Legal Document: 27th Street Property Owner Llc. v. Arthur Karpati, Randy Weiner, Jonathan Hochwald

On February 21, 2024 a MEMORANDUM OF LAW IN SUPPORT was filed involving a dispute between 27Th Street Property Owner Llc., and Arthur Karpati, Jonathan Hochwald, Randy Weiner, for Commercial - Contract in the District Court of New York County.

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FILED: NEW YORK COUNTY CLERK 07/02/2024 04:12 PM INDEX NO. 650911/2024
NYSCEF DOC. NO. 14 RECEIVED NYSCEF: 07/02/2024

SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
__________________________________________________

27TH STREET PROPERTY OWNER LLC, Index No. 650911/2024

Plaintiff, Mot. Seq. 001

ARTHUR KARPATI, RANDY WEINER, and
JONATHAN HOCHWALD,

Defendants.

MEMORANDUM OF LAW IN SUPPORT OF
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT

OVED & OVED LLP

401 Greenwich Street
New York, New York 10013
Tel.: 212.226.2700

Attorneys for Plaintiff 27th Street
Property Owner LLC

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TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES ................................................................................................................... ii

PRELIMINARY STATEMENT ...............................................................................................................1

UNDISPUTED FACTS ..........................................................................................................................2

A. THE PDNYC LEASE .................................................................................................2

B. THE PDNYC GUARANTY .........................................................................................4

C. PDNYC AND GUARANTORS BREACH THE
PDNYC LEASE AND THE PDNYC GUARANTY .........................................................5

D. LANDLORD’S FATALLY DEFECTIVE
AFFIRMATIVE DEFENSES AND COUNTERCLAIMS .......................................................7

LEGAL STANDARD ..........................................................................................................................10

ARGUMENT .....................................................................................................................................11

I. THE COURT SHOULD GRANT SUMMARY JUDGMENT TO LANDLORD ON THE
CLAIMS FOR BREACH OF THE PDNYC GUARANTY AND LEGAL FEES.....................11

II. THE COURT SHOULD DISMISS THE DEFENSES AND COUNTERCLAIMS .....................13

A. Guarantors Are Precluded from
Asserting the Defenses and Counterclaims................................................13

B. Guarantors’ Defenses and Counterclaims Based on
Breach of Contract Should Be Dismissed as a Matter of Law ..................15

C. Guarantors’ Defenses and Counterclaims Based on
Promissory Estoppel Should Be Dismissed as a Matter of Law ................16

D. Guarantors’ Defenses and Counterclaims Based on
Fraudulent Inducement Should Be Dismissed as a Matter of Law ............19

E. Guarantors’ Remaining Defenses Should Be
Dismissed as a Matter of Law ....................................................................21

CONCLUSION...................................................................................................................................22

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TABLE OF AUTHORITIES

Cases Page(s)

1407 Broadway Real Estate LLC v. Tsui,
36 Misc. 3d 1219(A) (Sup. Ct. N.Y. County June 29, 2012). ...................................17, 18

36 E. 57th St. LLC v. Falic,
117 A.D.3d 434 (1st Dep’t 2014) ......................................................................................14

47 W. 14th St. Corp. v. N.Y. Wigs & Plus, Inc.,
106 A.D.3d 527 (1st Dep’t 2013) ......................................................................................17

A.J.D. Bldg. LLC v. Ben-Harush,
2024 N.Y. App. Div. LEXIS 2626 (1st Dep’t May 9, 2024). ..........................................11

Alvarez v. Prospect Hosp.,
68 N.Y.2d 320 (1986) ........................................................................................................10

Aris Indus. v. 1411 Trizechahn-Swig, LLC,
294 A.D.2d 107 (1st Dep’t 2002) ......................................................................................18

Art Capital Group, LLC v. Neuhaus,
70 A.D.3d 605 (1st Dep’t 2010) ........................................................................................19

Banco do Estado de Sao Paulo, S.A. v. Mendes Jr. Int’l Co.,
249 A.D.2d 137 (1st Dep’t 1998) ......................................................................................14

Buffington, Ltd. v. 277 Bleecker LLC,
2017 N.Y. Misc. LEXIS 1345 (Sup. Ct. N.Y. County Apr. 14, 2017) ..............................21

BWA Corp. v. Alltrans Express U.S.A., Inc.,
1985 N.Y. App. Div. LEXIS 4599 (1st Dep’t Aug. 15, 1985) ..........................................17

Chase Manhattan Bank v. Goldberger,
199 A.D.2d 97 (1st Dep’t 1993) ........................................................................................14

