Opinion
Index No. 525291/20
07-31-2023
Yukah LLC, Plaintiff, v. Special Education Associates Inc., Child Care Staffing Inc., and NYC Learning Company, Inc., Defendants.
Lessor's counsel: Bradley S. Silverbush, Esq. Rosenberg & Estis, P.C. Lessee's Counsel David Lyle Stern, Esq
Unpublished Opinion
Lessor's counsel: Bradley S. Silverbush, Esq. Rosenberg & Estis, P.C.
Lessee's Counsel David Lyle Stern, Esq.
HON. CAROLYN E. WADE, JUSTICE
Recitation, as required by CPLR 2219 (a), of the electronic papers considered in the review of the motion of plaintiff Yukah LLC for summary judgment and other relief:
Notice of Motion, Affirmation (Affidavits), and Exhibits Annexed 120-132
Affirmations in Opposition and Exhibits Annexed 133-135
Reply Affirmation (Affidavit) and Exhibits Annexed 136-142
Proposed Orders 144-145
Upon the foregoing papers and after oral argument in this action to recover damages for breach of a commercial lease, the motion of plaintiff Yukah LLC ("Plaintiff") for an order, pursuant to CPLR 3212 (and/or CPLR 3211 [b], as applicable), granting it: (1) partial summary judgment on the second and fourth causes of action of the verified complaint, dated December 17, 2020 (the "complaint") (NYSCEF Doc. No. 127), for breach of the lease and for the award of use/occupancy, respectively, against defendants Special Education Associates, Inc. and Child Care Staffing, Inc. (collectively, "Tenant") in the total amount of $290,335.25; (2) summary judgment on the third cause of action of the complaint for breach of the MOU (as defined below) against co-defendant NYC Early Learning Company, Inc. ("ELC") in the amount of $50,342.62; (3) summary judgment on the fifth cause of action of the complaint for an award of attorneys' fees against Tenant and setting the matter down for a hearing to determine such fees; and (4) dismissal of the affirmative defenses of Tenant and ELC (collectively, "Defendants") in their joint verified answer, dated February 9, 2021 (the "answer") (NYSCEF Doc. No. 128), is decided as follows:
Background
1. The Lease
Tenant leased certain commercial premises (the "leased property") from Plaintiff in accordance with the terms of the Commercial Lease Agreement, dated May 15, 2002, as amended and extended by the Modification and Extension of Lease, effective as of June 1, 2017 (hereafter, the "initial portion of the lease" and the "modified portion of the lease," respectively and both portions, collectively, the "lease") (NYSCEF Doc. Nos. 124 and 125, respectively). Tenant was required to pay Plaintiff two types of rent: (1) the fixed rent which was the stated annual rent payable in monthly installments (hereafter, the "fixed-rent clause"); and (2) the additional rent consisting of Tenant's portion of the real estate taxes and its share of the NYC Department of Environmental Protection ("DEP") charges (hereafter, collectively, the "additional-rent clauses"). The terms of the fixed -rent clause were straightforward: the fixed rent was due and payable on the first day of every month; if the fixed rent was past due by the tenth day of the month, a $200 "late charge" was automatically added to the amount of the fixed rent for that month. The additional -rent clauses, however, were more involved, as they required compliance with certain conditions set forth therein. Both the fixed -rent and the additional -rent clauses (hereafter, collectively, the "rent clauses") were "independent" by nature, meaning that Tenant's obligation to pay rent (whether such rent was fixed or additional) was (with certain exceptions not applicable to this case) independent of Plaintiff's reciprocal covenants to Tenant under the lease. As relevant herein, Tenant's fixed rent was: (1) $7,426.30 per month from June 1, 2019 to May 31, 2020; (2) $7,649.09 per month from June 1, 2020 to May 31, 2021; and (3) $7,878.57 per month from June 1, 2021 to May 31, 2022, which was the scheduled expiration date of the lease (hereafter, the "scheduled expiration date").
Although Plaintiff's predecessors in interest entered into the initial portion of the lease and thereafter into the modified portion of the lease, Plaintiff (rather than its predecessors) was Tenant's landlord under the lease (as comprised of both portions) at all times relevant to this action.
Initial portion of the lease, § 1 (i) (fixed rent); modified portion of the lease, § 2 (base rent schedule).
Initial portion of the lease, § 1 (ii) (additional rent), § 13 (tax rent), § 12 (B) (water and sewer charges).
Initial portion of the lease, § 1 (rent).
