One NY Plaza Co. LLC v Vendorville, LLC
Annotate this CaseDecided on April 14, 2023
Supreme Court, New York County
One NY Plaza Co. LLC, Plaintiff,
against
Vendorville, LLC D/B/A CENTO PERCENTO, and TARAS HOLLOMAN, Defendants.
Index No. 157811/2022
Greenberg Traurig, LLP, New York, NY (Daniel J. Ansell of counsel), for plaintiff.
No appearance for defendants. Gerald Lebovits, J.
In this action on a commercial lease agreement and guarantees, plaintiff-landlord, One NY Plaza Co. LLC moves without opposition under CPLR 3215 for default judgment against defendant-tenant Vendorville, LLC, and defendant-guarantor Taras Holloman. The motion is granted in part and denied in part.
DISCUSSION
Landlord has established proper service and defendants' default, as CPLR 3215 (f) requires. With respect to the facts constituting landlord's claims, landlord submits an affidavit from its managing agent and supporting documentary evidence. (See NYSCEF No. 5 [affidavit]; NYSCEF Nos. 7-14.) These materials demonstrate the facts constituting some, but not all, of landlord's claims on this motion.
Landlord has shown that it properly terminated tenant's lease following a service of a notice to cure rent-related defaults. Landlord is therefore entitled to the requested declaration that the lease at issue was terminated on August 31, 2022. Landlord has similarly shown that it is entitled to possession of the (formerly) leased premises.
The issue of landlord's claimed damages is more complicated. Landlord seeks a monetary award on this motion comprising numerous categories of damages. But landlord is not entitled here to collect all those types of damages.
First, landlord seeks from tenant (i) unpaid rent accrued as of the lease-termination date, and (ii) holdover use and occupancy, accruing under the lease at double rent, for the period running from the termination date to the date of this motion. Landlord has established for default-judgment purposes that it is entitled to these claimed sums, which total $117,307.28. Landlord has also established that it is entitled to collect this $117,307.28 from guarantor, pursuant to guarantor's absolute and unconditional guarantee.
Second, landlord seeks interest on this sum at the contractual default rate of 18% annually. Landlord has shown that it is entitled under the lease to this claimed interest.
Third, landlord seeks its reasonable attorney fees incurred in this action, as provided for in § 27.02 of the lease. Landlord has shown that it is entitled under the lease to this increment of damages, although the amount of landlord's attorney fees remains to be determined.
Fourth, landlord seeks holdover-U&O at double rent for the period from the date of this motion through the date on which plaintiff recovers possession of the premises. Landlord has not established on this motion that it is entitled to this sum. This claimed sum is necessarily based on a U&O obligation that had not yet accrued at the time of the filing of the motion. Absent an acceleration clause in the lease or guarantee—which landlord does not rely on with respect to the holdover-U&O claim—landlord cannot recover future, not-yet-accrued U&O. (Utility Garage Corp. v National Biscuit Co., 71 AD2d 578, 578-579 [1st Dept 1979]; accord Runfola v Cavagnaro, 78 AD3d 1035, 1035 [2d Dept 2010].)
Fifth, landlord seeks damages running from the date on which plaintiff recovers possession through the expiration of the lease, consisting, in essence, of the rent tenant would have owed over that period, minus the net rent that landlord is able to collect should it relet the premises. Landlord is not entitled to this sum.
This fifth damages request is based on § 24.01 (b) of the lease. Under that provision, the damages are to be "payable upon the due dates therefor specified herein . . . as if this Lease had not so terminated or if Landlord had not so reentered the premises"—i.e., payable each month as if it were ordinary rent. (NYSCEF No. 9 at 62.) When post-default rent is "due and payable on a monthly basis," such that a tenant must "pay the amounts of deficiencies as they accrue[]," landlord cannot sue "for any deficiency in advance of its accrual." (Beaumont Offset Corp. v Zito, 256 AD2d 372, 373 [2d Dept 1998]; see also Itel Data Processing Corp. v Dominick Intl. Corp., 58 AD2d 576, 577 [holding that when a lease provides that "damages are to be paid by the tenant as they become due," the landlord "cannot bring a cause of action for additional rent through the end of the term of the lease"].)
The fifth damages request is unavailing for the additional, related reason that § 24.01 (b) makes the not-yet-accrued post-recovery damages subject to offset by rent collected by the landlord should it relet the premises. The landlord has not yet relet the premises (or failed or declined to do so). The amount of damages to which landlord is entitled under § 24.01 (b) is thus not merely equivalent to future rent (rather than accrued rent), but also remains contingent on [*2]future events. Under these circumstances, no claim lies for this increment of damages.
