Opinion
6017 Index 651200/15
03-15-2018
W. & M. OPERATING, L.L.C., Plaintiff–Appellant, v. Jon BAKHSHI, et al., Defendants–Respondents, John Best, Defendant.
Goldberg Weprin Finkel Goldstein LLP, New York (Matthew Hearle of counsel), for appellant. Nesenoff & Miltenberg LLP, New York (Philip A. Byler of counsel), for respondents.
Goldberg Weprin Finkel Goldstein LLP, New York (Matthew Hearle of counsel), for appellant.
Nesenoff & Miltenberg LLP, New York (Philip A. Byler of counsel), for respondents.
Manzanet–Daniels, J.P., Tom, Mazzarelli, Webber, Kern, JJ.
Order, Supreme Court, New York County (Shirley Werner Kornreich, J.), entered June 22, 2016, which denied plaintiff's motion for summary judgment, unanimously modified, on the law, to grant the motion as against defendants Frank Porco and Timothy Rugisford, and otherwise affirmed, without costs. The Clerk is directed to enter judgment as against said defendants in the amount of $521,294.59, plus interest.
Plaintiff met its prima facie burden on its claim for payment under a guaranty of its tenant's rent by submitting (1) the guaranty and Porco and Rugisford's and defendant Jon Bakhshi's (together, defendants) verified answers, which admitted the existence of the lease modification agreement of which the guaranty was a part; (2) the judgment against the tenant, i.e., the underlying debt; and (3) the complaint, which was verified by plaintiff's managing member based on its books and records and correspondence (see e.g. Cooperatieve Centrale Raiffeisen–Boerenleenbank, B.A., "Rabobank Intl.," N.Y. Branch v. Navarro, 25 N.Y.3d 485, 492, 15 N.Y.S.3d 277, 36 N.E.3d 80 [2015] ; Woori Am. Bank v. Global Universal Group Ltd., 134 A.D.3d 699, 700, 20 N.Y.S.3d 597 [2d Dept. 2015] ; CPLR 105[u] ).
Defendants' argument that their guaranty lacks consideration is unavailing. The fact that the guaranty does not recite consideration is not determinative (see Sun Oil Co. v. Heller, 248 N.Y. 28, 161 N.E. 319 [1928] ; Erie County Sav. Bank v. Coit, 104 N.Y. 532, 537, 11 N.E. 54 [1887] ). Defendants admit that the lease modification agreement of which their guaranty was a part was supported by consideration ( id. ; see also Beacon Hotel Corp. v. Springer, 256 App.Div. 606, 11 N.Y.S.2d 48 [1st Dept. 1939] ).
Defendants failed to raise an issue of fact whether Porco and Rugisford were fraudulently induced to sign the guaranty. This argument was permissible in opposition to plaintiff's summary judgment motion even though Porco and Rugisford failed to include it as a defense in their answer (see Nassau Trust Co. v. Montrose Concrete Prods. Corp., 56 N.Y.2d 175, 182, 451 N.Y.S.2d 663, 436 N.E.2d 1265 [1982] ). Moreover, on this summary judgment motion, defendants' affidavits recounting their conversations with Richard Maltz, who was then plaintiff's managing member but who has since died, are not barred by the Dead Man's Statute ( CPLR 4519 ) (see e.g. Phillips v. Kantor & Co., 31 N.Y.2d 307, 310, 313, 338 N.Y.S.2d 882, 291 N.E.2d 129 [1972] ). However, the fraudulent inducement defense is not viable, because the guaranty is unconditional, and because the lease of which it is a part contains a no-oral-modification clause (see e.g. Rabobank, 25 N.Y.3d at 494, 15 N.Y.S.3d 277, 36 N.E.3d 80 ; BNY Fin. Corp. v. Clare, 172 A.D.2d 203, 205, 568 N.Y.S.2d 65 [1st Dept. 1991] ).
The fact that Porco and Rugisford sold their interests in 150 RFT Varick Corp. (the tenant) does not relieve them of liability under their guaranty (see e.g. Franklin Natl. Bank of Long Is. v. S. & L. Constr. Corp., 16 A.D.2d 682, 227 N.Y.S.2d 577 [2d Dept. 1962] ). Unlike the guaranty in 150 Broadway N.Y. Assoc., L.P. v. Shandell , 27 Misc.3d 1234[A], 2010 WL 2383955 (Sup. Ct., N.Y. County 2010), affd 90 A.D.3d 498, 934 N.Y.S.2d 154 (1st Dept. 2011), the guaranty in the instant action does not contain provisions allowing a withdrawing partner to be discharged from his or her obligations.
The fact that plaintiff failed to give defendants notice of its lawsuit against the tenant does not bar recovery but is relevant to whether the judgment against the tenant is binding on defendants (see Bridgeport Fire & Mar. Ins. Co. v. Wilson, 34 N.Y. 275, 279 [1866] ).
Defendants failed to support their argument that the need for further discovery precludes summary judgment by showing either a likelihood that plaintiff has exclusive knowledge of relevant evidence or that further discovery might reveal the existence of such evidence (see Atomergic Chemetals Corp. v. Hartford Acc. & Indem. Co., 193 A.D.2d 551, 597 N.Y.S.2d 706 [1st Dept. 1993] ), at least as to liability. Rugisford's and Porco's affidavits merely said that they believed that codefendant John Best would have (unspecified) facts and information in defense of plaintiff's claim (see Lewis v. Safety Disposal Sys. of Pa., Inc., 12 A.D.3d 324, 325, 786 N.Y.S.2d 146 [1st Dept. 2004] ).
By contrast, Bakhshi raised a triable issue of fact whether plaintiff released him from his guaranty. He submitted an affirmation by his former attorney—"the person who last had custody of the original [release]" ( Schozer v. William Penn Life Ins. Co. of N.Y., 84 N.Y.2d 639, 644, 620 N.Y.S.2d 797, 644 N.E.2d 1353[1994] )—saying that the original release had been lost due to damage caused to his office by Hurricane Sandy. Bakhshi's affidavit and his former attorney's affirmation both said that plaintiff had released Bakhshi from his guaranty. In reply, plaintiff submitted an affirmation by its former attorney, saying that Bakhshi and his former attorney were lying.
Finally, contrary to defendants' contention, they are bound by the judgment that was entered in Civil Court as guarantors of the tenant's obligation (see APF 286 Mad LLC v. Chittur & Assoc. P.C., 132 A.D.3d 610, 20 N.Y.S.3d 4 (1st Dept. 2015), lv dismissed 27 N.Y.3d 952, 29 N.Y.S.3d 913, 49 N.E.3d 1207 [2016] ; Moon 170 Mercer, Inc. v. Vella, 146 A.D.3d 537, 538, 45 N.Y.S.3d 415 [1st Dept. 2017] ).