255 Butler Assoc. LLC v 255 Butler, LLC
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255 Butler Assoc. LLC v 255 Butler, LLC 2021 NY Slip Op 32708(U) December 16, 2021 Supreme Court, Kings County Docket Number: Index No. 511560/15 Judge: Leon Ruchelsman 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] KINGS COUNTY CLERK 12/16/2021 02:15 PM INDEX NO. 511560/2015 NYSCEF DOC. NO. 1064 RECEIVED NYSCEF: 12/16/2021 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF KINGS; CIVIL TERM: PART 16 -,--- - - ------ ---·- - - -.- -·-.- -- --- . ----.- - - - - - - .. -x 255 BUTLER ASSOCIATES LLC, Plaintiff, Decision and order Index No. 511560/15 - ag~inst - 255 BUTLER, LLC, ARIEL AKKAD, NATHAN AKKAD, SOLOMON AKKA,b and BEJAMIN AKKAD, December 16, 2021 Defendants, ---- ------- --- ------- --------------- X PRESENT: HON. LEON RUCHELSMAN The plaintiff has moved seeking to preclude the defendants from introducing any evidence of good faith on the part of the defendants. The defendants have cross~moved seeking to di~miss the entire trial on the grounds it is precluded by a ruling of the Appellate Division. arguments held. Papers were submitted by the parties and After reviewing all the arguments this court now makes the following determination:. The amended complaint asserted four causes of action. The first sought a declaratory judgement ttiere was no default under the lease. The second sought good faith and fair dealing. a breach of the implied covenant of The third sought a breach of the covenant of quiet enjoyment and a constructive eviction Fd the fourth sought tortious interference with prospective economic advantage. All. four causes of action stem from the same allegedly wrongful conduct, namely serving defaults the plaintiff cia:i.ms were knowingly false~ On February 21, 2018 Justice Ash denied defendants motion to dismiss the complaint. 1 of 8 on appeal the [*FILED: 2] KINGS COUNTY CLERK 12/16/2021 02:15 PM NYSCEF DOC. NO. 1064 INDEX NO. 511560/2015 RECEIVED NYSCEF: 12/16/2021 Appellate Division modified the order in a decision dated June 5 1 2019 (see, 255 Butler Associates LLC v. 255 Butler LLC, 173 AD3d 655, 102 NYS3d 699 [2d Dept., '2019]). The Appellate Division Specifically noted that "the amended complaint prop·erly stated a: cause of action to recover damages for breach of the implied covenant of good faith and fair dealing by alleging that the landlord's unlawful conduct destroyed and/or frustrated the tenant's right 'to receive the fruits of the [lease];,, (id). Further, thEo court held ''the amended complaint also stated a cause of action to recover damages for breach of the covenant of quiet enjoyment by alleging that the tenant was deprived of the beneficial use of the subject property based on the landlord's alleged wrongful service of notices of default and termination" (id) . Concerning the to·rtious interference claim the court ruled that "the facts alleged .in the amended complaint establish that the defendants' alleged actions were motivated by self-interest and other economic Considerations, and not for the sole purpose of harming the plaintiffn and concluded the plaintiff failed to state a cause of action in this regard. The defendant now argues that since the Appellate Division has already Concluded the landlord did not act solely for the purpose of harming the plaintiff there is no way the plaintiff can est.ablish the neces~ary .ba.d taith inherent in the. breach of implied covenant of good faith and c.ohstructive eviction. causes 2 2 of 8 [*FILED: 3] KINGS COUNTY CLERK 12/16/2021 02:15 PM INDEX NO. 511560/2015 NYSCEF DOC. NO. 1064 of action. RECEIVED NYSCEF: 12/16/2021 As the defendant explains, those causes of action are now "precluded by the Jurie 5; 2019 Decision bf the Appellate D:Lvision which, in the course of dismissing the Tenant's cause of action for tortious interference, held that as a matter of law the Landlord did not act with malice or wrongfully in transmitting the Notices" (see, Affidavit