BSD 80 Broad LLC v LSG (US) LLC

[*1] BSD 80 Broad LLC v LSG (US) LLC 2020 NY Slip Op 50806(U) Decided on July 6, 2020 Supreme Court, New York County Marin, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on July 6, 2020
Supreme Court, New York County

BSD 80 Broad LLC, Plaintiff,

against

LSG (US) LLC f/k/a Legal Solutions Group, LLC, Defendant.



654078/2019
Alan C. Marin, J.

The Court has considered efiled documents 1 through 6, 8 through 15, 17 and 19 through 31.

Defendant and plaintiff's predecessor-in-interest entered into a commercial lease for a portion of the 27th floor of Broad Street in lower Manhattan on March 13, 2009; occupancy began on that date, and the lease, amended in 2012 and 2013, has a term through September 30, 2021. BSD acquired the building on September 12, 2014.

On May 1, 2019, LSG vacated the premises, which according to plaintiff was without having permission or authorization to do so. BSD 80 Broad filed a summons and complaint on July 17, 2019 for $27,735.92 in unpaid rent, plus additional charges and fees. In its answer, two of LSG's affirmative defenses contend that plaintiff terminated the agreement, it accepted defendant's surrender of the premises and took actions that had the effect of preventing defendant from returning to the space.

Plaintiff BSD moves here to dismiss these two, along with the other affirmative defenses, which are, by and large, standard. For example, the third affirmative defense states that plaintiff's claim is barred by the "equitable doctrines of release, accord and satisfaction, res judicata, collateral estoppel, laches, estoppel, acquiescence, waiver, ratification and/or unclean hands" (document 3, p 3). Defendant LSG's memorandum of law argues that "One need not look beyond the 'wherefore' clause in the Complaint which requests that this Court award Plaintiff 'such other relief as the Court deems just and proper,'" adding that this includes equitable relief (document 26, p 8).

This Court finds that we would have to look beyond the wherefore clause; these affirmative defenses are struck. To the extent that they depend upon the email exchange of May 20 and May 24, 2019, see below.

In its fourth affirmative defense, defendant contends that any damages should be barred or reduced for failure to mitigate, citing one of a landlord's options from Holy Properties Ltd v Kenneth Cole Productions, 87 NY2d 130, 133-134: "When defendant abandoned these premises [*2]prior to expiration of the lease, the landlord had three options: (1) it could do nothing and collect the full rent due under the lease."[FN1] Defendant LSG argues that what it described as a "gut renovation" is at odds with "it could do nothing." This Court disagrees; defendant supplies no support for its interpretation. Moreover, the second sentence of Article 26 (c) provides that "The failure of Landlord to re-let the Premises or any part or parts thereof shall not release or affect Tenant's liability for damages."

Defendant's memorandum argues that BSD 80 Broad has breached article 25(1) of the lease by failing to provide it with a notice of default and an opportunity to cure, which under article 26 is a condition precedent for holding defendant to future rent after the premises is surrendered. Paragraph (1) of article 25 covers defaults for other than non-payment - - desertion, violation of non-monetary covenants and bankruptcy. What occurred here was not a desertion, which describes a situation when a tenant vacates or abandons the premises, but remains in possession. In that case, the landlord does owe the tenant notice and an opportunity to cure.

Defendant submits the affidavit of Gary Markham, president of LSG, which attaches his February 25, 2019 letter to plaintiff: "Pursuant to the Good Guy Guaranty related to the above lease, LSG US LLC is hereby providing you with 90 days written notice to surrender the space, effective today, 25th February 2019. Please acknowledge same" (document 24).

The good guy guaranty covered Mr. Markham's obligation as guarantor, and plaintiff does not dispute that Markham's obligation thereunder has ceased. Mr. Markham's affidavit further states that LSG moved out of 80 Broad on about May 1, and shortly thereafter plaintiff began a gut renovation and disposed of a smart board and projector that belonged to LSG. "Based on Plaintiff's actions throughout my move and my communications with Plaintiff's representatives," Markham concluded that plaintiff 80 Broad had agreed that defendant LSG was no longer obligated for rent or other payments per the lease (document 22, ¶8).

Defendant's president states that plaintiff acknowledged the termination of the lease to him verbally and in writing. He relies upon the email exchange of May 20 and May 24, 2019 (document 25). The first email was Markham's to the landlord, which contained the subject heading of "June Rent statement;" Markham's text read that the good guy warranty was activated February 25, with a 90-day limit, that LSG has vacated and that "no further rent payments shall be forthcoming as LSG has no funds or assets to cover these funds. This has been explained to your management in writing and in person."

On May 24, 2019, Danielle Purdy of BSD responded "Please disregard the June rent statement," and she noted that some things had been left in the LSG suite and asked when they would be removed.

David Israni is the senior managing director of Broad Street Development which manages plaintiff BSD 80 Broad. In his affidavit of January 23, 2020, he explains that Danielle Purdy, a former BSD employee, was at the time, a "low-level Assistant Property Manager with no knowledge of plaintiff's legal position concerning Defendant and no authority to bind Plaintiff" [*3](document 28, ¶ 14).

The authority of an employee to bind her employer can be a question for the trier of fact (see PJI 2:235). Ms. Purdy's email is insufficient to raise a question of fact in view of:

1) Plaintiff's continuing to invoice defendant for its financial obligations under the lease; monthly invoices, dated from June 1, 2019 through January 1, 2020, have been submitted (document 31);2) Article 43 (a) of the lease provides that "No agreement shall be effective to change, modify, waive, release, discharge, terminate or effect an abandonment of this Lease, in whole or in part, unless such agreement is in writing, expressly refers to this Lease and is signed by the party against whom enforcement of the change, modification [etc] is sought" (document 23); and3) BSD's February 28, 2019 letter to Mr. Markham, which reads in part: "We are in receipt of Tenant's letter dated February 25, 2019, advising that Tenant will be vacating the Premises, notwithstanding that the Lease does not expire until September 30, 2021. P1ease be advised that Tenant's purported surrender is not deemed a termination of the Lease and is without prejudice to any and all rights the Landlord may have pursuant to the Lease, including . . . the payment of rent and additional rent through the balance of the Lease term . . ." (document 14).

The foregoing discussion of the contract terms and the email exchange comprehends the second (documentary evidence), fifth (condition precedent), sixth (plaintiff's or third party actions), and seventh (breach of contract) affirmative defenses, which are also not viable.

* * *

NOW therefore, in view of the foregoing,

IT IS ORDERED, that plaintiff's motion to dismiss defendants' affirmative defenses is granted in its entirety.

ENTER

July 6, 2020

Alan C. Marin J.S.C. Footnotes

Footnote 1:The other two options are that: "(2) it could accept the tenant's surrender, reenter the premises and relet them for its own account thereby releasing the tenant from further liability for rent, or (3) it could notify the tenant that it was entering and reletting the premises for the tenant's benefit."