64 West 10th Street LLC v. L-Ray LLC, doing business as ALTA, et al.
Attorneys and Parties
Brief Summary
Commercial real estate lease guaranty enforcement and fee-shifting under a renewed lease
Denied landlord’s summary judgment on certain causes of action and dismissed the complaint against guarantor Christopher Chestnutt; denied attorneys’ fees.
The Appellate Division reversed, holding the guaranty enforceable and granting summary judgment to the landlord, including attorneys’ fees.
The guaranty was absolute and unconditional and expressly continued until delivery of vacant possession, which occurred in June 2024; the guarantor also signed the 2018 lease continuation, and the lease’s covenants (including attorneys’ fees) carried forward. Defendants failed to raise a bona fide defense.
Background
Plaintiff 64 West 10th Street LLC (landlord) sought to enforce a personal guaranty executed in 2001 by Christopher Chestnutt, a member of tenant L-Ray LLC (limited liability company), securing L-Ray’s rent under a commercial lease. The original lease expired in March 2018. Chestnutt then signed a new lease in 2018 so L-Ray could continue its tenancy. The guaranty stated it remained in effect “until delivery of vacant possession,” which did not occur until June 27, 2024. After L-Ray defaulted, the landlord sued for unpaid rent and enforcement of the guaranty, and sought attorneys’ fees under the lease.
Lower Court Decision
The Supreme Court, New York County, denied plaintiff’s motion for summary judgment on the fourth, sixth, and seventh causes of action and granted defendants’ cross-motion dismissing the complaint as to Christopher Chestnutt, effectively finding the 2001 guaranty not enforceable against him after the earlier lease expired, and denied attorneys’ fees.
Appellate Division Reversal
The Appellate Division reversed, holding that the landlord established an absolute, unconditional guaranty, the underlying debt, and the guarantor’s nonperformance, shifting the burden to defendants who failed to present a bona fide defense. The court ruled the guaranty’s duration clause—covering obligations until delivery of vacant possession—kept the guaranty in force past the 2018 lease expiration date, especially since Chestnutt executed the 2018 lease. It further held that the 2018 lease incorporated the original lease’s covenants, including fee-shifting, entitling the landlord to attorneys’ fees. The court granted plaintiff’s summary judgment in full.
Legal Significance
Confirms that a guaranty expressly tied to delivery of vacant possession remains enforceable beyond lease expiration and into a renewal or successor lease where the guarantor continues the tenancy, and that fee-shifting provisions incorporated into a new lease remain effective. Reinforces New York’s summary judgment standard for guaranties: creditor need only show an absolute guaranty, the debt, and default; the burden then shifts to the guarantor to present a bona fide defense.
In New York, an absolute commercial lease guaranty that runs until delivery of vacant possession will bind the guarantor beyond lease expiration—especially where the guarantor signs the successor lease—and incorporated attorneys’ fees provisions remain enforceable.