Opinion
Index No. 150210/2023
05-11-2023
Egger's Original Ice Cream, Inc., Plaintiff, v. Staten Island Historical Society, Inc. d/b/a HISTORIC RICHMOND TOWN and JESSICA B. PHILLIPS, Defendant.
Attorney for Plaintiff: Ryan Brand, Esq. Angiuli & Gentile, LLP Attorney for Defendants: Diane Lehman Klein, Esq. Kucker Marino Winiarsky & Bittens LLP Eric Russell Mcavey, Esq. Kucker Marino Winiarsky & Bittens, LLP
Unpublished Opinion
Attorney for Plaintiff:
Ryan Brand, Esq.
Angiuli & Gentile, LLP
Attorney for Defendants:
Diane Lehman Klein, Esq.
Kucker Marino Winiarsky & Bittens LLP
Eric Russell Mcavey, Esq.
Kucker Marino Winiarsky & Bittens, LLP
HON. RONALD CASTORINA, JR., JUSTICE.
The following e-filed documents listed on NYSCEF (Motion #002) numbered 19-30, 55-74 and (Motion #004) numbered 32, 34-46, 50-53 were read on this motion.
Upon the foregoing documents, and after argument conducted on March 30, 2023 on Motion Sequence #004 and on April 13, 2023 on Motion Sequence #002, Motion Sequence #002 and Motion Sequence #004 are resolved and therefore, it is hereby, ORDERED, that Defendants' motion pursuant to pursuant to CPLR § 3211 [a] [1] and CPLR § 3211 [a] [7] for dismissal of the Plaintiff's complaint is DENIED, and it is further;
ORDERED, that Defendants' motion pursuant to CPLR § 3211 [a] [7] for an order dismissing with prejudice and without leave to replead the Plaintiff's complaint as against Defendant Jessica B. Phillips is GRANTED, with prejudice, and it is further;
ORDERED, the Defendant's request to dismiss Motion Sequence #004 for Plaintiff's failure to comply with the service provisions of the order to show cause is DENIED, with prejudice, and it is further;
ORDERED, the Plaintiff's request for a Yellowstone injunction tolling the time for Plaintiff to cure alleged defaults of the Lease and staying the notice, staying the denial of Second Renewal Option, staying the termination of Lease, staying interference with Plaintiff's use of premises, staying the removal of Plaintiff's property, or recovering possession of the Premises pending final determination of action is GRANTED, and it is further;
ORDERED, that the Clerk of the Court shall enter judgment accordingly.
Memorandum Decision
I. Procedural History
Plaintiff commenced the instant action by service of a summons and verified complaint on the Defendants on or about January 31, 2023. Plaintiff alleges that it is the tenant of the Defendant and Defendant is improperly attempting to terminate Plaintiff's lease. Plaintiff seeks (1) a Yellowstone injunction tolling the cure period of any violations of the lease and prohibiting the Defendant from exercising termination of the lease or otherwise seeking possession of the premises; (2) a finding that Defendant is prohibited from exercising termination of the lease based on Plaintiff's alleged failure to maintain the premises' pipes; and (3) a finding that Defendant is prohibited from exercising termination of the lease based on Plaintiff's alleged failure to pay additional rent. Plaintiff further seeks (4) a finding that Defendant is prohibited from exercising termination of the lease based on Plaintiff's alleged failure to notify Defendant of alterations in relation to plumbing work performed outside the scope of Article 8 of the lease and (5) a finding that Defendant is prohibited from exercising termination of the lease based on Plaintiff's alleged failure to notify Defendant of alterations in relation to plumbing work and landscaping performed by Plaintiff not in accord with applicable laws and regulations.
Defendants filed Motion Sequence #002 by notice of motion on March 15, 2023 seeking (1) to dismiss the Plaintiff's action against all Defendants pursuant to CPLR § 3211 [a] [1] and CPLR § 3211 [a] [7]; (2) to dismiss the Plaintiff's cause of action against Defendant Jessica B. Phillips pursuant to CPLR § 3211 [a] [7]; and other such relief as deemed just and proper. Plaintiff filed opposition on April 7, 2023. Defendants filed reply on April 12, 2023. Oral argument was completed on Motion Sequence #002 April 13, 2023.
On March 24, 2023, Plaintiff filed Motion Sequence #004 by order to show cause seeking to (1) toll the time for Plaintiff to cure the alleged defaults of the Lease set forth in the "Lease Violations and Non-Renewal of Lease" letter dated March 6, 2023; (2) stay the notice; (3) stay the Defendants from denying Tenant's exercise of its Second Renewal Option; and (4) stay the Defendants from exercising termination of the lease. Plaintiff further seeks to (5) stay Defendants from interfering with Plaintiff's use of the premises; (6) stay Defendants from removal of Plaintiff's Property located within the premises or otherwise recovering possession pending the final determination of this action; and (7) such other and further relief as may be just and proper. Defendants filed opposition on March 30, 2023. Oral argument was heard by the Court on Motion Sequence #004 on March 30, 2023.
II. Facts
Plaintiff, Egger's Original Ice Cream, Inc., is a New York corporation. Defendant, Staten Island Historical Society, Inc., d/b/a Historic Richmond Town (hereinafter referred to as HRT) is a 501(c)3 Non-Profit organization Defendant Jessica B. Phillips (hereinafter referred to as CEO) is the Chief Executive Officer of the co-Defendant HRT. HRT is the owner and landlord of a pop-up structure within its larger complex known as the "Gas Station" on the property known as 441 Clark Avenue, Staten Island, New York.
Plaintiff and HRT entered a lease (hereinafter referred to as Lease) on May 1, 2020, for the premises known as the "Gas Station" within the Historic Richmond Town Complex. Plaintiff has been operating an ice cream shop from the location for just over two years. The initial term of the lease ran from May 1, 2020, and ended on October 30, 2020, and HRT reserved the ability to terminate the lease sooner under certain provisions of the lease. (NY St Cts Filing [NYSCEF] Doc No. 22). Plaintiff was obligated to pay Rent, a percentage of sales rent and additional rent as those terms were defined in Articles 4 and 5 of the lease. (see id).
The lease provides the Plaintiff with two additional options to renew the lease "Provided Tenant is not in default under any of the terms and conditions of this Lease either at the time of its exercise of the... Option or on the first day of the... Renewal Lease Term, Tenant shall have the option... to extend the term of this Lease for an additional two (2) year term." (see id).
Following the expiration of the lease on October 30, 2020, Plaintiff exercised its first of two renewal options by notifying Defendants of its intent. (NY St Cts Filing [NYSCEF] Doc No. 58). The lease was extended pursuant to a valid exercise of the First Renewal Option, and the Lease term was thereby extended through October 30, 2022. (NY St Cts Filing [NYSCEF] Doc No. 20; NY St Cts Filing [NYSCEF] Doc No. 58).