Sixth, and in the alternative, landlord seeks liquidated damages, consisting in essence of the difference between the rent landlord would have been able to collect from tenant over the remainder of the lease, minus the fair-market-rental value of the leased premises over that same period, with the difference subject to present discounting. (See NYSCEF No. 6 at ¶ 26.) This damages claim is based on lease § 24.01 (a). That lease paragraph, unlike paragraph (b), constitutes an acceleration clause, because it permits landlord to seek now the full rent owed over the remainder of the lease, subject only to discounting under a formula set in the lease. (See NYSCEF No. 9 at 62.) This sixth, alternative damages claim, though, is just that—alternative. Section 24.01 of the lease provides that landlord must elect between paragraphs (a) and (b) when pursuing a damages claim. (See id.) That election has not yet occurred. Indeed, landlord's papers on this motion state that "[u]pon the Possession Date, in lieu of further Deficiency, Plaintiff may seek" damages under § 24.01 (a). (NYSCEF No. 6 at ¶ 26 [emphasis added].) Landlord cannot seek two alternative and conflicting claims for (future) damages pending landlord's future choice between them.
Seventh and last, landlord seeks direct and consequential damages "arising out of any lost opportunities by Plaintiff to re-let the Premises or any part thereof, including loss of new leases, expenses related to delayed delivery of the Premises to a new tenant." (NYSCEF No. 6 at ¶ 24 [d].) This damages claim is based on lease § 34.01 (c). (See NYSCEF No. 9 at 77.) But this claim, too, seeks damages that had not yet accrued when the motion was filed—or, if they accrued during the three-month holdover period running from August 31, 2022, to November 18, 2022 (when landlord filed this motion), have no factual support in this motion. Landlord has not established the facts constituting this claim.
With respect to the fourth-through-seventh damages categories, landlord evidently recognizes the problem that these four categories consist of future, not-yet-collectible damages. Landlord seeks to get around this problem by proposing a post-judgment inquest to determine the amount of damages owed by tenant and guarantor under these four categories, followed by entry of a supplemental judgment for those damages. (See NYSCEF No. 6 at ¶ 29.) But a damages inquest is proper only when liability has been imposed but damages remain to be determined. As discussed above, tenant and guarantor are not liable, as of the date of this motion, for the fourth-through-seventh categories of damages. No basis exists, therefore, for this court now to direct an inquest to determine the amounts of damages owed under each category.[FN1]
Accordingly, it is
ORDERED that the branch of landlord's CPLR 3215 motion seeking default judgment on landlord's first cause of action for a declaratory judgment is granted; and it is further
ADJUDGED and DECLARED that landlord terminated tenant Vendorville's lease on August 31, 2022; and it is further
ORDERED that the branch of landlord's CPLR 3215 motion seeking default judgment on landlord's second cause of action for ejectment is granted; and it is further
ADJUDGED that landlord is entitled to possession of the Premises in the building located at One New York Plaza, New York, New York as against tenant Vendorville, and the Sheriff of the City of New York, County of New York, upon receipt of a certified copy of this Order and Judgment and payment of proper fees, is directed to place landlord in possession accordingly upon the expiration of 14 days from receipt of the Order and Judgment; and it is further
ADJUDGED that upon the expiration of 14 days from service of notice of entry of this Order and Judgment, landlord may exercise all acts of ownership and possession of the Premises in the building located at One New York Plaza, New York, New York, including entry thereto, as against tenant Vendorville; and it is further
ORDERED that the balance of the above-entitled action relating to recovery of damages is severed and continued; and it is further
ORDERED that the branches of landlord's CPLR 3215 motion seeking default judgment on landlord's third and fifth causes of action are granted in part and denied in part as set forth above, and plaintiff is awarded a money judgment against tenant and guarantor, jointly and severally, for $117,307.28, with interest running at the contractual default rate of 18% from the reasonable intermediate date of September 1, 2022, plus costs and disbursements as taxed by the Clerk upon the submission of an appropriate bill of costs; and it is further
ORDERED that landlord may obtain entry of a supplemental judgment for its reasonable attorney fees upon the determination of those fees on a motion on notice, supported by appropriate documentation; and it is further
ORDERED that landlord serve a copy of this order with notice of its entry on defendants by certified mail, return receipt requested, directed to their respective last-known addresses; and on the office of the County Clerk, which shall enter judgment accordingly.
DATE 4/14/2023 Footnotes
Footnote 1:This conclusion is without prejudice to the landlord's seeking an amendment under CPLR 3025 (b) or CPLR 3025 (c) to assert claims for these categories of damages once they have accrued. (See 210 W. 29th St. Corp. v Cohan, 13 AD3d 613, 614 [2d Dept 2004].) Similarly, if landlord were to bring a new action to collect these categories of damages upon their accrual, that action would not be barred by claim preclusion. (See 23 E. 39th St. Dev., LLC v 23 E. 39th St. Mgt. Corp., 172 AD3d 964, 966 [2d Dept 2019].)
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