Opinion
11594/06.
Decided May 4, 2007.
Gerald M. Klein, Esq., Katz Klein, for Plaintiffs, White Plains, New York.
Barry S. Kantrowitz, Esq., Kantrowitz Goldhamer Graifman, P.C., for Defendants, Chestnut Ridge, New York.
This action arises from a series of disputes related to a commercial lease. Now before the Court are cross-motions for interim relief and summary disposition of certain claims.
I. FACTUAL AND PROCEDURAL BACKGROUND
Plaintiffs commenced this action on June 21, 2006 seeking money damages and several forms of permanent injunctive relief based upon their claim that in several respects defendant has breached the terms of the lease (the Lease) that permits plaintiffs to operate a restaurant and cocktail lounge and to provide food and beverage services for meeting rooms and banquet facilities at a hotel owned and operated by defendant (the Hotel). Defendant served an answer to the complaint containing three counterclaims and demanding declaratory relief, ejectment of plaintiffs from the Hotel and money damages.
At the time they filed their summons and complaint, plaintiffs also moved by order to show cause for certain forms of preliminary injunctive relief (the First Injunction Motion). Defendant opposed that motion and cross-moved for dismissal of the complaint, an order of ejectment and related relief. Insofar as relevant, the decision and order entered by Justice J. Emmet Murphy on December 1, 2006 (the December 2006 Order) disposing of the cross-motions (together hereinafter "the 2006 Motions") granted plaintiffs a preliminary injunction (the Interim Injunction) as follows:
". . . plaintiff's motion is granted to the extent that pending the disposition of this action the defendant . . . is enjoined from (1) demolishing the restaurant, (2) competing with plaintiff by providing food and beverage services, provided plaintiff performs this function; (3) restricting plaintiff's use of all banquet facilities, and (4) terminating the lease and sublease on condition plaintiff posts an undertaking in the sum of $320,000 and commencing with December 1, 2006 pays plaintiff monthly the sum of $5,970 for rent, plus its share of real estate taxes in the sum of $666.67, and all utilities for the demised premises[.]" (Kantrowitz Affirm., Exh.1, p. 2 [emphasis added]).
The December 2006 Order denied defendant's cross-motion for dismissal of the complaint and an order of ejectment.
Plaintiffs then moved by order to show cause for renewal and reargument of the First Injunction Motion, which was opposed by defendant (the Renewal Motion). In his Short Form Order entered on December 15, 2006 (the Renewal Order), Justice Murphy ordered the following:
"1. The [December 2006 Order] is modified so as to reduce the required undertaking from $320,000 to $250,000. said undertaking to be filed no later than 30 days from the date hereof;
2. The [December 2006] Order is further modified in that beginning December 1, 2006 the Plaintiff is directed to pay 75% of the rent and taxes Provided in the lease, to wit $4,977.50 (.75 X $5,970 * $666.67) plus 100% of all utilities for the demised premises. The December rent shall be paid within 5 days hereof and all future rent to be paid on the first of each month. This rent reduction is based upon the alleged disruption of Plaintiff's business operations due to the renovation and construction work currently ongoing at the Defendant's premises, it being understood that this rent reduction constitutes interim relief during the ongoing construction and is subject to review upon the trial of this matter;
3. No later than 10 days from the date hereof, the Plaintiff is directed to provide the Defendant with notice of whether and when it intends to commence providing full food service to the Defendants [sic] hotel guests, including breakfast, lunch, dinner and room service." (Kantrowitz Affirm., Exh.2, p. 1-2 [emphasis added]).
The Renewal Order also addressed the parties' discovery disputes, by, inter alia, directing plaintiffs to "serve answers to the interrogatories and produce documents requested in the interrogatories propounded by Defendant on July 28; 2006 including, no later than January 15, 2007, all Plaintiff's individual and corporate tax returns for the period 1996-2006." (id., p. 2).
Dissatisfied with the extent of the relief granted on the Renewal Motion, on January 10, 2007 plaintiffs presented an order to show cause (the Appeal OTSC) to Appellate Division Justice Mark C. Dillon to bring on a motion for further modification of the December 2006 Order pending their appeal from the Renewal Order (the Appeal Motion), including a reduction of the undertaking to $39,820.00 and a reduction of their rent payment to $2,654.68 per month. As presented to Justice Dillon, the Appeal OTSC contained certain proposed relief pending the determination of the Appeal Motion, including the rent reduction plaintiffs were seeking on that motion. When he signed the Appeal OTSC, Justice Dillon struck all of the proposed interim relief. On January 30, 2007, the Appeal Motion was "denied, without prejudice to seeking relief in the Supreme Court, Westchester County" (Doria Affid., Exh.10).
