Opinion
Index No. 153180/2018
02-18-2022
100 FORSYTH LLC, Plaintiff, v. BIRDS & BUBBLES NYC LLC and Sarah Simmons, Defendants.
Bedford Soumas LLP, New York, NY (Cyril K. Bedford of counsel), for plaintiff. O'Donoghue PLLC, New York, NY (Kevin S. O'Donoghue of counsel), for defendants.
Bedford Soumas LLP, New York, NY (Cyril K. Bedford of counsel), for plaintiff.
O'Donoghue PLLC, New York, NY (Kevin S. O'Donoghue of counsel), for defendants.
Gerald Lebovits, J.
This commercial landlord-tenant action arises from a dispute between plaintiff landlord, 100 Forsyth LLC, and defendant-tenant Birds & Bubbles NYC LLC and defendant-guarantor Sarah Simmons.
Birds & Bubbles and 100 Forsyth entered into a lease on April 15, 2014, in which Birds & Bubbles leased the lower level of a commercial retail space and outdoor garden at 100 Forsyth Street in Manhattan to operate a restaurant. In connection with the lease, Simmons and 100 Forsyth entered into a guaranty agreement in which she agreed to assume Birds & Bubbles’ obligations to pay rent in case of Birds & Bubbles’ default.
In February 2017, 100 Forsyth retained two contractors, E & J All Seasons Constructions Corp. and Exsa Corp., to perform on the premises construction work that allegedly caused extensive flooding and mold conditions. Due to these conditions, Birds & Bubbles closed its restaurant. Thereafter, Birds & Bubbles brought an action against 100 Forsyth.
Birds & Bubbles’ action against plaintiff is pending before the undersigned. (See Birds & Bubbles NYC LLC v 100 Forsyth LLC , Index No. 651980/2017.) Parts of the motion and cross-motion here substantially overlap with arguments raised by the parties on motion sequence 005 in the related Birds & Bubbles action. This court's decisions resolving the two motions use similar language in dealing with the areas of overlap.
100 Forsyth later brought this action on the lease and guarantee to recover unpaid rent and other fees from Birds & Bubbles and Simmons. 100 Forsyth also seeks to recover payments it made to settle fines that Birds & Bubbles allegedly incurred for violations issued by the New York City Fire Department in conjunction with the Environmental Control Board and by the New York City Department of Buildings. Defendants counterclaimed for damages resulting from the February 2017 flood and attorney fees incurred as a result of having to defend this action.
Defendants now move under CPLR 3211 (a) (7) to dismiss plaintiff 100 Forsyth's complaint, and move under CPLR 3212 for summary judgment granting defendants’ counterclaims against plaintiff. 100 Forsyth cross-moves under CPLR 3212 for summary judgment on defendants’ liability and under CPLR 3211 (a) (4) to dismiss defendants’ counterclaims.
Defendants’ motions are denied. Plaintiff's cross-motion for summary judgment is denied. Plaintiff's cross-motion to dismiss defendants’ counterclaims is granted.
DISCUSSION
I. Defendants’ Motion to Dismiss 100 Forsyth's Complaint for Failure to State a Cause of Action
In deciding a CPLR 3211 (a) (7) motion to dismiss for failure to state a cause of action a court must "give the pleadings a liberal construction, accept the allegations as true and accord the plaintiff every possible favorable inference." ( Sassi v Mobile Life Support Servs., Inc. , 37 NY3d 236, 239 [2021] [citations and internal quotation marks omitted].) A complaint that alleges facts that "fit within a cognizable legal theory" will survive a motion to dismiss under CPLR 3211 (a) (7). (Id. )
The complaint alleges that Birds & Bubbles breached its obligation to pay under a valid lease and that, under a valid guaranty agreement, Simmons agreed to perform Birds & Bubbles’ obligations to pay rent in the event of its non-performance. (See NYSCEF No. 1.) Assuming the alleged facts in the complaint to be true, 100 Forsyth has sufficiently alleged a cause of action for unpaid rent against both defendants.
Defendants argue that the action should be dismissed because 100 Forsyth breached the lease by allegedly causing a flood in February 2017, damaging the premises and causing Birds & Bubbles’ alleged constructive eviction. (See NYSCEF No. 53.) But these defenses do not negate the point that 100 Forsyth has stated a valid cause of action.
