GRM v. MHG LLC DBA HUDSON HOTEL (2026)

The following papers efiled on NYSCEF were used on this motion: 12-35.

Upon the foregoing papers, having heard oral argument  ¹ , and due deliberation having been had, the within motion for summary judgment is determined as follows.

Background

On or about May 10, 2006, a document storage agreement was entered into whereby Plaintiff GRM Information Management Services, Inc. would store EC 58th Street LLC (d/b/a Hudson Hotel)'s records at Plaintiff's storage facilities. In September 2021, Hudson Hotel assigned the contract to Defendant MHG Holdco LLC. On May 10, 2022, Defendant sent a request to Plaintiff for permission to review Defendant's records stored at Plaintiff's facility. Plaintiff responded by requesting an access fee, claiming that Defendant was required to pay this amount to review its records stored at Plaintiff's facility. Defendant declined to pay said fee. On August 26, 2022, Defendant provided Plaintiff with notice of its intention to terminate the agreement. Plaintiff transmitted a final invoice in the amount of $115,223.40, dated August 29, 2022, to Defendant for what it claimed were outstanding charges. Plaintiff now seeks $51,794.97, the alleged outstanding balance owed by Defendant, plus interest at the contractual rate of 18% with attorney's fees of $10,358.99. Plaintiff now moves for summary judgment.

The Document Storage Agreement (submitted as NYSCEF Doc. No. 17) states that invoices may also include various surcharges implemented by the company, at the company's sole discretion, on an as-needed basis, and surcharges may include higher than usual fuel costs and other out-of-the-ordinary costs (see NYSCEF Doc. No. 17, ¶ 1). When a request is in writing and calls for the permanent removal, a permanent removal charge shall apply in addition to reference charges (id.). If the depositor fails to pay when any charges are due, then the depositor shall be charged the greater of accrued interest at the rate of 1.5% per month on unpaid charges and a flat late fee of $35 at the time of payment of the delinquent sum (see id. ¶ 2). The contract automatically renews for successive terms until either party cancels it by giving the other written notice at least 60 days prior to the expiration of the existing term (see id. ¶ 11). At the commencement of each renewal term, the depositor shall receive a revised Schedule of Charges indicating the charges in effect at that time (see id.). In the event that the depositor shall terminate this agreement prior to the expiration, the company can treat the charges payable to the depositor as immediately due and payable prior to the company's release of the depositor's stored goods (see id. ¶ 20). The agreement represents the entire and integrated agreement between the parties (see id. ¶ 25).

Movant Plaintiff's Contentions

T, Acerra, Vice President of Sales for Plaintiff, submitted an affirmation to authenticate business records. Defendant failed to pay from October 1, 2022 to July 31, 2023, resulting in damages of $35,528.04, and also failed to remit payment for September 1, 2023 to December 31, 2023, resulting in $16,266.93 more in damages, for a total of $51,794.47.

Mr. Acerra asserted that Defendant's counterclaims are based on allegations that Plaintiff breached the contract by failing to provide access to the property of Defendant at a time when the property was being stored by Plaintiff. Defendant was not denied entry; it failed to remit payment for the access. Plaintiff normally expends time and effort of employees to collect and bring the property to a location where access to the property is available, warranting a fee. Inability to access property is not a valid justification to refuse to pay for the storage of the property and there is no contractual term authorizing Defendant to refuse payment for the storage service in this situation.

Plaintiff's reply argues that Defendant's opposition papers do not contain a sworn affidavit of anyone with personal knowledge of the underlying facts of the matter even though Defendant's memorandum of law asserts facts. Generally, allegations set forth by someone without personal knowledge of the facts is deemed to be of insufficient weight to oppose a motion for summary judgment. The non-moving party must show by admissible evidentiary proof that the existence of a factual question necessitates a trial, which is not met by an attorney's affirmation, based upon unsubstantiated hypotheses and suppositions, Plaintiff citing to Hoffman v Eastern Long Is. Transp. Enter., 266 AD2d 509, 510 [2d Dept 1999]). Citing to Lorenz v McHebe's Partners, Inc. (71 Misc 3d 1225[A], 2021 NY Slip Op 50496[U], *2-3 [Sup Ct, Bronx County 2021]), Plaintiff argues that an affirmation by an attorney, who has no personal knowledge of facts asserted herein, is insufficient to raise a triable issue of fact with respect to movants' claimed lack of responsibility of the premises where plaintiff was caused to be harmed.

