McDonough v. 50 E. 96th St., LLC

• Decision Date: 24 September 2021
• Docket Number: 2021-32050,Index EFCA2020001541
• Court: United States State Supreme Court (New York)
• Parties: KEVIN F. MCDONOUGH and PATRICIA ANN KENNEDY, Plaintiffs, v. 50 EAST 96TH STREET, LLC, SUCCESSOR IN INTEREST TO THE RIGHTS OF PAYSON ESTATES INC. and A. RUTH & SONS REAL ESTATE, JOSH RUTH, LEE RUTH and PHILLIP F. RUTH, Defendants.

KEVIN F. MCDONOUGH and PATRICIA ANN KENNEDY, Plaintiffs,
v.
50 EAST 96TH STREET, LLC, SUCCESSOR IN INTEREST TO THE RIGHTS OF PAYSON ESTATES INC. and A. RUTH & SONS REAL ESTATE, JOSH RUTH, LEE RUTH and PHILLIP F. RUTH, Defendants.

No. 2021-32050

Index No. EFCA2020001541

Supreme Court, Broome County

September 24, 2021

Unpublished Opinion

Counsel for Plaintiffs: Kevin F. McDonough, Esq. McDONOUGH & ARTZ, P.C.

Counsel for Defendants: Adam Michael Levy, Esq. ADAM MICHAEL LEVY, P.C.

PRESENT: HON. EUGENE D. FAUGHNAN, JUSTICE PRESIDING

DECISION AND ORDER

EUGENE D. FAUGHNAN, JUDGE

This matter is before the Court upon the Defendants' motion to dismiss the Plaintiffs' Complaint pursuant to CPLR 3211 (a)(1) and CPLR 3211 (a)(7). The parties appeared for oral argument, which was conducted virtually by Microsoft Teams on May 14, 2021, after which the Court suggested the parties redouble efforts to resolve this matter amicably. Subsequently, the parties informed the Court that they had been unable to reach a resolution, and were seeking a determination on the motion to dismiss. After due deliberation, this Decision and Order constitutes the Court's determination with respect to the pending motion.^[1]

BACKGROUND FACTS

In September 2016, Plaintiff, Patricia Ann Kennedy, entered into a Lease agreement with 50 East 96^th Street, LLC successor in interest to the rights of Payson Estates, Inc., for an apartment in Manhattan, utilizing a standard lease form. The lease was for a one year term at $4, 800 per month and was signed by Plaintiff Patricia Kennedy and was also guaranteed by her father, Plaintiff Kevin McDonough. Kennedy allegedly also paid two months as security deposit. Over the next three years, Kennedy entered into new lease agreements in August of each year. Plaintiffs contend that McDonough was not a guarantor on the subsequent leases, because he did not sign any renewals.

Kennedy was laid off from her employment in approximately June 2017 but continued to receive severance pay until January 2018. In June 2019, General Obligations Law was amended to provide that landlords could only keep one month security deposit (GOL 7-108). Plaintiffs sought to recoup the additional month security deposit to no avail. Due to lack of employment, Kennedy fell behind on rent payments, and the landlord gave her a 14-day notice in December 2019. McDonough provided money to cover rent payments for November and December 2019 and January 2020. Beginning in March 2020, Governor Andrew Cuomo issued numerous Executive Orders due to the coronavirus pandemic, including a moratorium on eviction proceedings. Kennedy attempted to make ongoing rent payments, and also completed COVID hardship forms over the next few months. The Defendants advised Kennedy that they would not be renewing her tenancy at the end of the lease term-September 30, 2020.

On August 6, 2020, Plaintiffs commenced this action by the filing of a Summons and Complaint asserting three causes of action: breach of warranty of habitability, harassment (by virtue of demands for payment), and intentional infliction of emotional distress. Defendants filed a verified Answer with Counterclaims on September 4, 2020, to which Plaintiffs filed a reply on September 10, 2020.

Plaintiffs filed a motion to extend the time for service of the Summons and Complaint and for permission to serve and file and a verified Amended and Supplemental Complaint, which was granted by the Court in an Order signed February 25, 2021. Plaintiffs filed an Amended Complaint on March 2, 2021 listing six causes of action.

Defendants filed this motion to dismiss on March 22, 2021, and Plaintiffs filed opposition papers to the motion. Plaintiffs then filed reply papers. The parties appeared for oral argument on the motion, which was conducted virtually.

