EAST 54TH NEW YORK LLC v. CHATIRIS (2024)

Order, Supreme Court, New York County (Paul A. Goetz, J.) entered on or about December 12, 2022, which denied plaintiff's motion for summary judgment and sua sponte dismissed the complaint, unanimously reversed, on the law, without costs, the complaint reinstated, plaintiff's motion granted as to liability, and the matter remanded for further proceedings on damages.

Plaintiff demonstrated entitlement to its unopposed motion for summary judgment as to liability on its claim for amounts due under defendant's guaranty by establishing the existence of “an absolute and unconditional guaranty, the underlying debt, and the guarantor's failure to perform under the guarant[y]” (Kensington House Co. v. Oram, 293 A.D.2d 304, 305, 739 N.Y.S.2d 572 [1st Dept. 2002]).  In this case, plaintiff expressly sought to recover amounts that became due as of July 1, 2021, outside the period set forth in Administrative Code of City of N.Y. § 22–1005 (the guaranty law), which purports to preclude the enforcement of certain lease guaranties during a limited period of repose between March 7, 2020 and June 30, 2021.

On that basis, the motion court's sua sponte dismissal of the complaint was improper both procedurally and substantively (see 558 Seventh Ave. Corp. v. Times Sq. Photo Inc., 194 A.D.3d 561, 562, 149 N.Y.S.3d 55 [1st Dept. 2021]).  Plaintiff acknowledges that the guaranty law applies to the period preceding July 1, 2021 because the leased premises to which defendant's guaranty applied was a restaurant that was subject to Executive Order 202.3, and defendant-guarantor is a natural person.  As plaintiff correctly reasons, however, it was entitled to summary judgment because the complaint and motion expressly limited the damages sought on the breach of guaranty claim to those accruing on or after July 1, 2021, which is outside the applicable period of the guaranty law (id.;  see also Tamar Equities Corp. v. Signature Barbershop 33 Inc., 223 A.D.3d 421, 203 N.Y.S.3d 263 [1st Dept. 2024]).  This differs from the circumstances in (274 Madison Co., LLC v. Vieira, 205 A.D.3d 403, 168 N.Y.S.3d 30 [1st Dept. 2022], lv dismissed 39 N.Y.3d 1062, 183 N.Y.S.3d 50, 203 N.E.3d 625 [2023]), on which the motion court relied, in which we rejected the plaintiff-landlord's attempt to collect accelerated rents based on a default that occurred during the guaranty law's period of protection (id. at 404–405, 168 N.Y.S.3d 30).  Here, plaintiff is not seeking to accelerate all rents due under the lease or collect amounts due during the guaranty law's applicability, but rather to collect amounts due under the lease outside the statutory period to the extent they are due and owing.