Prince Fashions, Inc. v 60G 542 Broadway Owner LLC

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Prince Fashions, Inc. v 60G 542 Broadway Owner LLC 2019 NY Slip Op 33361(U) November 8, 2019 Supreme Court, New York County Docket Number: 651255/2016 Judge: W. Franc Perry 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 11/12/2019 04:02 PM NYSCEF DOC. NO. 163 INDEX NO. 651255/2016 RECEIVED NYSCEF: 11/12/2019 SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY PRESENT: HON. W. FRANC PERRY PART IAS MOTION 23EFM Justice · --------------------------------------------------~------------------------------X PRINCE FASHIONS, INC., INDEX NO. '651255/2016 MOTION DATE Plaintiff, MOTION SEQ. NO. 09/12/2019 005 I- V - 60G 542 BROADWAY OWNER LLC, DECISION AND ORDER Defendant. ---------------------------------------------------------------------------------X The following e-filed documents, listed by NYSCEF document number (Motion 005) 136, 137, 138, 139, 140, 141, 142, 143, 144, 145, 146, 147, 148, 149, 150, 151, 152, 153, 154, 155, 156, 157, 158, 159, 162 were read on this motion to/for RENEWAL/YELLOWSTONE : In motion sequence number 005, plaintiff Prince Fashions, Inc. ("Plaintiff'), moves for the sec;ond time, pursuant to CPLR 222l(e), for an order granting renewal of the Court's decision denying Plaintiffs application seeking to toll the cure period related to Plaintiffs purported failure to maintain general liability insurance naming Plaintiffs landlord, defendant 60G 542 Broadway Owner, LLC ("Defendant"), as an additional insured between May 2015·and March 2016. Justice Braun denied Plaintiffs motion for a Yellowstone injunction on June 30, 2016, \ finding that Plaintiff had failed to procure the requisite liability insurance in favor of Defendant and that the failure to procure the insurance required under its commercial lease constituted an incurable default. Plaintiff seeks renewal on the grounds that it has now successfully obtained .I retroactive liability insurance in favor of Defendant for the alleged gap period between May 2015 and March 2016. 651255/2016 PRINCE FASHIONS, INC. vs. 60G 542 BROADWAY OWNER, LLC Motion No. 005 1 of 8 Page 1of8 [*FILED: 2] NEW YORK COUNTY CLERK 11/12/2019 04:02 PM NYSCEF DOC. NO. 163 INDEX NO. 651255/2016 RECEIVED NYSCEF: 11/12/2019 ) BACKGROUND This action has an extensive litigation history including multiple supreme coUrt actions, a I civil cpurt proceeding, a bankruptcy proceeding, and multiple appeals. 1 The coUrt assumes famili~rity with the record and highlights a summary of tho~e facts and proceedings that are ~ . ... material to the determination of the instant motion. ' In 1980, Plaintiff took possession of the first floor, basement, and vault areas (the "Premises") of the building located at 542 Broadway, New York, New York (the "Building"), pursuant to an assignlnent of a master lease, dated April 22, 1980 (the "Lease"), between Plaintiff and non-party ~ . . . 542 Holding Corp. ("542 Holding"). Under the Lease, Plaintiff was required, in pertinent part, to: I : maintain general public liability insurance in standard form in favor of Landlord ! and Tenant against claims for bodily injury or death or property damage occurring in or upon the demised premises, effective from the date Tenant enters into : possession and during the term of this lease. Such insurance shall be in an amount ·: and with carriers acceptable to the Landlord. Such policy or policies shall be · delivered to the Landlord. (Lease; NYSCEF Doc. No. 3, Art. 8). On May 13, 2015, 542 Holding conveyed the Premises to Defendant pursuant to a ' Condo~inium Unit Deed that was recorded in the Office of the City Register of the City of New York on June 1, 2015 (the "Deed"). In the Deed, 542 Holding duly conveyed the Premises to ' Defendant together with "all the estate and rights of the Grantor in and to the [Premises]." (Deed, NYSCEF Doc. No. 21). In connection with the conveyance, 542 Holding also assigned Defendant all of its right, title, and interest in and to the Lease, pursuant to an Assignment and Assumption Agreerhent of Retail Master Lease (Assignment, NYSCEF Doc. No. 22). , \ 1 On May 29, 2019, Plaintiff filed a voluntary bankruptcy petition in the United States Bankruptcy Court for the Southern District of New York. On July 25, 2019, the bankruptcy court issued.an order that partially lifted the automatic stay, under 1 I U.S.C. § 362, permitting this court to hear and determine Plaintiffs motion to renew its Yellowstone application and permitting the civil court to determine a motion to intervene in the Holdover Proceeding. ! 