EATING 41 CORP v. NEWPORT LLC (2019)

Orders, Supreme Court, New York County (Shlomo Hagler, J.), entered September 27, 2018, which, to the extent appealed from as limited by the briefs, denied defendants' motion for summary judgment dismissing the causes of action for breach of the lease and breach of the covenant of quiet enjoyment, unanimously reversed, on the law, without costs, and the motion granted.

In September 2008, plaintiffs commenced an action alleging that defendants had informed them that plaintiff tenant E–Z Eating 41 Corp. (EZ41) was obligated under the lease to operate a Burger King on the premises, and seeking, inter alia, a declaration that EZ41 could operate a non-Burger-King fast-food burger restaurant consistent with the lease.  The instant complaint, which alleges, inter alia, wrongful eviction, does not allege that defendants physically expelled EZ41 from the premises.  Thus, until defendants served plaintiffs with a notice of cancellation of the lease, on March 27, 2009, the only eviction claim that plaintiffs could have asserted was a claim for constructive eviction.  However, plaintiffs stopped paying rent as of October 1, 2008.  Having elected that remedy, rather than remaining in the premises and paying rent, they are not entitled to damages (see Bostany v. Trump Org. LLC, 88 A.D.3d 553, 554, 931 N.Y.S.2d 280 [1st Dept. 2011], citing Frame v. Horizons Wine & Cheese, 95 A.D.2d 514, 519, 467 N.Y.S.2d 630 [2d Dept. 1983];  see also Universal Communications Network, Inc. v. 229 W. 28th Owner, LLC, 85 A.D.3d 668, 669, 926 N.Y.S.2d 479 [1st Dept. 2011] [the obligation to pay rent under a commercial lease is an independent covenant not suspended by landlord's breach] ).

The motion court erred in ruling that the doctrine of laches estopped defendants to assert the affirmative defense of the election of remedies.  EZ41's decision to escrow funds after it was determined in March 2009 in the prior action that EZ41 breached the lease does not justify application of this equitable doctrine (see Saratoga County Chamber of Commerce v. Pataki, 100 N.Y.2d 801, 816, 766 N.Y.S.2d 654, 798 N.E.2d 1047 [2003], cert denied 540 U.S. 1017, 124 S.Ct. 570, 157 L.Ed.2d 430 [2003] ).  Moreover, defendants were granted leave to amend their answer in August 2017, and EZ41 failed to show that it was actually prejudiced by the delay (see id.).

In light of the foregoing, we do not address defendants' remaining arguments.