Opinion
Index No. 153717/2021 Motion Seq. No. 004
12-19-2022
WFP TOWER B CO L.P. Plaintiff, v. PACIFIC AMERICAN CORPORATION, Defendant.
Unpublished Opinion
MOTION DATE 02/25/2022
PRESENT: HON. DAVID B. COHEN, JUSTICE
DECISION + ORDER ON MOTION
David B. Cohen, Judge
The following e-filed documents, listed by NYSCEF document number (Motion 004) 57, 58, 59, 60, 61, 62, 63, 64, 65, 66, 67, 68, 69, 70, 71, 72, 73, 74, 75, 77, 78, 79, 80, 81, 82, 83, 84, 85, 86, 87, 88, 89, 90, 91, 92, 93, 94, 95, 96, 97, 98, 99, 100, 101, 102 were read on this motion to/for SUMMARY JUDGMENT(AFTER JOINDER .
In this action to recover, inter alia, unpaid rent and attorneys' fees under a commercial lease, plaintiff moves, pursuant to CPLR 3211 (b) and 3212, for an order striking defendant's affirmative defenses and granting it summary judgment on the amended complaint, respectively. After consideration of the parties' contentions, as well as a review of the relevant statutes and case law, the motion is granted in part and denied in part.
FACTUAL AND PROCEDURAL BACKGROUND
This action is one of many commercial landlord-tenant disputes before the courts in New York state arising from the COVID-19 pandemic. The lease agreement at issue here, dated April 12, 2012, is between plaintiff WFP Tower B Co L.P. (the landlord) and Pacific American Corporation (the tenant) (Lease, NYSCEF Doc. No. 68). Pursuant to the lease, the landlord leased to the tenant a portion of the 36th floor of a building, known as Two World Financial Center, located at 225 Liberty Street in Manhattan (the premises), for a term running through
The amended complaint sets forth five cause of action seeking: (1) a declaration that the lease was terminated as of March 15, 2021 by the termination notice (first cause of action); (2) unpaid rent through March 15, 2021, accrued use and occupancy (or holdover rent) from March 15, 2021 through the date on which the landlord recovers possession of the premises, deficiency, liquidated damages, late charges, and interest (second cause of action); "alternative rent damages" (third cause of action); attorneys' fees and other expenses incurred as a result of the tenant's alleged default (fourth cause of action); and to recover possession of the premises (fifth January 31, 2024. The lease states that the premises "shall be used and occupied solely as general and executive offices" (id. at' 6.01).
The tenant maintains that it no longer has any active operations, but that when the lease was executed, it was in the business of purchasing aircraft parts in the United States and exporting them to airlines in China. The tenant apparently used the Premises to conduct business matters in connection with these operations.
In April 2021, the landlord commenced this action alleging that the tenant defaulted in performing its obligations under the lease in that it failed to pay rent during the period from May 1, 2020 through February 10, 2021 (Amended Complaint at &9, NYSCEF Doc. No. 64). The landlord further alleged that, on February 18, 2021, it served the tenant with a notice of default pursuant to the lease. When tenant failed to cure, the landlord served the tenant with a notice of termination, dated March 5, 2021, advising that the lease would be terminated effective March 15, 2021 (the termination date) (id. at &&10-12). According to the landlord, the tenant failed to vacate the premises on or before the termination date, and that no party had tendered the payment of unpaid rent or the amount due for the tenant's use and occupancy of the premises subsequent to that date as required by the lease's holdover provisions (id. at &&13-14).
The amended complaint sets forth five cause of action seeking: (1) a declaration that the lease was terminated as of March 15, 2021 by the termination notice (first cause of action); (2) unpaid rent through March 15, 2021, accrued use and occupancy (or holdover rent) from March 15, 2021 through the date on which the landlord recovers possession of the premises, deficiency, liquidated damages, late charges, and interest (second cause of action); "alternative rent damages" (third cause of action); attorneys' fees and other expenses incurred as a result of the tenant's alleged default (fourth cause of action); and to recover possession of the premises (fifth cause of action). The tenant filed an answer in which it denied the material allegations in the amended complaint and asserted numerous affirmative defenses, including impossibility, frustration of purpose, and failure of consideration (Answer to Amended Complaint, NYSCEF Doc. No. 65).
