Opinion
INDEX NO. 656112/2017
10-16-2019
MTS NY LESSEE, L.P., Plaintiff, v. EDEN H., INC.,D/B/A CLEO & PATEK, YOUSEF HAKIM, and CENTRAL PARK TOURS INC.D/B/A CENTRAL PARK TOURS, Defendants.
NYSCEF DOC. NO. 49 PRESENT: HON. DEBRA A. JAMES Justice MOTION DATE 11/16/2018 MOTION SEQ. NO. 001
DECISION + ORDER ON MOTION
The following e-filed documents, listed by NYSCEF document number (Motion 001) 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46 were read on this motion to/for SUMMARY JUDGMENT (AFTER JOINDER).
ORDER
Upon the foregoing documents, it is
ORDERED that plaintiff's motion for summary judgment on its first cause of action against Eden, is granted as to liability; and it is further
ORDERED that a Special Referee shall be designated to hear and report to this Court on the issue of damages, if any, to be awarded against Eden on plaintiff's first cause of action; and it is further
ORDERED that the Special Referee shall hear and determine the amounts, if any, which constitute Eden's Rent Arrears, Accelerated Future Rent and all non-rent damages including all outstanding interest, late fees, costs, disbursements, and attorneys' fees and expenses; and it is further
ORDERED that plaintiff's motion for summary judgment on its second cause of action based on the Guaranty is granted as to liability for rent arrears and other non-rent damages; and it is further
ORDERED that the Special Referee shall be designated to hear and report to this Court on the issue of damages, if any, to be awarded against Eden on plaintiff's second cause of action; and it is further
ORDERED that the Special Referee shall hear and determine the amounts, if any, which constitute Hakim's Rent Arrears and all non-rent damages including all outstanding interest, late fees, costs, disbursements, and attorneys' fees and expenses, with Hakim having no liability for Accelerated Future Rent; and it is further
ORDERED that this matter is hereby referred to the Special Referee Clerk (Room 119, 646-386-3028 or spref@nycourt.gov) for placement at the earliest possible date upon the calendar of the Special Referees Part (Part SRP), which in accordance with the Rules of that Part (which are posted on the website of this court at www.nycourts.gov/supctmanh at the "References" link), shall assign this matter at the initial appearance to an available JHO/Special Referee to hear and report as specified above; and it is further
ORDERED that counsel for plaintiff shall, within 15 days from the date of this Order, submit to the Special Referee Clerk by fax (212-401-9186) or e-mail an Information Sheet (accessible at the "References" link on the court's website) containing all the information called for therein and that, as soon as practical thereafter the Special Referee Clerk shall advise counsel for the parties of the date fixed for the appearance of the matter upon the calendar of the Special Referees Part; and it is further
ORDERED that counsel for the moving party shall serve a copy of this order with notice of entry upon the County Clerk (60 Center Street, Room 141B) and the Clerk of the General Clerk's Office (60 Center Street, Room 119); and it is further
ORDERED that such service upon the County Clerk and the Clerk of the General Clerk's Office shall be made in accordance with the procedures set forth in the Protocol on Courthouse and County Clerk Procedures for Electronically Filed Cases [accessible at the "E-Filing" page on the court's website at the address (www.nycourts.gov/supctmanh)]; and it is further
ORDERED that plaintiff's motion for summary judgment on its third cause of action for unjust enrichment against Central Park is denied; and it is further
ORDERED that the action against the remaining parties severed and shall continue; and it is further
ORDERED that counsel for the remaining parties are directed to appear for a preliminary conference in IAW Part 59 on November 14, 2019, 9:30 AM in IAS Part 59, Room 331, 60 Centre Street, New York, New York.
DECISION
Plaintiff, MTS NY LESSEE, L.P., moves for an order pursuant to CPLR 3212 granting summary judgment in its favor and against defendants, Eden H., Inc., d/b/a Cleo & Patek (Eden), Yousef Hakim (Hakim), and Central Park Tours Inc., d/b/a Central Park Tours (Central Park). Background
This action arises out of an alleged breach of a commercial lease in which plaintiff claims that (1) Eden, among other things, defaulted in paying rent; (2) Hakim defaulted on a written, personal guaranty; and (3) Central Park, an unauthorized subtenant of Eden, used and occupied a portion of the building in question without paying rent to plaintiff.
