Experience NY Now Inc. v. 126 W. 34Th St. Assocs. L.L.C.

• Decision Date: 14 November 2022
• Docket Number: Index No. 654775/2020,Motion Seq. No. 001
• Parties: EXPERIENCE NY NOW INC., Plaintiff, v. 126 WEST 34TH STREET ASSOCIATES L.L.C. Defendant.
• Court: New York Supreme Court

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2022 NY Slip Op 33877(U)

EXPERIENCE NY NOW INC., Plaintiff,
v.
126 WEST 34TH STREET ASSOCIATES L.L.C. Defendant.

Index No. 654775/2020, Motion Seq. No. 001

Supreme Court, New York County

November 14, 2022

Unpublished Opinion

MOTION DATE 04/14/2022

DECISION + ORDER ON MOTION

HON. NANCY BANNON, J.S.C.

The following e-filed documents, listed by NYSCEF document number (Motion 001) 26, 27, 28, 29, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 58, 59, 60, 61, 62, 63, 64, 65, 66, 67, 68, 69, 70, 71, 72, 73, 74, 75, 76, 77, 79, 80, 81, 82, 83, 84, 86, 87, 88, 92, 93, 94, 95, 96, 97, 98, 99, 100, 101 were read on this motion to/for SUMMARY JUDGMENT (AFTER JOINDER) .

I. INTRODUCTION

In this action wherein the plaintiff souvenir vendor seeks, inter alia, a declaration that it is excused from its performance under a commercial lease agreement with the defendant landlord, the plaintiff moves (1) pursuant to CPLR 3212 for summary judgment on the first through fourth causes of action of the amended complaint and (2) pursuant to CPLR 3211, or, in the alternative, CPLR 3212, to dismiss the defendant's counterclaims for unpaid rent and contractual attorney's fees. The defendant opposes the motion and cross-moves (1) pursuant to CPLR 3025 to amend its counterclaims to add additional unpaid rent accrued since the filing of its answer and (2) pursuant to CPLR 3212 for summary judgment dismissing the amended complaint and awarding the amounts sought in the amended counterclaims. For the following reasons, the plaintiff's motion is denied and the defendant's cross-motion is granted in part.

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II. BACKGROUND

The parties entered into a written commercial lease agreement on September 16, 2019, modified by a rider also dated September 16, 2019, for a term set to expire on September 30, 2029 (the lease). The plaintiff agreed to make monthly rental and additional rental payments to the defendant and to use and occupy the subject premises, which is the Herald Square area of Manhattan, "for retail sales of tourist apparel and souvenirs, general merchandise, and food items, and drink and for no other purpose." Pursuant to Paragraph 63 of the lease, the plaintiff provided a security deposit in the form of a letter of credit issued by BankUnited, N.A., in the amount of $210,000.00 (the letter of credit). The lease, pursuant to Paragraph 42 and Paragraph 63 thereof, permitted the defendant to draw upon the letter of credit to cure the plaintiff's default after any applicable notice and cure period provided elsewhere in the lease. Alternatively, the security deposit was to be returned to the plaintiff within three business days after the end of the lease term and after delivery of possession of the premises to the defendant in the event the plaintiff "fully and faithfully" performed under the terms and conditions of the lease.

Paragraph 26 of the lease, entitled "Inability to Perform," (Paragraph 26) provided as follows:

This lease and the obligation of [the plaintiff] to pay rent hereunder and perform all of the other covenants and agreements hereunder on part of [the plaintiff] to be performed shall in no way be affected, impaired, or excused because [the defendant] is unable to fulfill any of its obligations under this lease, or to supply, or is delayed in supplying, any service expressly or impliedly to be supplied or is unable to make, or is delayed in making, any repair additions, alterations or decorations, or is unable to supply, or is delayed in supplying, any equipment, fixtures or other materials, if [the defendant] is prevented or delayed from doing so by reason of strike or labor troubles government preemption or restrictions, or by reason of any rule, order or regulation of any department or subdivision thereof of any government agency, or by reason of the conditions of which have been or are affected, either directly or indirectly, by war or other emergency, or when, in the judgment of [the defendant], temporary interruption of such services is

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necessary by reason of accident, mechanical breakdown, or to make repairs, alterations or improvements.

Paragraph 60 of the lease, entitled "Force Majeure," (Paragraph 60) further provided that:

Anything in this Lease to the contrary notwithstanding, neither [the defendant] nor [the plaintiff] shall be in default in the performance of any provisions of this Lease to the extent such performance shall be delayed or prevented by strike, war, act of God, or other cause beyond the control of [the] party seeking to excuse performance.

In contrast to many other commercial leases, Paragraph 60 contained no carveout for rental obligations.