Chip Fifth Ave. LLC v. Quality King Distribs., Inc.,
158 A.D.3d 418 (1st Dep’t 2018) ................................................................................13, 14

City of New York v. Clarose Cinema Corp.,
256 A.D.2d 69 (1st Dep’t 1998) ........................................................................................11

Cooperatieve Centrale Raiffeisen-Boerenleenbank, B.A. v. Navarro,
25 N.Y.3d 485 (2015) ........................................................................................................14

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Curry v. Mackenzie,
239 N.Y. 267 (1925) ..........................................................................................................10

Dabriel, Inc. v. First Paradise Theaters Corp.,
99 A.D.3d 517 (1st Dep’t 2012) ........................................................................................20

Danann Realty Corp. v. Harris,
5 N.Y.2d 317 (1959) ..........................................................................................................20

Espinal v. Trezechahn 1065 Ave. of Americas, LLC,
94 A.D.3d 611 (1st Dep’t 2012) ........................................................................................10

Eujoy Realty Corp. v. Van Wagner Communications, LLC,
22 N.Y.3d 413 (2013) ........................................................................................................18

Gansevoort 69 Realty LLC v. Laba,
130 A.D.3d 521 (1st Dep’t 2015) ......................................................................................11

Glint & Dolleck, Inc. v. Tri-Pac Export Corp.,
22 N.Y.2d 439 (1968) ........................................................................................................10

Grossman v. New York Life Ins. Co.,
90 A.D.3d 990 (2d Dep’t 2011) .........................................................................................17

Kakade v. Newman,
2022 N.Y. Misc. LEXIS 10201 (Sup. Ct. N.Y. County Sept. 28, 2022) ...........................17

Kato Int’l LLC v. Gerard Fox Law, P.C.,
195 A.D.3d 516 (1st Dep’t 2021) ......................................................................................20

Laura Corio, M.D., PLLC v. R. Lewin Interior Design, Inc.,
49 A.D.3d 411 (1st Dep’t 2008) ........................................................................................21

Lincoln Place LLC v. RVP Consulting, Inc.,
16 A.D.3d 123 (1st Dep’t 2005) ........................................................................................21

Loughlin v. City of New York,
186 A.D.2d 176 (2d Dep’t 1992) .......................................................................................10

Markov v. Katt,
176 A.D.3d 401 (1st Dep’t 2019) ......................................................................................15

Moon 170 Mercer v. Vella,
146 A.D.3d 537 (1st Dep’t 2017) ......................................................................................13

iii

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MRI Broadway Rental, Inc. v. U.S. Mineral Prods. Co.,
242 A.D.2d 440(1st Dep’t 1997), ......................................................................................10

Odonata Ltd. v. Baja 137 LLC,
206 A.D.3d 567 (1st Dep’t 2022) ......................................................................................18

Rice v. Cohen,
161 A.D.2d 530 (1st Dep’t 1990) ......................................................................................21

Solow Mgmt. Corp. v. Tanger,
19 A.D.3d 225 (1st Dep’t 2005) ........................................................................................13

W. & M. Operating, L.L.C. v Bakhshi,
159 A.D.3d 520 (1st Dep’t 2018) ......................................................................................20

W6 Facility X, LLC v West 6 Care Ctr., Inc.,
169 A.D.3d 968 (2d Dep’t 2019) .......................................................................................13

Zazu, Inc. v. Manor,
148 A.D.2d 400 (1st Dep’t 1989) ......................................................................................20

Zuckerman v. New York,
49 N.Y.2d 557(1980) .........................................................................................................10

Statutes

CPLR 3212(b) ................................................................................................................................10

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Plaintiff 27th Street Property Owner LLC (“Plaintiff” or “Landlord”) respectfully submits

this memorandum of law in support of its motion for an Order pursuant to CPLR 3212,

granting summary judgment against Defendants Arthur Karpati and Jonathan Hochwald

(together, “Defendants” or “Guarantors”) in the amount of $4,518,744.66 representing the unpaid

amounts due for the period from June 15, 2023 through July 1, 2024, setting a hearing to determine

the additional amounts that Landlord is entitled to recover in legal fees and additional rent accrued

through the date of judgment, and dismissing the counterclaims and affirmative defenses.