in Opposition to Plaintiff's Motion to Preclude and in Support of Defendant.' s Cross-motion to Preclude And/or Dismiss Damage ca-uses of Action, 'J[ 1 7) . It is well settled that to establish a claim of tortibus interference with prospective .economic advantage the plaintiff must demonstrate that the interference with the plaintiff·' s prospective business relations was accomplished by wrongful means or that the defendant acted for the sole purpose of harming the plaintiff (Tsatskin v. Kordonsky, 189 AD3d 1296, 138 NYS3d 641 [2d Dept., 2020]) . since no formal contract exists at this point, this tort requires a greater degree of culpability than interfering with an already existing contract Noonan, 3 NY3d 182, 785 NYS2d 359 [2004]). v. (Carvel Corp. v~ In Guard-Life Cbrp. S. Parker Hardware Manufacturing Corp., 50 NY2d 183, 428 NYS2d 628 [1980] the court explained that tortious interference with economic advantage does not exist "where the interference is inte_nded at lea.st in part to advanc.e the competing interest q.f the interferer, no un1awfu1 restra.int of trade· is ·effected, and 3 3 of 8 [*FILED: 4] KINGS COUNTY CLERK 12/16/2021 02:15 PM NYSCEF DOC. NO. 1064 INDEX NO. 511560/2015 RECEIVED NYSCEF: 12/16/2021 the means employed are not wrongful" (id). Thus, there is no element of bad faith per se which applies to this tort. Therefore, the Appellate Division concluded the conduct of the defendant in issuing ah allegedly false default notice did not rise to the high level demanded of this tort wherein the conduct was wrongf1.1l or was done for the sole purpose of harming the plaintiff. The cause of action for a breach of implied covenant of good faith and fair dealing is premised upon parties to a contract exercising gooq. faith while performing the terms of an agreement (Van Valkenburq'h Nooqer & Neville v. Hayden Publishing Co., 30 NYZd 34, 330 NYS2d 329 [1972]). Thus, to succeed upon this claim "the plaintiff must allege facts which tend to show that the defendant sought to prevent performance of the contract or to withhold its benefits from the plaintiff'' (~; Aventine Investment Management Inc., v. Canadian Imperial Bank of Commerce, 265 AD2d 513, 697 NYS2d 128 [2d Dept., 1999]). Indeed, ~the elements of a claim for breach of the duty of good faith and fair dealing are practically identical to the elements of a negligence claim: Cl) oefendant must owe plaintiff a duty to act in good faith and conduct fair dealing; (2) defendant must breach that duty; and. (3) the breach of duty' must proximately cause plaintiffJs 4amages"·~nd includes "any promises which a reasonable person in the position of the prbmisee would be 4 4 of 8 [*FILED: 5] KINGS COUNTY CLERK 12/16/2021 02:15 PM INDEX NO. 511560/2015 NYSCEF DOC. NO. 1064 RECEIVED NYSCEF: 12/16/2021 justified in understanding were included [in the contract] (see, Pastor v. Woodmere Fire District, 2016 WL 6603189 [E.D.N.Y. 2016]). While the breach of a covenant of good faith and fair dealing maintains an element of bad faith it does not rise to the level of wrongful conduct necessary to establish any tortious interference with prospective business relations. The 'wrongfuli conduct demanded of tortious interference includes "physical violence, fraud or misrepresentation, civil suits and criminal prosecutions, and some degrees of economic pressure" (Guard-Life, supra). That high standard is not comparable at all to the had faith necessary to establish a claim for the breach of good faith and fair dealing. Further, a constructive eviction occurs when the landlord's "wrongful acts substantially and materially deprive the tenant of the bene_f icial use and enjoyment of the premisesn (Barash v. Pennsylvania Real Estate Terminal Real Estate Corporation, 26 NY2d 77, 308 NYS2d 649 [1970]). Corp., 257 ,A.D2d 218, In Dinicu v. Gro'ff Studios 690 NYS2d 220 [1st Dept., 1999] the court held that "a constructive eviction occurs when a tenant, though not physically barreQ. :f:rom the area in question, is