During the lease, there were several incidents involving clogs of the premises' sewer pipes, Defendants allege that the clogs involved the pipes that ran from the premises, across the HRT complex, to the City's sewer lines and were caused by milk fat originating from the ice cream parlor being operated by the Plaintiff at the premises. (NY St Cts Filing [NYSCEF] Doc No. 20). Defendants maintain that milk fat is a direct byproduct of the Plaintiff's business and Plaintiff is the only tenant that uses milk in the complex. (see id). Defendant contends that the clogs were a direct result of the Plaintiff's failure to maintain the sewage pipes and repair them when they became clogged as required by the lease.
In early January 2023, HRT alleges to have sent a Notice of Default to the Plaintiff enumerating defaults under the lease and followed this correspondence with a Termination Notice on or about January 19, 2023. (NY St Cts Filing [NYSCEF] Doc No. 40). On or about January 26, 2023, Plaintiff responded through counsel to contest Defendants' allegations and informed Defendants of Plaintiff's exercise of the lease renewal option. (NY St Cts Filing [NYSCEF] Doc No. 40).
Defendants maintain that Plaintiff was in default of the lease at the time of the second renewal option period, for (1) failing to maintain sewage pipes; (2) continuing food services without functioning drainage; (3) failure to obtain consent of HRT for alterations, failure to obtain approval of HRT of construction and failure to obtain HRT approval of contractor; and (4) failure to obtain government approval and permits prior to construction. Defendants allege Plaintiff was in further default, in that (5) a pipe clog requiring remediation was due to milk fat produced by Plaintiff, Plaintiff was provided with an invoice in the amount of the repair, $24,500.00, and Plaintiff failed to pay this amount as additional rent; and (5) Plaintiff failed to remove its property at the expiration of the First Renewal Lease Term.
Plaintiff maintains that (1) Plaintiff retained plumbing services to make necessary repairs to sewage system; (2) if there are any issues requiring remediation and a temporary ceasing of operations, Plaintiff is ready, willing, and able to cure by way of paying for services to make necessary repairs in a manner approved by HRT; (3) Plaintiff contends that plumbing issues were related to cracks in the underground pipes and not a result of its operations and that plumbing and landscaping services were retained for restorative work affecting the outside of the premises and not an alteration requiring HRT consent.
Plaintiff further contends that (4) the lease does not require Plaintiff to obtain government approval and permits and no evidence has been presented that its plumbing and landscaping work have interfered with the use and occupancy of the complex outside the premises; (5) the allegation to remove property is premature.
III. Dismissal Pursuant to CPLR § 3211 [a] [1] and CPLR § 3211 [a] [7] as Against all Defendants
"Pursuant to CPLR § 3211 [a] [1], a defendant may move to dismiss a cause of action on the ground that 'a defense is founded upon documentary evidence' (see CPLR § 3211 [a] [1]). A motion to dismiss a complaint based upon CPLR § 3211 [a] [1] may be granted 'only where the documentary evidence utterly refutes [a] plaintiff's factual allegations, conclusively establishing a defense as a matter of law' (see Sunset Café, Inc. v Mett's Surf & Sports Corp., 103 A.D.3d 707 [2d Dept 2013] quoting Goshen v. Mut. Life Ins. Co., 98 N.Y.2d 314 [2002]). "In order for evidence to qualify as documentary' it must be unambiguous, authentic and undeniable" (see id quoting Granada Condominium III Assn. v. Palomino, 78 A.D.3d 996 [2d Dept 2010]). "A valid lease qualifies as documentary evidence within the intendment of CPLR § 3211 [a] [1]" (see id citing Midorimatsu, Inc. v Hui Fat Co., 99 A.D.3d 680 [2d Dept 2012]).
"To succeed on a motion to dismiss pursuant to CPLR § 3211 [a] [1], the documentary evidence that forms the basis of the defense must resolve all factual issues as a matter of law, and conclusively dispose of the plaintiff's claim" (see NY Cmty. Bank v. Snug Harbor Square Venture, 299 A.D.2d 329 [2d Dept 2002] citing Teitler v. Max J. Pollack & Sons, 288 A.D.2d 302 [2d Dept 2001]; Kalivia Food Corp. v. Hunts Point Coop. Mkt., 244 A.D.2d 460 [2d Dept 1997]).
"In order to be documentary, the evidence must be unambiguous, authentic, and undeniable; thus, affidavits are not considered documentary evidence" (see Summer v Severance, 85 A.D.3d 1011 [2d Dept 2011] quoting Treeline 1 OCR, LLC v Nassau County Indus. Dev. Agency, 82 A.D.3d 748 [2d De
Where "evidentiary material has been considered in support of a motion to dismiss a complaint pursuant to CPLR § 3211 [a] [7], the court must determine whether the proponent of the pleading has a cause of action, not whether the proponent has stated one" (see Zurich Depository Corp. v. Iron Mtn. Info. Mgt., Inc., 61 A.D.3d 750 [2d Dept 2009] citing Guggenheimer v. Ginzburg, 43 N.Y.2d 268 [1977]; Steiner v. Lazzaro & Gregory, P.C., 271 A.D.2d 596 [2d Dept 2000]; Meyer v. Guinta, 262 A.D.2d 463 [2d Dept 2009]). "If the documentary proof disproves an essential allegation of the complaint, dismissal pursuant to CPLR § 3211 [a] [7] is warranted even if the allegations, standing alone, could withstand a motion to dismiss for failure to state a cause of action" (see id quoting Peter F. Gaito Architecture, LLC v. Simone Dev. Corp., 46 A.D.3d 530 [2d Dept 2007]).
CPLR § 3211 [a] [7] provides that a "party may move for judgment dismissing one or more causes of action asserted against him on the ground that the pleading fails to state a cause of action[.]" "In considering a motion pursuant to CPLR § 3211 [a] [7] to dismiss a complaint for failure to state a cause of action, the court must accept the facts as alleged in the complaint as true, accord the plaintiff the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory" (see Green 333 Corp. v RNL Life Science, Inc., 186 A.D.3d 1334 [2d Dept 2020] citing Cortlandt St. Recovery Corp. v Bonderman, 31 N.Y.3d 30 [2018]; Korsinsky v Rose, 120 A.D.3d 1307 [2d Dept 2014]).
"On a motion to dismiss for failure to state a cause of action, 'the pleading is to be afforded a liberal construction'" (see Nassau Operating Co., LLC v DeSimone, 206 A.D.3d 920 [2d Dept 2022] quoting Leon v Martinez, 84 N.Y.2d 83 [1994] citing CPLR § 3026 ). "The facts alleged in the complaint must be accepted as true, and the plaintiff is entitled to receive the benefit 'of every possible favorable inference'" (see id quoting Leon v Martinez, 84 N.Y.2d 83 [1994]). However, "[d]ismissal of the complaint is warranted if the plaintiff fails to assert facts in support of an element of the claim" (see id quoting Connaughton v Chipotle Mexican Grill, Inc., 29 N.Y.3d 137 [2017] citing Myers v Schneiderman, 30 N.Y.3d 1 [2017]).
