LLC v. LLC (2026)

This commercial nonpayment proceeding presents two principal issues following trial: whether a prior Supreme Court judgment against respondent's guarantor has collateral-estoppel effect as to the amount of respondent's lease indebtedness, and whether the court may reopen the trial on a limited basis after reconsidering its exclusion of petitioner's spreadsheet calculating additional rent, late fees and contractual interest. The court holds that the Supreme Court judgment has preclusive effect as to respondent's indebtedness in the amount of $9,099,767.25 through February 1, 2026. Futhermore, the court's prior exclusion of Petitioner's Exhibit 8 should be reconsidered. However, since respondent conducted the remainder of the trial in reliance upon that ruling, the trial will be continued on a limited basis to determine amounts, if any, accruing after February 1, 2026. Pursuant to CPLR 5012, the court severs, for purposes of judgment, the indebtedness adjudicated through February 1, 2026, from petitioner's unresolved claims for amounts accruing thereafter. Petitioner is awarded a partial money judgment in the amount of $9,099,767.25 and a judgment of possession. Issuance and execution of the warrant are stayed pending completion of the limited continued trial.

FINDINGS OF FACT AFTER TRIAL

Petitioner Covizon, LLC ("Covizon" or "petitioner") is the landlord of the premises located at 337—345 Butler Street, also known as 570—588 Baltic Street, Brooklyn, New York (the "premises"), and respondent Zerospace Holdings, LLC ("Zerospace" or "respondent") is a tenant pursuant to a written lease. Kenneth Chan ("Chan") is Covizon's managing member. The lease was admitted into evidence as Petitioner's Exhibit 1 without objection.

The undisputed records introduced at trial demonstrated that respondent fell into substantial arrears in rent payments starting in 2023. In July 2023, after several months of nonpayment, respondent requested additional time to address its arrears. The parties entered into an arrangement permitting it additional time to make payments toward the outstanding amounts. However, respondent failed to comply with that arrangement.

On November 10, 2023, the parties entered into a written agreement [Petitioner's Exh. 4] ("November 2023 Agreement") in which, respondent specifically acknowledged arrears through September 1, 2023 totaling $1,941,908.50, consisting of $1,766,666.64 in fixed rent, $77,291.69 in late fees, and $97,950.17 in interest. In the agreement, respondent further acknowledged: "(I) Tenant is obligated to pay to Landlord the Arrears, together with any and all other amounts due under the Lease as and when the same become due thereunder, (ii) the Arrears are justly due and owing by Tenant to Landlord, (iii) neither Tenant nor Guarantor have any valid defenses against enforcement of Landlord's remedies pursuant to the Lease..." However, respondent again failed to comply with the terms of the November 2023 Agreement..

The parties subsequently entered into a First Modification Agreement dated February 10, 2025 ("February 2025 Agreement") [Petitioner's Exh. 5]. Both parties acknowledged "Fixed Rent and Additional Rent (in the form of late fees and interest) arrears" owed through December 1, 2024 in the amount of $4,138,520.02. The February 2025 and provided respondent with another opportunity to address its outstanding obligations.

Petitioner introduced annual rent spreadsheets for the relevant period, collectively admitted into evidence as Petitioner's Exhibit 7 without objection. Chan testified that the spreadsheets were maintained electronically in the regular course of Covizon's business and reflected rent due and payments received. Exhibit 7 indicated unpaid fixed rent of $1,787,943.97 for 2023, $1,698,000.03 for 2024, $3,210,000 for 2025, and $1,128,150 through April 2026, for a total of $7,824,094.

The evidence further establishes that Zerospace made various payments toward its rent obligations during 2024. Exhibit 7 contains an entry reflecting a payment of $2,416,666.67 in June 2024. Chan acknowledged that this entry was erroneous. The contemporaneous bank records established payments totaling $241,666.67 from June 28 until July 2, 2024. The Court finds that the $2,416,666.67 entry was a clerical or scrivener's error and does not reflect an actual payment in that amount. The court credits the contemporaneous bank records concerning the June and July 2024 payments.

Paragraph 60(d) of the lease provided for a late fee equal to five percent of the amount remaining unpaid and interest at an annual rate of fifteen percent on unpaid amounts. Petitioner maintained calculations of late fees and interest separately from the fixed-rent ledger and updated those calculations over time.

Petitioner sought to introduce spreadsheets reflecting its calculations of late fees and interest. However, those spreadsheets were not admitted into evidence because the calculation method was unclear and petitioner did not demonstrate that the records were made contemporaneously. Thus, the court found that they did not qualify for admission under the business record exception (CPLR 4518) to the hearsay rule. During voir dire, Chan testified concerning the preparation and maintenance of the spreadsheets, including that formulas had been entered based upon his interpretation of the lease and that the calculations were affected by partial payments made at different times. The court also observed discrepancies between different versions of petitioner's calculations, including differing interest and subtotal figures for the same period. Based upon the foundation before the court at that point in the trial, the court concluded that the record did not establish a sufficiently reliable basis for admitting the spreadsheets as a business record or independently determining those charges.

