Opinion
INDEX NO. 657674/2019
03-02-2020
PRADA USA CORP., Plaintiff, v. 724 FIFTH FEE OWNER LLC,WHARTON PROPERTIES LLC,JEFF SUTTON Defendant.
NYSCEF DOC. NO. 35 PRESENT: HON. ANDREW BORROK Justice MOTION DATE 01/13/2020 MOTION SEQ. NO. 001
DECISION + ORDER ON MOTION
The following e-filed documents, listed by NYSCEF document number (Motion 001) 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 27, 28, 29, 30, 31, 32, 33, 34 were read on this motion to/for PREL INJUNCTION/TEMP REST ORDR. Upon the foregoing documents and as set forth below, 724 Fifth Fee Owner LLC (the Owner)'s motion seeking (i) dismissal of Prada USA Corp. (Prada)'s first and second causes of action is granted in part, (ii) a preliminary injunction is denied, and (3) its reasonable attorneys' fees, disbursement and court costs is granted in part.
The Relevant Facts and Circumstances
Reference is made to (i) an Amended and Restated Lease (NYSCEF Doc. No. 6, the 1997 Lease), dated May 7, 1997, by and between 724 Fifth Avenue Realty Company (Owner's predecessor-in-interest) and N.P.B. Corporation (Prada's predecessor-in-interest), as modified by a certain Lease Modification Agreement No. 1 dated August 2, 2006 (NYSCEF Doc. No. 7, the First Amendment), as further modified by a Lease Modification Agreement No. 2 dated February 25, 2009 (NYSCEF Doc. No. 8, the Second Amendment), as further modified by a Lease Modification Agreement No. 3 dated May 2, 2011 (NYSCEF Doc. No. 9, the Third Amendment), each by and between 724 Fifth Avenue Realty, LLC and Prada USA Corp., and as further modified by a Lease Modification Agreement No. 4 dated July 1, 2013 (NYSCEF Doc. No. 10, the Fourth Amendment; the 1997 Lease, the First Amendment, the Second Amendment, the Third Amendment, and together with the Fourth Amendment, hereinafter, collectively, the Lease), by and between 724 Fifth TIC Owner 1 LLC, 724 Fifth TIC Owner 2 LLC, 724 Fifth TIC Owner 3 LLC, and Prada pursuant to which Prada leased certain retail space at 724 Fifth Avenue (the Building), (ii) a certain letter, dated December 12, 2018 (the Suspension Notice), from Owner to Prada together with an Owner's Certification (the Owner's Certification), dated of even date therewith attached to the Suspension Notice, (iii) a certain letter (the Plans Letter), dated December 18, 2018, from Owner to Prada, (iv) a certain letter (the Plans Selection Letter), dated February 8, 2019, from Prada to Owner, (v) a certain letter (the Purported Withdrawal Notice), dated October 16, 2019, from Owner to Prada, (vi) a letter (the Rejection Letter), dated October 29, 2019, from Prada to Owner, and (vii) a letter (the Rejection Response), dated November 15, 2019, from Bradley Ruskin, Esq. of Proskauer Rose LLP to Eric Menkes, Esq. of Duval & Statchenfeld LLP. Terms used but not otherwise defined herein shall have the meaning ascribed thereto in the Lease. Pursuant to the Lease, Owner retained the option from time to time to suspend Prada's tenancy in connection with redevelopment of the Building (NYSCEF Doc. No. 1, ¶¶ 18-20). To wit, Paragraph 4 of the Fourth Amendment provides:
4. SUSPENSION OPTION
(a) For the purpose of commencing the Development, Owner shall have the option (the "Suspension Option"), from time to time , subject to the terms herein, to suspend the possession of Tenant with respect to all of the Demised Premises (and Tenant's right to possession thereof) pursuant to the Lease and any applicable law or Legal Requirement relating to such possession and the use by Tenant of the Demised Premises with such option exercisable by written notice (the "Suspension Notice") given by Owner to Tenant as hereinafter provided. The Suspension Notice shall (i) identify the effective date of suspension (the "Suspension Date") , which Suspension Date shall not be sooner than three hundred sixty-five (365) days after the giving of the Suspension Notice , (ii) be accompanied by a certification of Owner that Owner (or any predecessor of Owner) has entered into a written lease or other agreement with every other tenant and/or occupant of the Building providing for a termination of such tenant's or occupant's occupancy of the Building on or prior to the Suspension Date or has a final non-appealable court order to such effect, and (iii) specify the date (the "Anticipated Reinstatement Date") on which Owner reasonably anticipates the Reinstatement Date (as such term is hereinafter defined) to occur, which Anticipated Reinstatement Date shall be no later than the three (3) year anniversary of the Suspension Date identified in the Suspension Notice. Upon Tenant's request , Owner will furnish reasonable evidence of the items described in clause (ii) above to Tenant. For the avoidance of doubt, and not by way of limitation, Owner shall have no obligation to deliver a Suspension Notice or exercise its Suspension at any time during the Term nor shall Tenant have any right or option to so suspend the Term.
