First Department Affirms Dismissal Of Guarantors Pursuant to Administrative Code of the City of New York § 22-1005

On November 30, 2021, in 3^rd and 60^th Associates Sub LLC v. Third Avenue M&I, LLC, 2021 NY Slip Op 06647, the First Department affirmed a Decision and Order of Justice Andrew S. Borrok, which granted defendants’ motion to dismiss the amended complaint as against the individual defendants-guarantors of a lease for a restaurant. The Court explained:

The motion court properly dismissed the amended complaint against the individual defendants-guarantors under Administrative Code of the City of New York § 22-1005, which provides immunity from the enforcement of certain commercial lease guaranties where personal liability arose (1) as a result of the pandemic-related executive orders affecting the tenant's business and (2) fell within the statutory period of March 7, 2020 to June 30, 2021.

The First Department concluded the second requirement of § 22-1005 (the “Guaranty Law”) was satisfied based on a stipulation entered into among the parties which required a three-business-day cure period following delivery of a notice of default. Because the notice of default was sent on Friday March 6, 2020, the Court reasoned the cure period, and thus the default, could not have begun to run any sooner than Monday, March 9, 2020.

The attorneys at Schlam Stone & Dolan frequently litigate commercial landlord-tenant disputes, including the Guaranty Law. Please contact the Commercial Division Blog editors at commercialdivisionblog@schlamstone.com if you or a client have questions concerning such disputes or the Guaranty Law.