Times Sq. Souvenirs Inc. v Big Apple Entertainment Partners, LLC

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Times Sq. Souvenirs Inc. v Big Apple Entertainment Partners, LLC 2018 NY Slip Op 32231(U) September 11, 2018 Supreme Court, New York County Docket Number: 650686/2017 Judge: Eileen Bransten Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. [* 1] INDEX NO. 650686/2017 NYSCEF DOC. NO. 40 RECEIVED NYSCEF: 09/11/2018 SUPREl\'.lE COURT Oll' l'HE STATE OF NEW YORK COUNTY OF NE\V YORK - IAS PART 3 --------------------------------------------------------------------::X: TIMES SQUARE SOUVENIRS INC., a Nevi" York Corporation, Plaintiff. Index No,: 650686/2017 l\tfotion Date: 11/06/2017 :Motion Sequence 001 -againstBIG i\PPLE ENTERTAINl'vIENT PARTNERS, LLC d/b/a RIPLEY'S BELIEVE IT OR NOT?. a Delaware Limited Liability Cm:npany Defendant, --------------------------------------------------------------------}{ BRANSTEN, J. This action comes before the Court on Defondant Big Apple Entertainment Partners, LLC d/b/a Ripley's Believe It or Not's ("Big Apple") rnotion to dismiss Plaintiff Times Square Souvenirs, Inc.'s ("Times Square") Amended Verified Complaint pursuant to CPLR 3211 (a)(l) and (a)(7). Plaintiff opposes the motion. For the reasons set forth below, Big Apple's motion to dismiss is granted in part as to the breach of contract claim and denied in part as to the breach of the covenant of good faith and fair dealing and promissory estoppei claims. Defendant Big Apple operates a Ripley's Believe It or Not! museum pursuant to a franchise agree.ment with non-party Ripley's Attractions Inc., dated JVIarch 24~ 2006 (the "Franchise Agreement'} (Pidgeon Affid. Ex. G.) On lVfoy 11, 2006, Big Apple entered into a lease agreement (the '"Lease Agreemenf') with non-party FC 4211d Street 2 of 11 [* 2] INDEX NO. 650686/2017 NYSCEF DOC. NO. 40 RECEIVED NYSCEF: 09/11/2018 Times Square Souvenirs Inc. v. Big Apple Entertainment Index No. 650686/2017 Page 2 oflO Associates, LP. (the '"Landlord") for the building and premises located in Tirnes Square at 234 \Vest 42nd Streets New· York, NY (the "l\/Iuseum'} (Pidgeon AfficL Ex. H.) The Lease Agreement contained a provision that provided "Tenant shall not ... (ii) sublet the Premises or any part thereof: or offer or advertise to do so, or allow the same to be used, occupied or utilized by anyone other than Tenant ... without in each instance obtaining the prior written consent of Landlord, which consent may be granted or withheld in Landlord's sole discretion." (id. i HUH(a).) Plaintiff Times Square is a retail gift and souvenir store operator. (Am. CompL if 5.) On October 24, 2016, Times Square entered into a license agreement (the "License Agreement") with Defendant Big Apple, which granted Times Square non-exclusive use of a portion of the ground floor of the l\1useum to operate a gift concession area. (Id ~~ 7, 9; Pidgeon Affid. Ex. A.) The License Agreement was effective as of November 1, 2016 and had a term of five years, up to and including October 31, 202L (Am. CompL ii 8,) The License Agreement also provided that the agreement was "'subject and subordinate to . , . any and aH lease and ground lease Agreements, made or arranged by [Big Apple] of its interest in all or any part of the Building or Premises," (Pidgeon Affid. Times Square performed all of its obligations under the License Agreement. (Am. CompL ir 20.) Times Square tendered the $18,000 security deposit to Big Apple and paid $16,900 to purchase Big Apple's pre-existing inventory at the Museum. (Id. ii 12.) After the execution of the License Agreement, Times Square hired a designer and contractors 3 of 11 [* 3] INDEX NO. 650686/2017 NYSCEF DOC. NO. 40 RECEIVED NYSCEF: 09/11/2018 Tirnes Square Souvenirs Inc. v. Big Apple Entertainment to prepare the space for retail operations. (Id. ~ Index No. 650686/2017 Page 3of10 13,) Times Square also purchased merchandise, equipment, lighting, and store and display fixtures for the concession. (Id.) On October 18, 2016~ Big Apple's General l\1anager, Bret. Pidgeon, emailed Times Square's attomey to advise her that Big Apple had vvritten approval from its franchisor, Ripley Entertainment Inc., to proceed with the License Agreement (Pidgeon Affid. ~[ 17.) l\1r. Pidgeon also informed Time Square's attorney that Ripley Entertainment Inc. would have ••approval rights over the final design and layout of the renovated concession as per the terms of the License Agreement and the Franchise AgreemenC' (Id.) However, Mr. Pidgeon asseris he did not make any representations regarding the Landlord's consent to the License Agreement. (Id.