Opinion
Index No. 650221/2022
02-14-2022
JMB CAPITAL PARTNERS LENDING, LLC, Plaintiff, v. Inho SHIN, Defendant.
Lowenstein Sandler LLP, New York, NY (Michael T.G. Long of counsel), for plaintiff. No appearance for defendant.
Lowenstein Sandler LLP, New York, NY (Michael T.G. Long of counsel), for plaintiff.
No appearance for defendant.
Gerald Lebovits, J.
The following e-filed documents, listed by NYSCEF document number (Motion 001) 2, 28, 29 were read on this motion for SUMMARY JUDGMENT IN LIEU OF COMPLAINT.
Plaintiff, JMB Capital Partners Lending, LLC, brings this CPLR 3213 motion-action on a commercial-lease guarantee against the guarantor, defendant Inho Shin. The motion is denied, and the action is dismissed.
A CPLR 3213 motion may not be made returnable before defendant's time to appear under CPLR 320 expires. (See Alpine Capital Bank v Estate of Shiah , 2020 NY Slip Op 50587[U], at *3 [Sup Ct, NY County May 20, 2020].) If, as here, plaintiff served defendant through the leave-and-mail method under CPLR 308 (2) (see NYSCEF Nos. 28-29), defendant must appear "within 30 days after service is complete" ( CPLR 320 [a].) Service under CPLR 308 (2) is complete 10 days after the affidavit of service is filed. Plaintiff filed its affidavits of service on January 20, 2022. (See NYSCEF Nos. 28, 29.) Defendant's deadline to appear, therefore, is March 1, 2022. The return date of plaintiff's motion, on the other hand, is February 14, 2022. (See NYSCEF No. 2.) Given plaintiff's failure to provide defendant with sufficient advance notice of the motion, as required by CPLR 320 and 3213, this court lacks personal jurisdiction over defendant. (See Segway of NY, Inc. v. Udit Grp., Inc. , 120 AD3d 789, 791-792 [2d Dept 2014] ; Estate of Shiah , 2020 NY Slip Op 50587 [U], at *2-*3.)
Absent personal jurisdiction, plaintiff's motion-action must be dismissed. But even if this court were to have personal jurisdiction, plaintiff's moving papers fail on three independent grounds to establish its entitlement to summary judgment for the amount claimed.
The lease provides that the tenant "consents and agrees that the Supreme Court of the State of New York for the County of New York and the United States District Court for the Southern District of New York each shall have personal jurisdiction and proper venue with respect to any dispute between Landlord and Tenant." (NYSCEF No. 13 at 38 [Lease § 35].) The guarantee does not, however, contain a parallel provision. And in any event, this language is in the nature of a forum-selection clause, not a waiver of otherwise-applicable jurisdictional defenses. (See CV Holdings, LLC v Bernard Tech., Inc. , 14 AD3d 854, 854 [3d Dept 2005].)
First , plaintiff seeks to enforce the obligations of a commercial lease against an individual guarantor. Plaintiff claims a total of $193,413.30 in unpaid rent, late fees, and interest (plus an additional $73,344.82 in attorney fees and costs). Plaintiff's papers suggest, though, that approximately 40% of that $193,413.30, or $77,153.42, resulted from defaults that occurred before June 30, 2021. (See NYSCEF No. 12 at ¶ 49; NYSCEF No. 25.) Additionally, the leased premises were to "be used solely for the retail sale and supply of beauty products" and related items. (See NYSCEF No. 13 at 5.) The tenant thus appears to have been "a non-essential retail establishment subject to in-person limitations under guidance issued by the New York state department of economic development pursuant to executive order number 202.6 issued by the governor on March 18, 2020." ( New York City Administrative Code § 22-1005 [1] [b].) As a result, if the $77,153.42 in question accrued after March 7, 2020, as well as before June 30, 2021, § 22-1005 bars plaintiff from collecting that sum from defendant guarantor. Plaintiff's papers, however, do not mention when those sums did accrue. Plaintiff thus has not established that it may collect from the guarantor that portion of the total of $193,413.30 claimed in unpaid rent and charges.
Second , plaintiff supports its claim to the $193,4130.30 with two documents. One is an account statement reflecting unpaid rent and additional rent through December 1, 2021. (See NYSCEF No. 24.) The other is a "damages chart" reflecting unpaid rent and additional rent through January 1, 2022, plus accrued late charges and interest. (See NYSCEF No. 25.) But the amount claimed by plaintiff based on the damages chart includes more than $19,000 in additional rent that does not appear on the account statement. Additionally, the sums assessed in late charges and interest, as set out on the damages chart (see id. ), appear to exceed the permissible amounts for late charges and interest under the lease (see NYSCEF No. 13 at 9-10 [Lease §§ 2.2, 2.4]). The affidavit of plaintiff's principal (see NYSCEF No. 12) does not explain these discrepancies.
Third , plaintiff claims entitlement to an additional $69,320 in attorney fees and $4,024.82 in litigation-related expenses. Plaintiff has not established that it may collect any of that sum, much less the full amount.
The guarantee makes defendant Shin responsible for "the full and prompt payment of Rent and other charges and sums (including, without limitation, Landlord's legal expenses and reasonable attorneys’ fees and disbursements) payable by Tenant under the lease." (NYSCEF No. 13 at 88 [Guaranty at 1].) And the lease provides that if a breach or default by the tenant makes it "necessary or appropriate for Landlord to employ or consult with an attorney concerning or to enforce or defend any of Landlord's rights or remedies arising under this Lease, Tenant agrees to pay all Landlord's attorney's fees so incurred." (Id. at 22 [Lease § 19.4].)
The most logical reading of these provisions is that if plaintiff chooses to bring an action against the tenant (for example a nonpayment eviction proceeding) due to the tenant's default, plaintiff may collect the legal fees incurred in that action from the guarantor. Here, on the other hand, plaintiff is not seeking to recoup any attorney fees from an action against the tenant for a default under the lease. Plaintiff is seeking to collect only the fees incurred to bring this action on the guarantee. That is different. Plaintiff's papers do not explain how it may collect its attorney fees from the guarantor nonetheless.
The lease does appear to incorporate the guarantee by reference. (See NYSCEF No. 13 at 46 [Lease § 58].) As far as this court can tell, though the only possible interpretation of the lease-and-guarantee under which plaintiff could be entitled to collect here the full amount of its claimed attorney fees from defendant would be that (i) a suit against the guarantor under the guarantee is one of landlord's remedies arising under the lease, therefore (ii) the tenant is responsible for paying landlord's attorney fees incurred in that suit against the guarantor, therefore (iii) the guarantor is responsible for discharging the tenant's obligation to pay the landlord's fees incurred in suing the guarantor himself. Even had plaintiff advanced this argument (which, as discussed above, it has not), this court would regard it with skepticism.
Moreover, plaintiff is not seeking fees and expenses in an amount to be determined at an inquest. Rather, plaintiff seeks as part of its claim the specific sum of $69,320 in attorney fees—approximately 35% of the principal amount claimed. (See NYSCEF No. 12 at ¶ 64.) According to plaintiff's counsel's time records, that sum represents 103.7 hours of legal work by four different attorneys, including a junior associate billing at $519/hour, a senior associate billing at $695/hour, a counsel billing 22.7 hours at $806/hour, and a partner billing 19.5 hours at $902/hour. (See NYSCEF No. 4; see also NYSCEF No. 3 at ¶¶ 11-14.) Plaintiff's counsel's affirmation does not explain why it was reasonably necessary to devote this amount of time and staffing, at these high rates, to what would appear to be a straightforward, unopposed action on a commercial-lease guarantee.