This motion, by plaintiff Parimist Funding Corp., for an order pursuant to CPLR 3212 granting it summary judgment in specific amounts, or, in the alternative, an order granting it partial summary judgment with respect to liability, is denied; and the cross-motion, by defendants Suffolk Vascular Associates, PLLC and Robert Pollina, M.D, for an order pursuant to CPLR 3212 granting them summary judgment dismissing the complaint against them is granted; and the cross-motion, by defendant Paul Van Bemmelen, M.D., for, inter alia, an order pursuant to CPLR 3212 granting him summary judgment dismissing the complaint against him, or, in the alternative, an order pursuant to

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CPLR 603 severing the defendants' cross-claims for separate trial if plaintiff's motion is granted, is granted as provided herein.

This is an action to recover damages for breach of three lease agreements. Both [*2]the plaintiff lessor and the defendant lessees/guarantors seek summary judgment.

"On a motion for summary judgment pursuant to CPLR 3212, the proponent must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact." (Sheppard-Mobley v King, 10 AD3d 70, 74, 2nd Dept., 2004, aff'd. as mod., 4 NY3d 627 (2005), citing, Alvarez v Prospect Hosp., 68 NY2d 320, 324, 1986; Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853, 1985). "Failure to make such prima facie showing requires a denial of the motion, regardless of the sufficiency of the opposing papers." (Sheppard-Mobley v King, supra, at p. 74; Alvarez v Prospect Hosp., supra; Winegrad v New York Univ. Med. Ctr., supra. Once the movant's burden is met, the burden shifts to the opposing party to establish the existence of a material issue of fact. (Alvarez v Prospect Hosp., supra, at p. 324). The evidence presented by the opponents of summary judgment must be accepted as true and they must be given the benefit of every reasonable inference. (see, Demishick v Community Housing Management Corp., 34 AD3d 518, 2nd Dept., 2006, citing Secof v Greens Condominium , 158 AD2d 591, 2nd Dept., 1990).

The pertinent facts are as follows:

The defendants Suffolk Vascular Associates and Drs. Pollina and Van Bemmelen entered into three 60-months leases with plaintiff Parimist Funding on or about February 5, 1997, January 25, 2001 and March 2, 2001 for medical and office equipment as well as office furniture. By their terms, those leases expired on February 4, 2002, January 24, 2006, and March 22, 2006, respectively.

The leases provided that the equipment belonged to the Lessor, as follows:

"Equipment to Remain Unattached to Real Property: Each item of equipment leased hereunder shall at all times remain the property of the Lessor and Lessee shall have no right, title or interest therein or thereto except as expressly set forth in the lease."

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The leases also obligated the defendant Lessees to return the property, as follows:

"Upon the termination in any manner whatever of the lease hereby granted or any extension thereof, the Lessee shall

forthwith deliver, freight prepaid, the leased property to the Lessor or [sic] an address to be designated by Lessor, complete and in good order and condition, reasonable wear and tear alone excepted, and shall pay to the Lessor the full amount of rental due on [*3]it . . . ."

As for extensions, the leases all provided:

"Failure to Return Property As Extension of Lease: If, upon the expiration of the full term of this lease as provided for, the Lessee does not immediately return the leased property to the Lessor, and the Lessor does not request its return, then the leased property shall continue to be held and leased under and in accordance with the conditions in this agreement contained, and this agreement shall thereupon be extended indefinitely as to term, but thereafter either the Lessee or the Lessor upon thirty (30) days notice in writing to the other may terminate it, whereupon the Lessee shall forthwith deliver the leased property to the Lessor."

As for modifications, the Leases provided:

"ENTIRE AGREEMENT; WAIVER: This instrument constitutes the entire agreement between the parties. No employee or agent is authorized to bind or modify any term hereof. NO waiver by Lessor of any provision hereof shall constitute a waiver of any other matter and all waivers will be in writing and authorized by an officer of Lessor."

Finally, the leases provided that there were "no purchase option[s]" as follows:

"Lessee shall have no option to purchase or otherwise acquire title to or ownership of any of the equipment and shall have only the right to use the same under and subject to the terms and provisions of the lease."

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The first lease was unconditionally personally guaranteed by both of the defendant doctors. The guaranty provided that it applied to the payment and performance of all of Suffolk Vascular Associates' liabilities owed to Parimist Funding "whether new, existing or hereafter arising." It also provided:

"This Guaranty cannot be terminated or changed orally and no provision hereof may be modified or waiver except by you in writing; it shall continue in effect until you receive written notice of termination, which shall not release or affect our liability with respect to Liabilities theretofore created and any extensions thereof . . ."