LEGAL DISCUSSION AND ANALYSIS

In this case, Defendants have moved for dismissal under CPLR 3211 (a)(1) [documentary evidence] and CPLR 3211 (a)(7) [failure to state a cause of action]. To prevail under CPLR 3211 (a) (1), the movant must establish that "the documentary evidence utterly refutes [the] plaintiffs factual allegations, conclusively establishing a defense as a matter of law." MLB Constr. Servs., LLC v. Lake Ave. Plaza, LLC, 156 A.D.3d 983, 985 (3^rd Dept. 2017), citing Goshen v. Mut. Life Ins. Co. of N.Y., 98 N.Y.2d 314, 326 (2002); Shephard v. Friedlander, 195 A.D.3d 1191 (3^rd Dept. 2021); Crepin v. Fogarty, 59 A.D.3d 837 (3^rd Dept. 2009). Dismissal may be granted when the "factual claims ... are flatly contradicted by documentary evidence or are inherently incredible." Hyman v. Schwartz, 127 A.D.3d 1281, 1283 (3^rd Dept. 2015) quoting DerOhannesian v. City of Albany, 110 A.D.3d 1288, 1289 (3^rd Dept. 2013); Ozdemir v. Caithness Corp., 285 A.D.2d 961, 963 (3^rd Dept. 2001) ("a court need not accept as true legal conclusions or factual allegations that are either inherently incredible or flatly contradicted by documentary evidence."). "[I]t is clear that judicial records, as well as documents reflecting out-of-court transactions such as mortgages, deeds, contracts, and any other papers, the contents of which are 'essentially undeniable,' would qualify as 'documentary evidence' in the proper case." Fontanetta v. John Doe I, 73 A.D.3d 78, 84-85 (2^nd Dept. 2010); see Koziatek v. SJB Dev. Inc., 172 A.D.3d 1486 (3^rd Dept. 2019). Affidavits do not constitute documentary evidence contemplated under this section. State of NY Workers' Compensation Bd. v. Madden, 119 A.D.3d 1022 (3^rd Dept. 2014); Crepin v. Fogarty, 59 A.D.3d 837. "When documentary evidence is submitted by a defendant, 'the standard morphs from whether the plaintiff stated a cause of action to whether it has one.'" Basis Yield Alpha Fund (Master) v. Goldman Sachs Group, Inc., 115 A.D.3d 128, 135 (1^st Dept. 2014), quoting John R. Higgitt, CPLR 3211[a][7] and [a][7] Dismissal Motions-Pitfalls and Pointers, 83 NY St. BJ 32, 3.3 (2011). That is because the documentary evidence is being used to conclusively establish that no cause of action exists. See, e.g. State Farm Fire & Cas. Co. v. Main Bros. Oil Co., 101 A.D.3d 1575 (3^rd Dept. 2012).

Defendants assert that the landlord under the lease agreement was 50 East 96^th Street LLC, Successor in Interest to the Rights of Payson Estates, Inc., and that the other named defendants cannot be liable under the lease. The contract, and signatories to the contract, would indeed be the type of documentary evidence contemplated under CPLR 3211 (a)(1). Defendants maintain that A. Ruth & Sons Real Estate, Josh Ruth, Lee Ruth and Phillip Ruth were acting as agents of the landlord, and therefore cannot incur personal liability.

"When an agent acts on behalf of a disclosed principal, the agent will not be personally liable for a breach of contract unless there is clear and explicit evidence of the agent's intention to be personally bound." Lido Beach Towers v. Denis A. Miller Ins. Agency, Inc., 128 A.D.3d 1025, 1027 (2^nd Dept. 2015), quoting Weinreb v. Stinchfield, 19 A.D.3d 482, 483 (2^nd Dept. 2005); Simmons v. Washing Equip. Tech., 51 A.D.3d 1390, 1392 (4^th Dept. 2008). Defendants have met their initial burden on the motion by: 1) highlighting that Plaintiffs' Amended Complaint ¶ 5 states that "Defendants Josh Ruth, Lee Ruth and Phillip F. Ruth ... are owners and/or members of Defendant... and/or acted as agents, servants and/or employees of the [Landlord] and/or A. Ruth and Sons Real Estate"; 2) referencing various emails attached to Plaintiffs' Amended Complaint wherein the named individuals are noted as A. Ruth and Sons representatives and utilize an email address from "aruthandsons.com", and communicate regarding past due rents and payment options; and 3) showing communications that make clear that the named individuals and A. Ruth and Sons were acting on behalf of the landlord and do not show any intent to be personally liable. See, e.g. Weinreb v. Stinchfleld, 19 A.D.3d 482; American Diabetes Assn. v. Abbey, Mecca & Co, Inc., 77 A.D.3d 1333 (4^th Dept. 2010). Plaintiffs claim that there has been no discovery yet in this matter, and that the relationship, if any, between 50 East 96^thStreet, LLC, Payson Estates, A. Ruth & Sons Real Estate, and the individual defendants needs to be further explored through disclosure.

In this case, the Defendants did Answer the first Complaint, but after Plaintiffs' succeeded in obtaining an Order to permit late service and the filing of an Amended Complaint, the Defendants have now filed a motion to dismiss. Since the Amended Complaint replaces the initial Complaint, Defendants have properly filed a motion to dismiss, prior to serving an Answer to the Amended Complaint. Therefore, normal rules pertaining to motions to dismiss apply, and presume that there has been no discovery conducted.

This is essentially a landlord-tenant dispute. On this motion, Defendants have submitted copies of the lease agreement signed in September 2016, and renewals/extensions of the lease for additional one year terms in October 2017, October 2018 and October 2019. The lease contracts are proper documentary evidence to consider on a motion to dismiss under CPLR 3211(a)(1). The lease and renewals/extensions all list 50 East 96^th Street LLC, successor in interest to the rights of Payson Estates, Inc., as the Landlord. The parties also entered into a storage space license agreement, that specifies the person signing on behalf of 50 East 96^th Street LLC is a member of the LLC, or managing agent. "[O]ne who executes a contract on behalf of a corporation without also signing it in his individual capacity is not personally obligated under the agreement." Kreutter v. McFadden Oil Corp., 71 N.Y.2d 460, 468 (1988), citing Rene Boas & Associates v. Vernier, 22 A.D.2d 561, 563 (1965); see Shephard v. Friedlander, 195 A.D.3d 1191. In the present case, the leases and license agreements were not signed by any of the individual...