Summary
In W & G Wines, defendant-landlord had already acknowledged policy as sufficient in an email and in Classic Motors, defendant-landlord provided plaintiff-tenant with an explicit opportunity to cure the insurance defect in their notice.
Summary of this case from 117-119 Leasing Corp. v. Reliable Wool Stock, LLC.Opinion
No. 506818/14.
12-19-2014
W & G Wines LLC, Plaintiff, v. GOLDEN CHARIOT HOLDINGS LLC, Defendant.
Neil C. Dwork, Esq., Rosenberg & Estis, PC, New York, Attorneys for Plaintiff. Marnie R. Kudon, Esq., Locke Lord LLP, New York, Attorney for Defendants.
Neil C. Dwork, Esq., Rosenberg & Estis, PC, New York, Attorneys for Plaintiff.
Marnie R. Kudon, Esq., Locke Lord LLP, New York, Attorney for Defendants.
Opinion
CAROLYN E. DEMAREST, J.
The following papers read on this motion:
| Papers | Numbered |
|---|---|
| Notice of Motion/Order to Show Cause/Petition/Cross Motion and Affidavits(Affirmations)Annexed | 11–25, 27–56 |
| Opposing Affidavits (Affirmations) | 28–50 |
| Reply Affidavits(Affirmations) | 66–71 |
| Affidavits(Affirmations) | |
| Other Papers (Memoranda of Law) | 25, 52, 70 |
Plaintiff W & G Wines LLC (“Plaintiff” or “Tenant”) moves, by Order to Show Cause, for a Yellowstone injunction prohibiting its landlord, defendant Golden Chariot Holding LLC (“Defendant” or “Landlord”), from terminating its commercial lease while this action is pending, and tolling Plaintiff's time to cure any defaults of the lease for the property located at 306 Gold Street, Unit C1, Brooklyn, New York (the “Premises”). Defendant argues that the motion should be denied because Plaintiff has no ability to cure, and cross-moves, pursuant to CPLR § 3211, to dismiss Plaintiff's action, or, if the Court does not dismiss, Defendant seeks an order directing Plaintiff to pay use and occupancy during the pendency of this proceeding and directing Plaintiff to post an undertaking pursuant to CPLR § 6312 .
The Court notes that Plaintiff e-filed a memorandum of law and several affidavits in reply to the motion for a Yellowstone injunction and in opposition to Defendant's cross-motion. As no courtesy copies were submitted, the Court will not consider these papers in this decision.
BACKGROUND
This action involves the alleged breach of a lease agreement, dated July 16, 2010 (the “Lease”), between Defendant, the landlord, and Plaintiff, the tenant, for a period to commence on October 1, 2010 and expire on September 30, 2020. Plaintiff operates a wine and liquor store on the Premises. On June 23, 2014, Defendant served Plaintiff with a notice of default (the “June 2014 Notice”), outlining a number of alleged breaches of the Lease and giving Plaintiff fifteen days to cure. Plaintiff asserts that it is not in breach of any provision of the Lease, or to the extent that the Court finds Plaintiff to be in default, Plaintiff is ready, willing, and able to cure. Plaintiff claims that the June 2014 Notice is entirely pretextual because the rent that Plaintiff was able to negotiate for the Lease is significantly below fair market value, and that due to improving economic conditions and because of significant development in the neighborhood surrounding the Premises, Plaintiff projects that it will pay 60% below market rate throughout the term of the ten-year Lease. Plaintiff claims that Defendant has attempted to drive Plaintiff off the Premises from the commencement of the lease period in order to take advantage of the increasing property values in the neighborhood. Plaintiff claims that, to this end, Defendant has prevented Plaintiff from maintaining decorative awnings and signage at the Premises and has served multiple notices of default, which Plaintiff asserts were meritless, and which were withdrawn, with the exception of the June 2014 Notice at issue here.
The June 2014 Notice indicates that Plaintiff breached the Lease by not maintaining insurance as required by Paragraphs 8 and 49 of the Lease. Paragraph 8 provides, in pertinent part:
Tenant agrees, at Tenant's sole cost and expense, to maintain commercial general liability insurance in standard form in favor of Owner and Tenant against claims for bodily injury or death or property damage occurring in or upon the demised premises, effective from the date Tenant enters into possession of the demised premises and during the term of this lease. Such insurance shall be in the amount and with carriers acceptable to the Owner.
