Court Opinion

ID: 9945526
Source: CourtListenerOpinion
Date Created: 2024-02-27 21:10:04.428423+00
Date Added: 2024-06-11T14:25:31.511304
License: Public Domain

44th Midtown Holdings LLC v Zaika Food Co. LLC
               2024 NY Slip Op 30585(U)
                    February 23, 2024
           Supreme Court, New York County
        Docket Number: Index No. 656439/2021
                  Judge: Louis L. Nock
Cases posted with a "30000" identifier, i.e., 2013 NY Slip
  Op 30001(U), are republished from various New York
 State and local government sources, including the New
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 This opinion is uncorrected and not selected for official
                       publication.
                                                                                                                        INDEX NO. 656439/2021
  NYSCEF DOC. NO. 44                                                                                              RECEIVED NYSCEF: 02/23/2024

                                   SUPREME COURT OF THE STATE OF NEW YORK
                                             NEW YORK COUNTY
            PRESENT:             HON. LOUIS L. NOCK                                                 PART                              38M
                                                                                      Justice
            ---------------------------------------------------------------------------------X      INDEX NO.          656439/2021
             44th MIDTOWN HOLDINGS LLC,
                                                                                                    MOTION DATE         05/11/2022
                                                         Plaintiff,
                                                                                                    MOTION SEQ. NO.         001
                                                 -v-
             ZAIKA FOOD COMPANY LLC and MANMOHAN
                                                                                                      DECISION + ORDER ON
             AHLUWALIA,
                                                                                                            MOTION
                                                         Defendants.
            ---------------------------------------------------------------------------------X

            The following e-filed documents, listed by NYSCEF document numbers (Motion 001) 7, 8, 9, 10, 11, 12,
            13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40,
            41, 42, and 43
            were read on this motion for                                                         SUMMARY JUDGMENT                     .

            LOUIS L. NOCK, J.

            Background

                      Plaintiff commenced this action seeking damages against the defendant Zaika Food

            Company LLC (“Zaika”) and defendant Manmohan Ahluwalia (“Manmohan”) for unpaid rent

            and additional rent in connection with leased premises. Zaika was the commercial tenant of the

            Ground Floor Store a/k/a Eastern Store and Lower Level located at 230 East 44th Street, New

            York, New York (the “Leased Premises”), pursuant to a written commercial Lease agreement

            date September 19, 2017, for a term of ten years (the “Lease”). Manmohan is the guarantor of

            Lease.

                      On or about November 17, 2019, Zaika provided plaintiff with a “Notice of

            Surrender/Termination,” indicating its intent to surrender the Leased Premises by May 31, 2020,

            and seeking to obtain a termination of the Lease and a release of Manmohan from his

            responsibilities under the guaranty (the “Surrender Notice”). However, plaintiff asserts that in

             656439/2021 44TH MIDTOWN HOLDINGS LLC vs. ZAIKA FOOD COMPANY LLC ET AL                                     Page 1 of 5
             Motion No. 001

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                                                                                                  INDEX NO. 656439/2021
  NYSCEF DOC. NO. 44                                                                      RECEIVED NYSCEF: 02/23/2024

            accordance with the Lease and guaranty, the defendants agreed that in order to properly

            effectuate a termination of the Lease and guaranty, the defendants were required to be current

            with their monetary obligations at the time of the Surrender Notice and through the date of the

            vacatur. Plaintiff claims that defendants failed to comply with their respective obligations under

            the Lease and guaranty, and as such, the Surrender Notice was null and void, and defendants

            remain liable for the unpaid rent and additional rent. The complaint’s prayer for relief states that

            it seeks money judgments against Zaika for $215,032.31 (for outstanding arrears through May

            2020), for $93,607.42 (for outstanding arrears through November 2021), and $2,344,829.52 (for

            future rents).

                    Plaintiff now seeks a default judgment against Zaika, although Zaika filed a late answer

            with counterclaims along with its counsel’s affirmation of excusable default and statement of

            possible merit (NYSCEF Doc. Nos. 30, 31). Plaintiff moves for summary judgment against

            Manmohan on his guaranty.

            Motion for a Default Judgment against Zaika

                    Zaika’s counsel attests that the answer with counterclaims were filed late on account of

            anticipated adjournments, possible settlement, and personal issues (see, NYSCEF Doc. No. 30 ¶¶

            6-39). The court deems those circumstances to constitute excusable default, especially in light of

            its filing of its answer and counterclaims, demonstrating a willingness to defend the action (see,

            Hunter v Enquirer/Star Inc., 210 AD2d 32 [1st Dept 1994]).

                    As for meritorious defense: Zaika asserts the following. Zaika points to a 2019

            settlement agreement whereby all rent arrears claims would be settled upon payment of $90,000

            (see, NYSCEF Doc. No. 33). Zaika further asserts that it was promised a rent credit of $30,000,

            pointing to a confirmation from plaintiff’s agent (see, id., ¶¶ 45-49). Zaika further challenges the

             656439/2021 44TH MIDTOWN HOLDINGS LLC vs. ZAIKA FOOD COMPANY LLC ET AL               Page 2 of 5
             Motion No. 001

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                                                                                                            INDEX NO. 656439/2021
  NYSCEF DOC. NO. 44                                                                               RECEIVED NYSCEF: 02/23/2024

            portion of plaintiff’s claim that it owes a portion of plaintiff’s brokerage expense (see, id., ¶¶ 50-

            52). Zaika further challenges plaintiff’s assertion that it was under an obligation to leave its

            equipment in the leased premises for the benefit of plaintiff post-vacatur (see, id., ¶¶ 53-56).1

                      Zaika’s burden in seeking to prevent a default judgment against it – especially in light of

            its demonstrated desire to defend the action through its filing of its (belated) answer with

            counterclaims – is not to conclusively succeed on its stated defenses; but rather, at this pleading

            stage, to simply “raise[] an issue as to the existence of a meritorious defense” (Solomon

            Abrahams, P.C. v Peddlers’ Pond Holding Corp., 125 AD2d 355, 357 [2d Dept 1986]). The

            court finds Zaika’s submissions to reach that threshold and, therefore, the court denies the

            plaintiff’s motion for a default judgment against Zaika, and deems its belated answer and

            counterclaims (NYSCEF Doc. No. 31) as its answer and counterclaims in this action, to which

            plaintiff may reply on or before 20 days from the date of filing hereof.

