BBG received a solid victory for our client as the Supreme Court of New York County, Appellate Division, First Department rendered a favorable judgment and our client obtained a money judgment. The lawsuit sought to recover unpaid rent and additional rent from a restaurant tenant, based on the terms outlined in the lease and guaranty agreement. The defendants had raised several affirmative defenses, challenging the plaintiff’s claims.
One of the key factors contributing to the favorable outcome was the submission of affidavits from employees of their current and former property managers. These individuals, possessing extensive knowledge of the facts, attested to the plaintiff’s ownership as stated in the lease and its authorization to conduct business in New York. This evidence, along with the verified complaint, lease agreement, and rent ledgers provided by the property managers, effectively established the plaintiff’s identity and legitimacy.
Rejection of Pandemic-Related Defenses
Defendants had attempted to rely on frustration of purpose, impossibility of performance, and failure of consideration due to the pandemic as defenses against nonpayment of rent. However, the court dismissed these arguments, citing precedent cases that held such defenses invalid under a commercial lease. These cases established that even in the face of a brief period of closure during the pandemic, tenants remained obligated to fulfill their rent obligations unless otherwise specified in the lease.
Force Majeure and Eminent Domain
The court further addressed the defendants’ claims regarding force majeure and eminent domain. It clarified that the lease did not contain a force majeure clause, and therefore, such a defense could not be added or implied. Additionally, the court pointed out that the lease explicitly stated that even in the event of eminent domain, the defendants were still obligated to pay rent.
Defendants argued that the guarantor’s defenses were valid under the guaranty law. While the court acknowledged the applicability of the guaranty law in certain cases, it found that the damages awarded were incurred outside the statutory period, thus upholding the judgment against the guarantor. This ruling also dispelled defendants’ claims of commercial tenant harassment, as the enforcement of the guaranty did not violate relevant provisions.
In a unanimous decision, the Supreme Court of New York County, Appellate Division, First Department affirmed a money judgment in favor of our client and dismissed the defendants’ affirmative defenses (e.g., claims of frustration of purpose, impossibility of performance, and failure of consideration due to the pandemic). Additionally, the court ruled that the guaranty law, providing immunity for certain lease guaranties affected by pandemic-related executive orders, did not apply in this case. Our firm successfully enforced the guaranty without violating any commercial tenant harassment provisions.
For a copy of the decision, click here.