Petitioner separately commenced an action in Supreme Court [Index No. 526624/2025], Kings County, against Jonathan Kreutzer, the guarantor of Zerospace's obligations under the lease. Kreutzer acknowledged in the Guaranty of Lease that he was the "largest interest holder in, and chief executive officer of, Tenant and will derive substantial benefit from the Lease." Justice Aaron D. Maslow granted summary judgment in that action in favor of Covizon, LLC, awarding the sum of $6,529,668.99, through July 1, 2025, and an additional sum of $2,570,098.26, through February 1, 2026, for a total of $9,099,767.25, plus interest thereon, at the statutory rate of 9% per annum from 2/20/2026, to the date of entry of judgment.

This court's review of the transcript of oral argument on April 24, 2026 revealed that Justice Maslow's decision granting summary judgment was based on the provisions of the guaranty and lease, which imposed related but distinct obligations. Section 17(2) of the lease provides that if the tenant defaulted on the payment of rent or additional rent, and such default continued for more than ten days after written notice from the landlord of such default, then the landlord could dispossess the tenant by summary proceedings. Paragraph 1 of the guaranty provides that Kreutzer unconditionally guaranteed the full and timely payment of all rent and fixed rent payable by Zerospace if the latter defaulted after the expiration of notice and cure periods provided in the lease. Paragraph 2 characterized the guaranty as an "absolute, present, primary and unconditional guaranty of payment and performance" and permitted Covizon to proceed directly against Kreutzer without first pursuing remedies against Zerospace.

Kreutzer opposed summary judgment on the grounds that paragraph 1 of the guaranty incorporated the lease's notice and cure provisions and that the required monetary-default notice had not been served upon Zerospace in the manner required by section 17. Covizon argued that the unconditional language of paragraph 2 permitted enforcement against Kreutzer without satisfying that requirement and, alternatively, that sufficient notices had in fact been provided.

Justice Maslow construed the guaranty as unconditional, and as not requiring notice to the tenant in the manner asserted by Kreutzer. By order dated April 28, 2026 , the court granted Covizon's summary judgment motion in its entirety. In addition, the court directed entry of a money judgment against Kreutzer for $9,099,767.25, together with statutory interest. That was the amount Covizon had requested, which included $6,529,668.99 through July 1, 2025 and an additional $2,570,098.26 through February 1, 2026, totaling $9,099,767.25. The written order did not state the reasons for awarding this amount. However, when hearing the oral argument, Justice Maslow accepted the following argument from petitioner's attorney as a basis for awarding summary judgment : "[W]e've given detailed explanation of the rent that wasn't paid, how it accrued, interest on it, everything. There is not a single word before this guarantor saying I don't owe the money. The money is clearly due and we ask the Court based upon our motion and what we quote to give us summary judgment." By order entered July 2, 2026, Justice Maslow denied Kreutzer's motion to renew and reargue in its entirety. The legal effect of the Supreme Court proceedings is addressed below.

ANALYSIS AND CONCLUSIONS OF LAW

The following issues were raised following the trial: 1) whether petitioner established its status as a party authorized to maintain the proceeding; 2) whether petitioner's alleged failure to prove compliance with Limited Liability Company Law § 206 required dismissal; 3) whether the predicate rent demand was sufficient; 4) whether petitioner proved the amount of rent due; 5) whether the evidence supported petitioner's claim for late fees and contractual interest; and 6) whether the judgment entered in the Supreme Court guaranty action had preclusive effect on this nonpayment proceeding.

I. Petitioner established its right to maintain the proceeding under RPAPL 721

Respondent claims that petitioner did not establish its right to maintain this proceeding because it failed to prove that it qualifies as a "landlord or lessor." Pursuant to RPAPL 721 (1), a "landlord or lessor" is entitled to maintain a summary proceeding to recover possession of real property. Chickery v. Prestige Catering, 2021 NY Misc. LEXIS 1965, *2 (App. Term 2d Dept. 2021). "If a party enters as lessee of another, and the right of the lessor is in no way altered, the lessee is estopped from denying that relation." Attia v. Imoukhuede, 2017 NY Slip Op 50490(U), 2017 NY Misc. LEXIS 1312, *3 (App. Term 2d Dept. 2017). See also, Ford v. Ford, 2026 NY Slip Op 50014(U), 2026 NY Misc. LEXIS 31, *5 (Civ. Ct. Queens Co. 2026). Chan testified without objection that Covizon is the owner and landlord of the premises, that he is Covizon's managing member, and that Zerospace is the tenant. The lease was admitted without objection. Furthermore, in both the November 2023 and February 2025 Agreements, respondent acknowledged petitioner's status as owner-landlord, its own status as tenant, its being in possession pursuant to the lease, and substantial arrears. Accordingly, respondent is estopped from denying petitioner's status as landlord/lessor, and its own status as tenant/lessee.

