LIDC I, LLC v. Sunrise Mall, LLC

46 Misc. 3d 885, 996 N.Y.S.2d 875
CourtNew York Supreme Court
DecidedOctober 27, 2014
StatusPublished

This text of 46 Misc. 3d 885 (LIDC I, LLC v. Sunrise Mall, LLC) is published on Counsel Stack Legal Research, covering New York Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
LIDC I, LLC v. Sunrise Mall, LLC, 46 Misc. 3d 885, 996 N.Y.S.2d 875 (N.Y. Super. Ct. 2014).

Opinion

OPINION OF THE COURT

Daniel R. Palmieri, J.

The plaintiffs’ motion for a stay of termination of their commercial leasehold interests in defendant’s shopping mall pendente lite pursuant to First Natl. Stores v Yellowstone Shopping Ctr. (21 NY2d 630 [1968]), or, in the alternative, for a preliminary injunction pursuant to CPLR 6301, is denied in its entirety.

This matter stems from delays in construction of three restaurants plaintiffs planned to open in defendant’s (sometimes, the Mall) shopping center in Massapequa, New York. Each plaintiff LLC entered into a lease with the defendant on March 30, 2012. The defendant apparently was doing business as Westfield Sunrise, the name on the cover sheet of the lease, and as noted below defendant’s affiant identifies himself as vice-president of Westfield, LLC, managing agent for the Mall.

The leases and amendments thereto contemplated a period of construction of plaintiffs’ restaurants, during which rent would not be charged. The time from which rent would begin (commencement date) would be the earlier of when each restaurant would open for business, or the fixed dates of January 15, 2014 (LIDC I), March 1, 2014 (LIDC III) and April 15, 2014 (LDIC IV). The leases all contain a force-majeure clause excusing a delay in performance based on, among things, “restrictive government laws or controls; delayed governmental or municipal action.” Financial hardship was excluded as a force-majeure event, as was the inability of contractors to meet contract dates “unless caused by such governmental acts” or “acts of Landlord.” The clause also states, however, that the occurrence of any such event shall not excuse the tenant’s obligation to pay rent “from and after the Commencement Date.” Plaintiffs hired a general contractor, PC Consulting Management Corp., with the approval of the Mall; plaintiffs note that the parties selected this contractor jointly after plaintiffs initially had notified the [887]*887Mall that the cost of the project was going to be too high to allow them to build. Work thereafter began at the site.

However, in August of 2013 the Town of Oyster Bay, through its Commissioner of Building and Planning, issued a stop work order based on purported violations of the Town Code’s requirement that the contractor have an apprenticeship program in place. The contractor hired by plaintiffs, whose work had been halted by these orders, filed a CPLR article 78 petition challenging the Town’s actions (P.C. Consulting Mgt. Corp. v Town of Oyster Bay, Sup Ct, Nassau County, index No. 11212/13), which was assigned to this court. Upon execution of the order to show cause on September 13, 2013, bringing on the proceeding, the court stayed the stop work order, and on September 24, 2013 stayed revocation of the building permits by Commissioner Ippolito, which occurred after the case was commenced. Both stays, of course, were temporary, pending determination of the underlying proceeding.

That occurred on November 8, 2013, at which time the undersigned granted the petition on the record in open court and reinstated the building permits, allowing work to continue. Although it directed submission of a judgment, the court also offered to “so order” the transcript to create an appealable document.1 According to Paul Derrico, an “authorized representative” of plaintiffs, informal settlement discussions then ensued between the Mall and the Town after the court’s decision. According to Derrico, the Town had been taking actions against other Mall tenants, construction had been on “lockdown” because of those actions, and plaintiffs had been informed by the Mall that they should wait to submit a judgment until the Mall was able to resolve its issues with the Town.2

Derrico also states that in late January of 2014 the Town asked the court not to enter judgment as a settlement in [888]*888principle had been reached.3 Apparently, however, more discussions ensued, as in March 2014 the Mall asked the petitioner in the article 78 proceeding—then represented by the same attorneys who represent the plaintiffs here—not to submit a judgment in light of those discussions. This state of affairs continued until July of 2014, when the Mall sought entry of such a judgment.

The intervenor petitioners noted in footnote 2 and the respondent in the article 78 proceeding ultimately each submitted a proposed judgment and counterjudgment, and the latter was signed on July 28, 2014, with certain modifications not relevant here.

Prior to the execution of the judgment, however, the parties already had taken adversarial positions regarding the obligation to pay rent. By letter on behalf of each tenant dated January 13, 2014, plaintiffs notified Westfield that

“[p]er your discussion with the Tenant and agreement that the Mall is under a complete lockdown due to the repeated actions of the building commissioner . . . the Tenant, the Landlord, other tenants in the Mall, and the Mall in general have all experienced extreme difficulty with construction of any kind due to the [acts of] the Building commissioner . . . despite the several favorable court rulings on the [matter], the [Town] continues to be uncooperative . . . with . . . the Tenant’s general contractor . . . essentially preventing them from working at the Mall and as a consequence . . . prevents the Tenant from fulfilling its construction obligations under the Lease to build out the Premises in order to permit the Tenant to conduct business . . . Tenant hereby notifies the Landlord of the indicated force majeure events, thus tolling all of Tenant’s obligations under the Lease, including, but not limited to, the commencement of rent, until the matter is resolved.”

On February 7, 2014, counsel for the Mall responded by stating that the construction delays were caused by the tenants’ failure to employ union labor with an apprenticeship program, [889]*889which he claimed was a breach of certain lease conditions4 and, in addition, that even if the force-majeure clause could be invoked it did not excuse the payment of rent.

Ultimately, no rent having been paid under any of the leases, notices of default based thereon were served on September 5, 2014, threatening, inter alia, termination of the leases unless rent was paid prior to expiration of the stated cure period in the notice, leading to the present action and motion.

Rob Wyant, vice-president of Westfield, LLC, as noted the managing agent for the Mall, submits an affidavit in which he does not deny the discussions with the Town or with plaintiffs concerning a delay in submission of a judgment in the article 78 proceeding. He contends, however, that these discussions were not intended to and had no effect on the construction projects, but rather that the Mall was doing no more that acting as an intermediary in an attempt to revive construction, in which it had a vested interest.

He further states that there was no legal impediment to construction of the restaurants after the court acted, and stresses that the Mall had asked plaintiffs to resume construction as it continued to work with them and the Town to resolve their issues. He states, upon information and belief, that the original contractor (petitioner in the article 78 proceeding) had been terminated in or about November 2013, but that no new contractor had been engaged, notwithstanding the Mall’s urgings.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

First National Stores, Inc. v. Yellowstone Shopping Center, Inc.
237 N.E.2d 868 (New York Court of Appeals, 1968)
W. T. Grant Co. v. Srogi
420 N.E.2d 953 (New York Court of Appeals, 1981)
Aetna Insurance v. Capasso
552 N.E.2d 166 (New York Court of Appeals, 1990)
Trump on the Ocean, LLC v. Ash
81 A.D.3d 713 (Appellate Division of the Supreme Court of New York, 2011)
Barsyl Supermarkets, Inc. v. Avenue P Associates, LLC
86 A.D.3d 545 (Appellate Division of the Supreme Court of New York, 2011)
WPA /Partners LLC v. Port Imperial Ferry Corp.
307 A.D.2d 234 (Appellate Division of the Supreme Court of New York, 2003)

Cite This Page — Counsel Stack

Bluebook (online)
46 Misc. 3d 885, 996 N.Y.S.2d 875, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lidc-i-llc-v-sunrise-mall-llc-nysupct-2014.