245 Park Ave. Prop. v. HNA Capital U.S. LLC

• Docket Number: Index No. 158173/2022,Motion Seq. No. 001
• Decision Date: 17 November 2023
• Parties: 245 PARK AVENUE PROPERTY LLC, Plaintiff, v. HNA CAPITAL U.S. LLC, Defendant
• Court: New York Supreme Court

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2023 NY Slip Op 34140(U)

245 PARK AVENUE PROPERTY LLC, Plaintiff, v. HNA CAPITAL U.S. LLC, Defendant

Index No. 158173/2022, Motion Seq. No. 001

Supreme Court, New York County

November 17, 2023

Unpublished Opinion

MOTION DATE 05/01/2023

NYSCEF DOC. NO. 17

PRESENT: HON. NANCY M. BANNON JUSTICE

DECISION + ORDER ON MOTION

HON NANCY M. BANNON JUSTICE

The following e-filed documents, listed by NYSCEF document number (Motion 001) 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16 were read on this motion to/for JUDGMENT - DEFAULT_.

I. INTRODUCTION

In this breach of contract action, inter alia, to recover approximately $10.3 million in unpaid rent and additional rent due under a commercial lease and for a judgment declaring that the defendant tenant, HNA Capital U.S. LLC (HNA) is liable for approximately $10.4 million in future obligations, the plaintiff landlord, 245 Park Avenue Property LLC (245 Park), moves pursuant to CPLR 3215 for leave to enter default judgment against the defendant. No opposition is submitted. The motion is granted in part.

II. BACKGROUND

The plaintiff's predecessor-in-interest, BFP 245 Park Co. LLC, as landlord, and the defendant's predecessor-in-interest, Heineken Americas Inc. (Heineken), as tenant, entered into a lease agreement (the Lease) dated January 8, 2010, for the entire rentable portion of the 40th floor (the Premises) at 245 Park Avenue in Manhattan for a term commencing on January 8, 2010, and expiring on January 31, 2026.

By an Assignment and Assumption of Lease and Consent dated May 4, 2017 (Lease Assignment), Heineken assigned the Lease to the defendant and defendant assumed Heineken's obligations under the Lease. On or about May 5, 2017, BFP 245 Park Co. LLC conveyed the building to the plaintiff, with all of its right, title, and interest.

Under Section 1.04(a) of the Lease, the tenant must pay monthly fixed rent in the amount of $236,695.17 for the period from January 2018 through December 2020 and $252,668.08 for the period from January 2021 through January 2026. Section 1.04(b) of the Lease requires the tenant to pay additional charges consisting of, inter alia, "Operating Payments" (defined in Lease Article 3), electricity costs, taxes, and all other sums of money due from and payable by the tenant under the Lease. Section 22.02 permits the landlord to serve a notice to cure upon the tenant should the tenant default on its Lease obligations and then, further, to cancel and terminate the Lease should the tenant fail to cure the noticed default. Further, pursuant to Section 24.01(b) of the Lease, in the event of the termination of the Lease or re-entry of the Premises by the landlord following a default, the tenant must pay to the plaintiff as damages "sums equal to the Fixed Rent and the Additional Charges . . . which would have been payable by Tenant had this lease not so terminated . . . payable upon the due dates therefor specified herein following such termination ..." In addition, Section 27,02 of the Lease provides that the tenant is obligated to pay "reasonable counsel fees[] involved in collecting or endeavoring to collect the Fixed Rent or Additional Charges or any part thereof or enforcing or endeavoring to enforce any rights against Tenant or Tenant's obligations hereunder.. . ."

After making payments the first year of the Lease, the defendant defaulted in its obligations starting in December 2018. As of May 5, 2021, the defendant was in arrears of $5,601,806.24 for the period from December 2018 to May 2021. On or about May 5, 2021, the plaintiff delivered to HNA a Notice to Cure pursuant to Section 22.02 of the Lease. The defendant failed to timely and fully cure the default in ten days as provided by Section 22.02. On or about June 2, 2021, the plaintiff delivered to the defendant a Notice to Cancel pursuant to Section 22.02 of the Lease, cancelling and terminating the Lease effective June 14, 2021.

On or about July 11, 2022, the parties executed an agreement (the July 2022 Agreement) wherein the defendant acknowledged, inter alia, that it failed to cure the default identified in the Notice to Cure, the Lease was duly terminated and that it would vacate the Premises on or before July 22, 2022. The same agreement also stated that, notwithstanding anything to the contrary contained in that agreement or in the Notice to Cancel, the plaintiff reserved all of its rights and remedies with respect to rent and additional rent that may be due or become due pursuant to the Lease on, before, and after the termination of the Lease. The defendant vacated the Premises on or about July 22, 2022.

From June 2021 to August 2022, the defendant accrued arrears of $4,484,827.73.