Respondent further claims that petitioner failed to establish that it was the landlord/lessor because it did not introduce a deed or other documentary proof of ownership. However, proof of ownership is not a prerequisite to the maintenance of a summary proceeding under RPAPL § 721 when the landlord/lessor status is sufficiently established by petitioner on this record. Halle Realty Co. v. Abduljaami, 2014 NY Slip Op 50390(U)42 Misc 3d 148(A), 148A (App. Term 1st Dept. 2014). See, Tacfield Assoc., LLC v Davis, 2014 NY Slip Op 50531[U], 43 Misc 3d 129[A] (App Term 2d Dept, 2014]) (petitioner qualified under RPAPL 721(1) where the tenants recognized the petitioner as their lessor). Accordingly, the absence of a deed from the trial record does not require dismissal. Petitioner established that it was the landlord/lessor entitled to maintain the proceeding under RPAPL 721(1).

II. The Limited Liability Company Law § 206 argument was waived

Respondent further contends that petitioner, as an LLC, lacked capacity to bring this proceeding because it did not establish compliance with Limited Liability Company Law ("LLC Law") § 206 during trial. Notably, respondent does not claim that petitioner in fact failed to comply with LLC § 206.¹ Regardless, "a failure to comply with the requirements of § 206 does not constitute a jurisdictional defect warranting dismissal." 140 E 35st LLC. v. Booker, 2026 NY Slip Op 50768(U), 2026 NY Misc. LEXIS 5433, *3 (Civ. Ct. Kings Co. 2026).

Furthermore, the "defense of lack of capacity is waived if not raised in an answer or in a pre-answer motion to dismiss." Rodriguez v. Rodriguez, 229 AD3d 824, 825 (2d Dept. 2024); Barrow v. Griffith, 2026 NY Slip Op 31293(U), 2026 NY Misc. LEXIS 2522, *18 (Sup. Ct. Kings Co. 2026). Respondent did not plead failure to comply with LLC Law § 206 as an affirmative defense in its answer or its pre-answer motion to dismiss. The record reveals that respondent first raised the issue at the close of trial. Respondent waived lack of capacity as a defense, and the court may not dismiss the proceeding on this basis. The court therefore need not take judicial notice of Department of State records or reopen the trial record to establish publication.

III. The rent demand was sufficient to satisfy RPAPL 711(2)

Pursuant to RPAPL 711(2), "a proper rent demand is a statutory prerequisite to a nonpayment proceeding ... and an element of a landlord's prima facie case." Boatswain v. Willis, 2025 NY Slip Op 50502(U), 2025 NY Misc. LEXIS 2184, *3 (App. Term 2d Dept. 2025); EOM 106-15 217th Corp. v Severine, 2019 NY Slip Op 50068(U), 2019 NY Misc. LEXIS 218, *2-3 (App. Term 2d Dept. 2019). A rent notice must "set forth the approximate good faith amount of rent owed, "fairly apprise the tenant of the periods for which rent is allegedly due and in what amounts," and "in asserting the amount of rent owed for each period, a landlord must apply the payments that it accepted to the months for which they were earmarked." Boatswain, supra, 2025 NY Misc. LEXIS 2184 at *3. Exact mathematical correctness, however, is not the standard. - "a substantive dispute over the amount of arrears does not implicate the legal sufficiency of a rent demand" where the amount demanded was in good faith. McDonnell v Mitchell, 2018 NY Slip Op 50484(U), 2018 NY Misc. LEXIS 1225, *2 (App. Term 2d Dept. 2018). Here, the rent demand sought $7,963,362.52 through November 1, 2025. The demand identified the period of respondent's default and set forth the amounts claimed by petitioner. The fact that additional rent accrued during the pendency of the proceeding, or that the proof at trial ultimately supported a different amount, does not invalidate the predicate notice. 402 Nostrand Ave. Corp. v Smith, 19 Misc 3d 44, 46 (App Term, 2d Dept. 2008].) The demand adequately informed respondent of the nature and extent of petitioner's claim and afforded respondent an opportunity to pay or contest it. The predicate rent demand was therefore sufficient.

