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BIRDS & BUBBLES NYC LLC, Plaintiff, v. 100 FORSYTH LLC, E & J All Seasons Construction Corp., 2M Mechanical LLC, and Exsa Corp., Defendants.
In this commercial landlord-tenant action, plaintiff, Birds & Bubbles NYC LLC, has sued its landlord, defendant 100 Forsyth LLC, for allegedly causing a flood on the premises that put plaintiff's restaurant out of business.
Plaintiff and 100 Forsyth entered into a lease in April 2014 for the lower level of a commercial retail space and outdoor garden at 100 Forsyth Street in Manhattan, in which plaintiff operated a restaurant. In February 2017, 100 Forsyth retained two contractors, E & J All Seasons Construction Corp. and Exsa Corp., to perform on the premises construction work that allegedly caused extensive flooding and mold conditions. Due to these conditions, plaintiff closed its restaurant. Plaintiff later brought this action against 100 Forsyth. After learning the names of the contractors, plaintiff amended its complaint to add E & J and Exsa, and Exsa's alleged subcontractor, 2M Mechanical LLC, as defendants.
The contractors did not respond to plaintiff's complaint. Plaintiff sought and obtained default judgments against each of them. (See NYSCEF Nos. 28, 57.) Plaintiff also settled its claims against 2M Mechanical, leaving 100 Forsyth as the only remaining defendant.
Plaintiff and 100 Forsyth now move and cross-move for summary judgment against one another.1 Plaintiff's motion is denied. 100 Forsyth's motion is granted in part and denied in part.
I. Procedural Issues
A. Plaintiff's Submission of Its Motion for Summary Judgment Without a Statement of Material Facts
As an initial matter, 100 Forsyth contends that plaintiff's summary-judgment motion should be denied for failure to submit an accompanying statement of material facts. This court disagrees.
The Uniform Rules for Trial Courts provide that a party moving for summary judgment under CPLR 3212 must annex to its motion “a separate, short and concise statement, in numbered paragraphs, of the material facts as to which the moving party contends there is no genuine issue to be tried.” (22 NYCRR 202.8-g [a].) 100 Forsyth relies on a line of cases, including Amos Fin. LLC v Crapanzano (73 Misc 3d 448 [Sup Ct Rockland County 2021]) that have found the “total absence” of a statement of material fact to be a fatal defect. (See e.g. id. at 452.) These cases are inapposite.
The decision in Amos was predicated on the moving party's “total failure” to comply with Rule 202.8-g. (Id. at 453.) Here, although plaintiff did not annex a statement of material facts to its motion, it submitted the statement within two weeks of 100 Forsyth's filing of opposition papers. 100 Forsyth was then able to file a responsive counterstatement before the return date. (See NYSCEF Nos. 160, 164.) Moreover, considering that 100 Forsyth could and did respond to plaintiff's statement of material facts on the merits, 100 Forsyth suffered no prejudice. This court exercises its discretion to overlook such minor, nonprejudicial defects under CPLR 2001 and CPLR 2101.
B. Plaintiff's Successive Motions for Summary Judgment
100 Forsyth also argues that this court should deny plaintiff's motion as a successive motion for summary judgment (following motion sequence 004).
A successive motion for summary judgment is generally disfavored; but a party may file such a motion if it is based on evidence elicited after a prior motion was denied. (Elihu v Nicoleau, 173 AD3d 578, 578 [1st Dept 2019].) And a court may properly consider a successive summary-judgment motion when doing so enhances judicial efficiency. (See e.g. MTGLQ Invs., LP v Collado, 183 AD3d 414, 414 [1st Dept 2020].)
Plaintiff's motion here admittedly raises some of the same arguments as did the prior summary-judgment motion. (See NYSCEF Nos. 61, 67). But plaintiff puts forward substantial new evidence elicited in discovery since this court resolved that motion—such as an affidavit and a deposition of plaintiff's managing member and depositions of 100 Forsyth's manager—to support those arguments. (See NYSCEF Nos. 108, 117-119, 121.) Given this new evidence, this court does not agree with 100 Forsyth that the current motion impermissibly relies on documents and testimony already in plaintiff's possession at the time of the earlier motion.
