COVID Eviction Ban Does Not Bar Action for Money Judgment Against Corporate Tenant

On January 13, 2021, Justice Grays of the Queens County Commercial Division issued a decision in Able Motor Cars Corp. v. Three Bros. Chinese Cuisine Inc., 2021 NY Slip Op. 30716(U), holding that city and state COVID eviction bans did not bar an action for a money judgment against a corporate tenant, explaining:

Local Law 55 has no application to the defendant tenant. Defendant Three Brothers is the tenant, is not a natural person, and is not the guarantor of its own obligations under the lease.

Local Law 55 does apply to defendant Xing Wu Mei, who is a natural person, not the tenant, and the guarantor of defendant Three Brothers' obligations under the commercial lease. There is no merit in the plaintiffs argument that Local Law 55 is inapplicable to the instant case because the lease and the guarantee are two separate documents. Although Local Law 55 states a provision in a commercial lease or other rental agreement, the law cannot be read as strictly and literally as the plaintiff urges without frustrating the City Council's intent. Moreover, the lease and the guarantee appear to have been signed on the same day and were notarized on the same day (September 24, 2019). Generally, the rule is that separate contracts relating to the same subject matter and executed simultaneously by the same parties may be construed as one agreement. To determine whether contracts are separable or entire, the primary standard is the intent manifested, viewed in the surrounding circumstances. In the case at bar, the lease and the guarantee were both signed by defendant Mei, though in different capacities, apparently at the same time, and notarized at the same time, and the guarantee states that it was given as an inducement to the landlord to enter into the lease. Under all of the circumstances of this case, the lease and the guarantee should be treated as one document. Finally, in view of the fact that the plaintiff was paid 50% of the rent due for March, 2020 pursuant to an agreement among the parties, the Court finds, in order to advance the remedial purposes of the law, that its requirement that the default had to have occurred after March 7, 2020 was met for that month.

Thus guarantee given by defendant Mei cannot be enforced against him at this time, and the Complaint against him fails to state a cause of action.
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Executive Order No. 202.28 provides in relevant part: "There shall be no initiation of a proceeding of an eviction of any residential or commercial tenant, for nonpayment of rent facing financial hardship due to the COVID-19 pandemic.

The parties have not cited any cases or other authority construing Executive Order 202.28, and the court's own research has found only cases concerning the Executive Order that deal with issues not raised by the parties before this court.

Executive Order 202.28, though not a statute, should be construed in a similar manner. The defendant tenant did not argue legislative intent in an attempt to bring an action for a nonpossessory money judgment within the scope of the Executive Order, let alone submit any materials which would support such an argument. Moreover, a Court must interpret unambiguous language in a statute to give effect to its plain meaning. Executive Order 202.28 by its plain terms applies to evictions, and it does not mention non-possessory money judgments. Though this Court is mindful of the defendant tenant's difficult circumstances, absent ambiguity the courts may not resort to rules of construction to alter the scope and application of a statute because no such rule gives the court discretion to declare the intent of the law when the words are unequivocal.

The plaintiff correctly argues that the Executive Order does not apply to the case at bar because it is an action for a non-possessory money judgment based on breach of contract, rather than a proceeding to regain possession of the premises brought pursuant to RPAPL Article 7.

Thus, Local Law 55 bars this action against defendant Mei, but neither Local Law 55 nor Executive Order 202.28 bars this action against the defendant tenant.

We frequently litigate disputes over the sale or leasing of commercial property. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you are involved in a dispute regarding a commercial real estate transaction.