The complaint makes the following factual allegations. Plaintiff is the landlord/owner of a building known as the Manhattan Times Square Hotel, located at 790 Seventh Avenue a/k/a 1666 Broadway, New York, NY (building).
On September 1, 2009, plaintiff's predecessor-in-interest, Hudson Sheraton Corporation, LLC (Hudson), as landlord and Eden as tenant, entered into a ten-year commercial lease (Lease). The Lease expires on September 30, 2019.
From approximately September 2009 through November 2017, Eden was a tenant occupying the building's ground floor where it operated a first-class accessories store for the retail of ladies' handbags, luggage, boots, wallets, belts, costume jewelry and other related accessories. Subsequently, Hudson assigned the Lease to plaintiff. On the same day the Lease was signed, Hakim executed a guaranty in favor of plaintiff (Guaranty).
Despite the prohibition against subletting, as set forth in Article 16.1 of the Lease, Eden sublet 50% of its leased space to DJI New York (DJI), a non-party and 50% to Central Park. Plaintiff claims that DJI and Central Park used and occupied the premises pursuant to subleases with Eden.
In 2016, Eden stopped paying rent to plaintiff. Plaintiff alleges that Eden breached the Lease by (1) failing to pay plaintiff Minimum Rent and Additional Rent as set forth in the Lease, and (2) subletting the premises to DJI and Central Park. On August 24, 2017, plaintiff sent Eden a 10-day Demand For Rent which required Eden to cure its default for non-payment of rent.
After Eden failed to cure its default, plaintiff filed a non-payment eviction proceeding against Eden, Central Park & DJI in Civil Court of the City of New York (L&T Index # 17N074764), seeking a judgment of possession and a warrant of eviction. Plaintiff also sought rent arrears from Eden that were due and owing under the Lease. On November 16, 2017, plaintiff and Eden resolved the L&T matter by entering into a Stipulation of Settlement (Stipulation). In the Stipulation, Eden consented to a final Judgment of Possession in favor of plaintiff, as well as the immediate issuance of a Warrant of Eviction (Stipulation. Plaintiff alleges that the Stipulation contained a provision which reserved its right to pursue any and all claims for a money judgment against Eden in a plenary action. Plaintiff further alleges the claim for a monetary judgment was severed from the L&T proceeding.
Plaintiff commenced the instant action asserting a cause of action for breach of the Lease against Eden; a cause action for breach of the guaranty against Hakim, and a cause of action for unjust enrichment against Central Park. Defendants answered and asserted various affirmative defenses (verified amended complaint and Central Park's verified answer.
Plaintiff now moves for an order granting summary judgment. A. The Standard on Summary Judgment
A motion for summary judgment "shall be granted if, upon all the papers and proof submitted, the cause of action or defense shall be established sufficiently to warrant the court as a matter of law in directing judgment in favor of any party." (CPLR 3212 [b]). However, "facts must be viewed in the light most favorable to the non-moving party," Vega v Restani Constr. Corp., (18 NY3d 499, 503 [2012]), and "the motion shall be denied if any party shall show facts sufficient to require a trial of any issue of fact." (CPLR 3212 [b]). Once the moving party has demonstrated the absence of any triable issue of fact through the submission of sufficient evidence, "the burden shifts to the opposing party to submit proof in admissible form sufficient to create a question of fact requiring a trial." Kershaw v Hospital for Special Surgery, (114 AD3d 75, 82 [1st Dept 2013]). 1. Plaintiff's First Cause of Action for Breach of Commercial Lease
As a result of Eden's failure to make payments of all outstanding amounts due and owing under the Lease, plaintiff elected to pursue its right to seek rent arrears, as well as damages consisting of all outstanding interest, late fees, costs, disbursements and attorneys' fees and expenses, set forth in the Lease and Stipulation. Plaintiff also moves, pursuant to Article 20.4 of the Lease, to accelerate Future Rent due for the remaining term of the lease. In total, plaintiff seeks a money judgment against Eden in the sum of $705,926.32.
