Opinion
603691-2003.
Decided April 29, 2004.
In this action for breach of a guaranty and breach of fiduciary duty, plaintiff Country Glen, LLC ("Country Glen") moves for an order, pursuant to CPLR § 3212, granting partial summary judgment on plaintiff's breach of guaranty cause of action in the amount of $100,000, together with interest, costs and disbursements, including reasonable attorney's fees, and as reduced by a security deposit of $26,168.22.
In support of its motion for partial summary judgment, Country Glen submits, among other things, (1) the affidavit of Murray H. Miller, Managing Member of Country Glen ("the Miller affidavit"); (2) the affidavit of Jigna Shah, rent administrator for Country Glen ("the Shah affidavit"); (3) a statement of all rent owed by Luggage Authority, Inc. ("the rent statement"); (4) a statement of interest owed under the $100,000 of rent guaranteed by defendant Stuart Himmelfarb ("the interest calculation statement"); (5) a commercial lease agreement between Country Glen and Luggage Authority, Inc. ("the lease"); (6) a written limited guaranty executed by defendant Stuart Himmelfarb ("the guaranty"); (7) stipulations of settlement dated October 2, 2002 and February 20, 2003; and (8) a decision and order of the Nassau County District Court dated December 9, 2003. In opposition, defendant Stuart Himmelfarb ("Himmelfarb") submits, among other things, (1) an affidavit in opposition ("the Himmelfarb affidavit"); (2) a handwritten list of rental payments made by Luggage Authority, Inc. ("Luggage Authority"); and (3) a series of cancelled checks evidencing payment of rent by Luggage Authority. In reply, Country Glen submits a reply affidavit of its rent administrator, Jigna Shah ("the Shah reply affidavit") and the rent and interest calculation exhibits attached thereto.
As it appears from the submissions of both parties, the undisputed facts of this case are that plaintiff Country Glen is the owner of a shopping mall known as the Country Glen Center located at 15 Old Country Road, Carle Place, New York and defendant Himmelfarb is the president and principal shareholder of the Luggage Authority, Inc. On or about April 27, 1999, Country Glen and Luggage Authority entered into a commercial lease for retail premises at the Country Glen Center. Simultaneously, Himmelfarb, in his individual capacity, executed a written guaranty in which he guaranteed Country Glen "the full and due performance and observance" of all the covenants, conditions and agreements to be performed and observed by Luggage Authority pursuant to the terms of the commercial lease. The guaranty is limited to $100,000, together with interest, costs and disbursements on any judgment obtained by Country Glen on the guaranty, and reasonable attorney's fees and expenses incurred by Country Glen in enforcing the guaranty, reduced by the security on deposit with Country Glen at the time of Luggage Authority's default causing implementation of the guaranty. The guaranty also provides that it shall "in no wise be terminated, affected or impaired . . . by any modification or amendment" of the commercial lease.
Sometime in August, 2002 Country Glen commenced a non-payment eviction proceeding against Luggage Authority in the Nassau County District Court. By way of a stipulation of settlement dated October 2, 2002 ("the October 2002 stipulation"), Country Glen and Luggage Authority agreed that a warrant of eviction would be issued but that execution of that warrant would be stayed until January 2, 2003. According to the Miller affidavit, the October 2002 stipulation also provided that Luggage Authority could "remain in the premises upon the following essential conditions: (i) it pay, on a current basis, an amount equal to half the rent due under the lease; (ii) it remain liable for the remainder of the rent due under the lease; and, (iii) it vacate the premises upon thirty (30) days written notice from Country Glen." Specifically, Country Glen reserved the right in the October stipulation to "collect the balance of monies due as rent and additional rent pursuant to the terms of the lease, which remains in full force and effect". The October 2002 stipulation also provided that Country Glen had the right to reduce the size of the premises from either the east or the west to "either 2,400 square feet, 1,800 square feet, or 1,200 square feet at any time on 15 days notice. . . ."
