Sears Holdings Mgt. Corp. v Rockaway Realty Assoc., LP
Annotate this CaseDecided on October 9, 2018
Supreme Court, New York County
Sears Holdings Management Corp. on behalf of its affiliates and subsidiaries, including KMART CORPORATION, Plaintiff,
against
Rockaway Realty Associates, LP and I.S.J. MANAGEMENT CORP., Defendants.
650142/2015
For Plaintiff:
Richard J. Sprock and Robert Phillip Louttit
BRUCKMANN & VICTORY, LLP
420 LEXINGTON AVE, NEW YORK, NY 10170
For Defendants Rockaway and ISF:
Anthony Broccolo
Ropers Majeski Kohn Bentley. P.C.
750 Third Avenue 25th Floor, New York, NY 10017
For Defendant iSF:
Danielle Harlene Garten
Marks, O'Neill, O'Brien, Doherty & Kelly, P.C.
708 Third Avenue, Suite 2500, New York, NY 10017
Carmen Victoria St. George, J.
In this lawsuit, plaintiff Sears Holdings Management Corp., on behalf of a Kmart store (plaintiff) located in Rosedale, New York, alleges that, after Superstorm Sandy, defendants improperly refused to dry-out and restore the shopping center in which the store was located. As a result, plaintiff incurred the $1,012,412 cost of this work itself. Plaintiff also alleges that it sustained $6,000,000 in lost business income and property damage loss. According to plaintiff, defendants' refusal to pay breached its obligation to indemnify plaintiff, as did defendants' negligence — specifically, its failure to maintain drainage and otherwise protect plaintiff's store from flooding, a known risk. The refusal on which plaintiff relies is in an email from Henry [*2]Poyker of defendant ISJ, which is dated October 31, 2012 and states, "please note that as a Landlord we will not be involved in the interior repairs. Please contact your insurance company in all matters relating to interior damage and/or losses" (the October 31 email). After this, plaintiff undertook the repairs itself. Subsequently, it submitted a claim to defendants for reimbursement. Defendants rejected the claim in a July 2, 2013 letter from its counsel, stating that defendants had satisfied their lease obligations and plaintiff was responsible for the repairs it made. The letter noted that it had previously agreed to pay plaintiff $60,000 toward its expenses.
Discovery is complete, and plaintiff has filed the note of issue. Currently, plaintiff moves for partial summary judgment on its claims for breach of contract and failure to restore and quantum meruit/unjust enrichment. It alleges that the parties' contract, at sections 12A and 22(B), requires indemnification by defendants or else reimbursement in situations such as the one at hand, where plaintiff resorted to self-help. Plaintiff further alleges that defendants received $500,000 from their flood insurance carrier for flood remediation, but that defendants did not give that money to plaintiff, which had incurred the actual expenses for the damage.
Defendants oppose the motion. They state that the meaning of the October 31 email is not clear and that Sam Jemal, one of the owners of defendants, stated at deposition that he had not seen his employee's email. They state that Kmart was not entitled to the $500,000 it received from Hartford because the money was intended to cover losses for the entire shopping center and not for the individual stores. Defendants also annexes a copy of the November 12, 2012 letter they received from Sears Holding Corporation, which states that due to the damage from Superstorm Sandy it was terminating the lease. Defendants state that this November 12 letter raises issues of fact regarding the impact of the termination letter on the parties' obligations under the agreement. Defendants also point to plaintiff's failure to submit a copy of its own insurance policy, and they state that a question of fact therefore exists regarding whether plaintiff complied with its insurance obligations under the lease.
Furthermore, defendants state, their obligation to reimburse plaintiff under section 22 of the lease is unclear. They note that subsection 2 of that provision give them 30 days to cure their default, and that plaintiff commenced work within a few days of the mailing of its notice to defendant. Defendants also state plaintiff retained a contractor without obtaining approval from them, and therefore plaintiff arguably breached the lease. They state that they were not unjustly enriched by the Hartford payout at the expense of plaintiff — and, at the very least, a question of fact exists. They state that the emails that the parties exchanged in February 2013, relating to elevator repairs, show that defendants agreed to pay for the elevator repairs but reserved decision on the remainder of plaintiff's claims pending further review, and that there are questions relating to the reasonableness of the costs of the dry-out and other work.
