, 412 [1st Dept 2021] [internal quotation marks omitted].) Although defendants contend that plaintiff did not properly maintain the building, which made it much harder for tenant to tend to some of its clients, defendants do not allege that tenant was unable to use the leased premises (whether in whole or in part). (Cf. Koretz v 363 E. 76th St. Corp., 178 A.D.3d 445, 446 [1st Dept 2019] [denying motion to dismiss claim for breach of covenant of quiet enjoyment when plaintiff alleged "that the erection of the large handicap ramp and the walls covering a large portion of the private garden entrance effectively ousted him from physical possession of the garden portion of the premises, which was an unlawful interference with his beneficial use of the property"].)
There is also no merit to tenant's argument that it is excused from having to pay rent due to plaintiff's (alleged) tenant harassment. Tenant relies on New York City Administrative Code § 22-902, which bars landlords from committing harassment (as statutorily defined) against commercial tenants. But § 22-903, which carries into effect § 22-902's restrictions, provides expressly that a commercial tenant's bringing of an action claiming harassment does not "relieve[]" the tenant "of the obligation to pay any rent for which the commercial tenant is otherwise liable." (Administrative Code § 22-903 [b].) At most, a tenant-harassment claim or counterclaim, if successful, would offset the amount of "delinquent rent or other sum for which a court finds such commercial tenant is liable to landlord." (Id.) Tenant's harassment argument here is not a defense to plaintiff's summary-judgment motion.
B. Guarantors' Defenses to Summary Judgment
With respect to guarantors, plaintiff contends that the "absolute and unconditional" character of the guaranty forecloses any defenses that they might raise. (See NYSCEF No. 31 at 7-8 [mem. of law], quoting NYSCEF No. 10 at 3 [guaranty]. This contention is persuasive. (See Deco Towers Assoc., LLC v Fisch, 219 A.D.3d 1245, 1247 [1st Dept 2023] [explaining that a guaranty is "separate and distinct from a lease and an unconditional guarantor may not assert defenses that arise independently from the guaranty or are personal to the principal debtor"].)
Defendants have not provided evidence, in opposition to plaintiff's prima facie case, that might raise material disputes of fact. Defendants assert that summary judgment is nonetheless premature under CPLR 3212 (f) because they need further discovery to gather the necessary evidence. This assertion is without merit: As discussed above, the terms of the agreements among the parties foreclose the defenses that defendants' requested discovery might support.
Plaintiff's summary-judgment motion is granted as to liability. For the same reasons, the branch of plaintiff's motion seeking dismissal of defendants' affirmative defenses is granted.
II. Plaintiff's Requests for Summary Judgment Dismissing Defendants' Counterclaims
Plaintiff also moves for summary judgment to dismiss defendants' counterclaims. But plaintiff does not make any arguments in favor of dismissal. (See NYSCEF Nos. 31, 46. [memorandums of law]) This branch of plaintiff's motion is denied.
Given the outstanding counterclaims, plaintiff's request for attorney fees is denied without prejudice. Additionally, because the amount sought by defendants on their live counterclaims exceeds the maximum award to which plaintiff could be entitled on its claims, it is premature at this time to determine how much plaintiff should be awarded in damages.
Accordingly, it is
ORDERED that the branches of plaintiff's motions for summary judgment seeking summary judgment on plaintiff's first and second causes of action as against tenant and against guarantors (mot seqs. 001 and 002) are granted on liability, with damages to be determined after resolution of defendants' counterclaims; and it is further
ORDERED that the branches of plaintiff's motions seeking summary judgment dismissing defendants' affirmative defenses (mot seqs. 001 and 002) are granted; and it is further
ORDERED that the branches of plaintiff's motion seeking summary judgment dismissing defendants' counterclaims (mot seqs. 001 and 002) are denied; and it is further
ORDERED that the balance of the claims in this action are severed and shall continue; and it is further
ORDERED that plaintiff serve a copy of this order with notice of its entry on defendant and on the office of the County Clerk (by the means set forth in the court's e-filing protocol, available on the e-filing page of the court's website, https://ww2.nycourts.gov/courts/1jd/supctmanh/E-Filing.shtml), which shall enter judgment accordingly.