A subsequent stipulation of settlement was entered into by Country Glen and Luggage Authority on February 20, 2003 ("the February 2003 stipulation"). The February 2003 stipulation stayed the execution of the warrant of eviction through March 31, 2003 on the condition that Luggage Authority made certain payments "representing rent and additional rent due through February 28, 2003." The February stipulation also gave Country Glen the right, in the event Country Glen exercised its right to reduce the size of the premises, to remove Luggage Authority's sign within 15 days of electing to reduce the size of the premises. Thereafter, on April 2, 2003 a second warrant of eviction was issued by the Nassau District Court for Luggage Authority's failure to make timely payment of the reduced rent and reduced rent arrears called for in the stipulations of settlement. After the issuance of the warrant of eviction though, Country Glen accepted Luggage Authority's tender of rent and continued to accept payments of the reduced monthly rental amount pursuant to the terms of the stipulations of settlement. However, pursuant to its right to demand that Luggage Authority vacate the premises, by notice and service dated July 28, 2003, Country Glen terminated Luggage Authority's right to possession effective August 31, 2003. Luggage Authority did not vacate the premises on or before August 31, 2003, so on September 5, 2003, Country Glen executed the warrant of eviction dated April 2, 2003. By order to show cause, Luggage Authority then moved the Nassau County District Court to vacate and set aside the warrant of eviction. The District Court denied Luggage Authority's motion in a decision and order dated December 9, 2003, holding that because Luggage Authority's payments of reduced rent and reduced rent arrears were not timely made, Luggage Authority failed to show good cause to vacate the warrant of eviction. Luggage Authority completed vacating the premises on January 23, 2004.
In support of its motion Country Glen argues that it is entitled to summary judgment as to its breach of guaranty cause of action because it has established a prima facie case for enforcement of a guaranty by demonstrating the guaranty, the underlying obligation, and the non-payment of the outstanding sum due under the lease. Country Glen further contends that having established a prima facie case on the guaranty, Himmelfarb has the burden of demonstrating the existence of a triable issue of fact by the production of admissible evidence. Himmelfarb has not satisfied this burden, Country Glen argues, because each of the affirmative defenses raised by Himmelfarb is without merit. Himmelfarb's arguments in opposition, as well as Country Glen's reply, are fully discussed in the court's analysis below. The court also notes that Country Glen, in its reply memorandum of law, has represented that it will discontinue its breach of fiduciary duty cause of action against Himmelfarb if its motion for partial summary judgment is granted.
Analysis
To obtain summary judgment, the movant must establish its cause of action or defense sufficiently to warrant the court as a matter of law in directing judgment in its favor (CPLR § 3212 [b]). This standard requires that the proponent of a motion for summary judgment make a prima facie showing of entitlement to judgment as a matter of law by advancing sufficient "evidentiary proof in admissible form" to demonstrate the absence of any material issues of fact ( Winegrad v. New York Univ. Med. Ctr., 64 NY2d 851, 853; Zuckerman v. City of New York, 49 NY2d 557, 562; Silverman v. Perlbinder, 307 AD2d 230, 762 NYS2d 386 [1st Dept 2003]; Thomas v. Holzberg, 300 AD2d 10, 11, 751 NYS2d 433, 434 [1st Dept 2002] [defendant not entitled to summary judgment where he failed to produce admissible evidence demonstrating that no triable issue of fact exists as to whether plaintiff would have been successful in the underlying negligence action]). Thus, the motion must be supported "by affidavit [from a person having knowledge of the facts], by a copy of the pleadings and by other available proof, such as depositions" (CPLR § 3212 [b]).
Alternatively, to defeat a motion for summary judgment, the opposing party must show facts sufficient to require a trial of any issue of fact (CPLR § 3212 [b]). Thus, where the proponent of the motion makes a prima facie showing of entitlement to summary judgment, the burden shifts to the party opposing the motion to demonstrate by admissible evidence the existence of a factual issue requiring a trial of the action, or to tender an acceptable excuse for his or her failure to do so ( Vermette v. Kenworth Truck Co., 68 NY2d 714, 717; Zuckerman v. City of New York, supra, 49 NY2d at 560, 562; Forrest v. Jewish Guild for the Blind, 309 AD2d 546, 765 NYS2d 326 [1st Dept 2003]). Like the proponent of the motion, the party opposing the motion must set forth evidentiary proof in admissible form in support of his or her claim that material triable issues of fact exist ( Zuckerman, supra at 562). The opponent "must assemble and lay bare [its] affirmative proof to demonstrate that genuine issues of fact exist" and "the issue must be shown to be real, not feigned, since a sham or frivolous issue will not preclude summary relief" ( Kornfeld v. NRX Technologies, Inc., 93 AD2d 772 [1st Dept 1983], affd, 62 NY2d 686). Mere conclusions, expressions of hope or unsubstantiated allegations or assertions are insufficient ( Alvord and Swift v. Steward M. Muller Constr. Co, 46 NY2d 276, 281-82, 413 NYS2d 309; Fried v. Bower Gardner, 46 NY2d 765, 767, 413 NYS2d 650; Platzman v. American Totalisator Co., 45 NY2d 910, 912, 411 NYS2d 230; Mallad Const. Corp. v. County Fed. Sav. Loan Assn., 32 NY2d 285, 290, 344 NYS2d 925; Plantamura v. Penske Truck Leasing, Inc., 246 AD2d 347, 668 NYS2d 157 [1st Dept 1998]).