Parimist Funding maintains that the defendants retained the property covered by all three leases beyond their expiration in fact, until the present day and accordingly owe it, inter alia, several years rent pursuant to the "Failure to Return Property as [*4]Extension of Lease" clause.

The defendants oppose the relief sought by Parimist Funding on several grounds.

The defendants maintain that Parimist funding lacks standing because the leases were assigned. Parimist Funding, however, has established its reacquisition of all three leases at or about the time that they expired and allegedly were extended.

The defendants also maintain that Parimist Funding waived its right to enforce the lease extension clauses because that relief was not sought until several years after the first lease expired. However, the leases did not obligate Parimist Funding to seek rent owing under the extension clause within any specific time. And, all three leases provided "all waivers will be in writing and executed by an officer of Lessor (emphasis added)." Thus, absent a writing, the plaintiff's delay in seeking relief pursuant to the lease extension clause did not constitute a waiver.

Nor does Parimist Funding's alleged culpable conduct, i.e., its delay in seeking payment or the return of the equipment, defeat its claim. Culpable conduct is not a defense to a breach of contract claim. (American Express Equipment Finance Corporation v Mercado, 34 AD3d 880, 881-882, 3rd Dept., 2006, citing Nastro Contracting Inc. v Augusta, 217 AD2d 874, 3rd Dept., 1995). Furthermore, the lease agreements did not require Parimist Funding to seek payment or the return of the property.

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Defendants' affirmative defense of unconscionability fails as well. As the Court held in Gillman v Chase Manhattan Bank, N.A., (135 AD2d 488, 491, 2nd Dept., 1987, aff'd. 73 NY2d 1, 1988, quoting Equitable Lbr. Corp. v I.P.A. Development Corp., 38 NY2d 516, 1976):

"the doctrine of unconscionability has little applicability in the commercial setting because it is presumed that businessmen deal at arm's length with relative equality of bargaining power (citations omitted). Apparently the doctrine is primarily a means with which to protect the commercially illiterate consumer beguiled into a grossly unfair bargain by a deceptive vendor or finance company.' "

For the doctrine of unconscionability to apply the party must establish " an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party" (Matter of State of New York v Avco Fin. Serv., 50 NY2d 383, 389, 1980, quoting, Williams v Walker-Thomas Furniture Co., [*5]350 F.2d 445, 449, [Cir. Ct. D.C. 1965]) which has hardly been shown to exist here. And while defendants maintain that the lease permits them to incur exorbitant liability in an amount far in excess of the leased property's value, from the time that the lease expired until now, to prevent additional liability for rent, all the defendants had to do was to return the leased equipment to end the lease.

The defenses of laches and unclean hands are similarly inapplicable. They are not available in an action for breach of contract. (Fade v Pugliani/Fade, 8 AD3d 612, 614-615, 2nd Dept., 2004; Manshion Joho Center Co., Ltd. v Manshion Joho Center, Inc. 24 AD3d 189, 190, 1st Dept., 2005). In any event, the failure to remind a party of his own contractual obligations, i.e., to return the leased property at the expiration of the lease hardly constitutes unclean hands.

The defendants' argument that they are saved by Parimist Funding's failure to abide by the doctrine of good faith and fair dealing is similarly unavailing. More specifically, the defendants' assertion, that Parimist Funding's inclusion of the lease extension clause in the leases violated that doctrine, fails. The defendants read and executed the leases and in the absence of fraud and duress which are not alleged, are bound by its terms. (see, Colombus Trust Co. v Campolo, 110 AD2d 616, 2nd Dept.,1985, aff'd. 66 NY2d 701, 1985, citing Pimpinello v Swift & Co., 253 NY 159, 162-163, 1930).

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Nor do the leases constitute security assignments under UCC 1-201(37)(a), thereby terminating the defendants' obligations at the conclusion of the lease as a matter of law. UCC 1-201(37)(a) provides that a transaction constitutes a security interest if the consideration the lessee is to pay the lessor for the right to possession and use of the goods is an obligation for the term of the lease and not subject to termination by the lessee, and:

(i) the original term of the lease is equal to or greater

than the remaining economic life of the goods,

(ii) the lessee is bound to renew the lease for the

remaining economic life of the goods or is bound to

become the owner of the goods,

(iii) the lessee has an option to renew the lease for the

remaining economic life of the goods for no additional

consideration or nominal additional consideration upon

compliance with the lease agreement, or

(iv) the lessee has an option to become the owner of the [*6]

goods for no additional consideration or nominal

additional consideration upon compliance with the

lease agreement.