Likewise, this court rejects defendants’ argument that no valid claim against the guarantor exists because 100 Forsyth is not the entity payable under the guaranty. While the guaranty was executed in favor of "100 Forsyth Associates LLC" and "Forsyth Blue LLC," not plaintiff, plaintiff has alleged that it is a successor in interest of those two entities. (See NYSCEF Nos. 1, 68.) And the guaranty was also made in favor of the "successors and/or assigns" of the named parties on the guaranty. (See NYSCEF No. 68, at 1.) Accepting these allegations as true, 100 Forsyth has stated sufficient facts to survive defendants’ motion to dismiss.
II. Defendants’ Motion for Summary Judgment in their Favor on their Counterclaims
A party moving for summary judgment "must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact from the case." ( Winegrad v New York Univ. Med. Ctr. , 64 NY2d 851, 853 [1985].) Evidence tendered by the moving party must be in admissible form. ( Friends of Animals v Associated Fur Mfrs , 46 NY2d 1065, 1067 [1979].) If the moving party meets its prima facie burden, "the burden shifts to the opposing party to submit proof in admissible form sufficient to create a question of fact requiring a trial," viewing the evidence in the light most favorable to the non-moving party. ( Kershaw v. Hospital for Special Surgery , 114 AD3d 75, 82 [1st Dept 2013].)
Defendants move for summary judgment under CPLR 3212 seeking judgment on their counterclaims for breach of the covenant of quiet enjoyment, vicarious liability for the contractors’ alleged negligence, and negligent hiring and supervision of the contractors. Defendants also contend that they owe no rent because 100 Forsyth accepted defendants’ surrender of the premises. Each claim is analyzed in turn.
A. The Branch of Defendants’ Motion Seeking to Hold 100 Forsyth Liable for Breach of the Covenant of Quiet Enjoyment
Defendants claim that 100 Forsyth breached Birds & Bubbles’ right to quiet enjoyment by failing to make the necessary repairs following the February 2017 flood. As a result, defendants allege that 100 Forsyth constructively evicted Birds & Bubbles.
To succeed on a claim for breach of the covenant of quiet enjoyment, "a tenant must perform the conditions precedent to maintain[ing]" the claim, "unless there was a waiver of those conditions." ( Dave Herstein Co. v Columbia Pictures Corp. , 4 NY2d 117, 121 [1958].) One such condition is paying rent as long as the tenant remains in possession of the premises. (See id. )
Defendants have offered no proof that they had paid the rent due before 100 Forsyth is alleged to have constructively evicted Birds & Bubbles. Given that defendants have not proved an essential element of the breach of the covenant of quiet enjoyment claim, this branch of defendants’ motion is denied.
B. The Branch of Defendants’ Motion Seeking to Hold 100 Forsyth Vicariously Liable for Exsa and E & J's Alleged Negligence
Defendants claim that the floods and resulting damages were caused by 100 Forsyth's contractors, Exsa and E & J. As a result, defendants seek to hold 100 Forsyth vicariously liable for the alleged negligence of its contractors. Because a dispute about the cause of the damages to the premises still exists, this branch of Birds & Bubbles’ motion is denied.
To recover on a vicarious-liability claim, defendants must affirmatively establish the contractors’ negligence. (See Francesco v Empress Ambulance Serv., Inc. , 100 AD3d 589, 590-591 [2d Dept 2012] ; Holt v Holt , 262 AD2d 530, 530 [2d Dept 1999].) To make such a showing, defendants must rely on admissible evidence. (See Friends of Animals , 46 NY2d at 1067-1068.)
Defendants’ reliance on the default judgments against the contractors, without more, is insufficient to meet defendants’ burden. In the related Birds & Bubbles action, Index No. 651980/2017, Birds & Bubbles asserted negligence claims against the contractors, Exsa and E & J. After the contractors did not respond to Birds & Bubbles’ complaint, Birds & Bubbles sought and obtained default judgments against them. Defendants now argue that those default judgments conclusively establish the contractors’ negligence. But the default judgments do not establish Exsa and E & J's negligence for purposes of defendant's vicarious liability claim against 100 Forsyth. (See Friends of Animals , 46 NY2d at 1068 ; Birds & Bubbles NYC LLC v 100 Forsyth LLC , 2020 NY Slip Op 30854[U], at *3-*4 [Sup Ct, NY County Mar. 23, 2020].)