unable to use the area for the purpose intended" (id}. that ah wrong. It goes without saying eviction can only occur if the landlord did something Of course·, there can be no construqtive ,eviction if there is rib evidence the landlord acted iri .any wrongful manner ( 905 5th 5 of 8 [*FILED: 6] KINGS COUNTY CLERK 12/16/2021 02:15 PM NYSCEF DOC. NO. 1064 INDEX NO. 511560/2015 RECEIVED NYSCEF: 12/16/2021 Associates Inc.; v. 907 Corporation, 47 AD3d 401, 851 NYS2d 393 [1st Dept., 2008]}; Again, the w±dngftil activity necessary to establish a constructive eviction is far short of the wrongful conduct necessary to establish a tortious interference with prospective economic advantage. In truth, the defendant's entire argument is premisE:!d on the fact the same standard of conduct applies to all three activities, riamely, the tortio:us interference with prospective business relations, any breach df a covenant of good faith and a constructive eviction. As demonstrated, these three causes of action carry different standards of conduct and different levels of care:. Indeed, it would be entirely inconsistent for the Appellate Division to sustain the causes of action of breach of covenant of good faith arid constructive eviction and dismiss the claim for tortious interference if they all maintained the same standard of' care. To the extent the defendants believe the same standard applies to all three theri the proper venue to address those concerns is the Appellate Division. However, this court, examining the gtiidance of the Appellate Division and the standards necessary to prove the three causes of act:.ion perceives no such inconsistency. The fact the tortious interference claim was dismissed do-es not demand the dismissal. of the, two other claims. The simple fact the .AppeiJ.ate Division did not o.ismiss them :f:urther deIJ1onstrates their vitality at this time . .6 6 of 8 [*FILED: 7] KINGS COUNTY CLERK 12/16/2021 02:15 PM INDEX NO. 511560/2015 NYSCEF DOC. NO. 1064 RECEIVED NYSCEF: 12/16/2021 Therefore, based ort the foregoing, the motion seeking to dismiss the damages trial is consequently denied .. The plaintiff has moved seeking to preclude the introduction of good faith by defendants on the grounds the plaintiff has withheld contemporaneous communications with its counsel. The defendants oppose the motion on the grounds the request should have been made sooner. Notwithstc1nding, the defendants have not presented arty evidence that any prejudice will accrue if the plaintiff's are afforded this information or are given an opportunity to object to arty privilege log. This is particularly true since the legal basis of the defendant's within cross-motion filed on the eve of trial was fully known to them since June 5, 2019. Of course, this does not mean the plaintiff is entitl~d to that potentially privileg.ed information, rather, they should have an opportunity to argue they are so entitled and if still not produced then a preclusion order should issue. This is not merely a discovery issue that may not be raised after the filing 0£ a NO.te of Issue, but rather a trial issue. De.spite the fact it could have been raised sooner the iniportance of the information sought necessitates it is address·ed on the merits. In tbat vein, the court generally agrees the defendants will be permitted to introduce evidence of good faith in. th.eir defense subjeot to the disclosure issue note4. To streamline this filial dispute be.fore tria1 the plaintiff 7 7 of 8 [*FILED: 8] KINGS COUNTY CLERK 12/16/2021 02:15 PM NYSCEF DOC. NO. 1064 INDEX NO. 511560/2015 RECEIVED NYSCEF: 12/16/2021 may file any motion in this regard. The motion should be in letter form to expedite its resolution. The defendants will be aLforded an 9pportunity, via letter, to oppose ahy motion. parties may reach out to the court at arty time. So ordered. ENTER: DATED: December 16, 2021 Brooklyn N.Y. Hon. Leon Ruchelsma,n JSC 8 8 of 8 The
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