Empanada Fresca LLC v. 1 BK St. Corp.
| Decision Date | 10 April 2023 |
| Docket Number | Index No. 160303/2019 |
| Parties | Empanada Fresca LLC, Plaintiff, and Jose Rodriguez, Counterclaim, Defendant, v. 1 BK Street Corp., Defendant. |
| Court | New York Supreme Court |
Unpublished Opinion
Smith Buss & Jacobs, LLP, Yonkers, NY (John J. Malley of counsel), for defendant.
Rivkin Radler LLP, New York, NY (Jeremy B. Honig of counsel), for plaintiff and counterclaim-defendant.
This action concerns a dispute over a commercial lease for premises intended to house a restaurant. In July 2018 landlord-defendant 1 BK Street Corp. and tenant-plaintiff Empanada Fresca LLC entered into a 15-year commercial lease for the ground floor and basement space of the premises at 95 Greenwich Avenue, New York, New York 10012. Tenant intended to open a restaurant, as the preceding occupant had done.
On November 6, 2018, a Con Edison of New York, Inc. representative went to the building to initiate gas service for the premises. During his investigation, he discovered a leak in the house pipe and that the meter bar supporting the gas meter was defective and outdated. According to plaintiff's expert, "[t]he house pipe refers to the main gas distribution supply pipe after the meter" that for the most part, is" not located within the subject Premises but, rather, in the common area cellar of the Building." (NYSCEF No. 192 at ¶ 18 [emphasis in original].) Because of these deficiencies, the representative placed a Class A Warning Tag (Red Tag) and a lock on the meter. Based on Con Edison's directions to restore gas service, tenant hired a licensed plumbing contractor to replace the defective equipment. (See NYSCEF No. 123 [Con Edison letter].)
On January 15, 2019, tenant's counsel sent a letter to landlord based on information from tenant's hired plumbing company, Ariel Services, Inc. The letter stated that "the following Pre-Existing Conditions are preventing Tenant from opening: (1) currently existing gas appliances on the Premises are not registered with the New York City Department of Buildings; (2) No plans or permits were filed since 1993; and (3) the utilization of existing gas appliances 'as is' is a DOB violation." (NYSCEF No. 130 at 1.) Tenant's counsel further wrote that landlord was required to bear any expenses due to correct these conditions under § 4.2 (j) (i) of the lease and that the letter acted as notice to activate that section's "rent commencement date suspension." (Id. at 2.) In response, landlord sent tenant a letter disputing tenant's claim that these issues represented "pre-existing conditions" as defined by the lease and disclaiming any responsibility for remedying them. (See NYSCEF No. 185 [January 31, 2019 response letter].)
In March 2019, tenant hired a new plumbing company, Hudson Plumbing & Mechanical, to fix the gas equipment and restore service. To do so, Hudson had to obtain a Limited Alteration Application ("LAA") permit from the NYC Department of Buildings (DOB). Hudson's efforts were allegedly frustrated when it was unable to locate the DOB registration filings for the premises' gas equipment. Tenant personally went to the DOB office "on two different occasions" to try to find proof of registration but was unsuccessful. He also hired an expediter who was similarly unable to locate any registration for the equipment. Then, on July 11, 2019, tenant's counsel discovered that "years before Plaintiff signed the Lease, the existing appliances had been registered with the DOB under the wrong address." (NYSCEF No. 180 at ¶ 39; see NYSCEF No. 186 [DOB Query Inspection Results] [listing the premises address as "87 Greenwich Avenue Manhattan"].)
After finding the proof of registration, tenant hired Kew Forest Plumbing and Heating, Inc., to repair the defective equipment and increase its energy capacity. But Kew was also unable to apply for an LAA permit because Kew discovered that and that the violation had incurred a $6,000 penalty that remained outstanding. (NYSCEF No. 127 [Kew's July 31, 2019 letter].)
On August 2, 2019, tenant sent landlord its "Tenant's Notice of Intent to Vacate" letter. (NYSCEF No. 131.) The letter notified landlord of tenant's intent to vacate the premises on November 2, 2019. Tenant then sent landlord a second letter on August 7, 2019, informing it of tenant's inability "to perform Tenant's Work and/or the Alterations as contemplated by the terms of the Lease" due to the building's outstanding 2002 Environmental Control Board (ECB) violation. (NYSCEF No. 132 at 1.) Landlord sent a reply letter to tenant informing it that landlord had retained the services of a professional expediting company to resolve the violation.
On November 2, 2019, tenant vacated the premises. Two months later, on January 14, 2020, landlord received an email from its hired corrections specialist that the violation was resolved. And, on June 28, 2021, landlord re-let the premises. (NYSCEF No. 128 at ¶ 23.)
In October 2019, tenant commenced this action against landlord. Tenant has asserted claims sounding in breach of contract, frustration of purpose, rescission, and negligence; and it seeks damages and a refund of rent paid to landlord. Landlord counterclaimed against tenant for unpaid rent allegedly owed by tenant (plus attorney fees). Landlord also counterclaimed against counterclaim-defendant Jose Rodriguez, tenant's guarantor, for all sums that tenant was determined to owe to landlord.
Landlord now moves under CPLR 3212 for summary judgment dismissing tenant's claims, and for judgment in landlord's favor on landlord's counterclaims against tenant and against guarantor. Tenant cross-moves for summary judgment dismissing landlord's counterclaim against guarantor in its entirety. Tenant also cross-moves under CPLR 3025 (b) for leave to serve an amended complaint.
Landlord's summary-judgment motion dismissing tenant's claims is granted in part and denied in part. The branch of tenant's cross-motion seeking summary judgment dismissing landlord's claims against guarantor is denied. The branch of tenant's cross-motion for leave to amend is granted.
A party bringing a motion for summary judgment "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." (Alvarez v Prospect Hosp., 68 N.Y.2d 320, 324 [1986].) Once the movant establishes its prima facie entitlement, the opposing party must tender evidence showing the existence of a triable factual issue, with inferences drawn in the nonmoving party's favor. (See Zuckerman v City of New York, 49 N.Y.2d 557, 560 [1980].)
Landlord contends on its motion that four provisions of the lease require dismissal of all of tenant's claims. Given the recurring importance of these provisions, the court sets them out in detail here.
Section 4.1 (a), or the "As Is" Clause: (NYSCEF No. 129 at § 4.1 [a].)
Section 3.4 (b), or the "Disclaimer of Representations" Clause: (NYSCEF No. 129 at § 3.4 [b].)
Section 16.3 or the "No Liability for Gas Interruption" clause: "Landlord shall not be liable... to Tenant for any failure, defect or interruption of, or change in the supply, character and/or quantity of... gas service furnished to the Premises for any reason,... and no liability shall arise on the part of Landlord by reason of inconvenience, annoyance or injury to business, whether electricity and/or gas is provided by public or private utility...." (NYSCEF No. 129 at § 16.3.)
Section 36.5 or the "Merger" clause: "This Lease... contains the entire agreement between the parties and all prior negotiations and agreements are merged into this Lease." (NYSCEF No. 129 at § 36.5.)
This court begins by considering the branches of landlord's motion seeking dismissal of tenant's first and fifth causes of action, in particular. Consideration of the merits of...
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