The plaintiff commenced this action on September 22, 2022. The complaint includes five causes of action, all sounding in breach of contract and seeking money damages, save for the third cause of action which seeks declaratory relief in regard to future obligations. The plaintiff seeks $10,348,444.34, plus interest, costs and attorney's fees, as follows:

(1) Money damages of $5,863,616.61 in rent and additional rent from December 2018 to June 2021.

(2) Money damages of $4,484,827.73 in rent and additional rent from June 2021 to August 2022.

(3) A judgment declaring that the defendant is liable for $10,360,211.28 in rent and additional rent from August 6, 2022, to January 31, 2026, the expiration date of the Lease.

(4) Attorneys' fees and costs. (5) Contractual and statutory interest. The defendant did not answer or appear in this action.

On January 30, 2023, the plaintiff moved pursuant to CPLR 3215 for leave to enter a default judgment against the defendant. The Notice of Motion merely cites the statute without specifying what causes of action it seeks judgment, the nature of the relief sought or the grounds for the relief. The defendant did not oppose the motion.

III. LEGAL STANDARD

"On a motion for leave to enter a default judgment pursuant to CPLR 3215, the movant is required to submit proof of service of the summons and complaint, proof of the facts constituting the claim, and proof of the defaulting party's default in answering or appearing (see CPLR 3215[f]; Allstate Ins. Co. v Austin, 48 A.D.3d 720, 720)." Atlantic Cas. Ins. Co. v RJNJ Services, Inc., 89 A.D.3d 649 (2^nd Dept. 2011). "CPLR 3215 does not contemplate that default judgments are to be rubber-stamped once jurisdiction and a failure to appear have been shown. Some proof of liability is also required to satisfy the court as to the prima facie validity of the uncontested cause of action [see, 4 Weinstein-Korn-Miller, NY Civ Prac paras. 3215.22-3215.27]." Joosten v Gale, 129 A.D.2d 531, 535 (1^st Dept 1987); see Martinez v Reiner, 104 A.D.3d 477, 478 (1^st Dept 2013); Beltre v Babu, 32 A.D.3d 722, 723 (1^st Dept 2006); Atlantic Cas. Ins. Co. v RJNJ Services, Inc. 89 A.D.3d 649 (2^nd Dept. 2011). As such, "[w]here a valid cause of action is not stated, the party moving for a default judgment is not entitled to the requested relief, even on default." Green v Dolphy Constr. Co. Inc., 187 A.D.2d 635, 636 (2^nd Dept. 1992). However, having failed to answer, the defendant is "deemed to have admitted all factual allegations in the complaint and all reasonable inferences that flow from them." Woodson v Mendon Leasing Corp., 100 N.Y.2d 62, 70-71 (2003); see Paez v 1610 Saint Nicholas Ave. L.P., 113 A.D.3d 523 (1^st Dept. 2014).

IV. DISCUSSION

Initially, the court notes that the plaintiff failed to submit a Memorandum of Law with its motion, in violation Rule No. 19 of the Part 42 Rules. This alone is basis to dismiss the motion, but the court may disregard irregularities, defects, mistakes, and omissions, if a substantial right of a party is not prejudiced. See CPLR 2001. As the plaintiff's submissions sufficiently support its entitlement to partial relief and the defendant has defaulted, the court disregards the failure to submit a Memorandum of Law.

In support of the motion, the plaintiff submits, inter alia, the summons and complaint, an affidavit of service, an affirmation of counsel, an affidavit of Ken Padmore, Senior Vice President of Lease Administration/Collections for SL Green Realty Corp., the managing agent for plaintiff, the Lease, the Assignment of Lease, the Notice to Cure, and an arrears report dated August 15, 2022, showing arrears of $10,086,633.97 in rent and additional rent for the period from December 2018 to August 2022.

The plaintiff provides adequate proof of service of the summons and complaint upon the defendant and proof of its default in answering or appearing. Limited Liability Company Law § 303(a) provides in part that "[s]ervice of process on the secretary of state as agent of a domestic limited liability company or authorized foreign limited liability company shall be made by personally delivering to and leaving with the secretary of state." The affidavit of service submitted shows that the plaintiff served the summons and complaint on a person authorized by the Secretary of State at the Office of the Department of State in Albany on September 27, 2022. See Limited Liability Company Law § 303(a); CPLR 311-a. It is well settled that "[a]n affidavit of service constitutes prima facie evidence of proper service" (Jones v Grooms, 209 A.D.3d 584, 584 [1^st Dept. 2022]) and the defendant has not rebutted the presumption.

In addition, the plaintiff submits proof of the facts constituting its claims for the first, second, fourth, and fifth causes of action., as follows.

A. First and Second Causes of Action - Breach of Contract

The plaintiff establishes its breach of contract causes of action by demonstrating (1) the existence of a contract, (2) the plaintiff's performance under the contract, (3) the...