651255/2016 PRINCE FASHIONS, INC. vs. GOG 542 BROADWAY OWNER, LLC Motion No. 005 2 of 8 Page 2 of 8 [*FILED: 3] NEW YORK COUNTY CLERK 11/12/2019 04:02 PM NYSCEF DOC. NO. 163 INDEX NO. 651255/2016 RECEIVED NYSCEF: 11/12/2019 On March 4, 2016, Defendant issued a Notice of Default to Plaintiff in which Defendant identified numerous defaults under the Lease, including, inter alia, Plaintiff's failure to maintain general liability insurance in favor of Defendant and Plaintiffduring the period from May 2015 through March 2016 (Notice of Default, NYSCEF Doc. No. 27). In response, Plaintiffcommenced this action on March 10, 2016, by filing a summons and complaint seeking a declaration that Plaintiff was not in breach of the Lease and orders to show cause seeking a Yellowstone injunction tolling Plaintiff's time to cure the alleged defaults, to the extent they existed. Significantly, Plaintiff did not argue in its papers or at oral argument that it was ready, willing and able to cure the alleged insurance default by purchasing retroactive insurance coverage. Rather, Plaintiff argued that the liability insurance policies purchased by Plaintiff's subtenants which listed 542 Holding as an additional insured satisfied Plaintiff's obligations under the Lease. On June 30, 2016, Justice Braun denied Plaintiff's orders to show cause noting that Plaintiff had failed to demonstrate its ability to cure the alleged default under the Lease; the Court found that Plaintiff's failure to maintain a general liability insurance policy naming Defendant as . an additional insured from the time Defendant became the owner of the premises on May 19, 2015 through June of 2016 was an incurable default. When Plaintiff failed to cure i.ts default or obtain interim relief tolling its time to cure, Defendant served Plaintiff with a Notice of Termination and Cancelation of Lease Renewal Option, terminating Plaintiff's tenancy effective JUiy 5, 2016 (Notice of Termination, NYSCEF Doc. No. 25), and commenced a holdover pro~eeding against Plaintiff in New York County Civil Court on July 11, 2016 (the "Holdover Proceeding"). ,On July 25, 2016, Plaintiff appealed Justice Braun's denial ofa Yellowstone injunction and, on April 18, 2017, the Appellate Division unanimou~ly affirmed Justice Braun's decision. 651255/2016 PRINCE FASHIONS, INC. vs. 60G 542 BROADWAY OWNER, LLC Motion No. 005 3 of 8 Page 3 of 8 [*FILED: 4] NEW YORK COUNTY CLERK 11/12/2019 04:02 PM NYSCEF DOC. NO. 163 INDEX NO. 651255/2016 RECEIVED NYSCEF: 11/12/2019 The Appellate Division held that, because Plaintiff failed to obtain injunctive relief between July 1, 2016, the date of entry of Justice Braun's decision, and July 5, 2016, when Plaintiffs cure period expired, Plaintiffs lease was terminated, effective July 5, 2016, and the Appellate Division lacked the power to revive it. The Appellate Division also stated that were it to consider the merits of Plaintiffs arguments, it would reject them. (NYSCEF Doc. No. 4, pp, 7-8). 2 Plaintiffs subsequent motions for leave to reargue and to appeal to the Court of Appeals were denied. · While Plaintiffs appeal was pending, on August 5, 2016, Defendant filed a motion for summary judgment in the Holdover Proceeding seeking a final judgment.of possession against Plaintiff and Plaintiffs undertenants. Plaintiff cross-moved to dismiss the petition. The motions were held in abeyance pending the determination of Plaintiffs appeal in this action. Relying on the Appellate Division's decision affirming Justice Braun's denial of Plaintiffs application for a Yellowstone injunction, on September 20, 2017, Judge Samuels issued a decision and order in the Holdover Proceeding that granted Defendant's motion for summary judgment and denied Plaintiffs cross-motion to dismiss the petition. Judge Samuels struck Plaintiffs affirmative defenses, awarded Defendant a final judgment of possession, and directe,d a hearing on Defendant's attorneys' fees, a stay of the warrant of eviction, and to conduct an inquest against Plaintiffs non-appearing subtenants. (NYSCEF Doc. No. 123). However, on February 9, 2018, Judge Samuels issued an order, which Defendant appealed, granting Plaintiff leave to renew and reversing her September decision on the grounds (1) that her reliance on the Appellate Division's denial of Plaintiffs appeal of Justice Braun's Yellowstone injunction decision was in error as the Appellate Division had not made a 2 In dictum, the Appellate Division rejected Plaintiffs arguments that (1) liability insurance policies naming Plaintiffs subtenants as insureds could satisfy Plaintiff's obligation under the Lease to maintain liability insurance in favor of Plaintiff and Defendant and (2) that Plaintiff could cure its failure to maintain continuous liability insurance coverage by purchasing prospective insurance coverage for the remainder of the period. (NYSCEF Doc. No. 74, pp. 8-10). 