605 Fifth Property Owner, LLC v. Abasic, S.A.

Background

605 Fifth Property Owner, LLC sued Abasic, S.A. to enforce an unconditional guarantee. Under that guarantee, Abasic guaranteed the obligations of its subsidiary, NTS W. USA Corp., under a commercial lease. NTS had planned to operate a retail outlet at the leased property, but it was unable to operate profitably during the COVID-19 pandemic, later declared bankruptcy, and made no rental payments.

During NTS’s bankruptcy, NTS rejected the lease and sought to avoid its lease obligations in a related bankruptcy proceeding. The Bankruptcy Court ruled against NTS, and that ruling was affirmed by the District Court and then by the Second Circuit.

The present case followed two earlier actions between Owner and Abasic concerning the same lease and guarantee. In the first action, the court granted summary judgment to Owner, ruling that the guarantee was enforceable, had not been discharged in NTS’s bankruptcy, and was not defeated by Abasic’s other defenses. In the second action, the court again granted Owner’s summary-judgment motion and allowed an amendment seeking additional damages. Judgments in both earlier actions were on appeal and the appeals had been consolidated.

This third action sought damages that accrued after Owner’s summary-judgment motion in the second action was fully submitted. Abasic asserted the same defenses it had raised earlier. In opposing Owner’s motion, however, Abasic did not dispute its liability under the guarantee; it argued only that the case should be paused until the earlier appeals were resolved.

The Court’s Rulings

Stay. The court denied Abasic’s request to stay the case. It found that Abasic had not sufficiently explained why this request was stronger than its four earlier unsuccessful requests for a stay. The court also concluded that Owner had an interest in recovering the remaining amounts owed, that Abasic’s interests included avoiding another appeal and delaying payment, that judicial efficiency favored resolving the case because it presented issues already litigated, and that the public had an interest in efficient enforcement of unconditional guarantees.

Amendment. The court deemed the complaint amended to allege damages for unpaid rent through the expiration of the lease on March 31, 2023. The court reasoned that the two earlier actions had put Abasic on notice of its continuing liability and that Abasic did not argue the amendment would cause prejudice.

Summary judgment. Summary judgment is a ruling entered when the material facts and applicable law show that a party is entitled to judgment without a trial. The court granted summary judgment to Owner on its breach-of-contract and attorney’s-fee claims and on each of Abasic’s defenses. The court relied on the reasoning from its prior opinions and noted that Abasic had not identified any unresolved issue or disputed Owner’s arguments in this case.

Disposition

The court granted Owner’s motion to amend its complaint and for summary judgment on its claims and Abasic’s defenses. It ruled that Abasic was liable for the outstanding amounts due under the guarantee, attorney’s fees, and legal costs. The court directed Owner to submit a proposed judgment by June 9, 2023.