"Where evidentiary material is submitted and considered on a motion to dismiss a complaint pursuant to CPLR § 3211 [a] [7], and the motion is not converted into one for summary judgment, the question becomes whether the plaintiff has a cause of action, not whether the plaintiff has stated one, and unless it has been shown that a material fact as claimed by the plaintiff to be one is not a fact at all and unless it can be said that no significant dispute exists regarding it, dismissal should not eventuate" (see J & JT Holding Corp. v Deutsche Bank Natl. Trust Co., 173 A.D.3d 704 [2d Dept 2019]; quoting Rabos v R&R Bagels & Bakery, Inc., 100 A.D.3d 849 [2d Dept 2012]; citing Guggenheimer v. Ginzburg, 43 N.Y.2d 268 [1977]; Greenberg v Spitzer, 155 A.D.3d 27 [2d Dept 2017]).
Article 2 of the Premise Lease governs "Premises and Lease Term." The parties entered into a lease term that commenced on May 1, 2020 and expired on October 30, 2020. Section 2.3 provides Plaintiff the right to exercise a First and Second Renewal Option. Section 2.3(b) of the Lease, related to Plaintiff's ability to exercise the Second Renewal Option provides that:
Provided Tenant is not in default under any of the terms and conditions of this Lease either at the time of its exercise of the Second Renewal Option or on the first day of the Second Renewal Lease Term, Tenant shall have the option (the "Second Renewal Option") to extend the term of this Lease for an additional two (2) year term (the "Second Renewal Lease Term"), upon the same terms and conditions (except as otherwise provided herein), by giving written notice to Landlord of the exercise of the Second Renewal Option (the "Second Option Exercise Notice") by no later than January 31, 2023. Time shall be of the essence with respect to Tenant's giving of the Second Option Exercise Notice. In the event that Tenant elects to extend the term of this Lease pursuant to this Section 2.3(b) the Base Rent for the Second Renewal Lease Term shall be determined in accordance with Section 4.3(b) and (b) the Expiration Date shall be extended until the last day of the Second Renewal Lease Term. (NY St Cts Filing [NYSCEF] Doc No. 22).
There are two conditions that must be met for the Plaintiff to renew the lease. The first condition for renewal requires the Plaintiff to not be in default under any terms and conditions of the lease either at the time of its exercise of the renewal or on the first day of the second renewal lease term. The second condition is the Plaintiff must give written notice to HRT of its intent to exercise the renewal option, no later than January 31, 2023.
A. Failure by Plaintiff to Properly Notice of Intent to Exercise Renewal Option
There is no dispute that Plaintiff exercised its First Renewal Option via electronic mail to the CEO of HRT. The exercise of the first renewal option via email was deemed valid notice to effectuate the renewal of the Lease term. Defendant, Phillips, states in her affidavit, "[t]he lease was extended pursuant to a valid exercise of the First Renewal Option, and the Lease term was thereby extended through October 30, 2022." (NY St Cts Filing [NYSCEF] Doc No. 20). Defendants now seek to dispute the validity of Plaintiff's exercise of its Second Renewal Option via the January 26, 2023 letter sent by Plaintiff's counsel addressed to HRT CEO Phillips. Defendant, Phillips, contends, that the January 26, 2023 letter is invalid because "it did not comply with the notice provisions within the Lease, and thus was ineffective to constitute written notice as required in exercising the Second Renewal Option" (see id).
Section 24.10 of the premises Lease governs the general notice requirements as follows:
(a) Unless otherwise expressly provided herein, in order to be effective, any notice or demand hereunder shall be in writing and shall be personally delivered, sent by a nationally recognized courier service, or mailed by registered or certified mail, return receipt requested, addressed, (i) if to Tenant, at the Address of Tenant, or at such other address as Tenant shall have last designated by notice in writing to Landlord and (ii) if to Landlord, to the Address of Landlord or at such other address as Landlord shall have last designated by notice in writing to Tenant, Attention: Executive Director, with a copy to the attention of the President of the Board of Directors. Notices shall be deemed received when personally delivered or upon receipt (or rejection) if mailed or sent by a courier service. Notwithstanding the foregoing, Rent statements and routine correspondence relating to this Lease may be sent to Tenant by regular mail. (NY St Cts Filing [NYSCEF] Doc No. 6).
Plaintiff maintains that its letter from counsel, dated January 26, 2023 and sent via Federal Express and via email to HRT CEO, Defendant Phillips, constituted valid notice or, in the alternative, that there was no adverse effect from specific noncompliance with the notice requirement given the prior dealings between the parties. (NY St Cts Filing [NYSCEF] Doc No. 6).
"A lease is to be interpreted as a whole and construed to carry out the parties' intent, gathered, if possible, from the language of the lease" (see International Chefs v. Corporate Prop. Investors, 240 A.D.2d 369 [2d Dept 1997] quoting Cobalt Blue Corp. v. 184 W. 10th St. Corp., 227 A.D.2d 50 [1st Dept 1996]; citing Papa Gino's of Am. v. Plaza at Latham Assocs., 135 A.D.2d 74 [3rd Dept 1988]). "Moreover, a lease 'should not be interpreted in such a way as would leave one of its provisions substantially without force or effect'" (see id quoting Tantleff v. Truscelli, 110 A.D.2d 240 [2d Dept 1985]; citing Corhill Corp. v. S. D. Plants, Inc., 9 N.Y.2d 595 [1961]).
"[T]he general rule is that a tenant that fails to exercise an option to renew within the time and in the manner provided in the lease is without remedy at law" (see Laundry Mgt. - N. 3rd St., Inc. v BFN Realty Assoc., LLC, 179 A.D.3d 776 [2d Dept 2020] citing Dan's Supreme Supermarkets v. Redmont Realty Co., 240 A.D.2d 460 [2d Dept 1997]).
[E]quity will intervene to relieve a commercial tenant's failure to exercise an option to renew within the time and in the manner provided in the lease "where (1) such failure was the result of 'inadvertence,' 'negligence' or 'honest mistake'; (2) the nonrenewal would result in a 'forfeiture' by the tenant; and (3) the landlord would not be prejudiced by the tenant's failure to send, or its delay in sending, the renewal notice" (see id quoting Baygold Assoc., Inc. v Congregation Yetev Lev of Monsey, Inc., 19 N.Y.3d 223 [2012] quoting J. N. A. Realty Corp. v. Cross Bay Chelsea, Inc., 42 N.Y.2d 392 [1977]; citing Waterfalls Italian Cuisine, Inc. v Tamarin, 149 A.D.3d 1141 [2d Dept 2017]).
On March 7, 2021, as per Section 2.3 (a) of the Lease Plaintiff, exercised its First Renewal Option to extend the Lease Term for an additional two (2) year term as of January 31, 2021. This was done by way of email exchange between Plaintiff and Defendant Phillips, the CEO of HRT. (NY St Cts Filing [NYSCEF] Doc No. 67; NY St Cts Filing [NYSCEF] Doc No. 58).