On a motion for summary judgment to enforce a written guaranty "all that the creditor need prove is an absolute and unconditional guaranty, the underlying debt, and the guarantor's failure to perform under the guaranty" ( City of New York v. Clarose Cinema Corp., 256 AD2d 69, 71, 681 NYS2d 251 [1st Dept 1998]). Here, Country Glen has established the prima facie elements necessary to enforce Himmelfarb's written guaranty. Country Glen has submitted to the court the absolute and unconditional limited guaranty signed by defendant Himmelfarb in which Himmelfarb irrevocably guaranteed to Country Glen the full and due performance and observance of all covenants, conditions and agreements, including full payment of rent and additional rent for the full term, contained in the commercial lease agreement between Luggage Authority and Country Glen. Himmelfarb, by his own affidavit, concedes that he executed the written guaranty on or about April 27, 1999 and that the guaranty submitted by Country Glen in support of its motion for summary judgment is the guaranty he signed. Country Glen has established the underlying debt through the Shah affidavit and the rent and interest calculation statements attached thereto which establish that, as of January, 2004, Country Glen is owed $179,872.17 in rent and additional rent by Luggage Authority, and $20,404.87 in interest by Himmelfarb under the terms of the guaranty. The Shah affidavit also establishes that the security on deposit with Country Glen totals $26,168.22. The Miller and the Shah affidavits also establish that Luggage Authority has failed to pay Country Glen these sums as rent and interest due under the lease, and that Himmelfarb has similarly failed to pay Country Glen pursuant to the terms of the written guaranty.
With Country Glen having established a prima facie case for enforcement of the written guaranty, the burden shifts to defendant Himmelfarb to establish by admissible evidence the existence of a triable issue of fact or a meritorious defense ( Bank Leumi Trust Co. v. Rattet Liebman, 182 AD2d 541, 582 NYS 707 [1st Dept 1992]). In asserting that he is not liable under the written guaranty, Himmelfarb first argues that the terms of the underlying commercial lease between Country Glen and Luggage Authority were modified, without his consent as guarantor, by the October 2002 and February 2003 stipulations of settlement. The rule of strictissimi juris, that a guarantor's obligation is to be interpreted in the strictest manner, releases a guarantor from liability when a creditor and the principal debtor materially alter the terms of a contract for whose performance the guarantor is bound without the guarantor's consent ( Mangold v. Keip, 177 Misc 2d 953, 679 NYS2d 240 [App Term 1st Dept 1998]. The rationale for discharging a guarantor when the underlying contract is modified is that the modification essentially substitutes a new obligation for the old one, and the guarantor cannot and should not be held responsible for the failure of the principal to perform any obligation other than the obligation originally guaranteed. ( Trustco Bank New York v. Sage, 238 AD2d 839, 656 NYS2d 542 [3rd Dept 1997]. However, a guarantor is not relieved of his obligations where the written guaranty allows for changes in the terms of the guaranty and expressly waives notice to the guarantor of such changes ( White Rose Food v. Saleh, 292 AD2d 377, 738 NYS2d 683 [2nd Dept 2002] [rejecting a co-guarantor's claim that he was relieved from his obligations as co-guarantor on a promissory note by a subsequent agreement, made without his consent, which modified the original terms of the promissory note]; Banque Worms v. Andre Café, Ltd., 183 AD2d 494, 583 NYS2d 438 [1st Dept 1992] ["a guarantor is bound by an anticipatory agreement in his undertaking that he will not be relieved of liability by a modification of the principal contract"]). Here, Himmelfarb's guaranty expressly provides that it "shall remain and continue in full force and effect as to any modification or extension of said lease . . . and without any notice whatsoever." The guaranty also states that it "shall in no wise be terminated, affected or impaired . . . by any modification or amendment" of the underlying lease. Thus, because the written guaranty allows for changes in its terms and waives any requirement that Himmelfarb be given notice of such changes, the October 2002 and February 2003 stipulations of settlement do not relieve Himmelfarb of his obligations under the written guaranty ( see Blvd. Mall LLC v. Knight, 300 AD2d 1017, 755 NYS2d 133 [4th Dept 2002] [president and sole shareholder of corporate lessee was not relieved of his obligations under a written guaranty, despite three subsequent agreements amending that guaranty, because the guaranty provided that it was "absolute and unconditional and shall remain and continue in full force and effect as to any amendment, modification, renewal or extension of the within lease, to all of which the undersigned hereby consents in advance"]).
