255 Butler Assocs. v. 255 Butler, LLC

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2023 NY Slip Op 30653(U)

255 BUTLER ASSOCIATES LLC, Plaintiff, v. 255 BUTLER, LLC, ARIEL AKKAD, NATHAN AKKAD, SOLOMON AKKAD and BENJAMIN AKKAD,Defendants,

Index No. 511560/15, Motion Seq. No. #34

Supreme Court, Kings County

March 1, 2023

Unpublished Opinion

PRESENT: HON. LEON RUCHELSMAN

DECISION AND ORDER

Leon Ruchelsman Judge

The defendants have moved pursuant to CPLR §2221 seeking to reargue a portion of a decision and order dated December 5 2022 which awarded judgement to the plaintiff following a bench trial. The plaintiff has opposed the motion. Papers were submitted by the parties and arguments held. After reviewing all the arguments this court now makes the following determination.

The facts and conclusions of law are adequately presented in the prior decision and need not be repeated.

The defendants argue that while the court rejected all of defendant's defenses on the grounds they were all causation defenses and were barred by the decision of the Appellate Division striking the answer, there were two defenses which were not causation defenses which the court failed to consider. Those defenses are the fact the plaintiff did not sufficiently establish the necessary funding to prepare for the WeWork sublease and the fact the plaintiff failed to sufficiently establish the Wework sublease would have been effectuated under the WeWork escrow agreement. The defendants argue these issues, which they term "damages defenses" are distinct from causation defenses and that plaintiff was required to prove these issues by a reasonable degree of "certainty" (see. Affidavit in Support ¶5 [NYSCEF Doc. No. 1135]). The defendants argue that "resolution of both of these Issues in favor of Tenant was-even after the Strike Decision-necessary to support a money judgment in Tenant's favor" (see id., ¶4 [NYSCEF Doc. No. 1135]). The defendant's argue these two issues are different than the other causation issues which the defendants could not litigate because these two issues provide the factual underpinnings whether the plaintiff presented competent evidence to a reasonable degree of certainty that the WeWork.lease would have happened. The defendants stress the distinction between the two sets of issues is critical since the issues raised in the prior motion were all based upon defendants conduct while the two discrete issues raised here do not involve defendant's conduct at all. Consequently, without establishing these two predicate factual necessities the plaintiff's expert Mark Dunec had no basis upon which to conclude the plaintiff suffered any damages. Therefore, the motion for reargument should be granted and upon such reargument the court's decision should be changed accordingly.

Conclusions of Law A motion to reargue must be based upon the fact the court overlooked or misapprehended fact or law or for some other reason mistakenly arrived at in its earlier decision (Deutsche Bank National Trust Co., v. Russo, 170 A.D.3d 952, 96 N.Y.S.2d 617 [2d Dept., 2019]).

In the prior decision the court stressed that causation, and any causal link between defendant's conduct and damages sustained could not be raised at trial. Consequently, the court noted that "the sole issue to be determined at the inquest was the extent of the damages sustained by the plaintiffs" (Jihun Kim v. S & M Cateres Inc., 136 A.D.3d 755, 24 N.Y.S.3d 743 [2d Dept., 2016]). The damages defenses presented here do not relate to the extent of damages sustained but whether, in fact, damages were sustained at all. However, upon an inquest following a default, the court is only required to engage in two inquiries, namely, "determining the proper rule for calculating damages on such a claim, and assessing plaintiff's evidence supporting the damages to be determined under this rule" (see, Credit Lyonnais Securities (USA) v. Alcantara, 183 F.3d 151 [2d Cir. 1999]). It is improper to require the plaintiff to demonstrate its entitlement to damages since the plaintiff's entitlement to damages has been secured by the default imposed upon the defendants. Consequently, the only issue to which the defendant's may present any evidence is the extent of the damages.