When determining whether the letter, dated January 26, 2023, and sent through counsel to HRT CEO Phillips via Federal Express and email constituted valid notice or, in the alternative, that there was no adverse effect from specific noncompliance with the notice requirement, the Court has considered the prior dealings between the parties and in particular the undisputed fact that Plaintiff exercised its First Renewal Option via electronic mail to HRT CEO Phillips, which was deemed to constitute valid notice.
Section 2.3 and 24.10 of the Premises Lease, further, contain no language that expressly prohibits a designated agent or attorney to act on behalf of the Plaintiff to effectuate written notification of Plaintiff's exercise of the First and Second Renewal Option. Courts have recognized that where there is "no particular method for exercising a right to renew is prescribed in a lease, a tenant may adopt any reasonable method at the end of the term to indicate that tenant elects to renew the lease." (see Brooks v. Elabed, 7 Misc.3d 132 (A) [2d Dept 2005]; citing Foster v. Mulcahey, 196 AD 814 [4th Dept 1921]; Schwalben v. Cholowaczuk, 75 Misc.2d 98 [Sup Ct, Kings County]). Any ambiguity in a lease is resolved against the lessor and its manager. (see Sanford v. Jonathan Woodner Co., 304 A.D.2d 813 [2d Dept 2003] citing 455 Seventh Ave., Inc. v. Frederick Hussey Realty Corp., 295 NY 166 [1946]).
Defendants rely on the Matter of 2039 Jericho Turnpike Corp., where the Court held "[t]he lease rider specifically called for notice to the landlord in a particular manner. It is undisputed that notice was not given to the landlord in that manner, and there is no evidence in this record that the landlord waived such notice" (see Matter of 2039 Jericho Turnpike Corp. v. Caglayan, 64 A.D.3d 609 [2d Dept 2009]; citing Gilbert Frank Corp. v. Federal Ins. Co., 70 N.Y.2d 966 [1988]). The decision goes on to state, "Although the tenants' principal testified that he personally delivered to the landlord's principal a notarized letter exercising the renewal option, the District Court specifically credited the testimony of the landlord's principal that he never received any such letter. Thus, the landlord cannot be found to have waived proper notice through the receipt of, and failure to promptly object to, notice given in an improper manner (see id citing Juleah Co., L.P. v. Greenpoint-Goldman Corp., 49 A.D.3d 282 [1st Dept 2008]; Fortune Limousine Serv., Inc. v. Nextel Communications, 35 A.D.3d 350 [2d Dept 2006]; Rower v. W. Chamson Corp., 210 A.D.2d 7 [1st Dept 1994]; Mlcoch v. Smith, 173 A.D.2d 443 [2d Dept 1991]).
The main issue in this case is not whether the Defendants received the Plaintiff's notice of intent to exercise the lease renewal option, but rather the method of providing such notice. Plaintiff further relies on Hallock, where the Court held,
Essential to the creation of apparent authority are words or conduct of the principal, communicated to a third party, that give rise to the appearance and belief that the agent possesses authority to enter into a transaction. The agent cannot by his own acts imbue himself with apparent authority. 'Rather, the existence of 'apparent authority' depends upon a factual showing that the third party relied upon the misrepresentation of the agent because of some misleading conduct on the part of the principal - not the agent." (see Hallock v. State, 64 N.Y.2d 224 [1984] quoting Ford v. Unity Hospital, 32 N.Y.2d 464 [1973]; citing Restatement [Second] of Agency, § 27). Moreover, a third party with whom the agent deals may rely on an appearance of authority only to the extent that such reliance is reasonable (see id citing Wen Kroy Realty Co. v. Public Nat'l Bank & Trust Co., 260 NY 84; Restatement [Second] of Agency, § 8, Comment c).
In this matter there is no issue as to whether the Plaintiff's agent, her attorney in this matter had the authority to bind the Plaintiff to the renewal of the lease. Plaintiff does not contest the fact that her attorney was acting on her behalf. It bears reiterating here that Defendants do not dispute Plaintiff's written notification to exercise its Second Renewal Option was made in a timely fashion. Rather, the issue before this Court is whether the letter sent via Federal Express and via email, dated January 26, 2023, from Plaintiff's attorney to the Defendant CEO of HRT constituted valid notice as required to exercise the Second Renewal Option. In making its determination, the Court has also considered, the prior dealings between the parties with respect to Plaintiff's exercise of its Renewal Option under the Premise Lease such as the undisputed fact of Plaintiff's valid exercise of the First Renewal Option via electronic mail to the CEO of HRT, Defendant Phillips.
Accordingly, the Court finds the letter, dated January 26, 2023, and sent to HRT CEO Phillips via Federal Express and email to constitute valid notice by Plaintiff to exercise its Second Renewal Option.
B. Plaintiff was in Default Under Lease and ineligible to Exercise Renewal Option
Defendants contend that even if the letter and email, dated January 26, 2023, constitute notice under the terms of the Premise Lease, Plaintiff was precluded from exercising its Second Renewal Option due to numerous alleged defaults. The Premises Lease provides that,
"Provided Tenant is not in default under any of the terms and conditions of this Lease either at the time of its exercise of the Second Renewal Option or on the first day of the Second Renewal Lease Term, Tenant shall have the option (the "Second Renewal Option") to extend the term of this Lease for an additional two (2) year term (the "Second Renewal Lease Term"), upon the same terms and conditions (except as otherwise provided herein), by giving written notice to Landlord of the exercise of the Second Renewal Option (the "Second Option Exercise Notice") by do later than January 31, 2023. Time shall be of the essence with respect to Tenant's giving of the Second Option Exercise Notice. (NY St Cts Filing [NYSCEF] Doc No. 57).
Defendants cite the First Department's decision in American Realty Co., which held "An election to renew must be timely, definite, unequivocal and strictly in compliance with the lease term" (see American Realty Co. v. 64 B Venture, 176 A.D.2d 226 [1st 1991]). Defendants contends that in order for the letter and email, dated January 26, 2023 to constitute an effective exercise of the Second Renewal Option, Plaintiff could not be in default under any terms and conditions of the lease.
Defendant Phillips's affidavit alleges the Plaintiff violated numerous provisions of the Lease during the term of the Lease and the breaches remained as of the date of the January 26, 2023 communications providing notice of the Plaintiff's intent to exercise the renewal option. The affidavit of Defendant Phillips dated March 15, 2023 alleges repeated clogs of the sewage pipes running from the Premises out across the complex and into the City sewage lines. (NY St Cts Filing [NYSCEF] Doc No. 20). Defendant Phillips maintains,
"Such clogs have occurred due to milk fat originating from Tenant repeatedly clogging the sewage pipes. Indeed, milk fat is a direct byproduct of Tenant's use of the Premises and Tenant is tellingly the only tenant of the Premises that uses milk in its facility. Therefore, these clogs are a direct result of Tenant's failure to maintain the sewage pipes and repair them when they became clogged as was its responsibility under Section 10.2 of the Lease. The history of such clogs is a tortured one and ultimately demonstrates several of Tenant's clear breaches and defaults under the Lease." (see id).
