766 Tenth LLC v. Conversion Consulting LLC
| Decision Date | 29 August 2016 |
| Docket Number | Index No. 651905/2014 |
| Citation | 2016 NY Slip Op 31649 (U) |
| Parties | 766 TENTH LLC, Plaintiff, v. CONVERSION CONSULTING LLC a/k/a FLIP SERVICES d/b/a BOUNCE AND FLIP, and ED MATTHEWS, Defendants. |
| Court | New York Supreme Court |
DECISION and ORDER
Plaintiff 766 Tenth LLC ("766 Tenth") brings this commercial nonpayment action against defendants Conversion Consulting LLC a/k/a Flip Services d/b/a Bounce and Flip ("Consulting") and Edward Matthews ("Matthews" and collectively, "defendants"). In the verified complaint, plaintiff alleges that Consulting is in default under the terms of a commercial lease agreement, and that Matthews, as guarantor of the Lease, is liable for both a money judgment entered against Consulting in the Civil Court of the County of New York on August 19, 2013, and "all rent due and owing accruing thereafter under the Lease through and including the expiration of the Lease term."
On July 16, 2012, Consulting became a commercial tenant in a building owned by 766 Tenth pursuant to the terms of a least agreement (the "Lease"). On the same day, Matthews executed a "Good Guy Guaranty" (the "Guaranty") for the Lease. The term of the Lease is ten (10) years expiring on December 31, 2022.
On May 28, 2013, plaintiff commenced a summary nonpayment proceeding as a result of Consulting defaulting in the payment of the rent and additional rent. By decision and order dated August 19, 2013, Justice Nancy M. Bannon awarded plaintiff possession of the premises and a money judgment in favor of plaintiff as against Consulting in the sum of $192,903.23. Consulting was evicted from the demised premises pursuant to a warrant and notice of eviction and plaintiff obtained legal possession of the demised premises on January 13, 2015.
Consulting filed a voluntary bankruptcy petition in the United States Bankruptcy Court, Southern District of New York (No. 14-10665) on March 17, 2014. Matthews is not named as a debtor in the bankruptcy petition. Plaintiff commenced the instant action by the filing of a Summons and Verified Complaint on June 20, 2014.
On August 5, 2014, Matthews, appearing pro se, interposed a notice of appearance and a verified answer, in which he asserted the following affirmative defense: "Plaintiff has violated a federal stay, granted with defendant filing a voluntary bankruptcy petition, by seeking to collect/recover the rent that arose before the commencement of the bankruptcy case no. 14-10665 dated march 17, 2014." Matthews asserted no other defenses or counterclaims and denied all of the allegations in the complaint.
Plaintiff now moves for an order, granting summary judgment to plaintiff against defendant Matthews on its first, second, and third Causes of Action (Breach of Contract, Rent Due on Unexpired Term of Lease, and Reimbursement of Attorneys' Fees); dismissing the affirmative defense of Matthews; and awarding a money judgment in the amount of $3,578,550.66 in favor of plaintiff and against Matthews; and/or in the alternative, awarding attorney fees, expenses, costs and disbursements, and granting leave to file a note of issue and scheduling this matter for an inquest on the issue of plaintiff's damages as against Matthews.
Plaintiff submits the affirmation of Andreas Vasilatos, Esq., the affidavit of Annabelle Santiago, property manager of 766 Tenth, the affidavit of Travis Morrison, bookkeeper for 766 Tenth, and the following annexed exhibits: (a) the Lease; (b) the Guaranty; (c) the August 19, 2013 Decision and Order, awarding plaintiff a money judgment in the amount of $192,903.23 as against Consulting; (d) the voluntary bankruptcy petition, dated March 17, 2014, filed by Consulting in the United States Bankruptcy Court, Southern District of New York; (e) a copy of the warrant of eviction; and (f) the rent ledger for the premises leased by Consulting.
In opposition, defendant Matthews submits an affidavit annexing (a) an asbestos assessment report for the premises, dated October 19, 2013; (b) an email scheduling the asbestos abatement for January 12, 2013; (c) an estimate totaling $37,650 for roof resurfacing; (d) an architectural drawing of the premises; (e) an ECB Violation, dated April 24, 2012, for "failure to maintain building, noted at north facade bulging parapet/wall approx. 3-4 inches causing stucco to detach from inner brick face, facade shows multiple cracks throughout, w/washing out mortar joints," imposing a penalty of $1,000; (f) an email dated May 17, 2012 fromplaintiff's brokerage firm, Robert K. Futterman & Associates, LLC ("RKF"), to Matthews, containing a second counter proposal to lease the retail space at 766 Tenth; and (g) a NYC Department of Buildings permit, approved on May 24, 2011, for "renovation of existing commercial space, new storefront, minor plumbing work."