Indeed, the damages defenses presented are really causation issues. Essentially, the defendants argue they cannot be liable for any damages because, even if the committed improper behavior in some way, they did not cause any of the damages sustained by the plaintiff. Rather, they assert, the plaintiff lacked the ability to effectuate the WeWork lease and in turn the plaintiff himself, or circumstances, or the realities of the deal are the true causes of damages sustained. That argument is nothing more than another way of arguing the defendants did not cause any damages sustained. The uniqueness of these damages defenses are that they do not concern the defendant's conduct in any active and improper manner. While that may be true they do not in any way undermine the factual conclusions already reached, which cannot be litigated, that the defendants, and only the defendants, caused the damages sustained. The case of LD Acquisition Company 9 LLC v. TSH Trade Group LLC, 211 A.D.3d 928, _N.Y.S.3d_ [2d Dept., 2022] is instructive. In that case the plaintiff sued the defendant alleging the defendant interfered with plaintiff's easement rights. The defendant defaulted and an inquest on damages was held. The referee held that "the plaintiff failed to establish its entitlement to any damages because it did not establish that the breach of the parties' agreement was the cause of its purported damages" (id). The Appellate Division reversed that determination holding that "the inquest court erred in considering the question of whether the defendants caused the damages sustained by the plaintiff" (id). Further, concerning some uncertainty regarding lost profits the court held, citing earlier authority, that "when it is certain that damages have been caused by a breach of contract, and the only uncertainty is as to their amount, there Can rarely be good reason for refusing, on account of such uncertainty any damages whatever for the breach. A [party] violating [a] contract should not be permitted entirely to escape liability because the amount of the damages which [the party] has caused is uncertain" (id).

Consequently, the defendants are not permitted to present any evidence tending to defeat the plaintiff's causes of action (Whittemore v. Yeo, 117 A.D.3d 544, 986 N.Y.S.2d 69 [1^st Dept., 2014]). It does not matter if the evidence is in the form of the defendant attempting to deny his actions caused the damage or attempting to assert some other intervening factor really caused the damage. In either case the upshot of such evidence is to escape liability on the grounds the defendants did not "cause" the damages sustained. As noted, the defendants are precluded from making such arguments.

Indeed, consider the implications of defendant's contentions. According to the defendants a defaulting party would not be permitted to argue they did not cause the damages (see, Castaldini v. Walsh, 186 A.D.3d 1193^:, 127 N.Y.S.2d 917 [2d Dept., 2020]), however, they would be permitted to present evidence the damages were caused in some other manner, perhaps by the plaintiff himself or in some other fashion. Those arguments, if accepted, would permit a defaulted defendant to introduce evidence at a damages hearing to defeat the plaintiff's causes of action (see. Suburban Graphics Supply Corporation v. Nagle, 5 A.D.3d 663, 774 N.Y.S.2d 160 [2d Dept., 2004]). As noted repeatedly, a defaulted defendant has no right to argue causation in any manner.

Further, the argument these damages defenses relate to damages and not causation elides the distinction between damages and causation. Thus, in order for an expert to establish lost profits "first, it 'must be demonstrated with certainty that such damages have been caused by the breach and, second, the alleged loss must be capable of proof with reasonable certainty" (Kenford Company Inc., v. County of Erie, 67 N.Y.2d 257, 502 N.Y.S.2d 131 [1986]). The first prong has been satisfied by the legal canclusion, in the form of a default, ttist defendants have "caused" the breach. Allowing evidence to be presented in this regard, that some other reason is the cause of the breach, would effectively permit the defendants to once again argue causation. For this very reason, any causation, even those disguised as damages are not permitted where a defendant has defaulted.

Therefore in every case that has discussed the issue the defaulted defendant has been permitted to raise issues only concerning "the extent of the damages" (Cerullo LLC v. John D. Rocco Sales Company LLC, 208 A.D.3d 551, 171 N.Y.S.3d 832 [2d Dept., 2022], Gomez v. Big Line Inc., 2020 WL 6742803 [S.D.N.Y. 2020]) and not whether any damages have been sustained in the first place. To entertain such arguments would result in an impermissible attack on causation. In fact, the defendants cite to no cases to support their arguments. Indeed, the only case cited, by the defendants in support of this specific argument Bua v. Purcell & Ingrao P.C., 99 AD.3d 84 3, 952. N.Y.S.2d 592 [2d Dept., 2012] is not relevant to the questions presented here at all. In that case a defendant brought a motion to dismiss a complaint alleging legal malpractice. The plaintiff had hired the defendants to. represent him in the sale of property. The buyer's attorney sought to terminate the contract on the grounds the buyer could not obtain financing. The defendants, attorneys for the seller, informed the seller the buyer sought to cancel the contract and sought a return of the down payment and the seller agreed. However, seven months later the buyer sought to...