15‐1248‐cv 136 Field Point Circle Holding Co. v. Invar Intʹl Holding, Inc. UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007 IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURTʹS LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION ʺSUMMARY ORDERʺ). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 21st day of March, two thousand sixteen.
PRESENT: CHESTER J. STRAUB, DENNY CHIN, SUSAN L. CARNEY, Circuit Judges, ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐x
136 FIELD POINT CIRCLE HOLDING COMPANY, LLC, Plaintiff‐Counter‐Defendant‐Appellee,
v. 15‐1248‐cv
INVAR INTERNATIONAL HOLDING, INC., Defendant‐Counter‐Claimant‐Appellant.
‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐x
FOR PLAINTIFF‐COUNTER‐ MITCHELL J. BAKER, Gary L. Leshko, Katie DEFENDANT‐APPELLEE: R. Wendle, Baker Leshko Saline & Blosser, LLP, White Plains, New York.
FOR DEFENDANT‐COUNTER‐ STEVEN FEIGENBAUM, Matthew D. Parrott, CLAIMANT‐APPELLANT: Katten Muchin Rosenman LLP, New York, New York. Appeal from the United States District Court for the Southern District of
New York (Woods, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the judgment of the district court is AFFIRMED.
Defendant‐counter‐claimant‐appellant Invar International Holding, Inc.
(ʺInvarʺ) appeals a March 24, 2015 judgment of the United States District Court for the
Southern District of New York, entered after the district court granted summary
judgment in favor of plaintiff‐counter‐defendant‐appellee 136 Field Point Circle
Holding Company, LLC (ʺField Pointʺ), holding Invar liable under a guaranty. We
assume the partiesʹ familiarity with the underlying facts, procedural history of the case,
and issues on appeal.
Invar is wholly owned by two individuals (the ʺRazinskisʺ) and their
daughter. In 2012, as part of a complex financing arrangement, the Razinskis agreed to
lease property owned by Field Point in Greenwich, Connecticut, for $25,000 per month
until June 30, 2013. In the lease (the ʺLeaseʺ), the Razinskis agreed to a holdover
payment of $1,000,000 in the event they overstayed the term of the Lease. Invar then
entered into a guaranty agreement with Field Point (the ʺGuarantyʺ) that provided, in
pertinent part:
The Guarantor hereby absolutely, unconditionally and irrevocably guarantees to Purchaser . . . the full, complete and timely payment, performance and satisfaction of each and every one of the liabilities and obligations of either or
‐ 2 ‐ both of the Razinskis under the Transaction Documents [including the Lease] . . . . It is expressly understood and agreed that this is a continuing guarantee and that the obligations of the Guarantor under this Guarantee is and shall be absolute under any and all circumstances, without regard to the validity, regularity or enforceability of the Transaction Documents [including the Lease]. . . .
App. at 52‐53. The Razinskis did not vacate upon the expiration of the Lease, and Field
Point filed this action below seeking $1,000,000 from Invar under the Guaranty. On
March 19, 2015, the district court granted summary judgment in the amount of
$1,000,000 to Field Point. This appeal followed.1
We review a grant of summary judgment de novo, viewing the record in
the light most favorable to the non‐moving party. Robinson v. Concentra Health Servs.,
Inc., 781 F.3d 42, 44 (2d Cir. 2015). To obtain summary judgment to enforce a written
guaranty, ʺall that the creditor need prove is an absolute and unconditional guaranty,
the underlying debt, and the guarantorʹs failure to perform under the guaranty.ʺ City of
New York v. Clarose Cinema Corp., 256 A.D.2d 69, 71 (1st Depʹt 1998). We interpret a
guaranty ʺaccording to the plain meaning of its terms.ʺ Greenfield v. Philles Records, 98
N.Y.2d 562, 569 (2002).
1 The Razinskis also brought an action in New York state court to resolve whether they were equitable owners of the property; Field Point counterclaimed that the Razinskis owed $1,000,000 under the liquidated damages clause. On July 15, 2015, during the pendency of Invarʹs appeal, the state court entered an order and judgment memorializing Field Point and the Razinskisʹ stipulation that the $1,000,000 liquidated damages clause was an unenforceable penalty. Interim Order and Judgment, Razinski v. 136 Field Point Circle Holding Co., No. 652357/13 (N.Y. Sup. Ct. July 15, 2015).
‐ 3 ‐ On appeal, Invar argues that: (1) the underlying debt (the $1,000,000
payment, required by the liquidated damages clause) was an unenforceable penalty and
(2) consequently the obligation is unenforceable under the Guaranty.