This court therefore reaches the merits of plaintiff's successive summary-judgment motion.2
II. Plaintiff's Motion and 100 Forsyth's Cross-Motion for Summary Judgment
A party moving for summary judgment “must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact from the case.” (Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 .) Evidence tendered by the moving party must be in admissible form. (Friends of Animals v Associated Fur Mfrs, 46 NY2d 1065, 1067 .) If the moving party meets its prima facie burden, “the burden shifts to the opposing party to submit proof in admissible form sufficient to create a question of fact requiring a trial,” viewing the evidence in the light most favorable to the non-moving party. (Kershaw v. Hospital for Special Surgery, 114 AD3d 75, 82 [1st Dept 2013].)
Plaintiff moves for summary judgment in its favor on 100 Forsyth's claimed liability. 100 Forsyth opposes and cross-moves for summary judgment to dismiss plaintiff's claims against it.
A. The Branch of 100 Forsyth's Cross-Motion Seeking Dismissal of Plaintiff's Negligence Claims on the Basis of the Subrogation Clause
As a threshold matter, 100 Forsyth claims that waiver-of-subrogation provisions in the lease bar plaintiff's negligence claims against it.
The lease contains two waivers of subrogation: Articles 9 (e) and 46 (a). Specifically, Article 9 (e) releases 100 Forsyth with respect to damages “caused by fire or other casualty” that were within the coverage of plaintiff's insurance. Article 46 (a) requires plaintiff to obtain and maintain property and business interruption insurance, and states that “[plaintiff] waives all rights of subrogation against [100 Forsyth] for loss or damage to the property required to be insured in this provision.” (See NYSCEF No. 64.) The term “other casualty” may be defined as an “accident” or an “unfortunate occurrence” which includes events resulting from human error. (See 45 Broadway Owner LLC v NYSA-ILA Pension Trust Fund, 107 AD3d 629, 631 [1st Dept 2013].) Thus, the Article 9 (e) waiver applies to the alleged damages caused by the “flooding” in this case.
Plaintiff contends that Article 9 (e) is unenforceable as it is not specific to the damage and claim. Plaintiff also states that Article 9 (e) is not mutual and violates General Obligations Law § 5-321. (See NYSCEF No. 162 at 9-15.) This court disagrees. The waiver is sufficiently specific because it is limited to “damages caused by fire or other casualty.” Additionally, the Article 9 (e) waiver imposes a mutual obligation on the parties to obtain insurance, and a mutual waiver of their rights of subrogation regarding any claim by either party. This kind of waiver is enforceable. (See General Acc. Ins. Co. v 80 Maiden Lane Assoc., 252 AD2d 391 [1st Dept 1998].)
Given 100 Forsyth's alleged breach of its obligation to repair and abate rent under Article 9 (b) and (c), plaintiff questions the applicability of the waiver under Article 9 (e). This argument is rejected. The prefatory language in Article 9 (e) “notwithstanding anything contained to the contrary in subdivisions (a) through (e) hereof” suggests that the waiver is unaffected by breaches of Article 9 (b) and (c). Moreover, Article 9 (e) does not expressly condition the enforcement of the waiver on performance of other provisions. The absence of this condition contrasts with Article 9 (e)’s expressly conditioning enforcement on the parties’ insurance policies including a “clause providing that such a release or waiver shall not invalidate the insurance.”3 (See NYSCEF No. 64 at 4.) The language and context thus suggest the parties’ intent to make the waiver independent of Article 9 (b) and (c).
There is no merit to plaintiff's claim that the Article 9 (e) waiver cannot preclude its claims because 100 Forsyth's conduct constitutes gross negligence. It is true that a party may not contractually insulate itself from damages caused by gross negligence. (Abacus Fed. Sav. Bank v ADT Sec. Servs., Inc., 18 NY3d 675, 683 .) Yet a contractual provision that “requires a party to insure and waive subrogation rights” must be distinguished from a contractual provision that “exempts a party from liability.” (Id.) Here, the waiver merely requires each party to obtain insurance and waive subrogation rights rather than exempting 100 Forsyth from liability altogether.
Plaintiff also argues that, even assuming the subrogation clauses applied, their scope is limited. As such, plaintiff claims that the subrogation clauses would bar only a small percentage of the total damages sought. (See NYSCEF No. 162 at 9-15.) This court finds this argument persuasive. A subrogation waiver in an agreement “does not bar one party from suing the other to recover for a loss to the extent that such loss is not required by the parties’ agreement to be covered—and, in fact, is not covered—by insurance.” (Duane Reade v Reva Holding Corp., 30 AD3d 229, 233 [1st Dept 2006].)
