Solow Bldg. Co., LLC v L. Raphael NYC C1 Corp
Annotate this CaseDecided on June 15, 2018
Civil Court of the City of New York, New York County
Solow Building Company, LLC, Petitioner,
against
L. Raphael NYC C1 Corp d/b/a L RAPHAEL TEMPLE OF BEAUTY, Respondent-Tenant, "XYZ" CORP., Respondent-Undertenant.
LT 53465/18
Attorney for Petitioner:
Rosenberg & Estis, P.C. by Warren A. Estis, Esq. and Norman Flitt, Esq.
Attorney for Respondent:
Akin, Gump, Strauss, Hauer & Feld LLP by John Cullen Murphy, Esq. and Mitchell P. Hurley, Esq.
Mary V. Rosado, J.
This is a commercial holdover action involving space that Petitioner Solow Building Company, LLC (hereinafter "Petitioner") rented to Respondent L. Raphael NYC C1 Corp d/b/a L. Raphael Temple of Beauty (hereinafter "Respondent"). The bench trial commenced on March 13, 2018, continued on March 14, 2018 and completed on April 4, 2018.[FN1] Petitioner claims that Respondent violated the lease by failing to pay $590,682.22 in rent. Respondent [*2]claims that they do not owe the rent for the leased space because it was unable to use the space as a luxury beauty and anti-aging clinic because of construction performed by Petitioner in the building. Respondents counterclaimed for constructive eviction, breach of contract, fraud and nuisance in its answer.
The parties entered into the original Lease on January 29, 2013. Respondent leased the space "for anti-aging therapy and related treatments and the display of skincare products and for general, administrative and executive offices and ancillary uses thereto " (see Agreement of Lease Section 3[a]). In this case, Respondent agreed to "accept possession of the Premises in the condition which shall exist on Possession Date 'as is'" (see Lease Section 20). However, pursuant to section 15(b) of the lease, "[a]ny work performed or installations made by Landlord shall be made with reasonable diligence and in a manner designated to minimize interference with, or disruption of, Tenant's normal business operations." Respondent continued to lease the premises through the execution of the First Amendment to the Lease dated January 31, 2014.
Thereafter, the parties entered into the Second Amendment to the Lease dated July 13, 2016, which states that "[t]he parties acknowledge that Tenant has made a claim for constructive eviction on account of construction work at the Building in areas outside the Premises undertaken to prepare other premises for a different tenant, Bergdorf Goodman in the Building. Landlord has disputed such claim" (Second Amendment of the Lease Section 2) and states that the parties "agreed to compromise." Pursuant to the Second Amendment, Respondent received a full rent abatement for the month of November 2015, and "an abatement of all Rental from January 1, 2016 to and including December 31, 2016 (inclusive of both dates) " (Second Amendment of the Lease, Section 2[c]).The agreement further states:
Tenant has no unsatisfied claims, counterclaims, defenses or set-offs against Landlord arising from the Lease. Tenant is not entitled to any concession, rebate, allowance or free rent for any period after the date of this Amendment, except as may be expressly set forth in this Amendment.
(Second Amendment of the Lease, Section 3[a][iv]). The Second Amendment to the Lease does not contain any provisions for future abatement for continued construction on the property. The lease states that "[f]rom and after January 1, 2017, all Fixed Rent and additional rent shall be payable without abatement "(Second Amendment of the Lease, Section 2[c]).
On or about January 10, 2018, Petitioner served the 10 day Notice of Default upon Respondent. On January 26, 2018, Petitioner served the three (3) day notice of termination terminating the Respondent's lease on February 5, 2018. At the last court appearance prior to trial, February 28, 2018, Judge Joan Kenney ordered use and occupancy be paid for the month of March 2018 in the amount of $32,768.67 and it was paid (see tr from March 13, 2018 at 3, lines 1-4). Thereafter, Respondent vacated the premises on March 30, 2018 (see Petitioner's post-trial brief dated May 8, 2018 at page 2).
At trial, Petitioner presented Ting Chen Wang, Petitioner's employee. The testimony and evidence presented provided a sufficient basis for Petitioner's claim that Respondent rented the space and failed to pay rent, in violation of the lease terms, and Respondent owed $590,682.22 for January 1, 2017 through February 2018 (see tr from March 13, 2018 at 34, lines 4-10).
The burden then shifted to Respondent to refute the evidence presented by Petitioner and to present evidence to support its counterclaims.
Respondent presented Linda Malekaslanian, a former employee; Karen Deutsch, Human [*3]Resources Manager and Ronit Raphael, Founder and CEO. Ms. Raphael testified that the construction began in 2015 and continued until June of 2017, and that the construction caused ongoing issues. Further the witnesses supported Respondent's claims that it was unable to use most of the space rented. Respondent used two of the nine rooms on the premises for meetings and for use by the Human Resources Manager, but it was unable to host the type of luxury services it had hoped to provide. The ongoing construction created a litany of problems such as dust, noise and elevator malfunction.