Himmelfarb also argues that the commercial lease agreement between Country Glen and Luggage Authority terminated upon the Nassau County District Court's April 2, 2003 issuance of a warrant of eviction, and with it, his obligations as guarantor. As Himmelfarb correctly contends, a warrant of eviction for removal of a tenant cancels the agreement under which the person removed held the premises, and annuls the relationship of the landlord and tenant ( 101 Maiden Lane Realty Co. v. Tran Han Ho Tran Tuyet Van, 2004 Slip Op 50002U (Civil Ct. NY Co. January 12, 2004). However, as Country Glen points out, paragraph forty-three (b) of the lease provides, in pertinent part, that in the event the lease is terminated, Luggage Authority, at the election of Country Glen, will "pay sums equal to the basic rent and the additional rent . . . which would have been payable by [Luggage Authority] had the lease not so terminated. . . ." Because Himmelfarb guaranteed Luggage Authority's full and due performance and observance of all the covenants, conditions and agreements to be performed and observed by Luggage Authority under the lease, including the payment of rent following termination of the lease, the April 2, 2003 warrant of eviction and its corresponding termination of the lease do not relieve Himmelfarb of his liability under the written guaranty.
Himmelfarb next argues that Country Glen has failed to establish the underlying debt element necessary to enforce his written guaranty. Himmelfarb claims that the February 2003 stipulation of settlement superceded the October 2002 stipulation of settlement and that Country Glen did not reserve its right to seek any prior rent balances in the February stipulation, as Country Glen had expressly done in the October stipulation. Because the sums set forth in the February stipulation were ultimately paid by Luggage Authority, and accepted by Country Glen, Himmelfarb contends, there is no underlying debt, and therefore, no liability under the guaranty. In reply, Country Glen asserts that the February 2003 stipulation of settlement merely supplemented the October 2002 stipulation and claims that, by its very terms, the February 2003 stipulation explicitly assumed that all of the terms of the October 2002 stipulation would remain valid and binding, including the provision granting Country Glen the right to collect the balance of monies due for rent and additional rent pursuant to the lease.
A stipulation of settlement is a contract between the parties and, as such, is subject to the principals of contract law ( McWade v. McWade, 253 AD2d 798, 677 NYS2d 596 [2nd Dept 1998]). Because it is a contract, the court should construe a stipulation in accordance with the intent of the parties and the purpose of the stipulation, but the court should not, under the guise of interpretation, make a new contract for the parties ( Iacobacci v. McAleavey, 222 AD2d 406, 634 NYS2d 515 [2nd Dept 1995]). Here, an objective reading of the October 2002 and the February 2003 stipulations of settlement reveals that the parties intended the February 2003 stipulation to supplement, not supercede, the October stipulation. It should be noted first that in its order denying Luggage Authority's motion to vacate and set aside the April 2, 2003 warrant of eviction, the Nassau County District Court specifically described the February stipulation of settlement as a supplemental stipulation. Himmelfarb argues, however, that because the only provision of the October stipulation mentioned in the February stipulation was Country Glen's right to reduce the size of the premises, Country Glen failed to reserve its right under the October stipulation to collect the balance of monies due for rent and additional rent pursuant to the terms of the lease. However, the February stipulation of settlement discusses Country Glen's right to reduce the size of the premises only to the extent that it supplements the October stipulation to allow Country Glen the additional right to remove Luggage Authority's sign within 15 days of reducing the size of the premises, a right which Country Glen had not expressly reserved in the previous October stipulation. More importantly, in its decision denying Luggage Authority's motion to vacate the warrant of eviction, the District Court described Country Glen's right to demand that Luggage Authority vacate the Country Glen Center on thirty days notice as the critical provision of the October 2002 stipulation of settlement. Despite the fact that the February 2003 stipulation was silent as to Country Glen's right to demand that Luggage Authority vacate the premises, the District Court expressly found that that provision had not been modified in any way by the February 2003 stipulation. Similarly, Country Glen's right to collect the balance of monies due as rent and additional rent pursuant to the terms of the lease, though expressly reserved in the October stipulation of settlement, is nowhere mentioned in the February stipulation. The right to collect the balance of rents due under the lease is a right bargained for by Country Glen when it negotiated and entered into the October stipulation of settlement and nothing, other than Himmelfarb's speculative and conclusory assertions, indicates that Country Glen intended to waive this right when it entered into the February stipulation of settlement. Furthermore, nothing in the express terms of the February stipulation indicates that it was meant to supercede the October stipulation of settlement. In keeping with the interpretation of the Nassau County District Court, the apparent intent of Country Glen to have all the rights it reserved in the October stipulation continue to be so reserved in the February stipulation, and the apparent intent of the February stipulation to merely supplement the terms of the October stipulation, the court finds that the February 2003 stipulation of settlement supplemented, but did not supercede, the October 2002 stipulation of settlement. Thus, there is no question of fact as to whether Country Glen has established the underlying debt element of a prima facie case for enforcement of a written guaranty.
