Wassel Corp v Schelzen Islamaj

The case focused on a restaurant tenant that held over in its space for six weeks beyond the expiration of the lease without the landlord’s consent, and subsequently surrendered possession to the landlord without paying the last month’s rent. The defendant, Schelzen Islamaj, was guarantor of the lease, and had signed a so-called “good guy” clause.

Under the terms of the parties’ lease, in the event the tenant failed to vacate as required, both the tenant and its guarantor were liable for three times the rent last paid. The property owner retained Rosenberg & Estis, P.C. to commence an action against the guarantor for three times the amount of the unpaid rent, plus attorneys’ fees. After filing suit, R&E moved for summary judgment. The tenant opposed, claiming that the triple rent constituted an impermissible and unenforceable penalty.

Court ruled that the defendant’s arguments in opposition were without merit and granted R&E’s arguments in toto, issuing a judgment for three times the amount of the arrears, plus interest retroactive to the date the arrears began to accrue. In addition, Court set the matter down for hearing within 20 days to determine the amount of attorneys’ fees to be awarded to the landlord.

The decision establishes that if you sign, in the words of member Bradley S. Silverbush, “A ‘good guy’ guaranty, you better be a good guy.” R&E’s victory shows that owners can successfully pursue claims for liquidated damages even in a case of a brief holdover.