100 Forsyth contends that plaintiff did not articulate which of its outstanding damages fall outside the required insurance coverage. (See NYSCEF No. 165 at 7, 16-17.) But as the party (cross)-moving for summary judgment dismissing all of plaintiff's claims, it was 100 Forsyth's initial burden to demonstrate that all of plaintiff's claimed damages are barred by the subrogation-waiver clauses—not plaintiff's obligation to provide evidence indicating that subrogation remains available. 100 Forsyth did not meet its burden.
B. The Branch of Plaintiff's Motion Seeking to Hold 100 Forsyth Vicariously Liable for Exsa and E & J's Alleged Negligence
Plaintiff claims that the floods and resulting damages were caused by 100 Forsyth's contractors, Exsa and E & J. As a result, plaintiff seeks to hold 100 Forsyth vicariously liable for the alleged negligence of its subcontractors. (See NYSCEF No. 107 at 2, ¶ 8–9; NYSCEF No. 109 at 7-8; NYSCEF No. 122 at 7.) Because a genuine dispute of material facts as to 100 Forsyth's negligence still exists, this branch of plaintiff's motion is denied.
To obtain summary judgment on a vicarious-liability claim, plaintiff must affirmatively establish the contractors’ negligence as a matter of law through proof in admissible form. (See Francesco v Empress Ambulance Serv., Inc., 100 AD3d 589, 590-591 [2d Dept 2012]; Holt v Holt, 262 AD2d 530, 530 [2d Dept 1999]; see also Friends of Animals, 46 NY2d at 1067-1068.) The default judgments against Exsa and E & J are not sufficient to establish their negligence for vicarious-liability purposes. (See Birds & Bubbles NYC LLC v 100 Forsyth LLC, 2020 NY Slip Op 30854[U], at *3-*4 [Sup Ct, NY County Mar. 23, 2020].)
On this motion, plaintiff relies on an email from Robert Lentz, the attorney for plaintiff's insurance company (see NYSCEF No. 114); an environmental assessment report commissioned by plaintiff (see NYSCEF No. 115); and an expert report commissioned by a third-party insurance company. (See NYSCEF Nos. 121.) All these documents are inadmissible. They are out-of-court statements offered to prove the truth of the matter asserted, and no exception to the rule against hearsay applies.
The parties also dispute whether the damage to the premises was solely caused by the contractors. Plaintiff cites an email from Paul Wong, the building's former manager, in response to an email titled “Flooding at Birds & Bubbles,” in which Wong stated that he “heard that [the] contractor [has] broken a pipe.” (See NYSCEF No. 114 at 2.) 100 Forsyth claims that the flood was instead caused by “B & B's chef,” who, without authorization, turned on the main water valve. (See NYSCEF No. 130 at ¶ 39-44; NYSCEF No. 131 at 13.) 100 Forsyth also references asserted admissions in emails from Aaron Hopkins, one of plaintiff's restaurant managers. (See NYSCEF No. 147.) In short, the evidence plaintiff relies on does not eliminate material issues of fact regarding 100 Forsyth's alleged negligence.
C. The Branch of Plaintiff's Motion and 100 Forsyth's Cross-Motion on Plaintiff's Negligent-Hiring-and-Supervision Claims
Plaintiff contends that 100 Forsyth breached its common-law duty to exercise reasonable care to prevent its contractors from committing negligence. (See NYSCEF No. 67 at 7.) Plaintiff alleges that 100 Forsyth knew its contractors had caused leaks multiple times between 2016 and 2017, but did not take any actions to prevent leaks from happening again. (See NYSCEF No. 107 at 2; NYSCEF No. 109 at 7-8; NYSCEF No. 122 at 7-9, 21.) It remains unclear what specific acts 100 Forsyth committed that would give rise to a direct negligence claim on this theory.
As this court previously explained, a negligent-hiring claim requires a showing “that the employer was on notice of the relevant tortious propensities of the wrongdoing employee.” (Gomez v City of New York, 304 AD2d 374, 374 [1st Dept 2003].) In other words, plaintiff must offer proof showing both that the leaks were caused by the contractors’ negligence and that the 100 Forsyth knew or should have known of the contractors’ tortious conduct. Plaintiff has shown neither.
Plaintiff's owner testified that several leaks occurred in the premises in 2016 and 2017. (See NYSCEF No. 118 at 36.) But the mere fact that the leaks occurred is insufficient to establish negligence. Nor has plaintiff provided any admissible evidence in support of its claim. Moreover, none of the evidence plaintiff cites establishes that 100 Forsyth was on notice of the leaks before the February 2017 flood. (See NYSCEF Nos. 114, 117.) Therefore, the branch of plaintiff's motion seeking to hold 100 Forsyth liable on the negligent-hiring-and-supervision claim is denied.