Himmelfarb further contends that if he is liable under the written guaranty, Country Glen has failed to establish its damages as a matter of law. Specifically, Himmelfarb objects to the admissibility of Country Glen's documentary evidence in the form of the rent statement and the interest calculation statement attached to the affidavit of Country Glen's rent administrator, Jigna Shah. Himmelfarb argues that because these documents have not been properly authenticated and because the underlying support for the calculations contained in these documents has not been provided, summary judgment must be denied. In his affidavit in opposition, Himmelfarb states that the calculations contained in the rent and interest statements are incorrect and claims that Country Glen's rent statement omits and understates certain payments made by Luggage Authority by approximately $50,000. In support of these contentions, Himmelfarb submits a handwritten list of payments allegedly made by Luggage Authority, as well as numerous canceled checks, for the period December, 2000 through December, 2003. Himmelfarb does not, however, offer any evidence challenging Shah's determination of the original amount of rent owed to Country Glen under the terms of the lease. Country Glen, by the Shah reply affidavit, contends that its calculations of rent and additional rent paid by Luggage Authority are entirely consistent with Himmelfarb's figures, with the exception of a bounced check totaling $5,569.83, which Country Glen did not include in its original calculation. Shah further states that, contrary to Himmelfarb's claim, no $50,000 discrepancy exists between Country Glen's calculations and the figures submitted by Himmelfarb.
In both his original affidavit in support and his reply affidavit, Shah swears that the rent and additional rent, including use and occupancy owed to Country Glen, as well as the interest owed upon the $100,000 of rent guaranteed by Himmelfarb, are evidenced by the rent and the interest calculation statements attached to those affidavits. Documentation in the form of an affidavit of one with personal knowledge of the facts, like Shah, is evidentiary proof in admissible form for the purposes of a motion for summary judgment ( Desola v. Mads, Inc., 213 AD2d 445, 446, 623 NYS2d 889 [2nd Dept 1995]). Because both of Shah's affidavits and the exhibits attached thereto are in admissible form, the only question is whether Himmelfarb has raised an issue of triable fact regarding the amount of rent and additional rent owed to Country Glen by Luggage Authority. The court's review of the payments made by Luggage Authority, as provided by Himmelfarb, reveals that those payments correspond exactly to the calculations submitted by Country Glen in the Shah reply affidavit. Himmelfarb's claims that Country Glen's calculations are flawed, that the calculations appear to be based upon incorrect rents, that Country Glen's calculation omits and understates payments made by Luggage Authority, that Country Glen's interest calculation appears to be incorrect, and that Country Glen offers no underlying documents or explanation as to how the summaries were created are speculative and conclusory and do not raise an issue of triable fact ( see Zuckerman v. City of New York, supra, 49 NY2d at 560, 562).
Himmelfarb next asserts that there are a number of triable issues of fact, including those raised by his affirmative defenses, that preclude summary judgment in favor of Country Glen. Himelfarb first contends that a question of fact exists as to whether or not he actually breached the written guaranty. In support of this contention, Himmelfarb cites Yanuck v. Simon Pastor Sons Agency, 209 AD2d 207, 208, 618 NYS2d 295 [1st Dept] and Theatre Row Phase II Assocs. v. Nat'l Recording Studios, Inc., 291 AD2d 172, 174, 739 NYS2d 671 [1st Dept 2002] for the proposition that where a contract is susceptible to at least two reasonable interpretations, and is therefore ambiguous, interpretation of that contract is not a question of law resolvable on a motion for summary judgment, but is a question of fact that must be resolved by a trial. The cases cited by Himmelfarb, however, are not applicable to the case at bar because the court finds that the instant guaranty is in no way ambiguous. There is no question that Himmelfarb signed the guaranty in his individual capacity and not in his capacity as president and principal shareholder of Luggage Authority ( see Sound Distrib. Corp. v. Richmond, 213 AD2d 178, 179, 625 NYS2d 3 [1st Dept 1995] [finding a guaranty ambiguous where the guaranty named a corporation as the guarantor but was signed by the appellants in their individual capacities]). Nor is there any ambiguity with respect to the amount of Himmelfarb's liability under the guaranty ( see North Fork Bank Trust Co. v. Thomason Indus. Corp., 194 AD2d 772, 773-74, 599 NYS2d 835 [2nd Dept 1993] [holding defendants' contention that a guaranty was ambiguous to be without merit because the guaranty clearly stated that the defendants' liabilities were immediately due and payable upon default]). Because the court finds that the instant guaranty is not susceptible to two reasonable interpretations, there is no question of fact regarding Himmelfarb's breach of the guaranty that would warrant a trial on the merits.