PRELIMINARY STATEMENT

This is a simple and straightforward action by Landlord for a money judgment against

Guarantors based upon their breach of an absolute and unconditional guaranty of payment by

their entity, PDNYC LLC (“PDNYC”), under a commercial lease for a portion of the building

located at 530-542 West 27th Street, New York, New York (the “Premises”). It is undisputed that

Guarantors “absolutely, irrevocably and unconditionally, jointly and severally guarantee[d] to

[Landlord] … the prompt and punctual payment of all Fixed Rent, additional rent and other sums

payable under the Lease …” pursuant to a Limited Guaranty dated December 1, 2010. It is also

undisputed that beginning in June 2023 and continuing to present, PDNYC has failed to pay

the Fixed Rent, additional rent, and other sums due to Landlord under the lease and Guarantors

have likewise failed to make those payments pursuant to their guaranty.

In a frivolous attempt to evade their obligations under their guaranty, Guarantors asserted

a variety of affirmative defenses and counterclaims, absurdly claiming that PDNYC received some

sort of vague oral assurance that it did not have to comply with the lease and that Landlord

somehow breached the lease by not making good faith efforts to refinance its mortgage on the

Premises. Yet, Guarantors are barred as a matter of law from asserting these spurious defenses and

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counterclaims because their guaranty is “absolute and unconditional” and contains a waiver of

defenses. In addition, Guarantors’ unsupported contentions are flatly contacted by the undisputed

documentary evidence, including the terms of lease, and are otherwise insufficient as matter of law

to avoid summary judgment.

UNDISPUTED FACTS

A. The PDNYC Lease

Plaintiff owns the Premises, which includes a building comprised of a cellar, six floors

above the cellar, and a rooftop. (Affirmation of Harlan Berger dated July 2, 2024 (hereinafter,

“Berger Aff.”) ¶2.) PDNYC and its affiliate, One 27 Roof, LLC (“One Roof”), are tenants in

the building pursuant to written lease agreements with Landlord. (Id. ¶3.) PDNYC occupies

the cellar and the first five floors of the building pursuant to a written lease agreement dated

December 1, 2010 (the “Initial Lease”), as subsequently amended by written agreements dated

June 15, 2012 (the “First Amendment”), August 20, 2015 (the “Second Amendment”), and

June 15, 2022 (the “Third Amendment”) (collectively, the “PDNYC Lease”). (Id. ¶4, Exs. 1-4;

see also NYSCEF Doc. No. 7 (hereinafter, the “Counterclaims” or “CC”) ¶¶2, 20, 24. 26, 34.)

One Roof occupies the sixth floor and rooftop of the building pursuant to a written lease

agreement dated January 20, 2011, as subsequently amended by written agreements dated

June 15, 2012, August 20, 2015, and June 15, 2022 (collectively, the “One Roof Lease”).

(Berger Aff. ¶5, Exs. 5-8.)1

Pursuant to the PDNYC Lease, PDNYC agreed to pay Fixed Rent and Additional Rent

“in equal monthly installments on the first day of each and every month of the Term.”

1
The initial leases and first amendments were executed by Landlord’s predecessor-in-interest and
assigned to Landlord pursuant to an Assignment and Assumption of Leases dated as of April 2013.
(Berger Aff. ¶6, Ex. 9.)
2

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(Berger Aff. ¶7, Ex. 1, §2(A)-(B).) The term of the lease was initially from December 1, 2010

through September 30, 2014, but was subsequently extended to September 30, 2022, then to

January 8, 2025, and eventually to January 31, 2032. (Id. ¶7, Ex. 1, §1; Ex. 2, §3(a); Ex. 3, §3;

Ex. 4, §2(b); see also CC ¶¶24, 26, 34, 38.) Pursuant to the Third Amendment, the parties agreed

that the annual Fixed Rent would be increased to $5,050,000 from June 15, 2022 through

June 14, 2023 and then increase by approximately $130,000 to $155,000 in each subsequent

lease year. (Berger Aff. ¶7, Ex. 4, §3; see also CC ¶39.)

In the Initial Lease, PDNYC agreed that the Additional Rent would include, among other

things, (i) a late charge of five percent on any amounts not paid within five days after the due date

and interest from the date due until paid at the interest rate set forth therein; and (ii) a

portion of the difference between the taxes imposed (a) in each Tax Year commencing July 1, 2013

and (b) the Base Year, which was initially defined as the Tax Year from July 1, 2010 through

June 30, 2011 (the “Tax Rent”). (Berger Aff. ¶8, Ex. 1, §§2(A)(ii), 8(A)-(C), 43; see also id.

Ex. 2, §7(a).) However, pursuant to the Third Amendment, the parties agreed to significantly

reduce the Tax Rent payable by PDNYC by redefining the Base Year as the Tax Year from

July 1, 2022 through June 30, 2023. (Id. ¶8, Ex. 4, §5(a).)