As of August 24, 2021, the tenant vacated and delivered possession of the premises to the landlord (Statement of Material Facts at &14, NYSCEF Doc. No. 58; Responses & Counterstatements at &14, NYSCEF Doc. No. 78). By stipulation dated August 25, 2021, the landlord withdrew the first, third, and fifth causes of action in the amended complaint and the tenant stipulated that the lease was terminated by the notice of termination as of the termination date of March 15, 2021 (Stipulation &&4-5, NYSCEF Doc. No. 66).
The landlord now moves for an order: (1) pursuant to CPLR 3211 (b), striking the affirmative defenses asserted by the tenant and (2) pursuant to CPLR 3212, granting it summaiy judgment on the remaining causes of action (the second and fourth) in the amended complaint (NYSCEF Doc. No. 57). The tenant opposes the motion raising, among other things, CO VID-19 restriction-related defenses.
LEGAL CONCLUSIONS
The Second Cause of Action - Unpaid Rent, Use and Occupancy, and other Damages
As an initial matter, the tenant does not challenge the dismissal of any affirmative defenses other than frustration of purpose, impossibility, and failure of consideration. Thus, all of the other affirmative defenses are deemed abandoned and dismissed (see Knickerbocker Retail LLC v Bruckner Forever Young Social Adult Day Care Inc., 204 A.D.3d 536, 538 [1st Dept 2022]; Steffan v Wilensky, 150 A.D.3d 419, 420 [1st Dept 2017]). For the reasons discussed below, the remaining affirmative defenses of frustration of purpose, impossibility, and failure of consideration are dismissed as inapplicable.
It is well settled that "[o]n a motion for summary judgment, the moving party must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact. If the moving party proffers the required evidence, the burden shifts to the nonmoving party to establish the existence of material issues of fact which require a trial of the action" (Trustees of Columbia Univ, in the City of N.Y. v D'Agostino Supermarkets, Inc., 36 N.Y.3d 69, 73-74 [2020] [internal quotation marks and citations omitted]). "On a motion for summary judgment, the facts must be viewed in the light most favorable to the non-moving party and every available inference must be drawn in the [non-moving party's] favor" (Matter of Eighth Jud. Dist. Asbestos Litig., 33 N.Y.3d 488, 496 [2019][internal quotation marks and citations omitted]).
In support of its motion, the landlord submits the affidavit of Callie Haines, an Executive Vice President and Manager of the building located at the premises, providing personal knowledge in support of the pleadings (NYSCEF Doc. No. 60). Annexed to the affidavit are, among other things, the relevant lease, default notice and termination notice, as well as statements and documents pertaining to the alleged amounts due under the lease by virtue of the tenant's default (NYSCEF Doc. Nos. 68-73) (see Thor Gallery at S. Dekalb, LLC v Reliance Mediaworks (USA) Inc., 143 A.D.3d 498, 498 [1st Dept 2016] [plaintiff landlord "established prima facie the existence of the lease and the guaranty, through an affidavit by its CFO, and the tenant's failure to pay the rent, the amount of the underpayment, and the calculation of the amounts due under the lease, through the CFO's affidavit and an affidavit by plaintiffs manager of accounts receivable, which included a table of all payments by the tenant" and since "defendant offered no evidence in opposition, plaintiff is entitled to judgment"]).
In support of the motion, the landlord also contends that, to the extent the tenant may rely upon a provision in the lease entitled "Unavoidable Delays," this provision is inapplicable. The provision, which the landlord refers to as a "force majeure clause" even though it is not labeled as such, states:
"'Unavoidable Delays' shall mean delays incurred by Tenant due to (i) strikes, labor troubles, acts of God, enemy action, acts of terrorism, civil commotion, or the unavailability of materials and supplies, (ii) tire or other casualty, and (iii) other causes beyond the reasonable control of Tenant, including, but not limited to, any governmental preemption in connection with an emergency, and any Legal Requirements or Insurance Requirements. Unavoidable Delays shall not include Tenant's insolvency or financial condition"(Lease at 1.01, NYSCEF Doc. No. 68).