Initial portion of the lease, § 13 (tax rent), § 12 (B) (water and sewer charges).
In addition to the rent clauses, the lease contained several non-rent clauses, such as Tenant's obligation to maintain the HVAC system (initial portion of the lease, § 12 [C] [heat/air conditioning]) and to maintain a security deposit (modified portion of the lease, § 3 [security]). To trigger a default under the non-rent clauses, service of a twenty-day (rather than of a ten-day) predicate notice was required (initial portion of the lease, § 6 [b]). The non-rent clauses, though discussed by the parties in their respective submissions, are not material to the Court's determination of the motion.
Initial portion of the lease, § 5 (C) ("It is specifically agreed that [Tenant] shall be entitled to any setoff or reduction of Fixed Rent or Additional Rent by reason of any failure of [Plaintiff] to comply with the covenants of this or any other section of this Lease.").
Modified portion of the lease, § 2 (rent); § 1 (term).
Tenant was considered in default under the rent clauses (hereafter, the "rent event of default") if: (1) it failed to pay Plaintiff any fixed and/or additional rent when due, and (2) its failure to pay continued for ten days after receipt of a written notice of such non-payment from Plaintiff (hereafter, the "predicate notice"). Upon the occurrence and continuation of a rent event of default, Plaintiff could (but was not required to) serve a five-day written "notice of cancellation upon Tenant" (hereafter, the "five-day notice"). If the rent event of default (and/or some other event of default set forth in the five-day notice) continued after the expiration the five-day notice, then "this lease and the term thereunder shall end and expire as fully and completely as if the expiration of such five (5) day period or the day herein fixed for the end and expiration of this lease and the term thereof [so in the original], and Tenant shall then quit and surrender the [leased property] to [Plaintiff], but Tenant shall remain liable as hereinafter provided." During the occurrence and continuation of the rent event of default (and/or some other event of default set forth in the five-day notice), Plaintiff was afforded one or both of the two monetary remedies:
Initial portion of the lease, § 6 (a) (default clause).
Initial portion of the lease, § 6 (default clause).
Initial portion of the lease, § 6 (default clause).
The Termination Clause:" [T]he rent shall become due thereupon and be paid up to the time of such... expiration, together with such expenses as [Plaintiff] may incur for legal expenses, attorneys['] fees, brokerage and/or putting the [leased property] in good order or for preparing the same for re-rental" (hereafter, the "termination clause"); and/or
The Liquidated-Damages Clause: "Tenant... shall also pay [Plaintiff] as liquidated damages for the failure of Tenant to observe and perform Tenant's covenants herein set forth, any deficiency between the rent reserved in this lease and the net amount, if any, of the rents collected on account of the further lease or leases of the [leased property] for each month of the period which would otherwise have constituted the balance of the term of this lease" (hereafter, the "liquidated-damages clause").
Initial portion of the lease, §§ 7 (a) and (b) (remedies of landlord/waiver of redemption) (emphasis added). Plaintiff's foregoing remedies were further expanded by two provisos (set forth in the concluding sentences of the same sections of the initial portion of the lease): (1) "[t]he failure of [Plaintiff] to relet the [leased property] or any part thereof, shall not release or affect Tenant's liability for damages"; and (2) "the cancellation and/or termination of this lease as permitted hereby shall in no way affect Tenant's liability for [the liquidated] damages in the amount of the rental reserved hereunder for the balance of what would have been the term of this lease."
Apart from the foregoing, the lease (or, more specifically, its modified portion) contained the holdover clause:
" If the Tenant continues in possession after the expiration date of this Modification [i.e., the modified portion of the lease], without a new written Lease, Lease extension, or renewal, or another written agreement executed by the [Plaintiff] as to continued occupancy, the Tenant agrees that the tenancy shall be a month to month tenancy, with rental increased to one hundred fifty (150%) percent of the last Lease base rental, and that all of the obligations of the herein Lease and rental arrangements, including, but not limited to, any additional rent and additional charges shall continue, provided Landlord notifies Tenant with a thirty (30) day written notice advising Tenant that its Lease has expired. This shall all be without prejudice to any and all of Tenant's rights and remedies" (hereafter, the "holdover clause").
Modified portion of the lease, § 8 (continued possession) (emphasis added).
One other clause in the lease (again, in its modified portion) should be noted. That provision reads, as follows:
"All other terms, conditions and covenants of the original Lease [ i.e., the initial portion of the lease], except as expressly modified by this Agreement [ i.e., the modified portion of the lease], shall remain in full force and effect for the remainder of the term of the Lease, as extended and modified."
