Blue Dog at 399 Inc. v. BP 399 Park Avenue LLC (In re Blue Dog at 399 Inc.)

540 B.R. 67, 2015 Bankr. LEXIS 3631, 61 Bankr. Ct. Dec. (CRR) 199
United States Bankruptcy Court, S.D. New York·Decided October 27, 2015·No. Case No.: 15-10694 (MEW); Adv. Proc. No.: 15-1097 (MEW)·Published

Opinion

OPINION DENYING MOTION TO DISMISS

MICHAEL E. WILES, UNITED STATES BANKRUPTCY JUDGE

Before the Court is a motion to dismiss (the “Motion to. Dismiss”) filed by BP 399 Park Avenue LLC (the “Landlord”) in the above-captioned adversary proceeding brought by Blue Dog at 399 Inc. (the “Debtor”). Among other things, the Landlord takes the position that this Court is precluded from considering the claims raised in the Debtor’s complaint (the “Complaint”) under the doctrines of res judicata and collateral estoppel. The Landlord .also takes the position that this Court lacks subject-matter jurisdiction over this adversary proceeding under the Rooker-Feldman doctrine and that the Complaint fails to state a claim for which relief may be granted. For the reasons set forth below, the Court denies the Motion to Dismiss and directs the parties to appear at a conference to discuss further proceedings.

BACKGROUND

A. The Lease

On January 1, 2012, the Debtor and the Landlord entered into a lease agreement (the “Lease”) to allow the Debtor to operate a café in a portion of the Landlord’s building at 399 Park Avenue in Manhattan (the “Premises”). (Compl. ¶ 10, ECF No. [70]*701.) The Lease contained a provision mandating an outside opening date for the café of August 1, 2012 (the “Opening Date”). (Mot. to Dismiss ¶ 4, EOF No. 6.) After the Debtor allegedly defaulted on two rent payments and failed to open the café by the Opening Date, the Landlord sent the Debtor several notices of default and a notice of cancellation of the Lease. (Complin 15,17.)

B. The 2012 Stipulation and Other Extensions of Time

On September 11, 2012, prior to the expiration of the cure and termination periods, the Debtor commenced litigation in the New York State Supreme Court (the “State Court”) against the Landlord (Index No. 653158/2012) (the “State-Court Action”). (Comply 18.) The Debtor also moved by order to show cause for a Yellowstone injunction against termination of the Lease. (Id.; Proposed Order to Show Cause, Blue Dog at 399 Inc. v. BP 399 Park Avenue LLC, Index No. 653158/2012 (N.Y. Sup.Ct. filed Sept. 11, 2012), NYSCEF No. 3.) The Debtor’s motion, and “all other issues” arising out. of the Landlord’s prior notices, were resolved by the parties pursuant to a so-ordered stipulation dated November 27, 2012 (the “2012 Stipulation”). (Compl. ¶ 21; Stipulation of Settlement, Blue Dog at 399 Inc. v. BP 399 Park Avenue LLC, Index No. 653158/2012 (N.Y. Sup.Ct. so-ordered Nov. 29, 2012), NYSCEF No. 76.)

The 2012 Stipulation stated that “[p]ur-suant to the Three Day Notice, the validity of which was contested by [the Debtor], the Lease terminated as of September 13, 2012.” (Id. at ¶ 4.) However, the parties agfeed that if the Debtor satisfied all of the requirements in the 2012 Stipulation, including opening for business within the next 120 days (the last date of such period being the “Amended Opening Date”), the Lease would automatically be reinstated, and the prior notices of default and termination would be withdrawn. (Id.) In the interim the parties acknowledged that “the terms and conditions of the expired Lease are (and shall continue to be) binding.” (Id. at ¶¶ 5-6). The Debtor also consented to the entry of a judgment of possession and a writ of assistance as to the Premises (the “Judgment and Writ”), the execution of which was stayed pending the Debtor’s compliance with the 2012 Stipulation. (Id. at ¶¶ 7-8; Order and Judgment, Blue Dog at 399 Inc. v. BP 399 Park Avenue LLC, Index No. 653158/2012 (N.Y.Sup.Ct. Nov. 29, 2012), NYSCEF No. 77.)