Defendant Phillips contends milk fat clogs occurred on at least four occasions continued from around November 2020 through May 2022 (see id). HRT contends it had to remediate the issue at the cost of $24,500.00. (NY St Cts Filing [NYSCEF] Doc No. 20; NY St Cts Filing [NYSCEF] Doc No. 27). HRT contends that they advised the Plaintiff in writing that it had incurred this expense and billed the Plaintiff for this expense as "Additional Rent" pursuant to Sections 4.1, 4.12, 11.4, 23.5 and 23.8 of the lease. (NY St Cts Filing [NYSCEF] Doc No. 20). HRT alleges that this expense remained unpaid as of the time of the purported exercise of the Second Renewal Option of the lease by the Plaintiff. (see id). HRT contends that Plaintiff's default triggers a forfeiture of the Second Renewal Option. HRT also cites allegations of Plaintiff engagement in unauthorized work, and failure to abide by applicable regulations.
Defendants inference that prior alleged milk fat clogs originating from Plaintiff led to a larger, more severe clog requiring Defendant Landlord to remediate the issue in May of 2022. Specifically, Defendants allege that a milk fat clog occurred where Plaintiff's sewage pipes join the New York City sewer system. More than four months later, Defendants notified Plaintiff by an electronic message that "in May of this year [2022], a pipe clog from milk fat required emergency remediation" and HRT "executed their option to perform the work." (NY St Cts Filing [NYSCEF] Doc No. 59). Accompanying this communication was an invoice from Quality Plumbing, Inc. dated May 18, 2022, in the amount of $24,500.00 (NY St Cts Filing [NYSCEF] Doc No. 27).
The invoice from Quality Plumbing, Inc., provides no indication of the cause of the clog, or that the work performed in the City street can be traced back to the pipes of Egger's at Historic Richmond Town. Defendants do not provide any reports or affidavits of engineers or plumbers showing a connection between the pipe issue and operation of Plaintiff's business or that the pipe fixed involved the sewage pipe leading from the premises.
Section 10.2 of the Lease provides for the tenant's obligations as follows:
Tenant shall, at its expense, throughout the Lease Term, take good care of the Premises and the Complex Equipment, Improvements and Tenant's Property therein or serving the Premises and make all repairs and replacements necessary to keep the same in proper order and good repair. Tenant shall be responsible for the cost of all repairs, maintenance and replacement of wall and floor coverings and grounds in the Premises and for the repair and maintenance of all fixtures, installations, equipment, furniture, grounds and decorative items in the Premises. Tenant shall be responsible for all maintenance and repairs, interior and exterior, structural and non-structural, ordinary and extraordinary, of the Premises, the Complex and the Complex Equipment, made necessary by: (a) the impact of any Improvement; (b) the installation or use of Tenant's Property in the Premises; the moving of Tenant's Property into or out of the Complex; (d) any act or omission of Tenant or its officers, partners, principals, employees, agents, subtenants, contractors or invitees; or (e) Tenant's use or occupancy of the Premises. Tenant shall promptly make, at Tenant's expense, any and all repairs in or to the Premises for which Tenant is responsible pursuant to the foregoing provisions of this Section 10.2 and in accordance with Article 8 of this Lease. If any such repair work shall constitute an Alteration, the same shall be subject to the provisions of Article 8 regarding Alterations.
Any repairs and maintenance outside of the Premises for which Tenant is responsible pursuant to the foregoing provisions of this Section 10.2 shall, at the option of Landlord and upon reasonable prior notice to Tenant, be performed by Landlord at Tenant's reasonable cost and expense.
Tenant shall in no way impede Landlord from operating the Complex and shall take no actions and create no conditions which would adversely affect the Complex's status and reputation. (NY St Cts Filing [NYSCEF] Doc No. 28).
Further, Section 23.5 of the Premise Lease, provides Defendants the right to cure any default.
Landlord may, but shall not be obligated to, cure any default by Tenant under this Lease at any time after notice and the lapse of any cure period, if any, included within the conditional limitation to which such default relates, but without further notice. Whenever Landlord so elects, all costs and expenses incurred by Landlord in curing any such default; including attorneys' fees and disbursements, together with interest on the amount of costs and expenses so incurred at the Interest Rate (as defined in Section 4.11) shall be paid by Tenant to Landlord on demand, as Additional Rent. (see id).
In an undated letter from Defendants, submitted by Plaintiff to NYSCEF on April 7, 2023, Defendants allege Plaintiff to be in default of the lease in multiple areas. (NY St Cts Filing [NYSCEF] Doc No. 60). These allegations were reiterated with some additions and modifications by the Defendants to the Plaintiff in a letter dated March 6, 2023. (NY St Cts Filing [NYSCEF] Doc No. 24). Defendants maintain the Plaintiff has failed to maintain the pipes as required in Section 10.2 of the Lease, resulting in pipe clogs that caused unsanitary conditions as backed up and broken pipes leached sewage through the ground in multiple locations.
In Defendant Phillips affidavit she maintains, the "fourth clog was never resolved by Tenant and by April of 2022, the issue of leaching milk fat still had not been resolved. At that point in May of 2022, Landlord had no choice but to remediate the issue in Tenant's stead pursuant to Section 23.5 of the Lease. Landlord incurred associated expenses in the amount of $24,500.00" (NY St Cts Filing [NYSCEF] Doc No. 20).
Plaintiff maintains in her affidavit,
Landlord informed me on September 29, 2022 that there was a pipe clog in May of 2022 that required immediate remediation costing $24,500.00. Landlord provided me with an invoice from Quality Plumbing, Inc. detailing the work performed, asking for reimbursement. The invoice detailed that the work took place in a New York City roadway on Clarke Avenue and Arthur Kill Road, not on the grounds of EGGER'S [Premises]. At no point did Landlord provide me with any reports or documents illustrating that the piping fixed was connected to the piping of EGGER'S [Premises].
Thereafter, in August of 2022, the ice cream location at Historic Richmond Town experienced plumbing issues that were separate and unrelated to the aforementioned pipe clog in the New York City street. Specifically, this plumbing issue was related to cracks in the pipes underground, which were not a result of EGGER'S operation of the ice cream location. Instead, I was told by the plumbing company who performed the work, RK Plumbing & HVAC, that the piping connected to the Premises was not proper grade and that any issues EGGER'S was having was a result of the improper piping, not clogs (NY St Cts Filing [NYSCEF] Doc No. 67).
HRT certainly retains the right to correct any repair issues on its property. Section 23.5 of the Premise Lease provides that HRT may, but shall not be obligated to, cure any default by Plaintiff under the Lease "at any time after notice and the lapse of any cure period, if any, included within the conditional limitation to which such default relates, but without further notice." (NY St Cts Filing [NYSCEF] Doc No. 57). At this juncture, Defendant has not provided sufficient documentary evidence to demonstrate that it provided the Plaintiff with prior notification of the requirement of the Plaintiff to complete the specific repair ultimately completed by Quality Plumbing, Inc. on or about May 18, 2022, in the amount of $24,500.00 (NY St Cts Filing [NYSCEF] Doc No. 27).