The landlord contends that this provision does not apply to or excuse a tenant's failure to pay rent and therefore cannot be used as a force majeure defense in this action.
In opposition, the tenant does not dispute the validity of the lease or that it stopped paying rent in May 2020. The tenant also concedes that, under the lease, it was not excused from paying rent based upon the "Unavoidable Delays" provision. The tenant argues that it is not "here claiming an 'Unavoidable Delay' as contemplated by this provision. Rather, [it] is claiming that the purpose of the Lease was frustrated by the [COVID-19] pandemic, and that it did not receive the benefit of its bargain during the COVID-19 restrictions''' (Mem of Law in Opp at 8, NYSCEF Doc. No. 77 [emphasis added]). The tenant contends that "[c]ommencing in or about March 2020, as a result of the COVID-19 pandemic, [it] was unable to access the [p]remises for a period of approximately three months " and that "[d]uring that time, [the tenant] did not have any use of the [p]remises" (id. at 1 [emphasis added]).
The tenant does not specify which COVID-19 restrictions prevented it from using the Premises for three months beginning in March 2020. Seemingly, the tenant is referring to the in-person restrictions set forth in Executive Order 202.8. That order required all nonessential businesses and nonprofit entities in the state to "utilize, to the maximum extent possible, any telecommuting or work from home procedures that they can safely utilize" and for each employer to "reduce the in-person workforce at any work locations by 100% no later than March 22 [, 2020] at 8 p.m." (Executive Order No. 202.8, 2020 Bill Text NY E.O. 13).
The tenant thus asserts that the landlord failed to perform under the lease and argues that "there is no force majeure clause in the Lease that benefits the landlord and no indication that the parties foresaw the possibility of the pandemic, or a government shutdown that would render performance of the lease by the Landlord impossible" (id. at 10). The tenant highlights that, under section 2.01 of the lease, the landlord agreed to "demise" the premises to it, meaning that the landlord agreed to convey the premises for the term of the lease. The tenant asserts that "during the COVID-19 restrictions, it was impossible for Landlord to comply with this obligation, and it was impossible for [the tenant] to use the [p]remises. [The landlord] could not, because of the restrictions, 'demise' the [p]remises to" the tenant and therefore, "during the COVID-19 restriction, it was impossible for the Lease to serve its primary purpose" (Mem of Law in Opp at 10-11, NYSCEF Doc. No. 77).
Contrary to the tenant's contention, it is not entitled to an abatement of rent under the terms of the lease on this basis. Section 17.03 of the lease (although not referenced by either party) provides that the tenant's "covenants and obligations" under the lease would not be "reduced or abated in any manner" "by reason of an Event Beyond Landlord's Control" (Lease at' 17.03, NYSCEF Doc. No. 68). The lease defines an "Event Beyond Landlord's Control" as follows:
While section 17.03 states that it applies "[e]xcept as otherwise expressly provided in Section 17.01(e). Articles 22 and 23," none of these exceptions are implicated here. Article 22 contains provisions governing any damage or destruction of the Premises by fire or other casualty. Such casualty provisions do not contemplate loss of use due to the pandemic (see A/R Retail, LLC v Hugo Boss Retail, Inc., 72 Mise 3d 627, 639 [Sup Ct, NY County 2021] ["the pandemic is not a 'casualty' as the term is generally used in commercial leases"], quoting Gap Inc. v Ponte Gadea New York LLC, 524 F.Supp.3d 224, 233 [SD NY 2021]). Article 23 contains provisions governing the taking of the building in condemnation or by eminent domain, which is not the case here. Finally, section 17.01(e) addresses instances where a material portion of the Premises is rendered untenable (i.e., "unable to occupy") "by reason of any stoppage or interruption of any of Landlord's services ... for reasons other than an Event Beyond the Landlord's Control, a casualty or condemnation, or any other cause beyond the reasonable control of Landlord" (Lease at '17.01, NYSCEF Doc. No. 68 [emphasis added]).