Paragraph 49 provides, in pertinent part:
Tenant shall, at its own cost and expense, carry general liability and all risk/special form insurance with an “A” rated insurance carrier covering all liability in the demised Premises, and all insurance with limits of not less than $1,000,000.00 for each claim and $2,000,000 for each occurrence and a $3,000,000.00 umbrella policy and $500,000.00 for property damage and loss of income coverage. All insurance policies to include Landlord, and its agents, if any, as named insured and to insure both parties for any liability in connection with the ownership, operation and management of the demised Premises, both inside and outside, including the adjacent areas. The Certificate of Insurance shall provide that in the event of the non-payment of a premium by the Tenant, the Landlord must be given written notice thereof and a minimum ten day period to pay the premium to the insurance company.
The June 2014 Notice further demands that Plaintiff “produce insurance policies and all subsequent renewals for the required amounts with the inclusion of the mandatory language and Landlord as named insured from the commencement of the Lease to date with evidence of proof of payments of the premiums therefor.” Plaintiff asserts that it has maintained the required insurance throughout the term of the Lease and has provided copies of the subject policies to Defendant's counsel by letter dated July 22, 2014 (the “July Letter”). Plaintiff contends that Defendant cannot be included in the insurance policy as a “named insured”, as strictly required by Paragraph 49 of the Lease, but that Defendant is covered as an additional insured. Plaintiff also points to an e-mail from Sam Chiu, Defendant's principal (“Chiu”), dated September 21, 2010, in which Chiu demands coverage as an “additional insured”. However, Defendant contends, in its opposition papers, that there are other problems with the insurance policy, such as a lack of coverage for the personal property of others, and gaps in coverage under Plaintiff's Liquor Liability policy. Defendant claims that Plaintiff's allegedly nonconforming insurance policy is an incurable default such that a Yellowstone injunction is not warranted.
The June 2014 Notice also states that Plaintiff is in violation of the Alcoholic Beverage Control Laws (ABC Laws) regulated by the New York State Liquor Authority, and is thereby in breach of Paragraphs 6, 63, 65, and 69 of the Lease, which require Plaintiff to comply with all present and future laws and restricts the use of the Premises. Specifically, Paragraph 63 provides, in pertinent part:
Tenant acknowledges that in no event shall there be consumption of any alcoholic beverages including but not limited to wine, beer or liquor on the Premises except for “tasting” of wine, beer, or liquor sold in the Premises and for which no money is paid for such tasting. Such act shall be deemed a major and substantial breach of this Lease entitling Landlord to immediately terminate said Lease and to seek damages and other relief against Tenant by reason of such breach.
The ABC Laws provide, inter alia, that off-premise package stores are prohibited from conducting liquor tastings unless the tastings are conducted by a licensed distiller or liquor wholesaler, and from serving any samples over 1/4 fluid ounce (see Alcoholic Beverage Control Law § 63–a ). Defendant claims that Plaintiff served mixed drinks and liquor shots at the Premises, including samples exceeding 1/4 ounce in size. Defendant also claims that Plaintiff hosted wine tastings with the service of food without a valid food permit in violation of New York City Health Code and New York City Sanitary Code. Defendant further complains that Plaintiff charged cover fees for tastings at the Premises in violation of the express language of Paragraph 63 of the Lease. Defendant provides a number of internet printouts from Plaintiff's Facebook page, as well as other online sources, advertising and promoting events at the Premises, including photographs, which purportedly demonstrate Plaintiff's violations of the ABC Laws. For example, one of the internet printouts is a photograph purportedly depicting one of the owners of the wine shop, Stephanie Goebel, pouring a bloody mary at the Premises (Exhibit H to Defendant's Affirmation in Opposition). Another printout, dated February 14, 2011, is an advertisement promoting a “special Valentine wine and food pairing event for $30 per person” at the Plaintiff's wine shop (Exhibit K to Defendant's Affirmation in Opposition).
