May 26, 2015

The New York Supreme Court, Appellate Division, First Department, recently decided the case entitled, Moon 170 Mercer, Inc. v. Vella, 122 A.D.3d 544 (2014), in which it enforced a personal guaranty of a commercial lease.

The lower court had granted the landlord damages in the amount of $414,114.27 on its breach of contract claim.  The Appellate Division held that landlord had “demonstrated its prima facie entitlement to summary judgment on the issue of liability by establishing that the guarantor signed an absolute and unconditional guaranty of a commercial lease, that the tenant was in arrears in payment of base rent and additional rent, and that guarantor failed to perform under the guaranty.”

The Guarantor claimed that the tenant was wrongfully evicted and that landlord fraudulently prevented tenant from raising the money necessary to pay the rental arrears.  The Court held that only tenant could assert these claims (not the guarantor) and in any event the alleged fraud occurred only after the rental arrears had occurred.

However, the court found a discrepancy in the amount of the rental arrears.  Landlord failed to apply the security deposit and admitted that it miscalculated certain items.  Therefore, the case was remanded for discovery and trial on damages.

If you have any questions about commercial lease agreements or other real estate matters, please do not hesitate to contact an experienced attorney at (914) 338-8050. For more information about our firm please visit www.betenskylaw.com.