Neither Sections (i), (ii), (iii) nor (iv) apply here. It is not disputed that some of the equipment, indeed medical equipment, continued to be used past the leases' expiration and was still recently being used. The defendant lessees were not bound to extend the lease at all, let alone beyond the remaining economic life of the equipment. Renewal of the lease was not at no or nominal cost but was rather contingent on continued monthly rent payments. And, the defendants clearly did not have an option to purchase the property, let alone at no or nominal cost.

In fact, while UCC 1-201(37)(a) provides that "whether a transaction creates a lease or security interest is determined by the facts of each case," here, the leases were clearly not security agreements. UCC 1-201(37)(b) provides that a transaction does not constitute a security interest merely because:

(i) the present value of the consideration the lessee is

obligated to pay the lessor for the right to possession and

use of the goods is substantially equal to or is greater

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than the fair market value of the goods at the time the

lease is entered into,

(ii) the lessee assumes risk of loss of the goods, or agrees

to pay taxes, insurance, filing, recording or registration

fees, or service maintenance costs with respect to the

goods,

(iii) the lessee has an option to renew the lease or to

become the owner of the goods,

(iv) the lessee has an option to renew the lease for a

fixed rent that is equal to or greater than the reasonably

predictable fair market rent for the use of the goods for

the term of the renewal at the time the option is to be

performed, or [*7]

(v) the lessee has an option to become the owner of the

goods for a fixed price that is equal to or greater than the

reasonably predictable fair market value of the goods at

the time the option is to be performed.

In evaluating whether a transaction is truly a security interest or a lease, the labeling of the document is not controlling. (In re Owen, 221 BR 56, 63, NDNY, 1998). "[T]he main focus of the courts has been on (1) whether the purchase option price at the end of the lease term is nominal, (2) whether the lessee is required to make aggregate rental payments having a present value equaling or exceeding the original cost of the leased property, and (3) whether the lease term covers the total useful life of the equipment.' " (In re Owen, supra, at 61, quoting In re Edison Bros. Stores, Inc., 207 BR 801, 809-810, D. Del. 1997). While the defendants have established that the leases' aggregate payments arguably exceed some of the property's value, again, there was no purchase option and the useful life of at least some of the equipment went considerably beyond the leases' term. Accordingly, the leases were not security interests under Uniform Commercial Code § 2-101(37). (See, In re Owen, supra).

Defendants also maintain that they had an oral agreement with Parimist Funding's Vice President Howard Lebowitz that they could purchase all of the leased equipment for

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one dollar at the expiration of the leases. Not only does Mr. Lebowitz deny this, this argument fails in any event as a matter of law. The Lease's terms provide that Parimist Funding owns the leased equipment; that the Lessee does not have a purchase option; and, that defendants must return the leased equipment at the termination of the lease. Evidence of oral agreements which contradict an integrated written agreement is unacceptable. (Braten v Bankers Trust Co., 60 NY2d 155, 1983; Harris v Hallberg, 36 AD3d 857, 859, 2nd Dept., 2007). In any event, where there is a conflict between the alleged oral agreement and the writing, the writing controls. (Rose v Spa Realty Assur., 42 NY2d 338, 343, 1977; Shah v Micro Connections, Inc., 286 AD2d 433, 2nd Dept., 2001). The alleged oral agreement is in complete dereliction of the written agreement and accordingly fails.

Nevertheless, General Obligations Law § 5-901 is a complete defense to Parimist Funding's claim for accumulated rent. That section provides:

"No provision of a lease of any personal property which states that the term thereof shall be deemed renewed for a specified additional period unless the lessee gives notice to the lessor of his intention to release the property at the expiration of such term, shall be [*8]operative unless the lessor, at least fifteen days and not more than thirty days previous to the time specified for the furnishing of such notice to him, shall give to the lessee written notice, served personally or by mail, calling the attention of the lessee to the existence of such provision in the lease.

