Opinion
081507/2008.
Decided November 25, 2008.
Lipsig Price, PLLC, New York, NY, for Petitioner.
Alonso, Andalkar Kahn, P.C., New York, NY, for Respondent.
In this commercial holdover proceeding, petitioner 200 West 81st Street Company, LLC ("200 West") moves for summary judgment on its petition. Respondent Pensu Corp. d/b/a Roppongi Restaurant ("Pensu") cross moves to dismiss the petition.
Pursuant to a lease agreement dated August 1, 1998 (the "Lease"), 200 West leased the ground floor store space and basement at 434 Amsterdam Avenue (the "Premises") to Pensu. The Lease term was for ten years, ending on July 31, 2008, and the Premises were to be used as a restaurant. Pursuant to the supplemental rider to the Lease, also dated August 1, 1998, "(t)enant may extend the term of this Lease for an additional period of two (2) years by written notice to Landlord given not less than ten (10) months prior to the commencement of said extension period, on the same terms and conditions as set forth herein."
Performance under the Lease was guaranteed by Suan Lee Cheah ("Cheah") in a written guaranty dated August 5, 1998 (the "Guaranty"). In the Guaranty, Cheah agreed:
that this guaranty shall be a continuing guaranty and that the validity of this Guaranty and the obligations and liability of the Guarantor hereunder shall in no way be terminated, affected, diminished or impaired by reason of . . . d) any renewal or extension of the Lease or any modification thereof, whether pursuant to the Lease or by subsequent agreement of Landlord and Tenant.
By letter dated April 18, 2007, Pensu informed 200 West that it intended to exercise its option of extending the Lease term for an additional two years. By letter dated July 31, 2008, Cheah informed 200 West that the Guaranty ended with the expiration of the Lease term on July 31, 2008 and that Cheah had demanded surrender of the Premises from Pensu.
In or about August 2008, 200 West commenced this proceeding alleging that Pensu unlawfully remained in possession of the Premises after expiration of the Lease term on July 31, 2008. 200 West now moves for summary judgment on its petition, arguing that the tenancy has expired because Pensu did not extend the Lease term under the same terms and conditions as the original Lease. Specifically, 200 West alleges that Cheah expressly terminated the Guaranty at the conclusion of the original Lease term, and thus any Lease term extension would lack the original guarantor and would be invalid because it would not be under the same terms and conditions as the original Lease.
Pensu cross moves to dismiss the petition, arguing that it properly exercised its option to extend the Lease term as set forth in the Lease. Pensu maintains that Cheah was not permitted to unilaterally terminate the Guaranty and is not relieved of the obligations under the Lease. Rather, the Guaranty extended to the entire period of the Lease, including any renewal periods and extensions. Thus, 200 West may not rely upon Cheah's ineffective attempt to limit the Guaranty in refusing to honor Pensu's exercise of its option to extend the Lease.
Discussion
Pursuant to the terms of the Lease, Pensu properly sought to extend the Lease term by written notice in its letter dated April 18, 2007. There is no allegation that the letter was never received or that Pensu had defaulted in its rent payments or any other obligations under the Lease. The only issue here is whether 200 West is entitled to rely upon Cheah's attempt to terminate the Guaranty in refusing to honor Pensu's exercise of the Lease extension.
Contrary to 200 West's contention, Cheah's letter dated July 31, 2008 did not serve as a cancellation of the Guaranty. The Guaranty specifically provided, in relevant part, "(g)uarantor hereby expressly agrees that this Guaranty shall be a continuing guaranty and that the validity of this Guaranty and the obligations and liability of Guarantor hereunder shall in no way be terminated, affected, diminished or impaired by reason of . . . (d) any renewal or extension of the Lease or any modification thereof, whether pursuant to the Lease or by subsequent agreement of Landlord and Tenant." The Guaranty was to extend through the surrender date of the Premises.
Here, this was a commercial lease agreement where the Lease was renewable for only a fixed period, i.e. two years. Because the potential scope of the guarantor's obligation was clearly defined at the outset, the guaranty of payment would continue into the renewal term. See Jones Brindisi, Inc. v. Breslaw, 250 NY 147 (1928); Levine v. Segal, 174 Misc 2d 998 (NY App. Term 1997) affd 256 AD2d 199 (1st Dept. 1998).
In contrast, in cases involving rent stabilization leases, in which an infinite amount of renewal leases can be offered thus setting up the possibility of a guaranty of indefinite duration, courts have held that the guarantor may revoke and end its future liability by reasonable notice to the principal. See generally Levine v. Segal, 174 Misc 2d 998 (NY App. Term 1997) affd 256 AD2d 199 (1st Dept. 1998); 1374 Boston Rd., LP v. Fountain House, 8 Misc 3d 1020A (NY Civ. Ct. 2005) 131 Seventh Ave. S. LLC v. Young , 6 Misc 3d 804 (NY Civ. Ct. 2004). Here, even if Cheah was permitted to revoke the guaranty, Cheah would have been obligated to do so with "reasonable notice" to 200 West. Cheah gave notice to 200 West on the last day of original Lease term, notice which can not be considered reasonable. See 131 Seventh Ave. S. LLC v. Young , 6 Misc 3d 804 (NY Civ. Ct. 2004).
Pensu properly exercised its option to extend the Lease for an additional two years cf. Trump Management v. Tuberman, 163 Misc 2d 921 (NY Civ. Ct. 1995), and 200 West was not entitled to rely upon Cheah's invalid attempt to limit the term of the Guaranty. Therefore, 200 West's motion for summary judgment on its petition is denied and Pensu's motion to dismiss the petition is granted
In accordance with the foregoing, it is
ORDERED that petitioner 200 West 81st Street Company, LLC's motion for summary judgment on its petition is denied; and it is further
ORDERED that respondent Pensu Corp. d/b/a Roppongi Restaurant's cross motion to dismiss the petition is granted, the petition is dismissed, and the Clerk of the Court is directed to enter judgment accordingly.
This constitutes the decision and order of the Court.