255 Butler Assoc. LLC v 255 Butler, LLC

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255 Butler Assoc. LLC v 255 Butler, LLC 2022 NY Slip Op 33204(U) September 21, 2022 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. INDEX NO. 511560/2015 FILED: KINGS COUNTY CLERK 09/22/2022 10:34 AM NYSCEF DOC. NO. 1108 RECEIVED NYSCEF: 09/22/2022 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF KINGS : CIVIL TERM: PART 16 --------------. -- ·----· .---.---- ·----------x 255 BUTLER ASSOCIATES LLC, Plaintiff, Decision and o.rder - against""" 1ndex No, 511560/15 255 BUTLER, LLC, ARIEL AKKAD, NATHAN AKKAD, SOLOMON AKKAD and BEJAMIN AKKAD, Defendants, September 21, 2022 .. ----. .-----. -----------...---. ---·----.-----.-x PRESENT: HON. LEON RUCHELSMAN The plaintiff has moved seeking to modify the use and occupancy stipulation negotiated between the parties dated November 23, 2015. The defendants oppose the motion. parties and arguments held. Papers were submitted by the After reviewing all the arguments this court how makes the following determination. On June 5, 2019 the Appellate Di vision held that the. use ancl occupancy order negotiate;d be:tween the parties on November 231 2015 was deemed a court order (see., 255 Butler Associates LLC v. Butler LLC, 173 AD3d 651, 102 NYS3d 259 (2d Dept., 201.9] J. 255 The Court further held, citing earlier authority, that "where to enforce a stipulation would beurijust or ineqi.iitable or permit the Other party to gain an unconscionable advantage, courts will afford relief" (id). The Appel.la:te Division reversed an earlier determination modifying the use ahd qccupancy amo11nt finding that- the court incorrectly consider'ed the value to the. plaintiff .~nd sh.ould have c9nsi.dered "the fair market rental va.lue of the. .subj.$ct p.roperi:y, name.ly, the amourit that a prospective cornmerc:iai teniint would be. willing subject property from the de.fendant'~ (id) . to pay to: 1eas.e the The Appellate bivisi.on concluded that. ''in the ev.ent that the plaintiff is successful at trial [* 1] 1 of 5 INDEX NO. 511560/2015 FILED: KINGS COUNTY CLERK 09/22/2022 10:34 AM NYSCEF DOC. NO. 1108 RECEIVED NYSCEF: 09/22/2022 and it is determined that the plaintiff did not default on its obligations under the lease, the plaintiff may be entitled to recover damages, including •a refund o.r rent credit'" (id). Thus, the award of 'use and occupancy' is not final but rather it is pendente lite and subject to change upon the conclusion of a trial (Morris Heights Health Center Inc., v. DellaPietra, 38 AD3d 261, 834 NYS2d 9 [1 st Dept. , 2007] ) . In its opposition, the defendants concede the Appellate Division authorized plaintiff's entitlement to a refund or a rent credit but stresses the plaintiff can avail itself of a rent credit for the remaining years of the lease and that there is no need (and no basis) for a refund of the escrow payments to date or a suspension of further payments. That argument contradicts further arguments presented by the defendants in an email to the court where the defendants assert that in the event the Yellowstone injune:tion has now lapsed "the 'absolute· and uricondi tional' oblig·a tion to pay rent and taxes under the Net Lease would appear to be reactivated" (see, Email sent by Stuart Blander Esq., on behalf of dE2fendant.s, Tuesday, September 20, 2022 at 5:34 PM [NYSCEF Doc.#]. Notwithstanding the .i..nconsistent arguments presented the defendants arguments .whol.ly ignore the impact of the Appellate Division .decisions, first strikin9 their answer and second concluding the plaintiff never defaulted its obligati.ons pursuant to the lease. The .defendapt' ~ straine\:l arguments simply refuse to contend with the consequences of the Appeilate Division decisions. Thus, there are two distinct .reasons the tenant should be 2 [* 2] 2 of 5 INDEX NO. 511560/2015 FILED: KINGS COUNTY CLERK 09/22/2022 10:34 AM NYSCEF DOC. NO. 1108 RECEIVED NYSCEF: 09/22/2022 entitled to a return of the escrow funds paid to date and a suspension of future use and occupancy payments. First, the Appellate Division's clear directive the plaintiff is entitled to such refund. The defendant's argument that awarding the escrow funds prior to a jtrdgeni.eri. t is improper fails to appreciate the es crow funds, and bnl y the. escrow funds, are distinct