Cuculich v. Rigos
- Sarah Cave
- 1:21-cv-06752
- U.S. District Court · Southern District of New York
- 26
In Cuculich v. Rigos, Judge Cave granted in part and denied in part summary judgment, finding Rigos liable but ordering an inquest to determine damages.
The ruling establishes John Z. Rigos’s liability to Steven A. Cuculich, as trustee of the Trust, for breaching the commercial-lease guaranty. The amount owed remains undetermined pending a damages inquest.
What happened
In Cuculich v. Rigos, Steven A. Cuculich, acting as trustee, sued John Z. Rigos over an alleged failure to honor a guaranty of a commercial lease. Rigos did not dispute that he failed to perform, but argued that a New York City COVID-19 law prevented enforcement of the guaranty for certain rent obligations.
The court ruled that the guaranty covered the tenant’s unpaid rent and that Rigos was liable. It rejected Rigos’s argument because the trustee sought rent that became due before the law’s protected period, and because the evidence showed that the tenant operated a meal-delivery business rather than a restaurant or bar serving customers on the premises.
Judge Sarah L. Cave granted in part and denied in part the trustee’s summary-judgment motion. She granted summary judgment on Rigos’s liability but denied summary judgment on the amount of damages because the record contained conflicting calculations and did not resolve how tenant payments should be credited. The court ordered an inquest to determine damages, prejudgment interest, and attorneys’ fees.
The detailed version
- Cuculich v. Rigos · No. 1:21-cv-06752
- Sarah Cave
- Mar. 19, 2024
Background
Steven A. Cuculich, as trustee of Inter Vivos Tr II FBO The Cuculich Family, sued John Z. Rigos for allegedly breaching a guaranty connected to a commercial lease. The lease covered premises at 45-13 Broadway in Astoria, New York, and was entered into between the Trust and FlavorworksTruck LLC doing business as The Delicious Life by Rocco DiSpirito. Rigos guaranteed the tenant’s payment and performance obligations, subject to a contractual limit based on rent due during the 12 months following the default.
The trustee asserted that the tenant began failing to pay rent and maintain required insurance on March 1, 2019. The trustee sought to hold Rigos responsible for rent from March 2019 through February 2020, before the period protected by New York City’s commercial-guaranty law, which ran from March 7, 2020 through June 30, 2021. The tenant made six payments totaling $88,250 during that earlier period, but the trustee claimed that additional rent remained unpaid.
After discovery, the trustee moved for summary judgment under Federal Rule of Civil Procedure 56. Rigos did not dispute that the tenant breached the lease or that he breached the guaranty. He argued only that factual disputes remained about whether the COVID-19 guaranty law barred some of the trustee’s claim. Rigos relied on testimony that he and the tenant’s representative believed pandemic restrictions required the tenant to close.
Liability
The court held that the trustee established the elements of a breach-of-guaranty claim: an underlying debt, an unconditional guaranty, and Rigos’s failure to perform. The lease required the tenant to make monthly rent payments, the tenant failed to make those payments, and Rigos did not satisfy the trustee’s demand under the guaranty. The court applied New York law because the lease provided that New York law governed its validity and enforcement.
The court rejected Rigos’s defense under New York City Administrative Code § 22-1005. First, the trustee sought damages for rent that became due between March 2019 and February 2020, entirely outside the law’s protected period. The court explained that each monthly failure to pay rent created a separate default and that the law applies only to rent that became due during its protected period.
Second, the court found that the tenant did not meet the relevant business-condition requirement. The undisputed testimony showed that the tenant operated a meal-delivery business, did not operate a restaurant at the premises, did not provide on-premises food or beverage service, did not have members of the public eating or drinking there, and did not have a permit for restaurant or on-premises food service. The court concluded that the testimony about the parties’ beliefs concerning COVID-19 restrictions was not enough to create a genuine factual dispute.
The court also stated that Rigos’s other affirmative defenses were waived as to liability because he did not raise them in opposition to the summary-judgment motion.
Damages
The trustee claimed $155,774.58 in guaranty damages. The court declined to grant summary judgment on that amount because the record contained unresolved discrepancies. The trustee’s demand letter stated that $150,600 was due, while the motion claimed $155,774.58. The trustee also did not explain the difference between the additional-rent figures in the demand letter and the ledger.
The court further found an unresolved issue concerning the six tenant payments totaling $88,250. The trustee included those payments in calculating unpaid rent but did not account for them in the claimed guaranty damages. Because the guaranty allowed Rigos to assert defenses and rights available to the tenant, the court found a factual question about whether the payments should reduce the amount recoverable.
Disposition
Judge Sarah L. Cave concluded that the motion was granted in part and denied in part. The Trust obtained summary judgment on Rigos’s liability for breach of the guaranty, but the court did not determine the damages amount. Instead, it ordered an inquest concerning damages, prejudgment interest, and attorneys’ fees, and scheduled a conference to set the inquest schedule.
Read the full 26-page opinion on CourtListener, the free public archive maintained by the Free Law Project.