Mr. Sound, USA Inc v 95 Evergreen Bldg. Invs. III, LLC

[*1] Mr. Sound, USA Inc v 95 Evergreen Bldg. Invs. III, LLC 2016 NY Slip Op 50353(U) Decided on February 16, 2016 Supreme Court, Kings County King, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on February 16, 2016
Supreme Court, Kings County

Mr. Sound, USA Inc, a/k/a Mr. Sound USA Inc and Pro Audio NY, Inc., Plaintiff,

against

95 Evergreen Building Investors III, LLC and EPC Holdings 840 LLC, Defendants.



13485/2015



Atty for petitioner: Matthew Kaufman, Esq.

Atty for respondent: Edward Klein, Esq.
Kathy J. King, J.

The following papers numbered 1 to 9 read herein:

Papers Numbered

Notice of Motion/Order to Show Cause/Petition/Cross Motion and Affidavits (Affirmations) Annexed 1- 2

Opposing Affidavits (Affirmations) 3-6

Reply Affidavits (Affirmations) 7-8

Affidavit (Affirmation)

Other Papers (Plaintiff's Memo of Law; Prior Motion Papers) 9

Plaintiffs, Mr. Sound, USA Inc., a/k/a, Mr. Sound USA, Inc., ("Mr. Sound") and Pro Audio NY, Inc., ("Pro Audio") move by order to show cause for an order granting the following: (1) a preliminary injunction and temporary restraining order, pursuant to Civil Practice Law and Rules ("CPLR") §§ 6301, 6311, and 6312, enjoining and restraining Defendants, 95 Evergreen Building Investors, III, LLC ("95 Evergreen") and EPC Holdings 840, LLC, ("EPC") their employees, servants, agents, and all other persons acting on behalf on in concert with them, from any construction work on the first and second floor of the premises located at 95 Evergreen Avenue, Brooklyn, NY 11206 ("Subject Building"), absent a proper safety plan; and, (2) removal of the summary proceeding entitled 95 Evergreen Building Investors III LLC v Mr. Sound USA, Inc. a/k/a Mr. Sound USA Inc., Pro Audio NY Inc. (L & T Index No.: 90127/2015), currently pending in the Civil Court of the City of New York, County of Kings ("Civil Court Proceeding"), and upon such removal consolidating the Civil Court Proceeding with the present action.

The court granted the temporary restraining order upon signing the order to show cause on November 13, 2015. Defendants' oppose plaintiffs' order to show cause and cross move to dismiss pursuant to CPLR §§ 3211 (a)(1) and (a)(3). After oral argument, this Court now considers the requested relief of the respective parties.

Background

Plaintiff, Mr. Sound, became a tenant of a portion of the first floor of the Subject Building pursuant to a written lease with defendant 95 Evergreen. At the time its tenancy commenced, Mr. Sound had been the owner and operator of a professional music and entertainment business which included retail sales, equipment repairs and rentals, research and development of high end pro-audio equipment, sound mixing, and education. Plaintiff, Pro Audio became Mr. Sound's successor in interest in the business on or about March 2012.[FN1]

Defendant, EPC purchased the Subject Building from 95 Evergreen in January 2015. Thereafter, EPC entered into a lease agreement with defendant 95 Evergreen for the Subject Building. In April 2015 defendants began a multimillion dollar renovation project to convert the Subject Building from a warehouse into an office space, which plaintiffs assert is being conducted in a dangerous and disruptive manner to force Pro Audio out of business.

On September 21, 2015, 95 Evergreen commenced a non-payment action entitled 95 Evergreen Building Investors III LLC v Mr. Sound USA, Inc. a/k/a Mr. Sound USA Inc., Pro Audio NY Inc. (L & T Index No.: 90127/2015) which is currently pending in Civil Court, Kings County. On November 12, 2015, plaintiffs filed a summons with notice in Supreme Court, Kings County seeking, inter alia, a judicial declaration that defendants are in breach of the lease regarding a portion of the first floor of the Subject Building; an order enjoining the defendants from construction work in the space adjacent to plaintiffs' business absent a proper plan, and various claims for money damages.

Discussion

Since the question of whether the plaintiffs are entitled to a preliminary injunction depends upon whether the action will survive the defendants' cross motion, the Court's discussion begins with the defendants' cross motion.

Defendants' Cross Motion

Defendants contend that the plaintiffs' action must be dismissed pursuant to CPLR §§ 3211 (a)(1) and (a)(3). As regards, plaintiff, Mr. Sound, defendants argue that it lacks capacity to sue because it is a dissolved corporation.

Additionally, defendants also contend that plaintiff, Pro Audio's claims must be dismissed since it is not a party to the lease with defendants. As a result, defendants reject plaintiffs' characterization of Pro Audio as a "successor in interest" to Mr. Sound under the lease, and argue that neither defendants nor the prior landlord consented to the assignment of the lease in contravention of Article 11 of the lease.