(b) On or prior to the Suspension Date (time being of the essence), Tenant shall quit and surrender to Owner possession of the Demised Premises, vacant and broom clean; provided, however, Tenant shall have no obligation to so surrender possession of the Demised Premises , and the Suspension Date shall not be deemed to have occurred , unless (i) on such date there shall not be any other tenants or occupants in possession of all or any part of the Building, (ii) no later than twenty (20) days prior to the Suspension Date , Owner shall have deposited into escrow with First American Title Insurance Company, Chicago Title Insurance Company, Fidelity National Title Insurance Company or a national underwriter reasonably acceptable to Tenant (the "Escrow
Agent") (x) the payment described in Paragraph 4(c) hereof and (y) a letter of credit (the "Letter of Credit") in the amount of Twenty-Five Million and No/100 Dollars ($25,000,000.00) to secure Owner's payment obligations under Paragraph 5(h)(ii) and Paragraph 5(i), and in each case given Tenant reasonable evidence thereof, and (iii) on or prior to the Suspension Date, the Escrow Agent shall (x) pay to Tenant the payment described in Paragraph 4(c) hereof and (y) deliver to Tenant the Letter of Credit Tenant acknowledges that possession of the Demised Premises must be surrendered to Owner on or prior to the Suspension Date (time being of the essence), subject to the terms of the preceding sentence ...And, on December 12, 2018, Owner sent the Suspension Notice to Prada complying with each of the three conditions set forth in Paragraph 4(a) of the Fourth Amendment - i.e., (i) specifying a Suspension Date of not sooner than 365 days after giving of the notice (i.e., March 12, 2020), (ii) enclosing a certification that Owner has entered into a written lease or other agreement with every other tenant and/or occupant of the Building providing for a termination of such tenant's or occupant's occupancy of the Building on or prior to the Suspension Date or has a final non-appealable court order to such effect (i.e., the Owner's Certification) and (iii) specifying the date on which Owner reasonably anticipated the Reinstatement Date which Anticipated Reinstatement Date was not later than the three (3) year anniversary of the Suspension Date identified in the Suspension Notice (i.e., March 12, 2023). Subsequently, on December 18, 2018, pursuant to Paragraph 5 of the Fourth Amendment, Owner sent the Plans Letter enclosing three options of preliminary plans for the Tenant's review and selection, and on February 8, 2019 (i.e., within the requisite 45 day time period provided for in the Fourth Amendment (see NYSCEF Doc. No. 10, ¶ 5) Prada sent the Plans Selection Letter indicating its selection of the 40/125 Dimension Option and the 2,100 usable square feet Mezzanine Level USF Option. Approximately 10 months later, on October 16, 2019, Owner sent Prada the Purported Withdrawal Notice purporting to withdraw the Suspension Notice, and on October 29, 2019, Prada sent the Rejection Letter indicating that it was rejecting the Owner's attempt to rescind the Suspension Notice and requesting adequate assurances that the Owner respect the Suspension Date of March 12, 2020:
(c) From and after the date on which Tenant shall surrender the Demised Premises to Owner vacant and broom clean neither Owner nor Tenant shall have any rights, liabilities or obligations with respect to the Demised Premises under the Lease from the Suspension Date until the Reinstatement Date (as hereinafter defined), except such rights, liabilities and obligations set forth in this Paragraph 4 and in Paragraph 5 hereof and which, by the terms of the Lease, survive the expiration or sooner termination of the Lease. Notwithstanding anything to the contrary herein , it shall be a condition of Tenant's obligation to surrender the Demised Premises in accordance with Paragraph 4(b) hereof that contemporaneous with such surrender of the Demised Premises , Owner shall pay, or shall cause the Escrow Agent to pay, to Tenant, by unendorsed bank check payable to the direct order of Tenant or by wire transfer of funds to an account designated in writing by Tenant an amount (the "Suspension