Modified portion of the lease, § 10 (other terms unmodified) (emphasis added).
2. The MOU
In addition to (and separately from) the lease with Tenant, Plaintiff entered into a Memorandum of Understanding, dated July 22, 2020, with codefendant ELC ("MOU") (NYSCEF Doc. No. 126). The MOU provided, in relevant part, that:
"[ELC] will pay the [fixed] rent arrears, $22,501.69 + $7,649.09, corresponding to April, May, June 2020 and July 2020, no later than July 23, 2020;
The Tenant will pay on or before July 23, 2020, the additional rent arrears of $20,191.84, corresponding to [the sum of the] real estate taxes [for the period of] 07/01/19-12/31/19 [in the amount of] $10,095.92 [and] 01/01/20-06/30/20 [in the amount of] $10.095.92[.]
In consideration for the timely payments of [the foregoing] made by... [ELC],... [Plaintiff] will waive the late fees of $5,158.73 that... [ELC] has accrued from December 2019 through March 2020.
* * *
All other terms and conditions of the lease and Amendments [ i.e., the initial and modified portions of the lease] remain in full force and effect."
MOU, § 2 (a), § 2 (b), and unnumbered paragraphs.
The MOU incorrectly identified ELC as the tenant under the modified portion of the lease and, to that end, recited (likewise incorrectly) that Plaintiff and ELC "entered into a lease agreement dated July 1, 2019" (i.e., the modified portion of the lease), even though defendants Special Education Associates Inc. and Child Care Staffing Inc. were the named "Tenant" under the lease.
MOU, § 1.
3. Summary of Defaults Under the Lease and MOU
Insofar as the lease is concerned, Tenant undisputedly failed to pay Plaintiff the fixed rent for approximately two years from April 1, 2020 to April 11, 2022 when it vacated the leased property (hereafter, the "vacancy date"). In addition and insofar as the lease is concerned, Plaintiff alleges (over Tenant's vigorous objection) that Tenant owes it additional rent under the lease for its portion of the real estate taxes and the DEP charges.
Plaintiff's Statement of Undisputed Material Facts, dated September 7, 2022 (hereafter, "Plaintiff's SOF") (NYSCEF Doc. 132), ¶ 12; Defense Counsel's Affirmation in Opposition, dated October 14, 2022 (hereafter, "Defense Counsel's Opposition") (NYSCEF Doc. No. 133), ¶ 6 ("There is... no dispute that [fixed] rent is owed for the period April 2020 through April 11, 2022."). Although Plaintiff initially asserted that Tenant vacated the leased property on April 13, 2022 (see Edward Yu's Affidavit, dated August 11, 2022 [NYSCEF Doc. No. 122] ["Yu's Affidavit"], ¶ 12), rather than two days earlier on April 11, 2022, Plaintiff ultimately conceded April 11, 2022 as the vacancy date (see Plaintiff's Response to Defendants' Statement of Material Facts, dated October 24, 2022 [NYSCEF Doc. No. 142], ¶ 20).
Plaintiff's SOF, ¶ 12; Defense Counsel's Opposition, ¶ 6 ("What has been and remains vigorously disputed is... whether Plaintiff is entitled to the additional rents that it seeks.") (emphasis added).
Insofar as the MOU is concerned, ELC undisputedly failed to make any payment of the fixed rent and/or the additional rent to Plaintiff under the MOU, which payments (as noted) were due no later than July 23, 2020.
Plaintiff's SOF, ¶ 18. Defendants' corresponding statement (in ¶ 18 of their Counterstatement of SOF) is non-responsive (NYSCEF Doc. No. 135).
4. Pre-Litigation Service of Various Notices on Tenant (But Not on ELC)
On September 10, 2020, Plaintiff (then acting pro se) served Tenant with a notice of rent default (among other defaults) based on its failure to pay (among other amounts) the fixed rent. Tenant failed to respond.
Notice to Correct Violations of the Lease Agreement, dated and served September 10, 2020 (NYSCEF Doc. No. 10).
On November 4, 2020, Plaintiff (now represented by counsel) served Tenant with the predicate notice of rent default (among other defaults) based on its failure to pay (among other amounts) the fixed rent. Tenant again failed to respond and, upon the expiration of ten calendar days from the mailing date of the predicate notice (plus two business days contractually allowed for the mailing of the notice by certified mail ), the rent event of default (on the basis of Tenant's failure to pay, among other amounts, the fixed rent) occurred and was continuing.