IV. Petitioner proved the unpaid base rent

A valid rent demand does not establish the amount recoverable at trial. A petitioner separately bears the burden of proving its entitlement to the rent ultimately sought. See, Spring Val. Preserv., L.P. v McCoy, 88 Misc 3d 733, 739 (Clarkstown Town Ct. 2025) (Petitioner bears the burden of establishing by a fair preponderance of the credible evidence that the rent sought is actually owed). Respondent's failure to offer contrary evidence of the amount owed does not relieve petitioner of its initial burden to establish the amount claimed through competent evidence. See, Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 (1985) (failure to make the required prima facie showing mandates denial regardless of the sufficiency of the opposing proof); U.S. Bank N.A. v. Ingber, 2026 NY Slip Op 30998(U), 2026 NY Misc. LEXIS 1651, *24 (Sup. Ct. Kings Co. 2026) ("the law does not permit the Court to supply what the proof did not"); ); 2261 Realty, LLC v. Cai Ping Wang, 242 AD3d 682, 686 (2d Dept. 2025) (where plaintiff failed to meet its initial burden as the movant, Supreme Court should have denied summary judgment dismissing the defendant's affirmative defenses regardless of the sufficiency of the defendants' opposition papers).

Petitioner satisfied the burden as to fixed rent. Petitioner's Exhibit 7, together with Chan's testimony and the lease, established unpaid fixed-rent arrears of $7,824,094.00 through April 2026. Respondent presented no witness, competing ledger, proof of payment, or other evidence establishing that the base-rent figures in Exhibit 7 were incorrect. The admitted 2023 Agreement and 2025 First Modification further corroborated the existence of substantial arrears. Although the ledger contains the erroneous June 2024 entry, Chan specifically explained that entry, testified that no such payment was ever made, and no contrary evidence was presented. The June 2024 entry contained an obvious error, listing a payment of $2,416,666.67 instead of $241,666.67. The error was explored at trial, and the court itself described it as appearing to be a scrivener's error. Petitioner's bank records subsequently corroborated the actual $241,666.67 payment. An isolated and identifiable error in petitioner's rent accounting does not, standing alone, require rejection of the remainder of the accounting where the amount otherwise due is established by the lease and competent proof. Courts may disregard or correct the unsupported component of a rent claim while awarding the rent independently established by the evidence. See, Friedman v Eisner, 2009 NY Slip Op 50817[U], 23 Misc 3d 136[A] (App Term 2d 2009); 402 Nostrand Ave. Corp. v Smith, 19 Misc 3d 44, 46-47 (App Term, 2d Dept 2008); McDonnell v Mitchell, 59 Misc 3d 133[A], 2018 NY Slip Op 50484[U] (App Term 2d Dept. 2018).

Petitioner moved at trial to amend the petition to include rent accruing through April 2026. The motion is granted pursuant to CPLR 3025 (c) . Pursuant to CPLR 3025(c), "[t]he court may permit pleadings to be amended before or after judgment to conform them to the evidence, upon such terms as may be just." When there is no "prejudice or surprise" to the opposing party, "leave to amend a pleading should be freely granted unless the proposed amendment is palpably insufficient or patently devoid of merit." Roco G.C. Corp. v Bridge View Tower, LLC, 166 AD3d 1031, 1033 (2d Dept. 2018). Respondent had notice of the continuing claim for rent, the additional amounts arose from the same lease and continuing nonpayment, and respondent demonstrated no surprise or prejudice. Courts routinely grant such requests to amend the petition to include additional unpaid rent because a tenant could not reasonably allege surprise or prejudice in these circumstances. 11 Park Place LLC v. ASAP Documents, Inc., 2019 NYLJ LEXIS 979, *13 (Civ. Ct. NY Co. 2019). Accordingly, the petition is deemed amended to include fixed rent owing through April 2026 in the amount of $7,824,094.

V. THE SUPREME COURT GUARANTY JUDGMENT

Law of the Case

Petitioner primarily relies on the law-of-the-case doctrine to support its position that Justice Maslow's decision has preclusive effect. However, that doctrine does not apply here, as it concerns the binding effect during the course of a single litigation, of a legal determination previously made in that action. People v Evans, 94 NY2d 499, 502-504 (2000); Brownrigg v New York City Hous. Auth., 29 AD3d 721, 722 (2d Dept 2006). See also, Westman Realty Co., LLC v. Nettles, 2023 NY Misc. LEXIS 1629, *6 (2023) (" 'Law of the case' only addresses the potential preclusive effect of judicial determinations made by courts of coordinate jurisdiction before final judgment and in the course of a single litigation"). The proceeding before this Court and the Supreme Court guaranty action are separate actions; therefore, Justice Maslow's determination does not constitute law of the case in this proceeding. Rather, collateral estoppel governs and precludes respondent from relitigating the amount of indebtedness adjudicated in Supreme Court.

Collateral Estoppel

Petitioner also relied upon the collateral estoppel effect of the Justice Aaron D. Maslow's decision granting summary judgment against Jonathan Kreutzer pursuant to the latter's personal guaranty. This court finds that the Supreme Court judgment conclusively determines the amount of Zerospace's indebtedness through February 1, 2026, but does not determine amounts accruing thereafter.