Payment") equal to the lowest sum listed in Schedule I attached hereto that correlates to either (x) the date which is the Suspension Date or (y) if following the Suspension Date, the date Tenant actually delivers possession of the Demised Premises in the condition required hereunder, provided, however, that notwithstanding the contents of Schedule I attached hereto, in no event shall the Suspension Payment exceed $5,000,000.00 (e.g., if the Suspension Date occurs on June 30, 2014, but Tenant actually delivers possession of the Demised Premises on June 30, 2015, Owner shall pay to Tenant $5,000,000.00; or if the Suspension Date occurs on June 30, 2023, but Tenant actually delivers possession of the Demised Premises on June 30, 2024, Owner shall pay to Tenant $3,581,315.00; or if the Suspension Date occurs on June 30, 2025, but Tenant actually delivers possession of the Demised Premises on June 30, 2026, Owner shall pay to Tenant $1,193,772.00; or if Owner does not exercise the Suspension Option during the Extended Term, Owner shall not be obligated to pay to Tenant a Suspension Payment) ...
(NYSCEF Doc. No. 10, at 3-4, ¶¶ 4(a)-(c)).
Owner does not have the right, under the Lease or under the law to withdraw the Suspension Notice. The Suspension Notice remains in effect and the Suspension Date remains as March 12, 2020.On November 15, 2019, Bradley Ruskin, Esq. of Proskauer Rose LLP sent the Rejection Response to counsel for Prada pursuant to which Mr. Ruskin indicated that Owner rejected Prada's interpretation of the Lease because, inter alia, (i) there is no language in the Lease prohibiting withdrawal of its Suspension Notice, (ii) the Lease contemplates withdrawal of a Suspension Notice because the Lease provides that Owner has the option "from time to time" to suspend Prada's possession of the demised premises and that language would be meaningless if Owner only had a single irrevocable Suspension Notice, and (iii) Owner can withdraw a termination notice citing Eve & Mike Pharmacy, Inc. v Greenwich Pooh, LLC, 107 AD3d 505 [1st Dept 2013] (holding that tenant's declaratory judgment action regarding the validity of a termination notice was rendered moot by landlord's subsequent withdrawal of that notice) and Abramson v 74th LLC, 2014 NY Slip Op 33005[U] [Sup Ct, NY County 2014] (holding that Landlord had a right to withdraw a Termination Notice where "[n]othing in the Lease prohibit[ed] Landlord from withdrawing the Termination Notice prior to the termination date set forth in the Termination Notice") and arguing that if a landlord can withdraw a termination notice, "it goes without saying that Owner can withdraw a less drastic Suspension Notice". A little over one month later, on Christmas Eve, by Summons and Complaint, dated December 24, 2019, Prada sued Owner seeking (i) a declaration that (a) Owner was not permitted to withdraw its exercise of the Suspension Notice and (b) Owner no longer retains any rights to exercise the Suspension Notice (first cause of action), (ii) anticipatory breach of contract and damages in the amount of $5 million relating to the refused Suspension Payment (second cause of action), (iii) tortious interference as against Wharton Properties and Jeff Sutton by causing scaffolding to remain in front of the Building (third cause of action), and (iv) as an alternative to Prada's third cause of action, as against Wharton Properties and Jeff Sutton, intentional infliction of harm upon Prada continuing to cause scaffolding to remain in front of the Building unnecessarily (fourth cause of action). On January 13, 2020, Owner filed this motion by order to show cause for partial dismissal of the first and second causes of action, a preliminary injunction, and an award of reasonable attorneys' fees, disbursements and court costs pursuant to the Lease.
Based on your October 16 notice, we presume that Owner does not intend to comply with the terms of the Lease respecting the Suspension Date, including, without limitation, Owner's obligation to pay the Suspension Payment. Please confirm, whether Owner intends to comply with these obligations. If we do not hear from you within the next 15 days, we will assume that you do not so intend to comply.
(NYSCEF Doc. No. 17).