As to the liquidated damages clause, the ʺwell establishedʺ New York rule
is that ʺ[a] contractual provision fixing damages in the event of breach will be sustained
if the amount liquidated bears a reasonable proportion to the probable loss and the
amount of actual loss is incapable or difficult of precise estimation.ʺ Truck Rent‐A‐Ctr.,
Inc. v. Puritan Farms 2nd, Inc., 41 N.Y.2d 420, 425 (1977). ʺThe burden is on the party
seeking to avoid liquidated damages . . . to show that the stated liquidated damages are,
in fact, a penalty.ʺ JMD Holding Corp. v. Cong. Fin. Corp., 4 N.Y.3d 373, 380 (2005). Here,
Invar argues that the $1,000,000 liquidated damages clause is disproportionate to the
$25,000 monthly rent, the clause is not reasonably calculated to accommodate the extent
of any breach, and actual damages would not be difficult to ascertain. Invar also asks us
to take judicial notice of the state court stipulation whereby Field Point and the
Razinskis agreed that the liquidated damages provision in the Lease constituted an
unenforceable penalty. We need not decide whether the liquidated damages clause is
enforceable, however, in light of our resolution of the second issue below.
As to the Guaranty, ʺbroad, sweeping and unequivocal languageʺ in an
absolute and unconditional guaranty generally ʺforecloses any challenge to the
enforceability and validity of the documents which establish defendantʹs liability for
‐ 4 ‐ payments arising under the [underlying] agreement, as well as to any other possible
defense to his liability for the obligations.ʺ Cooperatieve Centrale Raiffeisen‐
Boerenleenbank, B.A. v. Navarro, 25 N.Y.3d 485, 494 (2015); see Compagnie Financiere de CIC
et de LʹUnion Europeenne v. Merrill Lynch, Pierce, Fenner & Smith Inc., 188 F.3d 31, 35 (2d
Cir. 1999) (ʺAbsolute and unconditional guaranties have in fact been found to preclude
guarantors from asserting a broad range of defenses under New York law.ʺ). For
instance, where a guaranty provides that it is ʺabsolute and unconditional irrespective
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15‐1248‐cv 136 Field Point Circle Holding Co. v. Invar Intʹl Holding, Inc. UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007 IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURTʹS LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION ʺSUMMARY ORDERʺ). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 21st day of March, two thousand sixteen.
PRESENT: CHESTER J. STRAUB, DENNY CHIN, SUSAN L. CARNEY, Circuit Judges, ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐x
136 FIELD POINT CIRCLE HOLDING COMPANY, LLC, Plaintiff‐Counter‐Defendant‐Appellee,
v. 15‐1248‐cv
INVAR INTERNATIONAL HOLDING, INC., Defendant‐Counter‐Claimant‐Appellant.
‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐x
FOR PLAINTIFF‐COUNTER‐ MITCHELL J. BAKER, Gary L. Leshko, Katie DEFENDANT‐APPELLEE: R. Wendle, Baker Leshko Saline & Blosser, LLP, White Plains, New York.
FOR DEFENDANT‐COUNTER‐ STEVEN FEIGENBAUM, Matthew D. Parrott, CLAIMANT‐APPELLANT: Katten Muchin Rosenman LLP, New York, New York. Appeal from the United States District Court for the Southern District of
New York (Woods, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the judgment of the district court is AFFIRMED.
Defendant‐counter‐claimant‐appellant Invar International Holding, Inc.
(ʺInvarʺ) appeals a March 24, 2015 judgment of the United States District Court for the
Southern District of New York, entered after the district court granted summary
judgment in favor of plaintiff‐counter‐defendant‐appellee 136 Field Point Circle
Holding Company, LLC (ʺField Pointʺ), holding Invar liable under a guaranty. We
assume the partiesʹ familiarity with the underlying facts, procedural history of the case,
and issues on appeal.
Invar is wholly owned by two individuals (the ʺRazinskisʺ) and their
daughter. In 2012, as part of a complex financing arrangement, the Razinskis agreed to
lease property owned by Field Point in Greenwich, Connecticut, for $25,000 per month
until June 30, 2013. In the lease (the ʺLeaseʺ), the Razinskis agreed to a holdover
payment of $1,000,000 in the event they overstayed the term of the Lease. Invar then
entered into a guaranty agreement with Field Point (the ʺGuarantyʺ) that provided, in
pertinent part:
The Guarantor hereby absolutely, unconditionally and irrevocably guarantees to Purchaser . . . the full, complete and timely payment, performance and satisfaction of each and every one of the liabilities and obligations of either or
‐ 2 ‐ both of the Razinskis under the Transaction Documents [including the Lease] . . . . It is expressly understood and agreed that this is a continuing guarantee and that the obligations of the Guarantor under this Guarantee is and shall be absolute under any and all circumstances, without regard to the validity, regularity or enforceability of the Transaction Documents [including the Lease]. . . .
App. at 52‐53. The Razinskis did not vacate upon the expiration of the Lease, and Field
Point filed this action below seeking $1,000,000 from Invar under the Guaranty. On
March 19, 2015, the district court granted summary judgment in the amount of
$1,000,000 to Field Point. This appeal followed.1
We review a grant of summary judgment de novo, viewing the record in
the light most favorable to the non‐moving party. Robinson v. Concentra Health Servs.,
Inc., 781 F.3d 42, 44 (2d Cir. 2015). To obtain summary judgment to enforce a written
guaranty, ʺall that the creditor need prove is an absolute and unconditional guaranty,
the underlying debt, and the guarantorʹs failure to perform under the guaranty.ʺ City of
New York v. Clarose Cinema Corp., 256 A.D.2d 69, 71 (1st Depʹt 1998). We interpret a
guaranty ʺaccording to the plain meaning of its terms.ʺ Greenfield v. Philles Records, 98
N.Y.2d 562, 569 (2002).
