Locon Realty Corp. v. Safisas Corp.

73 Misc.3d 997

157 N.Y.S.3d 891

LOCON REALTY CORP., Plaintiff,

v.SAFISAS CORP., Defendant.

Index No. LT-309912-20KI

Civil Court, City of New York, Kings County.

Decided on November 15, 2021

William J. Coury, Brooklyn, for petitioner.

Melvin B. Berfond, New York City, for respondent.

Nicholas W. Moyne, J. Petitioner, Locon Realty Corp, has brought this holdover proceeding against respondent, Safisas Corp., seeking to terminate a commercial lease and obtain a judgment of possession and warrant of eviction. The petitioner has moved for summary judgment and dismissal of the respondent's affirmative defenses. Respondent cross-moves, pursuant to CPLR § 3212, for an order granting summary judgment and dismissing the petition or, in the alternative, pursuant to CPLR § 3211(a)(2), for an order dismissing the petition due to lack of subject matter jurisdiction. Additionally, the plaintiff has moved to challenge the hardship declaration filed in this case. Both motions for summary judgment are denied for the reasons set forth below. The motion challenging the hardship declaration is granted to the extent that a hearing is ordered.

The petitioner and the respondent entered into a lease dated September 1, 2019 for premises located at 2670 Coney Island Avenue, Brooklyn, New York. The respondent alleges that it utilized the premises as a catering hall. The lease contains an enforceable conditional limitation clause allowing for the petitioner to seek termination of the lease if the respondent fails to timely pay rent three times in a twelve-month period. The petition alleges that the respondent failed to make timely payments of rent and additional rent three times between July and October 2020. Respondent was served with a Notice to Cure and a Notice of Termination, the latter of which indicated that the lease would expire on December 21, 2020. Respondent has remained in possession since the lease purportedly expired.

Respondent's motion to dismiss for lack of subject matter jurisdiction.

The respondent's motion to dismiss for lack of subject matter jurisdiction is denied.

There is nothing in the currently applicable Executive Orders which prohibits the initiation of a summary proceeding to recover possession of leased premises, irrespective of whether the proceeding is plead as a holdover or non-payment proceeding. This case is governed by Executive Orders 202.57 and 202.48, which provide that a landlord can commence a summary proceeding and if the tenant files a hardship, the case is stayed. The Landlord may challenge the hardship and the court can order a hearing as to whether the hardship stay should be vacated. That is exactly what has happened here. Accordingly, there is no merit to the respondents’ argument that the court lacks subject matter jurisdiction because the action was unlawfully commenced. Indeed, to hold otherwise would deprive the landlord of its due process rights to pursue remedies against tenants who are financially able to pay their rent but, without legal justification, fail to honor their contractual obligations under the lease (see SRI Eleven 1407 Broadway Operator LLC v. Mega Wear Inc. , 71 Misc. 3d 779, 806-07, 144 N.Y.S.3d 289 [N.Y.Civil Ct. 2021 Tsai, J.] ). It would mean that a tenant could simply file a self-certified declaration of hardship without the landlord having any recourse to challenge it, thereby permitting the tenant to become "a judge in his own case" (see Chrysafis v. Marks, 594 U.S. ––––, 141 S. Ct. 2482, 2483, ––– L.Ed.2d –––– [2021] ). This is not consistent with due process as found by the United States Supreme Court ( id. ).

Respondent's motion for summary judgment.

The Respondent's motion for summary judgment is denied. There are questions of fact regarding the frustration of purpose defense.

The respondent raises the defense of impossibility of performance in their summary judgment motion. Under New York law, impossibility of performance is a valid excuse for failing to perform contractual obligations only when the destruction of the subject matter of the contract or the means of performance makes performance objectively impossible (see Kel Kim Corp. v. Cent. Markets, Inc. , 70 N.Y.2d 900, 902, 524 N.Y.S.2d 384, 519 N.E.2d 295 [1987] ). A financial hardship or economic difficulty, no matter how acute, cannot, by itself, excuse performance (see 407 East 61st Garage, Inc. v. Savoy Fifth Ave. Corp. , 23 N.Y.2d 275, 281, 296 N.Y.S.2d 338, 244 N.E.2d 37 [1968] ). This rule applies even when the financial hardship or difficulty is caused by governmental intervention (see Stasyszyn v. Sutton E. Assoc. , 161 A.D.2d 269, 271, 555 N.Y.S.2d 297 [1st Dept. 1993] ). Here, the subject matter of the lease, the leased premises, remains intact. Therefore, the respondent is not entitled to summary judgment on the impossibility defense.

The respondent also raises frustration of purpose. In order to properly invoke the doctrine of frustration of purpose as a defense to the failure to pay rent due under a lease, "the frustrated purpose must be so completely the basis of the contract that, as both parties understood, without it, the transaction would have made little sense" ( Warner v. Kaplan , 71 A.D.3d 1, 6, 892 N.Y.S.2d 311 [1st Dept. 2009] [internal quotation marks omitted], lv denied 14 N.Y.3d 706, 2010 WL 1235676 [2010] ; see Jack Kelly Partners LLC v. Zegelstein, 140 A.D.3d 79, 85, 33 N.Y.S.3d 7 [1st Dept. 2016], lv dismissed 28 N.Y.3d 1103, 45 N.Y.S.3d 364, 68 N.E.3d 92 [2016] ). Examples of a lease's purposes being declared frustrated have included situations where the tenant was unable to use the premises as a restaurant until a public sewer was completed, which took nearly three years after the lease was executed (see Benderson Dev. Co. v. Commenco Corp. , 44 A.D.2d 889, 355 N.Y.S.2d 859 [4th Dept. 1974], affd 37 N.Y.2d 728, 374 N.Y.S.2d 618, 337 N.E.2d 130 [1975] ), and where a tenant who entered into a lease of premises for office space could not occupy the premises because the certificate of occupancy allowed only residential use and the landlord refused to correct it ( Jack Kelly Partners LLC v. Zegelstein , 140 A.D.3d 79, 81, 33 N.Y.S.3d 7 [1st Dept. 2016] ).

Here, there is a question regarding whether the respondent could have operated in any capacity, such as offering takeout or...