Twenty (20) Day Notice to Cure, dated and served November 4, 2020 (NYSCEF Doc. No. 129). Although the predicate for a rent default was a ten-day prior notice, the aforementioned Notice to Cure encompassed (in addition to the rent defaults) the non-payment defaults which required a twenty-day prior notice (initial portion of the lease, § 6 [b]).
Modified portion of the lease, § 5 (notices).
On December 1, 2020, Plaintiff served Tenant with the five-day notice. After reciting the occurrence and continuation of the rent event of default (on the basis of Tenant's failure to pay, among other amounts, the fixed rent), together with its other alleged defaults such as the non-payment of the additional rent, Plaintiff declared that: (1) "Tenant[]'s tenancy at the [leased property] is hereby terminated, effective December 8, 2020" (hereafter, the "termination date"); and that (2) "Tenant[] [is] hereby required to quit, vacate and surrender possession of the [leased property] to [Plaintiff] on or before [the termination date],... and that upon Tenant[]'s failure to quit, vacate and surrender possession thereof, [Plaintiff] will commence an action or proceedings in the Courts of the State of New York to recover possession of the [leased property]."
Five (5) Day Notice of Cancellation, dated November 30, 2020 and served on December 1, 2020. The five-day notice is e-filed under NYSCEF Doc. No. 130, whereas its affidavit of service is e-filed under NYSCEF Doc. No. 13 (rather than as part of Doc. No. 130).
Five-day notice, pages 1-2.
5. The Instant Action
On December 17, 2020 (or nine days following the termination date of December 8, 2020), Plaintiff commenced the instant action against Tenant and ELC, asserting (as relevant herein) four claims which are numbered as second through fifth causes of action in the complaint, as follows:
The first cause of action for ejectment has been rendered moot by Tenant's vacating the leased property in the course of this action on April 11, 2022.
Second Cause of Action: This cause of action, as predicated on Tenant's breach of the lease, seeks four categories of damages from Tenant:
(1) the fixed rent due and owing from April 1, 2020 through the termination date of December 8, 2020 in accordance with the termination clause;
(2) the additional rent due and owing through the termination date of December 8, 2020, in accordance with the termination clause;
(3) the liquidated damages, in the form of the fixed and additional rent, net of any rents collected from a third party, after the termination date of December 8, 2020 through the scheduled expiration date of May 31, 2022, in accordance with the liquidated-damages clause;
and
(4) monetary damages of $34,000 arising from Tenant's alleged failure to maintain the HVAC system at the leased property.
Complaint, ¶¶ 67-68; initial portion of the lease, § 7 (a).
Complaint, ¶¶ 67-68; initial portion of the lease, § 7 (a).
Complaint, ¶ 69; initial portion of the lease, § 7 (c).
Complaint, ¶ 66; initial portion of the lease, § 12 (C).
Third Cause of Action: This cause of action, predicated on ELC's breach of the MOU, seeks the aggregate amount due and owing by ELC to Plaintiff under the MOU.
Fourth Cause of Action: This cause of action seeks from both Tenant and ELC "the fair market value of... use and occupancy of the [leased property]" for the period after the termination date of December 8, 2020 to the vacancy date of April 11, 2022.
Complaint, ¶¶ 78-80 (emphasis added). Although the vacancy date was undefined at the inception of this action, it occurred on April 11, 2022 in the course of this litigation.
Notably, this cause of action is not asserted under the holdover clause.
Fifth and Final Cause of Action: This cause of action seeks attorneys' fees from Tenant in accordance with the lease.
Complaint, ¶¶ 82-85; initial portion of the lease, § 34; amended portion of the lease, § 6.
On February 9, 2021, Defendants answered the complaint, asserting (as relevant herein ) four affirmative defenses: (1) failure to state a cause of action; (2) waiver/estoppel; (3) statute of limitations; and (4) laches (the first through fourth affirmative defenses). On September 7, 2022, Plaintiff served the instant motion. On October 14, 2022, Defendants opposed by way of their principal's and their counsel's respective affirmations. After oral argument held on May 31, 2023, the Court reserved decision on the instant motion. On June 13, 2023, Plaintiff filed a note of issue requesting a non-jury trial (NYSCEF Doc. No. 143). Additional facts will be stated when relevant to the discussion below. The well-established summary judgment standard of review is omitted in this decision and order in the interest of brevity.