In addition to the amounts paid by PDNYC under the PDNYC Lease, the parties agreed

in the One Roof Lease that, during the period from January 1, 2015 through January 8, 2025,

One Roof would pay (i) an annual Fixed Rent of $400,000 per year and (ii) a Percentage Rent

equal to 10% of the difference between (a) Gross Sales and (b) $6.5 million. (Id. ¶9, Ex. 7, §5.)

However, in connection with the Third Amendment, the parties also amended the One Roof Lease

to reduce the annual rent payable by One Roof to a mere $12 per year to partially offset the increase

in Fixed Rent under the PDNYC Lease. (Id. ¶9, Ex. 8, §3.)

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The parties expressly agreed that the PDNYC Lease was fully integrated and could only

be modified by an agreement in writing signed by the parties. (Id. ¶10, Ex. 1, §48.) In particular,

the parties agreed that the PDNYC Lease “contains the entire agreement between the parties …,

and no representation, promise, inducement or statement of intention relating to the transactions

contemplated by [the PDNYC Lease] has been made by any party which is not set forth in

[the PDNYC Lease].” (See id.) The parties also agreed that the PDNYC Lease “may be changed

or modified only by an instrument in writing signed by the party against which enforcement of

such change or modification is sought.” (See id.) Moreover, in connection with each amendment,

the parties affirmed, ratified, and confirmed these provisions. (Id. ¶10, Ex. 2, §§12, 13;

Ex. 3, §§8, 9; Ex. 4, §§12, 13.)

B. The PDNYC Guaranty

Defendants Arthur Karpati, Jonathan Hochwald, and Randy Weiner are members of

PDNYC and indirect owners of beneficial interests in One Roof. (Id. ¶11.) Defendants executed

a Limited Guaranty dated December 1, 2010 in connection with the PDNYC Lease

(the “PDNYC Guaranty”) and also a Limited Guaranty dated June 15, 2012 in connection with

the One Roof Lease (the “One Roof Guaranty”). (Id ¶12, Exs. 10-11.) Defendants also executed

a written agreement in connection with each of the amendments, confirming that they consented

to the terms and agreed that the guaranties were “ratified and confirmed and remain[] in full force

and effect with respect to the Lease[s], as modified” by each amendment. (Id. ¶13, Exs. 2-4 and

6-8; see also CC ¶37.)

Pursuant to the PDNYC Guaranty, Defendants “absolutely, irrevocably and

unconditionally, jointly and severally guarantee[d] to [Landlord] … the prompt and punctual

payment of all Fixed Rent, additional rent and other sums payable under the [PDNYC] Lease….”

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(Berger Aff. ¶14, Ex. 10, §2(a); see also CC ¶22.) Defendants further agreed to “pay all of

[Landlord’s] costs and expenses (including, without limitation, reasonable attorneys’ and

investigators’ fees and disbursements) in enforcing [the PDNYC] Guaranty.” (Berger Aff. ¶ 14,

Ex. 10, §8.)

Defendants also agreed that they “shall not be released … by reason of any waiver,

extension, modification, forbearance or delay or other act or omission of [Landlord] … or by

reason of any further dealings between [PDNYC] and [Landlord], whether relating to the Lease or

otherwise” and “expressly waive[d] and surrender[ed] any defense of [their] liability [t]hereunder

based upon any of the foregoing acts, omissions, things, agreements, waivers or any of them….”

(Id. ¶15, Ex. 10 §5(d).) Defendants further agreed that their liability “shall be unaffected by,”

among other things, “any amendment or modification of the provisions of the [PDNYC] Lease or

any other instrument made to or with [Landlord] by [PDNYC].” (Id. §5(c).)2

C. PDNYC and Guarantors Breach the PDNYC Lease and the PDNYC Guaranty

Beginning in June 2023, PDNYC breached its obligation to timely pay the agreed upon

Fixed Rent and Additional Rent, and Guarantors likewise breached their obligation to pay

these amounts. (Berger Aff. ¶17, Ex. 12.) In particular, PDNYC failed to timely pay the agreed

upon Fixed Rent of $224,444.43 that was due to Landlord for the period from June 15, 2023

through June 30, 2023, the agreed upon Fixed Rent of $438,000 per month that was due to

Landlord during the period from July 1, 2023 through June 30, 2024, and the agreed upon

Fixed Rent of $448,950 that was due to Landlord during the period from July 1, 2024 through

2
While the PDNYC Guaranty contains a “good guy clause” that would extinguish certain of
Guarantors’ obligations in the event that PDNYC provided the requisite written notice, surrendered
the Premises and paid all amounts due as of that date, it is undisputed that PDNYC continues to
occupy the Premises without paying rent. (Berger Aff. ¶16, Ex. 10, §3(a); Ex. 4, §21; see also
CC ¶¶23, 40.)
5

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June 30, 2025. (Id. ¶18; compare id. Ex. 4, §3(b)-(d) with id. Ex. 12.) Although PDNYC

made certain partial late payments, PDNYC ceased making payments altogether beginning in

January 2024 with the exception of a single payment of $120,000 in April 2024. (See id. ¶18,

Ex. 12.) Despite Landlord’s repeated demands for payment, PDNYC and Guarantors did not pay

the arrears or the Fixed Rent and Additional Rent that continued to accrue while PDNYC continued

to use and occupy the Premises. (Id. ¶18.)

