[*1]
Thirty Six W. Thirty Six Assets LLC v New Forest Nails Spa Inc.
2024 NY Slip Op 51733(U)
Decided on December 9, 2024
Supreme Court, New York County
Lebovits, J.
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and will not be published in the printed Official Reports.


Decided on December 9, 2024
Supreme Court, New York County


Thirty Six West Thirty Six Assets LLC, Plaintiff,

against

New Forest Nails Spa Inc., XIU HUA HU, and TANG JIM CHUN, Defendants.




Index No. 656875/2021


Zingman & Associates PLLC, New York, NY (Cheryl R. Ginsburg of counsel), for plaintiff.

Schiller Law Group, P.C., Catskill, NY (Chaim Howard Berglas of counsel), for defendants.


Gerald Lebovits, J.

This is a commercial-landlord-tenant action, brought by plaintiff-landlord, Thirty Six West Thirty Six Assets LLC, to collect on rent/additional rent owed under a lease and guarantee by defendant-tenant, New Forest Nails Spa Inc., and defendants-guarantors, Hu Xiu Hua and Tang Jim Chun. On this motion, landlord moves under CPLR 3212 for a grant of summary judgment in its favor on its claims against tenant and guarantors, and for dismissal of defendants' affirmative defenses and counterclaims. Landlord's motion is granted.

DISCUSSION


I. The Branch of Landlord's Motion Seeking Summary Judgment on Landlord's Claims and Dismissal of Defendants' Affirmative Defenses


A. Landlord's Request for Summary Judgment in its Favor

Landlord has established its prima facie entitlement to summary judgment on its claims [*2]for unpaid rent/additional rent against both tenant and guarantors. In particular, landlord has provided copies of the underlying lease and guarantee (see NYSCEF Nos. 70, 71), along with the affidavit of its principal (see NYSCEF No. 66), supported by rent statements and other invoices (see NYSCEF Nos. 72, 73, 74).

In opposition, defendants do not raise a material dispute of fact about the amount claimed. At most, the affidavit of guarantor Xiu Hu asserts that (i) landlord did not credit the amount of tenant's security deposit; and (ii) landlord did not offset the amount claimed by the rent paid by a "new tenant [who] took occupancy of the premises" six months before the lease's expiration. (NYSCEF No. 79 at ¶ 4.) But the affidavit of landlord's principal expressly represents that the claimed amount in rent/additional rent is what is owed after a security-deposit credit (NYSCEF No. 66 at ¶ 5); and that "[a]lthough Landlord was able to re-rent the Premises, the new tenant did not begin paying rent until after expiration of the lease" (id. at ¶ 21). Defendants' motion papers do not provide any evidence that might raise a factual dispute about these representations. And although defendants contend that summary judgment is premature under CPLR 3212 (f) because significant discovery remains outstanding (see NYSCEF No. 80 at 12-13), they do not explain how that discovery would be material to the claims/counterclaims and defenses in this action.

Defendants also contend that a dispute of fact exists about whether defendants were constructively evicted from the leased premises—which, if proven, would constitute a defense to plaintiff's rent claims.[FN1] Plaintiff argues that the claim-preclusive effect of a prior Civil Court judgment bars defendants from raising this constructive-eviction argument. (See NYSCEF No. 99 at 1-2.) This court agrees.

The doctrine of "[c]laim preclusion prevents relitigation between the same parties, or those in privity with them, of a cause of action" or a defense that arises "out of the same transaction or series of transactions" that was "raised or could have been raised in [a] prior proceeding" litigated to judgment—including a default judgment. (Rojas v Romanoff, 186 AD3d 103, 108 [1st Dept 2020]; accord Sky East, LLC v Franco, 204 AD3d 594, 595 [1st Dept 2022].)

Here, it is undisputed that in August 2019, landlord brought a summary proceeding against tenant in the Commercial Landlord-Tenant Part of Civil Court, seeking tenant's eviction for nonpayment of rent. (See NYSCEF No. 88 [petition from summary proceeding].) In late November 2019, landlord and tenant ultimately reached a settlement in that proceeding. (See [*3]NYSCEF No. 89 [settlement agreement].) Their settlement stipulation reflects that Civil Court had already awarded landlord a judgment of possession and issued a warrant of eviction.[FN2] (See id. at ¶ 2). The stipulation provides that if tenant paid its rent arrears (on terms set forth in the stipulation), landlord would stay execution of the eviction warrant (see id. at ¶ 3.)

Crucially, landlord's commencement of the summary proceeding in August 2019 occurred after the start in July 2019 of the renovation-related disruptions, leaks, dust, and so on that defendants now say led to tenant's constructive eviction (see NYSCEF No. 79 at ¶¶ 5-6). Tenant thus could have raised those disruptions as a defense to landlord's nonpayment claim. As a result, taking into account the entry of judgment in the nonpayment proceeding, tenant is barred by claim preclusion from raising the disruptions in support of a constructive-eviction defense against summary judgment here. And because guarantors are in privity with tenant for preclusion purposes (see Moon 170 Mercer Inc. v Vella, 146 AD3d 537, 538 [1st Dept 2017]), the claim-preclusion bar applies to them as well.