The evidence provided indicates that HRT made the May 18, 2022, repair without any prior notification to the Plaintiff and in fact the Plaintiff was only notified of her obligation to pay for the $24,500.00 repair as Additional Rent four months after the repair had been made. Further, Defendants have not provided any evidence of reports or affidavits from engineers or plumbers demonstrating a nexus between the pipe issue and operation of Plaintiff's business or that the May 2022 repair involved the sewage pipe leading from the premises.
Defendants' documentation contending Plaintiff was in further default of the Lease for engaging in unauthorized work by failing to provide documentation and obtain prior approval for alleged alterations is somewhat contradictory. There is a question of whether the alterations were alterations under Article 8 of the Lease or were repairs that Plaintiff was required to make under Section 10.2 of the Lease.
Defendants alleges that Plaintiff failed to obtain approval from the Department of Buildings or the Department of Health prior to undertaking the work in August 2022, however, Defendant Landlord does not reference any statutes or administrative codes specifically violated by Plaintiff. Defendants also do not provide any documentary evidence establishing that the City of New York issued any violations for work undertaken by Plaintiff.
"On a motion to dismiss for failure to state a cause of action, 'the pleading is to be afforded a liberal construction'" (see Nassau Operating Co., LLC v DeSimone, 206 A.D.3d 920 [2d Dept 2022] quoting Leon v Martinez, 84 N.Y.2d 83 [1994] citing CPLR § 3026 ). "The facts alleged in the complaint must be accepted as true, and the plaintiff is entitled to receive the benefit 'of every possible favorable inference'" (see id quoting Leon v Martinez, 84 N.Y.2d 83 [1994]). However, "[d]ismissal of the complaint is warranted if the plaintiff fails to assert facts in support of an element of the claim" (see id quoting Connaughton v Chipotle Mexican Grill, Inc., 29 N.Y.3d 137 [2017] citing Myers v Schneiderman, 30 N.Y.3d 1 [2017]).
The documentary evidence submitted as a defense by the Defendants fails to conclusively dispose of the Plaintiff's claim and does not resolve all the factual issues as a matter of law as required pursuant to CPLR § 3211 [a] [1]. (see NY Cmty. Bank v. Snug Harbor Square Venture, 299 A.D.2d 329 [2d Dept 2002]). Further, Defendants evidence is not conclusive and fails to proof disproves an essential allegation of the complaint as required by CPLR § 3211 [a] [7]. (see Zurich Depository Corp. v. Iron Mtn. Info. Mgt., Inc., 61 A.D.3d 750 [2d Dept 2009]).
Accordingly, the Defendants' motion pursuant to pursuant to CPLR § 3211 [a] [1] and CPLR § 3211 [a] [7] for an order dismissing the Plaintiff's complaint is DENIED, with prejudice.
IV. Dismissal Pursuant to CPLR § 3211 [a] [7] as Against Defendant Jessica B. Phillips
"The decision whether to pierce the corporate veil in a given instance depends on the particular facts and circumstances" (see Matter of Goldman v. Chapman, 44 A.D.3d 938 [2d Dept 2007] quoting Damianos Realty Group, LLC v. Fracchia, 35 A.D.3d 344 [2d Dept 2006]). "[A] director or officer of a corporation does not incur personal liability for its torts merely by reason of his official character" (see PDK Labs, Inc. v. G.M.G. Trans W. Corp., 101 A.D.3d 970 [2d Dept 2012] quoting Greenway Plaza Office Park-1, LLC v. Metro Constr. Servs., 4 A.D.3d 328 [2d Dept 2004]).
"The mere claim that the corporation was completely dominated by the owners, or conclusory assertions that the corporation acted as their 'alter ego,' without more, will not suffice to support the equitable relief of piercing the corporate veil (see Matter of Goldman v. Chapman, 44 A.D.3d 938 [2d Dept 2007] citing Morris v. State Dep't of Taxation & Fin., 82 N.Y.2d 135 [1993]; Damianos Realty Group, LLC v. Fracchia, 35 A.D.3d 344 [2d Dept 2006]).
"Generally, however, piercing the corporate veil requires a showing that: (1) the owners exercised complete domination of the corporation in respect to the transaction attacked; and (2) that such domination was used to commit a fraud or wrong against the plaintiff which resulted in plaintiff's injury" (see id; citing Guptill Holding Corp. v. State, 33 A.D.2d 362 [3rd Dept 1970] affd 31 N.Y.2d 897 [1972]; Lowendahl v. Balt. & Ohio R.R. Co., 247 A.D. 144 [1st Dept 1936] affd 272 NY 360 [1936]; American Protein Corp. v. AB Volvo, 844 F.2d 56 [2d Cir 1988]).
The two allegations made by the Plaintiff specifically against Jessica B. Phillips in the Complaint are in paragraphs 10 and 11, which allege respectively: "Upon information and belief, Defendant, JESSICA B. PHILLIPS, is the CEO of Historic Richmond Town." and "Upon information and belief, Defendant, JESSICA B. PHILLIPS, resides on the Historic Richmond Town property." (NY St Cts Filing [NYSCEF] Doc No. 1).
Defendant Phillips' only involvement with the Plaintiff, the Premises, or the Lease is that she is the Chief Executive Officer of Defendant Staten Island Historical Society Inc. d/b/a Historic Richmond Town. (NY St Cts Filing [NYSCEF] Doc No. 20). Plaintiff's Exhibit A, a copy of the lease executed by Plaintiff and Defendants clearly demonstrates that Ms. Phillips was executing the lease in her role as Executive Director and CEO on behalf of the Staten Island Historical Society, Inc, doing business as Historic Richmond Town, a New York not-for-profit corporation. (NY St Cts Filing [NYSCEF] Doc No. 57).
Plaintiff has submitted Exhibit C, an electronic communication, from Defendant Phillips (NY St Cts Filing [NYSCEF] Doc No. 59) and Exhibits D, E, and F, copies of written correspondence from Defendant Phillips (NY St Cts Filing [NYSCEF] Doc Nos. 60; 61; 63). All communications from Defendant Phillips clearly identify that she is acting in her role as CEO of HRT. Plaintiff owner, Danielle Raleigh, further refers to an "email exchange between myself and Jessica Phillips, the CEO of Historic Richmond Town" acknowledging Ms. Phillips was acting in her role as an office of HRT. (NY St Cts Filing [NYSCEF] Doc No. 67).
No evidence has been submitted that even remotely demonstrates that Jessica B. Phillips exercised complete domination over the not-for-profit corporation HRT in respect to the Plaintiff's action, nor has Plaintiff submitted any evidence that Ms. Phillips used such domination to commit a fraud or wrong against the plaintiff which resulted in Plaintiff's injury. Plaintiff has only been able to demonstrate that Jessica B. Phillips executed the Lease and has acted on behalf of HRT.