As set forth in the Affirmation of Harlan Berger, during the period from June 15, 2023

through February 1, 2024, the Fixed Rent payable under the PDNYC Lease was $3,728,444.43

and the total amount paid by PDNYC was only $1,788,000.00. (See id. ¶19, Exs. 4 and 12.)

Thus, as of February 1, 2024, the unpaid Fixed Rent payable under the PDNYC Lease was

$1,940,444.43 and the unpaid Additional Rent was $245,234.09, comprised of cumulative late

charges totaling $164,522.22 and cumulative interest charges totaling $80,711.87. (See id.)

Moreover, during the period from February 2, 2024 through July 1, 2024, the Fixed Rent payable

under the PDNYC Lease was $2,200,950.00 and the total amount paid by PDNYC was only

$120,000.00. (See id. ¶20, Exs. 4 and 12.) Thus, as of July 1, 2024, the additional unpaid

Fixed Rent payable under the PDNYC Lease was $2,080,950.00 and the additional unpaid

Additional Rent was $252,116.13, comprised of cumulative late charges totaling $109,500.00 and

cumulative interest charges totaling $142,616.13. (See id.)

Landlord commenced this action on February 21, 2024, asserting claims against

Guarantors for breach of the PDNYC Guaranty and seeking a money judgment against Guarantors

for the unpaid rent from June 2023 through February 2024, and an amount to be determined for

rent that has accrued since February 2024 and legal fees. (See NYSCEF Doc. No. 2 (hereinafter,

the “Complaint” or “Compl.”).) To date, PDNYC continues to use and occupy the Premises

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without paying rent, and PDNYC and Guarantors have refused to honor their obligations under

the PDNYC Lease and PDNYC Guaranty in any respect.3 (Berger Aff. ¶22.) Accordingly,

as of July 1, 2024, Guarantors owe a total of $4,518,744.66 comprised of a total of $2,185,678.52

for the period from June 15, 2023 through February 1, 2024 and a total of $2,333,066.13 for

the period from February 2, 2024 through July 1, 2024. (See id. ¶23, Ex. 12.)

D. Landlord’s Fatally Defective Affirmative Defenses and Counterclaims

On April 1, 2024, Guarantors filed their Answer with Counterclaims in which they grasp

at straws to avoid their plain and unambiguous contractual obligations. In particular, Guarantors

have asserted affirmative defenses and counterclaims based upon breach of contract, promissory

estoppel, and fraudulent inducement. (CC ¶¶56-87.)4 However, all of Guarantors’ affirmative

defenses and counterclaims are barred as a matter of law because the PDNYC Guaranty is

absolute and unconditional and contains an express waiver of defenses. (See Berger Aff. Ex. 10,

§§2(a), 5(d).) Guarantors’ affirmative defenses and counterclaims are also barred by the plain

terms of the PDNYC Lease and other undisputed documentary proof.

In support of their Fifth Affirmative Defense and First Counterclaim, Guarantors rely upon

the conclusory assertion that “Landlord has unjustifiably and inexcusably breached the Lease by

failing to use good faith efforts to refinance its existing mortgage.” (CC ¶63.) Yet, in addition to

the fact that Guarantors are not even parties to the PDNYC Lease, the PDNYC Lease expressly

3
On March 12, 2024, Landlord also commenced a separate action against PDNYC to recover
possession of the Premises. See generally 27th Street Property Owner, LLC v. PDNYC LLC et al.,
Index No. LT-304720-24/NY (Civ. Ct. N.Y. County). PDNYC opposed that petition by making
technical arguments that Landlord failed to make a proper rent demand, adequately describe
the Premises, or effectuate proper service. See id.
4
The following day, on April 2, 2024, PDNYC commenced an entirely separate action against
Landlord asserting the exact same claims premised upon the exact same allegations. See generally
PDNYC LLC v. 27th Street Property Owner LLC, Index No. 651699/2024 (Sup. Ct. N.Y. County).
7

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provides that “[t]he obligations and liabilities of [PDNYC] hereunder in no way shall be released,

discharged or otherwise affected … by reason of,” among other things, “any claim which

[PDNYC] has or might have against Landlord; [or] any failure on the part of Landlord to comply

with or perform any of the terms hereof or of any other agreement with [PDNYC].”

