MEMORANDUM OF LAW IN SUPPORT OF DEFENDANT S CROSS-MOTION FOR SUMMARY JUDGMENT AND IN OPPOSITION TO PLAINTIFF S MOTION FOR SUMMARY JUDGMENT

Transcription

1 FILED: NEW YORK COUNTY CLERK 03/23/ :12 PM INDEX NO /2013 NYSCEF DOC. NO. 29 RECEIVED NYSCEF: 03/23/2016 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK x DDR SOUTHEAST JONES BRIDGE, L.L.C. Plaintiff, Index No.: /13 -against- ANA RESTREPO, Defendant x MEMORANDUM OF LAW IN SUPPORT OF DEFENDANT S CROSS-MOTION FOR SUMMARY JUDGMENT AND IN OPPOSITION TO PLAINTIFF S MOTION FOR SUMMARY JUDGMENT BALLON STOLL BADER & NADLER, P.C. Attorneys for Defendant Office and Post Office Address, Telephone 729 Seventh Avenue - 17 th Floor New York, New York Tel of 11

2 TABLE OF CONTENTS PAGE TABLE OF AUTHORITIES..iii PRELIMINARY STATEMENT.1 STATEMENT OF FACTS..2 ARGUMENT...2 I. Georgia Law Applies Here 2 II. Standard on a Motion for Summary Judgment..3 A. Summary Judgment Under Georgia Law....3 B. Summary Judgment Under New York Law 3 III. Defendant is Entitled to Summary Judgment as Plaintiff Has Failed to State an Actionable Claim.4 A. Where There Is No Underlying Liability, Guarantor Cannot Be Held Liable...4 CONCLUSION 6 ii 2 of 11

3 TABLE OF AUTHORITIES New York Cases PAGE Alvarez v. Prospect Hosp. 68 N.Y.2d 320 (1986)...3 Esteve v. Abad 271 A.D. 725 (1st Dep t 1947)..4 Greenfield v. Philles Records 98 NY2d 562, 780 NE2d 166, 750 NYS2d 565 (2002).2 Pearson v. Dix McBride, LLC 63 A.D.3d 895 (2d Dep t 2009)...4 R/S Assoc. v. New York Job Dev. Auth. 98 NY2d 29, 771 NE2d 240, 744 NYS2d 358 (2002)..2 Welsbach Elec. Corp. v. MasTec N. Am., Inc. 7 N.Y.3d 624 (2006) 2 W.W.W. Assoc. v Giancontieri 77 NY2d 157, 566 NE2d 639, 565 NYS2d 440 (1990).2 Zuckerman v. City of New York 49 N.Y.2d 557 (1980)...4 Georgia Cases Fowler v. Smith 237 Ga. App. 841 (1999)..3 Hicks v. Heard 286 Ga. 864 (Ga. 2010).3 Holiday Inns v. Newton 157 Ga. App. 436 (Ga. 1981) 3 Lau s Corp. v. Haskins 261 Ga. 491 (Ga. 1991).3 Lestorti v. DeLeo 4 A.3d 269 (Conn. 2010).5 McWhirter Material Handling Co. v. Ga. Paper Stock Co. iii 3 of 11

4 118 Ga. App. 582 (1968).5 State Dep t of Corr. v. Developers Sur. & Indem. Co. 324 Ga. App. 371 (Ga. Ct. App. 2013) 5 Illinois Cases JPMorgan Chase Bank, N.A. v. East-West Logistics, L.L.C IL App (Ill. App. Ct. 2014)..5 Hensler v. Busey Bank 231 Ill. App. 3d 920 (Ill. App. Ct. 1992)..5 Arizona Cases Westside Forest Prods. v. Steven s Custom, Inc Ariz. App. Unpub. LEXIS 381 (Ariz. Ct. App. 2008)..5 Texas Cases 84 Lumber Co., L.P. v. Powers 393 S.W.3d 299 (Tex. App. 2012) 5 Treatises See Restatement (Third) of Suretyship and Guaranty, 43.4, 5 Restatement (Third) of Suretyship and Guaranty, 50, cmt. d 5 Statutes CPLR 3212(b) 3, 4 Ga. L. 11-2A , 5 O.C.G.A O.C.G.A iv 4 of 11

5 PRELIMINARY STATEMENT Defendant Ana Restrepo ( Defendant ) respectfully submits this memorandum of law in support of Defendant s Cross-Motion for Summary Judgment (the Cross-Motion ) and in opposition to Plaintiff s Motion for Summary Judgment (the Motion ). Defendant seeks summary judgment on all claims asserted by Plaintiff DDR Southeast Jones Bridge, L.L.C. s ( Plaintiff ) as Plaintiff is not entitled to judgment against Defendant as a matter of law. This case arises out of a commercial lease (the Lease ) entered into between Plaintiff, as landlord, and Mish Mish LLC (the Restaurant ), as tenant, for certain premises located in the Jones Bridge Square shopping center in Norcross, Georgia (the Premises ), which is now extinguished. In connection with the Lease, Plaintiff and Defendant executed a purported personal guaranty agreement (the Guaranty ) under which Defendant allegedly guaranteed the Restaurant s performance of its obligations under the Lease. As will be discussed in detail below, Plaintiff has no actionable claim against the Restaurant and, as a result, Plaintiff is precluded from seeking recompense from Defendant. Accordingly, Defendant s Cross-Motion should be granted, Plaintiff s Motion should be denied, and Plaintiff s claims should be dismissed in their entirety. 1 5 of 11