Discussion
I. Owner's Motion to Dismiss
On a motion to dismiss, the pleadings are to be afforded a liberal construction and the facts as alleged in the complaint are accepted as true (Leon v Martinez, 84 NY2d 83, 87 [1994]). Dismissal under CPLR § 3211 (a)(7) requires the court to assess whether the proponent of the pleading has a cause of action and not whether he has stated one (id.).
1. The First Cause of Action (Declaratory Judgment)
In its Complaint, Prada seeks a declaratory judgment that (A) Owner no longer retains any right to exercise the Suspension Option and (B) Owner was not permitted to withdraw its exercise of the Suspension Option. Owner argues that the first cause of action should be dismissed because the Fourth Amendment permits the issuance of more than one Suspension Option and does not impose any limitation on Owner's right to withdraw the Suspension Option. In opposition, Prada argues that Owner can only exercise the Suspension Option once, and that the Suspension Option once exercised is irrevocable. In short, both parties are partially correct.
The Suspension Option
A. Owner is not limited to a single one time only Suspension Option As described above, Paragraph 4 (a) of the Fourth Amendment provides the Owner with the right " from time to time " to issue a Suspension Notice. These words mean exactly what they say and do not mean what they do not say - i.e., "from time to time" necessarily means more than once. They simply cannot be interpreted to confer a single one time only option. Prada urges the court to interpret the words "from time to time "to be synonymous with "at any time" and to read a limitation in the Lease which simply is not expressed. For completeness, Prada also argues that elsewhere the Lease uses, inter alia, the words "the" and "its" as it relates to the Suspension Option, but again, the Lease does not provide any words of limitation limiting the Owner to a single option which is customary and necessary to include in these agreements when such limitation is intended. And, "from time to time," can only mean more than one time. Put another way, and at the risk of redundancy, the Lease simply does not say that the Owner has a single one time option to suspend Prada's tenancy and there are no other words of limitation used in the Lease as it relates to the Owner's Suspension Option or to issue a Suspension Notice. To accept Prada's interpretation would effectively amount to rewriting Paragraph 4(a) to make a new contract for the parties under the guise of interpreting the writing which the court may not do (see Jade Realty LLC v Citigroup Commercial Mtge Trust 2005-EMG, 83 AD3d 567 [1st Dept 2011], aff'd 20 NY3d 881 [2012]; 425 Fifth Ave. Realty Assoc. v Yeshiva Univ., 228 AD2d 178 [1st Dept 1996]; Flag Wharf, Inc. v Merrill Lynch Capital Corp., 40 AD3d 506, 507 [2007]). In addition, and putting aside that "from time to time" are words of art, and although not argued in the papers, to the extent Prada's counsel suggested at oral argument (2/28/20) that the Lease may be ambiguous and that the court should look at the extrinsic evidence of Nasim Peretsman's affidavit (NYSCEF Doc. No. 29) in interpreting Paragraph 4(a) of the Fourth Amendment, the argument is unavailing. The court notes that the Fourth Amendment is not ambiguous as to whether the Owner was limited to one single Suspension Option and therefore the affidavit should not be considered in interpreting this provision (Reiss v Financial Performance, 97 NY2d 195 [2001]; Schmidt v. Magnetic Head Corp., 97 AD2d 151 [1983]). But even if the affidavit were considered, Mr. Peretsman simply does not refer to even a single conversation or communication or other interaction with the Owner where it was ever discussed that the Owner agreed to a limitation as to its rights to exercise the Suspension Option, and again, no such limitation appears in the executed Fourth Amendment. Indeed, Mr. Peretsman merely acknowledges that the language is "from time to time" - i.e., as opposed to "at any time" - and suggests that the court should interpret it as imposing a limitation to one single Suspension Option without any limiting language set forth in the Lease to that effect because he does "not believe that Owner would have been interested in making more than one $5 million payment and post more than one $25 million letter of credit as required as part of Owner's exercise of the Suspension Option" (id., ¶ 8). Therefore, (i) the first cause of action is dismissed to the extent that Prada seeks a declaration that the Owner had a single Suspension Option and (ii) a declaration is granted in favor of the Owner that the Lease does not contain a one time only single Suspension Option. B. Revocability of the Suspension Option The Fourth Amendment by its express terms does not provide for revocation of the Suspension Notice by the Owner. This is also not without meaning. Relying primarily on Eve & Mike Pharmacy, Inc. v Greenwich Pooh, LLC, 107 AD3d 505 [1st Dept 2013] and Abramson v 74th LLC, 2014 NY Slip Op 33005[U] [Sup Ct, NY County 2014], the Owner argues that