Defendants also rely on an environmental assessment report commissioned by Birds & Bubbles (see NYSCEF No. 57); an expert report commissioned by a third-party insurance company (see NYSCEF No. 61); and the deposition of Edmond Li, a managing member of 100 Forsyth. (See NYSCEF No. 59.) The environmental assessment and expert reports are hearsay, and no exception to the rule against hearsay applies. Therefore, those reports are inadmissible. As to Li's deposition, it does not support defendants’ allegations.
Plaintiff and defendants have offered contradicting evidence of who caused damage to the premises. Defendants point to an email from Paul Wong, 100 Forsyth's former construction manager. Wong's email was in response to an email titled "Flooding at Birds & Bubbles," in which Wong stated that he "heard that [the] contractor [has] broken a pipe." (See NYSCEF No. 58, at 2.) 100 Forsyth claims, on the other hand, that the flood was caused by "B & B's chef," who, without authorization, turned on the main water valve. (See NYSCEF No. 80, at ¶¶ 22, 24-25.) 100 Forsyth also references admissions in emails from Aaron Hopkins, one of Birds & Bubbles’ restaurant managers. (See NYSCEF N. 58.) In short, the evidence defendants rely on does not eliminate material issues of fact regarding 100 Forsyth's alleged negligence. This branch of defendants’ motion is denied.
C. The Branch of Defendants’ Motion Seeking to Hold 100 Forsyth Liable for Negligent Hiring and Supervision
Defendants argue that 100 Forsyth breached its common-law duty to exercise reasonable care to prevent its contractors from committing negligence. Defendants allege that 100 Forsyth knew there had been floods in the premises in 2016 and 2017 but did not take any actions to prevent a flood from happening again. (See NYSCEF No. 53, at 14-16.)
A negligent-hiring claim requires a showing "that the employer was on notice of the relevant tortious propensities of the wrongdoing employee." ( Gomez v City of New York , 304 AD2d 374, 374 [1st Dept 2003].) In other words, defendants must offer proof showing both that the leaks were caused by the contractors’ negligence and that 100 Forsyth knew or should have known of the contractors’ tortious conduct. Defendants have shown neither.
Birds & Bubbles’ owner testified that several leaks occurred in the premises in 2016 and 2017. (See NYSCEF No. 60, at 36.) But the mere fact that the leaks occurred is insufficient to establish negligence. Nor have defendants provided any admissible evidence that would show negligence. Moreover, none of the evidence defendants cite establishes that plaintiff was on notice of the leaks before the February 2017 flood. (See NYSCEF Nos. 114, 117.) The branch of defendants’ summary-judgment motion is denied.
D. The Branch of Defendants’ Motion Seeking to Bar 100 Forsyth from Recovering Rent After the Alleged Constructive Eviction
Defendants argue that they do not owe 100 Forsyth rent following Birds & Bubbles’ alleged constructive eviction because Birds & Bubbles’ surrender of the premises was a "negotiated surrender" that 100 Forsyth accepted. This court is not persuaded by this argument.
The only evidence defendants adduce is the lease agreement and stipulations between the parties in the prior summary proceedings. (See NYSCEF Nos. 67, 70, 75.) These documents do not establish the existence and terms of the alleged "negotiated" surrender. And defendants offer no legal basis to support the argument that no rent is owed because of Birds & Bubbles’ surrender. This branch of defendants’ motion is denied.
III. 100 Forsyth's Cross-Motion for Summary Judgment
100 Forsyth cross-moves for summary judgment under CPLR 3212 on defendants’ liability for unpaid rent, and to recover fines and violations that Birds & Bubbles allegedly incurred.
As an initial matter, this court disagrees with defendants’ contention that 100 Forsyth's cross-motion is untimely. The cross-motion was filed by the deadline set by this court for plaintiff to file papers opposing defendants’ motion. This court therefore considers the merits of the cross-motion.