Defendants have withdrawn their sixth and seventh affirmative defenses (Defense Counsel's Opposition, ¶ 18). Defendants' fifth affirmative defense grounded on Plaintiff's then-requested ejectment of Tenant from the leased property has been rendered moot by the subsequent vacancy of the leased property.
Answer, ¶¶ 35-38.
Determination of Plaintiff's Motion
1. Breach of Lease; Use and Occupancy Charges (Second and Fourth Causes of Action)
As noted, the first branch of Plaintiff's motion seeks partial summary judgment on the second and fourth causes of action for breach of the lease and for the award of use/occupancy against Tenant in the total amount of $290,335.25 (the "claimed damages"). The claimed damages is the sum of the following components (as more fully set forth in the affidavit of Plaintiff's member ):
See Edward Yu's Affidavit, dated August 11, 2022, ¶ 13 (NYSCEF Doc. No. 122).
First: The fixed rent from April 1, 2020 through December 1, 2020 (plus the late fee of $200 per month from April 11, 2020 through November 11, 2020 );
Second: The additional rent in the form of tax rent from July 1, 2019 to April 12, 2022;
Third: The additional rent in the form of the DEP charges from August 1, 2020 to April 11, 2022; and
Fourth: The use and occupancy charges from January 1, 2021 to April 12, 2022 (Note: this amount is sought from both Tenant and ELC ).
Plaintiff did not charge Tenant the late fee for the month of December 1, 2020 because the lease was canceled on December 8, 2020, or two days before the late fee would have been due for that month.
As noted, Tenant vacated the leased property on April 11, 2022.
Complaint, ¶¶ 78-80.
Addressing the first component of the claimed damages, the Court agrees with Plaintiff that under the termination clause of the lease, it is entitled to the fixed rent from April 1, 2020 through December 1, 2020 (plus the late fee of $200 per month from April 11, 2020 through November 11, 2020), and, accordingly, grants Plaintiff partial summary judgment on that component of the claimed damages, as more fully set forth in the decretal paragraphs below (see VRA Family Ltd. Partnership v Salon Mgt. USA, LLC, 183 A.D.3d 614, 615 [2d Dept 2020]; Key Equip. Fin., Inc. v South Shore Imaging, Inc., 39 A.D.3d 595, 596 [2d Dept 2007]).
Defendants' contention that the MOU constituted ELC's assumption of Tenant's obligations (and, in effect, its substitution for Tenant) under the lease from and after April 1, 2020 is unsupported by the record. Nothing in the MOU excused Tenant from its obligations under the lease, notwithstanding ELC's one-time promise to pay (among other amounts) the fixed rent for the months of April 2020 through June 2020.
Addressing the second and third components of the claimed damages, the Court cannot determine, on the basis of the documents attached to Plaintiff's principal's reply affidavit (NYSCEF Doc. Nos. 138-139), whether Plaintiff, as a matter of law, complied with the additional-rent clauses and, accordingly, denies that portion of Plaintiff's motion and sets it down for a framed-issue hearing, as more fully set forth in the decretal paragraphs below.
Initial portion of the lease, § 1 (ii) (additional rent), § 13 (tax rent), § 12 (B) (water and sewer charges).
Addressing the fourth and final component of the claimed damages, the Court holds that Plaintiff is not entitled to receive use and occupancy (either from Tenant or ELC, or both) for two reasons. First, "[i]n an action by a landlord for breach by the tenant of a lease, the amount of the damage, prima facie, is the rent reserved" (Tov Knitting Mills, Inc. v Starr Realty Co., 148 A.D.2d 526, 527 [2d Dept 1989]). "[T]his proposition contemplates circumstances [as is the case here] in which the tenant did not remain in occupancy for the entire term of the lease" (Lager Assoc. v City of New York, 304 A.D.2d 718, 721 [2d Dept 2003]). Thus, in accordance with the liquidated-damages clause, Plaintiff is entitled to summary judgment on the fixed rent from January 1, 2021 through the scheduled expiration date of May 31, 2022, less any rents collected by Plaintiff from another tenant (if any) for the leased property from April 12, 2022 (the date following Tenant's vacancy date of April 11, 2022) through the scheduled expiration date of May 31, 2022 (see Tov Knitting Mills, 148 A.D.2d at 527; see also Empire LLC v Sharapov, 192 A.D.3d 417, 418 [1st Dept 2021]; Lexington Ave. & 42nd St. Corp. v Pepper, 221 A.D.2d 273, 274 [1st Dept 1995]).
