A New York appellate court recently upheld a judgment against the owners of Khims Organic, Inc., for breach of contract. The decision, made on April 29, 2026, affects Sung Kyu Khim and Su Lim Khim, who failed to respond to a lawsuit regarding unpaid rent. The court's ruling reinforces the importance of adhering to contractual obligations and the consequences of ignoring legal proceedings.

The case, titled 166 N. 7 St., LLC v. Sung Kyu Khim, was filed under docket number 2021-01309. The ruling came from the Appellate Division of the Supreme Court of the State of New York, Second Department, and involved a significant judgment of $739,903.31 against the defendants.

Background

The dispute began when 166 North 7 St., LLC, the plaintiff, entered into a 10-year commercial lease agreement with Khims Organic, Inc., in 2010. The lease covered a commercial storefront located in Brooklyn. In conjunction with the lease, the defendants, Sung Kyu Khim and Su Lim Khim, signed a guaranty, making them jointly and severally liable for the lease's terms.

In August 2018, Khims Organic ceased operations and vacated the premises, leading to a breach of the lease agreement. Following the business's departure, neither Khims Organic nor the defendants made any rental payments. In response, the plaintiff initiated legal action in 2020, seeking damages for the breach of contract through a motion for summary judgment in lieu of a complaint.

The Supreme Court of Kings County granted the plaintiff's motion for summary judgment after the defendants failed to appear or oppose the motion. Consequently, a judgment was entered on November 25, 2020, in favor of the plaintiff, resulting in the substantial monetary award.

The Ruling

The defendants later sought to vacate the November 2020 judgment, arguing that they had reasonable excuses for their default. However, the Appellate Division affirmed the lower court's decision, stating, "In order to vacate a default in opposing a motion pursuant to CPLR 5015(a)(1), the moving party is required to demonstrate a reasonable excuse for the default and a potentially meritorious opposition to the motion."

The court found that the defendants failed to provide a reasonable excuse for their absence, noting that ignorance of the law and confusion about court dates do not qualify as valid reasons. The ruling emphasized that the determination of what constitutes a reasonable excuse lies within the sound discretion of the Supreme Court.

Additionally, the court addressed the defendants' request for a protective order to vacate restraining notices on their bank accounts. The court stated, "CPLR 5240 grants the courts broad discretionary power to alter the use of procedures set forth in CPLR article 52 to prevent 'unreasonable annoyance, expense, embarrassment, disadvantage or other prejudice.'" The court concluded that the restraining notices were necessary to secure enforcement of the judgment.

Impact

The court's decision has significant implications for both the defendants and other parties involved in commercial leases. It underscores the importance of responding to legal actions promptly and the potential consequences of failing to do so. The ruling reinforces that contractual obligations must be taken seriously, and parties cannot simply ignore their responsibilities without facing legal repercussions.

This case may also serve as a precedent for similar disputes in the future, emphasizing the courts' willingness to uphold judgments against parties who default on their obligations. The ruling highlights the need for individuals and businesses to seek legal counsel when faced with contractual disputes to avoid adverse outcomes.

What's Next

The defendants have the option to appeal the ruling, but details regarding any potential appeal were not available in the court filing. There is no mention of related cases pending in connection with this matter.