Although it is undisputed that neither the New York State Liquor Authority, nor any other state regulatory agency, has ever issued a violation against Plaintiff, Defendant claims that Plaintiff's alleged violations of the ABC Laws and health codes are an incurable default under the Lease. In the affidavit of Owen C. Wright (the “Wright Affidavit”), the managing member of the Plaintiff, Plaintiff asserts that it does not use the Premises for any unlawful purpose and that any tastings that have taken place at the Premises were lease-compliant, did not involve the service of liquor in excess of 1/4 fluid ounce, and did not involve a cover fee. Plaintiff concedes that it has allowed licensed distillers and wholesalers to distribute cheese and crackers during tastings, but has disallowed this practice pending the instant action, and is willing to permanently disallow the practice should the Court find it to be in violation of any law or the Lease.
The Notice further indicates that Plaintiff is in violation of Paragraph 53 of the Lease, which provides, in pertinent part:
A. Tenant shall not perform work which would ... (iii) not be in compliance with all applicable laws, rules, regulations and requirements of any governmental department having jurisdiction over the Building and/or construction of the Premises, including but not limited to, the Americans with Disabilities Act of 1990. Notwithstanding the language herein in this paragraph, both parties agree that the HVAC systems and related plumbing fixtures that are installed on the Premises shall remain part of the Premises and shall not be removed by the Tenant on the expiration of this Lease or earlier termination of this Lease agreement.
......
C. All construction, alteration, renovation or other work which is performed shall be at Tenant's sole cost and expense and shall be strictly in accordance with the plans and specifications approved by Landlord, and shall comply with all governmental rules, regulations, codes, ordinances, statutes, policy, and provisions.
Defendant complains that Plaintiff removed the ADA compliant bathroom sink from the Premises and installed a new sink that is not ADA compliant and installed a glassware sanitizer in the bathroom without the approval of Defendant. The Notice further states that “Tenant is in default of a substantial obligation of its Lease by illuminating Tenant's millwork and installing electric outlets and light fixtures on the exterior of the Building without obtaining prior approvals and a work permit from the New York City Department of Buildings.” In response, Plaintiff argues that no notice of any violation has ever been issued to Plaintiff from the Department of Buildings (DOB) or any other municipal, state, or federal agency. Nevertheless, as Plaintiff indicated in its July Letter, Plaintiff has removed the glassware sanitizer, reinstalled the prior ADA compliant sink, and removed the electric outlets and light fixtures from the exterior of the building. Plaintiff contends, however, that the millwork is not affixed to the Premises, but is shelving custom-made to fit the Premises, which contains internal lighting, and as such, no approval or permit was required.
Another purported violation described in the June 2014 Notice involves Plaintiff's removal of awnings and exterior signage which Defendant claims Plaintiff originally installed without Defendant's approval, without work permits from the DOB, or the required certificates of insurance. According to Defendant, in 2011, Plaintiff installed an awning on the exterior of the Premises which did not conform with the proposal that Defendant had approved, and without providing a certificate of Worker's Compensation insurance, as is required by the Lease. At that time, Defendant sent Plaintiff a notice to cure, dated September 7, 2011 (the “2011 Notice”), requiring Plaintiff to remove the awning. Defendant further claims that in September 2013, Plaintiff installed signage on the Premises without Defendant's prior written consent or the issuance of a work permit from the DOB. In response, Defendant sent Plaintiff a notice to cure dated January 21, 2014 (the “January 2014 Notice”). Plaintiff asserts that it attempted to work with Defendant to obtain approval of its proposed signage, but that Defendant unreasonably withheld its approval, and that Plaintiff finally erected signage that replicated Defendant's own signage at the space adjacent to the Premises, which Defendant's owner, Chiu, uses for his insurance brokerage. On or about February 7, 2014, Plaintiff removed the awning and the signage and repaired the mullions of the curtain wall and entry door frame which were drilled into in order to erect the awnings. In the instant June 2014 Notice, Defendant claims that Plaintiff “failed to repair the damage and/or restore the holes to both the exterior and interior curtain walls of the Building and Demised Premises caused from Tenant's removal of the exterior signage and structural supports”. Plaintiff contends that the remaining damage to the storefront is minimal and does not represent a structural compromise to the facade, but that Plaintiff is ready, willing, and able to perform any further repair that may be directed by the Court.