"strikes, labor troubles, acts of God, enemy action, acts of terrorism, bioterrorism (e.g., the release or threatened release of an airborne agent that may adversely affect the Real Property or any portion thereof including the Building or its occupants), civil commotion, unavailability of materials and supplies, or any event or circumstance whatsoever reasonably beyond Landlord's control, whether similar or dissimilar, including, but not limited to, any governmental preemption in connection with an emergency, any Legal Requirements , Insurance Requirements, or Landlord's inability to act due to any requirement of a Superior Instrument or due to a Superior Party's actions despite, in each case, Landlord's reasonable efforts so to act. Without limiting the foregoing, the following shall be deemed to be reasonably beyond Landlord's control:
(i) lack of access to the Building or the Premises (which shall include, but not be limited to, the lack of access to the Building or the Premises when it or they are structurally sound but inaccessible due to evacuation of the surrounding area or damage to nearby structures or public areas);
(ii) any event or circumstance outside the Building-, or
(iii) reduced air quality or other contaminants within the Building that would adversely affect the Building or its occupants (including, but not limited to, the presence of biological or other airborne agents within the Building or the Premises);
An Event Beyond Landlord's Control shall not include Landlord's insolvency or Financial condition"(Lease at' 1.01, NYSCEF Doc. No. 68 [emphasis added]).
Section 11.01 (b) of the lease states with regard to "Legal Requirements" that the "Tenant shall, at Tenant's expense, comply with all federal, state and local laws, orders, ordinances, directions, rules, regulations and requirements of any Governmental Authority, now or hereinafter in force (collectively 'Legal Requirements'), in respect to the Premises" (Lease at' 11.01 [b], NYSCEF Doc. No. 68).
Since pandemic-related government orders restricting the use of the premises clearly fall under this definition, the tenant was not relieved of its obligation to pay rent during the three months it was unable to utilize the Premises by reason of COVID-19 restrictions. Nor did it invalidate any of the tenant's "covenants and obligations" under the lease (id. at' 17.03).
The tenant's argument that the purpose of the lease was frustrated by the COVID-19 restrictions is also without merit.
"In order to invoke the doctrine of frustration of purpose, the frustrated purpose must be so completely the basis of the contract that, as both parties understood, without it, the transaction would have made little sense. Examples of a lease's purposes being declared frustrated have included situations where the tenant was unable to use the premises as a restaurant until a public sewer was completed, which took nearly three years after the lease was executed, and where a tenant who entered into a lease of premises for office space could not occupy the premises because the certificate of occupancy allowed only residential use and the landlord refused to correct it"(Center for Specialty Care, Inc. v CSC Acquisition I, LLC, 185 A.D.3d 34, 42-43 [1st Dept 2020][internal quotation marks and citations omitted]). In contrast to those examples (where the tenant could not occupy the leased premises for three years or for any part of the lease term), here the tenant is claiming a closure of its office space for a limited period of three months, in March through May of 2020. This temporary closure could not have frustrated the overall puipose of a lease the term of which spanned over 11 years - from April 2012 through January 2024 (see Knickerbocker Retail LLC v Bruckner Forever Young Social Adult Day Care Inc., 204 A.D.3d 536, 537 [1st Dept 2022] [holding that "the affirmative defense of frustration of purpose should be dismissed as inapplicable, because the purpose of the parties'10-year lease agreement was not completely defeated" by a New York City Executive Order that "directed adult congregate care facilities such as the tenant's to suspend operations during the pandemic," inasmuch as the order "was temporary"]; Gap, Inc. v 44-45 Broadway Leasing Co. LLC, 206 A.D.3d 503, 504 [1st Dept 2022]["frustration of purpose