(Berger Aff. ¶26, Ex. 1, §3.) Accordingly, Landlord’s alleged breach of its obligations under

the PDNYC Lease to use good faith efforts to refinance its mortgage does not provide a defense

to payment of rent by PDNYC and Guarantors.

In addition, Guarantors’ the sole support for this claim is an assertion that Landlord

“still has not refinanced its mortgage.” (CC ¶43.) This is insufficient as a matter of law because

Landlord did not guarantee that it would succeed in refinancing its mortgage, but rather merely

that it would “use its good faith efforts to refinance its existing mortgage,” which the parties agreed

would include “exercising its existing or any future extension option.” (Berger Aff. ¶27, Ex. 4, §7

(emphasis added).) This omission is telling because it is undisputed that, on February 13, 2023,

Landlord formally exercised its right to extend the maturity date of the loan for an additional

five years to May 2028. (Id. ¶28, Exs. 13.)

Moreover, PDNYC could not allege any damage because Landlord had not sought to

terminate the PDNYC Lease based on an inability to refinance. (See id. ¶29.)

In support of their Second and Third Affirmative Defenses and Second through

Fifth Counterclaims based on promissory estoppel and fraudulent inducement, Guarantors concoct

absurd allegations that during oral discussions before executing the Third Amendment and also

subsequent to the Third Amendment, Landlord allegedly promised or represented to PDNYC that

it “would not be required to pay rent.” (CC ¶¶32, 47-49, 67, 77, 83, 86.) Yet, in addition to being

barred by the merger and no oral modification clauses in the PDNYC Lease, and the waiver of

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defenses in their absolute and unconditional guarantees, these allegations are also flatly refuted by

undisputed documentary evidence.

In particular, before executing the Third Amendment, when PDNYC, One Roof, and

Guarantors were in default to the tune of over $5.5 million, Landlord expressly rejected a proposal

from Guarantors in March 2021 that specifically contemplated the payment of rent because

“[t]he building is worth more today vacant th[a]n occupied 4 years from now.” (Berger Aff. ¶31,

Exs. 14-15; see also CC ¶30.) Further, the plain terms of the Third Amendment show that the

parties resolved the defaults and substantially reduced Guarantors’ liability by (i) waiving and

releasing amounts that were past due as of June 15, 2022; (ii) substantially reducing the Tax Rent

payable by PDNYC; and (iii) essentially eliminating the rent payable by One Roof. (Compare

CC ¶39 with Berger Aff. ¶32, Ex. 4, §§2(c), 5; Ex. 8, §§2(c), 3.) Likewise, the various emails

subsequent to the Third Amendment that are referenced in the Counterclaims do not even remotely

support Guarantors’ allegations. (Compare CC ¶¶47, 51-52 with Berger Aff. Exs. 16-17.) Rather,

those emails confirm that Landlord merely agreed that if PDNYC made certain payments and

provided projected revenues and expenses then Landlord would allow PDNYC to send a written

surrender notice by November 15, 2023 that would be effective as of August 31, 2023. (See id.

¶34, Ex. 16.) Moreover, in the email dated January 5, 2024, Landlord’s representative asked

Karpati whether he was proposing that PDNYC would “continue to pay 125/week to 3/31” and

“clear the arrears by 3/31” or “proposing something different.” (Compare CC ¶49 with

Berger Aff. ¶35, Ex. 18.)

On May 3, 2024, Landlord filed its Reply to the Counterclaims. (NYSCEF Doc. No. 8.)

Landlord now seeks to put an end to Guarantors’ delay tactics by bringing this motion for summary

judgment, which should be granted for reasons set forth below.

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LEGAL STANDARD

Summary judgment “shall be granted if, upon all the papers and proof submitted, the cause

of action or defense shall be established sufficiently to warrant the court as a matter of law

in directing judgment in favor of any party.” CPLR 3212(b); see also Zuckerman v. New York,

49 N.Y.2d 557, 562 (1980). Once the movant makes “a prima facie showing of entitlement to

judgment as a matter of law, … the burden shifts to the party opposing the motion … to produce

evidentiary proof in admissible form sufficient to establish the existence of material issues of fact

which require a trial of the action.” See Alvarez v. Prospect Hosp., 68 N.Y.2d 320, 324 (1986).

