Smart Coffee, Inc., Petitioner, v. Michelle Sprauer, Leonardo Gil, Queenswood Newstand LLC, John Doe, Jane Doe and XYZ Corp., Respondents.
On December 3 and 14, 2020, this Court conducted a bench trial in the instant proceeding. The Court had ample opportunity to observe and assess the demeanor and credibility of the witnesses and carefully reviewed and considered all exhibits admitted into evidence.
The petitioner Smart Coffee, Inc., (hereinafter "petitioner" or "Smart Coffee") is the lessee of a newsstand situated at 9100 59th Avenue, Elmhurst, NY 11373 (hereinafter "subject premises"). The subject premises is located across the street from Queens Center Mall (hereinafter "the Mall"), the largest mall in the region. The respondent, Michelle Sprauer (hereinafter respondent or "Sprauer") is the commercial lessor. The respondent, Leonardo Gil (hereinafter "Gil") is the current month to month tenant in occupancy of the subject premises, together with "Jane Doe", who was revealed at trial as Destinee Julia Sanchez (hereinafter "Sanchez").
Sprauer as landlord and Smart Coffee as tenant entered into a written lease agreement at the behest of Arthur Mavashev (hereinafter "Mavashev"), a co-owner of petitioner's business for the subject premises for a one-year term, commencing November 1, 2019 and ending November 1, 2020 (hereinafter "lease") with an initial monthly base rent of $1,000.00. The lease was submitted by petitioner. It is a document drafted by Sprauer and faxed to Mavashev by Sprauer. While the corporate petitioner is named as the tenant in the lease, Mavashev's name was typewritten on the signature page and signed by Mavashev in his name. The lease was executed by both parties and acknowledged by a notary public.
In mid-March 2020, the Corona virus referred to as Covid-19, became a full-fledged global pandemic, which resulted in a governmental shut down of nonessential services, based upon Executive Order 202.8, effective in the evening of March 22, 2020. When Smart Coffee's representatives noticed the Mall was shut down, they thought it prudent to shut down as well and did. This had a direct impact on the petitioner's ability to pay its rent. The petitioner last paid its rent in March 2020.
For many months, Mavashev and Sprauer engaged in a series of text messages concerning the petitioner's tenancy and the payment of rent, or more accurately, the nonpayment of rent, in the midst of the Corona virus pandemic. In those text messages, Mavashev advised the respondent that she would get the rent once they were able to pay, reminded her that in the midst of the pandemic they were unable to conduct their business and were losing income due to the NYS Governor's Executive Order. Furthermore, Mavashev informed Sprauer she would be engaging in illegal activity under the terms of the EO's if she were to enter the subject premises without their permission and remove their possessions. To underscore his objection to her potential illegal conduct, Mavashev told her that they would commence a lockout proceeding if she did so.
The respondent consistently maintained that, "I need my rent money if you cannot pay the money that you owe me you have to leave the premises that's it". "If you do not leave you will not be able to get your stuff". These statements were made by text message when only one month's rent was due. Sprauer's perspective was that the Executive Orders were irrelevant. The only issue of any relevance was when and how much rent the petitioner was going to pay her. When Mavashev advised Sprauer that if she entered the subject premises without his permission, he would contact the police and report her breaking and entering, Sprauer's tune changed. At that point, she claimed she was concerned that the newsstand must be cleaned. However, the refrain continued, "This is my business and I'm giving you the right to stay there and now I'm not giving you the right anymore you're not paying me any rent get out."
At one point, Sprauer tried to analogize that the petitioner's situation was the same as hers, but reverted to the same intolerant persona and said,
You know what [Arthur] I am in the same situation you are whether we sign the lease or not this is not normal circumstances and you are not working with me I don't care about no lease no court will care about no lease you[r] [lease] went out the window. I don't need you I'm not getting any money from you.
When Mavashev responded by reminding Sprauer, "We signed and notarized a legal lease", she did not deny the existence of the written and acknowledged lease at that time. Her reply was "I understand that but there's no more there's nothing illegal about anything that we're going through are you going to pay me April or not"?
On April 15, 2020, Sprauer continued with her ultimatums. This time, she became more specific. In a lengthy text message that day, Sprauer told Mavashev she was giving him until May 1st to pay her rent for April and May i.e., $2,000.00, or he would no longer be permitted to occupy her newsstand. Mavashev repeated that he would seek legal recourse for an illegal eviction if she were to continue along her threatened path by entering the subject premises and removing his inventory. And again he reminded Sprauer of the existence of the signed lease. Once again, she did not deny its existence. Instead, she discounted its legitimacy presumably, because the rent had not been paid for April and May.
On May 4, 2020, Mavashev sent the following text message, "You have entered my newspaper stand without my permission and illegally changed the locks". Still he tried to reason with her and give her an opportunity to reverse her misdeeds. "Tomorrow if you don't put all my stuff back I would have to call the cops". Obviously, he was seeking restoration to the subject premises. Courthouse proceedings were considerably reduced for several months, though some activity continued. Ultimately, this proceeding was commenced on October 9, 2020.