from other damages sought plaintiff and will b$ the subject or a broader motion. by the It is true the Appellate Division made no distinction between escrow funds (which perhaps did not even exist when the ruling was decided} arid other rents paid, however, regarding a judgement, and the amount of such judgement, requires careful consideration of future rent credits as noted and an examination of the pote,r1tial WeWork lease and any issues the defendant may present in opposition. No such analysis is required concerning the escrow funds which remain available. second, surely the striking of the defendant's answer and counterclaims and a determination the plaintiff did hot breath the lease and acted with due diligenc:e as decided by the Appellate Division in two separate decisions, demands a modificatiqn of the use and occupancy agreement (see, 255 Butler Associates LLC v. 255 Butler LLC, 2022 WL 3904649 [2d Dept., 202i] and 255 Butler Associates LLC v. 255 ButlSr LLC, 2D22 WL i904616 [2d Dept., 2022]). bbs~r~ed ~n 255 Butler Assbciates LLC v. As the court 255 Butler LLC, 173 AD3d 651, 102 NYS3d 259 [ 2d Dept., 2019] ) in cases whe.re it would be. unjust or inE!quitable to enforce a st1pulcition then the c:ou:tt may afford relief. Cons ider1-ng the changed circumstances, as noted, where.in the . .o.e.fendei.nt' s coni.plairi.t has beeh dismissed and ther.e has been 3 [* 3] 3 of 5 ari INDEX NO. 511560/2015 FILED: KINGS COUNTY CLERK 09/22/2022 10:34 AM NYSCEF DOC. NO. 1108 RECEIVED NYSCEF: 09/22/2022 Appellate determination there was no basis for the defaults which precipitated this lawsuit, it would be inequitable to maintain any funds in escrow and to. further require any payments Of use and occupancy during the continuation of the litigation. Thus, the motion of the plaintiff seeking recovery funds placed in escrow is granted. of all the The defendant's shall return all the current escrow funds to the plaintiff witl}in ten days of receipt of this order. Further, the plaintiff's request seeking to suspend use arid occupancy payrilerits duririg the pendency of the litigation is granted. Lastly, this decision does not addres.s any other issues :r:egardirig othet refunds, credits and ah ult.i,mate judgement. The defendant;s a•rguments that this motion should be denied because of claims the lease will be anticipatorily breached by the tenant are unsubstantiated arguments. that do not alter the analysis of this court's conclusion. In the event the plaintiff or any party commits breaches of the lease appropriate relief may be sought. Likewise; arguments the plaintiff has an obligation to continue to pay rent, if use arid occupancy is eliminated, and thus, this coli.rt, by imposing this ruling implicitly app.roves of such future breaches of not paying :tent, must be rejected for three reasons. future breaches is speculative as noted. First, th1:= existence of any Second, the Appellate Div i.s ion expl i ci tl y au tho ri zed such r.e funds or crecti ts in the .event the plaintiff prevailed. Lastly, it is grd:Ssly unfair tc:i demand .eit:,her the payment of use and, occupancy for the past seven years fo1lowed by the resumption of rent, as if the intervening lawsuit, 4 [* 4] 4 of 5 FILED: KINGS COUNTY CLERK 09/22/2022 10:34 AM NYSCEF DOC. NO. 1108 INDEX NO. 511560/2015 RECEIVED NYSCEF: 09/22/2022 pre<::Jpi ta ted so lei y by the defendant, never happened. This is particularly true. since tbe Appellate Division has concluded there was no basis for initiating the lawsuit and that therefore the plaintiff was surely harmed by the delay resulting in the inability to develop the property. The defendant's arguments, that the lease should be resumed as if no damage has been appreciated by the plaintiff at all is untenable. The parameters regarding the resumption of rent, if at all, ate surely issues that must be explored, however, that issue has no bearing ·ori. the plaintiff's right to a return of the escrow money and a cessation of future use and occupancy. Therefore, as noted; the plaTntiff's motion seeking the return of all the esc::row funds and the cessation of any 11s_e and occupancy going forward is granted. All other issues remain undecided. So ordered. ENTER: DATED: September 21, 2022 Brooklyn N.Y, Hori.-. JSC 5. [* 5] 5 of 5

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