A plaintiff meets its burden of establishing prima facie its entitlement to judgment by submitting the governing lease and proof of nonpayment (Lease Corp. of Am. v Hop Hing Realty Corp., 17 Misc 3d 128(A) [App Term, 1st Dept 2007]).
In support of its motion, plaintiff submits the affidavits of their General Manager Brendan Moraes and Controller Pratik Ahir. Mr. Moraes attests that Eden has failed to pay plaintiff Minimum Rent and Additional Rent since 2016. Eden does not dispute this allegation. Mr. Moraes also alleges that Eden sublet its portion of the building without consent of the plaintiff. Next, Mr. Ahir states that his review of the ledgers and spreadsheets annexed as exhibits I-M of the Moraes affidavit, accurately set forth the amount plaintiff owes for rent arrears, non-rent damages and accelerated future rent.
The Lease provides in Article 4, entitled "Rent", specifically Articles 4.1 and 4.6 entitled, "Minimum Rent" and "Additional Rent", respectively, that tenant shall pay plaintiff minimum rent on the tenth day of each month in which it is due, or if not paid when due, on the next subsequent date on which minimum rent is due (Lease at 6, ¶ 4.1[a] & 4.6). The Lease also contains provisions that required Eden to pay plaintiff, as additional rent, its proportionate share of the real estate taxes for the building, as well as impositions (id., Articles 4.4 - 4.5 at 3, ¶ 10). Article 4.7 of the Lease states that in the event Eden fails to pay any installment of Minimum Rent or Additional Rent when due under the Lease, Eden, at the plaintiff's election, shall pay a late charge equal to five percent (55) of such overdue amount and tenant shall pay interest on the overdue amount (id., Article 4.7 at ¶ 4.7).
Furthermore, Lease Article 20.4 provides that if Eden fails to pay any installment of Minimum Rent or Additional Rent when due, plaintiff may pursue its right to accelerate Future Rent due and recover all Minimum Rent and Additional Rent owed by Eden for the remaining term of the lease (id., Article 20.4 at 25, ¶ 20.4). Articles 20.4 and 31.20 of the Lease state that if plaintiff either incurs any costs in collecting any amounts or damages owed by the tenant under the lease, or brings an action against Eden by reason of the breach of any covenant, warranty or condition of the Lease and prevails in such action, plaintiff shall be entitled to recover its costs and expenses, including reasonable attorneys' fees.
Finally, Article 16.1 provides in part that the tenant shall not sublease all or any part of the premises, nor permit all or any part of the premises to be used or occupied by others, without the prior written consent of the landlord in each instance.
Here, plaintiff has met its prima facie burden on its motion for summary judgment by submitting the Lease and proof of nonpayment (Lease Corp. of Am., 17 Misc 3d 128(A) at 128(A). Plaintiff has also established that Eden breached the terms of the Lease by subletting to Central Park and DJI. Accordingly, the burden shifts to Eden to submit proof in admissible form sufficient to create a question of fact requiring a trial (Kershaw, 114 AD3d at 82).
In opposition, Eden submits the affidavit of its president, Hakim (Hakim is also personally sued herein as a guarantor). Hakim argues that triable issues of fact exist which preclude summary judgment. Eden asserts that (1) the rent acceleration provision contained in the Lease is unenforceable as it constitutes a penalty; (2) the Stipulation extinguished any obligation on behalf of Eden to pay future rent; (3) plaintiff's predecessor-in-interest, Hudson, allowed Eden to sublet to DJI and Central Park; and (4) summary judgment is premature because discovery is outstanding.
Eden argues that the rent acceleration clause is an unenforceable penalty and is no longer binding on Eden or Hakim pursuant to the Stipulation.