Although the use and occupancy clause is not pleaded in the complaint (either in the fourth cause of action requesting the award of use and occupancy or in the other causes of action), "summary judgment may be awarded on an unpleaded cause of action if the proof supports such cause and if the opposing party has not been misled to its prejudice" (Weinstock v Handler, 254 A.D.2d 165, 166 [1st Dept 1998] [internal quotation marks and citation omitted]). Tenant's failure to object to the absence of the requisite pleading of the insurance-procurement claim in the complaint corroborates that it "has not been misled to its prejudice" (id.).
Second, the holdover clause of the lease is not applicable here because, by its express and unambiguous terms: (1) it becomes effective if (and only if) Tenant remains in possession as a holdover tenant "after the expiration date of this Modification" (i.e., after the scheduled expiration date of May 31, 2022); and (2) it further requires as a condition precedent to its effectiveness (which condition undisputedly was not satisfied in this case) that Plaintiff give Tenant a prior 30-day notice of its intent to treat the latter as a holdover occupant. Plaintiff's contention that "[t]he 30-day notice was not required herein because... [it] terminated the Lease" which (as the consequence of such termination) "did not 'expire,'" misses the mark by a wide margin. The purpose of the 30-day notice under the holdover clause was to advise Tenant of Plaintiff's intent to treat it as a holdover occupant at the scheduled expiration date of May 31, 2022. The predicate notice and the five-day notice which, taken together, effectuated the default-related cancellation of the lease could not magically metamorphose Tenant from (1) the in-default occupant subject to the liquidated-damages clause under the canceled lease, into (2) a default-free occupant subject to the holdover clause under the extended, month-to-month lease. Stated otherwise, the default-related cancellation of the lease triggered the application of the liquidated-damages clause to the exclusion of the holdover clause.
Cf. Thirty-Third Equities Co. LLC v Americo Group, Inc., 294 A.D.2d 222, 222 (1st Dept 2002) ("the landlord purported to comply with the holdover clause by giving the tenant advance notice of its intention to begin treating the tenant as a holdover") (emphasis added).
Plaintiff's opening memorandum of law at page 6, n 2, and Plaintiff's reply memorandum of law at pages 5-7 (NYSCEF Doc. Nos. 131 and 141, respectively).
Plaintiff's reliance on Federal Realty Ltd. Partnership v Choices Women's Med. Ctr., Inc., (289 A.D.2d 439 [2d Dept 2001]), is misplaced as the facts of that case (as well as the use and occupancy clause of the underlying lease) were substantively different, as more fully set forth in the margin. Similarly inapplicable is the First Judicial Department's recent decision in Victoria's Secret Stores, LLC v Herald Sq. Owner LLC, (211 A.D.3d 657, 657 [2022], lv denied 2023 NY Slip Op 62754[U] [1st Dept 2023]), which upheld "summary judgment to defendant landlord on its counterclaim for holdover rent at three times the monthly rent under article 21(A) of the lease after plaintiff tenant failed to vacate upon defendant's termination of the lease for nonpayment."
In Federal Realty which was a true holdover by a tenant (rather than an early cancellation of the lease by the landlord as is the case here), the applicable provision of the lease read as follows (quoting from the defendants' appellate brief reproduced at 2000 WL 35938557):
"[44B] Tenant acknowledges that possession of the demised premises must be surrendered to Owner on the Expiration Date [July 31,1998]. Tenant agrees to indemnify and save harmless Owner from and against any and all cost, damage, expense, loss or liability (including, without limitation reasonable attorneys' fees and disbursements and any claims made by any succeeding tenant) resulting from delay by Tenant in so surrendering the demised premises. The parties recognize and agree that the damage to the Owner resulting from any failure by Tenant to timely surrender possession of the demised premises as aforesaid will be substantial and will be impossible to accurately measure. Tenant therefore agrees that if possession of the demised premises is not surrendered to Owner within 24 hours after the Expiration Date, the Tenant shall pay to Owner for each month and for each portion of any month during which Tenant holds over in the demised premises after the Expiration date, a sum equal to three (3) times the aggregate of that portion of the fixed rent and additional rent which was payable under this Lease during the last month of the term hereof (or a pro rata portion thereof, if applicable). Nothing herein contained shall be deemed to permit Tenant to retain possession of the demised premises after the Expiration date. The provisions of this Article 44 shall survive the expiration or sooner termination of this lease" (emphasis added).