As for Himmelfarb's affirmative defenses, the court notes that the guaranty in question contains no language limiting the defenses that can be raised by Himmelfarb as guarantor. Thus, Himmelfarb is entitled to assert all the defenses that were available to Luggage Authority as principal obligor of the commercial lease ( Durable Group, Inc. v. De Benedetto, 85 AD2d 524, 444 NYS2d 662, 663 [1st Dept 1981]). The first affirmative defense raised by Himmelfarb is that of payment. Himmelfarb contends that Luggage Authority paid the sums called for in the stipulations of settlement and that by accepting those sums, Country Glen waived any claim for any additional monies due under the lease. In reply, Country Glen argues that it has proved Luggage Authority's non-payment through the Shah affidavits and the exhibits attached thereto and that Himmelfarb's handwritten list of payments allegedly made by Luggage Authority does not provide the evidentiary basis necessary to support a payment defense. While defendant Himmelfarb has made an evidentiary showing of payment in the form of canceled checks and the handwritten list of payments attached to his affidavit in opposition, as discussed above, Country Glen does not contest the fact that these payments were actually made by Luggage Authority. Country Glen is not suing to recover rent that Luggage Authority paid, though not in a timely manner, pursuant to the stipulations of settlement. Such an action would lead to an improper double recovery by Country Glen. Rather, pursuant to the right it reserved in the October 2002 stipulation, Country Glen is seeking to recover, in an amount not to exceed $100,000, the difference between the reduced rent and reduced arrears paid by Luggage Authority under the stipulations of settlement, and the original, higher rent payments called for in the lease. Because there is no dispute between the parties as to the amount of reduced rent or use and occupancy actually paid by Luggage Authority, and because Country Glen's acceptance of Luggage Authority's reduced rent and use and occupancy does not constitute a waiver of Country Glen's right to recover the balance of rent owed to it pursuant to the terms of the lease, ( see Sharp v. Stavisky, 242 AD2d 447, 448, 662 NYS2d 39 [1st Dept 1997] [stating that plaintiffs' acceptance of use and occupancy payment expressly called for in a stipulation of settlement negates any inference that plaintiffs waived defendants' breach of the stipulation]), Himmelfarb's payment defense is without merit.
Himmelfarb next asserts that his defenses of novation and accord and satisfaction should be permitted to stand. Himmelfarb contends that because he believed that the stipulations of settlement constituted a new agreement between Country Glen and Luggage Authority, because rent payments were made by Luggage Authority in accordance with those stipulations, and because Country Glen accepted those rent payments, his defenses of novation and accord and satisfaction are valid. Country Glen argues that Himmelfarb's subjective understanding of the stipulations of settlement is irrelevant for the purposes of establishing a novation, and that Himmelfarb's citation to the doctrine of accord and satisfaction is inapplicable here because there is no genuine dispute between the parties as to the amount of rent owed to Country Glen under the lease.
The requisite elements of a novation include a previous valid obligation, agreement of all the parties to a new obligation, extinguishment of the old contract, and a valid new contract ( Wasserman v. Interstate Litho. Corp., 114 AD2d 952, 495 NYS2d 217, 219 [2nd Dept 1985]). A novation will not discharge the obligations created under a prior agreement unless it was so intended, and such intent may be determined from the writings and conduct of the parties ( Water St. Dev. Corp. v. City of New York, 220 AD2d 289, 290, 632 NYS2d 544 [1st Dept 1995]). There is no evidence here, either from the terms of the stipulations of settlement or the conduct of the parties, other than Himmelfarb's speculative belief that the stipulations of settlement barred Country Glen from seeking retroactive payment of rents under the lease, to indicate that Country Glen and Himmelfarb, in his role as president and principal shareholder of Luggage Authority, intended the October and February stipulations to in any way revoke, cancel, extinguish, supercede or otherwise satisfy the obligations Himmelfarb owes to Country Glen as a guarantor ( see Ventricelli v. DeGennaro, 221 AD2d 231, 232, 633 NYS2d 315 [1st Dept 1995]). Thus, the October and February stipulations of settlement do not satisfy the elements necessary from the establishment of a novation.