is not implicated by temporary governmental restrictions on in-person operations"][quotation marks and citation omitted]; Avamer 57 Fee LLC v. Gorgeous Bride, Inc., 2022 NY Slip Op 31453 [U], **2 [Sup Ct, New York County 2022] [rejecting frustration of purpose defense even though "high-end salon . . . was closed by administrative order for a number of months during the pandemic"]; CAB Bedford LLC v Equinox Bedford Ave, Inc., 2020 NY Slip Op 34296 [U], **4 [Sup Ct, New York County 2020] ["A gym being forced to shut down for a few months does not invalidate obligations in a fifteen-year lease"]; BKNYI, Inc. v 132 Capulet Holdings, LLC, 2020 NY Slip Op 33144[U], **3 [Sup Ct, Kings County 2020] ["Inasmuch as the initial term of the lease ... is for approximately nine years (Nov. 2012 to Sept. 2021), a temporary closure of plaintiff's business for two months (April and May 2020) in the penultimate year of its initial term could not have frustrated its overall purpose"]; see also Williamsburg Climbing Gym Co., LLC v Ronit Realty LLC, 2022 U.S. Dist LEXIS 2146, at *8, 2022 WL 43753, at *3 [ED NY 2022] ["Against a ten-year time horizon, this temporary period does not so completely frustrat[e] the Lease as to terminate it"][quotation marks and citation omitted]).
This Court also rejects the tenant's contention that its performance under the lease should be excused due to impossibility. "Impossibility excuses a party's performance only when the destruction of the subject matter of the contract or the means of performance makes performance objectively impossible. Moreover, the impossibility must be produced by an unanticipated event that could not have been foreseen or guarded against in the contract" (Kei Kim Corp, v Central Mkts., Inc., 70 N.Y.2d 900, 902 [1987]). Here, the subject matter of the lease was not destroyed and nothing prohibited the tenant from paying rent (see Gap, Inc. v 44-45 Broadway Leasing Co. LLC, 206 A.D.3d at 504 [doctrine of impossibility inapplicable where "the pandemic did not render (the retail store's) performance impossible as the leased premises were not destroyed"], quoting Valentino U.S.A., Inc. v 693 Fifth Owner LLC, 203 A.D.3d 480, 480 [1st Dept 2022]; Ponte Gadea Madison LLC v L3C Capital Partners LLC, 2021 NY Slip Op 32383 [U], **4 [Sup Ct, New York County 2020] ["though the shutdown may have prevented Tenant from mostly using the Premises for three months out of a five-year lease, losing 5% of the Lease's term is not the same as having its performance rendered impossible"]; see generally Fives 160th, LLC v Zhao, 204 A.D.3d 439, 440 [1st Dept 2022]["we have already determined that the (COVID-19) pandemic cannot serve to excuse a party's lease obligations on the grounds of frustration of purpose or impossibility"]). Moreover, while a pandemic may not have been foreseeable, the parties anticipated future events such as "governmental preemption in connection with an emergency, any Legal Requirements," "lack of access to the [b]uilding or the [p]remises," "or any event or circumstance whatsoever reasonably beyond Landlord's control," and provided in the lease that such events would not reduce or abate the tenant's "covenants and obligations" "in any manner" (Lease at "1.01, 17.03, NYSCEF Doc. No. 68). Therefore, impossibility of performance does not relieve the tenant of its obligations under the lease.
The tenant's reliance on the defense of lack of consideration is also misplaced. Consideration was not lacking inasmuch as the tenant was able to use the premises for the entire term of the Lease, which spanned over 11 years, except for a temporary 3-month period in 2020, and was not set to expire until 2024 (see Valentino U.S.A., Inc. v 693 Fifth Owner LLC, 203 A.D.3d 480, 480-481 [1st Dept 2022] ["the failure of consideration argument fails for the same reasons that the frustration of purpose and impossibility arguments fail"]; CAB Bedford LLC v Equinox Bedford Ave, Inc., 2020 NY Slip Op 34296 [U], at *5 ["The Court rejects defendants' argument that there was a failure of consideration. Defendants entered into a lease and guarantee in 2016, operated a gym for a few years before a temporary shut down and now are permitted to run the gym again. This is not a case where they are forbidden from running a gym ever again at the premises"]).
