380 Yorktown Food Corp. v. 380 Downing Drive, LLC
| Decision Date | 09 March 2012 |
| Docket Number | No. 55188/11.,55188/11. |
| Parties | 380 YORKTOWN FOOD CORP., Plaintiff, v. 380 DOWNING DRIVE, LLC, Defendant. |
| Court | New York Supreme Court |
OPINION TEXT STARTS HERE
Zeichner Ellman & Krause LLP by Bruce S. Goodman, Esq., New York, attorneys for plaintiff.
Shamberg Marwell & Hollis, P.C. by P. Daniel Hollis, III, Esq., John S. Marwell, Esq., Carrie E. Hilpert, Esq., Mount Kisco, attorneys for defendant.
Plaintiff, 380 Yorktown Food Corp. (“Plaintiff” or “Yorktown Food”) moves, pursuant to CPLR 3212, for an order granting it summary judgment and a judgment declaring the rights, responsibilities and obligations of the parties with regard to a sublease entered into between Plaintiff and non-party The Great Atlantic & Pacific Tea Company (“A & P”) concerning property located at 380 Downing Drive, Yorktown Heights, New York (the “Property”) dated July 23, 1992 (the “Sublease”). Defendant 380 Downing Drive, LLC (“Defendant” or “380 Downing Drive”) opposes Plaintiff's motion and cross-moves, pursuant to CPLR 3212, for an order denying Plaintiff's motion and granting Defendant's cross-motion for a judgment dismissing Plaintiff's Complaint, denying Plaintiff's claimed right to possession and directing that Plaintiff's sublease be deemed terminated. Defendant also seeks summary judgment on its counterclaim for ejectment. Plaintiff opposes Defendant's cross-motion.
This action was initiated September 7, 2011 by Plaintiff's filing of a Summons and Complaint. Plaintiff also presented a proposed Order to Show Cause (“OTSC”) seeking a Yellowstone Injunction to enjoin Defendant from terminating or canceling the Sublease or otherwise interfering with Yorktown Food's right of possession to the Property. As discussed infra, the request for a Yellowstone Injunction has been mooted by Defendant's amendment of its answer to assert a counterclaim for ejectment.
Based on the allegations of the Complaint, Plaintiff asserts that Defendant and A & P entered into the Overlease for the Property on May 21, 1971 and on July 23, 1992, A & P entered into the Sublease with Plaintiff . The Sublease was for a five-year term with options to Plaintiff to renew for seven additional five-year terms. The current five-year term is scheduled to end in June 2012, at which time Plaintiff asserts that it intends to renew the Sublease for an additional five years (Complaint at ¶ 10). On June 28, 1998, Plaintiff entered into a Sub–Sublease with Turco's North LLC (“Turco's”) (Complaint at ¶ 11, a copy of the Sub–Sublease is attached as Ex. C to the Friedman Aff.).
At issue in this dispute is Plaintiff's contention that A & P and Defendant improperly colluded to attempt to terminate Plaintiff's Sublease (and, in turn, Turco's Sub–Sublease) through A & P's voluntary rejection of the Overlease as a debtor in a Chapter 11 bankruptcy pending in the United States Bankruptcy Court for the Southern District of New York, Case No. 10–24549(RDD) (the “Bankruptcy Action”). In this regard, Plaintiff vigorously contests Defendant's position that A & P's rejection has extinguished Plaintiff's rights under the Sublease and disputes that Defendant has any right to interfere with Plaintiff's possession of the Property.2
In support of its continued right to possession under the Sublease, Plaintiff contends that because A & P's rejection was a voluntary surrender, Plaintiff became Defendant's immediate tenant and Defendant has no right to terminate Plaintiff's Sublease. Plaintiff seeks an injunction against Defendant's termination and a declaratory judgment that “Defendant is not entitled to terminate the Sublease ... [and] that Yorktown Food is entitled to continue its possession of the Property pursuant to the terms of the Sublease....” (Complaint at ¶ 27).
At the oral argument on Plaintiff's request for interim Yellowstone relief on September 7, 2011, the Court questioned its ability to issue a restraining order given that it was Defendant's position that the Sublease was already extinguished as a result of the rejection by A & P of the Overlease in the Bankruptcy Action. Further, because Defendant had not issued a notice of default, there was no cure period to extend, the sine qua non of a Yellowstone injunction ( see Korovo Milk Bar of White Plains, Inc. v. Pre Properties LLC, 70 AD3d 646 [2d Dept 2010] ). In addition, while there was an indication that Defendant intended to bring a summary proceeding in the Yorktown Town Court, no such proceeding had been initiated so there was nothing to enjoin. Given that the application was either inappropriate or not ripe, Plaintiff's counsel agreed to withdraw its Yellowstone injunction application and convert its motion to a motion for summary judgment.