A party seeking to establish an accord and satisfaction must demonstrate that there was a disputed or unliquidated claim between the parties which they mutually resolved through a new contract discharging all or part of their obligations under the original contract ( Pothos v. Arverne Houses, Inc., 269 AD2d 377, 378, 702 NYS2d 392 [2nd Dept 2000]). Even assuming that there is a dispute between Country Glen and Luggage Authority as to the amount of rent owed to Country Glen under the lease, though Himmelfarb has not offered any evidence on this point, as discussed above, the October 2002 and February 2003 stipulations of settlement did not discharge Luggage Authority from its duty to pay rent and additional rent owed under the lease because Country Glen expressly reserved in those stipulations its right to collect those rents. Because Luggage Authority was not discharged from its obligation under the lease, Himmelfarb was not discharged from his duty to guaranty Luggage Authority's performance of that obligation. Therefore, as with his novation defense, Himmelfarb is unable to establish the elements necessary for an accord and satisfaction.
Himmelfarb also cites the doctrines of res judicata and collateral estoppel as yet another defense to his liability under the written guaranty. Himmelfarb argues that because he was not personally a party to the Nassau County District Court proceeding, and because Country Glen was, Country Glen should be barred from re-litigating certain issues. Specifically, Himmelfarb argues that Country Glen cannot now challenge (1) the District Court's holding that Luggage Authority's commercial lease terminated on April 2, 2003 when the warrant of eviction was issued; (2) the District Court's refusal to assess use and occupancy at the higher rates provided for in the commercial lease; or (3) the amount of rent due from Luggage Authority. Country Glen contends that Himmelfarb and Luggage Authority are in privity and that the District Court's decision and order denying Luggage Authority's motion to vacate the April 2, 2003 warrant of eviction should be given preclusive effect against Himmelfarb. Country Glen also argues that because the District Court's determination of use and occupancy is not identical to the determination of rent owed, the District Court's calculation of use and occupancy has no preclusive effect on Country Glen's claims under the written guaranty.
Two requirements must be satisfied before collateral estoppel can be invoked — (1) there must be an identity of issue which has necessarily been decided in a prior action which is decisive of the present action, and (2) there must have been a full and fair opportunity to contest the decision now said to be controlling ( Buechel v. Bain, 97 NY2d 295, 304). The party seeking the benefit of collateral estoppel must demonstrate that the decisive issue was necessarily decided in a prior action against a party or one in privity with a party, while the party to be precluded bears the burden of demonstrating the absence of a full and fair opportunity to contest the prior determination ( Buechel v. Bain, supra 97 NY2d 295 at 304). Himmelfarb has not met his burden of proving that the decisive issue of this case, his liability under the terms of the written guaranty, was necessarily decided in the action before the Nassau County District Court. Nowhere in its decision and order dated December 9, 2003 did the Nassau County District Court address Himmelfarb's liability to Country Glen for Luggage Authority's failure to honor the terms of the October and February stipulations of settlement. Assuming that Himmelfarb was not personally a party to the District Court proceeding, the District Court may not have even been aware of the fact that Himmelfarb had executed a written guaranty. Nor did the District Court rule on Country Glen's right pursuant to the October stipulation to recover the balance of rent due under the terms of the lease agreement. Thus, the identity of issue requirement of collateral estoppel is not present in this case.
Himmelfarb also claims that he is entitled to assert Country Glen's failure to mitigate damages as a defense to his liability under the guaranty. However, because the Appellate Division, First Department has repeatedly held that a commercial landlord is under no duty to mitigate damages, this defense also lacks merit ( 11 Park Place Assocs. v. Barnes, 202 AD2d 292, 293, 608 NYS2d 664 [1st Dept 1994]; Sage Realty Corp. v. Kenbee Management-New York, Inc., 182 AD2d 480, 481, 582 NYS2d 182 [1st Dept 1992]; Mitchell Titus Assocs. v. Mesh Realty Corp., 160 AD2d 465, 466, 554 NYS2d 136 [1st Dept 1990]). Furthermore, as Country Glen was under no duty to mitigate damages, its failure to do so does not relieve Luggage Authority of its obligations under the lease or the stipulations of settlement, nor does it relieve Himmelfarb of his liability under the written guaranty. In addition, Himmelfarb's claim that he is entitled to a credit in the amount equal to the security on deposit with Country Glen is equally irrelevant as Country Glen has conceded in both the Miller and Shah affidavits, that, for the purposes of this motion, Country Glen will reduce Himmelfarb's liability under the written guaranty by the full amount of the security deposit. Furthermore, Himmelfarb's contention that Country Glen was required to demand Himmelfarb's payment under the guaranty is also unavailing, as the guaranty unambiguously provides that "the undersigned waives any notice of non-performance, non-observance or non-payment, or proof, notice or demand, whereby to charge the undersigned therefor. . . ."