The tenant further argues in its memorandum of law in opposition to the motion that the landlord interfered with its right to the quiet use and enjoyment of the premises because it was "locked out of the [p]remises, and unable to use them for any purpose" for three months during the COVID-19 pandemic (Mem of Law in Opp at 5, NYSCEF Doc. No. 77). In support of this assertion, the tenant cites the affidavit of Wei (Emily) Jiang, who states that she is fully familiar with the facts and circumstances set forth in her affidavit but does not specify her relationship to the tenant (Jiang Affidavit, NYSCEF Doc. No. 80). Jiang states that: "Commencing in or about March 2020, as a result of the CO VID-19 pandemic, [the tenant] was unable to access the [p]remises for a period of approximately three months. During that time, [the tenant] did not have any use of the [p]remises" (id. at &7). Jiang does not mention being "locked out" of the [p]remises by the landlord. Indeed, a cause of action for breach of the covenant of quiet enjoyment requires conduct on the part of the landlord that "directly caused" the tenant to be deprived of its use and enjoyment of the premises (GFE Jerome Ave. LLC v Steph-Leigh Assoc., LLC, 200 A.D.3d 490, 491 [1st Dept 2021]). Here, there is no evidence that any conduct on the part of the landlord directly caused the tenant lack of access or inability to use the [p]remises during the COVID-19 pandemic. Rather, the tenant acknowledges in its opposition papers that the direct cause of the disruption were the CO VID-19 restrictions that began in March 2020 and impacted its use of the [p]remises for three months.
Additionally, the tenant maintains that the landlord violated section 9.01 of the Lease, which states in part: "So long as this Lease is in full force and effect, and there shall be no Event of Default hereunder, Tenant shall peaceably and quietly have, hold and enjoy the [p]remises" (Lease at '9.01, NYSCEF Doc. No. 68). The tenant argues that in light of this provision, the "cases which hold that the covenant [of quiet enjoyment] is only breached when a landlord's conduct deprives the tenant of the use of the [p]remises are inapplicable" (Mem of Law in Opp at 5, NYSCEF Doc. No. 77). The tenant asserts that, since it was unable to "have, hold and enjoy the [p]remises" during the pandemic, the landlord breached section 9.01 of the lease. This argument is based upon the same legal theory as the affirmative defenses already rejected by this Court above. Although the tenant was unable to use the premises for three months because of pandemic restrictions, this was an "Event Beyond Landlord's Control" and did not invalidate the tenant's "covenants and obligations" under the lease (Lease at "1.01, 17.03, NYSCEF Doc. No. 68).
In sum, the landlord demonstrated as a matter of law that the tenant's obligations under the lease were not excused by the COVID-19 restrictions that rendered the tenant unable to use the premises for a period of three months. In opposition, the tenant failed to raise a triable issue of fact as to any of its defenses.
With respect to damages, the landlord's second cause of action seeks unpaid rent from May 1, 2020 through the termination date of March 15, 2021, and holdover use and occupancy for and/or during the period from March 16, 2021 through August 25, 2021 (the date it recovered possession the premises pursuant to the parties' stipulation), plus late charges (see Lease at "3.03, 3.04 [a], 3.04 [b], 20.04 [c], 28.02 [a], NYSCEF Doc. No. 68).
