Opinion
2013-12-24
RSB BEDFORD ASSOCIATES LLC, Plaintiff–Respondent–Appellant, v. RICKY'S WILLIAMSBURG, INC., etc., et al., Defendants–Appellants–Respondents.
Santamarina & Associates, New York (Gill Santamarina of counsel), for appellants-respondents. Gallagher, Harnett & Lagalante LLP, New York (Brian K. Gallagher of counsel), for respondent-appellant.
Santamarina & Associates, New York (Gill Santamarina of counsel), for appellants-respondents. Gallagher, Harnett & Lagalante LLP, New York (Brian K. Gallagher of counsel), for respondent-appellant.
TOM, J.P., ANDRIAS, SAXE, FREEDMAN, RICHTER, JJ.
Judgment, Supreme Court, New York County (Bernard J. Fried, J.), entered July 20, 2012, awarding plaintiff $1,048,708.97, unanimously affirmed, without costs. Appeal from order, same court and Justice, entered on or about May 11, 2012, which confirmed in part and rejected in part the Special Referee's report and recommendation as to damages, unanimously dismissed, without costs, as subsumed in the appeal from the judgment.
This Court previously held that plaintiff's ability to close on the contract for purchase of the subject building was frustrated by defendants' repudiation of their agreement to lease space therein. As such, defendants cannot claim that closing was a condition precedent to plaintiff's recovery of contract damages since a party causing the failure of a condition is not permitted assert it as a defense (91 A.D.3d 16, 23, 933 N.Y.S.2d 3 [1st Dept. 2011], citing Rachmani Corp. v. 9 E. 96th St. Apt. Corp., 211 A.D.2d 262, 270, 629 N.Y.S.2d 382 [1st Dept. 1995] ). However, as we noted, while the propriety of damages was not then before us, the issue of whether defendants “caused” the transaction to fail is immaterial to any determination of the amount of damages (id. at 22–23, 629 N.Y.S.2d 382).
The evidence that plaintiff's purchase of the building was not consummated and that the seller retained the security deposit is sufficient to support the Referee's finding that the transaction did not close ( see Poster v. Poster, 4 A.D.3d 145, 771 N.Y.S.2d 635 [1st Dept. 2004], lv. denied3 N.Y.3d 605, 785 N.Y.S.2d 21, 818 N.E.2d 663 [2004] ). The plain language of the parties' side-letter agreement made clear that plaintiff could not proceed with the purchase of the property if defendants did not proceed with the lease for space in the building. However, the Referee did not err in finding that rent due under the lease was unrecoverable because it was not sufficiently foreseeable that defendants would be held liable for lost rent at the time the parties entered into their agreement ( Hadley v. Baxendale, 9 Exch. 341, 156 Eng. Rep. 145 [1854] ). Moreover, it would be unjust to award plaintiff the gross amount of rent due under the lease without deducting the operating costs attributable to the leased premises, which are unknowable ( see American List Corp. v. U.S. News & World Report, 75 N.Y.2d 38, 550 N.Y.S.2d 590, 549 N.E.2d 1161 [1989] [alleged lost future profits incapable of proof with reasonable certainty] ).
Likewise, there is no indication that, as a consequence of the breach, plaintiff would not only be unable to purchase the building but would also face a foreseeable loss of a hypothetical opportunity to sell it several years later. Lost profits from the sale of the building, which plaintiff never owned, at some point in the indefinite future to an unknown purchaser are patently speculative ( see id.; Bi–Economy Mkt., Inc. v. Harleysville Ins. Co. of N.Y., 10 N.Y.3d 187, 193, 856 N.Y.S.2d 505, 886 N.E.2d 127 [2008] ). Plaintiff is nevertheless entitled to recover expenses incurred for renovations necessary to create a “pop-up” store because the parties' agreement expressly makes those costs the responsibility of defendants.
While recovery of attorneys' fees by “the successful party” is provided for in the lease, the Referee properly reduced the amount sought by plaintiff to reflect that while it was the prevailing party ( see Board of Mgrs. of 55 Walker St. Condominium v. Walker St., 6 A.D.3d 279, 280, 774 N.Y.S.2d 701 [1st Dept. 2004]; cf. Walentas v. Johnes, 257 A.D.2d 352, 683 N.Y.S.2d 56 [1st Dept. 1999] ), it did not prevail on all of its claims, particularly those seeking “expectancy” (extraordinary) damages ( see Duane Reade v. 405 Lexington, L.L.C., 19 A.D.3d 179, 180, 798 N.Y.S.2d 393 [1st Dept. 2005]; Matter of Rahmey v. Blum, 95 A.D.2d 294, 304, 466 N.Y.S.2d 350 [2d Dept. 1983]; Nestor v. Britt, 16 Misc.3d 368, 380, 834 N.Y.S.2d 458 [Civ. Ct., N.Y. County 2007], affd.19 Misc.3d 142[A], 2008 N.Y. Slip Op. 51042 [U] [App. Term 2008] ).