"As a general matter parties are free to agree to a liquidated damages clause provided that the clause is neither unconscionable nor contrary to public policy" (172 Van Duzer Realty Corp. v Globe Alumni Student Assistance Assn., Inc., 24 NY3d 528, 536 [2014]; quoting Truck Rent-A-Ctr. v Puritan Farms 2nd, 41 NY2d 420, 424 [1977], citing Mosler Safe Co. v Maiden Lane Safe Deposit Co., 199 NY 479, 485 [1910] ). Liquidated damages that constitute a penalty, however, violate public policy, and are unenforceable (Truck Rent-A-Ctr., 41 NY2d at 424, citing City of Rye v Public Serv. Mut. Ins. Co., 34 NY2d 470, 472-473, [1974]). A provision which requires damages "grossly disproportionate to the amount of actual damages provides for [a] penalty and is unenforceable" (Truck Rent-A-Ctr., 41 NY2d at 424 [1997]).
Whether a provision in an agreement is "an enforceable liquidation of damages or an unenforceable penalty is a question of law, giving due consideration to the nature of the contract and the circumstances" (JMD Holding Corp. v Congress Fin. Corp., 4 NY3d 373, 379, [2005], citing Mosler Safe Co., 199 NY at 485). "The burden is on the party seeking to avoid liquidated damages ... to show that the stated liquidated damages are, in fact, a penalty" (JMD Holding Corp., 4 NY3d at 380, citing P.J. Carlin Constr. Co. v City of New York, 59 AD2d 847, [1st Dept.1977]). Where a party establishes a penalty, the proper recovery is the amount of actual damages established by the party (JMD Holding Corp.,4 NY3d at 380). Eden alleges that plaintiff's claim for damages in the sum of $705,926.32 is grossly disproportionate to its actual damages, in light of the fact that plaintiff has possession of the building and has re-let a portion of the building.
Contrary to Eden's contention, the liquidated damages provision in the parties' Lease does not constitute a penalty, but rather, allowed plaintiff to recoup its actual damages and the benefit of its bargain. The provision does not allow recoupment of damages "disproportionate to any loss which could possibly accrue to the landlord" (Fifty States Mgt. Corp. v Pioneer Auto Parks, 46 NY2d 573, 578 [1979]). Plaintiff argues that the accelerated rent provision is not a liquidated damages provision because plaintiff only seeks to collect the exact amount of the rent due and owing through the end of the Lease. Plaintiff also credited Eden for the amounts received from re-letting half of Eden's portion in the building to successor tenants. Plaintiff applied the terms of the parties' accelerated rent provision favorably so as to reduce Eden's liability exposure under the Lease by seeking payment of the fixed annual rent and additional rent payable through the end of the Lease discounted to the present value based on the U.S. Treasury yield rate for ten-year notes, with credits to Eden for rent payments received by plaintiff from Eden's subtenant who remained in occupancy of portions of Eden's former leasehold, as well as credits for additional rents, if any, received by plaintiff upon a successful re-letting of the building, which was part of Eden's former leasehold (see e.g. Fifty States Mgt. Corp., 46 NY2d at 577-578 [1979]); 186-90 Joralemon Assoc. v Dianzon, 161 AD2d 329 [1st Dept 1990]). A landlord is under no legal duty to mitigate damages in the event of a material breach of the lease by a commercial tenant (see Holy Props. v Cole Prods., 87 NY2d 130, 133 [1995]). Nonetheless, in the instant case, the plaintiff has taken appreciable steps to mitigate any losses Eden may incur due to its own breach. Eden's contention that the Lease terms were unconscionable in that they would allow plaintiff a windfall of all rent due, including additional rent is an argument without evidentiary support in the record.
Eden has not met its burden of establishing that the acceleration of rent provision is a penalty (JMD Holding Corp., 4 NY3d at 380 [2005]).