A. 100 Forsyth's Claims Against Birds & Bubbles
In alleging that Birds & Bubbles failed to pay rent arrears, 100 Forsyth relies solely on a rent history statement and Li's affidavit. (See NYSCEF Nos. 71, 79.) This evidence is insufficient to meet plaintiff's prima facie burden. The amounts due according to the statement of rent history are inconsistent with the amounts due according to 100 Forsyth's complaint. (Compare NYSCEF No. 71, with NYSCEF No. 1.) And the statement does not contain any indication of how the late fees are calculated. Additionally, Li's statements regarding the alleged amounts due are based on the statement of rent history, rather than having an independent evidentiary foundation.
As to 100 Forsyth's claim to recover its payments for fines that Birds & Bubbles allegedly incurred, 100 Forsyth did not provide any evidence to support this claim. 100 Forsyth's summary judgment motion on this aspect of its claim is denied.
This court also rejects 100 Forsyth's argument that it is entitled to summary judgment because defendants’ counterclaims and defenses are barred by the waiver-of-subrogation clauses in the lease. Whether those provisions preclude defendants’ claims has no bearing on whether 100 Forsyth has shown that no genuine dispute of material fact exists regarding defendants’ unpaid rent and fees.
B. 100 Forsyth's Claims Against Simmons
100 Forsyth asserts that the guarantor "unconditionally and irrevocably" promised to pay Birds & Bubbles’ payment obligations in the lease. 100 Forsyth argues that because Birds & Bubbles did not pay rent and other fees defendant Simmons is liable as guarantor for Birds & Bubbles’ obligations.
On a motion for summary judgment to enforce a written guaranty, a landlord must establish (1) an absolute and unconditional guaranty; (2) the underlying debt; and (3) the guarantor's failure to perform under the guaranty. (See 4 USS LLC v DSW MS LLC , 120 AD3d 1049, 1051 [1st Dept 2014].) 100 Forsyth provides copy of the written guaranty executed by Simmons in which Simmons agrees to guarantee the rent, attorney fees, and Birds & Bubbles’ performance of the lease. (See NYSCEF No. 68.) As explained above, this court rejects defendants’ argument that 100 Forsyth cannot invoke the guaranty because it is not a named party in the guaranty. Thus, 100 Forsyth has sufficiently established the guaranty was absolute and unconditional.
Nonetheless, as stated above, 100 Forsyth has not established the underlying debt as a matter of law, an essential element for obtaining summary judgment on the guaranty.
IV. 100 Forsyth's Cross-Motion to Dismiss Birds & Bubbles’ Counterclaims
In its cross-motion, 100 Forsyth asks this court to dismiss defendants’ counterclaims because they are identical to the claims in Birds & Bubbles , Index No. 651980/2017—a prior action pending in this court.
A court has broad discretion in considering a motion to dismiss an action under CPLR 3211 (a) (4) ( Whitney v Whitney , 57 NY2d 731, 731 [1982].) Dismissal is appropriate if another action is pending between the same parties for the same cause of action. ( PK Rest., LLC v Lifshutz , 138 AD3d 434, 436 [1st Dept 2016].) The counterclaims asserted by the defendants in this action are identical to the claims already asserted by Birds & Bubbles in another earlier-filed action—both seek to hold 100 Forsyth liable for negligence and breach of the lease; both arise out of the February 2017 flooding incident at the premises; and both seek substantially the same recovery. (See NYSCEF No. 53; Birds & Bubbles , Index No. 651980/2017, NYSCEF No. 1.) Although Simmons is not a party in the other action, the parties are "substantially similar" given that the guarantor is a managing member of Birds & Bubbles, a party in both actions. (See Lifshutz , 138 AD3d at 436.) For these reasons, 100 Forsyth's cross-motion to dismiss defendants’ counterclaims is granted.
Accordingly, for the foregoing reasons, it is hereby
ORDERED that defendants’ CPLR 3211 (a) (7) motion to dismiss plaintiff's complaint for failure to state a cause of action is denied; and it is further
ORDERED that defendants’ CPLR 3212 motion for summary judgment is denied; and it is further
ORDERED that plaintiff's CPLR 3212 cross-motion for summary judgment is denied; and it is further
ORDERED that plaintiff's CPLR 3211 (a) (4) cross-motion to dismiss defendant's counterclaims as duplicative is granted.