The doctrine of collateral estoppel precludes a party from relitigating in a subsequent action an issue clearly raised in a prior action and decided against that party or those in privity, whether or not the tribunals or causes of actions are the same. Reyes v. Seaqua Delicatessen, Inc., 234 AD3d 88, 92 (2d Dept. 2024); Jamal v Caroline Garden Tenants Corp., 173 AD3d 843, 844 (2d Dept. 2019). Collateral estoppel applies only where the following conditions are satisfied: "(1) the issues in both proceedings are identical, (2) the issue in the prior proceeding was actually litigated and decided, (3) there was a full and fair opportunity to litigate in the prior proceeding, and (4) the issue previously litigated was necessary to support a valid and final judgment on the merits." Conason v Megan Holding, LLC, 25 NY3d 1, 17 (2015). The party seeking to invoke collateral estoppel has the burden to prove identity of the issues, while the party seeking to defeat its application must establish the lack of a full and fair opportunity to litigate. Matter of Dunn, 24 NY3d 699, 704 (2015); Kaufman v. Eli Lilly & Co., 65 NY2d 449, 456 (1985)

Privity is "an amorphous concept" and "includes those who are successors to a property interest, those who control an action although not formal parties to it, those whose interests are represented by a party to the action, and [those who are] coparties to a prior action." Buechel v. Bain, 97 NY2d 295, 304 (2001). The Court deems Kreutzer, as guarantor of the lease, to be in privity with Zerospace. See, Nat'l Cmty. Reinvestment Coal., Inc. v. Midtown Coalition Space LLC, 245 AD3d 566 (1st Dept. 2026) (defendant was collaterally estopped from raising question of whether the parties' sublease terminated under a stipulation of settlement, as the matter was litigated and decided in plaintiff's related action against defendant's guarantor, with which defendant was in privity); Comalgri Holding Corp. v. SC Crossfit, Inc., 241 AD3d 632, 633-634 (2d Dept. 2025) (guarantors of the lease deemed in privity with the tenant). Furthermore, Kreutzer's status as Zerospace's largest interest holder and chief executive officer, together with his responsibility for its daily affairs, supports the conclusion that Zerospace's interests concerning the underlying lease indebtedness were represented in the Supreme Court action.

This court finds that Justice Maslow's decision has collateral estoppel effect based on the four factors described above. First, petitioner has established that the issues in both proceedings are identical. Covizon's summary-judgment motion did not seek merely a determination that Kreutzer's guaranty had been triggered; it sought a money judgment based upon Zerospace's underlying indebtedness under the same lease at issue here. In support of its summary judgment motion, Covizon submitted its business record as Exhibit G and asserted that $6,529,668.99 was due under the Lease through July 1, 2025, together with an additional $2,570,098.26 through February 1, 2026, for a total indebtedness of $9,099,767.25. The court's comparison of the accounting submitted to Supreme Court with Petitioner's Exhibit 8 reveals that the monetary issue adjudicated by Justice Maslow is the same underlying indebtedness presented here. The spreadsheet submitted in Supreme Court calculated Zerospace's arrears through February 1, 2026 using the same monthly rent, five-percent late fee, fifteen-percent interest rate, payment allocations, and calculation methodology reflected in Exhibit 8. Supreme Court directed entry of judgment based upon that accounting in the amount of $9,099,767.25. Exhibit 8 subsequently updated the same calculation through April 27, 2026 to $9,966,859.65. The $867,092.40 difference is accounted for exactly by $564,075.00 in March and April 2026 rent, $28,203.75 in corresponding late fees, and $274,813.65 in additional accrued interest. Thus, except for amounts accruing after the period adjudicated by Supreme Court, petitioner is not presenting a different debt or accounting methodology in this proceeding; it is presenting an updated calculation of the same underlying lease indebtedness.

The second criterion is also satisfied, as the issue in the prior proceeding was actually litigated and decided. Collateral-estoppel effect is afforded only to matters "actually litigated and determined" in the prior action. Kaufman v Eli Lilly & Co., 65 NY2d 449, 456 (1985). An issue is actually litigated for collateral-estoppel purposes when it is properly placed before the prior tribunal, submitted for determination, and determined. Halyalkar v. Board of Regents, 72 NY2d 261, 268 (1988). An issue may be so submitted on a motion for summary judgment. Montoya v JL Astoria Sound, Inc., 92 AD3d 736, 737 (2d Dept 2012). An issue is not actually litigated where there has been a default, confession of liability, failure to place the matter in issue by proper pleading, or stipulation. Kaufman, supra, 65 NY2d at 456-457; Douglas Elliman, LLC v. Silver, 143 AD3d 752, 755 (2d Dept. 2016). Here, Covizon expressly placed the amount of Zerospace's lease indebtedness before Supreme Court by seeking summary judgment for the specific sum of $9,099,767.25 and submitting documentary evidence supporting that amount. Kreutzer appeared, opposed the motion, and requested that it be denied in its entirety. Justice Maslow nevertheless granted summary judgment and directed entry of a money judgment for the precise amount sought. This was therefore not a determination entered on default, confession, or stipulation.