6 STATEMENT OF FACTS To avoid unnecessary repetition, the Defendant respectfully refers the Court to the annexed affirmation of Michael J Sheppeard (the Sheppeard Affirmation ) for a recitation of relevant facts. The Sheppeard Affirmation and the exhibits attached thereto are incorporated herein as if fully set forth. Abbreviations used therein will be used herein for consistency. ARGUMENT I. Georgia Law Applies Here Contrary to those assumptions made in Plaintiff s Motion, New York law should not apply to the consideration of the Motion and Cross-Motion. The final paragraph of the Guaranty provides that it shall be governed by and construed in accordance with the laws of the State of Georgia. Exhibit D to the Sheppeard Affirmation, Guaranty, p. 3. Furthermore, courts will enforce a choice-of-law clause so long as the chosen law bears a reasonable relationship to the parties or the transaction. Welsbach Elec. Corp. v. MasTec N. Am., Inc., 7 N.Y.3d 624, 629 (2006) (citation omitted). Courts will generally enforce such provisions as agreements should be construed to effectuate the intent of the parties. Id. (citing Greenfield v. Philles Records, 98 NY2d 562, 569, 780 NE2d 166, 750 NYS2d 565 [2002], R/S Assoc. v. New York Job Dev. Auth., 98 NY2d 29, 32, 771 NE2d 240, 744 NYS2d 358 [2002], W.W.W. Assoc. v Giancontieri, 77 NY2d 157, 162, 566 NE2d 639, 565 NYS2d 440 [1990]). Here, Plaintiff alleges that the Lease was entered into between Plaintiff and the Restaurant for the Premises located in Jones Bridge Square, a shopping center in Norcross, Georgia. See Exhibit B to the Sheppeard Affirmation, Complaint. Furthermore, the Guaranty unambiguously provides for the application of Georgia law on its face. See Exhibit D to the Sheppeard Affirmation, Guaranty, p. 3. As such, Defendant submits that Georgia law bears a reasonable relationship to 2 6 of 11

7 the parties or transaction here and should apply to the Court s consideration of the Motion and Cross-Motion. II. Standard on a Motion for Summary Judgment A. Summary Judgment Under Georgia Law To prevail at the summary judgment stage under O.C.G.A , the moving party must demonstrate that there is no genuine issue of material fact and that the undisputed facts, viewed in the light most favorable to the nonmoving party, warrant judgment as a matter of law. See O.C.G.A (c); Lau s Corp. v. Haskins, 261 Ga. 491, 491 (Ga. 1991). The movant must make this showing by establishing that the documents, affidavits, depositions and other evidence in the record reveal that there is no evidence sufficient to create a jury issue on at least one essential element of plaintiff s claim. Lau s Corp. v. Haskins, 261 Ga. at 491 (citing Holiday Inns v. Newton, 157 Ga. App. 436 (Ga. 1981)). Where more than one inference can be drawn from the evidence, the duty of solving the mystery should be placed upon the jury and not on the trial judge, and summary judgment should be denied. Hicks v. Heard, 286 Ga. 864 (Ga. 2010). At summary judgment, the court can neither resolve facts nor reconcile the issues, but can only determine whether there a triable issue exists. See Fowler v. Smith, 237 Ga. App. 841, 848 (1999). B. Summary Judgment Under New York Law 1 The movant seeking summary judgment under CPLR 3212(b) must make a prima facie showing of entitlement to judgment as a matter of law by demonstrating the absence of any material issues of fact. See Alvarez v. Prospect Hosp., 68 N.Y.2d 320, 324 (1986). For purposes 1 Defendant submits that Georgia law should apply here, due to the choice of law clause in the Guaranty (See Exhibit D to the Sheppeard Affirmation, p. 3) and the location of the Premises in this case (Norcross, Georgia). However, out of an abundance of caution, Defendant recites the following standard for summary judgment under New York Law. 3 7 of 11