Due to the COVID-19 pandemic and attendant decreases in tourism and sales, the plaintiff's business began to decline in early 2020. On January 30, 2020, the World Health Organization (WHO) declared that the "unprecedented" COVID-19 outbreak constituted a public health emergency. The U.S. Secretary of Health and Human Services declared a nationwide public health emergency arising from COVID-19 the following day. In March 2020, the WHO announced that the COVID-19 outbreak had risen to the level of a global pandemic. Then President Trump eventually, albeit reluctantly, followed suit, recognizing and declaring that the rampant spread of COVID-19 and mounting death toll constituted a national emergency.

The threat posed in the state of New York was deemed particularly serious. On March 7, 2020, Governor Andrew Cuomo issued Executive Order No. 202, declaring a statewide disaster emergency. On March 20, 2020, the Department of Homeland Security issued a "major disaster declaration" in New York. Consequently, state officials began taking actions to address the COVID-19 crisis by, among other things, issuing government orders limiting or prohibiting the operation of businesses to combat the transmission of the virus in such environments. Ultimately, on March 20, 2020, Governor Cuomo issued Executive Order 202.8, requiring "non-essential"

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businesses, including the plaintiff's souvenir shop, to reduce their in-person work force by 100% no later than March 22, 2020. Also on March 20, 2020, Mayor Bill DeBlasio issued Emergency Executive Order No. 102, implementing similar restrictions on in-person retail operations in New York City.

On March 16, 2020, the plaintiff notified the defendant by letter that, effective March 11, 2020, it was invoking Paragraph 60 and ceasing its rental payments due to the COVID-19 pandemic and attendant restrictions on its business "until this situation is resolved." The defendant did not respond to the plaintiff's letter. On August 19, 2020, however, the defendant, by its managing agent, sent a rent demand notice (the demand) to the plaintiff seeking payment of monthly rent due under the lease from April 2020 through August 2020. On August 26, 2020, the plaintiff responded, stating that the demand was defective because, inter alia, the plaintiff had invoked Paragraph 60. On September 4, 2020, the defendant drew down on the plaintiff's letter of credit. On September 22, 2020, the plaintiff vacated the premises and provided the defendant with notice of lease termination, purporting to be effective immediately.

Approximately one week thereafter, the plaintiff commenced the instant action. In the amended complaint, filed on December 18, 2020, the plaintiff asserts claims sounding in breach of contract (first cause of action), conversion (sixth cause of action), and money had and received (seventh cause of action) and seeking a declaratory judgment and rescission of the lease on theories of frustration of purpose, impossibility, and failure of consideration, (second, third, and fourth causes action), and pursuant to Section 227 of the New York Real Property Law (NYRPL) (fifth cause of action). On January 15, 2021, the defendant filed an answer to the amended complaint with counterclaims sounding in breach of contract and seeking unpaid rent

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(first counterclaim) and contractual attorney's fees (second counterclaim). Discovery was completed, and the Note of Issue filed, as of October 31, 2021. This motion ensued.

III. LEGAL STANDARDS

A. CPLR 3212

It is well settled that the proponent of a motion for summary judgment must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any triable issues of fact. See Winegrad v New York Univ. Med. Ctr., 64 N.Y.2d 851 (1985). In opposition, the nonmoving party must demonstrate by admissible evidence the existence of a triable issue of fact. See Alvarez v Prospect Hospital, 68 N.Y.2d 320 (1986); Zuckerman v City of New York, 49 N.Y.2d 557 (1980). However, if the initial burden is not met by the movant, summary judgment must be denied regardless of the sufficiency of the opposing papers. See Winegrad v New York University Medical Center, 64 N.Y.2d 851; Giaquinto v Town of Hempstead, 106 A.D.3d 1049 (2^nd Dept. 2013); O'Halloran v City of New York, 78 A.D.3d 536 (1^st Dept. 2010). This is because "summary judgment is a drastic remedy, the procedural equivalent of a trial. It should not be granted if there is any doubt about the issue.'" Bronx-Lebanon Hosp. Ctr. v Mount Eden Ctr., 161 A.D.2d at 480 (1^st Dept. 1990) quoting Nesbitt v Nimmich, 34 A.D.2d 958, 959 (2^nd Dept. 1970).

B. CPLR 3211

On a motion to dismiss for failing to state a cause of action under CPLR 3211(a)(7), the pleading is to be afforded a liberal construction and the court should accept as true the facts alleged in the pleading, accord the pleading the benefit of every reasonable inference, and only

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determine whether the facts, as alleged, fit within any cognizable legal theory. See Hurrell-Harring v State of New York, 15 N.Y.3d 8 (2010); Leon v Martinez, 84 N.Y.2d 83 (1994).

Pursuant to CPLR...