1 The Razinskis also brought an action in New York state court to resolve whether they were equitable owners of the property; Field Point counterclaimed that the Razinskis owed $1,000,000 under the liquidated damages clause. On July 15, 2015, during the pendency of Invarʹs appeal, the state court entered an order and judgment memorializing Field Point and the Razinskisʹ stipulation that the $1,000,000 liquidated damages clause was an unenforceable penalty. Interim Order and Judgment, Razinski v. 136 Field Point Circle Holding Co., No. 652357/13 (N.Y. Sup. Ct. July 15, 2015).
‐ 3 ‐ On appeal, Invar argues that: (1) the underlying debt (the $1,000,000
payment, required by the liquidated damages clause) was an unenforceable penalty and
(2) consequently the obligation is unenforceable under the Guaranty.
As to the liquidated damages clause, the ʺwell establishedʺ New York rule
is that ʺ[a] contractual provision fixing damages in the event of breach will be sustained
if the amount liquidated bears a reasonable proportion to the probable loss and the
amount of actual loss is incapable or difficult of precise estimation.ʺ Truck Rent‐A‐Ctr.,
Inc. v. Puritan Farms 2nd, Inc., 41 N.Y.2d 420, 425 (1977). ʺThe burden is on the party
seeking to avoid liquidated damages . . . to show that the stated liquidated damages are,
in fact, a penalty.ʺ JMD Holding Corp. v. Cong. Fin. Corp., 4 N.Y.3d 373, 380 (2005). Here,
Invar argues that the $1,000,000 liquidated damages clause is disproportionate to the
$25,000 monthly rent, the clause is not reasonably calculated to accommodate the extent
of any breach, and actual damages would not be difficult to ascertain. Invar also asks us
to take judicial notice of the state court stipulation whereby Field Point and the
Razinskis agreed that the liquidated damages provision in the Lease constituted an
unenforceable penalty. We need not decide whether the liquidated damages clause is
enforceable, however, in light of our resolution of the second issue below.
As to the Guaranty, ʺbroad, sweeping and unequivocal languageʺ in an
absolute and unconditional guaranty generally ʺforecloses any challenge to the
enforceability and validity of the documents which establish defendantʹs liability for
‐ 4 ‐ payments arising under the [underlying] agreement, as well as to any other possible
defense to his liability for the obligations.ʺ Cooperatieve Centrale Raiffeisen‐
Boerenleenbank, B.A. v. Navarro, 25 N.Y.3d 485, 494 (2015); see Compagnie Financiere de CIC
et de LʹUnion Europeenne v. Merrill Lynch, Pierce, Fenner & Smith Inc., 188 F.3d 31, 35 (2d
Cir. 1999) (ʺAbsolute and unconditional guaranties have in fact been found to preclude
guarantors from asserting a broad range of defenses under New York law.ʺ). For
instance, where a guaranty provides that it is ʺabsolute and unconditional irrespective
of . . . any lack of validity or enforceability of the agreement . . . or . . . any other
circumstance which might otherwise constitute a defense,ʺ the guarantor is precluded
from asserting a defense as to the ʺexistence of a valid underlying debt.ʺ Cooperatieve
Centrale, 25 N.Y.3d at 494‐95 (internal quotation marks omitted). In other words, this
language forecloses ʺaffirmative defenses and counterclaims.ʺ Citibank, N.A. v.
Plapinger, 66 N.Y.2d 90, 92 (1985); see Fed. Realty Ltd. Pʹship v. Choices Womenʹs Med. Ctr.,
Inc., 289 A.D.2d 439, 441 (2d Depʹt 2001) (characterizing challenge to liquidated
damages as ʺaffirmative defenseʺ).
This case is indistinguishable from those cases. Invar guaranteed
ʺabsolutely, unconditionally and irrevocably . . . each and every one of the liabilities and
obligations of either or both of the Razinskis under the [Lease]ʺ and agreed that its
obligations ʺshall be absolute under any and all circumstances, without regard to the
validity, regularity or enforceability of the [Lease].ʺ App. at 52‐53. These ʺplain terms,
‐ 5 ‐ in broad, sweeping and unequivocal language,ʺ bound Invar to the obligations recited
in the Lease, regardless of whether the Lease or its provisions were enforceable as to the
Razinskis. Cooperatieve Centrale, 25 N.Y.3d at 494. Even assuming the Leaseʹs provision
that required the Razinskis to pay Field Point $1,000,000 was an unenforceable penalty,
Invar was foreclosed from challenging its obligation to ensure payment, and the district
court thus did not err in granting summary judgment against it.
We have reviewed Invarʹs remaining arguments and conclude they are
without merit. Accordingly, we AFFIRM the judgment of the district court.
FOR THE COURT: Catherine OʹHagan Wolfe, Clerk
‐ 6 ‐