Nor does Kreutzer's failure to challenge separately each component of Covizon's calculation transform the resulting judgment into a default determination. Once the amount was placed before Supreme Court on a contested summary-judgment motion and submitted for judicial determination, Kreutzer's strategic decision to oppose the motion on other grounds did not remove the amount from the issues before the court. See, Montoya, supra, 92 AD3d at 737. Indeed, New York courts have recognized that even where a party appears and thereafter deliberately elects not to litigate a particular issue, preclusion may still be appropriate under the circumstances. See, Matter of Abady, In re Abady, 22 AD3d 71, 83-84 (1st Dept. 2005). Accordingly, the amount of the respondent's underlying indebtedness was actually litigated and decided for collateral-estoppel purposes.

Just as the burden of showing that the issue was identical and necessarily decided rests upon petitioner, the burden rests on respondent to show that collateral estoppel should not be applied because it did not have a full and fair opportunity to litigate in the prior proceeding. Schwartz v. Public Adm'r of County of Bronx, 24 NY2d 65, 73 (1969); Jamal v Caroline Garden Tenants Corp., 173 AD3d 843, 844 (2d Dept. 2019). Respondent, as the party seeking to defeat the application of collateral estoppel, has not met that burden. Among the factors to be considered in determining whether a party has had a full and fair opportunity to litigate are "the importance of the claim in the prior litigation" and "the incentive and initiative to litigate and the actual extent of litigation." Ryan v. New York Tel. Co., 62 NY2d 494, 501 (1984). Another important factor is privity; "the connection between the parties must be such that the interests of the nonparty can be said to have been represented in the prior proceeding." Jacobson v. Fein, Such & Crane, LLP, 2026 NY App. Div. LEXIS 3614, *2 (2d Dept. 2026); Mullings v. N.Y.C. DOT, 2026 NY Slip Op 30210(U), 2026 NY Misc. LEXIS 595, *9 (Sup. Ct. NY Co. 2026). The court also considers whether the party opposing the application of collateral estoppel had control over their defense in the prior action - if they failed to raise the issue at the prior proceeding, they may be estopped from raising it in the subsequent action. Usoiani v. Dumbo Moving & Stor., Inc., 241 AD3d 986, 988 (2d Dept. 2025).

Kreutzer acknowledged in the Guaranty of Lease that he was the "largest interest holder in, and chief executive officer of, Tenant and will derive substantial benefit from the Lease." In his sworn affirmation submitted in Supreme Court, Kreutzer further identified himself as a member of Zerospace whose duties included the daily management of its affairs. His liability under the guaranty was dependent upon Zerospace's underlying obligations under the lease, and he therefore had a direct and substantial incentive to contest the amount claimed by petitioner. Any reduction in Zerospace's indebtedness would have correspondingly reduced the amount recoverable from him under the guaranty. Moreover, as discussed above, Kreutzer and Zerospace were in privity with respect to the underlying lease indebtedness, and Zerospace's interests were effectively represented in the Supreme Court action. The fact that Kreutzer and Zerospace were represented by the same counsel further demonstrates the close alignment of their interests, although the court does not rely upon shared counsel alone as establishing control of the prior litigation. Under these circumstances, the Court finds that respondent had a full and fair opportunity to litigate in the prior proceeding.

The fourth criterion, whether determination of the amount was necessary to support the valid and final judgment in the Supreme Court action, is also satisfied. Covizon sought summary judgment for a sum certain, and the Supreme Court could not have directed entry of judgment in the amount of $9,099,767.25 without determining that petitioner's evidentiary submissions established that amount. The amount of Zerospace's underlying indebtedness was therefore not collateral or incidental to Supreme Court's determination; it was a necessary predicate to the judgment entered against Kreutzer. Accordingly, respondent is precluded from relitigating the $9,099,767.25 indebtedness adjudicated through February 1, 2026.

Pursuant to CPLR 5012  ² , this court severs, for purposes of judgment, the indebtedness adjudicated through February 1, 2026 from petitioner's unresolved claims for amounts accruing thereafter and awards petitioner a partial money judgment against respondent Zerospace Holdings LLC in the amount of $9,099,767.25. "Without a severance there can only be one judgment in a civil action." See, Stevenson v Lazzari, 16 AD3d 576, 578 (2d Dept 2005); 511 Petro Realty Corp. v. Joseph Petro, Inc., 2026 NY Slip Op 50387(U)2026 NY Misc. LEXIS 1736, *6 (Nassau Co. Sup. Ct. 2026).

