451-453 Park Ave. S. Corp. v. Lifelab, LLC

1

2023 NY Slip Op 31956(U)

451-453 PARK AVENUE SOUTH CORP., Plaintiff, v. LIFELAB, LLC, and SPARTAN BRANDS, INC Defendants.

Index No. 654845/2020, Motion Seq. No. 001

Supreme Court, New York County

June 6, 2023

Unpublished Opinion

MOTION DATE 12-19-22

DECISION + ORDER ON MOTION

HON NANCY M. BANNON JUDGE

The following e-filed documents, listed by NYSCEF document number (Motion 001) 50, 51, 52, 53, 54, 55, 56, 57, 58, 59, 60, 61 62, 63, 64, 65, 66, 67, 68, 69, 70, 71, 72, 73, 74, 75, 76 77, 78, 79, 80, 81, 82, 83, 84, 85, 86, 87, 88, 89, 90, 91, 92, 93, 94, 95, 96, 97, 98, 99, 100, 101, 103, 104, 105, 106, 107, 108, 109, 110, 111, 112, 113, 114, 115, 116, 117, 118, 119, 120, 121, 122, 123 were read on this motion to/for PARTIAL SUMMARY JUDGMENT

I. INTRODUCTION

In this action, wherein the plaintiff landlord seeks, inter alia, to recover damages for breach of commercial lease agreements by the defendants, a pair of former tenants, the plaintiff moves pursuant to CPLR 3212 for partial summary judgment in its favor with respect to the defendants' liability for breach of their respective lease agreements (first and second causes of action), as well as for contractual attorneys' fees (third and fourth causes of action), and to dismiss the defendants' counterclaims and affirmative defenses. The defendants oppose the motion and cross-move for summary judgment on their first counterclaim. The plaintiff's motion is granted in part and denied in part, and the defendants' cross-motion is granted in accordance with the discussion below.

II. BACKGROUND

Defendant Spartan Brands, Inc. ("Spartan Brands") entered into a commercial lease agreement with the plaintiff on March 22, 2012 (the "Spartan Brands Lease") with respect to the fifth floor of the premises located at 451-453 Park Avenue South (the "Building") in Manhattan. The Spartan Brands Lease was amended on October 7, 2014, expanding Spartan Brands' footprint in the Building to include the sixth floor of the premises in addition to the fifth floor. A second amendment to the Spartan Brands Lease was executed on September 7, 2018. The same day, defendant Lifelab, LLC ("Lifelab"), an affiliate of Spartan Brands, entered into its own commercial lease agreement with the plaintiff with respect to the sixth floor premises in the Building (the "Lifelab Lease," and, together with the Spartan Brands Lease, the "Leases"). Pursuant to the Lifelab Lease and the contemporaneous second amendment to the Spartan Brands Lease, the right of possession to the sixth floor of the Building was effectively transferred from Spartan Brands to Lifelab. The term of each of the Leases extended until March 31, 2024.

The defendants are jointly in the business of developing, marketing and distributing hair products and other personal care products. According to the defendants, an integral component of their business is the in-house development of chemical formulas and fragrances used in their various products. To that end, prior to the outbreak of the COVID-19 pandemic, the defendants operated a laboratory in their premises on the fifth and sixth floors of the Building (the "Leased Premises") where their chemist could experiment with, test and sample such formulas and fragrances. In the Leases, both Spartan Brands and Lifelab secured identical provisions granting them the right to terminate their Leases should their operation of the laboratory in the Leased Premises be prohibited due to any governmental order or decree. Specifically, Article 44 in each of the Leases, titled "USE," stated in pertinent part:

Notwithstanding anything to the contrary contained herein, Tenant shall be permitted to use the Demised Premises for its laboratory use, which consists of Tenant's products being developed and tested by their chemist for both quality control and development purposes...

If at any time Tenant is advised by any applicable governmental authority that Tenant cannot use the Premises for its operation of its lab, then Tenant shall have the right to terminate this Lease on not less than ninety (90) days' notice to Landlord..

Article 44 of the Leases further provided that, "[i]f any of the Base Rent abatements contemplated in Section 41 have been applied prior to Tenant's termination notice, then Tenant shall reimburse Landlord for the amount so abated on or before the early termination date."

The Leases also required the plaintiff to make certain improvements and repairs to the Leased Premises, including, as relevant here: painting the common corridors on both the fifth and sixth floors, installing new flooring and wall covering in the elevator lobby areas of both floors, and installing new carpet tiles in the common areas of the fifth floor. It is undisputed that the plaintiff did not perform any of these improvements and repairs.

