City of New York v. Clarose Cinema Corp.
| Decision Date | 08 December 1998 |
| Citation | 681 N.Y.S.2d 251,256 A.D.2d 69 |
| Parties | 1998 N.Y. Slip Op. 10,846 The CITY OF NEW YORK, Plaintiff-Appellant, v. CLAROSE CINEMA CORP., Defendant-Respondent. |
| Court | New York Supreme Court — Appellate Division |
Steven J. Rappaport, for plaintiff-appellant.
Richard M. Zuckerman, for defendant-respondent.
Before MILONAS, J.P., ELLERIN, RUBIN, TOM and SAXE, JJ.
Order, Supreme Court, New York County (Salvador Collazo, J.), entered September 14, 1994, denying the plaintiff City's motion for summary judgment and to dismiss defendant's affirmative defenses in an action under a guaranty agreement, unanimously modified, on the law, to the extent of granting the City's motion for partial summary judgment on the issue of liability and the matter remanded for an assessment of damages and otherwise affirmed, without costs.
In August 1985 the City, having received an $800,000 grant from the United States Department of Housing and Urban Development, agreed to loan, subject to submission of a third party guaranty, up to $800,000 to Movieland Associates in connection with the renovation of Loew's Victoria Theater in upper Manhattan. Movieland leased the theater from the Harlem Urban Development Corporation, a wholly owned subsidiary of the New York State Urban Development Corporation, and it obtained a building and project loan from Chemical Bank secured by a SONYMA mortgage insurance policy. The guaranty agreement was executed by Cine Forty Second Street Theatre Corp., the predecessor-in-interest to defendant Clarose Cinema Corp.
The guaranty was an irrevocable and unconditional guaranty of full and prompt payment to the City of principal and interest due under the loan agreement. The guaranty agreement elsewhere provided that the guaranty was an "absolute, unconditional, present and continuing guaranty of payment and not of collection ... and [is] completely independent of the obligations of any other person or entity and a separate cause of action ... may be brought and prosecuted against the guarantor ...". The guaranty agreement also provided that the guarantor's obligation would not be affected by settlement, release, modification or other changes in the loan agreement between the debtor and the City, and that the City retained the right to proceed first against the guarantor without the need to exhaust other available remedies.
Movieland met its loan obligations until October 1, 1989, after which time it defaulted under the loan...
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