Defendant accused Plaintiff of material breach of contract in failing to allow Defendant access to stored property, but Defendant has admitted that the business between the parties is best defined as a bailment agreement. A bailment cannot be canceled unless one party terminates it either by removal of the property or by the bailee's notice to do so. The agreement was not terminated by Defendant bailor because property was never repossessed by them and Plaintiff bailee has never given notice to remove the subject property. Furthermore, the dispute over access to stored materials is insufficient justification for Defendant's failure to pay for storage.

Defendant's Opposition

Since September of 2021, Defendant has continued to timely pay to Plaintiff all monthly storage charges under the agreement. When Defendant requested Plaintiff's permission to review its records, Plaintiff responded by demanding an access fee of over $36,000.00, claiming that Defendant was required to pay this amount for the sole purpose of reviewing Defendant's own records stored at Plaintiff's facility. The agreement does not contain such an access fee. The agreement states that except in the case of the depositor's default on the agreement, the depositor shall have access to the business records in the Plaintiff's depository on all regular business days during regular business hours as posted at the premises without advance notice unless special facilities will be required.

On August 26, 2022, Defendant provided Plaintiff with notice of its intention to terminate, properly terminating the agreement, and Plaintiff provided a list of charges. When Defendant disputed these charges, Plaintiff directed it to review clauses 1-11 of the contract, and when Defendant responded that such clauses did not support the charges, Plaintiff then shifted its position and argued that a fee schedule to the agreement supports these charges. There was no schedule of charges at the time of the agreement and despite Defendant's repeated requests to be provided with one, Plaintiff has not. Plaintiff has refused to provide access to Defendant's records that were within its possession, acknowledge Defendant's termination of the agreement, and maintains that Defendant must pay the cost to access its records and/or the cost for Plaintiff to destroy them.

Defendant's Memorandum of Law in Opposition claims that Plaintiff's motion is premature, as there has been no preliminary conference, discovery produced, or depositions. Summary judgment prior to meaningful discovery is inappropriate where essential facts lie within Plaintiff's exclusive possession, including the December 31, 2023 contract which Plaintiff identifies in the complaint, the invoices upon which Plaintiff relies and the basis for the charges reflected, the methodology and contractual basis for the rates applied, proof of transmission and receipt of invoices to Defendant, the documents and testimony explaining the discrepancy between the August 29, 2022 final invoice in the amount of $115,223.40  ² and Plaintiff's current demand for $51,794.97, the basis for Plaintiff's April 2023 invoice, and any contractual or legal basis permitting Plaintiff to retain Defendant's property after termination, accrue additional fees without consent, and demand attorney's fees.

Discussion

I. Whether the Agreement was Properly Terminated by Defendant

The parties agree that the agreement was in fact a bailment agreement. Plaintiff contends that because the agreement was a continuing bailment, the agreement was never terminated because property was never repossessed by Defendant and Plaintiff has never given notice to remove the subject property. Defendant contends that the agreement was terminated when it gave notice of its intent to terminate and Plaintiff's possession of the property is a conversion.

A continuing bailment is one that remains in effect until it is terminated by one of the parties, either through the removal of the bailed property by the bailor or by notice from the bailee to terminate the agreement (see Dupont v Joedon & Co., 107 AD2d 369 [1st Dept 1985]). Defendant bailor has not removed the bailed property and Plaintiff bailee has not given notice to terminate the agreement. Therefore, the agreement stands.

While Defendant's unilateral notice was legally insufficient to terminate the bailment, the circumstances surrounding that notice may still be relevant to the question of liability. If the access fee requested by Plaintiff is as Defendant claims and has no contractual basis, it may be determined that Plaintiff improperly blocked Defendant from retrieving the bailed property and, therefore, Plaintiff was in breach of the contract.