"Where a 'document [is] executed by [an] individual... in his corporate capacity, [it] cannot form a basis for personal liability upon him" (see Siciliano v. Forchelli & Forchelli, 17 A.D.3d 343 [2d Dept 2005] quoting Gold v. Royal Cigar Co., 105 A.D.2d 831 [2d Dept 1984]; citing Gottehrer v. Viet-Hoa Co., 170 A.D.2d 648 [2d Dept 1991]).
Accordingly, the Defendants' motion pursuant to CPLR § 3211 [a] [7] for an order dismissing with prejudice and without leave to replead the Plaintiff's complaint as against Defendant Jessica B. Phillips is GRANTED, with prejudice.
V. Sufficiency of Service of Motion Sequence #004
On March 24, 2023, Plaintiff filed via NYSCEF a proposed order to show cause initiating Motion Sequence #004. The Court held a virtual hearing pursuant to NYCRR 202.7 [f] on March 24, 2023 with counsel and signed the order to show cause. The Court "Ordered that service upon counsel via NYSCEF together with the paper upon which it is based, including the summons and amended verified complaint, upon Defendant or its counsel, on or before March 24, 2023, shall be deemed good and sufficient." (NY St Cts Filing [NYSCEF] Doc No. 50).
The signed order to show cause was uploaded to NYSCEF by the Court on March 24, 2023. (see id). Plaintiff's supporting documents for Motion Sequence #004 were uploaded to NYSCEF on March 23, 2023, accompanying the proposed order to show cause. (NY St Cts Filing [NYSCEF] Doc Nos. 32-46). The summons and amended verified complaint were uploaded by Plaintiff on March 23, 2023. (NY St Cts Filing [NYSCEF] Doc No. 50). Defendant were provided with notice of all appropriate documents via NYSCEF and were participants in the virtual hearing on March 24, 2023. The reuploading of the signed order to show cause that had just been uploaded by the Court accompanied by documents uploaded that same day is merely a minor irregularity unique to the circumstances of this matter that in no way has prejudiced the Defendant or affected any of its substantial rights.
"[A] court has discretion to cure mistakes, defects, and irregularities that do not affect substantial rights of parties or to amend an order or judgment 'to make it reflect what the court's holding clearly intended'" (see Board of Mgrs. of Sea Breeze II Condominium v Kwiecinski, 72 A.D.3d 630 [2d Dept 2010] quoting Matter of Owens v. Stuart, 292 A.D.2d 677 [3rd Dept 2002]; citing Halloran v. Virginia Chemicals, Inc., 41 N.Y.2d 386 [1977]; Crain v. Crain, 109 A.D.2d 1094 [4th Dept 1985]; Di Prospero v. Ford Motor Co., 105 A.D.2d 479[3rd Dept 1984]; Schoenberg v. Schoenberg, 269 AD 864 [2d Dept 1945]).
"The method of service provided for in an order to show cause is jurisdictional in nature and must be strictly complied with" (see Lobo v Soto, 73 A.D.3d 1135 [2d Dept 2010] quoting City of New York v Miller, 72 A.D.3d 726 [2d Dept 2010] quoting Matter of El Greco Socy. of Visual Arts, Inc. v. Diamantidis, 47 A.D.3d 929 [2d Dept 2008] citing Matter of Del Villar v. Vekiarelis, 59 A.D.3d 642 [2d Dept 2009]; Matter of Master v. Pohanka, 43 A.D.3d 478 [2d Dept 2007], affd 10 N.Y.3d 620 [2008]; Hennessey v. DiCarlo, 21 A.D.3d 505 [2d Dept 2005]). In this matter the method of service indicated was NYSCEF. All the documents required to be served on the Defendant were available to the Defendant via NYSCEF within the time restrain set by the Court.
Defendant cites a lower court decision from the First Department, Torres v. Sedgwick Ave. Dignity Developers LLC, 74 Misc.3d 839 [Civ Ct Bronx County 2022], which has facts distinct from this matter. In Torres,
the 'proposed' order to show cause was uploaded by petitioner to the New York State Courts Electronic Filing system (NYSCEF) on October 7, 2021, and the version signed by the court uploaded by the court on October 15, 2021. The order to show cause requires service of the motion 'and the papers annexed thereto' on (1) the individually named respondents by overnight mail or personal delivery and (2) on respondents' counsel by upload to NYSCEF.
Petitioner never filed a complete order to show cause with supporting papers on NYSCEF after the court signed his application, even assuming that this type of motion is deemed served upon the court's upload. The court only uploaded the three (3) page order to show cause. The court did not upload the supporting papers. (see id).
In Torres there was an eight-day gap between the submission of the proposed order to show cause on October 7, 2021, and the signing of the order to show cause and uploading of the order to show cause to NYSCEF by the Court on October 15, 2021. In this matter the proposed order to show cause with supporting papers was submitted via NYSCEF, a virtual hearing was conducted pursuant to NYCRR 202.7 [f] with both parties represented, and the signed order to show cause was uploaded to NYSCEF on the same day, March 24, 2023. Further, in this matter the sole method of service indicated by the Court was NYSCEF.
Accordingly, the Defendant's request to dismiss Motion Sequence #004 for Plaintiff's failure to comply with the service provisions of the order to show cause is DENIED, with prejudice.
VI. Yellowstone Injunction
"A Yellowstone injunction is not a creature of statute (see CPLR § 6301 ). It is, instead, a creation of case law originating in 1968 with the decision of the Court of Appeals in First Nat'l Stores, Inc. v. Yellowstone Shopping Center, Inc., 21 N.Y.2d 630 [1968]." (see 159 MP Corp. v Redbridge Bedford, LLC, 160 A.D.3d 176 [2d Dept 2018]). "The true importance of the case is its implicit acceptance of a commercial tenant's presumptive right of action to extend noticed cure periods and thereby forestall or avoid lease terminations and evictions until the merits of commercial lease disputes can be resolved by the courts" (see id citing Graubard Mollen Horowitz Pomeranz & Shapiro v. 600 Third Ave. Assocs., 93 N.Y.2d 508 [1999]; Post v. 120 East End Ave. Corp., 62 N.Y.2d 19 [1984]; Korova Milk Bar of White Plains, Inc. v PRE Props., LLC, 70 A.D.3d 646 [2d Dept 2010]; Hopp v. Raimondi, 51 A.D.3d 726 [2d Dept 2008]).
"To avoid the injustice of subjecting a tenant... to summary eviction proceedings during the pendency of its declaratory judgment action without any further opportunity to cure its breach, courts have devised 'the Yellowstone injunction, i.e., a preliminary injunction by a tenant prior to the expiration of the cure period, which stays the running of that period, and allows the lease to remain in effect until the underlying dispute has been resolved'" (see Times Square Stores Corp. v. Bernice Realty Co., 107 A.D.2d 677 [2d Dept 1985]; quoting Brodsky v. 163-35 Ninth Ave. Corp., 103 A.D.2d 105 [2d Dept 1984]; citing First Nat'l Stores, Inc. v. Yellowstone Shopping Center, Inc., 21 N.Y.2d 630 [1968]).