Matthews argues that plaintiff made four misrepresentations to fraudulently induce defendants into executing the Lease and Guaranty, rendering the Guaranty invalid. Specifically, Matthews alleges that plaintiff represented that there was no asbestos in the building (the "first misrepresentation"), that the building was in satisfactory condition (the "second misrepresentation"), and that defendants would receive five months of rent concessions (the "third misrepresentation"). Matthews further alleges that plaintiff verbally requested to do work during the first two months after lease execution and represented that, if the work was not complete within two months, plaintiff would provide the amount of months in rent concessions to the defendants equal to the number of months that plaintiff remained on the premises completing its work (the "fourth misrepresentation").
The proponent of a summary judgment motion 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. Santiago v. Filstein, 35 A.D.3d 184, 185-86 (1st Dept. 2006). The burden then shifts to the opponent to "present evidentiary facts in admissible form sufficient to raise a genuine, triable issue of fact." Mazurek v. Metropolitan Museum New York, 49 N.Y.2d 557, 562 (1980). Mere conclusions, expression of hope or unsubstantiated allegations or assertions are insufficient for this purpose. Zuckerman v. City of New York, 49 N.Y.2d 557, 562 (1980).
"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." 4 USS LLC v. DSW MS LLC, 120 A.D.3d 1049, 1051 (1st Dept. 2014); City of New York v. Clarose Cinema Corp., 256 A.D.2d 69, 71 (1st Dept. 1998).
The Guaranty executed by Matthews on July 16, 2012 provides:
[T]he undersigned (sometimes hereinafter called "Guarantor) does hereby ... unconditionally guarantee to Landlord . . . the full and timely payment, performance and observance of, and compliance with all of Tenant's obligations under the Lease, including, without limitation, the full and prompt payment of all Base Rent, additionalrent, an amount equal to the prorated remaining value of the real estate commission paid initially by the Landlord, an amount equal to the prorated remaining value of the initial build out time, an amount equal to the full security . . . and all other reasonable charges and sums due and payable by Tenant under the Lease (including, without limitation, Landlord's reasonable attorney's fees and disbursements) (collectively, the "Obligations") through and including the date that Tenant ... shall have completely performed all of the following: (i) provide written notice to Landlord (pursuant to the notice requirements in the Lease) of Tenant's intention to vacate and surrender the Demised Premises to Landlord ... ; (ii) vacated and surrendered the Demised Premises to the Landlord pursuant to the terms of the Lease; (iii) delivered the keys to the Demised Premises to Landlord; and (iv) paid to Landlord all Obligations through and including the date of the surrender of the Demised Premises.
Further, the Guaranty provides:
This Guaranty is an absolute and unconditional guaranty of payment and performance. The undersigned hereby covenants and agrees to and with Landlord and its successors and assigns, that the undersigned may be joined in any action or proceeding against Tenant in connection with the Obligations, and that recovery may be had against the undersigned in such action or proceeding or in any independent action or proceeding against the undersigned without Landlord ... first pursuing or exhausting any remedy or claim against Tenant[.]
Here, the terms of the Guaranty are unambiguous and unconditional, and plaintiff has otherwise met its prima facie burden by submitting proof of the underlying debt and the guarantor's failure to perform under the Guaranty. In opposition, defendant Matthews fails to raise a triable issue of fact. The sole affirmative defense Matthews raises in his Answer fails as a matter of law. It is well settled that "[d]efendants, as guarantors of the debt of a corporation against which a proceeding has been commenced under the Bankruptcy Code, are not relieved from liability, nor is plaintiff prevented from proceeding against the non-bankrupt individual defendant guarantors by the bankruptcy stay." Milliken & Co. v. Stewart, 182 A.D.2d 385, 386 (1st Dept. 1992) . Where, as here, a guarantee states that it is "absolute" and "unconditional," binding the guarantor to pay immediately upon the default of thedebtor, "it is considered to be a guarantee of payment, and upon default the creditor may proceed directly against the guarantor in the first instance." Milliken, ...
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