For the period subsequent to August 25, 2021, the landlord seeks the difference between the balance of the rent it would have collected from the tenant for the remainder of the lease had it not been terminated and "the net amount, if any, of rents collected under any reletting of the [p]remises ... or any part of such period," after first deducting from such rents, inter alia, "the cost and expense of terminating the Lease, re-entering, retaking, and repossessing" the premises, as well as "the cost and expense sustained in securing any new tenants and other occupants" (Lease at "20.04[d] and [e]). The landlord refers to the latter as "the deficiency," and asserts that "[i]n lieu of any further deficiency and as liquidated and agreed final damages, [it] at any time may demand, pursuant to the terminated Lease, that [the tenant] pay to [the landlord] a sum equal to the amount by which the Rent for the period which otherwise would have constituted the unexpired portion of the Terni exceeds the then fair and reasonable rental value of the [p]remises for the same period (with both amounts being discounted to present worth at the rate of 3% per annum) less the [d]eficiencies collected by [the landlord] for the same period" (Ansell Affirmation at &15, citing Lease at § 20.04 [f]). The landlord asserts that accordingly, it should be awarded "Liquidated Damages attributable to the period subsequent to entry of judgment" (id.). The landlord also asserts that pursuant to section 3.04 of the lease, the tenant is liable for interest on the above damages and any liquidated damages from the date each portion thereof became due through the date of entry of judgment.
In opposition, the tenant contends that material issues of fact exist with regard to damages and that discovery is not complete. It argues that it is entitled to an offset against the landlord's claim for damages on the grounds that (1) the tenant sustained leaks at the [p]remises throughout its tenancy and (2) the tenant left valuable furniture and equipment on the [p]remises after it vacated the same. The tenant also contends that "no discovery or proof exists as to reletting the [p]remises" (Mem of Law in Opp at 12, NYSCEF Doc. No. 77). The tenant asserts that it is entitled to depose a representative of the landlord regarding its calculation of alleged damages.
Turning first to the issue of the leaks, the tenant argues that, during its tenancy, the landlord violated its obligation to properly maintain the premises insofar as the tenant "experienced significant leaks in the [p]remises" (id. at 12). In support of this assertion, Jiang attests that "[throughout the term of the Lease, there were significant leaks in the [p]remises that caused damage to the furnishings and to critical business papers" (Jiang Affidavit at &6, NYSCEF Doc. No. 80).
The tenant also submits the affidavit of its "in-house accountant," Mandy Wong, who attests that she utilized one of the offices at the [p]remises and that "[a]t numerous times throughout [the tenant's] occupancy, there was leaking water dripping from the ceiling onto [her] desk and the surrounding areas in the [p]remises" (Wong Affidavit at &6, NYSCEF Doc. No. 79). Wong further states:
"On numerous occasions, we telephonically notified [the landlord's] representatives concerning the leaks. It is my understanding that they made periodic attempts but the issue reoccurred on various occasions.
[] The leaks and water damage which they caused affected my ability to perform services for the [tenant], its employees, agents, representatives and vendors.
[] If called to testify, I will explain the specific nature, extent, and impact of these leaks and damage which occurred"(id. at &&7-9).
The tenant argues that the aforementioned "damages are an offset against [the landlord's] claim and until they are calculated, [the landlord] should not be entitled to judgment" (Mem of Law in Opp at 12, NYSCEF Doc. No. 77). However, the tenant does not elaborate on these allegations. It provides no details as to the dates or duration of the alleged leaks, the dates it notified the landlord of the need for any repairs, the landlord's response to any such notifications, or the damage it actually sustained. This is insufficient. All of this information is within the tenant's own knowledge, and it was incumbent upon it "to assemble, lay bare, and reveal [its] proofs" in order to raise an issue of fact in opposition to the landlord's motion (Genger v Genger, 123 A.D.3d 445,447 [1st Dept 2014]; see Zuckerman v City of New York, 49 N.Y.2d 557, 562 [1980]; Hoot Group, Inc. v Caplan, 9 A.D.3d 448, 448 [2d Dept 2004]; Middle States Leasing Corp, v Manufacturers Hanover Trust Co., 62 A.D.2d 273, 276 [1st Dept 1978]).
