CONTRACT PHARMACAL CORP v. AIR INDUSTRIES GROUP (2021)

Upon the following papers read on this motion to reargue; Notice of Motion and supporting papers86-94; Notice of Cross Motion and supporting papers; Answering Affidavits and supporting papers96; Replying Affidavits and supporting papers97; it is,

ORDERED that the motion by the plaintiff for reargument of its motion to amend the complaint, which was granted in part and denied in part by an order of this court dated July 8, 2021, is granted; and it is further

ORDERED that, upon reargument, the court adheres to its prior determination.

On May 21, 2018, the parties entered into a sublease for approximately 81,000 square feet of space in a large warehouse building in Hauppauge, New York. On June 26, 2018, the defendant advised the plaintiff that it could not immediately deliver the entire premises. The defendant offered to provide the plaintiff with approximately 31,500 square feet of “back space” and the remainder of the space (approximately 50,000 square feet) by the fourth quarter of 2018. On July 11, 2018, the defendant advised the plaintiff that the “back space” would be available by August 3, 2018. On July 20, 2018, the defendant advised the plaintiff that it would construct a wall to separate the “back space” from the rest of the space. On August 3, 2018, the plaintiff advised the defendant that it was in breach of the sublease and expressly reserved its rights and remedies thereunder. The plaintiff also accepted defendant's offer to wall off the “back space” as long as the wall was constructed at the defendant's sole cost and expense. The defendant then built the wall, and the plaintiff moved into the “back space.” On September 10, 2018, the defendant advised the plaintiff that “the deal has now changed” and asked the plaintiff to enter into a new sublease for only the “back space.” The plaintiff did not agree and entered into a lease for approximately 50,000 square feet of space in another warehouse building. The plaintiff then commenced this action against the defendant for breach of contract, specific performance, and promissory estoppel. By an order dated July 8, 2021, the court denied the plaintiff's motion to amend the complaint insofar as it sought to add a cause of action for anticipatory breach of contract. The plaintiff seeks reargument thereof.

The court adheres to its prior determination that a plaintiff who brings a claim for breach of contract cannot simultaneously pursue a claim for anticipatory breach. When confronted with an anticipatory repudiation, the non-repudiating party may (a) elect to treat the repudiation as an anticipatory breach and seek damages for breach of contract, thereby terminating the contractual relation between the parties, or (b) continue to treat the contract as valid and await the designated time for performance before bringing suit Lucente v Intl. Bus. Machines Corp., 310 F3d 243, 258 [2nd Cir.]). The non-repudiating party must, however, make an affirmative election (Id.). He cannot treat the contract as broken and subsisting at the same time (Id.). One course of action excludes the other (Id.). In determining which election the non-repudiating party has made, the operative factor is whether the non-breaching party has taken an action (or failed to take an action) that indicated to the breaching party that he has made an election (Id. at 259).

The defendant's repudiation of the sublease occurred in June 2018, when the defendant advised the plaintiff that it could not immediately deliver the entire premises. Rather than terminate the parties' contractual relationship at that point and seek damages for breach of contract, the plaintiff accepted the defendant's offer to wall off the “back space” and moved into the “back space” until the defendant could deliver the remaining 50,000 square feet. The court finds that, by accepting the defendant's offer and moving into the “back space,” the plaintiff indicated to the defendant that it was electing to treat the sublease as valid and to await the defendant's performance thereunder. Once a party has elected a remedy for a particular breach, his choice is binding with respect to that breach and cannot be changed (Id. at 258-259). Accordingly, the court adheres to its prior determination that the plaintiff's claim for anticipatory breach is barred as a matter of law.

Elizabeth H. Emerson, J.