"As a matter of policy, courts have routinely granted Yellowstone injunctions in order to avoid forfeitures of tenants' interests and, in doing so, have accepted far less than the normal prerequisites for preliminary injunctive relief" (see id; citing Post v. 120 East End Ave. Corp., 62 N.Y.2d 19 [1984]; Brodsky v. 163-35 Ninth Ave. Corp., 103 A.D.2d 105 [2d Dept 1984]; Ameurasia International Corp. v. Finch Realty Co., 90 A.D.2d 760 [1st Dept 1982]; Podolsky v. Hoffman, 82 A.D.2d 763 [1st Dept 1981]). "The threat of termination of lease and forfeiture, standing alone, has been sufficient to permit maintenance of the status quo by injunction" (see id; citing Post v. 120 East End Ave. Corp., 62 N.Y.2d 19 [1984]).
"Inasmuch as tenants have a substantial property interest in their leaseholds, the right to cure violations must be preserved in order to ensure that if they prevail on the merits, their success will not be nullified by virtue of the lease having been terminated" (see id citing Podolsky v. Hoffman, 82 A.D.2d 763 [1st Dept 1981])
"Generally, the decision to grant or deny a preliminary injunction lies in the sound discretion of the Supreme Court" (see 203-205 N8 MB, LLC v. 203-205 N 8th St., LLC, 212 A.D.3d 694 [2d Dept 2023] citing Congregation Erech Shai Bais Yosef, Inc. v Werzberger, 189 A.D.3d 1165 [2d Dept 2020]; Matter of Goldfarb v Ramapo, 167 A.D.3d 1009 [2d Dept 2018]). "Although the purpose of a preliminary injunction is to preserve the status quo pending a trial, the remedy is considered a drastic one, which should be used sparingly" (see id quoting Soundview Cinemas, Inc. v AC I Soundview, LLC, 149 A.D.3d 1121 2d Dept 2017]; citing Matter of Armanida Realty Corp. v Town of Oyster Bay, 126 A.D.3d 894 [2d Dept 2015]).
"To obtain a Yellowstone injunction, the tenant must demonstrate that (1) it holds a commercial lease, (2) it received from the landlord either a notice of default, a notice to cure, or a threat of termination of the lease, (3) it requested injunctive relief prior to both the termination of the lease and the expiration of the cure period set forth in the lease and the landlord's notice to cure, and (4) it is prepared and maintains the ability to cure the alleged default by any means short of vacating the premises" (see Prestige Deli & Grill Corp. v. PLG Bedford Holdings, LLC, 213 A.D.3d 962 [2d Dept 2023] quoting 255 Butler Assoc., LLC v. 255 Butler, LLC, 208 A.D.3d 829 [2d Dept 2022]).
Defendant maintains that there is no lease between the parties and a Yellowstone injunction would be academic and meaningless. Plaintiff counters that she successfully exercised her right to renew the Lease under the Second Renewal Option. As has been previously discussed, the Lease provided for a Second Renewal Option. Two conditions needed to be met for the Plaintiff to renew the lease. The first condition for renewal required the Plaintiff to not be in default under any terms and conditions of the lease either at the time of its exercise of the renewal or on the first day of the second renewal lease term. The second condition is the Plaintiff must give written notice to HRT of its intent to exercise the renewal option, no later than January 31, 2023.
Defendant contends that there is no lease because Plaintiff failed to properly provide the Defendant with notice of her intent to exercise the Second Renewal Option. Specifically, Defendant contends that Plaintiff's January 26, 2023 Letter, which attempted to exercise such renewal option, should be deemed a nullity as it did not comply with the notice provisions within the Lease, and thus was ineffective to constitute written notice as required in exercising the Second Renewal Option. As previously discussed, the Court found the letter from Plaintiff's counsel, dated January 26, 2023, and sent to HRT CEO Phillips via Federal Express and email clearly constituted valid notice by Plaintiff to exercise its Second Renewal Option.
Defendant further contends that even if the January 26, 2023 Letter constituted a "notice" under the terms of the Lease, and thus functioned as Tenant's attempt to exercise its Second Renewal Option, it was still a nullity and rightly rejected by Landlord because the Plaintiff was in default of the lease. The Defendant's documentary evidence as this juncture does not conclusively support Defendant's allegation that the Plaintiff was in default of the terms of the Lease and thus ineligible to exercise the Second Renewal Option.
Section 23.1.4 Failure to Perform Under This Lease provides as follows:
If Tenant shall fail to observe and perform any provision of this Lease (other than those specifically mentioned in this Section 23.1) to be observed or performed by Tenant and such failure continues for fifteen (15) days after notice thereof by Landlord to Tenant, unless, if the nature of such failure is such that it cannot reasonably be cured within such fifteen (15) day period, (a) within such fifteen (15) day period Tenant notifies Landlord in writing that it intends to cure such failure and actually commences to cure such failure, and (b) Tenant thereafter diligently proceeds to complete such cure within a reasonable time.
In a letter dated March 6, 2023, Defendant provided with notice that she had been in default on January 26, 2023, when Plaintiff provided notice of her intent to exercise the Second Renewal Option and as a result the Lease was not being renewed. Plaintiff should have been provided with notice of defaults in a timely manner and provided with notice to cure within a specified period or at a minimum within the time limitations provided by the lease. Defendant's evidence of the defaults is not definitive, but Plaintiff is prepared and has the ability to cure any defaults. (NY St Cts Filing [NYSCEF] Doc No. 35).
Accordingly, the Plaintiff's request for a Yellowstone injunction tolling the time for Plaintiff to cure alleged defaults of the Lease and staying the notice, staying the denial of Second Renewal Option, staying the termination of Lease, staying interference with Plaintiff's use of premises, staying the removal of Plaintiff's property, or recovering possession of the Premises pending final determination of action is GRANTED.
Decretal Paragraphs
It is hereby ORDERED, that Defendants' motion pursuant to pursuant to CPLR § 3211 [a] [1] and CPLR § 3211 [a] [7] for dismissal of the Plaintiff's complaint is DENIED with prejudice, and it is further;
ORDERED, that Defendants' motion pursuant to CPLR § 3211 [a] [7] for an order dismissing with prejudice and without leave to replead the Plaintiff's complaint as against Defendant Jessica B. Phillips is GRANTED, with prejudice, and it is further;
ORDERED, the Defendant's request to dismiss Motion Sequence #004 for Plaintiff's failure to comply with the service provisions of the order to show cause is DENIED, with prejudice, and it is further;
ORDERED, the Plaintiff's request for a Yellowstone injunction tolling the time for Plaintiff to cure alleged defaults of the Lease and staying the notice, staying the denial of Second Renewal Option, staying the termination of Lease, staying interference with Plaintiff's use of premises, staying the removal of Plaintiff's property, or recovering possession of the Premises pending final determination of action is GRANTED, and it is further;
ORDERED, that the Clerk of the Court shall enter judgment accordingly.
The foregoing shall constitute the Decision and Order of this Court.