With respect to 100 Forsyth's cross-motion seeking dismissal of plaintiff's negligent-hiring-and-supervision claim, 100 Forsyth's argument is grounded on the waiver-of-subrogation clauses. (See NYSCEF No. 131.) As explained above, 100 Forsyth does not meet its prima facie burden of production on this issue. This branch of 100 Forsyth's cross-motion is denied.
D. The Branch of Plaintiff's Motion and 100 Forsyth's Cross-Motion on Plaintiff's Claim for Breach of the Covenant of Quiet Enjoyment
Plaintiff claims that 100 Forsyth breached plaintiff's right to quiet enjoyment by failing to make necessary repairs following the February 2017 flood, and by failing to remedy other tenants’ alleged interference with plaintiff's use of the premises’ patio.
To succeed on a claim for breach of the covenant of quiet enjoyment, “a tenant must perform the conditions precedent to maintain[ing]” the claim, “unless there was a waiver of those conditions.” (Dave Herstein Co. v Columbia Pictures Corp., 4 NY2d 117, 121 .) One such condition is paying rent as long as the tenant remains in possession of the premises. (See id.)
Here, plaintiff concedes that “there may have been rents missed,” but contends that this unpaid rent was an effect of 100 Forsyth's breach of lease. Plaintiff claims that this breach of the lease, by allegedly failing to repair damage from the leak (including a mold condition in the premises) constituted a constructive eviction. (See NYSCEF No. 162 at 5.) But plaintiff has not showed that it had paid the rent due before the alleged constructive eviction. Because plaintiff has not proved an essential element of the breach of the covenant of quiet enjoyment claim, this branch of its motion for summary judgment is denied.
Turning to plaintiff's claim that 100 Forsyth breached plaintiff's right to quiet enjoyment of the patio, this court is not persuaded by plaintiff's argument. Plaintiff contends that during the spring and summer of 2016, other residential tenants above the premises began feeding birds, an activity that allegedly interfered with plaintiff's use of the premises’ patio. As a result, plaintiff claims it was constructively evicted from the patio. (See NYSCEF No. 109 at 6-7; NYSCEF No. 122 at 6; NYSCEF No. 130, at ¶ 31; NYSCEF No. 163 at ¶ 31.) Plaintiff is not entitled to summary judgment on this claim because it has not offered any admissible evidence either that it made rent payments before the alleged constructive eviction or to show the existence and extent of the bird-feeding issue.
In its cross-motion for summary judgment, 100 Forsyth seeks to bar plaintiff from insisting on the covenant of quiet enjoyment because plaintiff did not pay the outstanding arrears of rent while plaintiff was in possession of the premises. In support, 100 Forsyth offers an affidavit of James Lyan, the building's manager, and a rent statement dated May 3, 2017. (See NYSCEF Nos. 133, 141.) On its part, plaintiff has not controverted 100 Forsyth's allegations as required by 22 NYCRR 202.8-g. (See NYSCEF No. 163 at ¶ 37.) 100 Forsyth's allegations of unpaid rent are thus deemed admitted by plaintiff. 100 Forsyth has thus met its initial burden of proof on summary judgment. The burden now shifts to plaintiff to point to admissible evidence raising a genuine dispute of fact. Plaintiff has not done so. As such, 100 Forsyth has sufficiently shown its entitlement to summary judgment on this branch of its cross-motion.
E. The Branch of Plaintiff's Motion and 100 Forsyth's Cross-Motion on Plaintiff's Constructive-Eviction Claim.
In addition to breach of the covenant of quiet enjoyment, plaintiff argues that 100 Forsyth constructively evicted it because it did not remedy the damages resulting from the February 2017 flood, and it did not stop neighboring tenants from feeding birds. 100 Forsyth cross-moves, arguing correctly that the constructive eviction claim should be dismissed as duplicative of the claim for breach of the covenant of quiet enjoyment.
A tenant's claim for constructive eviction should be dismissed when it is duplicative of tenant's claim for breach of the covenant of quiet enjoyment and can only be asserted as a defense. (See Phoenix Garden Rest. v Chu, 245 AD2d 164, 166 [1st Dept 1997]; Elkman v. Southgate Owners Corp., 233 AD2d 104, 105 [1st Dept 1996].) Here, both claims rely on the same alleged flooding and mold conditions and bird-feeding interference. Plaintiff has provided no indication of how the claims are different. The constructive eviction claim is dismissed.