Finally, Himmelfarb contends that Country Glen's motion for partial summary judgment should be denied pursuant to CPLR § 3212 [f] which provides that "should it appear from affidavits submitted in opposition to the motion that facts essential to justify opposition may exist but cannot then be stated the court may deny the motion or may order a continuance to permit affidavits to be obtained or disclosure to be had. . . ." According to Himmelfarb, Country Glen served this motion for partial summary judgment simultaneously with its responses to Himmelfarb's interrogatories and request for documents and by doing so, did not give Himmelfarb ample time to evaluate those responses. Himmelfarb also argues that Country Glen's responses to his interrogatories are incomplete and that Country Glen has failed to properly respond to his request for documents. Further, Himmelfarb contends that the deposition of Murray Miller, Managing Member of Country Glen, was noticed prior to this motion but was not actually conducted prior to the motion. Himmefarb contends that Miller's deposition is essential on the issues of liability, damages, and how Country Glen calculated those damages. Himmelfarb also contends that the documents so far provided by Country Glen suggest the need for other depositions, in addition to Miller's, and that until all discovery issues are resolved and all depositions are completed, Country Glen's motion for summary judgment is premature. In reply, Country Glen argues that Himmelfarb cannot defeat Country Glen's motion for partial summary judgment by alleging that he is entitled to additional discovery because the information Himmelfarb seeks to obtain through such discovery will not provide a defense to Country Glen's action to recover on the written guaranty.
It is well settled that a grant of summary judgment cannot be avoided by a claimed need for discovery unless some evidentiary basis is offered to suggest that discovery may lead to relevant information ( Bailey v. New York City Transit Auth., 270 AD2d 156, 157, 704 NYS2d 582 [1st Dept 2000]). For the court to delay action on the motion, there must be a likelihood of discovery leading to evidence that will justify opposition to the motion ( Mazzaferro v. Barterama Corp., 218 AD2d 643, 644, 630 NYS2d 346 [2nd Dept 1995]). The mere hope that discovery will lead to evidence sufficient to defeat the motion is insufficient ( Spatola v. Gelco Corp., 773 NYS2d 101 [2nd Dept 2004]). Here, Himmelfarb has not offered any evidentiary basis to suggest that further discovery will lead to information relevant to Country Glen's motion. In fact, based on the lengthy record in this case, it appears to the court that all of the relevant facts were readily available to Himmelfarb at the time Country Glen served this motion. Himmelfarb has not shown that any relevant evidence was in the exclusive knowledge or control of Country Glen, nor has he shown that further discovery would lead to competent evidence in support of his affirmative defenses ( see Younger v. Spartan Chem. Co., 252 AD2d 265, 268, 686 NYS2d 152 (3rd Dept 1999]). The fact that discovery was not yet complete, or that outstanding discovery issues were not yet resolved at the time this motion was served does not warrant denial of the motion pursuant to CPLR 3212 [f] ( see Dunn v. 726 Main Pine, Inc., 255 AD2d 981, 982, 680 NYS2d 344 [4th Dept 1998]).
Accordingly, it is hereby
ORDERED that plaintiff's motion for partial summary judgment on its breach of guaranty cause of action is granted; and it is further
ORDERED that plaintiff's second cause of action is dismissed based upon the representation in plaintiff's reply memorandum of law that plaintiff would discontinue its breach of fiduciary duty cause of action upon the court's granting of plaintiff's motion for partial summary judgment; and it is further
ORDERED that the matter is to be set down for a hearing for the assessment of damages, interest, costs, disbursements, and attorneys' fees; and it is further
ORDERED that, on or before June 8, 2004, plaintiff is directed to serve a copy of this order with notice of entry, a note of issue and a statement of readiness upon the Clerk of the Trial Support Office (60 Centre Street, Room 158), and shall pay the proper fees, if any, and all parties are directed to appear before Justice Carol Edmead, Part 35, 60 Centre Street, Room 543 on July 27, 2004 at 10:00 AM; and it is further ORDERED that counsel for plaintiff is directed to serve a copy of this Order along with Notice of Entry upon defendant within 20 days from the date of entry of this Order.