Opinion
100487-04.
Decided May 9, 2006.
Plaintiff Solow Management Corp. ("Solow"), the owner of a commercial building in Manhattan, brings this action against its former tenant Arista Records, Inc. ("Arista"). The complaint contains three causes of action. The first alleges that Arista breached its lease when it failed to restore the premises to their original condition at the end of the lease term. In the second cause of action, Solow alleges that Arista failed to leave the premises "broom clean" and neglected to remove all of its property. The third cause of action seeks attorneys' fees. In Motion Sequence No. 4, Arista seeks summary judgment dismissing the complaint in its entirety. In Motion Sequence No. 5, Solow seeks summary judgment on liability and the dismissal of Arista's affirmative defenses.
There is no dispute that during the course of its fifteen year tenancy, Arista made numerous changes to the premises, all of which were approved in advance by Solow. There is also no dispute that Arista did not restore the premises at the end of the lease term. Solow maintains that Arista was obligated under the lease to restore each and every change to its original condition and thus violated the lease when it vacated the premises and failed to restore. However, the lease provision governing restoration is not as broad as Solow urges. Article 34[C][3][c] provides that "[Solow] will not require such restoration with respect to any [change made by Arista] which is not inconsistent with the use of the Demised Premises for general office purposes and is not likely to cause [Solow] any additional expense in preparing the Demised Premises for occupancy by a subsequent tenant for office purposes."
The Court concludes that neither party is entitled to summary judgment on the restoration cause of action because there are disputed issues of fact as to whether the various changes made by Arista were consistent with the use of the premises for general office purposes. Although Arista maintains that all of its changes left the premises suitable for office purposes, Solow's former Director of Construction, David Williams, identified two spaces that were not consistent with such use a recording studio and a mailroom containing compact disc copying and distribution equipment. Arista argues that there was no restoration obligation for these two areas because they were not part of the changes it had made to the premises. However, Arista submits no evidentiary support for this claim and erroneously states that Williams conceded that the mailroom and recording studio were not part of a tenant change. In fact, Williams merely stated that he could not recall a specific alteration project involving these areas. Thus, because of the disputed issues of fact concerning these two areas, summary judgment is inappropriate on the first cause of action. Solow maintains that Arista is procedurally barred from arguing that it had no restoration obligation because it failed to previously alert Solow to this defense prior to the initiation of this lawsuit. However, Solow's claim is belied by the record. In several letters written before this action was commenced, Arista explicitly reminded Solow that the lease did not require restoration where the changes in the premises could be used for general office purposes. Nor is there any merit to Solow's claim that Arista was required to specifically plead this defense as an affirmative defense. Under C.P.L.R. § 3018, an affirmative defense must be included in an answer only if: (1) the matter is one that would be likely to surprise the plaintiff; or (2) the matter raises fact issues not appearing on the face of the complaint. Here, this defense certainly could not have surprised Solow in light of the fact that it is founded on the plain language of the lease and that Arista's pre-litigation letters had specifically alerted Solow to this lease provision. Moreover, the face of Solow's complaint cites to the specific paragraph that contains the language underlying this defense. Thus, Arista was under no obligation to specifically plead this defense as an affirmative defense.
There is also a disputed factual issue as to whether the premises even contained a recording studio.
The first claim also alleges that Arista breached provisions of the lease requiring it to remove a key card security system and certain indoor and outdoor signage upon vacating the premises. Because of factual disputes over the nature of the security system, summary judgment on this part of the first cause of action is also denied.
Solow also argues that Arista is estopped from raising its "no restoration obligation" defense because it had never previously objected to Solow's conditioning its approval of the changes on an explicit obligation that the premises be restored. However, not all of Solow's approval letters contained an unequivocal requirement to restore. Indeed, a number of these letters stated that restoration was required "unless otherwise set forth to the contrary under the terms of the Lease". Since the lease does not require restoration of changes involving general office purposes, there would have been no need for Arista to object to the qualified language contained in these letters. In any event, Solow has not offered any evidence, as it must, that it detrimentally relied on Arista's failure to object to the restoration obligation in the approval letters. See, e.g., Melwani v. Jain, 281 AD2d 276 (1st Dept. 2001) (rejecting the plaintiff's claim of estoppel because "there is neither allegation nor proof of the infliction of unconscionable injury on plaintiff as a result of any reliance").