Lastly, Defendant claims in the June 2014 Notice that Plaintiff failed to pay additional rent arising from Plaintiff's obligation pursuant to the Lease to pay the reasonable attorneys fees incurred as a result of the January 2014 Notice. Paragraph 68 of the Lease provides that “[i]f Tenant breaches any terms of this lease agreement ... Tenant shall pay Landlord reasonable attorneys fees and expenses incurred by Landlord whether or not an action is actually commenced”. Defendant sent Plaintiff an additional rent notice, dated April 21, 2014 (the “Additional Rent Notice”), and attached invoices from its attorney for legal fees. Plaintiff maintains that it does not owe any additional rent because it was never in default of the Lease, but that Plaintiff is ready, willing, and able to pay the Defendant any amount that the Court deems is owed to Defendant as additional rent.
On July 24, 2014, Plaintiff filed a complaint with this Court seeking judgment declaring that Plaintiff has not breached any provision of the Lease and seeking a permanent injunction enjoining Defendant from terminating the Lease. Plaintiff also seeks damages for Defendant's alleged breach of the Lease for unreasonably refusing to consent to Plaintiff's proposal to erect signage at the Premises, for breach of the implied covenant of good faith and fair dealing, and for prima facie tort. On July 25, 2014, Plaintiff moved, by order to show cause, for a Yellowstone injunction prohibiting Defendant from terminating the Lease during the pendency of this action and tolling Plaintiff's time to cure any breach of the Lease and was granted a temporary restraining order. On August 5, 2014, Defendant cross-moved, pursuant to CPLR § 3211, to dismiss Plaintiff's complaint, or, in the alternative, seeking an order directing Plaintiff to pay use and occupancy during the pendency of this action and directing Plaintiff to post an undertaking pursuant to CPLR § 6312.
DISCUSSION
“A Yellowstone injunction maintains the status quo so that a commercial tenant, when confronted by a threat of termination of its lease, may protect its investment in the leasehold” (Graubard Mollen Horowitz Pomerantz & Shapiro v. 600 Third Ave. Assoc., 93 N.Y.2d 508, 514 [1999] ). To obtain such injunction, a tenant must prove that:
(1) it holds a commercial lease; (2) it received from the landlord either a notice of default, a notice to cure, or a threat of termination of the lease; (3) it requested injunctive relief prior to the termination of the lease; and (4) it is prepared and maintains the ability to cure the alleged default by any means short of vacating the premises (Graubard Mollen, 93 N.Y.2d at 514, quoting 36th St. Garage Corp. v. 221 E. 36th Owners Corp., 211 A.D.2d 420, 421 [1st Dept 1995] ).
Moreover, a party seeking a Yellowstone injunction need not satisfy all the elements generally required for a preliminary injunction; the “threat of termination of the lease and forfeiture, standing alone, has been sufficient to permit maintenance of the status quo by injunction” (Post v. 120 E. End Ave. Corp., 62 N.Y.2d 19, 25–26 [1984] ; see Graubard Mollen, 93 N.Y.2d at 514 ). Here, Plaintiff holds a commercial lease, received a notice to cure, and sought injunctive relief on July 25, 2014, five days before the July 30, 2014 deadline to cure stated in the June 2014 Notice. Thus, Plaintiff should be a granted a Yellowstone injunction if “a basis exists for believing that the tenant desires to cure and has the ability to do so through any means short of vacating the premises” (Herzfeld & Stern v. Ironwood Realty Corp., 102 A.D.2d 737, 738 [1st Dept 1984] ).
As a threshold matter, Plaintiff argues that the June 2014 Notice is defective because “it is ambiguous and fails to state any basis for Defendant's belief that the defaults alleged therein actually occurred” (Plaintiff's Memorandum of Law in Support, p. 5). “The purpose of a notice to cure is to specifically apprise the tenant of claimed defaults in its obligations under the lease and of the forfeiture and termination of the lease if the claimed default is not cured within a set period of time” (Filmtrucks, Inc. v. Express Industries & Terminal Corp., 127 A.D.2d 509, 510 [1st Dept 1987] ). Plaintiff's argument that the notice to cure is insufficient, fails as there is no requirement that Defendant must include “substantiation” or “particularity” with respect to a basis for believing the defaults actually occurred. The June 2014 Notice is sufficient in that it lists the claimed defaults, the specific provisions of the Lease implicated, and informs the Plaintiff of possible termination if the defaults are not cured within a set period of time. Thus, Defendant's June 2014 Notice is not defective and a Yellowstone will not be granted on this ground alone.
