Opinion
INDEX NO: 155814/2019
09-25-2019
40 WALL STREET, LLC, v. MAGNA GROUP, LLC.
NYSCEF DOC. NO. 22 DECISION/ORDER
Mot Seq No: 001 Present: Hon. Lynn R. Kotler, J.S.C. Recitation, as required by CPLR 2219 [a], of the papers considered in the review of this (these) motion(s):
| Papers Numbered | |
|---|---|
| N/Motion, Affirmations, Exhibits | 4-21 |
This is a breach of contract action arising from a commercial lease entered into between plaintiff as landlord and defendant as lessor. The subject property is 40 Wall Street, New York, New York 10005, 57th and 58th floors. Plaintiff now moves pursuant to CPLR § 3215, for a default judgment on (i) all base rent and additional rent due through June 30, 2019 plus interest; (ii) all sums due under the lease for the period of July 1, 2019 through September 30, 2027 with interest; (iii) all additional rent anticipated to be incurred from July 1, 2019 through September 30, 2027; and (iv) reasonable attorney's fees. The defendant has not submitted opposition to the motion despite notice and an opportunity to respond. Therefore, the motion is considered on default.
Plaintiff has submitted proof that the summons and complaint were served upon Magna Group, LLC pursuant to LLC Law § 303. Despite such service, the defendant has not answered the complaint nor has its time to do so been extended by the court. Plaintiff has also satisfied the additional service requirement under CPLR § 3215(g)(4)(i) by serving by mail to Magna Group, LLC. Accordingly, the defendant has defaulted in appearing in this action.
While a default in answering the complaint constitutes an admission of the factual allegations therein, and the reasonable inferences which may be made therefrom (Rokina Optical Co., Inc. v. Camera King, Inc., 63 NY2d 728 [1984]), plaintiff is entitled to default judgment in its favor, provided it otherwise demonstrates that it has a prima facie cause of action (Gagen v. Kipany Productions Ltd., 289 AD2d 844 [3d Dept 2001]). An application for a default judgment must be supported by either an affidavit of facts made by one with personal knowledge of the facts surrounding the claim (Zelnick v. Biderman Industries U.S.A., Inc., 242 AD2d 227 [1st Dept 1997]; and CPLR § 3215[f]) or a complaint verified by a person with actual knowledge of the facts surrounding the claim (Hazim v. Winter, 234 AD2d 422 [2d Dept1996]; and CPLR § 105 [u]).
The complaint is verified by Adam L. Rosen who is an authorized representative for 40 Wall Street, LLC, plaintiff in this action, and therefore supports the motion. Plaintiff represents that despite due demand, Magna Group, LLC failed to satisfy its obligations under the lease by not paying rent due beginning March 1, 2019. Plaintiff has provided to the court a copy of the default notice that it sent to Magna Group, LLC dated March 27, 2019, stating the amount of rent and additional due at the time. Plaintiff has also provided to the court a copy of a letter from defendant's counsel dated April 30, 2019 which states in relevant part that, "due to certain business and financial difficulties, [defendant] will be vacating [] premises on or about June 2, 2019." Plaintiff represents that defendant did vacate by that date.
Plaintiff has asserted five (5) causes of action: (1) breach of the lease by failing to pay rent; (2) breach of the lease by failing to pay additional rent; (3) a declaration that the defendant anticipatorily breached the lease and seeking sums due from July 1, 2019 to September 27, 2027 for base rent; (4) a declaration that defendant anticipatorily breached the lease and seeking sums due from July 1, 2019 to September 27, 2027 for additional rent; and (5) reasonable legal fees.
The four elements required of a cause of action for breach of contract are: [1] formation of a contract between the parties; [2] performance by plaintiff; [3] defendant's failure to perform; and [4] resulting damage (Furia v. Furia, 116 AD2d 694 [2d Dept 1986]). A written lease is a contract. All five of Plaintiff's substantive causes of action against Magna Group, LLC are for breach of the written lease. While plaintiff has provided a copy of the lease to the court, it is illegible. Therefore, the motion must be denied without prejudice to renew upon plaintiff providing a legible copy of the lease or providing an explanation for its inability to do so.
Further, the third and fourth causes of action allege that defendant is in anticipatory breach of the lease. There is disagreement between the body of these causes of action and the wherefore clause in plaintiff's complaint. In the body, plaintiff seeks a declaration that the defendant has anticipatorily breached. Meanwhile, in the wherefore section of the complaint, the defendant only seeks money damages. In any event, an anticipatory breach cannot be committed by a party already in material breach of an executory contract. An anticipatory breach of a contract is one that occurs before performance by the breaching party is due. Kaplan v. Madison Park Grp. Owners, LLC, 94 A.D.3d 616, 618, 942 N.Y.S.2d 522, 524 (2012) (citing Norcon Power Partners v. Niagara Mohawk Power Corp., 92 N.Y.2d 458, 682 N.Y.S.2d 664, 705 N.E.2d 656 [1998]). The rationale behind the doctrine of anticipatory breach is that it gives the non-repudiating party an opportunity to treat a repudiation as an anticipatory breach without having to futilely tender performance or wait for the other party's time for performance to arrive. Id. In the case at bar, defendant was in breach in March 2019 when it failed to pay rent. The subsequent letter in June stating that defendant would be vacating did not give rise to anticipatory breach because the defendant was already in breach three months before the letter was sent. Therefore, plaintiff is not entitled to a declaration that defendant anticipatorily breached the lease but may seek money damages throughout the duration of the lease.
It is well settled in this State that the law imposes no duty on either a residential or commercial landlord to mitigate damages (see Holy Props, v. Cole Prods., 87 N.Y.2d 130 [1995]); Whitehouse Estates v. Post, 173 Misc.2d 558, 662 N.Y.S.2d 982).
The law imposes upon a party subjected to injury from breach of contract, the duty of making reasonable exertions to minimize the injury ... Leases are not subject to this general rule, however, for, unlike executory contracts, leases have been historically recognized as a present transfer of an estate in real property ... Once the lease is executed, the lessee's obligation to pay rent is fixed according to its terms and a landlord is under no obligation or duty to the tenant to relet, or attempt to relet abandoned premises in order to minimize damages.Holy Props, v. Cole Prods., 87 N.Y.2d at 133, 637 N.Y.S.2d 964, 661 N.E.2d 694. Since Magna Group, LLC vacated the premises, it will be liable for rent due up to the end of the lease term and 40 Wall Street is under no obligation to find another tenant. However, the court requires a sworn affidavit from plaintiff representing that it will leave the premises vacant for the rest of the lease term. Otherwise, plaintiff could obtain a judgment here, and relet the premises, which would result in an unjust enrichment.
Accordingly, it is hereby ORDERED that plaintiff's motion for default judgment is denied without prejudice to renew within 90 days from the date of entry of this decision/order. Plaintiff's failure to renew within this timeframe will be deemed an unreasonable failure to prosecute and the court will sua sponte dismiss the complaint pursuant to CPLR § 3216.
Any requested relief not expressly addressed herein has already been considered by the court and is hereby denied. This constitutes the decision and order of the court. Dated: New York, New York
9-25-19
So Ordered:
/s/ _________
Hon. Lynn R. Kotler, J.S.C.