In Victoria's Secret, Section 21(A) of the lease specifically provided that the use and occupancy charges would be imposed upon the earlier of: (1) the scheduled expiration of the lease, or (2) the "sooner termination of this Lease," as follows:
"Tenant... agrees that if possession of the Premises is not surrendered to Landlord within twenty-four (24) hours after the Expiration Date or sooner termination of the Term, in addition to any other rights or remedy Landlord may have hereunder pursuant to Section B below, Tenant shall pay to Landlord for each month and for each portion of any month during which Tenant holds over in the Premises after the Expiration Date or sooner termination of this Lease, a sum equal to three (3) times the aggregate of that portion of the Rent and the additional rent which was payable under this Lease during the last month of the Term. Nothing herein contained shall be deemed to permit Tenant to retain possession of the Premises after the Expiration Date or sooner termination of this Lease and no acceptance by Landlord of payments from Tenant after the Expiration Date or sooner termination of the Term shall be deemed to be other than on account of the amount to be paid by Tenant in accordance with the provisions of this Article 21, which provisions shall survive the Expiration Date or sooner termination of this Lease" (emphasis added).The lease is available at the e-courts Web site under Victoria's Secret Stores v Herald Square Owner LLC, Index No. 651833/20 (Sup Ct, NY County), NYSCEF Doc. No. 201 (original lease), pages 43-44.
2. Breach of MOU (Third Cause of Action)
As noted, Plaintiff also seeks summary judgment on its third cause of action for breach of the MOU against ELC in the amount of $50,342.62, consisting of the sum of: (1) the fixed rent in the aggregate amount of $30,150.79 for the months of April 2020 through July 2020, and (2) the real estate taxes in the aggregate amount of $20,191.84 for the period from July 1, 2019 through June 30, 2020. In accordance with the MOU, Plaintiff is entitled to summary judgment as against ELC in the aggregate amount of $30,150.79 representing the fixed rent for the months of April 2020 through July 2020; provided that to avoid a potential for Plaintiff's double recovery, ELC and Tenant shall be entitled to a credit for any amount of the fixed rent attributable for this period paid by the other. Conversely (and as was the case with Tenant's alleged liability for the additional rent in the form of the real estate taxes and the DEP charges), the amount (if any) owed by ELC for the additional rent in the form of the real estate taxes for the period from July 1, 2019 through June 30, 2020 shall be set down for a framed-issue hearing, as more fully set forth in the decretal paragraphs below.
3. Attorney's Fees (Fifth Cause of Action)
Under the lease, Plaintiff is entitled to recover from Tenant reasonable attorneys' fees in any action instituted on account of the latter's default. Although Tenant is liable for attorneys' fees under the terms of the lease, in "recognition of the traditional authority of the courts to supervise the charging of fees for legal services under the courts' inherent and statutory powers to regulate the practice of law" (Matter of First Natl. Bank of E. Islip v Brower, 42 N.Y.2d 471, 474 [1977]), a hearing is necessary to determine the reasonable amount of Plaintiff's attorneys' fees (see Key Equip. Fin., 39 A.D.3d at 597).
4. Defendants' Affirmative Defenses
The final branch of Plaintiff's motion seeks to dismiss Defendants' remaining (i.e., their first through fourth) affirmative defenses. CPLR 3211 (b) provides that "a party may move for judgment dismissing one or more defenses on the ground that a defense is not stated or has no merit." Defendants' first affirmative defense (in ¶ 35 of their joint answer) of failure to state a cause of action cannot be dismissed under CPLR 3211 (b), "as this [would] amoun[t] to an endeavor by the plaintiff to test the sufficiency of [its] own claim" (Lewis v U.S. Bank N.A., 186 A.D.3d 694, 697 [2d Dept 2020]). On the other hand, Defendants' second, third, and fourth affirmative defenses (in ¶¶ 36-38 of their joint answer) of waiver/estoppel, statute of limitations, and laches are subject to dismissal because they are unsubstantiated by factual allegations and are conclusory (see Bruno v Sant'elia, 52 A.D.3d 556, 557 [2d Dept 2008]; Kronish Lieb Weiner & Hellman LLP v Tahari, Ltd., 35 A.D.3d 317, 319 [1st Dept 2006]).
The Court has considered the parties' remaining contentions and finds them to be without merit. All relief not specifically granted herein has been considered and is denied.