Next, Eden claims that plaintiff was aware of the fact that Eden sublet its portion of the building to subtenants and that plaintiff attempted to enter into direct lease agreements with DJI and Central Park. Eden further alleges that this interference resulted in the subtenant's refusal to pay rent to Eden and the subsequent default in Eden paying rent to plaintiff. The court notes that Eden has not filed a counterclaim against plaintiff for tortious interference with contract, nor does Eden submit any proof that it had permission to sublet any portion of the building. Finally, Eden has also failed to establish how discovery is necessary to address the issues with respect to the issues raised in the instant motion. Having failed to satisfy its burden on summary judgment that triable issues of fact exist which require a plenary trial, plaintiff's motion for summary judgment on the first cause of action against Eden is granted. As it is unclear from plaintiff's papers as to what exact amount plaintiff is crediting Eden for anticipated rent and plaintiff's position should Camrise fail to pay anticipated rent, plaintiff's request for a money judgment is set down for an accounting before a Special Referee to hear and report, on the issue of the amount due from Eden. 2. Plaintiff's Second Cause of Action based upon Breach of the Guaranty
Plaintiff brings this cause of action to recover a money judgment under a written guaranty making Hakim personally liable for certain unpaid rent.
"On a motion for summary judgment to enforce a written guaranty, all that the creditor need prove is an absolute and unconditional guaranty, the underlying debt, and the guarantor's failure to perform under the guaranty" (H.L. Realty, LLC v Edwards, 131AD3d 573, 574 (2d Dept 2015]).
A contract will be interpreted in accordance with the intent of the parties as expressed in the language of the agreement (Johnston v MGM Emerald Enters., Inc., 69 AD3d 674 [2d Dept 2010], citing Greenfield v Philles Records, 98 NY2d 562, 569 [2002] ). A written agreement that is complete, clear, and unambiguous on its face must be enforced according to the plain meaning of its terms (id., Johnston v MGM Emerald Enters., Inc., 69 AD3d at 677, citing South Rd. Assoc., LLC v International Bus. Machs. Corp., 4 NY3d 272, 277 [2005]). A guaranty is to be interpreted in the strictest manner—particularly in favor of a private guarantor and cannot be altered without the guarantor's consent. Accordingly, a guarantor cannot be bound beyond the express terms of his guarantee. (665-75 Eleventh Ave. Realty Corp. v Schlanger, 265 AD2d 270[1st Dept 1999]).
The relevant provisions of the Guaranty are as follows:
Paragraph 1 :
"Subject to the provisions of Paragraph 18, if default shall at any time be made by in any rent or any other sums and charges payable by Tenant under the lease, whether at maturity, by acceleration or otherwise, or if
Tenant should default in the performance and observance of any of the other covenants, terms, conditions or agreements contained in the Lease,
Guarantor shall promptly pay such rent and other sums and charges, and any arrears thereof, to Landlord and shall promptly perform and fulfill all of such other terms, covenants, conditions and agreements, in accordance with and pursuant to the Lease...."
Paragraph 2 :
"The obligations of Guarantor hereunder are independent of any of the obligations of Tenant under the Lease. This guaranty is an absolute, irrevocable and unconditional guaranty of payment and of performance."
As set forth in the Moraes affidavit, Hakim entered into a valid guaranty and unconditionally guaranteed each and every obligation of Eden under the Lease, including but not limited to the obligation of Eden to pay the rent due thereunder. Mr. Moraes attests that Hakim has failed to pay any funds that are due to plaintiff.
Plaintiff has satisfied its burden of establishing that Hakim executed the Guaranty, Eden has defaulted pursuant to the Lease and Hakim has failed to pay plaintiff pursuant to the Guaranty.
In opposition, Hakim does not deny that he executed the Guaranty nor does he deny that he failed to satisfy those obligations. Rather, Hakim argues that he is not liable for any claims for any rent after November 16, 2017 (the date Eden surrendered possession of the building) or for accelerated rent because plaintiff, pursuant to the Stipulation, accepted possession of the building from Eden.