II. Motion for Summary Judgment

Summary judgment is a drastic remedy that should be granted only if no triable issues of fact exist and the movant is entitled to judgment as a matter of law (see Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]; Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]; Andre v Pomeroy, 35 NY2d 361, 364 [1974]). The party moving for summary judgment must present a prima facie case of entitlement to judgment as a matter of law, tendering sufficient evidence in admissible form demonstrating the absence of material issues of fact, and the failure to make such a showing requires denial of the motion, regardless of the sufficiency of the opposing papers (see CPLR 3212 [b]; Smalls v AJI Industries, Inc., 10 NY3d 733 [2008]; Alvarez v Prospect Hosp., 68 NY2d at 324; Winegrad v New York Univ. Med. Ctr., 64 NY2d at 853). Once a prima facie showing has been made, however, the burden shifts to the nonmoving party to produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact that require a trial for resolution or tender an acceptable excuse for the failure to do so; mere expressions of hope are insufficient to raise a genuine issue of fact (see Zuckerman v City of New York, 49 NY2d 557, 560 [1980]). If there is any doubt as to the existence of a triable issue of fact, the motion for summary judgment must be denied (see Rotuba Extruders, Inc. v Ceppos, 46 NY2d 223, 231 [1978]). On a motion for summary judgment, facts must be viewed in the light most favorable to the non-moving party (see Bazdaric v Almah Partners LLC, 41 NY3d 310, 314 [2024]).

Granting a motion for summary judgment when discovery is incomplete or has not started is premature (see Churaman v C&B Elec., Plumbing & Heating, Inc., 142 AD3d 485 [2d Dept 2016] [motion for summary judgment deemed premature since there had been almost no discovery]). A party should be afforded a reasonable opportunity to conduct discovery into issues within the knowledge of the moving party prior to a motion for summary judgment (see Colombini v Westchester County Healthcare Corp., 24 AD3d 712, 715 [2d Dept 2005] [summary judgment motion should be denied where party has not had opportunity to conduct discovery]).

The merits of this matter present genuine issues of fact that preclude summary judgment. Plaintiff has not provided a reasonable basis for requesting an access fee of over $36,000.00, as the agreement does not make any mention of a fee for Defendant to access its own records (see NYSCEF Doc. No. 17). Additionally, Plaintiff has not provided a fee schedule or other explanation for the charges on the final invoice to Defendant, including a service charge, permanent removal charges/record charges, dock access fee charges, a charge for nine monthly storage charges through May 2023, and a tax at 8.75%, totaling $115,223.40, none of which are supported by the agreement. Plaintiff claims that Defendant failed to pay $51,794.47, the amount of damages requested. However, Plaintiff fails to explain why the amount on the final invoice is not being requested, why it is only requesting damages accrued since the alleged breach, and why it is not requesting payment from August 1, 2023 to August 31, 2023, and has omitted such invoice from exhibits (see NYSCEF Doc. No. 18). Plaintiff has not produced the December 31, 2023 agreement referenced in its complaint.

Plaintiff correctly notes that Defendant's opposition was not supported by a sworn affidavit from a person with personal knowledge of the facts, and that an attorney's affirmation alone is generally insufficient to raise a triable issue. However, this procedural deficiency does not change the fact that there are substantive gaps in Plaintiff's prima facie showing, nor does it overcome the strong judicial policy against granting summary judgment before the non-moving party has had a meaningful opportunity to conduct discovery. Despite Defendant's filings pointing out these deficiencies, Plaintiff has notably avoided addressing such.

The unresolved material issues of fact go to the heart of Plaintiff's entitlement to the damages it seeks. First, the absence of a contractual basis for the access fee is significant not only because it undermines Plaintiff's damages calculation, but because it raises the question of whether Plaintiff itself materially breached the agreement by conditioning Defendant's access to its own records on an unauthorized charge. If Plaintiff breached first, that breach may have excused Defendant's subsequent non-payment. Second, the fee schedule, the December 31, 2023 agreement, and any explanation for the substantial discrepancy between the $115,223.40 final invoice and the $51,794.97 now sought are the foundation of Plaintiff's damages claim, and their absence makes it impossible for the Court to assess whether Plaintiff's demanded relief is contractually authorized. Third, Plaintiff's continued possession of Defendant's bailed property while simultaneously demanding payment of disputed and potentially unauthorized charges raises the question of whether such retention is a conversion, particularly if Plaintiff's denial of access constituted a material breach that forfeited its right to continue holding the property under the terms of the agreement. Each of these issues is intertwined with the other, and none can be resolved without a developed factual record.

Conclusion

It is hereby ORDERED Plaintiff's motion for summary judgment is DENIED.

FOOTNOTES

1.   Transcripts may be procured from the court reporter (see Matter of Lewandowski v Office of Ct. Admin., 173 Misc 2d 335 [Sup Ct, Albany County 1997]).

2.   This amount includes a service charge of $18,199.18; permanent removal charges/record charges of $59,645.38; dock access fee charges of $9,529.50; a charge for nine monthly storage charges through May 2023 of $25,143.57; and a tax at 8.75% of $2,231.49.

Aaron D. Maslow, J.