Defendant argues that Plaintiff's purported failure to carry sufficient insurance is an incurable default of the Lease, as plaintiff is not able to amend its insurance policy retroactively. In Kyung Sik Kim v. Idylwood, NY, LLC (66 AD3d 528, 529 [1st Dept 2009] ), the Appellate Division held that failure to carry adequate insurance is a material breach of a lease and that a such a breach may not be cured by obtaining prospective insurance coverage. The court reasoned that such coverage “does not protect [the landlord] against the unknown universe of any claims arising during the period of no insurance coverage” (id. at 529 ). Here, Plaintiff has provided documentation sufficiently demonstrating that it has carried insurance throughout the relevant period. The issue is whether the terms of Plaintiff's insurance policy fully comply with the requirements of the Lease. The June 2014 Notice demands that Plaintiff produce insurance policies with “the inclusion of the mandatory language and Landlord as named insured,” which is required by Paragraph 49 of the Lease. Plaintiff argues that Defendant cannot be a “named insured” but only an “additional insured,” and that Chiu waived coverage as a “named insured” and acknowledged that coverage as an “additional insured” is sufficient in an e-mail dated September 21, 2010. Conflicting credible interpretations of a lease provision create a triable issue of fact (see Blue Jeans USA, Inc. v. Basciano, 286 A.D.2d 274, 277 [1st Dept 2011] ). Chiu's alleged waiver by e-mail is also a question of fact as waiver “may be accomplished by express agreement or by such conduct or failure to act as to evince an intent not to claim the purported advantage' “ (Dice v. Inwood Hills Condominium, 237 A.D.2d 403, 404 [2d Dept 1997], quoting Hadden v. Consolidated Edison Co., 45 N.Y.2d 466, 469 [1978] ). Further, Plaintiff claims in the Wright Affidavit that Chiu, an insurance broker, reviewed and approved the insurance policy before Plaintiff purchased it. Thus, the Defendant's acceptance of the adequacy of Plaintiff's insurance coverage becomes a question of fact such that a Yellowstone injunction may not be denied to Plaintiff until the merits of the underlying case are adjudicated (see New York Classic Motors, LLC v. 250 Hudson Street, LLC, 2013 WL 5925541 [Sup Ct N.Y. County 2013] ).
However, this rule may not necessarily preclude a tenant who has continuously carried insurance from curing a breach by retroactively amending the terms of his coverage so that it is consistent with the lease (see Federated Retail Holdings, Inc. v. Weatherly 39th St., LLC, 32 Misc.3d 247, 253–54 [Sup Ct, N.Y. County 2011] [distinguishing Kyung Sik Kim on the grounds that the tenants “always had insurance, and merely amended their existing policies to provide for greater insurance”] ).
Additionally, for the first time in its opposition papers, Defendant complains that Plaintiff's insurance policy does not conform to the requirements of Paragraph 50 of the Lease, which requires coverage for the personal property of others. Defendant also complains in its opposition that Plaintiff's Liquor Liability Coverage excludes protection if an injury arises out of Plaintiff's “product” but does not cite to the section of the Lease that requires inclusion of such coverage. As any possible default relating to these two items mentioned in the Defendant's opposition are not included in the June 2014 Notice, the Court will not consider them here (see 112 West 34th Street Assocs. v. 112–1400 Trade Properties, LLC, 95 AD3d 529, 535 [1st Dept 2012] ).
The crux of Defendant's argument is that Plaintiff's allegedly illegal behavior in violation of the ABC Laws is an incurable default under the Lease, and that it exposes Defendant to liability because the insurance policy excludes coverage of any injury “arising out of any alcoholic beverage sold, served or furnished while any required license is not in effect.” Defendant argues that photographic and other promotional materials printed off the internet confirm that Plaintiff openly and continuously served mixed drinks and liquor at the Premises, charged a cover fee, and committed other violations of the ABC Laws. Defendant claims that this constitutes a substantial breach of Paragraph 63 of the Lease entitling Landlord to immediately terminate the Lease. Plaintiff asserts in the Wright Affidavit that Plaintiff has never served liquor at the Premises and only its licensed wholesalers and distributors have conducted tastings at the Premises, which is permitted by the Lease and by applicable ABC Laws (¶ 22). The Wright Affidavit further asserts that Plaintiff does not serve food at the Premises but that its licensed wholesalers and distributors have served cheese and crackers and other packaged food items to complement their tastings, but that Plaintiff has discontinued allowing this practice and will continue to disallow it should this Court find it to be in violation of any law (¶ 23). Plaintiff also affirmatively states that it has never charged an entry fee or cover for attendance at one of the tastings held at the Premises, nor has any of its licensed wholesalers or distributors, and that Plaintiff has never served shots or mixed drinks at the Premises, or liquor tastings larger than 1/4 fluid ounce (Wright Affidavit ¶ 24–25). It is undisputed that no citation, violation, or penalty has ever been issued against the Premises.
