Captain Lucas, Inc. 8 v Royal Equities Operating, LLC

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Captain Lucas, Inc. 8 v Royal Equities Operating, LLC 2019 NY Slip Op 33080(U) October 15, 2019 Supreme Court, New York County Docket Number: 655357/2017 Judge: Debra A. James 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. [*FILED: 1] NEW YORK COUNTY CLERK 10/16/2019 03:06 PM INDEX NO. 655357/2017 NYSCEF DOC. NO. 17 RECEIVED NYSCEF: 10/16/2019 SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY PRESENT: PART HON. DEBRA A. JAMES Justice ---------------------------------------------------------------------------------X IAS MOTION 59EFM 655357/2017 INDEX NO. CAPTAIN LUCAS, INC.8 MOTION DATE 08/10/2018 Plaintiff, 001 MOTION SEQ. NO. -vDECISION + ORDER ON MOTION ROYAL EQUITIES OPERATING, LLC, Defendant. ---------------------------------------------------------------------------------X The following e-filed documents, listed by NYSCEF document number (Motion 001) 3, 4, 5, 6, 7, 8, 9, 1O, 11, 12, 13, 14, 15, 16 were read on this motion to/for DISMISSAL ORDER Upon the foregoing documents, it is ORDERED that defendant's motion for summary judgment is granted and the first and second cause of action of the complaint are dismissed with costs and disbursements to defendant as taxed by the Clerk upon the submission of an appropriate bill of costs; and it is further ORDERED that the Clerk is directed to enter judgment accordingly; and it is further This matter August 10, been 2018, having come on on motion to dismiss, represented in before this court on and the plaintiff having connection therewith by Martin Alan Shell, Esq., and the defendant having been represented in connection therewith 655357/2017 CAPTAIN LUCAS, INC. vs. ROYAL EQUITIES OPERATING, LLC Motion No. 001 1 of 7 by Howard Page 1of7 [*FILED: 2] NEW YORK COUNTY CLERK 10/16/2019 03:06 PM INDEX NO. 655357/2017 NYSCEF DOC. NO. 17 Grun, RECEIVED NYSCEF: 10/16/2019 Esq., and, pursuant to CPLR 4317, own motion determined to consider the court having on its the appointment of a referee to determine as follows, it is now hereby ORDERED that a Judicial Hearing Officer ( "JHO") or Special Referee shall be designated to determine the following individual issue of fact, which is hereby submitted to the JHO/Special Referee for such purpose: ( l) the issue of the reasonable amount of attorneys' that defendant incurred in defendant the herein action, fees which plaintiff is obligated to remit to defendant under the Lease, and it is further ORDERED that the powers of the JHO/Special Referee shall not be limited beyond the limitations set forth in the CPLR; and it is further ORDERED that this matter is hereby referred to the Special Referee Clerk (Room 119, 646-386-3028 or spref@nycourts.gov) for placement at the earliest possible date upon the calendar of the Special Referees Part (Part SRP), which, in accordance with the Rules of that Part (which are posted on the website of this court at www.nycourts.gov/supctmanh at the "References" link ), assign this matter at the initial appearance to an JHO/Special Referee to determine as specified above; shall available and it further 655357/2017 CAPTAIN LUCAS, INC. vs. ROYAL EQUITIES OPERATING, LLC Motion No. 001 2 of 7 Page 2 of 7 is [*FILED: 3] NEW YORK COUNTY CLERK 10/16/2019 03:06 PM NYSCEF DOC. NO. 17 INDEX NO. 655357/2017 RECEIVED NYSCEF: 10/16/2019 ORDERED that counsel shall immediately consult one another and counsel for defendant shall, within 15 days from the date of this Order, 918 6) or submit to the Special Referee Clerk by fax e-mail "References" information link called Information an on the for court's therein Sheet (accessible website) and that, (212-401- containing as soon as at the all the practical thereafter, the Special Referee Clerk shall advise counsel for the parties of the date fixed for the appearance of the matter upon the calendar of the Special Referees Part; and it is further ORDERED that the parties shall appear for the reference hearing, including with all witnesses and evidence they seek to present, and shall be ready to proceed with the hearing, on the date fixed by the Special Referee Clerk for the initial appearance in the Special Referees Part, subject only to any adjournment that may be authorized by the Special Referees Part in accordance with the Rules of that Part; and it is further ORDERED that, except as otherwise directed by the assigned JHO/Special Referee for good cause shown, the trial of the issue(s) specified above shall proceed from day to day until completion and counsel must arrange their schedules and those of their witnesses accordingly; and it is further and it is further 655357/2017 CAPTAIN LUCAS, INC. vs. ROYAL EQUITIES OPERATING, LLC Motion No. 001 3 of 7 Page 3 of 7 [*FILED: 4] NEW YORK COUNTY CLERK 10/16/2019 03:06 PM NYSCEF DOC. NO. 17 INDEX NO. 655357/2017 RECEIVED NYSCEF: 10/16/2019 ORDERED that counsel shall file memoranda or other documents directed to the assigned JHO/Special Referee in accordance with the Uniform Rules of the Judicial Hearing Officers and the Special Referees (available at the "References" link on the court's website) by filing same with the New York State Courts Electronic Filing System (see Rule 2 of the Uniform Rules). DECISION Defendant Royal Equities pursuant to CPLR 3211 (a) (1) Operating, LLC (Owner) moves, and (7), to dismiss the complaint. At oral argument, on April 24, 2018, pursuant to CPLR § 32ll(c), this court converted the motion to one for summary judgment. The first two causes of action alleged in the complaint seek, respectively, clause, a declaratory judgment that an accelerated rental contained in a commercial lease (Lease) between the parties, constitutes a penalty, and is, therefore, unenforceable; and a declaratory judgment that the Lease terminated in May 2016, and that all obligations due and owing under the Lease ceased at that time. Ruling from the bench at oral argument, this court dismissed the third cause of action, which alleges a breach of contract. a related action, captioned Royal Equities Operating, LLC v 154 AD3d 516 Department, (1st Dept 2017), the Appellate In Rubin, Division, First granted defendant summary judgment in the amount of $1,740,818.60, plus interest and attorney's 655357/2017 CAPTAIN LUCAS, INC. vs. ROYAL EQUITIES OPERATING, LLC Motion No. 001 4 of 7 fees. Rubin Page 4 of 7 and [*FILED: 5] NEW YORK COUNTY CLERK 10/16/2019 03:06 PM NYSCEF DOC. NO. 17 INDEX NO. 655357/2017 RECEIVED NYSCEF: 10/16/2019 Orensten, who are the principals of plaintiff in this action, were guarantors of plaintiff's performance of its obligations under the Lease. It is undisputed that, in May 2016, defendant/Owner re-let the premises to an entity known as "Breya," and that plaintiff has remained in possession, pursuant to a sublease with Breya. Holy Props. v Cole Prods. ~~"--~~=-----~~~~~~~~~~ (87 NY2D 130, 134 [1995]), Citing plaintiff argues that Owner should be precluded from collecting rent on top of the rent collected from Breya, rent that, the complaint alleges, exceeds the rent provided for in the Lease. serving the notice described below, collect rent from plaintiff, for However, other than Owner has not attempted to any period after Brey a took possession of the premises, and there is no indication that Owner ever will do so. A declaratory judgment may be issued only if the controversy at issue contingent "'involve[s] or remote, present, prejudice rather to than hypothetical, plaintiffs.'" Tomasulo v Village of Freeport, 151 AD3d 1100, 1100 (1st Dept 2017), quoting American Ins. Assn. V Chu, 64 NY2d 379, prejudice to plaintiff is not present, 382 (1985). Here, but hypothetical. any Thus, the first cause of action must be dismissed. The second cause of action must also be dismissed. The Lease provides that: 655357/2017 CAPTAIN LUCAS, INC. vs. ROYAL EQUITIES OPERATING, LLC Motion No. 001 5 of 7 Page 5 of 7 [*FILED: 6] NEW YORK COUNTY CLERK 10/16/2019 03:06 PM NYSCEF DOC. NO. 17 INDEX NO. 655357/2017 RECEIVED NYSCEF: 10/16/2019 "Reference to "termination of this lease" includes expiration or earlier termination of the term of this Lease pursuant to any provisions of this [L] ease or to law [U] nless expressly otherwise provided in this Lease, any liability for a payment which shall have accrued to or with respect to any period ending at time of termination shall survive the termination of this Lease." The complaint admits that, as the result of plaintiff's failure to timely to pay the full rent due, in January, February, and March 2016, Owner served a five-day notice, prior to April 28, 2016, accelerating all through July 31, 2021, fixed rent due, pursuant to the Lease, although Owner has not acted to collect such rent from plaintiff. The complaint also recites that Owner re-let the premises to Breya, on May 3, 2016, and that Breya took possession on or about May 15, 2016. Consequently, even if, as plaintiff argues, its obligations under the Lease did not survive the termination Owner's notice of its leasehold, accelerating the such rent. termination Therefore, postdated plaintiff's second cause of action must be dismissed. It does not declaration that, follow, however, that Owner as a matter of law, is entitled to a plaintiff's liability for the accelerated rent survived the alleged termination of the Lease. Any right that Owner may have to collect the accelerated rent would be subject to a determination that the collection of such rent would not constitute an impermissible penalty. Owner may not simultaneously argue that plaintiff's first cause of action must 655357/2017 CAPTAIN LUCAS, INC. vs. ROYAL EQUITIES OPERATING, LLC Motion No. 001 6 of 7 Page 6 of 7 [*FILED: 7] NEW YORK COUNTY CLERK 10/16/2019 03:06 PM INDEX NO. 655357/2017 NYSCEF DOC. NO. 17 RECEIVED NYSCEF: 10/16/2019 be dismissed, because Owner has not sought, and may never seek, to collect the accelerated rent from plaintiff, and prevail on that argument, and then argue that it is entitled to a judgment that it is entitled to that rent as a matter of law. Finally, paragraph 19 of the Lease provides that, if plaintiff is in default of any of its obligations, under the Lease, and if Owner, in connection thereto, incurs attorney's "in fees instituting, prosecuting or defending any action or proceeding and prevails," Owner plaintiff, and attorneys' will be entitled accordingly, to defendant collect is such entitled sums to from recover fees in defending this action from plaintiff. 10/15/2019 DATE CHECK ONE: DEA Jf.JAMES, J.S.C. CASE DISPOSED GRANTED D DENIED APPLICATION: SETTLE ORDER CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN ~ NON-FINAL DISPOSITION GRANTED IN PART SUBMIT ORDER FIDUCIARY APPOINTMENT 655357/2017 CAPTAIN LUCAS, INC. vs. ROYAL EQUITIES OPERATING LLC ' Motion No. 001 7 of 7 D 0 OTHER REFERENCE Page 7 of 7

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