651255/2016 PRINCE FASHIONS, INC. vs. 60G 542 BROADWAY OWNER, LLC Motion No. 005 4 of 8 Page4 of 8 [*FILED: 5] NEW YORK COUNTY CLERK 11/12/2019 04:02 PM NYSCEF DOC. NO. 163 INDEX NO. 651255/2016 RECEIVED NYSCEF: 11/12/2019 deterillination on the merits that Plaintiff had failed to obtain the requisite commercial liability insurahce and was in default of the Lease and (2) Plaintiffs.allegation that recently discovered eviderice demonstrated that Defendant engaged in a conspiracy to deprive Plaintiff of its leaseh'old raised questions of fact that precluded summary judgment (NYSCEF Doc. No. 147). 3 On October 31, 2018, the Appellate Term modified Judge Samuels' renewal decision to deny Plaintiffs motion to renew and grant Defendant's motion to dismiss certain affirmative defenses, and for summary judgment of possession, and remanded the matter to the Civil Court for a ~earing on use and occupancy and reasonable attorneys' fees due to Defendant. The Appel,ate Teim held that Defendant's motion for summary judgment of possession should have been g~anted based upon Defendant's "ufi!ebutted showing that the tenant ~reached the insurance covera'ge requirements of the governing commercial lease agreement." The Appellate Term also ,; found that "landlord [Defendant] had valid grounds for terminating [the] commercial [L]ease, based on tenant's [Plaintiff s].incurable default in obtaining insurance nam.ing the landlord as an additional insured." (NYSCEF Doc. No. 1488). Plaintiffs motion seeking leave to appeal the Appell~te Division's decision to the Court of Appeals was denied on May 14, 2019 (NYSCEF Doc. No. 48). On March 18, 2019, despite the fact that the Lease had already been ~erminated, Plaintiff purchased a retroactive liability insurance policy in favor of 542 Holding and Defendant with an \ effective period from May 12, 2015 through May 12, 2016. Now, Plaintiff moves for the second 3 1 . In motion sequence number 004, Plaintiff sought to renew Justice Braun's June 2016 decision based on the same arguments presented to Judge Samuels, that newly discovered evidence established (1) that Defendant, 542 Holding, and the subject Co-op participated in a "sham" real estate transaction regarding the Premises as part of a conspiracy to steal Plaintiff's valuable leasehold and (2) that Plaintiff's alleged failure to maintain general liability insurance in favor of Defendant did not expose Defendant to potential liability because Defendant was required under the terms of its mortgage agreements to purchase its own liability insurance covering Defendant and the Premises. This Court found that the evidence and arguments raised by Plaintiff did not warrant renewal or modification of Justice Braun's decision Iiand denied the motion on the record on May 31, 2018 (NYSCEF Doc. No. 135). . 651255/2016 PRINCE FASHIONS, INC. vs. 60G 542 BROADWAY OWNER, LLC Motion No. 005 5 of 8 Page 5 of 8 [*FILED: 6] NEW YORK COUNTY CLERK 11/12/2019 04:02 PM INDEX NO. 651255/2016 NYSCEF DOC. NO. 163 RECEIVED NYSCEF: 11/12/2019 time, pursuant to CPLR 2221 (e), to renew its motion seeking a Yellowstone injunction on the grounds that Plaintiff has now obtained retroactive insurance curing the prior default. DISCUSSION A motion for leave to renew shall be based upon new facts not offered on the prior motion. The new facts must be those that would change the prior determination or demonstrate that there has been a change in the law that would change the prior determination. (CPLR 2221 [e] [2]). Movant must provide reasonable justification for the failure to present such facts on . the prior motion. (CPLR 2221 [e] [3]). Any alleged new facts must accompany a party's application to renew (Reyes v. Sequeira, 64 A.D.3d 500, 512-13 [1st Dept 2009]). Here, Plaintiff fails to present any new facts or changes in the law that would alter the court's prior decision I , denying Plaintiffs motion for a Yellowstone injunction. Plaintiff is not entitled to a Yellowstone· injunction as the period to cure has expired. It is well settled that a tenant is not entitled to a Yellowstone injunction after the cure period has expired (KB Gallery, LLC v 875 W 181 Owners Corp., 76 AD3d 909 [2010]; Retropolis, Inc. v . 