In considering whether the party opposing the motion has presented sufficient proof and

evidentiary facts, a court should grant summary judgment if it is “convinced that the issue

is not genuine, but feigned, and that there is in truth nothing to be tried.” Curry v. Mackenzie,

239 N.Y. 267, 270 (1925); see also Glint & Dolleck, Inc. v. Tri-Pac Export Corp., 22 N.Y.2d 439,

441 (1968) (similar). Indeed, “[i]t is well recognized that a shadowy semblance of an issue is not

enough to defeat [summary judgment]; nor is a court required to shut its eyes to the patent

falsity of a defense.” MRI Broadway Rental, Inc. v. U.S. Mineral Prods. Co., 242 A.D.2d 440,

443 (1st Dep’t 1997), aff’d, 92 N.Y.2d 421 (1998) (internal quotation marks and citation omitted);

see also Espinal v. Trezechahn 1065 Ave. of Americas, LLC, 94 A.D.3d 611, 613 (1st Dep’t 2012)

(finding “plaintiff’s version of the incident incredible as a matter of law” and, therefore,

“insufficient to defeat [the] motion for summary judgment”); Loughlin v. City of New York,

186 A.D.2d 176, 177 (2d Dep’t 1992) (similar).

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ARGUMENT

I. THE COURT SHOULD GRANT SUMMARY JUDGMENT TO LANDLORD ON
THE CLAIMS FOR BREACH OF THE PDNYC GUARANTY AND LEGAL FEES

It is well-settled that “[o]n a motion for summary judgment to enforce a written guaranty,

all that the creditor need prove is an absolute and unconditional guaranty, the underlying debt, and

the guarantor’s failure to perform under the guaranty.” City of New York v. Clarose Cinema Corp.,

256 A.D.2d 69, 71 (1st Dep’t 1998); accord Gansevoort 69 Realty LLC v. Laba, 130 A.D.3d 521,

521 (1st Dep’t 2015); see also A.J.D. Bldg. LLC v. Ben-Harush, 2024 N.Y. App. Div. LEXIS 2626,

*1 (1st Dep’t May 9, 2024). Here, Landlord has met its burden with evidence establishing

(i) the existence of the PDNYC Guaranty, (ii) PDNYC’s failure to pay $4,518,744.66 due under

the PDNYC Lease through July 1, 2024, and (iii) Guarantors’ failure to pay these amounts.

First, there is no dispute that Guarantors executed the PDNYC Guaranty or that they

consented to the Third Amendment and “agree[d] that the said [PDNYC] Guaranty is hereby

ratified and confirmed and remains in full force and effect with respect to the [PDNYC] Lease,

as modified” by the Third Amendment. (See CC ¶¶22 & 37; see also Berger Aff. Ex. 10; see also

id. Ex. 4.) Section 2(a) of the PDNYC Guaranty provides that Guarantors “absolutely,

irrevocably[,] and unconditionally, jointly and severally guarantee[] to [Landlord] … the prompt

and punctual payment of all Fixed Rent, additional rent[,] and other sums payable under

the [PDNYC] Lease.” (Berger Aff. Ex. 10, §2(a).)

Second, there is no dispute that PDNYC failed to pay Fixed Rent and Additional Rent

due under the PDNYC Lease in the amount of $4,518,744.66 comprised of a total of $2,185,678.52

for the period from June 15, 2023 through February 1, 2024 and a total of $2,333,066.13 for

the period from February 2, 2024 through July 1, 2024. (Id. ¶¶18-20, 23, Ex. 12.) In particular,

PDNYC agreed to pay Fixed Rent in the amount of (i) $244,444.43 for June 15, 2023 through

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June 30, 2023; (ii) $438,000 per month during the period from July 1, 2023 through June 30, 2024;

and (iii) $448,950 per month during the period from July 1, 2024 through June 30, 2025. (Id. Ex. 4,

§§3(b)-(d).) PDNYC further agreed that these amounts would be payable “on the first day of each

and every month” and that in the event any amounts were “not paid within five days after the date

due,” it would pay, as Additional Rent, a late charge of five percent as well as interest at the interest

rate set forth therein. (Id. Ex. 1, §§2(A)(ii), 2(B), 43.) During the period from June 15, 2023

through February 1, 2024, the Fixed Rent payable under the PDNYC Lease was $3,728,444.43

and the total amount paid by PDNYC was only $1,788,000.00. (See id. ¶19, Exs. 4 and 12.) Thus,

the unpaid Fixed Rent payable under the PDNYC Lease was $1,940,444.43 and the unpaid

Additional Rent was $245,234.09, comprised of cumulative late charges totaling $164,522.22 and

cumulative interest charges totaling $80,711.87. (See id. ¶19, Ex. 12.) Moreover, during the period

from February 2, 2024 through July 1, 2024, the Fixed Rent payable under the PDNYC Lease was

$2,200,950.00 and the total amount paid by PDNYC was only $120,000.00. (See id. ¶20,

Exs. 4 and 12.) Thus, as of July 1, 2024, the additional unpaid Fixed Rent payable under

the PDNYC Lease was $2,080,950.00 and the additional unpaid Additional Rent was $252,116.13,

comprised of cumulative late charges totaling $109,500.00 and cumulative interest charges totaling

$142,616.13. (See id. ¶20, Ex. 12.)