On March 20, 2020, with the onset of the COVID-19 pandemic, then Governor Cuomo issued Executive Order No. 202.8 requiring the complete shutdown of all non-essential in-office business operations in New York State. The shutdown requirements of Executive Order No. 202.8, which were periodically extended during 2020, precluded the defendants from operating their laboratory and conducting other in-person business operations at the Leased Premises. Faced with a mandatory, government-imposed shutdown of indefinite duration, on May 21, 2020, the defendants invoked Article 44 of their respective Leases by sending to the plaintiff Termination Notices giving the requisite ninety days' notice of the defendants' election to terminate their Leases effective August 25, 2020.

The defendants claim that, upon receiving their Termination Notices, the plaintiff embarked on a campaign of tenant harassment with the alleged aim of causing the defendants to waive and abandon their rights to terminate the Leases under Article 44. To that end, the defendants allege the plaintiff: had its building superintendent enter the Leased Premises without their permission and take surreptitious photos of the defendants' sample products and other personal property, as well as of the defendants' chemist; imposed new restrictions upon the defendants' use of the Building's freight elevator that were not imposed upon other Building tenants; and deprived the defendants of various Building services provided to all tenants, including daily waste removal. The plaintiff disputes these contentions.

The defendants vacated the Leased Premises as of September 30, 2020. The defendants did not pay their respective monthly rent of $18,907.23 (plus utility costs and tax) for the period from April 2020 through September 2020, nor did they reimburse the plaintiff for rent abatements applied prior to May 2020, when they served the Termination Notices on the plaintiff. It is undisputed that, prior to serving their Termination Notices in May 2020, Lifelab received an abatement of $18,358.21 in base rent for the month of April 2019, while Spartan Brands received abatements of base rent totaling $103,144.43 for the months of: April 2013 ($16,033.34); April 2014 ($16,681.08); April 2015 ($17,014.70); April 2016 ($17,355.00); May 2017 ($17,702.10); and April 2019 ($18,358.21).

On September 30, 2020, the plaintiff initiated this action seeking to recover unpaid rent owed since April 2020, together with the previously applied rent abatements and contractual attorneys' fees. Defendants answered on October 20, 2020, asserting counterclaims seeking: a declaration that the defendants validly terminated their Leases pursuant to Article 44 and therefore are not liable for any rent, additional rent, or other charges or fees for the period subsequent to September 30, 2020, the date on which they vacated the Premises (first counterclaim)^[1]; as well as money damages in connection with the plaintiff's alleged acts of tenant harassment (second counterclaim) and failure to perform repairs and improvements required under the terms of the Leases (third counterclaim). The instant motions ensued.

III. LEGAL STANDARD

It is well settled that the proponent of a motion for summary judgment must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any triable issues of fact. See Winegrad v New York Univ. Med. Ctr., 64 N.Y.2d 851 (1985). In opposition, the nonmoving party must demonstrate by admissible evidence the existence of a triable issue of fact. See Alvarez v Prospect Hospital, 68 N.Y.2d 320 (1986); Zuckerman v City of New York, 49 N.Y.2d 557 (1980). However, if the initial burden is not met by the movant, summary judgment must be denied regardless of the sufficiency of the opposing papers. See Winegrad v New York University Medical Center, 64 N.Y.2d 851; Giaquinto v Town of Hempstead, 106 A.D.3d 1049 (2^nd Dept. 2013); O'Halloran v City of New York, 78 A.D.3d 536 (1^st Dept. 2010).

Pursuant to CPLR 3211(b), a "party may move for judgment dismissing one or more defenses, on the ground that a defense is not stated or has no merit." The burden is on the plaintiff to demonstrate that the defenses are without merit as a matter of law. See Granite State Ins. Co. v Transatlantic Reinsurance Co., 132 A.D.3d 479 (1^st Dept. 2015); 534 East 11^th Street Housing Dev. Fund v Hendrick, 90 A.D.3d 541 (1^st Dept. 2011). In reviewing such a motion, "the allegations set forth in the answer must be viewed in the light most favorable to the defendant." Granite State Ins. Co. v Transatlantic Reinsurance Co., supra at 481; see 182 Fifth Avenue LLC v Design Development Concepts, Inc., 300 A.D.2d 198 (1^st Dept. 2002).

IV. DISCUSSION

A. Plaintiff's Breach of Contract Claims and Defendants' First Counterclaim

The plaintiff seeks summary judgment finding the defendants liable for breach of the Leases...