Whether Plaintiff has violated the ABC Laws and thereby committed a substantial breach of the Lease is a question of fact requiring an evidentiary hearing. However, the granting of a Yellowstone injunction is appropriate pending a trial of the matter. “Our courts have held that a Yellowstone injunction is appropriate in circumstances where there is not a sufficient basis to evaluate whether a tenant actually has violated its lease and, thus, in default” (Burlington Coat Factory of New York, LLC v. Majestic Rayon Corp., 2013 N.Y. Slip Op 31315(U), *10 [Sup Ct N.Y. County 2013], citing Boi To Go, Inc. v. Second 800 No. 2 LLC, 58 AD3d 482 [1st Dept 2009] ). There is a direct contradiction between the parties' assertions of fact such that the Court cannot now determine whether Plaintiff actually committed the acts that are alleged as violations of the Lease and applicable laws. Whether such a breach, if it occurred, is curable, is a question for another day. In the interim, “the tenant need not, as a prerequisite to the granting of a Yellowstone injunction, demonstrate a likelihood of success on the merits ... [n]or is a tenant required to prove its ability to cure prior to obtaining a Yellowstone injunction” (Herzfeld & Stern v. Ironwood Realty Corp., 102 A.D.2d 737, 738 [1st Dept 1984] ).
Concerning Plaintiff's alterations to the Premises which are also cited in the June 2014 Notice, Plaintiff has removed the glassware sanitizer, restored the original ADA compliant sink to the bathroom, removed the electric outlets and light fixtures from the exterior of the building, and removed the awning and exterior signage that Defendant did not approve. Although Defendant claims that Plaintiff did not repair all of the damage caused by the removal of the awning and exterior signage, Plaintiff has affirmatively stated its willingness to complete any further repairs required by the Court. A Yellowstone injunction may be granted where a tenant has stated its willingness to cure by affidavit (see TSI West 14, Inc. v. Samson Assocs., LLC, 8 AD3d 51 [1st Dept 2004] ). Plaintiff has affirmatively stated and demonstrated its willingness to cure the alleged defaults by reversing most of the alterations it has made to the Premises that were claimed as defaults in the June 2014 Notice (see Terosal Properties, Inc. v. Bellino, 257 A.D.2d 568, 568 [2d Dept 1999] [“[T]he plaintiff has satisfied its burden both by repeatedly indicating in its motion papers that it was willing to repair any defective condition found by the court and by providing proof of the substantial efforts it had already made in addressing the majority of conditions listed in the notice to cure.”] ). As regards the illuminated millwork, there is a factual dispute regarding whether the millwork is affixed to the Premises requiring Defendant's approval pursuant to the Lease, and thus, the Court finds no basis at this time to determine whether this issue constitutes a default of the Lease.
Although it is undisputed that Plaintiff made certain alterations to the Premises without DOB work permits, it is also undisputed that no violation has been issued by the DOB against the Premises. Further, Plaintiff maintains that certain minor alterations on the Premises, such as the glassware sanitizer and bathroom sink, did not require permits from the DOB. Regardless, even if Plaintiff were found to be in default of the Lease for not obtaining the required work permits, this would not constitute an incurable default as New York courts have consistently granted Yellowstone injunctions in cases where violations were actually issued by the DOB (see Baruch, LLC v. 587 Fifth Ave., LLC, 44 AD3d 339 [1st Dept 2007] ; see also Champion 221 LLC v. Madave Properties SPE, LLC, 2013 Slip Op 31457(U) (Sup Ct N.Y. County, 2013] ); Burlington Coat Factory of New York, LLC v. Majestic Rayon Corp., 2013 N.Y. Slip Op 31315(U) [Sup Ct N.Y. County 2013] ).