To be sure, claim preclusion would not foreclose a constructive-eviction defense based on disruptions to tenant's business allegedly occurring after the time when tenant could have raised that defense in the nonpayment proceeding. (See UBS Secs. LLC v Highland Capital Mgt., L.P., 86 AD3d 469, 476 [1st Dept 2011].) But beyond a couple of conclusory sentences in a party affidavit (see NYSCEF No. 79 at ¶ 7), defendants do not identify the time period in which those disruptions occurred, or connect disruptions occurring at a particular time to tenant's inability to use all of the leased premises or to operate its business.[FN3] This imprecision is particularly significant because defendants' party-verified answer alleges that tenant did not provide notice to landlord that it would be vacating the premises (as required for a full-constructive-eviction claim) until April 1, 2020—the day after tenant had told landlord that it was closing "due to COVID-19 Executive Order." (NYSCEF No. 44 at ¶¶ 67-68.)

Thus, defendants have not established that their constructive-eviction argument in opposition to summary judgment suffices to raise a genuine dispute of material fact that is outside the scope of any claim-preclusion bar.

B. Landlord's Request for Dismissal of Defendants' Affirmative Defenses

Landlord also moves for dismissal of defendants' affirmative defenses. This request is granted as well.

With respect to defendants-guarantors, their execution of an unconditional guarantee of payment (see NYSCEF No. 71 at ¶ 2) forecloses them from raising the affirmative defenses in defendants' answer, because those defenses personal to the tenant. (See I Bldg., Inc. v Cheung, [*4]137 AD3d 478, 478 [1st Dept 2016].) The sole defense outside the scope of this principle is defendants' eighth affirmative defense, failure of consideration. (See id.) For the reasons discussed above, though, that defense, sounding in constructive eviction, is subject to dismissal on its merits. Landlord's request for dismissal of the affirmative defenses is thus granted as to the defenses as asserted by guarantors.

Defendant-tenant does not contest landlord's request for dismissal of its affirmative defenses. The request is therefore granted without opposition.

Landlord has therefore established as a matter of law that it is entitled to the $360,116.86 that it claims in unpaid rent and additional rent through the end of the lease term. Landlord has not requested interest, so no interest is awarded. (See NYSCEF No. 63 at 1 [notice of motion].) Landlord is also entitled under the lease and guarantee to an award of its attorney fees incurred in this action.[FN4] The amount of those fees shall be determined by motion made on notice.


II. The Branch of Landlord's Motion Seeking Dismissal of Defendants' Counterclaims

In addition to seeking summary judgment on its own claims, landlord asks this court to grant it summary judgment dismissing defendants' counterclaims. Defendants' motion papers do not address this request. It is therefore granted without opposition.

Accordingly, it is

ORDERED that the branch of landlord's motion seeking dismissal of defendants' affirmative defenses is granted; and it is further

ORDERED that the branch of landlord's motion seeking entry of summary judgment in landlord's favor on its claims is granted, and landlord is awarded a judgment against defendants, jointly and severally, for $360,116.86 plus costs and disbursements as taxed by the Clerk upon the submission of an appropriate bill of costs; and it is further

ORDERED that landlord may enter a supplemental judgment for the amount of its reasonable attorney fees incurred in this action, with the amount of those fees to be determined by motion made on notice, supported by appropriate documentation; and it is further

ORDERED that the branch of landlord's motion seeking dismissal of defendants' counterclaims is granted without opposition; and it is further

ORDERED that landlord shall serve a copy of this order with notice of its entry on all parties; and on the office of the County Clerk (by the means set forth in the court's e-filing protocol, available on the e-filing page of the court's website, https://ww2.nycourts.gov/courts/1jd/supctmanh/E-Filing.shtml), which shall enter judgment accordingly.

DATE 12/9/2024

Footnotes


Footnote 1:In a post-argument letter brief (submitted by leave of court), plaintiff contends, in effect, that defendants may not raise this argument in opposition to summary judgment because they "did not raise constructive eviction as an affirmative defense in their answer." (NYSCEF No. 99 at 1.) This court disagrees. Defendants' eighth affirmative defense in the answer is that their "obligation to perform any of [their] alleged obligations under the lease and guaranty was excused for a failure of consideration." (NYSCEF No. 44 at ¶ 52.) Constructive eviction, if established, would constitute a failure of consideration. (See Moon 170 Mercer, Inc. v Vella, 216 AD3d 570, 571 [1st Dept 2023].) And in light of the constructive-eviction-related allegations pleaded in support of defendants' counterclaims, and the evidence submitted in opposition to plaintiff's motion, this court would exercise its discretion to "deem defendants' answer[] amended to assert the defense" in any event. (Rivera v New York City Transit Auth., 11 AD3d 333, 333 [1st Dept 2004].)

Footnote 2:Given the entry of judgment, claim preclusion would apply even if, as defendants contend (see NYSCEF No. 98 at 1), issue preclusion would not.

Footnote 3:The affidavit also attaches photographs that assertedly "show how serious the problem was and how openings in the ceiling caused water leaks, dust accumulation and loud noises." (NYSCEF No. 79 at ¶ 7.) But those photographs are not dated. (See NYSCEF No. 84.) Nor do defendants establish that the conditions reflected in those photographs were representative of the entire period over which defendants contend that renovation-related disruptions occurred.

Footnote 4:To the extent that landlord is also seeking an award of attorney fees incurred in the prior Civil Court nonpayment summary proceeding, recovery of those fees is barred by the doctrine of claim-splitting. (See O'Connell v 1205-15 First Ave. Assoc., LLC, 28 AD3d 233, 234 [1st Dept. 2006].)