~ 18.) On November 18, 2016, Times Square commenced its business operations at the !vfoseum with a fully-finished concession and fully-stocked inventory. (Am, Compl. 4115.) On November 22, 2016, a representative of Big Apple told Tlrnes Square to immediately cease its operation and vacate the premises. (Id. 1!- 16.) The representative stated that ~·the order came from above." (Id.) Times Square cm:nplied with this directive and vacated the premises. (See id. 1! 17.) Subsequently, Times Square's representatives allegedly observed that the premises vacated by Times Square \Vere being exhibited to a prospective tenant (Id) Times Square commenced this action on February 2, 2017 by Summons and Verified Complaint and .filed an Amended Verified Complaint on April 19, 2017. Times 4 of 11 [* 4] INDEX NO. 650686/2017 NYSCEF DOC. NO. 40 RECEIVED NYSCEF: 09/11/2018 Times Square Souvenirs Inc. v. Big Apple Entertainment Index No. 650686/2017 Page 4 of10 Square asserts three causes of action against Big Apple for breach of contract, prornissory estoppel, and breach of covenant of good faith. Presently before the Court is Big Apple's motion to dismiss the Arnended Verified Complaint pursuantto CPRL 321l(a)(1) and 3211(a)(7). Clri(ler1-vriters _{~"lS. (~?{), ·o ~· . ,L·tJ.Yl.(lrn{.Ir.k l:rJ...5., .... ....... ., l ..-(}o ~ '1 . } i\,,f),3<1 'l 72.,~ I 7if ~l J.' st I)e~1 )t :2{)0-4)~ ~T'11e ,. (.1.lS!l11SS:: at _:__ .,_·,· _,f _,,: ~·.:.: ,i·.:.:-.·_ •.·,·~.-· ...'~'.· ...·,:.: ......,·•. ,•.··.•··.' ,,._•...'.--,.,·.·' •••"',·'.,·"·.'.••'··~·.,·.· ... __ ... -· - ....................~ ...,{.:.,....'·" i\~:~'.{ ·,n ,··• ,.,,...:.; l .....~,:....... ......... ,_..., ...c··,:~ , ,.:·~ Q ·~, ..~ ·~.t~A li _ ,~··:·_.',".'.• ... ,····.,:.'.'.·. _. . · ,~...•• ~...,"$:~:.r~~.·t~/t:· ..~o .:. - .:-.:_, '\.?' 1 .....·-f :.... ~-.~ ...~··"~"~ 5 of 11 [* 5] INDEX NO. 650686/2017 NYSCEF DOC. NO. 40 RECEIVED NYSCEF: 09/11/2018 Times Square Souvenirs Inc. v. Big Apple Entertainment Index No. 650686/2017 Page 5 of10 154, 154 (1st Dep't 1993). The Court is not required to accept factual allegations that are contradicted by documentary evidence or legal conclusions that are unsupported in the face of undisputed facts. See Zanett Lombardier, Ltd v. Afaslow, 29 A.D.3d 495, 495 (1st Dep't 2006). Ultimately, under CPLR 321 l(a)(l), "dismissal is warranted only if the documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter oflaw." Leon v. A:fartinez, 84 N.Y.2d 83, 88 (1994). The Lease Agreement between the Landlord and Big Apple provides that any sublet or license agreement was subject to the Landlord's "prior written consent," which "rnay be granted or withheld in Landlord's sole discretion." (Pidgeon Affid. Ex. H ii 18.01.) In turn, the License Agreement between Big Apple and Times Square provides 6 of 11 [* 6] INDEX NO. 650686/2017 NYSCEF DOC. NO. 40 RECEIVED NYSCEF: 09/11/2018 Times Square Souvenirs inc. v. Big Apple Entertainment Index No. 650686/2017 Page 6of10 that the agreement would be "subject and subordinate to , .. any and all lease and ground lease Agreements, rnade or arranged by [Big ,Apple] of its interests in all or any part of the Building or Premises.'' (id. Ex. A~ 19 (ernphasis added).) When a sublease uses the term "subject and subordinate to,~' the sublease is bound to the tem1s of the lease. See Getty Props. Corp. v. Getzv Petroleum 11..fktg, Inc. 106 A.D.3d 429, 429 (1st Dep't 2013);1nst.forEastivestStudies, Inc. v. Nat'lAudubonSoc., Inc., 17 Misc. 3d 1108(A), at 5 (Sup. CL N.Y. Cnty. 2007) (finding '<subject and subordinate" clause incorporates by reference the terms of the overlease into the sublease), Therefore, the Landlord's prior written consent was required for Times Square to obtain the right to use and occupy the premises under the License Agreement "When a lease provides for a term to commence upon the happening of a future event, if the event does not occur no tenancy_is created." Duane Reade v. LG. Second Generaiion Partners, LP., 280 A,D.2d 410, 41 l -·· 12 (1st Dep't 200 I) (internal quotation marks omitted.) Here, Big Apple failed to obtain the Landlord's prior \Vrltten approval for the License Agreement (Pidgeon Affid. ii 18.) Ivforeover, Big Apple lacked the authority to waive its obligation to obtain written consent from the Landlord because "a sublease can confor no greater rights on a sublessee than those afforded to the tenant by his prime lease." lvfillicom Inc. v. Breed, Abbott & Aforgan, 160 A.D.2d 496, 497 (1st Dep't 1990) ("[w]hile [tenant] may waive a provision of its sublease agreement ·with [subiesseeJ, it is without the power to waive a condition of its lease with [landlord]"). Thus, Times Square never became a licensee but remained a potential licensee whose 7 of 11 [* 7] INDEX NO. 650686/2017 NYSCEF DOC. NO. 40 RECEIVED NYSCEF: 09/11/2018 Times Square Souvenirs inc. v. Big Apple Entertainment Index No. 650686/2017 Page 7of10 interest in the prernises remained expressly conditioned upon the Landlord's written consent See Duane Reade, 280 A.D.2d at 412. The plain terms of the Lease Agreement and License Agreement establish Big Apple could not provide Times Square with the right to use a portion of the ground floor of the iv1useum without the Landlord's \Vritten consent. The Landlord ultimately refused to consent to the License Agreement. Therefore, Big Apple has conclusively established a defense to Times Square's breach of contract claim. Accordingly, Big Apples motion to dismiss Time Square;s claim fix breach of the License Agreement is granted to the extent such claim is based on Big Apples terrrlination of the License Agreement and faflure to tender the license to use and occupy the premises. c. Times Square also alleges Big Apple breached the License Agreement's implied covenant of good faith and fair dealing. In Ne\v York, all contracts imply a covenant of good J:aith and fair dealing in the course of perfi}m1ance. See 511 W. 232nd Ovvners Corp. v. Jennifer Real~y Co., 98 N.Y.2d 144, 153 (2002), This embraces a pledge that ~'neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract'' Dalton v, Educ. Testing Serv., 87 N.Y.2d 384, 389 (1995). Here, Times Square's right to use the premises "\Vas conditioned on the Landlord's written consent to the License Agreement Accordingly, Time Square's benefit of the 8 of 11 [* 8] INDEX NO. 650686/2017 NYSCEF DOC. NO. 40 RECEIVED NYSCEF: 09/11/2018 Times .Square Souvenirs inc. v. Big Apple Entertainment Index No. 650686/2017 Page 8of10 bargain \vould undoubtedly be destroyed by the lack of the Landlord's consent. By executing the License Agreement with Times Square, Big Apple had a duty to make good faith effmis to obtain the Landlord's consent to the License Agreement. Therefore, Big Apple's motion to dismiss the breach of the implied covenant of good faith and fair dealing is denied. D. Promissory Estoppel {)Il ~?.~aintiff r11tist aIIeg;e tl1a.t ' . c1a1rr~ {~. -... ·_:,'_-' lS t{) tl1e ct3t1tract~. ,)·f.-..~f.~ (~~elle ,, ...... v. l°i(J.f'(.~ l{~~J·~~.' l1.:~~.nk- _$_'·' .{'... t .. ' (/\rii, 9 of 11 ,:::,·_ - lS IS -~ .... ~. . {Jl.~l),' 4 g i\~I)~3t1 30 .t' 3{)3 (~~(}t11_p1,. ' ' \ 1 st { l)e}) ~ ,... t 2{){)8 ,.1.\ [* 9] INDEX NO. 650686/2017 NYSCEF DOC. NO. 40 RECEIVED NYSCEF: 09/11/2018 '~:_:..,:·,.. ~ ..$ , .., .,, :'""'', f' ..... .••-i_~_·'_.·,.'·,','.,'•.',·,·':· - - ,'•",'.-·,··.,'. ..·.·,·,·.·.·,._,,·,···.·.' - "·,', ,·-·.•: _,...,.,_,'·.' 3.~·~ ;,.\..":.; ........l._:.C·:}-h~ r..: r<:~_preser1tati l3.t1s {)11 _prt:rr11ses ., ,• ,-, 1!1l{Jf1T~ especiaII:I trt1e the1Tl ()f tf1<:; a1lef?at·~()11 th~at C()IlSer1t ll!ltiI a.fter ·~rirs1es were unreasonable. Therefi:m;:~ Big Apple's motion to dismiss the promissory estoppel claim is denied, 10 of 11 [* 10] INDEX NO. 650686/2017 NYSCEF DOC. NO. 40 RECEIVED NYSCEF: 09/11/2018 Times Square Souvenirs inc. v. Big; Apple Entertainment Index No. 650686/2017 Page 10of10 i\CCORDINGLY, it is hereby ORDERED, that Defondanfs motion to Dismiss is GRANTED IN PART as to Times Square's breach of contract claim and DENIED IN PART as to Times Square's breach of the implied covenant of good faith and fair dealing and promissory estoppel claims. This constitutes the decision and order of the Court Dated: New York, New York September J..\._ _ _, 2018 ENTER: 11 of 11

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