Notwithstanding the directives set forth in the Renewal Order, plaintiffs did not post the $250,000 undertaking by January 15, 2007. Nor, by that same date, did they produce any of the discovery as also required by the Renewal Order. Based upon those violations of Justice Murphy's directives, defendant filed a motion seeking an order ejecting plaintiffs from the Hotel. Plaintiffs responded with a cross-motion to modify their obligations to post an undertaking and pay rent, and for partial summary judgment. The Court turns first to plaintiffs' motion.
II. PLAINTIFFS' MOTION
On their motion, plaintiffs seek three forms of relief: (1) partial summary judgment; (2) modification of the conditions of the Interim Injunction; and (3) leave to amend their complaint. Defendant opposes the motion in all respects. The Court addresses plaintiff's requests in the order that it deems most logical.
A. SUMMARY JUDGMENT
First, plaintiffs ask for partial summary judgment, i.e., judgment in the amount of $186,360, representing revenue received by defendant for the use of certain meeting rooms at the Hotel that plaintiffs contend it was their right to use. In order to be entitled to that relief, plaintiffs must establish, inter alia, that a particular lease amendment executed in 1975 (the 1975 Amendment) did not take their right to use those rooms and that they have standing to sue to recover those monies.
Upon his consideration of the papers submitted on the 2006 Motions. Justice Murphy concluded that factual issues existed as to both the standing issue and the issue of the validity of the 1975 Amendment. Having read those papers, as well as the papers submitted on the current cross-motions, this Court agrees with Justice Murphy that resolution of these two issues must await trial. For that reason, plaintiffs' motion for partial summary judgment is denied.
B. MODIFICATION
Next, plaintiffs move to modify the conditions of the Interim Injunction. Specifically, they request that the Court free them from any obligation to pay rent and that it reduce the amount of the undertaking to $186,360, that being the amount they believed that they would receive on their partial summary judgment motion. Building upon their argument that the undertaking should be reduced to that amount and that they should receive a judgment in that sum against defendant, plaintiffs also ask the Court to direct that the anticipated judgment be deemed to be the required undertaking. Each of these applications (collectively hereinafter "the Three Modification Applications") is founded upon plaintiffs' view that there has been a further significant change in the conditions at the Hotel which has wholly undermined their ability to conduct their business at a profit. [FN1]
FN1. Although plaintiffs' supporting papers refer, in certain respects, to a "renewal" of their earlier preliminary injunction motion, this Court need not refer this motion to Justice Murphy pursuant to CPLR 2221 because CPLR 6314 specifically provides for motions to modify existing preliminary injunctions (see Rosemont Enterprises, Inc. v. Irving, 49 AD2d 445,448 [1st Dept. 1975], appeal dismissed 41 NY2d 829). Thus, this Court may rule upon plaintiffs' motion (see id., 49 AD2d, at 448 [CPLR 6314, "has, upon occasion, been construed so as to permit one whose interests or rights are seriously affected to seek such relief", whether or not they are the restrained parties]).
Although it appears that as the renovation work at the Hotel has progressed, plaintiffs' business has had to deal with further disruptions, no showing has been made that there has been a change in circumstances that was not contemplated by Justice Murphy when he reduced the rent and undertaking conditions initially established by the December Order. Indeed, as plaintiffs acknowledge, they sought the modification of those conditions upon learning that the work planned by defendant was a complete renovation of the Hotel. It was on that basis that Justice Murphy significantly reduced the rent obligation and the undertaking.
Having obtained those reductions from Justice Murphy, they then sought further relief from the Appellate Division, which denied the Appeal Motion. Notwithstanding that the denial was without prejudice to a further application in Supreme Court, plaintiffs have not sufficiently demonstrated a basis for the further reductions sought by them. For that reason, the Three Modification Applications are denied.
C. LEAVE TO AMEND
Plaintiffs' final request is for leave to amend their complaint to assert a claim with respect to their right to use the meeting rooms at the Hotel. Under CPLR 3025(b), leave to amend a pleading shall be freely granted absent prejudice to the adverse party. Here, defendant has not demonstrated that it will suffer any prejudice if plaintiffs are permitted to amend their complaint in the manner sought. Therefore, this branch of the motion is granted. Plaintiff shall serve their amended complaint upon defendant by no later than May 22, 2007.
II. DEFENDANT'S MOTION
Complaining that plaintiffs have failed to post the undertaking and pay the monthly rent, defendant seeks an order of ejectment and a warrant of eviction. In addition, defendant moves to dismiss the complaint based upon plaintiffs' violation of their discovery obligations. All three requests are opposed by plaintiffs.