                      Motion for Summary Judgment against Manmohan2

                      A plaintiff meets its prima facie burden for summary judgment to enforce an absolute and

            unconditional guaranty where the plaintiff proves the existence of a guaranty, the underlying

            debt, and the guarantor's failure to perform under the guaranty (City of N.Y. v Clarose Cinema

            Corp., 256 AD2d 69 [1st Dept 1998]). On a motion for summary judgment to enforce a written

            guaranty, plaintiff must prove: (i) the existence of an unconditional guaranty; (ii) the underlying

            debt; and (iii) failure by the guarantor to perform under the guaranty (see, id.).

            1
              Zaika also argues that the Governor’s COVID-19-related shutdowns in 2020 constitute a defense (see, NYSCEF
            Doc. No. 30 ¶¶ 57-60). However, the Appellate Division has already counseled that such circumstances do not
            constitute a defense to the nonpayment of rent (see, e.g., 558 Seventh Ave. Corp. v Times Square Photo Inc., 194
            AD3d 561 [1st Dept], appeal dismissed 37 NY3d 1040 [2021]).
            2
              Zaika’s counsel informs that he technically represents only Zaika, not Manmohan (see, NYSCEF Doc. No. 30 ¶ 3).
            Manmohan has timely appeared in this action by way of filing of a pro se answer (see, NYSCEF Doc. No. 15).
                656439/2021 44TH MIDTOWN HOLDINGS LLC vs. ZAIKA FOOD COMPANY LLC ET AL                      Page 3 of 5
                Motion No. 001

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                                                                                                   INDEX NO. 656439/2021
  NYSCEF DOC. NO. 44                                                                       RECEIVED NYSCEF: 02/23/2024

                   While it is true that the terms of Manmohan’s guaranty are unambiguous (see, NYSCEF

            Doc. No. 19), and there is no dispute that he executed the guaranty, the issues of fact raised by

            Zaika’s submissions in opposition to plaintiff’s motion for a default judgment (denied above)

            render it impossible at this time to conclusively establish Manhoman’s liability, as a guarantor of

            Zaika, or the extent of any such liability. Colloquially stated, the guaranty presents as a “Good

            Guy” guaranty, whereby the guarantor’s obligation ceases upon surrender of the leasehold (see,

            NYSCEF Doc. No. 19 § 2). Plaintiff asserts that said provision provides no relief to Manhoman

            because, in plaintiff’s view, Zaika has not fulfilled its payment obligations as of the date of the

            vacatur. However, as observed above, the issue of Zaika’s obligations, if any, and the extent

            thereof, are matters that emain in issue in this action, thereby precluding summary judgment

            against Manhoman. As the Appellate Division, First Department, declared:

                   In granting partial summary judgment, Special Term abused its discretion. It resolved
                   issues of fact presented by the papers, rather than merely determining that there were
                   genuine issues of fact requiring a trial. The role of the court on a motion for summary
                   judgment is issue finding not issue resolution.

            (Dependable Lists, Inc. v Malek, 98 AD2d 679, 680 [1st Dept 1983], appeal dismissed 62 NY2d

            645 [1984].)

                   Accordingly, it is

                   ORDERED that plaintiff’s motion for a default judgment against defendant Zaika Food

            Company LLC is denied; and, accordingly, it is

                   ORDERED that the answer and counterclaims filed herein as NYSCEF Doc. No. 31 shall

            be deemed said defendant’s answer and counterclaims in this action, to which plaintiff may reply

            (as to the counterclaims) on or before 20 days from the date of filing hereof; and it is further

                   ORDERED that plaintiff’s motion for summary judgment against defendant Manmohan

            Ahluwalia is denied; and it is further

             656439/2021 44TH MIDTOWN HOLDINGS LLC vs. ZAIKA FOOD COMPANY LLC ET AL                Page 4 of 5
             Motion No. 001

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                                                                                                      INDEX NO. 656439/2021
  NYSCEF DOC. NO. 44                                                                            RECEIVED NYSCEF: 02/23/2024

                    ORDERED that a preliminary conference will be convened on March 20, 2024, at 10:00

            a.m., at the Courthouse, 111 Centre Street, Room 1166, New York, New York.

                    This will constitute the decision and order of the court.

                                                                            ENTER:

                    2/23/2024                                                               $SIG$
                      DATE                                                           LOUIS L. NOCK, J.S.C.
             CHECK ONE:                  CASE DISPOSED                  X   NON-FINAL DISPOSITION

                                                                                                     □
                                         GRANTED          X    DENIED       GRANTED IN PART              OTHER

             APPLICATION:                SETTLE ORDER                       SUBMIT ORDER

                                                                                                     □
             CHECK IF APPROPRIATE:       INCLUDES TRANSFER/REASSIGN         FIDUCIARY APPOINTMENT        REFERENCE

             656439/2021 44TH MIDTOWN HOLDINGS LLC vs. ZAIKA FOOD COMPANY LLC ET AL                   Page 5 of 5
             Motion No. 001

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