Again, the leases provide:

"Failure to Return Property As Extension of Lease: If, upon the expiration of the full term of this lease as provided for, the Lessee does not immediately return the leased property to the Lessor, and the Lessor does not request its return, then the leased property shall continue to be held and leased under and in accordance with the conditions in this agreement contained, and this agreement shall thereupon be extended indefinitely as to term, but thereafter either the Lessee or the Lessor upon thirty (30) days notice in writing to the other may terminate it,

whereupon the Lessee shall forthwith deliver the leased property to the Lessor."

Parimist Funding seeks to avoid the application of this statute and excuse its failure to notify the defendant lessees of the automatic extensions/renewals because the

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leases specifically provided for extensions if the lessee fails to return the equipment, not if the lessee fails to give notice of his intention to release the property. Parimist Funding also contends that this statute does not apply because the lease is not automatically extended "for a specified additional period." Any ambiguity in a contract is to be interpreted against the drafter, here, Parimist Funding. (Restatement [Second] of Contracts § 206; Lae Ling Cheng v Modansky Leasing Co. Inc., 73 NY2d 454, 1989; 151 West Assocs. v Printsiples Fabric Corp., 61 NY2d 732, 1984; Computer Associates International, Inc. v U.S. Balloon Manufacturing Co., Inc., 10 AD3d 699, 2nd Dept., 2004). The leases obviously become month-to-month leases as they are terminable upon 30 days notice by either party. Parimist Funding's narrow readings of this statute subverts its clear intent.

In fact, the sponsor of this bill as originally enacted as General Business Law § 399 explained its purpose as follows:

"This bill seeks to protect all businessmen from fast talking sales organizations armed with booby traps which they plant in business contracts involving equipment rentals * * * Undoubtedly, many unsuspecting small businessmen are taken in by such evil practices which taken collectively are costing those who cannot afford it many thousands of [*9]dollars yearly (internal quotation marks omitted)." (Andin International Inc. v Matrix Funding Corporation, 194 Misc 2d 719, 722, (NY Sup. 2003), quoting Peerless Towel Supply Co., Inc. v Triton Press, Inc., 3 AD2d 249, 251, 1st Dept. 1957, quoting 1953 NY Legis Ann at 61-62).

Indeed, the Court of Appeals explained in Feder v Caliguira,(8 NY2d 400, 405 [1960]), that the harm aimed at by the statute (former Business Law § 399):

". . . was the infliction of continuing and, at times, heavy . . . financial burdens upon unwary businessmen by means of automatic renewal clauses. . . The Legislature was concerned with the unfairness of binding the lessee to a "renewed" term and forcing him to pay the rental for such renewed term even though he may not have known about the automatic renewal clause or may have forgotten about it (citations omitted)(emphasis added)."

GeneralObligations Law § 901 applies here. Parimist Funding's failure to provide the defendant lessees of their statutory notice regarding the leases' extension/renewal

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defeats its claim that the leases were extended. (see, Production Industries Corp. v PDB

Needham Worldwide, Inc., 306 AD2d 175, 1st Dept., 2005; Andin International Inc. v Matrix Funding Corporation, supra).

The Court notes that the application of General Obligations Law § 5-901 does not preclude claims by Parimist Funding sounding in conversion, replevin and for the value of the equipment.

Dr. Van Bemmelen's departure from Suffolk Vascular Associates prior to the execution of the second and third leases does not absolve him from liability as a guarantor. The guaranty was unconditional and was not contingent on his continued affiliation with Suffolk Vascular Associates. Moreover, it was never terminated or modified in writing as was required.

Nevertheless, as for the individual defendants, Suffolk Vascular Associates' lack of liability for the claims asserted defeats claims against them as guarantors. "A contract of guaranty is subject to the fulfillment of any condition precedent to the liability imposed on the guarantor . . . In particular, the guarantors' liability accrues only after default on the part of the principal obligor.' " (Madison Ave. Leasehold, LLC v Madison Bentley Associates, LLC, 30 AD3d 1, 1st Dept., 2006, aff'd. 8 NY3d 59, 2006, rearg den. 8 [*10]NY3d 867, 2007, quoting, Brewster Tr. MixCorp. v McLean, 169 AD2d 1036, 1037, 1991, citing, General Phoenix Corp. v Cabot, 300 NY87, 85, 1949).

Parimist Funding's motion is denied. The defendants' cross-motion for summary judgment dismissing the complaint is granted.

This order concludes the within matter assigned to me pursuant to the Uniform Rules for New York State Trial Courts.

So Ordered.

DatedXXXJ.S.C.