| Johnston v MGM Emerald Enters., Inc. |
| 2010 NY Slip Op 00220 [69 AD3d 674] |
| January 12, 2010 |
| Appellate Division, Second Department |
| Kevin R. Johnston, Appellant, v MGM EmeraldEnterprises, Inc., et al., Respondents. (And Third-Party Actions.) |
—[*1] Garth A. Molander, Bohemia, N.Y., for respondents MGM Emerald Enterprises, Inc., andDennis J. Gandley, and Benjamin Herzweig, Patchogue, N.Y., for respondent Michael G.Murphy (one brief filed).
In an action, inter alia, to recover damages for breach of a commercial lease, the plaintiffappeals, as limited by his brief, from so much of an order of the Supreme Court, Suffolk County(Henry, J.), dated September 30, 2003, as denied those branches of his motion which were forsummary judgment on the issue of liability against the defendants AMLG Enterprises, Inc., andAnthony Noto, and for summary judgment on the issue of damages.
Ordered that the order is modified, on the law, (1) by deleting the provision thereof denyingthat branch of the plaintiff's motion which was for summary judgment on the issue of liabilityagainst the defendants AMLG Enterprises, Inc., and Anthony Noto, and substituting therefor aprovision granting that branch of the motion, (2) by deleting the provision thereof denying thatbranch of the plaintiff's motion which was for summary judgment on the issue of damagesagainst the defendants Dennis J. Gandley and Michael G. Murphy in the principal sum of$156,000, and substituting therefor a provision granting that branch of the motion to the extentthat it sought to recover damages in the principal sum of $130,000 against those defendants, (3)by deleting the provision thereof denying that branch of the plaintiff's motion which was forsummary judgment on the issue of damages against the defendant MGM Emerald Enterprises,Inc., in the principal sum of $949,000, and substituting therefor a provision granting that branchof the motion to the extent that it sought to recover damages in the principal sum of $156,000against the defendant MGM Emerald Enterprises, Inc., (4) by deleting the provision thereofdenying that branch of the plaintiff's motion which was for summary judgment on the issue ofdamages against the defendants AMLG Enterprises, Inc., and Anthony Noto in the principal sumof $949,000, and substituting therefor a provision granting that branch of the motion, and (5) byadding thereto a provision that the initial $130,000 of the sum recoverable by the plaintiff is thejoint and several liability of all of the defendants, the next $26,000 is the joint and severalliability of the defendants MGM Emerald [*2]Enterprises Inc.,AMLG Enterprises, Inc., and Anthony Noto, and the balance of $793,000 is the joint and severalliability of the defendants AMLG Enterprises, Inc., and Anthony Noto; as so modified, the orderis affirmed insofar as appealed from, with costs to the plaintiff.
On February 14, 1997, the defendant MGM Emerald Enterprises, Inc. (hereinafter MGM),and the plaintiff's decedent (hereinafter the landlord) entered into a 10-year lease for a portion ofcertain premises located on Nesconset Highway in Stony Brook. The defendants Dennis J.Gandley and Michael G. Murphy, as MGM's principals, executed a guarantee for the payment ofall rent due the landlord and also agreed that, in case of a default by MGM, each of them wouldbe jointly and severally liable to the landlord for the sum of $156,000, representing one year'srent. The guarantee provided that "[s]aid amount shall be considered a fair and reasonable sum tocompensate Owner for said breach of Lease, and in consideration of Owner not seeking the rentdue and owing for the then outstanding remainder of the Term of the Lease."
The lease was assigned by MGM to the defendant AMLG Enterprises, Inc. (hereinafterAMLG), on November 2, 2000. Anthony Noto, as AMLG's principal, guaranteed the payment ofrent to the landlord. Gandley and Murphy executed a subsequent guarantee in favor of thelandlord on November 2, 2000, which also included language stating that an amount equal to oneyear's rent would be owed in the event of a default by the tenant or AMLG, and was to be paid inconsideration for the landlord's forbearance in seeking the remainder of the rent due under thelease.
Eventually, AMLG defaulted on its lease obligations, and the landlord obtained a warrant ofeviction, dated November 9, 2001. The landlord commenced this action against MGM, AMLG,and Noto, inter alia, for breach of the lease, and against Gandley and Murphy to recover underthe guarantees.