8 of summary judgment, issue finding, rather than issue determination, is the key to the procedure. See Esteve v. Abad, 271 A.D. 725, 727 (1st Dep t 1947). If the movant satisfies its burden, then the opposing party must establish, through admissible evidence, proof of the existence of material issues of fact which requires a trial. Zuckerman v. City of New York, 49 N.Y.2d 557, 562 (1980). All facts and evidence must be viewed in the light most favorable to the non-movant. CPLR 3212(b); Pearson v. Dix McBride, LLC, 63 A.D.3d 895 (2d Dep t 2009). III. Defendant is Entitled to Summary Judgment as Plaintiff Has Failed to State an Actionable Claim Under Georgia law, an action for default under a lease must be commenced within four years of the default. Ga. L. 11-2A-506. As such, where a lease is governed by Georgia law (as it is here) a landlord suing a tenant must do such within four years of the breach of that lease or risk forfeiting its rights to recover on such lease. In this case, Plaintiff sued Defendant on the Guaranty on 07 March 2013, more than four years after any purported default occurred under the Lease on 01 November See Exhibit B to Sheppeard Affirmation, Complaint; Exhibit E to Sheppeard Affirmation, Affidavit of Renee B. Weiss in Support of Motion, p. 5. As such, the obligation underlying the Guaranty at issue in this case was rendered unenforceable against the primary obligor (the Restaurant) at least four months prior to the filing of this case. Had the Plaintiff timely sued the Restaurant, obtained a judgment against the Restaurant and then sought to collect the amount of such judgment against the Defendant, the Plaintiff might have asserted a viable claim against Defendant here. However, the Plaintiff did not take such action or even sue the Guarantor within four years after the purported breach of the Lease. Instead, the Plaintiff waited over four years until its claims against the Restaurant had expired and then sought to recover directly against the Defendant guarantor based upon the Guaranty. Defendant submits that, since the underlying obligation for which Plaintiff seeks recompense was 4 8 of 11

9 extinguished under Georgia law prior to the filing of this action, Plaintiff cannot assert a viable claim here. A. Where There Is No Underlying Liability, Guarantor Cannot Be Held Liable Generally, delay by a creditor to take action against the principal obligor will discharge a secondary obligor from liability on the underlying debt. See Restatement (Third) of Suretyship and Guaranty, 43. Under Georgia statutory law, a secondary obligor s liability is extinguished if the underlying obligation becomes extinct. See O.C.G.A (when a principal s obligation becomes extinct for any reason, the obligation of a guarantor or surety likewise becomes extinct)(emphasis added); see also State Dep t of Corr. v. Developers Sur. & Indem. Co., 324 Ga. App. 371, 379 (Ga. Ct. App. 2013) (holding that where a primary obligor is no longer liable, the secondary obligor cannot be held liable); McWhirter Material Handling Co. v. Ga. Paper Stock Co., 118 Ga. App. 582, 584 (1968) (same). Furthermore, where an underlying obligation becomes barred, the obligee cannot pursue relief against the guarantor, as there is no claim to be asserted. See Restatement (Third) of Suretyship and Guaranty, 43; accord Lestorti v. DeLeo, 4 A.3d 269, 280 (Conn. 2010) ( [I]f a creditor allows the statute of limitations to expire as to the principal obligor, the secondary obligor s rights and duties with respect to the... creditor are the same as if... the creditor has released the principal obligor from its duties. [emphasis added]); Westside Forest Prods. v. Steven s Custom, Inc., 2008 Ariz. App. Unpub. LEXIS 381, 10 (Ariz. Ct. App. 2008); JPMorgan Chase Bank, N.A. v. East-West Logistics, L.L.C., 2014 IL App (Ill. App. Ct. 2014) (articulating general rule that a guarantor s liability is no greater than the principal debtor, and if the principal is exempt from liability so too is the guarantor) (citing Hensler v. Busey Bank, 231 Ill. App. 3d 920 [Ill. App. Ct. 1992]); 84 Lumber Co., L.P. v. Powers, 393 S.W.3d 299, 308 (Tex. App. 2012); see also Restatement (Third) of Suretyship and Guaranty, 50, cmt. d ( The 5 9 of 11

10 failure of the obligee to pursue either the principal obligor or the secondary obligor until after the expiration of the statute of limitations governing the underlying obligation may result in an impairment of recourse. ). As explained above, Plaintiff failed to seek recourse against the Restaurant within the applicable time imposed under Ga. L. 11-2A-506. As such, Plaintiff permitted the underlying obligation of the Restaurant to become extinguished, thereby eliminating any actionable claims against Defendant. Had the Plaintiff protected its rights herein and sued the Restaurant within the four year statute of limitations for breach of a lease agreement in Georgia, then maybe Plaintiff could have asserted an actionable claim herein. However, Plaintiff permitted its rights to expire under the Lease and, without a preservation of those rights, Plaintiff cannot recover against the Defendant. Therefore, Plaintiff has failed to state an actionable claim against Defendant, and Defendant should be granted summary judgment here. CONCLUSION For the foregoing reasons, Defendant respectfully requests that the Court grant Defendant s Cross-Motion for Summary Judgment and deny Plaintiff s Motion for Summary Judgment, along with such other and further relief as the Court deems appropriate of 11

11 Dated: New York, New York 23 March 2016 Respectfully submitted, BALLON STOLL BADER & NADLER, P.C. /s Michael J Sheppeard By: Michael J Sheppeard Attorneys for Defendant Ana Restrepo 729 Seventh Avenue 17th Floor New York, New York Tel: Fax: of 11