9 Clinton St., LLC v Adscas LLCAnnotate this Case
Decided on June 19, 2014
Civil Court of the City of New York, New York County
9 Clinton Street, LLC, DECISION/ORDER, Petitioner-Landlord,
Adscas LLC, , Respondent-Tenant, -and- "XYZ CORPORATION", "JOHN DOE" and "JANE DOE", Respondents-Undertenants.
L & T 60118/14
The attorneys for:
Douglas L. Fromme, PC
462 Seventh Avenue, 12th Floor
New York, New York 10018
Helbraun Levey & O'Donoghue, LLP
110 William Street, Suite 1410
New York, New York 10038
Lynn R. Kotler, J.
Recitation, as required by CPLR 2219 [a], of the papers considered in the review of this (these) motion(s):
Resp's mot, KSOD affirm, CS affid, exhs.. .. . ... ... ...1
Pet's x-mot, SMP affirm, JM, DL affids, exhs.. . ... ... ...2
KSOD opp affirm, exhs ........ . ... ... ...3
DRS reply affirm, exhs... ..... . ... ... ...4
SMP reply affirm . ..... . ... ... ...5
LYNN R. KOTLER, J.:
This is a commercial landlord/tenant holdover proceeding. Respondent moves to dismiss for lack of personal jurisdiction, dismiss based upon prior action in Supreme Court, New York County, stay the action, and for summary judgment. Petitioner opposes the motion and cross-moves for summary judgment, to strike respondent's affirmative defenses and to reconstruct the court file. For the reasons that follow, respondent's motion is denied and the cross-motion is granted in its entirety.
Petitioner is the owner of the subject premises known as Duplex South with Rear Extension (the "premises") located at 9 Clinton Street, New York, New York (the "building").
This proceeding arises from a Fifteen (15) Day Notice to Cure dated July 8, 2013 (the "Second Notice to Cure"), claiming that respondent breached the lease and lease rider between the parties dated April 16, 2010 as follows:
You are having live performances in the premises;
You are advertising the Premises as being available for live performances;
You are hosting live performances at the Premises;
Percussion and amplified instruments are being used and played in the Premises;
You have scheduled live performances to take place in the Premises after [petitioner] terminated your right to have live performances in the Premises;
You have hosted live performances in the Premises after [petitioner] terminated your right to have live performances in the Premises;
You are having live performances in the Premises after 10:00 PM in violation of your lease agreement.
There is a prior action pending in Supreme Court, New York County, entitled "Adscas LLC v. 9 Clinton Street LLC" bearing Index Number 652097/12, which involves the same parties and the same premises. The Supreme Court action arose from a Notice to Cure dated May 30, 2012 (the "First Notice to Cure"). The First Notice to Cure asserts that respondent has:  sold alcohol to persons under the age of 21 years;  has caused and/or permitted excessive nose to emanate from the premises;  has failed to install an electric meter and used electricity under the owner's account without consent;  has caused and permitted the premises to be used in an unlawful manner and or nuissance;  has permitted more than ten persons to occupy the second floor of the premises in violation of the certificate of occupancy;  has failed to obtain a public assembly permit or certificate of occupancy; and  has failed to maintain the security deposit of $15,000 or pay petitioner's attorney's fees. By Order dated September 7, 2012, the Hon. Ellen M. Coin enjoined petitioner from terminating respondent's lease of the premises or commencing an action to recover possession "based upon the [First] Notice to Cure."
On July 31, 2013, respondent electronically filed an Order to Show Cause for Yellowstone relief seeking to toll the running of the Second Notice to Cure. Justice Coin signed that OSC on August 2, 2013, after the cure period had expired. By decision/order dated January 28, 2014, Justice Coin denied the respondent's application for a Yellowstone injunction, because "the Court heard the motion and signed an order to show cause only after the cure period ended, and thus the Court did not have jurisdiction to grant the injunction." On March 13, 2014, [*2]petitioner sent a Notice of Termination to respondent flowing from the Second Notice to Cure, which expired on March 25, 2014. The instant holdover ensued.
Respondent first argues that this Court lack jurisdiction based on two grounds: first, there is no affidavit of service for the Notice of Petition and Petition within the court's file; and second, the person who was served was not respondent's employee, but rather, was "an artist who was having an exhibition and assisting with having the artwork hung." The former argument is resolved in light of petitioner's provision of a copy of the affidavit of service for the Notice of Petition and Petition as well as an affidavit from the process server himself, Diego Lozano, attesting to the fact that he timely filed the affidavit of service. According to Mr. Lozano, he served a person at the premises who identified himself as Joshua, stated he was an employee authorized to accept service, and further said that "he had already accepted service for [respondent] earlier that day of legal papers in three different actions."
Based on the foregoing, the Court grants petitioner's application to reconstruct the court's file to include Mr. Lozano's affidavit of service of the petition and notice of petition, annexed as Exhibit "R" to the cross-motion. Further, the court finds that respondent has failed to raise a sufficient issue of fact to warrant a traverse hearing, because respondent has failed to rebut the affidavit of service or the affidavit of Mr. Lozano. Accordingly, the motion to dismiss for lack of personal jurisdiction or, alternatively, for a traverse hearing, is denied.