The plaintiff moved for summary judgment on the complaint. The plaintiff sought to recover,inter alia, the sum of $949,000 from MGM, AMLG, and Noto, representing "rent due andowing," and the sum of $156,000 from Gandley and Murphy pursuant to the guarantees executedby them. The Supreme Court, among other things, denied those branches of the plaintiff's motionwhich were for summary judgment on the issue of liability against AMLG and Noto, and forsummary judgment on the issue of damages.
Eviction terminates the landlord-tenant relationship, thereby precluding a landlord fromseeking rent after the eviction from a former, evicted tenant unless the lease specifically providesthat the tenant remains liable for rent following an eviction (see Holy Props. v ColeProds., 87 NY2d 130, 134 [1995]). However, "[a] clear contractual provision limitingdamages is enforceable absent a special relationship between the parties, a statutory prohibition,or an overriding public policy" (Schietinger v Tauscher Cronacher Professional Engrs., P.C., 40 AD3d954, 955 [2007]).
Here, the lease provided that the tenant would remain liable for rent even in the event thatthe lease was terminated by summary proceedings. However, a rider to the lease, the provisionsof which controlled in the event of a conflict between its provisions and those contained in thepreprinted portion of the lease, stated that, as inducement for the landlord to lease the premises,Gandley and Murphy personally guaranteed payment of an amount equal to one year's rent in theevent of a default. Thus, while the parties to the lease agreed to extend the liability of the tenantwith respect to the payment of rent posteviction, they also agreed to limit that liability to anamount equal to rent for a period of one year. Since there was neither a special relationshipbetween the parties, nor any statutory prohibition or any overriding public policy, the clearcontractual provision in the guarantee limiting damages is enforceable (id.).
The Supreme Court erroneously determined that the plaintiff did not meet his burden ofestablishing his prima facie entitlement to judgment as a matter of law on the issue of damagesas against MGM, Gandley, and Murphy. A contract will be interpreted in accordance with theintent of the parties as expressed in the language of the agreement (see Greenfield v PhillesRecords, 98 NY2d 562, 569 [2002]; W.W.W. Assoc. v Giancontieri, 77 NY2d 157[1990]). A written agreement that is complete, clear, and unambiguous on its face must beenforced according to the plain meaning of [*3]its terms (see South Rd. Assoc., LLC v InternationalBus. Machs. Corp., 4 NY3d 272, 277 [2005]). Therefore, the plaintiff was entitled tosummary judgment on the issue of damages in the sum of $156,000 as against MGM, Gandley,and Murphy. While the plaintiff sought to recover damages in the sum of $949,000 from MGM,the clear, unambiguous terms of the guarantee capped the rent which could be recovered in theevent of a breach of the lease at the sum of $156,000, i.e., one year's rent (see Schietinger vTauscher Cronacher Professional Engrs., P.C., 40 AD3d at 955). Moreover, we note that theplaintiff, in his brief, concedes that Gandley and Murphy are entitled to a credit in the sum of$26,000 against the sum of $156,000 due under the guarantees.
In opposition, MGM, Gandley, and Murphy, inter alia, asserted that they were entitled tocertain offsets, which the Supreme Court determined raised a triable issue of fact. We disagree.The unambiguous guarantee did not allow for the consideration of any offsets against theguaranteed sum of $156,000, and the Supreme Court erred in inserting extraneous terms ormodifying the language of the guarantee (see Bailey v Fish & Neave, 8 NY3d 523, 528 [2007]; Vermont Teddy Bear Co. v 538 MadisonRealty Co., 1 NY3d 470, 475 [2004]).
The Supreme Court also erred in denying that branch of the plaintiff's motion which was forsummary judgment on the issue of liability against AMLG and Noto on the ground that theplaintiff failed to annex a copy of their answer to his motion papers, as the record shows that theplaintiff did, in fact, annex a copy of AMLG and Noto's answer to his motion papers. Therefore,the Supreme Court should have granted that branch of the motion as against AMLG and Notoinasmuch as the plaintiff established, prima facie, his entitlement to judgment as a matter of lawby demonstrating AMLG and Noto's breach of the lease and Noto's liability on the guarantee(see CPLR 3212 [b]). Accordingly, the plaintiff is entitled to recover an award in thesum of $949,000 against AMLG and Noto, representing the full amount of rent due for thereminder of the term of the lease. Prudenti, P.J., Skelos, Covello and Austin, JJ., concur.