A New York Supreme Court judge has ruled in a lease dispute involving Auto-Chlor Systems of New York City, Inc. and the restaurant Honey Badger. The court's decision affects both the plaintiff, Auto-Chlor, and the defendants, Golden Ratio 1 618 Corp., which operates Honey Badger, and its president, Fjolla Sheholli. This ruling is significant as it addresses issues of default judgment and the rights of a pro se defendant in a commercial lease agreement.
The case, Auto-Chlor Sys. of N.Y. City, Inc. v. Golden Ratio 1 618 Corp., was filed on April 7, 2026, under docket number 513204/2023. The dispute arose from a contract between Auto-Chlor and Honey Badger, which involved the lease of a dishwasher and related services. Auto-Chlor claimed that Honey Badger failed to pay for the leased equipment, leading to the legal action.
Auto-Chlor Systems, which provides dishwashing equipment and services, entered into a lease agreement with Honey Badger on February 6, 2018. The lease stipulated that Honey Badger would pay a base rental rate for the dishwasher, along with additional fees based on usage. Sheholli, as the president of the restaurant, signed the lease as a guarantor. The original complaint was filed on May 5, 2023, naming Sheholli as the only defendant. Sheholli responded in August 2023, claiming that Auto-Chlor breached the contract by not providing the agreed services and disconnecting the dishwasher.
As the case progressed, Auto-Chlor sought to amend its complaint to include the corporate entity, Golden Ratio 1 618 Corp. The court allowed this amendment, and the defendants were served with the amended complaint in June 2025. However, neither Sheholli nor the corporation responded to the amended complaint, prompting Auto-Chlor to file a motion for default judgment.
Judge Aaron D. Maslow presided over the case and issued a ruling on the motion. The court found that while the defendants had failed to answer the amended complaint, Sheholli provided a reasonable excuse for the default. She testified that she had moved to a new apartment and had been caring for her newborn son, which impacted her ability to respond to the legal documents. The court noted that Sheholli's claims of service issues with the dishwasher and her intention to hire an attorney to represent her were significant factors in its decision.
The court ruled, "The determination of what constitutes a reasonable excuse lies within the Supreme Court's discretion... a strong public policy in favor of resolving cases on the merit."
As a result, the court denied Auto-Chlor's motion for a default judgment and allowed Sheholli and her corporation to file a late answer to the amended complaint. The ruling emphasized the importance of allowing defendants to present their defenses, especially when they can demonstrate a reasonable excuse for their default. The judge highlighted that the interests of justice favored allowing the case to be resolved based on its merits rather than procedural defaults.
This ruling has implications for both parties. For Auto-Chlor, the denial of the default judgment means they must continue to litigate the case rather than receiving a quick resolution in their favor. For Sheholli and her restaurant, the decision allows them to defend against the claims and potentially argue that Auto-Chlor breached the lease agreement. The court's ruling also underscores the challenges faced by pro se litigants, who may not be familiar with legal procedures but still have the right to defend themselves in court.
Looking ahead, the court has ordered Sheholli and Golden Ratio 1 618 Corp. to file their answer to the amended complaint by May 8, 2026. If they fail to do so, Auto-Chlor is permitted to file for a default judgment again. This ongoing litigation could set important precedents for similar lease disputes, particularly regarding the treatment of pro se defendants and the enforcement of commercial leases.
Details were not available in the court filing regarding whether Auto-Chlor plans to appeal the decision or if there are any related cases pending. However, the outcome of this case will likely influence how similar disputes are handled in the future, especially in New York courts.