Case Name: H.L. Realty, LLC, Respondent, v. Walter Edwards et al., Appellants. (And a Third-Party Action.)
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 2015-08-19
Citations: 131 A.D.3d 573
Docket Number: 
Parties: H.L. Realty, LLC, Respondent, v Walter Edwards et al., Appellants. (And a Third-Party Action.)
Judges: Dillon, J.P., Leventhal and Sgroi. JJ., concur.
Reporter: Appellate Division Reports
Volume: 131
Pages: 573–579

Head Matter:
H.L. Realty, LLC, Respondent, v Walter Edwards et al., Appellants. (And a Third-Party Action.)
[15 NYS3d 413]

Opinion:
In an action to recover on a personal guaranty, the defendant Walter Edwards appeals, as limited by his brief, from so much of an order of the Supreme Court, Nassau County (Palmieri, J.), dated May 5, 2014, as granted the plaintiff's motion for summary judgment on the issue of liability against him, and denied that branch of the defendants' motion which was for summary judgment dismissing the complaint insofar as asserted against him, and the defendant Kim Edwards, Inc., also appeals from the order.
Ordered that the appeal by the defendant Kim Edwards, Inc., is dismissed as abandoned, without costs or disbursements (see 22 NYCRR 670.8 [e]); and it is further,
Ordered that the order is affirmed insofar as appealed from by the defendant Walter Edwards; and it is further,
Ordered that one bill of costs is awarded to the plaintiff, payable by the defendant Walter Edwards.
The plaintiff is the owner of retail property located in Greenlawn, New York. On August 21, 2003, the plaintiff entered into a 10-year lease of the property with the defendant Kim Edwards, Inc. (hereinafter KEI). At the same time, the defendant Walter Edwards (hereinafter the appellant), executed a personal guaranty of KEI's payment obligations under the lease. In pertinent part, the guaranty stated as follows: "[The guarantor] does hereby . . . unconditionally and irrevocably guarantee the full and prompt payment by Tenant of all amounts due under such Lease as the same may be renewed, extended, amended or modified. . . . This Guaranty shall be a continuing guaranty and liability hereunder shall in no way be affected or diminished by any renewal, extension, amendment or modification of the Lease or any waiver of any of the provisions thereof. The Guarantor hereby waives any notice of default under the Lease" (emphasis added).
By assignment and assumption of the lease dated January . 16, 2009, KEI assigned the lease to the third-party defendant, Angelina Liquors, Inc. (hereinafter Angelina). The assignment was executed by the appellant, both in his capacity as guaran tor and on behalf of KEI. By agreement also dated January 16, 2009, the plaintiff, along with KEI, as tenant, and the appellant, as guarantor, entered into a lease extension referable to the premises. This agreement extended the lease term until August 31, 2018, and stated, inter alia, that "the Guarantor has agreed to allow his guaranty to remain in full force and effect throughout the term of said Lease as extended hereby." Further, the agreement stated that " [b]y his signature hereunder, Walter Edwards hereby ratifies and confirms that his guaranty of the aforementioned Lease shall remain in full force and effect throughout the term thereof, to wit, August 31, 2018, and hereby consents to any assignment of said Lease during said period."
At some point thereafter, Angelina defaulted in the payment of rent, and the plaintiff commenced a nonpayment proceeding against Angelina in the District Court, Suffolk County. In February 2013, that proceeding was settled by a stipulation, pursuant to which Angelina agreed to the entry of a money judgment against it, representing certain rent arrears, as well as to the entry of a judgment of possession in favor of the plaintiff. The stipulation also recited that "the parties further agree and understand that future rent must be timely paid in addition to any amount paid toward arrears." The appellant and KEI were not parties to the District Court proceeding. Angelina subsequently vacated the premises, and the plaintiff assumed possession thereof.
In November 2013, the plaintiff commenced this action against KEI and the appellant seeking to recover on the guaranty. The plaintiff moved for summary judgment on the issue of liability against the appellant, and the defendants cross-moved, inter alia, for summary judgment dismissing the complaint insofar as asserted against the appellant. The Supreme Court, inter alia, granted the plaintiff's motion and denied that branch of the defendants' motion.
"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" (City of New York v Clarose Cinema Corp., 256 AD2d 69, 71 [1998]; see 4 USS LLC v DSW MS LLC, 120 AD3d 1049 [2014]). Here, the terms of the guaranty were unambiguous and unconditional, and the plaintiff otherwise met its prima facie burden on its motion for summary judgment. In opposition, the appellant failed to raise a triable issue of fact.
While we agree with our dissenting colleague that the landlord-tenant relationship between Angelina and the plaintiff ended after Angelina vacated the premises and the plaintiff assumed possession, we disagree that such a circumstance operated to terminate the appellant's liability under the guaranty. "Although an eviction terminates the landlord-tenant relationship, the parties to a lease are not foreclosed from contracting as they please" (Holy Props. v Cole Prods., 87 NY2d 130, 134 [1995]). Where a lease provides that a landlord is under no duty to mitigate damages after its reentry by virtue of its successful prosecution of a summary proceeding, and that the tenant remains liable for damages, "[the tenant] remain[s] liable for all monetary obligations arising under the lease" (id. at 134).
Here, the lease did not obligate the plaintiff to mitigate damages after reentry by virtue of its successful prosecution of a summary proceeding, and specifically provided that in the event of such reentry, "tenant shall also pay owner as liquidated damages . . . any deficiency between the rent hereby received and or covenanted to be paid and the net amount, if any, of the rent collected on account of the subsequent lease or leases of the demised premises for each month of the period which would otherwise have constituted the balance of the term of this lease." Thus, although the tenant no longer remained liable for rent after it vacated the premises, it was liable for liquidated damages, which could be as much as the balance of rent due under the original term of the lease, since the plaintiff was under no obligation to rent to a new tenant for the balance of the term. Moreover, the guaranty specifically stated that the appellant guaranteed "the full and prompt payment by Tenant of all amounts due under [the] lease." Accordingly, the plaintiff was entitled to seek from the appellant the liquidated damages for which the tenant was liable under the lease even after the termination of the landlord-tenant relationship (see 172 Van Duzer Realty Corp. v Globe Alumni Student Assistance Assn., Inc., 24 NY3d 528, 535 [2014]; cf. Centre Great Neck v Rite Aid Corp., 292 AD2d 484 [2002]).
This is true regardless of the terms of the stipulation which settled the summary proceeding between the plaintiff and Angelina, since the stipulation covered only Angelina's liability for rent. While a guarantor may be relieved of the guaranty where the original obligation is altered without his or her consent, contrary to the appellant's contention, the stipulation of settlement between the plaintiff and Angelina did not vitiate either Angelina's obligation to pay liquidated damages or the appellant's guaranty of that obligation under the unconditional guaranty (see White Rose Food v Saleh, 99 NY2d 589 [2003]; Bier Pension Plan Trust v Estate of Schneierson, 74 NY2d 312 [1989]; cf. Lo-Ho LLC v Batista, 62 AD3d 558 [2009]). In addition, as indicated, in the January 16, 2009, lease extension agreement executed by the plaintiff and the defendants, the appellant specifically agreed that his guaranty would "remain in full force and effect."
The appellant's remaining contentions are without merit.
Accordingly, the Supreme Court properly granted the plaintiff's motion for summary judgment on the issue of liability on the guaranty against the appellant and, consequently, also properly denied that branch of the defendants' motion which was for summary judgment dismissing the complaint insofar as asserted against the appellant (see generally Alvarez v Prospect Hosp., 68 NY2d 320 [1986]).
Dillon, J.P., Leventhal and Sgroi. JJ., concur.