Finally, Plaintiff's non-payment of additional rent allegedly owed to Defendant is not a bar to Yellowstone relief. Plaintiff has affirmatively stated its willingness and ability to pay the additional rent should the Court find that Defendant is entitled to its reasonable attorney's fees related to the January 2014 Notice, which dealt with Plaintiff's installation of signage and awnings without prior approval of the Defendant. Paragraph 68 of the Lease requires Plaintiff to pay Defendant's reasonable attorney's fees and expenses incurred by Defendant in the event of Plaintiff's breach of the Lease regardless of whether an action is actually commenced against the Tenant. Defendant provided Plaintiff with invoices from its attorney for services related to the January 2014 Notice totaling $6883.34. Plaintiff argues that it does not owe additional rent because it was not in default of the Lease as alleged in the January 2014 Notice. Although Plaintiff does not dispute that it installed exterior signage and an awning on the Premises without Defendant's prior approval, Plaintiff's position is that Defendant unreasonably withheld its approval, which Defendant may not do pursuant to Paragraph 53 of the Lease.
In its cross-motion, Defendant requests that if the Court grants the Yellowstone injunction, as it has, that Plaintiff be required to post an undertaking, pursuant to CPLR § 6312, in the amount of $500,000. As justification for the amount, Defendant states that $500,000 is half the amount of Plaintiff's general liability insurance coverage and would cover any liability, including attorney's fees, or the imposition of civil penalties arising from Plaintiff's alleged prohibited conduct. “The undertaking should be reduced to reflect those actual damages defendant may incur if the court determines that the preliminary injunction was erroneously granted” (Visual Equities v. Sotheby's Inc., 199 A.D.2d 59, 59 [1st Dept 1993] ). As the majority of Defendant's potential damages are entirely speculative at this time, and Plaintiff has already absorbed the costs of reversing and repairing its unauthorized alterations to the Premises, an undertaking in the amount of $500,000 is excessive (see Medical Buildings Assoc., Inc. v. Abner Properties, 102 AD3d 488 [1st Dept 2013] ). The only specific, foreseeable damages that Defendant may recover is the additional rent to cover attorneys fees in the amount of $6883.34, plus attorneys fees and expenses yet to be determined related to the June 2014 Notice and the instant action, and any unpaid rent or use and occupancy during the pendency of this action. Therefore, an undertaking in the amount of reasonable attorneys' fees and expenses plus one month's rent is appropriate here (see Medical Buildings Assoc., 102 AD3d 488 [1st Dept 2013] ). Accordingly, Plaintiff shall post an undertaking in the amount of $20,000.
Pursuant to Paragraph 40 of the Lease, the rent is $9,450 per month for the period commencing October 1, 2013 and ending September 30, 2014 and is $9,922.50 per month for the period commencing October 1, 2014 and ending September 30, 2015.
Defendant's cross-motion also seeks dismissal of the Complaint, pursuant to CPLR § 3211(a)(1), based on documentary evidence. The court may dismiss a cause of action under CPLR 3211(a)(1) “only if the documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law” (Leon v. Martinez, 84 N.Y.2d 83, 88 [1994] ). Defendant argues that its annexed printouts of Plaintiff's promotional material from the internet is documentary evidence that unequivocally demonstrates that Plaintiff violated the ABC Laws and the Lease. “In order for evidence to qualify as documentary,' it must be unambiguous, authentic, and undeniable” (Granada Condominium v. Palomino, 78 AD3d 996, 997 [2d Dept 2010], citing Fontanetta v. John Doe 1, 73 AD3d 78 [2d Dept 2010] ). The internet printouts proffered by Defendant from Plaintiff's Facebook page, Yelp, and other sources, are subject to interpretation and their reliability and authenticity have not been sufficiently established. Defendant's cross-motion cannot be granted on this type of printed evidence.
Defendant also seeks an order directing Plaintiff to pay use and occupancy during the pendency of this action. By Stipulation dated August 4, 2014, Plaintiff agreed to pay use and occupancy during the pendency of this action, thus resolving this portion of Defendant's cross-motion.
CONCLUSION
Plaintiff's motion for a Yellowstone injunction is granted pending an evidentiary hearing. Plaintiff is directed to post an undertaking in the amount of $20,000 no later than December 30, 2014.
Defendant's cross-motion to dismiss the Complaint is denied.
The parties shall appear on January 12, 2015 at 2:30 PM for a pre-hearing conference.
This constitutes the decision and order of the Court.