The tenant's contention that it is entitled to an offset for the "valuable furniture and equipment" it left on the [p]remises is also unavailing. The tenant stipulated on August 25, 2021, that it vacated the premises and that "anything remaining in the [p]remises ... is abandoned by [the tenant] and may be immediately retained or disposed of by [the landlord] as [the landlord] sees fit" (Stipulation at &5, NYSCEF Doc. No. 66).
To the extent the tenant is arguing that discovery is needed as to the efforts made by the landlord to relet the [p]remises, there is no duty to mitigate damages in the context of commercial lease agreements (see 172 Van Duzer Realty Corp, v Globe Alumni Student Assistance Assn., Inc., 24 N.Y.3d 528, 535 [2014]["once a tenant abandons the property prior to expiration of the lease, a 'landlord [is] within its rights under New York law to do nothing and collect the full rent due under the lease,'" quoting Holy Props. L.P. v Kenneth Cole Prods., 87 N.Y.2d 130, 134 [1995]; cf. 14 E. 4th St. Unit 509 LLC v Toporek, 203 A.D.3d 17, 23-24 [1st Dept 2022]). The landlord also correctly contends that pursuant to the lease, the parties agreed that the landlord would not be obligated to relet the premises (see Lease at' 20.04 [d]["Landlord in no way shall be responsible or liable for any failure to relet the [p]remises .... and no such failure to relet or to collect rent shall operate to relieve Tenant of any liability under this Lease or to otherwise affect any such liability"], NYSCEF Doc. No. 68).
However, the landlord concedes that pursuant to the lease, for the period following the landlord's re-entry, the tenant is responsible for the difference between the rent for the period which otherwise would have constituted the expired portion of the term of the lease had it not been terminated and "the net amount, if any, of rents collected under any reletting of the [p]remises ... or any part of such period," after first deducting from such rents, inter alia, "the cost and expense of terminating the Lease, re-entering, retaking, and repossessing" the [p]remises, as well as "the cost and expense sustained in securing any new tenants and other occupants" (id. at "20.04[d] and [e]). On this record, there is no evidence as to whether the landlord has re-let the premises. Therefore, issues of fact remain as to the damages the landlord refers as "the deficiency" and the "liquidated damages" under section 20.04 (f) of the lease.
Furthermore, while the tenant failed to demonstrate that it is entitled to an offset with respect to the damages the landlord is seeking for unpaid rent from May 1, 2020 through the termination date of March 15, 2021, and holdover use and occupancy for and/or during the period from March 16, 2021 through August 25, 2021, the landlord's documentation as to how it calculated the amount of damages it seeks includes "the deficiency" (see NYSCEF Doc. Nos. 7173). Therefore, this Court grants summary judgment only as to liability on the second cause of action insofar as it seeks damages for unpaid rent from May 1, 2020 through the termination date of March 15, 2021, and holdover use and occupancy for and/or during the period from March 16, 2021 through August 25, 2021.
Fifth Cause of Action - Reasonable Attorneys' Fees
In the fifth cause of action, the landlord seeks an award of reasonable attorneys' fees and expenses incurred in this action pursuant to sections 20.14 of the lease. The tenant does not dispute that this section of the lease expressly provides for the recovery of "reasonable attorneys' fees and disbursements and court costs" to the extent incurred in connection with the landlord's enforcement of the lease (Lease at' 20.14, NYSCEF Doc. No. 68). Thus, the landlord is entitled to recover reasonable attorneys' fees and disbursements from the tenant.
Accordingly, it is hereby:
ORDERED that the motion by plaintiff for summary judgment against defendant is granted only as to liability on the second and fifth causes of action in accordance with this decision, and all of defendant's affirmative defenses are dismissed; and it is further
ORDERED that the issue of the amount of damages to be awarded to plaintiff shall be determined at trial; and it is further
ORDERED that the parties are to appear for a preliminary conference on January 3, 2023, at 10:00 a.m., Room 305, 71 Thomas Street, New York, New York, at which time they will propose a preliminary conference order providing for the expedited completion of all of the limited outstanding discovery by March 31, 2023 and the filing of the Note of Issue by April 4, 2023.