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Guarantees

Postby TenantNet » Wed Apr 08, 2015 12:26 pm

504 Associates LLC, Plaintiff v. Ring Nason, as Guardian Ad Litem for Ruth Rogin, and Gilbert Rogin, Defendant, 2476/13
April 8, 2015

Cite as: 504 Associates LLC v. Nason, 2476/13, NYLJ 1202722672211, at *1 (Sup., KI, Decided March 30, 2015)
2476/13
Justice Yvonne Lewis
Decided: March 30, 2015

ATTORNEYS
Plaintiff Attorney: Jack L. Glasser, P.C.
Defense Attorney: Robert a Katz, Salzman & Salzman.

Plaintiff, 504 Associates, moves for an order pursuant to CPLR 3212 granting summary judgment against defendant Gilbert Rogin in the amount of $87,978.00 and against defendant Ruth Rogin in the amount of $72,732.00, and setting this action down for a hearing for an assessment of property damages for which the defendants are liable and awarding the plaintiff attorney fees against Gilbert Rogin. Defendant Gilbert Rogin cross-moves for summary judgment dismissing the complaint as asserted against him.

Background

On April 16, 2002, Gilbert Rogin signed a guarantee of a one year lease running from May 1, 2002 to April 30, 2003 for an apartment located at 68 West 13th Street in Manhattan. The lease for the apartment was entered into on April 17, 2002 between Taki & Mary Thanasoulis and defendant Ruth Rogin for a term commencing on May 1, 2002 and ending on April 30, 2003. The lease provided for rent in the amount of $2,800.00 per month. It appears that the lease was modified on December 6, 2002; a modification which extended the term to November 30, 2005 at a monthly rent of $2,000.00 due to noise resulting from construction. Then another lease was entered into for the period August 1, 2006 through July 31, 2007. At the expiration of this lease Ms. Rogin became a month to month tenant from 2007 until 2010. It appears that in approximately 2008 the premises was sold by the Thanasoulis' to 504 Associates. On August 1, 2010, the plaintiff sent Ms. Rogin a letter which included what was deemed a lease renewal of the Apartment that she had been renting, apartment #1. The term was for one year commencing on August 1, 2010 and ending on July 31, 2011 at a rate of $3,800 per month.

Gilbert Rogin received a letter from the plaintiff, dated September 17, 2010, informing him that the plaintiff was exercising its right to collect payment under the April 16, 2002 guaranty. The demand for payment sought $4,028.00 which represented the $3,800 monthly rent and $228 which was a six percent late charge assessed by the plaintiff. The letter states that "[u]nder the Guaranty, Guarantor is required to pay Landlord all monetary obligations payable by Tenant under or in any way relating to the Lease including future renewals thereof." Gilbert Rogin responded, by letter dated October 6, 2010, addressed to the plaintiff, which stated "[t]his letter is to serve as written notice to you that, effective as of the date hereof, the undersigned is terminating the Guaranty Agreement dated April 16, 2002. The undersigned shall no longer act as guarantor of any lease obligations, or any other obligations, of or on behalf of Ruth Rogin." The plaintiff's attorney then sent a letter to Mr. Rogin dated October 26, 2010, which pertinently stated "I draw your attention to the fact that on April 16, 2002, you had agreed to guarantee performance of Ruth Rogin under both her lease and future renewals. Inasmuch as Ms. Rogin still remains on the premises under a renewal, we reject your attempt to terminate your personal guarantee and we wish to advise you that it is our intention to hold you responsible under that personal guarantee for the full extent of any damages that my client may sustain in this matter."

On or about November 11, 2010, the plaintiff commenced a non payment proceeding against Ruth Rogin in Landlord-Tenant court. On November 22, 2011, the non payment proceeding was settled pursuant to a stipulation that allowed Ms. Rogin to stay in the apartment until March 30, 2012. The plaintiff then commenced the instant litigation by summons and complaint on or about December 8, 2012 alleging causes of action against both Gilbert and Ruth Rogin. By stipulation dated January 31, 2014, the caption was amended to reflect that Ring Nason was appointed as guardian ad litem for Ruth Rogin.