it could revoke the Suspension Notice notwithstanding the lack of any express right to do so reserved in the Lease. The Owner's reliance is misplaced. In Eve & Mike Pharamcy, Inc., the defendant landlord had issued a notice of termination of the plaintiff's lease which it subsequently withdrew after the commencement of the lease. New York State Supreme Court Justice Jeffrey K. Oing, among other things, dismissed the plaintiff's request for a judicial declaration as to the legal effect of the notice because it was rendered moot. Upon appeal, the First Department affirmed. In other words, in that case, the tenant was seeking a determination that the default notice delivered by the landlord was a nullity and upon withdrawal of the notice of default, the court dismissed the cause of action seeking a declaration that the issuance of a notice of default was a nullity because the issue was mooted by the withdrawal of the notice of default. This case simply does not support the proposition that an owner is free to revoke the exercise of an option under a lease as this issue was never before that court. In Abramson, the plaintiff tenant operated a medical practice pursuant to a ten year lease which had one five year extension option and had a right of first offer as to any sale of the building and in the event of a sale to a third party, the right to terminate the plaintiff tenant's lease. In the event of a termination, the termination date was to occur six months following written notice to the tenant and the tenant was entitled to a termination payment in the amount of nine times the monthly base rent payable on the date that tenant vacated the premises. Three years into the extension term, the landlord gave the tenant the offer notice of its intention to list the building for sale for $17.6 million. The tenant elected not to exercise the right of first offer and the tenant informed the landlord that the amounts allegedly owed as additional rent were incorrect. Subsequently, the landlord served the tenant with a notice to cure and informed a potential third party purchaser that the landlord was in the process of removing the tenant and ultimately served the tenant with a notice of termination. Prior to bringing the action, the tenant made an additional rent payment. The tenant sued seeking a declaratory judgment, breach of lease and breach of covenant of good faith and fair dealing. When the landlord's negotiations ended with the prospective third party purchaser, the landlord admitted the error in the amount owed for additional rent and withdrew the notice to cure and termination notice and the tenant moved for summary judgment seeking a declaration that the notices of default and termination were legally defective, null and void, that the termination notice was null and void and that the tenants were not in default in their obligations under the lease. New York State Supreme Court Justice Manuel J. Mendez held that the tenants failed to make the prima facie showing of entitlement to judgment as a matter of law that the termination notice was null and void and that the withdrawal of the termination notice is valid and remains in full force and effect and the tenant was not entitled to the nine month termination payment. Significantly in that case, Justice Mendez noted that the tenant had not vacated the premises prior to the termination date and that the lease remained in full force and effect (i.e., it was not terminated) when landlord withdrew its termination notice. Put another way, summary judgment was denied because the movant could not make its prima facie showing under Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986] that it was entitled to judgment that the landlord had defaulted as the tenant had not performed. This case does not however stand for the proposition that the exercise of an option does not create a binding bilateral contract. As the Court of Appeals has explained, an option contract is an agreement to hold an offer open, which confers on the optionee, for consideration, some right at a later date (Kaplan v Lippman, 75 NY2d 320, 324 [1990] [citations omitted]). At the moment that the optionee gives notice of "intent to exercise the option in accordance with the agreement, the unilateral option agreement ripens into a fully enforceable bilateral contract" (id., at 325). Here, Paragraph 4(a) provided that the Suspension Option could be exercised with written notice - i.e. the Suspension Notice - specifying a forward date which was at least 365 days following the date of delivery of the Suspension Notice, providing a certification from Owner that the Owner was really doing a redevelopment and not using this provision as a subterfuge for displacing Prada's tenancy and to permit Prada to be the last tenant to vacate the building if Prada so chooses (i.e., Prada does not have to comply with Suspension Option until all other tenants have vacated if it chooses to wait and Prada's request that Owner "will furnish reasonable evidence of the items described in clause (ii) above to Tenant" (NYSCEF Doc. No. 10, ¶ 4(b)). The Owner next argues that because not all of its conditions set forth in the Fourth Amendment were satisfied, the Owner could revoke its Suspension Notice. To wit, the Owner argues that exercise of the Suspension Notice required:
(1) a notice is provided to Prada at least 365 days prior to the Suspension Date, containing certain specified details;But this argument misses the point. Paragraph 4(a) of the Fourth Amendment requires three things for exercise of the Suspension Option - (1) delivery of notice 365 days prior to the Suspension Date identifying such Suspension Date in the Suspension Notice, (2) a certification that the Owner is vacating the entire building and has secured deals or a judgment to do so, and (3) identifying a reinstallation date which reinstallation date must be within 3 years of the Suspension Date. Nothing further is required to exercise the Suspension Option. Paragraph 4(b) of the Fourth Amendment, addresses the Suspension Date and provides that the Tenant's obligation to vacate the premises on the Suspension Date is time is of the essence but that the Suspension Date shall not be deemed to have occurred - meaning that Prada does not need to vacate - unless items (2), (3) and (4) identified by the Owner above (i.e., and incorrectly argued to be unsatisfied pre-conditions to the exercise of the Suspension Option) have occurred. Put another way, it is not that the Suspension Option has not been exercised but rather Prada need not vacate because the Suspension Date has not been deemed to have occurred. For the avoidance of doubt, to the extent that the Owner argues that because the Owner has the right to issue a subsequent Suspension Notice, it necessarily follows that the Owner must be permitted to revoke its Suspension Notice. The argument is also without merit. As Mr. Peretsman explains:
(2) On the Suspension Date, the other tenants or occupants have vacated the Building;
(3) At least 20 days prior the Suspension Date, Owner deposits into Escrow the Suspension Payment and a $25 million Letter of Credit; and
(4) On the Suspension Date, the Escrow Agent pays Prada the Suspension Payment and deliver the Letter of Credit.
(NYSCEF Doc. No. 21, at 12, citing NYSCEF Doc. No. 10, ¶¶ 4 (a)-(b).
[i]f Owner had sought a withdrawal right, Prada would have either refused or required significant additional provisions regarding such revocation right. Those additional provisions would likely have included terms regarding when the revocation could occur (that is, how far in advance of the proposed Suspension Period), and whether a fee or expense reimbursed would be required.Having failed to negotiate such a reservation of rights, the court declines to impose one in favor of the Owner. The parties are however entitled to an appropriate declaration of the their rights (see Daly v Becker, 109 AD2d 651, 652 [1st Dep't 1985]). The Owner does not have a single Suspension Option - from time to time, means more than once. The Suspension Option once exercised is irrevocable. However, the Fourth Amendment provides that the Suspension Date cannot be sooner than 365 days from the date of the Suspension Notice. It can be longer. The Fourth Amendment clearly contemplates that the Suspension Date may not occur on the date first set forth in the Suspension Notice (see NYSCEF Doc. No. 10, ¶ 4(b)). And, the deal that Prada negotiated was for 365 days notice of the date in which it needs to vacate - not a particular date (i.e., not March 12, 2020 per se). This basic understanding of the Lease is confirmed by Mr. Peretsman in his affidavit:
(NYSCEF Doc. No. 29, ¶ 9).
5. The parties negotiated the terms on which Owner would be able to "suspend" the term of the Lease. Prada had several concerns regarding the proposed suspension, including whether sufficient advance notice would be provided , whether appropriate compensation would be paid, whether space in the new building would be suitable and whether Prada would be forced from the Premises prematurely (that is, before other tenants leave).
6. Following discussions about these and other concerns, Prada agreed to allow Owner to have an option to suspend the term of the Lease to allow Owner to effectuate a redevelopment, provided that Owner complied with certain advance notice , payment and other requirements, and additional requirements regarding the space to be returned to Prada upon conclusion of the redevelopment.
7. Accordingly, Section 4 of the Fourth Amendment includes a detailed provision entitled "Suspension Option". Under this section, Owner was granted an option - referred to in the Lease as the "Suspension Option" - to suspend Prada's possession of the Premises for a period of up to three years.
8. Under Section 4 of the Fourth Amendment, Owner could exercise the Suspension Option at any time during the Lease term by providing a written
notice (referred to as the Suspension Notice) at least 365 days prior to the start of the period of suspension ...Finally, the Suspension Date triggering Prada's obligation to vacate has not yet occurred.
(NYSCEF Doc. No. 29, ¶¶ 5-8 [emphasis added]).
