Delco Development Company of Hicksville, L.P. v Shoes Etc., Inc.
Attorneys and Parties
Brief Summary
Commercial real estate (CRE) lease—whether a corporate officer's signature created personal liability in addition to the corporation’s obligations.
Granted summary judgment to the landlord against the individual officer (Habibian) and denied defendants’ cross-motion, entering judgment of $93,800.
The judgment and order imposing personal liability on Habibian; the grant of plaintiff’s summary judgment and the denial of defendants’ cross-motion as to Habibian.
The lease, drafted by the landlord, was ambiguous and contained a separate guaranty clause naming Habibian; his signatures on renewals/modifications included “PRES.” indicating corporate capacity. There was no clear and explicit evidence that he intended to be personally bound.
Background
The landlord, Delco Development Company of Hicksville, L.P., sued its commercial tenant Shoes Etc., Inc., and its president, Said Habibian, for breach of a lease. The action began in June 2020. The lease was drafted by the landlord and included a guaranty clause with Habibian named as guarantor. On multiple renewals and modifications, Habibian signed with the handwritten designation “PRES.” The landlord sought to hold Habibian personally liable under the lease.
Lower Court Decision
By order dated January 12, 2024, the Supreme Court, Nassau County (Rizzo, J.), granted the landlord’s motion for summary judgment against Habibian and denied defendants’ cross-motion to dismiss as to him. A July 24, 2024 judgment was entered for $93,800 against Habibian.
Appellate Division Reversal
The Appellate Division reversed the judgment insofar as appealed from, denied the landlord’s summary judgment motion against Habibian, and granted defendants’ cross-motion dismissing the complaint against him. Applying settled law that corporate officers are not personally liable absent clear, explicit intent to assume such liability, and construing ambiguities in a landlord-drafted lease against the drafter, the court found the record failed to clearly show Habibian intended to be personally bound in addition to his corporate capacity.
Legal Significance
Reaffirms that an officer signing a commercial lease on behalf of a disclosed corporate principal is not personally liable unless the instrument contains clear and explicit language evidencing an intent to assume personal liability, and that ambiguities in a landlord-drafted lease are construed in favor of the tenant.
To bind a corporate officer personally on a CRE lease, the document must contain unmistakable personal liability language and proper signature blocks; a separate guaranty clause and a signature denoting corporate capacity (e.g., “PRES.”) weigh against finding personal liability.