The plaintiff moves for an order granting summary judgment against defendant Gilbert Rogin in the amount of $87,978.00 and against defendant Ruth Rogin in the amount of $72,732.00 and setting this action down for a hearing for an assessment of property damages for which the defendants are liable and awarding the plaintiff attorney fees against Gilbert Rogin. The plaintiff claims that the amount of liquidated damages owed to it from the defendants is $87,978.00 which includes base rent, late fees and attorney fees but that since the stipulation of settlement relieved Ruth Rogin of liability for legal fees the amount sought from her is $72,732. In addition the plaintiffs seek approximately $37,000 in property damages resulting from the state of disrepair the apartment was left in.

The plaintiff argues that the validity of the lease and the Guaranty are clear warranting summary judgment awarding the plaintiff the liquidated amount of $87,978. Defendant Gilbert Rogin opposes the plaintiff's motion and cross moves for summary judgment dismissing the claims as asserted against him. He argues that the guarantee failed to identify the apartment and that although the form stated that it included "future renewals" there was no reference to the rent being guaranteed nor the duration of the guarantee. He points out that the guarantee also stated that "A copy of this letter shall be attached to each copy of the lease executed by the owner and tenant" but that neither the April 17, 2002 lease, nor the August 1, 2010 lease, sued upon here, had a copy of the guarantee attached as required. Mr. Rogin argues that when the lease ended on April 30, 2003, the guaranty lapsed and Ms. Rogin became a month to month tenant. Mr. Rogin further argues that the August 1, 2010 lease used the words "extension" and "renewal" but that it was neither inasmuch as it was preceded by a 7 year month to month tenancy. He notes that the August 1, 2010 lease makes no reference to the 2002 guarantee and no copy of the guarantee is attached thereto as required by the terms of the guarantee. Mr. Rogin points out that as soon as he was advised of the claimed 2010 guarantee he immediately cancelled it. He argues that a guarantee is voided when the underlying obligation is changed and here the rent obligation was increased by 36 percent. He argues that it would be unconscionable for the guarantee to apply to limitless renewals and rent increases. Finally, he claims that it is vague and unenforceable as it fails to refer to any specific rent or period of time.

The court will first address Mr. Rogin's claim that the guaranty lapsed when Ms. Rogin's lease expired on April 30, 2003. The plaintiff points out that there was a modification to the April 16, 2002 lease on December 6, 2002 which extended the tenancy through November 30, 2005 and then there was a lease dated July 14, 2006 covering the period of August 1, 2006 through July 31, 2007. The plaintiff argues that the guaranty states that it is effective to future renewals. In support of its claim that the guarantee was effective as to the extensions and renewals between it and Ms. Rogin, the plaintiff points to 29 Holding Corp. v. Diaz, 3 Misc 3d 808, 811 (NY Sup. Ct. 2004) in which the court held that a guarantee extended to renewal leases which involved a broadly worded guaranty which applied not only to renewals, but also if the lease is "changed or extended in any way." The guaranty signed by Mr. Rogin states "I agree to be liable to the owner for rent due that is not paid by the tenant, including future renewals. Furthermore, I agree to guarantee the performance by the tenant of this lease as if I was a named tenant, including future renewals…. A copy of this letter shall be attached to each copy of the lease executed by the owner and tenant."

A "guaranty is to be interpreted in the strictest manner, particularly in favor of a private guarantor, and cannot be altered without the guarantor's consent" (Lo-Ho LLC v. Batista, 62 AD3d 558, 559 [2009]; see Bier Pension Plan Trust v. Estate of Schneierson, 74 NY2d 312, 315 [1989]) Specifically, "[a] guaranty of a tenant's obligations under a lease must be strictly interpreted in order to assure its consistency with the lease terms to which the guarantor actually consented" (404 Park Partners, L.P. v. Lerner, 75 AD3d 481, 482 [2010]). "If the original [lease] is modified without [the guarantors] consent, a guarantor is relieved of its obligation" (White Rose Food v. Saleh, 99 NY2d 589, 591 [2003]; Arlona Ltd. Partnership v. The 8th of January Corp., 50 AD3d 933 [2008]). Where a guaranty obligates a guarantor as to any "renewal, change or extension of the lease," upon the expiration of the lease, the guaranty lapses and can no longer bind defendant ( Lo-Ho LLC v. Batista, 62 AD3d 558 [2009]; see also, 665-75 Eleventh Ave. Realty Corp. v. Schlanger, 265 AD2d 270, 271 [1999] [holding that "[b]ecause the guaranty clause created an obligation on the part of the individual defendant guarantor as to "any renewal, change or extension of the lease," upon the expiration of the lease it lapsed and cannot be a vehicle to bind the individual defendant"]).