2. The Second Cause of Action (Anticipatory Breach of Contract) Owner argues that the second cause of action should be dismissed because Owner could not have anticipatorily breached the Lease because the Suspension Option was properly withdrawn and also because the obligation to pay the Suspension Payment is payable only when Prada is vacating the Building. In addition, the Owner argues that Prada has not alleged that it intends to vacate the Building and instead takes the position that it is entitled to stay in the Building and also receive what amounts to be a $5 million windfall which is not in any way reflected in the Lease and is wholly inconsistent with the terms of the Fourth Amendment and the purpose for which Prada would be entitled to the $5 million in the event of its relocation during the suspension period. In its opposition papers, Prada alleges that it has sufficiently pled a cause of action for anticipatory breach because the Owner attempted to revoke its Suspension Notice which Prada rejected and Owner continued to take the position that it could withdraw its Suspension Notice and therefore has communicated its intention to breach the Lease by not funding the required escrow amounts:
Owner has definitively stated its unequivocal and final intention not to perform its obligations in respect of the Suspension Option, including the obligation to make the Suspension Payment to Prada.An anticipatory breach occurs "when, before the time for performance has arisen, a party to a contract declares his intention not to fulfill a contractual duty" (Kaplan v Madison Park Group Owners, LLC, 94 AD3d 616, 619 [1st Dept 2012], citing Lucente v International Bus. Machs. Corp., 310 F3d 243, 258 [2d Cir 2002]). Taking the allegations set forth in the Complaint as true as the court must on a motion to dismiss, Prada has sufficiently made out a claim for anticipatory breach. It is of no moment that Prada is not entitled to receive the $5 million payment until Prada vacates the premises. To the extent that certain conditions to its obligation to vacate are identified in Paragraph 4(b) of the Fourth Amendment, Prada very well could notify the Owner of its intention to waive those condition and could in fact move out at which time the Owner would be obligated to make the Suspension Payment. Accordingly, dismissal of the second cause of action at this stage of the proceeding must be denied.
(NYSCEF Doc. No. 1, ¶ 65).
II. Preliminary Injunction
The Owner also seeks a preliminary injunction tolling the commencement of the suspension period until one year after this Court rules on Prada's first cause of action for a declaratory judgment. Given the foregoing, there is no immediate harm, and the Owner's request for injunctive relief must be denied.
III. Attorneys' Fees, Disbursements and Court Costs
The Owner seeks an award of attorneys' fees, disbursements, and costs pursuant to Section 64(I) of the Lease, which provides:
In the event that Landlord or Tenant places the enforcement of this Lease, or any part thereof, or the collection of any Fixed Rent or Additional Rent due, or to become due hereunder, or recovery of the possession of the Premises, in the hands of an attorney, or files suit upon the same, the prevailing party shall recover its reasonable attorneys' fees, disbursements and court costs from the other in connection with such matter. The provisions of this paragraph shall survive the termination or expiration of this Lease.In its opposition papers, Prada did not oppose this branch of Owner's motion such that any objection is waived. Therefore, Owner may recover attorneys' fees, disbursements, and court costs solely as it relates to the dismissal of the portion of the first cause of action which sought a declaration that the Owner only had a single one-time option Suspension Option. Accordingly, it is ORDERED that the branch of Owner's motion seeking dismissal of Prada's first cause of action and a declaratory judgment is granted solely to the extent set forth herein; and it is further ADJUDGED AND DECLARED that Owner does not have one single Suspension Option but is denied in that the Suspension Notice is irrevocable; and it is further ADJUDGED and DECLARED that the Suspension Date has not yet occurred and that Prada has no obligation to vacate; and it is further ADJUDGED and DECLARED that Owner may issue another Suspension Notice and exercise a Suspension Option; and it is further ORDERED that the branch of Owner's motion seeking dismissal of Prada's second cause of action is denied; and it is further ORDERED that the branch of Owner's motion seeking a preliminary injunction is denied; ORDERED that the branch of Owner's motion awarding Owner its reasonable attorneys' fees, disbursements, and court costs is granted solely to the extent that the first cause of action was dismissed as to a declaration that the Owner has one single Suspension Option. 3/2/2020
(NYSCEF Doc. No. 6, at 30-31).
DATE
/s/ _________
ANDREW BORROK, J.S.C.