Initially the court notes that plaintiff states in its reply memorandum that it is not seeking to collect accelerated future rent from Hakim. Therefore, that portion of plaintiff's motion seeking accelerated future rent from Hakim is denied as moot. Plaintiff's claims for a money judgment seeking Minimum Rent and other non-rent damages is decided as follows.
Hakim claims the Stipulation provided that plaintiff agreed to take an assignment of all of Eden's rights, title and interest in the balance of the Lease and by doing so, plaintiff waived its right to seek any rent for the period of time following the execution of the Stipulation.
Paragraph 4 of the Stipulation reads, in relevant part, as follows:
"The parties hereby agree that: (a) Petitioner-Landlord's monetary claims for a money judgment against Eden H., in the amount of all minimum rent, additional rent, interest, late fees, and attorneys' fees (hereinafter, 'Rent Arrears') adjudged to be due and owning from Eden H. To Petitioner-Landlord, are hereby severed, without prejudice, for a plenary action, and that Eden H. Hereby reserves all claims and defenses in any such action;
(b) Eden H. Is not in actual possession of the Premises, is not obligated to take any action in order to deliver possession of the Premises to Petitioner-Landlord, and is not obligated to restore the Premises to its original condition;
(c) Eden H. hereby transfers, assigns, waives, and surrenders to Petitioner-Landlord all right, title and interest that it has in and to the Lease and to any and all furniture, fixtures, equipment and personal property in the Premises to Petitioner, and Petitioner-Landlord hereby agrees to accept the Premises in 'as is' condition as of
the date of the mutual execution of the Stipulation by the Parties and their legal counsel."
Paragraph 18 of the Guaranty provides, in pertinent part, as follows:
"This Guaranty shall not extend to or include any obligations of Tenant under the Lease which accrue following the first date on which all of the following events shall have occurred (the 'Surrender Date'):
(A)Tenant and anyone claiming through or under Tenant, shall have vacated the Premises pursuant to and in accordance with the terms of the Lease, and
(B)Tenant shall have then offered to deliver possession of the Premises to Landlord; and such obligations shall not include any acceleration remedies of Landlord against Tenant."
Paragraph 18 clearly states that the Guaranty will not extend or include any obligations of Eden under the Lease that accrue after the Surrender Date. A Surrender Date is triggered when the tenant and anyone claiming through the Tenant, shall have vacated the premises and the tenant shall have offered to deliver possession. In the instant case, Eden gave two unauthorized subtenants use and possession of the building and Central Park failed to vacate until January 23, 2018. While it is undisputed that Eden surrendered possession of the building, Eden' subtenant remained in possession. Therefore, Eden did not "vacate the premises pursuant to and in accordance with the terms of the Lease" and Eden's subtenant, Central Park, remained in possession of the building for approximately two months after Eden signed the Stipulation. Thus, all of the events set forth in Paragraph 18 of the Guaranty have not occurred to trigger the Surrender Date which would have the effect of releasing Hakim from his obligations.
Here, the terms of the Guaranty are unambiguous and unconditional, and plaintiff has met its prima facie burden on its motion for summary judgment on the issues of rent arrears and other non-rent damages as set forth in the Lease and Guaranty. Hakim fails to raise a triable issue of fact. Therefore, plaintiff's motion for summary judgment against Hakim based upon the Guaranty is granted as to rent arrears and non-rent damages. In light of plaintiff's concession that it will not seek accelerated rent from Hakim, the exact amount plaintiff is seeking from Hakim is unclear. Accordingly, plaintiff's request for a money judgment is set down for an accounting before a Special Referee to hear and report, on the issue of the amount due from Hakim. 3. Plaintiff's Third Cause of Action against Central Park for Unjust Enrichment
Plaintiff moves for an order granting summary judgment against Central Park for unjust enrichment. Specifically, plaintiff seeks unspecified damages consisting of the fair market value of Central Park's use and occupancy of the building.