Conclusion
Based on the foregoing and after oral argument, it is hereby
ORDERED that the first branch of Plaintiff's motion which is for partial summary judgment on the second and fourth causes of action for breach of the lease and for the award of use/occupancy against Tenant in the total amount of $290,335.25 is GRANTED TO THE EXTENT that Plaintiff is entitled to:
(1) SUMMARY JUDGMENT as to the fixed rent due and owing by Tenant to Plaintiff, to be calculated as the sum of: (a) the fixed rent from April 1, 2020 through December 1, 2020 (plus the late fee of $200 per month from April 11, 2020 through November 11, 2020), and (2) the fixed rent from January 1, 2021 through the scheduled expiration date of May 31, 2022, less any rents collected by Plaintiff from another tenant (if any) for the leased property from April 12, 2022 (the first date following the vacancy date of April 11, 2022) through the scheduled expiration date of May 31, 2022; and
(2) FRAMED-ISSUE HEARING as to the amount (if any) of the additional rent due and owing by Tenant to Plaintiff, to be calculated as the sum of: (1) the additional rent (if any) in the form of the real estate taxes from July 1, 2019 to the vacancy date of April 11, 2022, and (2) the additional rent (if any) in the form of the DEP charges from August 1, 2020 to the vacancy date of April 11, 2022, in each instance, in accordance with the additional-rent clauses; and the remainder of the first branch of its motion is denied; and it is further
ORDERED that the second branch of Plaintiff's motion which is for summary judgment on the third cause of action for breach of the MOU against ELC in the amount of $50,342.62 is GRANTED TO THE EXTENT that Plaintiff is entitled to:
(1) SUMMARY JUDGMENT as to the fixed rent due and owing by ELC to Plaintiff in the aggregate amount of $30,150.79 representing the fixed rent for the months of April 2020 through July 2020; provided that to avoid a potential for Plaintiff's double recovery, ELC and Tenant shall be entitled to a credit for any amount of the fixed rent attributable for this period paid by the other; and
(2) FRAMED-ISSUE HEARING as to the amount (if any) of the additional rent (if any) owed by ELC in the form of the real estate taxes for the period from July 1, 2019 through June 30, 2020, in accordance with the applicable additional-rent clauses; provided that to avoid a potential for Plaintiff's double recovery, ELC and Tenant shall be entitled to a credit for any amount of the additional rent attributable for this period paid by the other; and the remainder of the second branch of its motion is denied; and it is further
ORDERED that the third branch of Plaintiff's motion which is for summary judgment on the fifth cause of action for the award of attorneys' fees against Tenant is GRANTED TO THE EXTENT that the matter of Plaintiff's reasonable attorneys' fees is set down for a hearing to determine such fees, with such hearing to be held no earlier than thirty days after the conclusion of the aforementioned framed-issue hearing on the additional rents (if any) owed by Tenant and ELC in order to allow an adequate advance review of the underlying invoices by Defendants and the Court; and it is further
ORDERED that the fourth and final branch of Plaintiff's motion which is for dismissal of Defendants' affirmative defenses is GRANTED TO THE EXTENT that: (1) Defendants' waiver/estoppel, statute of limitations, and laches (the second through fourth affirmative defenses, respectively) are DISMISSED; (2) Defendants' ejectment (or the fifth) affirmative defense is DISMISSED AS MOOT; and (3) Defendants' remaining (or the sixth and seventh) affirmative defenses are DISMISSED AS WITHDRAWN ; and the remainder of the fourth and final branch of its motion is denied; and it is further
ORDERED that, upon searching the record, Plaintiff's fourth cause of action for use and occupancy as against Tenant and ELC (as pleaded in ¶¶ 77-80 of the complaint) is DISMISSED in its entirety; and it is further
ORDERED that the remainder of Plaintiff's second cause of action against Tenant for breach of contract which is for recovery of $34,000 representing Plaintiff's alleged cost of replacement of the HVAC system (as pleaded in ¶¶ 65-66 of the complaint) is SEVERED and CONTINUED for non-jury trial; and it is further
ORDERED that Plaintiff's counsel shall settle judgment (as limited by this Decision and Order) on notice pursuant to 22 NYCRR 202.48 (a); and it is further
ORDERED that Plaintiff's counsel is directed to electronically serve a copy of this Decision and Order with notice of entry on Defendants' counsel and to electronically file an affidavit of service thereof with the Kings County Clerk.
This constitutes the Decision and Order of the Court.