Plaintiffs, in opposition, assert that the within motion is premature, since the underlying action was commenced by summons with notice, and unlike a complaint, does not contain causes of action upon which relief is sought.

At the outset, the Court finds that defendants' cross motion is not premature. The cases cited by plaintiffs for the proposition that defendants' cross motion to dismiss is premature, are inapplicable. Those cases involve dismissal based on the failure to state a cause of action, which apply to the sufficiency of a complaint (see Letrova v Investors Capitol, 24 Misc 3d 977 [Sup. Ct. Kings County 2009]). Additionally, contrary to plaintiffs' contentions, the absence of a complaint, or demand for a complaint, does not preclude defendants from seeking dismissal pursuant to CPLR § 3211 (a)(3) at this time because the time period for dismissal pursuant to CPLR § 3211(a)(3) is measured, not against the filing of the complaint, or demand thereof, but against the time within which a responsive pleading is required (see Bojanovich v Woitach, 972 NYS2d 142 [1st Dept 2013]). At the time the instant motion was filed, no responsive pleading was required.

The Court now considers the defendants' request for dismissal for lack of capacity under [*2]CPLR §§ 3211 (a)(1) and (a)(3) as to Mr. Sound and Pro Audio. As a general matter, capacity "concerns a litigant's power to appear and bring its grievance before the court." (Community Bd. 7 v Schaffer, 84 NY2d 148, 155 [1994]).

It is well settled that a dissolved corporation may only institute a suit if it is related to the winding up of its affairs (see Business Corporation Law §§ 1006, 1009).

Defendants submit a copy of a printout from the New York State Division of Corporations database demonstrating that Mr. Sound was dissolved by Proclamation on April 27, 2011. While Mr. Sound, in opposition, contends that it is permitted by Business Corporation Law § 1006 to bring the within action, no dispositive evidence was submitted by Mr. Sound in this regard. Therefore, the branch of defendants' cross motion to dismiss the summons with notice as to plaintiff, Mr. Sound's claims is granted.

Defendants also assert that Pro Audio lacks capacity under CPLR §§ 3211 (a)(1) and (a)(3) because it is not a party to the lease with 95 Evergreen. Additionally, defendants assert that Article 11 of the lease prohibits assignments without the consent of the landlord, and no consent was provided by defendants. In opposition, plaintiffs assert that both the prior landlord, as well as defendants, were aware that Mr. Sound had relinquished its interest in the Subject Building to Pro Audio and would not operate its business from the premises. In this regard, the affidavit of Yoel Karpen points to Pro Audio's payment of rent to the defendants for almost three years, and compliance with the insurance coverage provisions set forth in the lease. The Court finds that since Pro Audio's capacity to sue is intertwined with the merits of plaintiffs' allegations and could constitute a waiver of defendants' rights under Article 11 of the lease, that the branch of defendants' cross motion seeking dismissal of the complaint as to Pro Audio is denied (see e.g. Alsens American Portland Cement Works v Degonon Contracting Co., 222 NY 34, 37 [1917]).

Plaintiffs' Order to Show Cause

It is well settled that in order to obtain a preliminary injunction, a movant must establish 1) a likelihood of ultimate success on the merits; 2) danger of irreparable harm unless the injunction is granted; and 3) a balance of equities in its favor (see CPLR §§ 6301, 6312).

In support of its motion for preliminary injunction, plaintiffs[FN2] submit the affidavits of Moshe Karpen ("Moshe"), assistant manager of Pro Audio and Yoel Karpen ("Yoel"), an officer of Mr. Sound and the manager of Pro Audio. Both state that the dust and debris emitting from the construction from the second floor onto the first floor have affected the transaction of daily business, and overall has had negative financial consequences on the business. Further, both indicate that the ongoing construction is both dangerous and disruptive, and contend that if the preliminary injunction is not granted, that their employees will be at risk. Moshe specifically cites that he was injured and hospitalized when chunks of debris fell through the ceiling hitting him.

Defendants, in opposition, submit a number of affidavits from individuals affiliated with the subject premises.