Petitioner may not obtain a double recovery against both tenant and guarantor "for the same amount, for the same time period," because that would "result in an unjust windfall." BLDG ABI Enter, LLC v. 711 Second Ave. Corp. , 2019 NY Slip Op 33569(U), 2019 NY Misc. LEXIS 6456, *20 (Sup. Ct. NY Co. 2019). Any amount collected upon the Supreme Court judgment against Kreutzer that is attributable to the same underlying indebtedness shall be credited against petitioner's recovery from Zerospace, and vice versa.

VI. PETITIONER'S EXHIBIT 8 AND REMAINING MONETARY CLAIMS

Petitioner's remaining monetary claims concern amounts accruing after February 1, 2026, including fixed rent, late fees and interest pursuant to paragraph 60(d) of the lease. Those amounts were not adjudicated by Supreme Court and therefore are not established by collateral estoppel.

During trial, petitioner offered Exhibit 8, an Excel spreadsheet setting forth the monthly rent due, payments received, late fees, interest and resulting balances through April 27, 2026. The Court declined to admit the exhibit as a business record, principally because of concerns regarding when the spreadsheet had been created, whether its entries had been made contemporaneously with the underlying transactions, and the participation of another employee in reviewing the document.

Upon review of the complete trial record and the parties' post-trial submissions, the Court concludes that its ruling excluding Exhibit 8 should be reconsidered. The testimony elicited after the Court's initial ruling materially enhanced the foundation for the document. Chan testified that an earlier version of the spreadsheet was created before litigation in connection with respondent's 2023 default and the parties' efforts to determine the outstanding arrears and negotiate a payment arrangement. He further testified that the spreadsheet was thereafter updated as additional rent accrued and payments were received.

The evidence also established that earlier iterations of the calculation existed at discrete points during the tenancy. Chan testified that one such spreadsheet was created and updated in August 2023 and that subsequent spreadsheets developed from the same accounting process as additional months, defaults and partial payments accumulated. He testified that the records were maintained in the ordinary course of petitioner's business, that it was petitioner's regular practice to maintain them, and that he reviewed the entries and calculations for accuracy.

The fact that another employee participated in checking the calculations does not render the records inadmissible. CPLR 4518 (a) requires that a business record be made in the regular course of business, that it be the regular course of such business to make the record, and that the record be made at the time of the event or within a reasonable time thereafter. CPLR 4518 "does not require the witness to have personally keyed each entry or to have personally observed" each transaction; "familiarity with the recordkeeping system and the creation and maintenance of the records in the ordinary course suffices." TD Bank, N.A. v. K & G Appliance Serv., LLC, 2026 NY Slip Op 50393(U), 2026 NY Misc. LEXIS 1750, *21 (Sup. Ct. Rich. Co. 2026). "It would clearly defeat the utility of CPLR 4518 to require the testimony of all persons involved in creating the record." Bank of NY Mellon v Gordon, 171 AD3d 197, 205 (2d Dept. 2019).

The Court also reconsiders its observation during trial that expert testimony was necessary to explain the calculation of late fees and interest. Paragraph 60(d) established the governing terms. It provided for a five-percent late fee upon qualifying overdue amounts and contractual interest at 15% per annum, or the maximum statutory rate if lower, from the date payment became due through payment. Applying those provisions to the amounts outstanding and the periods during which they remained unpaid presented an issue of basic arithmetic, not one requiring specialized expert knowledge. See, United States v. Joseph, 108 F.4th 1273, 1283 (7th Cir. 2024) ("When considering math, a lay witness is free to provide testimony that utilizes 'basic arithmetic' "). The absence of expert testimony therefore does not provide a basis for rejecting petitioner's claim.

