45 47 49 EIGHTH AVENUE LLC v. City of New York, Amicus Curiae. (2023)

Order, Supreme Court, New York County (Gerald Lebovits, J.), entered July 23, 2021, which, to the extent appealed from as limited by the briefs, denied plaintiff's motion for summary judgment in lieu of complaint on defendant's guaranty and granted defendant's cross-motion to dismiss certain amounts alleged to be due under the guaranty, unanimously reversed, on the law, with costs, plaintiff's motion granted in part as to its claims for $37,875.81 representing the undisputed amounts due and owing under the guaranty, defendant's cross-motion to dismiss the balance of plaintiff's claims under Administrative Code of City of N.Y. § 22–1005 (the guaranty law) denied, and the matter remanded for further proceedings consistent with this order.

We agree with plaintiff that the motion court should not have concluded that the parties’ guaranty was not susceptible to relief under CPLR 3213 (see e.g. PDL Biopharma, Inc. v. Wohlstadter, 147 A.D.3d 494, 495, 47 N.Y.S.3d 25 [1st Dept. 2017]).  Although defendant guaranteed both payment and certain performance obligations, this does not preclude summary judgment in lieu of complaint where, as here, performance is not a condition precedent to payment (see iPayment, Inc. v. Silverman, 192 A.D.3d 586, 587, 146 N.Y.S.3d 51 [1st Dept. 2021], lv dismissed 37 N.Y.3d 1020, 154 N.Y.S.3d 27, 175 N.E.3d 909 [2021]).

The court should have granted partial summary judgment on plaintiff's claims for $37,875.81 for water and sewer charges and repayment of the brokerage commission, as plaintiff established “the existence of the guaranty, the underlying debt and the guarantor's failure to perform under the guaranty” for those amounts (Cooperatieve Centrale Raiffeisen–Boerenleenbank, B.A., “Rabobank Intl.,” N.Y. Branch v. Navarro, 25 N.Y.3d 485, 492, 15 N.Y.S.3d 277, 36 N.E.3d 80 [2015] [internal quotation marks omitted]).  The claims for $37,875.81 due and owing, fall outside the period set forth in the guaranty law.

In view of the recent decision in Melendez v. City of New York, ––– F.Supp.3d ––––, 2023 WL 2746183, 2023 U.S. Dist LEXIS 57050 [S.D.N.Y., Mar. 31, 2023, No. 20–CV–5301 (RA)] finding the guaranty law unconstitutional, we remand the constitutional question raised by the parties here so the parties can further develop the record in the trial court for the purpose of applying the Contracts Clause test for constitutionality (see 721 Borrower LLC v. Moha, 204 A.D.3d 510, 511, 164 N.Y.S.3d 817 [1st Dept. 2022]).  Plaintiff is directed to serve notice on nonparty City of New York under CPLR 1012(b)(2) and file proof of service in order for the City to “intervene in support of its constitutionality” (id.).

Given the vitality of the constitutional question, we also reverse the dismissal of plaintiff's claim for those amounts the court determined were barred by the guaranty law for a determination following the court's resolution of the constitutional issue.  We therefore find that the conversion of the case to a plenary action on the remaining issues was appropriate (see e.g. Punch Fashion, LLC v. Merchant Factors Corp., 180 A.D.3d 520, 521, 120 N.Y.S.3d 284 [1st Dept. 2020], lv dismissed 35 N.Y.3d 1124, 134 N.Y.S.3d 7, 158 N.E.3d 898 [2020]).