F. The Branch of Plaintiff's Motion Seeking to Hold 100 Forsyth Liable for Breach of the Covenant of Good Faith and Fair Dealing and 100 Forsyth's Cross-Motion
Plaintiff alleges that 100 Forsyth breached the covenant of good faith and fair dealing by refusing to take action to stop other residential tenants from feeding birds above the Birds & Bubbles patio. (See NYSCEF No. 109 at ¶¶ 36-40; NYSCEF No. 162 at 6.) 100 Forsyth contends that the lease did not impose a duty on 100 Forsyth to enforce the Building's Rules and Regulations or the terms of any lease against other tenants, and that it had no liability for other tenants’ violations. (See NYSCEF No. 131 at 21.) This court agrees with 100 Forsyth.
The covenant of good faith and fair dealing does not imply obligations inconsistent with other terms of the contractual relationship. Here, article 35 of the lease explicitly states that 100 Forsyth owed plaintiff no duty to enforce the Building's Rules and Regulations, or terms, covenant, or conditions in any other lease against other tenants. (See NYSCEF No. 111.) Any duty on the part of 100 Forsyth to stop other tenants from feeding birds is inconsistent with the lease. Therefore, such duty is not implied in the duty of good faith and fair dealing.
Plaintiff also contends that 100 Forsyth violated Articles 4 and 9 (a)-(c) of the lease by refusing to stop other tenants from feeding birds. This argument is rejected as a matter of law. These Articles concern repairs or damages to the premises due to “fire or other casualty,” which do not apply to the alleged bird feeding interference. (See NYSCEF No. 111; NYSCEF No. 162 at 6.)
G. The Branch of Plaintiff's Motion and 100 Forsyth's Cross-Motion on Plaintiff's Unjust-Enrichment Claim
Plaintiff argues that 100 Forsyth was unjustly enriched by overcharging rent and refusing to abate the rent in an amount commensurate with the actual usable space following the February 2017 flooding. 100 Forsyth argues that this claim should be dismissed as the issue of the amount of rent owed is governed by the lease. This court agrees with 100 Forsyth.
A party may not recover on a theory of unjust enrichment if the parties have entered into a valid contract governing the subject matter. (Cox v NAP Constr. Co., Inc., 10 NY3d 592, 607 .) Here, the lease governs the obligation to pay rent (and entitlement to an abatement). Plaintiff does not dispute the lease's validity. (See NYSCEF No. 130 at ¶ 5-8; NYSCEF No. 163 at ¶ 5-8.) Plaintiff's claim for unjust enrichment is dismissed as a matter of law.
Accordingly, for the foregoing reasons, it is hereby
ORDERED that plaintiff's motion for summary judgment under CPLR 3212 is denied; and it is further
ORDERED that the branch of defendant 100 Forsyth's cross-motion for summary judgment under CPLR 3212 seeking to dismiss plaintiff's negligence claims is denied; and it is further
ORDERED that the branches of defendant 100 Forsyth's cross-motion for summary judgment under CPLR 3212 seeking dismissal of plaintiff's claims for breach of the covenant of quiet enjoyment, constructive eviction, breach of the covenant of good faith and fair dealing, and unjust enrichment are granted, and those claims are dismissed.
1. Parts of the motion and cross-motion substantially overlap with arguments raised by the parties on motion sequence 003 in a related action pending before the undersigned, 100 Forsyth LLC v Birds & Bubbles NYC, LLC, Index No. 153180/2018. This court's decisions resolving the two motions use similar language in dealing with the areas of overlap.
2. In considering the merits, this court is mindful that many of the paragraphs in plaintiff's counterstatement of fact (responding to 100 Forsyth's 202.8-g statement) merely assert “Denied” or provide responsive contentions without the citations to evidence that Rule 202.8-g requires.
3. The parties’ insurance policies satisfied this condition. (See NYSCEF No. 135 at 57-58; NYSCEF No. 137 at 57-58; NYSCEF No. 150 at 128; and NYSCEF No. 151 at 130.)
Gerald Lebovits, J.
Response sent, thank you
Docket No: Index No. 651980/2017
Decided: February 18, 2022
Court: Supreme Court, New York County, New York.
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