Here, the guaranty clause created an obligation on the part of Mr. Rogin as guarantor as to "any renewal of the lease," upon the expiration of the lease. The lease lapsed and cannot be a vehicle to bind him (see 665-75 Eleventh Ave. Realty Corp., 265 AD2d at 271; Elite Gold, Inc. v. TT Jewelry Outlet Corp., 31 AD3d 338, 340 [2006]). It could, with reason, be argued that Mr. Rogin's guaranty was nullified when the lease was modified on December 6, 2002 without his consent and without attaching a copy of the guaranty, inasmuch as the guaranty extended only to renewals of the orignal lease (see White Rose Food, 99 NY2d at 591; Arlona Ltd. Partnership, 50 AD3d 933). There can be little question that the expiration of that lease on November 30, 2005 ended Mr. Rogin's guaranty obligation. Mrs. Rogin was a month to month tenant from December 1, 2005 until she entered into a new lease for the period of August 1, 2006 to July 31, 2007, which was not a renewal of her prior leases and thus Mr. Rogin was not a guarantor of that lease. Finally, he most certainly can not be considered a guarantor of the rent for her month to month tenancy which began on August 1, 2007 and continued until she was evicted.

In 250 West 78th LLC v. Pildes of 83rd Street, Inc., (2014 WL 1396940 [NY Sup Ct 2014]), a factually similar case, the motion court in granting summary judgment dismissing the complaint in favor of the guarantor, held that: "[i]nterpreting the guaranty in the strictest manner, we agree that the subsequent revised lease renewals were not an extensions of the lease as would permit 250 West to recover from Defendant guarantor." Similarly, Mr. Rogin cannot be bound to terms to which he did not consent. The expiration of the original lease extinguguised Mr. Rogin's guaranty.

The court notes the plaintiff claimed at oral argument that Mr. Rogin's October 6, 2010 letter revoking the guaranty is evidence that he was aware that the guaranty was in full force and effect. Despite what Mr. Rogin may have erroneously believed at that time and despite the fact that he did indeed continue to pay Mrs. Rogin's rent until September 10, 2010, he was under no legal obligation to do so inasmuch as his obligation under the guaranty had terminated when the lease ended and Mrs. Rogin became a month to month tenant. Moreover, "[a] continuing guaranty may be terminated by the guarantor by notice to the obligee…revoking his liability for obligations that may be incurred subsequent to the notice" (27th St. Assocs., LLC v. Lehrer, 4 AD3d 165, 166 [2004]). Accordingly, the plaintiff's motion is denied to the extent that it seeks summary judgment on all claims asserted as against Mr. Rogin. Mr. Rogin's cross motion seeking summary judgment in his favor dismissing the plaintiffs' claims against him is granted.

The plaintiffs also moved for summary judgment as against Ruth Rogin in the amount of $72,732.00 and an assessment of property damages for which the defendants are liable. Mrs. Rogin does not offer any opposition to that branch of the plaintiff's motion seeking the amount of $72,732.00 which represent the base rent and late fees that were not paid. Accordingly, that branch of the plaintiff's motion seeking a judgment in the amount of $72,732.00 as against Ruth Rogin is granted.

Mrs. Rogin's guardian ad litem, her grandson, Ring Nason, submits an affidavit in opposition to the claimed property damage totaling $37,452.59, arguing that the property damage portion of the summary judgment motion must be denied as it falls far short of the standard of proof needed for the granting of such relief. The court agrees. The plaintiff has failed to demonstrate that any action by Mrs. Rogin has necessitated the repairs and renovations that plaintiff claims were needed to the apartment following Mrs. Rogin's tenancy. The parties are directed to appear for a hearing on April 28, 2015 in Room 535 at 2:00 PM on the issue of property damages.

Mrs. Rogin asserts a cross claim against Gilbert Rogin alleging that his conduct in failing to pay her rent under the guaranty constituted willful or reckless infliction of emotional harm fully intended to cause mental anguish, exacerbate and aggravate her known medical conditions. As this court has determined that Mr. Rogin's guaranty of Mrs. Rogin's rent terminated when her lease ended and she became a month to month tenant, the court cannot find that Mr. Rogin's conduct in failing th pay her rent, when he was in fact, under no obligation to do so, constitutes extreme infliction of emotional distress. Mrs. Rogin's cross claim is therefore dismissed.

The foregoing constitutes the decision and order of this court.

ENTER,
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