Opinion
8562N 8562NA Index 650654/17
02-28-2019
FREE PEOPLE OF PA LLC, Plaintiff–Appellant–Respondent, v. DELSHAH 60 NINTH, LLC, Defendant–Respondent–Appellant.
Drinker Biddle & Reath LLP, Philadelphia, PA (William M. Connolly, of the bar of the Commonwealth of Pennsylvania and the State of New Jersey, admitted pro hac vice, of counsel), for appellant-respondent. Rosenberg & Estis, P.C., New York (Bradley S. Silverbush and Richard Corde of counsel), for respondent-appellant.
Drinker Biddle & Reath LLP, Philadelphia, PA (William M. Connolly, of the bar of the Commonwealth of Pennsylvania and the State of New Jersey, admitted pro hac vice, of counsel), for appellant-respondent.
Rosenberg & Estis, P.C., New York (Bradley S. Silverbush and Richard Corde of counsel), for respondent-appellant.
Friedman, J.P., Kapnick, Webber, Oing, Singh, JJ.
Orders, Supreme Court, New York County (Barry R. Ostrager, J.), entered October 18, 2017 and November 21, 2017, which, after a nonjury trial, awarded plaintiff $ 650,000 in damages, plus statutory interest from March 6, 2016, denied the parties' respective requests to be deemed the prevailing party, and granted defendant's request pursuant to CPLR 3220 for expenses, including reasonable attorneys' fees, associated with trying the issue of damages, unanimously affirmed, without costs.
The trial court correctly determined, giving due consideration to the nature of the contract and the circumstances, that the rent credits provision in the parties' lease constituted an unenforceable penalty (see JMD Holding Corp. v. Congress Fin. Corp., 4 N.Y.3d 373, 379–380, 795 N.Y.S.2d 502, 828 N.E.2d 604 [2005], citing Truck Rent–A–Ctr. v. Puritan Farms 2nd, 41 N.Y.2d 420, 424–425, 393 N.Y.S.2d 365, 361 N.E.2d 1015 [1977] ; see also Bates Adv. USA, Inc. v. 498 Seventh, LLC, 7 N.Y.3d 115, 120, 818 N.Y.S.2d 161, 850 N.E.2d 1137 [2006] ). The rent credit sought by plaintiff as liquidated damages under the lease agreement was grossly disproportionate to its estimated and actual loss, creating a windfall for plaintiff, and the damages flowing from the breach were readily ascertainable at the time the parties entered into the lease.
The record supports the court's damages determination, which rests in large measure on considerations relating to the credibility of the witnesses (see Nightingale Rest. Corp. v. Shak Food Corp., 155 A.D.2d 297, 547 N.Y.S.2d 61 [1st Dept. 1989], lv denied 76 N.Y.2d 702, 558 N.Y.S.2d 891, 557 N.E.2d 1187 [1990] ).
Considering the true scope of the dispute litigated and what was achieved within that scope, the court properly determined that neither party was entitled to prevailing party attorneys' fees (see Excelsior 57th Corp. v. Winters, 227 A.D.2d 146, 641 N.Y.S.2d 675 [1st Dept. 1996] ).
The court correctly awarded defendant its expenses, including attorneys' fees, incurred in trying the issue of damages from the date of its offer pursuant to CPLR 3220 to settle the action (see Abreu v. Barkin & Assoc. Realty, Inc., 115 A.D.3d 624, 982 N.Y.S.2d 752 [1st Dept. 2014] ).