Plaintiff replies that their November 12 termination letter was a "pro forma" letter which all parties recognized as such. In support, plaintiff notes that it remained at the premises and is there still, and it argues that under section 12 (b) of the lease it's letter was ineffective to end Kmart's obligations. Plaintiff states there is no subrogration waiver because the $1,012,412 bill fell within its deductible, and it indicates that it did not provide a copy of its insurance policy because defendants did not request it. They state that the 30-day waiting period did not apply where, as here, the dry-out was necessary to protect the property from further damage. Based on defendants' correspondence — which, plaintiff claims, is clear on its face — plaintiff rejects the argument that issues of fact exist regarding defendants' potential participation in the repairs and the reasonable cost of such repairs.
On a motion for summary judgment, the moving party has the initial burden of establishing its entitlement to judgment as a matter of law with evidence sufficient to eliminate any material issue of fact (Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1985]). The facts must be viewed "in the light most favorable to the non-moving party" (Ortiz v Varsity Holdings, LLC, 18 NY3d 335, 339 [2011]). The failure to make such a showing requires denial of the motion, regardless of the sufficiency of the opposition papers (Voss v Netherlands Ins. Co., 22 NY3d 728, 734 [2014]). Once the moving party "produces the requisite evidence, the burden then shifts to the non-moving party to establish the existence of material issues of fact which require a trial of the action" (Nomura Asset Capital Corp. v Cadwalader, Wickersham & Taft, LLP, 26 NY3d 40, 49 [2015]). The court's task in deciding a summary judgment motion is to determine whether there is bonafide issues of fact and not to delve into or resolve issues of credibility (Vega v Restani Constr. Corp, 18 NY3d 499, 505 [2012]). If the court is unsure whether a triable issue of fact exists, or can reasonably conclude that fact is arguable, the motion must be denied (Tronlone v Lac d'Amiante Due Quebec, Ltee, 297 AD2d 528, 528-529 [1st Dept 2002]).
Here, the Court determines that there is no issue of fact with respect to defendants' liability. Defendants do not deny that the lease imposes an obligation upon it to indemnify plaintiff against such loss. Contrary to defendants' contention, moreover, the October 31 email and the July 2, 2013 letter are clear on their face and show that they declined to undertake or pay for the repairs. The fact that the parties continued to engage as tenant and landlord after November 2012 — indeed, many of the communications occurred in 2013 — show that the parties treated the termination of tenancy letter as ineffective. Defendants' claim that there are issues of fact as to whether any of the insurance money they recovered from Hartford should go to plaintiff is irrelevant as to defendants' liability under the lease. Moreover, it only goes to the question of damages on the issue of quantum meruit because, as plaintiff points out, defendants were enriched by the work plaintiff performed on property that is owned by defendants. Plaintiff's failure to wait 30 days for defendants to undertake repairs is not fatal; the parties do not dispute that there was significant flooding and property damage. As plaintiff notes, such damage must be repaired promptly to avoid additional loss. The Court has considered the parties' additional arguments and finds them unavailing.
Finally, to the extent that plaintiff seeks a judgment for a sum certain, the request is denied. Instead, there must be a hearing to determine the amount of loss, the actual costs of repair, and the amount of work that related directly to repairing the storm damage. Accordingly, it is
ORDERED that the motion is granted in part, and plaintiff is granted judgment on the issue of liability only on its breach of contract and quantum meruit/unjust enrichment claims; and it is further
ORDERED that this matter is referred to a Special Referee to hear and report on the amount due on the complaint either with recommendations, or to hear and determine, if the plaintiff so stipulates in writing; and it is further
ORDERED that counsel for Plaintiff shall, within 30 days from the date of this order, serve a copy of this order with notice of entry, with a completed Special Referee Information Sheet, upon the Special Referee Clerk in the Motion Support Office to arrange a date for the reference to a Special Referee.
Dated: October 9, 2018
ENTER:
____________________________________
CARMEN VICTORIA ST. GEORGE, J.S.C.
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