In its post-trial brief, Respondent's counsel states that "[i]t was Ms. Raphael's understanding that under the terms of the Second Amendment [to the Lease], L. Raphael would not be required to pay until Solow had finished its construction." Further, Respondent claims that while it may have waived all claims prior to January 1, 2017 in the Second Amendment to the Lease, the document contains no express, clear, or unequivocal language stating that Respondent abandoned its right to bring future claims based upon future conduct. Respondent's counsel highlights the difference between the release of any claims made by its client for everything prior to January 1, 2017, and any future covenant not to sue Petitioner, which is important to note in this case.
"The obligation of a commercial tenant to pay rent is not suspended if the tenant remains in possession of the leased premises, even if the landlord fails to provide essential services" (Towers Organization, Inc. v Glockhurst Corp., N.V., 160 AD2d 597 [App Div 1st Dept 1990]). The independent obligation of a commercial tenant to pay rent is not suspended where the premises were demised "as is" and tenant remained in possession (Towers Org. v Glockhurst Corp., 160 AD2d 597, 599 [1990]).
To prevail at a trial for possession of commercial space a petitioner can present evidence that the conditions of the lease have not been met (see Universal Communications Network, Inc. v 229 W. 28th Owner, LLC, 85 AD3d 668 [App Div 1st Dept 2011]). Further "the obligation to pay rent pursuant to a commercial lease is an independent covenant, and thus, cannot be relieved by allegations of a landlord's breach, absent an express provision to the contrary" (Id. at 669 [emphasis added]).
"A release is a provision that intends a present abandonment of a known right or claim. By contrast, a covenant not to sue also applied to future claims and constitutes an agreement to exercise forbearance from asserting any claim which either exists or which may accrue" (McMahan & Co v Bass, 250 AD2d 460 [App Div 1st Dept 1998]). Where an express covenant not to sue is not in a contract document, the court, as a matter of law cannot be construed to imply such a covenant (Collins & Aikman Products Co. v Serma-Tech Engineering Group, Inc., 297 AD2d 248 [App Div 1st Dept 2001]).
A commercial "tenant may assert as a defense to the nonpayment of rent the doctrine of constructive eviction, even if he or she has abandoned only a portion of the demised premises due to the landlord's acts in making that portion of the premises unusable by the tenant" (Minjak Co. v Randolph, 140 AD2d 245, 248 [App Div 1st Dept 1988]; see also Shackman v 400 E. 85th St. Realty Corp, 2018 NY App Div LEXIS 3183 [App Div 1st Dept 2018]).
This court credits the testimony of Ms. Wang and finds that Petitioner provided a sufficient basis to support its claim of unpaid rent and fees against Respondent. However, the original lease clearly states that the landlord may conduct work on the premises in a manner so as to minimize interference with the tenant's normal business operations. Based on the evidence including the lease documents and the credibility of the witnesses, this Court finds that [*4]Respondents presented a sufficient basis to show that its agreement in the Second Amendment to Lease served as a release of their claims related to the construction through December 31, 2016 but did not constitute a covenant not to sue for any claims that accrued in 2017 and thereafter. Respondent's witnesses testified that Petitioner did not comply with their obligations under the original lease to perform work in a manner to minimize interference with the tenant's business through 2017 and performed work which caused Respondent to abandon a substantial portion of the demised premises and made certain portions (the treatment/spa rooms) unusable for Respondent throughout the first half of 2017. The trial testimony adduced that the construction in 2016 made it impossible to use the premises for its original intended purpose: high-end anti-aging therapy and related skincare services.
As such, Petitioner has proven its claim against Respondent in the amount of $590,682.22 for unpaid rent from January 1, 2017 through February 5, 2018 (and use and occupancy for March 2018, has already been paid) but Respondent provided sufficient evidence to support its counterclaim for constructive eviction and a rent abatement of $211,390.96 for the seven out of nine rooms at the leased premises they could not use for treatments from January 1, 2017 through June 30, 2017 (see Respondent's Post-Trial Memorandum of Law Section III).
For the reasons stated above, judgment is entered for Petitioner in the amount of $379,291.26.
The clerk shall enter final judgment in favor of Petitioner.
The Petitioner shall serve a copy of this decision and order and a copy of the underlying judgment with notice of entry on the Respondents within thirty (30) days of the entry of this decision and order and judgment by the Clerk of Commercial Part 52 and shall file proof of service thereof with the Clerk of the Court.
Both parties may retrieve their evidence from the chambers of the undersigned within thirty (30) days.
This constitutes the decision and order of the Court.
Dated: June 15, 2018
New York, New York
Mary V. Rosado, J.C.C. Footnotes
Footnote 1:The parties represented to the Court that Respondent-Tenant has commenced an action in Supreme Court, New York County (L. Raphael NYC C1 Corp. d/b/a L. Raphael Temple of Beauty v Solow Building Company, LLC & Bergdorf Goodman Inc., Index No. 651456/2018). Also, the parties were asked to submit post-trial memoranda of law and, therefore, the matter was fully submitted on May 8, 2018. In addition, Respondent's counsel filed a letter reply on May 22, 2018, which the Court has rejected as counsel were advised that reply submissions were not necessary.
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
