RSB Bedford Associates, LLC v. Ricky's Williamsburg, Inc.

91 A.D.3d 16, 933 N.Y.2d 3
CourtAppellate Division of the Supreme Court of the State of New York
DecidedNovember 10, 2011
StatusPublished
Cited by10 cases

This text of 91 A.D.3d 16 (RSB Bedford Associates, LLC v. Ricky's Williamsburg, Inc.) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
RSB Bedford Associates, LLC v. Ricky's Williamsburg, Inc., 91 A.D.3d 16, 933 N.Y.2d 3 (N.Y. Ct. App. 2011).

Opinion

OPINION OF THE COURT

Moskowitz, J.

A commercial tenant and its guarantor parent corporation appeal from five orders: three substantive determinations and two discovery rulings. Because plaintiffs willingness and ability to close on the property associated with the lease at issue is irrelevant, we affirm.

Plaintiff RSB Bedford planned to buy a building on Bedford Avenue in Brooklyn (the property). However, plaintiff was unwilling to acquire the property without a committed commercial tenant. Accordingly, in anticipation of entering into a commercial lease, plaintiff entered into a letter agreement (the side letter) on August 12, 2008 with defendant Ricky’s Williamsburg (Ricky’s or defendant). In the side letter, Ricky’s specifically acknowledged that “[landlord does neither currently own the Property nor have the Property under contract. Landlord intends to execute a contract (the ‘Contract’) concurrently with or shortly after executing the Lease. Landlord is unwilling to execute the Contract for the acquisition of the Property until the Lease has been fully signed.”

Thus, defendant understood that plaintiff did not currently own the property and would not acquire the property until plaintiff had obtained a tenant for it.

[19]*19In the side letter, defendant also acknowledged that plaintiff had until September 14, 2009 to close on the property. If title did not close by that date, defendant would have the right to terminate the lease unilaterally (the walkaway clause). Defendant also had the right to terminate if plaintiff did not sign an agreement to acquire the property by September 15, 2008 or if, after acquiring title, plaintiff failed to deliver the property in the condition the lease required.

As the side letter had contemplated, on August 18, 2008, the parties entered into a lease for space at the property. Among other things, the lease provided that defendant promised to take possession of a particular retail storefront on the “Commencement Date.” The commencement date remained open in the lease for the obvious reason that plaintiff had not yet purchased the property. The lease specifically provided that if delivery of possession had not occurred by March 1, 2010, defendant had the right to cancel the lease with no further obligation to plaintiff. The lease also contained a standard merger clause prohibiting changes that were not in writing.

On August 18, 2008, plaintiff also entered into a guaranty agreement with defendant’s parent company, defendant Ricky’s Holdings, Inc. (Holdings). Under the guaranty, Holdings guaranteed all aspects of defendant’s performance and obligations under the lease and side letter.

On August 27, 2008, plaintiff signed an agreement to purchase the property (the acquisition agreement).

On June 15, 2009, counsel for defendant sent a letter “to formally notify [plaintiff] that Ricky’s will not take possession of the premises” (the rejection letter). Although defendant had acknowledged in the side letter that plaintiff had not yet acquired the property and that plaintiff wanted a signed lease before entering into the acquisition agreement, defendant nevertheless accused plaintiff of material misrepresentation because “this firm has learned that you do not own the Premises in fee simple as you represented in the purported lease.” Ignoring the merger clause in the lease, the rejection letter also accused plaintiff of having failed “to deliver the Premises in accordance with your subsequent oral modifications to the alleged lease.” Even though the dates whereby defendant could walk away from the deal had not occurred, the rejection letter stated, “[A]s a result of your repeated delays and general inability to meet with the terms of the alleged lease, my client has suffered material damages.” The rejection letter continued that “[a]s a result [20]*20of your seemingly incompetent and unethical behavior, my client has no desire to enter into any business arrangement with you or your corporate vehicles.” The rejection letter included a release in favor of defendants and stated that plaintiff should agree to rescind the agreements. The rejection letter threatened legal action if plaintiff did not comply.

In July 2009, plaintiff commenced this action that included a claim for anticipatory breach of the lease and side letter. Plaintiff sought, inter alia, damages arising from its inability to purchase the building, as well as lost rent and other unspecified damages totaling $20 million.

Defendants filed their answer and counterclaim on August 13, 2009. Accompanying the answer was a request for production of documents. On August 28, 2009, plaintiff moved for partial summary judgment as to defendant Ricky’s liability and to dismiss the counterclaims. Ricky’s opposed and cross-moved to dismiss the complaint.

Supreme Court heard oral argument on March 11, 2010. Defendants did not, either in their brief or during oral argument, argue that plaintiff had to show it was ready, willing and able to perform in order to recover.

On April 12, 2010, the motion court granted partial summary judgment as to liability against both defendants (2010 NY Slip Op 33750[U]). The court found the rejection letter to be an unequivocal statement of intent to breach the agreement. The court also granted plaintiff’s request for attorney’s fees and costs against Holdings only and referred the issues of the amount of damages, attorney’s fees and costs to a special referee to hear and report with recommendations. Defendants have appealed from this order to the extent it granted plaintiffs motion for partial summary judgment.

Defendants moved to reargue. Plaintiff cross-moved to reargue that part of the decision that denied plaintiffs motions for attorney’s fees and costs against Ricky’s. On June 9, 2010, the court denied defendants’ motion for reargument, but granted plaintiffs, and accordingly also sent the issues of attorney’s fees and costs relating to Ricky’s to a special referee (2010 NY Slip Op 33749[U]). Defendants also appeal from this order.

The hearing before the special referee was to take place on June 17, 2010. However, defendants moved by order to show cause to vacate or stay that hearing. Defendants argued that [21]*21the lease, the letter agreement and the guaranty expressly precluded recovery for compensatory or consequential damages and these were what plaintiff was seeking. Supreme Court denied this motion on June 17, 2010 without explanation. Defendants appealed.

Defendants served discovery demands on plaintiff and the nonparty seller of the property at issue, and asked the court for leave to conduct discovery and to set a discovery schedule. On August 5, 2010, the court provided for limited discovery, including that: (1) the parties must provide all documents they were to use at the hearing, (2) “plaintiff must provide all documents concerning the $400,000 deposit and return of that deposit” and (3) plaintiff had to provide all documents that defendants had requested a year earlier that related to damages. The court did not provide for any nonparty discovery. The court then restored the case to the special referee calendar. Defendants have taken an appeal from this order as well. However, as this order is apparently not from a motion on notice, it is not appealable. The proper course would have been for defendants to move to vacate and appeal from the denial of vacatur.

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Cite This Page — Counsel Stack

Bluebook (online)
91 A.D.3d 16, 933 N.Y.2d 3, Counsel Stack Legal Research, https://law.counselstack.com/opinion/rsb-bedford-associates-llc-v-rickys-williamsburg-inc-nyappdiv-2011.