Solow's citation to Solow Building Co. v. Morgan Guaranty Trust Co., 301 AD2d 440 (1st Dept. 2003) is misplaced. In that case, the Court affirmed the dismissal, after trial, of the tenant's counterclaims seeking reimbursement for certain restoration that it had undertaken. The Court held that if the tenant believed that the landlord's condition that the tenant restore was unreasonable, it should have challenged the condition at the time it was imposed. Here, however, Arista has not asserted any affirmative counterclaims but merely seeks to avail itself of a lease provision that explicitly bars Solow from requiring restoration. Furthermore, Solow v. Morgan went to trial and thus was in an entirely different procedural posture than the instant case. Finally, as noted above, due to the qualified language contained in some of Solow's approval letters, it cannot be said that Arista was under any obligation to specifically object to the restoration condition contained in the letters. Thus, Solow v. Morgan is distinguishable.
The Court grants Solow's motion to dismiss Arista's third affirmative defense alleging that Solow unreasonably delayed its approval of Arista's restoration plans. Article 3 of the lease provides that Arista shall not make any changes to the premises without Solow's prior written consent, and Article 34[C][3][b] states that Solow shall not unreasonably withhold any such consent or approval. Article 42[A] provides a mandatory arbitration procedure where one party considers that the other party has unreasonably delayed a consent. That provision further states that the failure to submit the issue to arbitration "shall preclude any further right to dispute the reasonableness of such withholding of consent" and that "[a] consent shall not be deemed to have been unreasonably withheld or delayed unless the aggrieved party [submits the issue to arbitration]".
Here, there is no dispute that Arista requested Solow's approval of its restoration plans and that Arista never availed itself of the mandatory arbitration procedure when Solow's consent was allegedly delayed. Thus, based on the plain language of the arbitration clause, Arista is foreclosed from raising the unreasonable delay defense in this proceeding. See, e.g., 153 Hudson Development, LLC v. DiNunno, 8 AD3d 77 (1st Dept. 2004) ("plaintiff's failure to invoke the claim resolution mechanism in its . . . contract . . . bars it from seeking recovery"). There is no merit to Arista's argument that it did not have to seek arbitration because it was not the aggrieved party. As the party having the express obligation to restore, Arista was undoubtedly aggrieved by Solow's purported delay because it allegedly led to Arista's failure to restore, which resulted in this very action being brought. Thus, the third affirmative defense of unreasonable delay is dismissed.
The Court also grants Solow's motion to dismiss Arista's fourth, fifth and sixth affirmative defenses. Arista's responsive papers are silent on these defenses, which are plainly insufficient as a matter of law. The fourth affirmative defense is dismissed because in a commercial lease setting, there is no duty for a landlord to mitigate damages. See 11 Park Place Associates v. Barnes, 202 AD2d 292 (1st Dept. 1994). The fifth affirmative defense alleging unclean hands, laches, estoppel and waiver is dismissed as conclusory and duplicative of the unreasonable delay defense, which this Court has dismissed. The sixth affirmative defense is dismissed because the defense of economic waste has been soundly rejected by the Court of Appeals. See Farrell Lines, Inc. v. New York, 30 NY2d 76 (1972).
The Court denies the parties' motion for summary judgment on the second cause of action alleging that Arista failed to leave the premises "broom clean" and neglected to remove all of its property. The Court cannot say that either side is entitled to judgment as a matter of law based on the photographs submitted by both parties. Finally, summary judgment is denied on the third cause of action seeking attorneys' fees because there has been no finding as of yet that Arista breached the lease. Accordingly, it is
ORDERED that Arista's motion for summary judgment dismissing the complaint (Motion Sequence No. 4) is denied; and it is further
ORDERED that Solow's motion for summary judgment on the complaint (Motion Sequence No. 5) is denied; and it is further
ORDERED that Solow's motion for summary judgment dismissing Arista's affirmative defenses (Motion Sequence No. 5) is granted to the extent that the third, fourth, fifth and sixth affirmative defenses are dismissed, and is otherwise denied.
This constitutes the decision and order of the Court.