The affidavit of Joe Rizzo, defendants' Project Manager from an environmental and engineering consultant firm indicates that contrary to plaintiff's contentions, all of the asbestos containing materials were removed from the Subject Building and said removal was in compliance with New York City, State and Federal law, rules and regulations. Additionally, the affidavit of Eric DeSimone, a Vice President for Project Management for Savannah, a real estate private equity firm and asset management company, and a principal member of defendant, 95 Evergreen Building Investors III, LLC, indicates that the temporary restraining order presently in place has prevented the landlord from installing windows and doors on the first floor of the building in question to protect it from intruders and the elements. According to Mr. DeSimone, the temporary restraining order is preventing the fire safety sprinkler system from being [*3]completed, and if the preliminary injunction is granted, it would have a deleterious effect on the Subject Building and the adjacent building located at 105 Evergreen Avenue, since the water main for the sprinkler system connects through the Eastern wall of the Subject Building and 105 Evergreen Avenue. The Court notes that neither the Rizzo or DeSimone affidavits conclusively establishes that the remaining construction work on the second floor of the Subject Building meets appropriate safety standards, the absence of which would result in further disruption to plaintiff, Pro Audio's business on the first floor.

In the case at bar, the Court finds that plaintiffs have satisfied the criteria set forth in CPLR § 6301 for the grant of a preliminary injunction. Plaintiffs have demonstrated a likelihood of success regarding the claims enunciated in their summons with notice, namely, breach of lease and tortious interference with a contract. Thus, if a preliminary injunction is denied, the status quo would be disturbed and a final judgment would likely be rendered ineffectual. Furthermore, the imminent threat of the plaintiffs' loss of a valuable business and resulting good will for which there is no monetary award satisfies the irreparable harm requirement for a preliminary injunction (see Chrysler Realty Corp. v Urban Inv. Corp., 100 AD2d 921, 923 [2d Dept 1984]; Golden v Steam Heat, Inc., 216 Ad2d 440, 442 [2d Dept 1995]; GPA Inc. v Liggett Group, Inc., 862 F Supp 1062, 1068 [SD NY 1994]). While the balance of the equities favors the granting of preliminary injunctive relief to maintain the status quo (see e.g. S.P.Q.R. Co., Inc. v United Rockland Stairs, Inc., 57 AD3d 642, 643 [2d Dept 2008]), the Court is keenly aware that the construction schedule of defendants' would be significantly impacted by the grant of injunctive relief.

Accordingly, the plaintiffs' order to show cause is granted to the extent that defendants are enjoined and restrained from any further construction on the second floor of the Subject Building pending the submission of an approved safety plan from the New York City Department of Building for the Court's review. Pending the submission of said safety plan, defendants are permitted to complete installation of the windows and doors on the first floor of the Subject Building. As regards, the heating and boiler work, the Court notes that the temporary restraining order was modified by order of this Court dated November 25, 2015, which allowed defendants' to install a boiler.

As to plaintiffs' request to remove and consolidate the within action with the proceeding presently pending in Civil Court, Kings County entitled, 95 Evergreen Building Investors III LLC v Mr. Sound USA, Inc. a/k/a Mr. Sound USA Inc., Pro Audio NY Inc. (L & T Index No.: 90127/2015), the Court finds that Paragraph 48 of the Rider to the lease is controlling and precludes removal and consolidation. Said provision provides in pertinent as follows:

"[Nothing] herein shall be deemed to prohibit the Tenant from bringing a separate action against the Owner on account of any claim which the Tenant may have against the Owner, provided, however, that the Tenant agrees that the Tenant, in the prosecution of any such claim, shall make no motion or otherwise request any Court in which such claim is sought to be asserted, to join or consolidate any such claim with any proceeding instituted by the Owner to recover possession of the demised premises or for other relief in any trial, or make any motion or otherwise seek to have any such proceeding instituted by the Owner and any action or proceeding commenced by the Tenant by reason of such claim of the Tenant tried simultaneously in any Court."

Accordingly, that branch of plaintiffs' order to show cause seeking removal and consolidation is denied.

Based on the foregoing, it is hereby,

ORDERED, that the defendants' cross motion is granted to the extent of dismissing plaintiff, Mr. Sound's claims contained in the summons with notice pursuant to CPLR §§ 3211 (a)(1) and (a)(3). In all other respects, the cross motion is denied, and it is further

ORDERED, that the plaintiffs' order to show cause is granted to the extent that defendants are enjoined and restrained from conducting any construction work on the first and [*4]second floor of the Subject Building pending the submission of an approved safety plan from the New York City Department of Building for the Court's review. Pending the approval of said safety plan, defendants are permitted to complete installation of the windows and doors on the first floor of the subject premises. In all other respects, plaintiffs' order to show cause is denied.

The foregoing constitutes the Decision and Order of the Court.

E N T E R,

Hon. Kathy J. King

J. S. C. Footnotes

Footnote 1: Plaintiff, Mr. Sound, contends that it assigned its interest in the Subject Building to Pro Audio in March 2012. Defendants dispute the validity of said assignment.

Footnote 2: The Court refers to the joint application made by plaintiffs, however, based on the Court's dismissal of the complaint as to Mr. Sound the within discussion applies solely to plaintiff, Pro Audio.