The parties thereafter agreed to many extensions of the Amended Opening Date. (Compl. ¶ 31; Mot. to Dismiss ¶¶ 10-15.) However, by early 2015, the Debtor still had not opened for business. (Comply 32.) The Landlord then began the eviction process pursuant to the previously issued Judgement and Writ, having the New York City Sheriff serve the Debt- or with a notice of eviction in late January 2015. (Mot. to Dismiss ¶¶ 16-17.) On January 29, 2015, the Debtor filed another motion in the State-Court Action by order to show cause.* (Compl. ¶ 32; Proposed Order to Show Cause, Blue Dog at 399 Inc. v. BP 399 Park Avenue LLC, Index No. 653158/2012 (N.Y. Sup.Ct. filed Jan. 29, 2015), NYSCEF No. 79.) This motion asked the State Court: (1) to modify the 2012 Stipulation to grant a further extension of the Amended Opening Date; (2) to enjoin the eviction of the Debtor; and (3) to compel the Landlord to assist the Debt- or in obtaining final Department of Build[71] ing inspections and sign offs. (Id.) This motion resulted initially in a temporary restraining order against enforcement of the writ of eviction. (TRO, Blue Dog at 399 Inc. v. BP 399 Park Avenue LLC, Index No. 653158/2012 (N.Y.Sup.Ct. Jan. 30, 2015), NYSCEF No. 114.)

On February 2, 2015, the State Court so-ordered another stipulation that, among other things: (1) vacated the temporary restraining order and denied the eviction stay request and (2) directed the parties to meet and resolve their issues to ensure that the Debtor opened for business on or before February 28, 2015 (the “2015 Stipulation” and, together with the 2012 Stipulation, the “Stipulations”). (Stipulation, Blue Dog at 399 Inc. v. BP 399 Park Avenue LLC, Index No. 653158/2012 (N.Y. Sup.Ct. so-ordered Feb. 2, 2015), NYSCEF No. 115.) It appears that pursuant to the 2015 Stipulation, the agreed deadline for opening was extended to February 28, 2015 (the “February 28, 2015 Deadline”). (Id.; Compl. ¶ 33.)

C. The February 2015 Events

The Debtor did not open for business by the February 28, 2015 Deadline. (Compl. ¶ 43.) The Debtor, however, alleges in the Complaint in this case that on February 28, 2015, the Debtor was “ready, willing and able to legally open for business” and “was only prevented from doing so by the failure and refusal of Landlord’s representatives to attend the scheduled, final phase of the ‘All Systems Test’ that the Landlord required.” (Id.) The Debtor claims the Landlord imposed the All Systems Test requirement and that this test would not otherwise be required pursuant to applicable law. (Id. at ¶¶ 34, 41.) Moreover, the Debtor claims that the Landlord imposed the time restriction for the All Systems Test as well, requiring it to be performed after 6:00 PM. (Id. at ¶ 40.) According to the Debtor, on February 27, 2015, the first phase of the All Systems Test was conducted and successfully completed, and the second and final phase was to be performed thereafter on the same day. (Id. at ¶40.) However, the Debtor contends that the only reason the second and final phase of the All Systems Test was not completed was because the Landlord’s representatives, whose attendance was required by the Landlord, left the Premises at approximately 4:45 PM, advising that they would return in time for the after 6:00 PM half of the test, and then refused to return for the test. (Id. at ¶¶ 40, 42.) As a result, the Debtor claims that it was unable to open for business the next day by the February 28, 2015 Deadline to fulfill the Stipulations’ condition precedent to reinstatement of the Lease. (Id. at ¶ 43.)

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Blue Dog at 399 Inc. v. BP 399 Park Avenue LLC (In re Blue Dog at 399 Inc.), 540 B.R. 67, 2015 Bankr. LEXIS 3631, 61 Bankr. Ct. Dec. (CRR) 199 (N.Y. 2015).

540 B.R. 67 (Blue Dog at 399 Inc. v. BP 399 Park Avenue LLC (In re Blue Dog at 399 Inc.)) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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