| Courthouse Corporate Ctr. LLC v Schulman |
| 2010 NY Slip Op 04728 [74 AD3d 725] |
| June 1, 2010 |
| Appellate Division, Second Department |
| Courthouse Corporate Center LLC, Respondent, v RichardSchulman et al., Appellants. |
—[*1] Bauman Katz & Grill, LLP, New York, N.Y. (Daniel E. Katz and David M. Grill ofcounsel), for respondent.
In an action, inter alia, to recover damages for breach of a commercial lease, the defendantsappeal, as limited by their brief, from so much of an order of the Supreme Court, Suffolk County(Gazzillo, J.), dated February 23, 2009, as granted those branches of the plaintiff's motion whichwere pursuant to CPLR 3211 (b) to dismiss the affirmative defenses of collateral estoppel and resjudicata, and denied their cross motion for summary judgment dismissing the first and secondcauses of action based on the doctrines of collateral estoppel and res judicata, and for summaryjudgment dismissing the complaint insofar as asserted against the defendant Richard Schulman,individually and doing business as LAN Associates.
Ordered that the order is affirmed insofar as appealed from, with costs.
In October 2001 the plaintiff, Courthouse Corporate Center LLC (hereinafter CCC), aslessor, entered into a commercial lease with the defendant LAN Associates (hereinafter LAN), aslessee. The lease was for a term of seven years and two months, beginning in December 2001and ending in January 2009. The individual defendant, Richard Schulman, signed the lease as"Richard Schulman, Pres."
During the term of the lease, disputes arose over conditions in the premises and LAN'salleged nonpayment of rent. LAN commenced an action against CCC seeking, inter alia, aYellowstone injunction (see First Natl. Stores v Yellowstone Shopping Ctr., 21NY2d 630 [1968]). Thereafter, CCC commenced a holdover proceeding and, eventually, theparties to the lease stipulated, among other things, that LAN would vacate the premises. CCCthen commenced this action against LAN, as well as against Schulman, individually and doingbusiness as LAN, inter alia, seeking damages for breach of the lease. CCC alleged that Schulmanwas individually liable on the ground that LAN was not an entity licensed to conduct business inNew York State and, alternatively, under the doctrine of piercing the corporate veil. In its firstand second causes of action, CCC sought to recover unpaid rent for the period of April 2005through March 2007, as well as an attorneys' fee in connection with its attempts to collect thatrent. In their answer, the defendants raised the affirmative defenses of res judicata and collateralestoppel with respect to those causes of [*2]action, and LAN alsoasserted a counterclaim against CCC.
Eventually, CCC moved pursuant to CPLR 3211 (b) to dismiss those affirmative defensesand LAN's counterclaim, and the defendants cross-moved for summary judgment dismissing thefirst and second causes of action on the basis of those defenses and dismissing the complaintinsofar as asserted against Schulman individually and doing business as LAN. The SupremeCourt granted CCC's motion to dismiss the affirmative defenses and the counterclaim and deniedthe defendants' cross motion. The defendants appeal from so much of the order as granted thosebranches of CCC's motion which were to dismiss the defendants' affirmative defenses and deniedtheir cross motion. We affirm the order insofar as appealed from.
Pursuant to CPLR 3211 (b), a party may move for judgment dismissing one or moredefenses on the ground that a defense is not stated or has no merit. "In reviewing a motion todismiss an affirmative defense, the court must liberally construe the pleadings in favor of theparty asserting the defense and give that party the benefit of every reasonable inference" (Fireman's Fund Ins. Co. v Farrell, 57AD3d 721, 723 [2008]; see Butlerv Catinella, 58 AD3d 145, 147-148 [2008]). Here, the Supreme Court properly grantedthose branches of CCC's motion which were pursuant to CPLR 3211 (b) to dismiss theaffirmative defenses of collateral estoppel and res judicata and properly denied those branches ofthe defendants' cross motion which were for summary judgment dismissing the first and secondcauses of action based on those affirmative defenses. CCC established, as a matter of law, thatres judicata and collateral estoppel did not apply because the defendants did not establish that theissue of their payment of rent for the disputed period was actually decided in the prior actions(see Mahler v Campagna, 60 AD3d1009, 1011 [2009]).
The Supreme Court also properly denied that branch of the defendants' cross motion whichwas for summary judgment dismissing the complaint insofar as asserted against Schulmanindividually and doing business as LAN Associates. As the moving party, the defendants had theburden of establishing their prima facie entitlement to such relief (see Zuckerman v City ofNew York, 49 NY2d 557, 562 [1980]; Crespo v Pucciarelli, 21 AD3d 1048, 1049 [2005]). " 'The defenseof agency in avoidance of contractual liability is an affirmative defense and the burden ofestablishing the disclosure of the agency relationship and the corporate existence and identity ofthe principal is upon he who asserts an agency relationship' " (12 Lord, Williston on Contracts§ 35:35, at 359 [4th ed], quoting Brown v Owen Litho Serv., Inc., 179 Ind App198, 199, 384 NE2d 1132, 1133 [2d Dist 1979]; see Ingordo v Square Plus OperatingCorp., 276 AD2d 528 [2000]). When an agent signs on behalf of a principal, but the identityor legal status of the principal is not disclosed, the agent may be held individually liable on thecontract (see Kwangjin Song v MGMDev., LLC, 30 AD3d 1040 [2006]; Continental Manor II CondominiumHomeowners Assn. v Depew, 277 AD2d 340 [2000]; New England Mar. Contrs. vMartin, 156 AD2d 804, 804-805 [1989]; 12 Lord, Williston on Contracts § 35:35, at359 [4th ed]). In support of that branch of their cross motion which was for summary judgmentdismissing the complaint insofar as asserted against Schulman individually and doing business asLAN Associates, the defendants failed to establish, prima facie, that Schulman disclosed thelegal status of LAN Associates when he signed the lease. Consequently, the cross motion wasproperly denied, without regard to the adequacy of the plaintiff's papers in opposition (seeWinegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]).
In light of our determination, we need not reach the parties' remaining contentions. Fisher,J.P., Santucci, Eng and Chambers, JJ., concur.