Because both sides were amenable to this action being resolved here rather than in the Yorktown Justice Court, the Court scheduled another conference for September 16, 2011 so that counsel could contact Turco's counsel and A & P's counsel to determine if they wished to intervene in this action. At the September 16, 2011 conference, the Court was advised by A & P's counsel that A & P would not intervene 3 and that it would be providing a written response waiving further notification and agreeing to be bound by whatever the outcome may be. Turco's counsel informally appeared at the conference and advised the Court that Turco's would not be intervening in the action. The Court then set a summary judgment schedule and these motions ensued.
On January 5, 2012, this Court initiated a conference call with Plaintiff's and Defendant's counsel based on its belief that because the only claims and counterclaims asserted were for declaratory relief and because any decision issued by this Court on the declaratory judgment claim and counterclaim would be advisory only to the ultimate eviction proceeding that would occur subsequent to this Court's decision, counsel agreed to tee up the issue in a manner such that this Court's determination would have a binding effect 4 by having Defendant amend its answer to assert a counterclaim for ejectment.5
On January 19, 2012, Defendant amended its answer by denying the material allegation of the Complaint— i.e., that the rejection resulting from the stipulated Amagreement between A & P and Defendant was a voluntary surrender ( see Answer at ¶ 18)—asserting several affirmative defenses, and interposing two counterclaims, one for a declaratory judgment 6 and the second for a judgment pursuant to the common law remedy of ejectment under Article 6 of the RPAPL.7
On January 31, 2012, Plaintiff replied to Defendant's counterclaim by denying its material allegations and asserting various affirmative defenses. The Court then marked the motion fully submitted.
In support of its motion, Plaintiff submits an affirmation from its counsel, an affidavit from its President, Joseph Friedman, and a memorandum of law. In his affidavit, Friedman attaches the documentary evidence at issue 8 and attests to many of the facts set forth in the Complaint, which will not be reiterated herein. He confirms that Plaintiff intends to exercise its option to renew for an additional five-year term in June 2012 ( id. at ¶ 10) and he summarily states that “Yorktown Food is not i[n] breach of any of its obligations under either the Sublease or the Sub–Sublease” ( id. at ¶ 11).
According to Plaintiff, A & P filed for bankruptcy relief under Chapter 11 of Title 11 of the United States Bankruptcy Code on December 12, 2010. Based on A & P's filing for bankruptcy protection, Plaintiff and A & P entered into an Assignment and Assumption of Lease (the “Assumption Agreement”) in which Plaintiff agreed to pay A & P $100,000 in exchange for A & P's agreement to assume the Overlease and assign it to Plaintiff. As evidence of the Assumption Agreement, Plaintiff attaches an unsigned order that the parties presented to the Bankruptcy Court for approval that reflects the parties' Assumption Agreement ( id. at ¶ 14, and Ex. D thereto). Friedman explains that on June 17, 2011, Defendant objected to A & P's motion seeking the Bankruptcy Court's approval of the Assumption Agreement and disclosed in its Objection that it had offered to pay A & P $200,000 to reject the Overlease (a copy of Defendant's Objection is attached as Friedman, Ex. E). According to Friedman, after Defendant increased its offer to $300,000, A & P and Defendant executed the “Stipulation and Order Authorizing Debtors to Reject the Unexpired Lease of Non–Residential Real Property Between A & P and 380 Downing Drive, LLC” dated July 16, 2011, which was approved by the Bankruptcy Court on August 18, 2011 (the “Rejection Order”) (Friedman, Ex. F). Friedman points out that in this Rejection Order, Defendant not only agreed to pay A & P $300,000 to reject the Overlease and Sublease pursuant to 11 U.S.C. § 365(d)(4), but also agreed to waive pre-petition claims (including rejection damage claims) and certain post-petition rent claims (Friedman Aff. at ¶ 17).
Friedman explains that on September 2, 2011, Plaintiff received a letter from Defendant's counsel, P. Daniel Hollis, III, Esq. (Shamberg Marwell & Hollis, P.C.) in which Defendant contended that Plaintiff's rights under the Sublease had been extinguished by virtue of A & P's rejection of the Overlease as well as A & P's acknowledgment of its breach of the Overlease in the Rejection Order (Friedman Aff., Ex. G). In that notice, Defendant advised that it would be bringing a summary proceeding against A & P, Plaintiff and sub-subtenant Turco's to regain...
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PS Food Corp. v. Granville Payne Retail, LLC
...defective, the absence of a Yellowstone injunction does not bar it from challenging its purported default (see 380 Yorktown Food Corp. v. 380 Downing Dr., LLC, 35 Misc.3d 1243[A], 2012 N.Y. Slip Op 51132 [U], *2–3 [Sup Ct, Westchester County 2012], appeal dismissed 107 AD3d 786 [2d Dept 201......