Finally, there is no dispute that Guarantors have failed to pay the unpaid Fixed Rent and

Additional Rent payable under the PDNYC Lease and the PDNYC Guaranty during the period

from June 15, 2023 through July 1, 2024. (See id. ¶22.)

Accordingly, Landlord has established that it is entitled to summary judgment against

Guarantors on its causes of action for breach of the PDNYC Guaranty and legal fees. See, e.g.,

Chip Fifth Ave. LLC v. Quality King Distribs., Inc., 158 A.D.3d 418, 418-19 (1st Dep’t 2018)

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(holding that landlord established entitlement to judgment as a matter of law by submitting

evidence that guarantor executed “an absolute and unconditional guaranty of the defaulting

tenant’s rental obligations under a commercial lease”); Moon 170 Mercer v. Vella, 146 A.D.3d 537,

537-38 (1st Dep’t 2017) (affirming order granting summary judgment against guarantor for

tenant’s breach of the lease and failure to pay rent).

In addition, there is no dispute that Landlord is entitled to recover its legal fees. Indeed,

Section 8 of the PDNYC Guaranty expressly provides that “Guarantor shall pay all of [Landlord’s]

costs and expenses (including, without limitation, reasonable attorneys’ and investigators’ fees and

disbursements) in enforcing this [PDNYC] Guaranty.” (See Berger Aff. Ex. 10, §8.) Here,

Landlord commenced this action to enforce the PDNYC Guaranty. Accordingly, Landlord is

entitled to recover its legal fees in an amount to be determined at a hearing or upon submission of

papers, as directed by the Court. See, e.g., W6 Facility X, LLC v West 6 Care Ctr., Inc., 169 A.D.3d

968, 969-70 (2d Dep’t 2019) (plaintiff established entitlement to summary judgment as to liability

on its cause of action to recover attorney’s fees from guarantor because the guaranty provided for

the recovery of attorney’s fees in connection with an action to enforce the guaranty); see also Solow

Mgmt. Corp. v. Tanger, 19 A.D.3d 225, 226 (1st Dep’t 2005) (“As a general matter, case law

establishes that where a landlord has a right to recover attorneys’ fees pursuant to a lease provision,

the recoverable fees are those that are reasonable.”).

II. THE COURT SHOULD DISMISS THE DEFENSES AND COUNTERCLAIMS

A. Guarantors Are Precluded from Asserting the Defenses and Counterclaims

Guarantors are expressly barred from asserting the defenses and counterclaims that they

have asserted in this action pursuant to the express terms of the PDNYC Guaranty. In particular,

Guarantors executed an “absolute[], irrevocabl[e] and unconditional[]” guarantee of payment

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under the PDNYC Lease. (Berger Aff. Ex. 10, §2(a).) In addition, they agreed, that they “shall

not be released … by reason of any waiver, extension, modification, forbearance or delay or other

act or omission of [Landlord] … or by reason of any further dealings between [PDNYC] and

[Landlord], whether relating to the Lease or otherwise” and “expressly waive[d] and surrender[ed]

any defense of [their] liability [t]hereunder based upon any of the foregoing acts, omissions, things,

agreements, waivers or any of them….” (Id. §5(d).)

As the New York Court of Appeals has held, “[g]uaranties that contain language obligating

the guarantor to payment without recourse to any defenses or counterclaims, i.e., guaranties that

are ‘absolute and unconditional,’ have been consistently upheld by New York courts.”

Cooperatieve Centrale Raiffeisen-Boerenleenbank, B.A. v. Navarro, 25 N.Y.3d 485, 493 (2015)

(collecting cases). Accordingly, Landlord is entitled to summary judgment against Guarantors

dismissing the counterclaims and defenses based upon the language of the PDNYC Guaranty.

See, e.g., Chip Fifth Ave., 158 A.D.3d at 418-419 (“pursuant to the express terms of the guaranty,

[the guarantor] waived the benefit of, or enforcement of, any defense affecting th

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