A. DISMISSAL OF COMPLAINT
The dismissal motion does not require extended discussion. It is not disputed that after the motion was filed, plaintiffs did serve what they characterize as approximately 1500 pages of documents in response to the demands previously served upon them. Because defendant has not specified in what respects this production is inadequate, the motion to dismiss is denied. Any claimed deficiency in the discovery produced by plaintiffs should be addressed at the next conference, which is currently scheduled for 9:30 a.m. on May 16, 2007.
B. EJECTMENT
Defendant's motion for an order of ejectment and a warrant of eviction is, in fact, a motion for partial summary judgment, since it requests one of the forms of the ultimate relief sought on one defendant's counterclaims in the lawsuit. However, defendant has not established its entitlement to summary disposition in its favor. In particular, there are issues of fact as to whether plaintiffs' ability to conduct their business and meet their obligations under the Lease has been impeded by actions taken by defendants as alleged in the complaint.
Of course, that conclusion does not mean that defendant is without a remedy in the face of plaintiffs' continuing failure to comply with the conditions of the Interim Injunction. To the contrary, "[u]pon the motion of a party, a court has the power to vacate an order which granted a preliminary injunction for failure to post an undertaking within a reasonable period of time" [Cade v. New York Community Bank , 18 AD3d 489 , 490 [2d Dept. 2005]).
In this case, for several months plaintiffs have simply ignored the conditions imposed by Justice Murphy on their entitlement to the Interim Injunction. [FN2] Although they filed their modification motion as a cross-motion to the instant motion filed by defendant, no stay of the conditions has ever been granted. Thus, by not posting the undertaking and by tailing to make the monthly rent and related payments, plaintiffs have simply declared their own stay, which, of course, they may not do.
FN2. Without any authorization from the Court, defendant filed a Supplemental Affirmation in Opposition to the Cross-motion, to which plaintiffs responded with a Supplemental Affirmation and a Supplemental Affidavit. Since these papers constitute an unauthorized sur-reply and sur-sur-reply, the arguments put forth in them have not been considered (see Matter of Kushaqua Estates, Inc. v. Bonded Concrete, Inc., 215 AD2d 993,994 [3d Dept. 1995] ["Supreme Court could properly refuse to consider respondents' surreply which not only was submitted without permission from the court, but was not restricted to the issues raised in petitioner's reply affidavit and contained new factual information"]). Nevertheless, the Court has considered the factual assertion made by defendant in its sur-reply, and not disputed by plaintiffs in their sur-sur-reply, that as of March 2007 the conditions set by Justice Murphy had not been met.
Under these circumstances, this Court would be justified in vacating the Interim Injunction effective immediately (see ibid.). Recognizing, however, as Justice Murphy did, that the Lease involved in this case "is a unique property interest, the forfeiture of which prior to an adjudication of the merits would result in irreparable harm" (Kantrowitz Affirm., Exh.1, p. 12), this Court shall exercise its discretion by giving plaintiffs one final opportunity to comply with the December Order as modified by the Renewal Order. If plaintiffs do not satisfy the conditions set by Justice Murphy as directed below, the Interim Injunction shall be vacated in all respects without further motion practice.
WHEREFORE, it is.
ORDERED that by no later than May 31, 2007, plaintiffs shall post the undertaking in the amount of $250,000 as required by the orders of Justice J. Emmet Murphy entered on December 1, 2006 and December 15, 2006 as a condition for the issuance of a preliminary injunction against defendant in the form set forth in the order entered on December 1, 2006; and it is further.
ORDERED that by no later than May 31, 2007, plaintiffs shall make all monthly payments owed from January 1, 2007 through and including May 31, 2007 as directed by the orders of Justice J. Emmet Murphy entered on December 1, 2006 and December 15, 2006 as a condition for the issuance of a preliminary injunction against defendant in the form set forth in the order entered on December 1, 2006; and it is further.
ORDERED that on the first of each month commencing on June 1, 2007 and continuing until further order of the Court, plaintiffs shall make all monthly payments as directed by the orders of Justice J. Emmet Murphy entered on December 1, 2006 and December 15, 2006 as a condition for the issuance of a preliminary injunction against defendant in the form set forth in the order entered on December 1, 2006; and it is further.
ORDERED that the preliminary injunction against defendant in the form set forth in the order entered on December 1, 2006 by Justice J. Emmet Murphy shall be vacated in all respects, without further motion practice, upon plaintiffs' failure to comply with any of the above-ordered paragraphs.
The foregoing shall constitute the decision and order of the Court.