14th St. Dev. LLC, 17 AD3d 209 [2005]; Prince Fashions, Inc. v 542 Holding Corp., 15 AD3d 214 [2005]). Here, after the initial Yellowstone application was denied, the stay of the cure period 'was lifted, the cure period expire4, and the Lease was terminated, effective July 5, 2016. Since Plaintiffs motion to renew its Yellowstone application was brought after this date, the Court cannot now grant Yellowstone reliefin this case (see 166 Enterprises_ Corp. v I G Second Generation Partners. L.P., 81AD3d154, 158 [1st Dept 2011] [holding tenant's motion to renew its application for a Yellowstone injunction, which was brought after the cure period had expired, should have been denied]). Moreover, a Yellowstone injunction cannot be afforded retroactive application in this case (see SHS Baisley, LLC v Res Land, Inc., 18 AD3d 727, 728 [2d Dept 651255/2016 PRINCE FASHIONS, INC. vs. 60G 542 BROADWAY OWNER, LLC Motion No. 005 6 of 8 Page 6 of 8 [*FILED: 7] NEW YORK COUNTY CLERK 11/12/2019 04:02 PM NYSCEF DOC. NO. 163 INDEX NO. 651255/2016 RECEIVED NYSCEF: 11/12/2019 2005] [allowing retroactive relief as a result of errors by the court]; compare T. W Dress Corp. v Kaufman, 143 AD2d 900 [1988] [lapse of Yellowstone TRO was not a mere technicality where the plaintiffs counsel failed to obtain an extension of the TRO and allowed the cure period to expire]). Moreover, the retroactive insurance policy procured by Plaintiff after the Lease was terminated does not qualify as a new fact that was not offered on the prior motion that would chang~ the Court's decision denying Plaintiffs motion for a Yellowstone injunction. To establish its entitlement to a Yellowstone injunction, tolling its time to cure the alleged insurance default, Plaintiff was required to demonstrate its willingness and ability to obtain sufficient retroactive insurance coverage at the time of its Yellowstone injunction motion, not three years hence (see Great Wall 384, Inc. v 384 Grand St. Haus., 2016 N.Y. Slip Op. 32942[U] [Sup Ct New York Cnty 2016] [granting conditional 10 day Yellowstone injunction based on tenant's representation that it had the ability to obtain retroactive insurance to bridge the gap in coverage]; see also Bliss World LLC v 10 W 57th St. Realty LLC, 170 AD3d 401, 401 [1st Dept 2019] ["None of these proposed cures involve any retroactive change in coverage, which means that th~ alleged defaults raised by the landlord are not susceptible to cure."]). :Here, Plaintiff never argued in its application for a Yellowstone !njunction that it was ready, willing and able to remedy the alleged insurance default by purchasing a retroactive liability insurance policy in favor of Defendant. Rather, Plaintiffargued, inter alia, that (1) Defendant had waived its right to enforce insurance requirements set forth in the Lease through the inaction of its predecessor.in interest, 542 Holding, and (2) insurance policies purchased by Plaintiffs subtenants provided sufficient coverage. The retroactive insurance policy purchased by Plaintiff after its Lease was terminated is not newly discovered evidence that can operate to · alter the court's prior determination denying its Yellowstone application. 651255/2016 PRINCE FASHIONS, INC. vs. 60G 542 BROADWAY OWNER, LLC Motion No. 005 7 of 8 Page 7 of 8 [*FILED: 8] NEW YORK COUNTY CLERK 11/12/2019 04:02 PM NYSCEF DOC. NO. 163 INDEX NO. 651255/2016 RECEIVED NYSCEF: 11/12/2019 CONCLUSION Accordingly, it is hereby ORDERED that Plaintiff's motion to renew is denied in its entirety. Any requested relief not otherwise discussed has nonetheless been considered by the Court and is hereby denied and this constitutes the decision and order of the Court. ?J%~.tfh:::. Administrative Judge Supreme Court, New York COUlity W. FRAN<5'1i:t!!Rfl'Y, J.S.C. DATE CHECK ONE: APPLICATION: CHECK IF APPROPRIATE: ~ CASE DISPOSED GRANTED ' 0 NON-FINAL DISPOSITION DENIED GRANTED IN PART SETTLE ORDER SUBMIT ORDER INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT 651255/2016 PRINCE FASHIONS, INC. vs. 60G 542 BROADWAY OWNER, LLC Motion No. 005 8 of 8 D D OTHER REFERENCE Page 8 of 8

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