It has been stated that "'[t]he theory of unjust enrichment lies as a quasi-contract claim'" "and contemplates 'an obligation imposed by equity to prevent injustice, in the absence of an actual agreement between the parties' (Georgia Malone & Co. v Rieder, 19 NY3d 511, 516 [2012]; quoting IDT Corp. v Morgan Stanley Dean Witter & Co., 12 NY3d 132, 142 [2009], quoting Goldman v Metropolitan Life Ins. Co., 5 NY3d 561, 572 [2005]).
An unjust enrichment claim is rooted in "the equitable principle that a person shall not be allowed to enrich himself unjustly at the expense of another" (Miller v Schloss, 218 NY 400, 407 [1916]).
Thus, the elements of a cause of action to recover for unjust enrichment are "(1) the defendant was enriched, (2) at the plaintiff's expense, and (3) that it is against equity and good conscience to permit the defendant to retain what is sought to be recovered" (GFRE, Inc. v U.S. Bank, N.A., 130 AD3d 569, 570 (2d Dept 2015); quoting Mobarak v Mowad, 117 AD3d 998, 1001 [2nd Dept 2014]).
Here, plaintiff alleged in the complaint that Eden sublet half of the premises to Central Park without plaintiff's consent, in violation of Article 16.1 of the Lease. Plaintiff further alleges that Central Park used and occupied part of the building since August 19, 2017 through January 2018 without permission from plaintiff and without paying any consideration to plaintiff. As a result, plaintiff argues that by receiving the benefit of the use and occupancy, Central Park was unjustly enriched.
In addition to satisfying the above elements of its cause of action for unjust enrichment, plaintiff has established a viable cause of action as there was no express contract with Central Park (Rosar Realty Corp. v Leavin, 7 AD3d 295 [1st Dept 2004].
In opposition, Teodor Panterov, President of Central Park states that beginning July 2017, pursuant to a sublease entered into between Eden and Central Park, Central Park ccupied the building. Mr. Panterov claims that plaintiff was aware of Central Parks occupancy. Moreover, Mr. Panterov argues that Central Park paid Eden over $481,000.00 for its use and occupancy of the building. Central Park further maintains that it was partially constructively evicted and that its use and occupancy of the building was compromised by unremedied leaks, which caused damage to its business, to wit: falling sheet rock and water leaks from the ceiling. Central Park claims that in December 2017, it was forced to vacate its business from a portion of the building due to build-up of water and in January 2018, Central park ceased all business in the building.
Plaintiff alleges that it did not receive payment of any kind from either of Eden's subtenants (DJI or Central Park) during Eden's possession of the building.
Central Park has not submitted proof in admissible form that plaintiff knew of, consented to or acquiesced to Central Park's use and occupation of the building. Nor does Central Park provide proof of its communication with plaintiff regarding the allegations of leaks and structural failures. Central Park's argument that plaintiff was aware that Central Park was paying rent directly to Eden is unpersuasive . Moreover, Central Park's constructive eviction defense is without merit as it has failed to establish privity of contract with the plaintiff. A necessary element to a constructive eviction claim is a landlord-tenant relationship (7001 E. 71st St., LLC v Millennium Health Servs., 138 AD3d 573 [1st Dept 2016]).
However, Central Park has provided proof of payment to Eden for a portion of its use and occupancy. "'[T]he theory of unjust enrichment lies as a quasi-contract claim'" and contemplates "an obligation imposed by equity to prevent injustice, in the absence of an actual agreement between the parties" (IDT Corp. v Morgan Stanley Dean Witter & Co., 12 NY3d 132, 142 [2009], quoting Goldman v Metropolitan Life Ins. Co., 5 NY3d 561, 572, [2005]). An unjust enrichment claim is rooted in "the equitable principle that a person shall not be allowed to enrich himself unjustly at the expense of another" (Georgia Malone & Co. v Rieder, 19 NY3d 511, 516 [2012] [internal quotation marks and citations omitted).
Central Park has raised issues of fact as to what extent, if any, it has been unjustly enriched. Thus, plaintiff's summary judgment motion on its third cause of action must be denied. 10/16/2019
DATE
/s/ _________
DEBRA A. JAMES, J.S.C.