As for respondent's motion relating to the Supreme Court action, respondent is neither entitled to dismissal of this action based upon a prior action or a stay pending the Supreme Court action. The Supreme Court action is premised upon different breaches of the Lease set forth in the First Notice to Cure, and the injunction issued therefrom does not prohibit petitioner from maintaining this action based upon the Second Notice to Cure.
Finally, respondent's arguments as to petitioner's refusal to accept payment for late fees, legal fees, etc, are rejected. This is a holdover proceeding and consequently, nonpayment is not an issue. To the extent that respondent is objecting to paying use and occupancy, the Court already decided at oral argument on the instant motion sequence that petitioner was not entitled to use and occupancy.
Accordingly, respondent's motion is denied in toto.
The thrust of petitioner's cross-motion for summary judgment is based on a theory of issue preclusion insofar as Justice Coin held in the January 28, 2014 decision/order that respondent "did not make good faith efforts to comply with the notice to cure during the cure period." Petitioner maintains that Justice Coin "clearly found that the [respondent] failed to cure the breach set forth in the [Second Notice to Cure] before the notice expired, and that finding is decisive of the present action'" (internal citations omitted). The Court disagrees. Whether law of the case or collateral estoppel (see i.e. Davenport Trading Corp. v. 684 Owners Corp., 169 Misc 2d 421 [NYC Civ Ct 1995]), the Court is aware that many issues overlap between Yellowstone applications and the summary landlord/tenant proceedings. However, these doctrines should not be blindly applied; "the circumstances must be carefully examined in each case to make certain that the party  to be estopped [will] not be unfairly or prejudicially treated" (860 Executive Towers, Inc. v. Board of Assessors, 53 AD2d 463 [2d Dept 1976
Justice Coin decided that injunctive relief was not available with respect to the Second Notice to Cure because the application was untimely. Petitioner highlights Justice Coin's treatment of the issue of whether an exception would apply to respondent's late application for a [*3]Yellowstone injunction, that exception being that respondent had shown that it could not possibly cure within the cure period but had begun making diligent efforts to cure. Justice Coin held that respondent failed to show that it could not possibly cure within the applicable time period and therefore the exception did not apply. The Court rejects petitioner's arguments that respondent had a full and fair opportunity to litigate the issue of whether it remedied the subject defaults prior to the expiration of the cure period (see generally Shaid v Consolidated Edison Co. of NY, 95 AD2d 610 [2d Dept 1983]) because that was not the issue before Justice Coin. Respondent did not have its day in Court thereby obviating the need for a trial on the issue in the context of this proceeding.
The Court next turns to petitioner's motion to strike the affirmative defenses and counterclaims. Respondent's first affirmative defense alleges that this proceeding is barred by the Yellowstone injunction. The Court rejects respondent's argument that a Yellowstone injunction stays all summary proceedings. A Yellowstone injunction is not a magic wand which permits a tenant to then violate other obligations under its lease upon issuance; it is merely a term for a type of preliminary injunction which enjoins only what the signing court expressly orders enjoined. Based upon the clear and plain language of Justice Coin's September 7, 2012 order, the subject Yellowstone injunction enjoined petitioner from terminating the lease based upon the defaults asserted in the First Notice to Cure. Accordingly, the first affirmative defense is stricken.
The second affirmative defense alleges lack of personal jurisdiction. For the reasons stated herein, that defense is unavailing and is therefore stricken.
The following affirmative defenses are stricken because they are not viable in a holdover proceeding: damages are stale (third); claims for rent, etc are barred by laches or are incorrect (fourth); security deposit should be used as an offset (fifth); petitioner refuses to accept rent (sixth); January-April rents were tendered to petitioner but not accepted (eighth); additional rent claimed not due (ninth); late fees improper (tenth).
The eleventh and twelfth affirmative defenses are stricken because they are legally untenable and otherwise meaningless.
The Court also strikes respondent's seventh affirmative defense for unjust enrichment based upon improvements, as well as the four counterclaims:  promissory estoppel;  material misrepresentation;  breach of the lease; and  malicious prosecution. Counterclaims and affirmative defenses are barred by the terms of the lease (Paragraph 25). Moreover, the Court rejects respondents' contention that its defenses and counterclaims are inextricably intertwined with petitioner's case. This case is about whether respondent had live performances or permitted amplified instruments to play, not about an offset for improvements made. Finally, respondent has failed to allege sufficient allegations to support the counterclaims.
Based upon the foregoing reasons, respondent's affirmative defenses and counterclaims are hereby stricken. Petitioner's cross-motion is otherwise denied.
In accordance herewith, it is hereby:
ORDERED that respondent's motion is denied in its entirety; and it is further
ORDERED that petitioner's cross-motion is granted only to the extent that:
 the court's file is reconstructed to include Mr. Lozano's affidavit of service of the petition and notice of petition, annexed as Exhibit "R" to the cross-motion; and
 Respondent's affirmative defenses and counterclaims are stricken; and it is further
[*4]ORDERED that the parties are directed to appear in Part 52 in Room 353 on July 8, 2014 for trial.
Any requested relief not expressly addressed by the Court has nonetheless been considered and is hereby denied and this constitutes the decision and order of the Court.
Dated: June 19, 2014So Ordered:
New York, New York_____________________
Hon. Lynn R. Kotler, J.C.C.