Respondent conducted the remainder of the trial in reliance upon the Court's ruling that Exhibit 8 was not in evidence. "A trial court, in the exercise of its discretion and for sufficient reasons, may allow a party to reopen and supply defects in evidence which have inadvertently occurred." Commonwealth Land Title Ins. Co. v. Islam, 220 AD3d 739, 741 (2d Dept. 2023); Kay Found. v. S & F Towing Serv. of Staten Is., Inc., 31 AD3d 499, 501 (2d Dept. 2006). The following factors must be considered: "whether the movant has provided a sufficient offer of proof, whether the opposing party is prejudiced, and whether significant delay in the trial will result if the motion is granted." Id., Ward v. Eldon, 250 AD3d 1116 (2d Dept. 2026). Each of these factors favors a limited reopening. Petitioner made a sufficient offer of proof by offering Exhibit 8, eliciting testimony concerning its preparation and maintenance, and establishing the nature of the additional amounts it seeks to recover. Reopening will not cause significant delay because no new claim or unrelated proof will be introduced; the continued trial will be confined to Exhibit 8 and the amounts accruing after February 1, 2026. Finally, although respondent would be prejudiced if the court simply reversed its evidentiary ruling and relied upon Exhibit 8 without further proceedings, that prejudice can be eliminated by affording respondent the opportunity it would have had if the exhibit had been admitted during trial: to raise any remaining evidentiary objection, conduct appropriate cross-examination, and challenge the accuracy of the relevant calculations after February 1, 2026. See, Gary G. v Elena A.G., 77 Misc 3d 760, 771-772 (Sup Ct, Kings County 2022) (upon reopening trial to permit introduction of business records, opposing party afforded full and fair opportunity to raise admissibility objections, test the records' correctness and conduct cross-examination). Accordingly, the interests of fairness favor a limited continuation of trial rather than either adhering to the prior exclusion of Exhibit 8 or admitting and relying upon it without affording respondent an additional opportunity to raise evidentiary objections. However, the parties may not relitigate the $9,099,767.25 indebtedness adjudicated by Supreme Court through February 1, 2026.

VII. JUDGMENT OF POSSESSION

Petitioner has also established its entitlement to a judgment of possession under section 17 of the lease. In a nonpayment proceeding, entitlement to possession is established upon proof of the tenant's default in the payment of rent, a proper rent demand, and a duly issued petition and notice of petition. Goldman v MJJ Music, Inc., 2007 NY Slip Op 52163[U], 17 Misc 3d 1127[A],*3 [Civ Ct, Kings County 2007]; RPAPL 711[2], 741; see also 34-15 Parsons Blvd., LLC v Ming Hang Zhao, 74 Misc 3d 134[A], 2022 NY Slip Op 50283[U] [App Term, 2d Dept. 2022]. Since petitioner has established these elements here, judgment of possession is granted in its favor.

However, issuance and execution of any warrant of eviction shall be stayed pending completion of the limited continued trial and further order of this court. Permitting execution of the warrant before those claims are resolved could terminate the summary proceeding and thereby impair the court's ability to adjudicate the very issues it has reserved. See, Steinmetz v Oyala, 2021 NY Slip Op 50255[U], 71 Misc 3d 129[A] (App Term, 2d Dept., 2021) ("a summary proceeding remains pending only through the execution of a warrant ... Once a warrant of eviction has been executed . . . the summary proceeding is terminated ... the court no longer retained jurisdiction ... to entertain landlord's motion").

CONCLUSION

Petitioner established its authority to maintain this proceeding, the existence of the parties' lease, service of a sufficient rent demand, respondent's monetary default, and its entitlement to possession.

The determination in Covizon LLC v Kreutzer, Supreme Court, Kings County, Index No. 526624/2025, has collateral-estoppel effect as to Zerospace's lease indebtedness through February 1, 2026. The court therefore severs that adjudicated indebtedness from petitioner's remaining monetary claims and awards petitioner a partial money judgment against respondent Zerospace Holdings LLC in the amount of $9,099,767.25, subject to appropriate credit for any amount recovered from Kreutzer upon the Supreme Court judgment attributable to the same indebtedness.

Petitioner is also awarded a judgment of possession. Issuance and execution of the warrant of eviction are stayed pending further order of the Court.

The only monetary issues remaining for determination concern amounts, if any, accruing after February 1, 2026. The trial shall be continued solely for that purpose. Petitioner may renew its offer of Exhibit 8 as proof of those subsequent amounts. Respondent may raise any remaining evidentiary objection, conduct limited cross-examination concerning the post-February 1 calculations, and present rebuttal evidence limited to those calculations.

The parties may not reopen proof concerning petitioner's authority to maintain the proceeding, the sufficiency of the rent demand, respondent's underlying default, the $9,099,767.25 indebtedness adjudicated through February 1, 2026, or petitioner's entitlement to possession.

The parties shall appear on September 2, 2026, at 10:00 a.m. for the limited continuation of trial directed herein. This constitutes the Decision and Order of the Court.

Dated: August 20, 2026

Hon. Tehilah H. Berman

Judge of the Civil Court

FOOTNOTES

1.   Respondent is correct that noncompliance with the publication requirement can prevent an LLC from maintaining an action. Small Step Day Care, LLC v Broadway Bushwick Builders, L.P., 137 AD3d 1102 (2d Dept. 2016); Credit League, LLC v. Cella Bella's Hospice Corp., 2026 NY Slip Op 31905(U), 2026 NY Misc. LEXIS 5109, *3 (Sup. Ct. Kings Co. 2026).

2.   CPLR 5012 provides: "The court, having ordered a severance, may direct judgment upon a part of a cause of action or upon one or more causes of action as to one or more parties."

Tehilah H. Berman, J.