Sanchez was the first witness called by the petitioner. Her testimony was brief, but credible. Sanchez established that she and Gil currently occupy the subject premises pursuant to an oral month to month tenancy. They took possession in mid-September 2020 from Sprauer after having answered an advertisement on "Craig's List". She is not involved in the day-to-day activities of the newsstand and has only visited when it was necessary to pay a bill or re-stock the merchandise for sale.
Mavashev testified as an owner of the petitioner's business. He and his co-owner, Ricardo Torres (hereinafter "Torres"), rented the subject premises to run a combined newsstand and integrated technology enterprise. In addition to running a newsstand from the subject premises, petitioner also operated a delivery business for customers of the Mall. When stores in the Mall across the boulevard received orders for merchandise, the petitioner delivered the merchandise to the customers. Mavashev also testified that he executed the lease with Sprauer.
Due to the Mall shut down, Mavashev therefore believed he was required to shut down by the Governor's mandate as well. Mavashev attempted to speak with Sprauer about the need to shut down the newsstand, but her response from the beginning was that if he didn't pay the rent, she would have it cleaned out. She continually demanded that her keys be returned. Mavashev attempted to reason with Sprauer and told her once the newsstand was operational again, she would receive the rent. She varied her excuses of why she needed to enter the subject premises and Mavashev told her there was no need to enter, because the newsstand was not operational. During the course of these conversations, Sprauer told Mavashev that she would be changing the locks.
Then about a month after the Jewish holiday of Passover, Mr. Torres visited the subject premises and was unable to enter. The locks had been changed. This time frame is borne out by the text messages between Sprauer and Mavashev, which were entered into evidence. At that point, the petitioner was in rental arrears for $2,000.00, representing rent for the months of April and May 2020.
Once the locks were changed, on May 4, 2020, Mavashev sent Sprauer the text which confirmed she acted on her earlier threats. "You have entered my newsstand without my permission and illegally changed the locks. Tomorrow if you don't put all my stuff back I would have to call the cops." When Mavashev asked Sprauer to put the petitioner back in possession, she responded by telling him she had another tenant who was going to pay a higher rent.
On Mavashev's cross examination, Sprauer's attorney relied upon the lease, which Sprauer claimed did not exist, to put forth an argument that Sprauer was justified in changing the locks, because the rent had not been paid. Sprauer's counsel also tried to assert that the petitioner was not the proper party to maintain this litigation, because Mavashev signed the lease without reference to Smart Coffee or his corporate office in it. In essence, Sprauer claimed Mavashev executed the lease in his individual capacity, not on behalf of Smart Coffee. Through cross examination, Sprauer's counsel was able to ascertain that the petitioner did not exercise its option to renew the lease. The option would have expired approximately 4 months after Sprauer had changed the locks without petitioner's permission, i.e. September 1, 2020.
Mr. Torres testified briefly. His testimony was focused on the items which were inside the subject premises at the time the petitioner shut down the newsstand. The shut down was due to the Covid pandemic and resulting Governor's Executive Order 202.8, issued on March 20, 2020. The initial Executive Order contained a 90-day moratorium on enforcement of "eviction orders."
Michelle Sprauer testified on her own behalf and was her only witness. Throughout this proceeding, there has been a dispute over the authenticity of the lease submitted by petitioner. Sprauer maintained during trial that the lease did not contain her signature, although she did not give the Court any reasonable basis to believe her statement; and in light of her other testimony, as well as the tenor of the text messages admitted into evidence, this testimony is not credited with any probative value. Moreover, by stipulation with petitioner, Sprauer submitted an unsigned document and somehow attributes this piece of paper as the agreement between the parties. The Court cannot accord any probative value to this document submission by respondent. Therefore, the Court determines that the valid lease is the fully executed and acknowledged document submitted by the petitioner.
Sprauer admitted she changed the locks on the newsstand, but Sprauer insisted this did not occur until June 4, 2020. She presented a receipt for a locksmith from that date. However, the date of the receipt contradicts the text message from Mavashev, which was created in real time. It appears to this Court that Sprauer was under the impression that if she could show the locks were changed after the issuance of Executive Order 202.31, (which permitted phase 1 industries to re-open on May 15, 2020), this would lend more credibility to her claim the subject premises were abandoned.
Sprauer alternately claimed she believed the subject premises had been abandoned by the petitioner and that she changed the locks because she believed someone had broken into the subject premises. She tried to make the Court believe she was simply trying to secure the subject premises from burglary. Neither of these excuses have any plausibility in the face of the circumstances.
Sprauer's text messages with the petitioner's representatives paint a clear picture of a cavalier landlord who gave the tenant an ultimatum of paying her rent or getting out. Then she switched tactics by feigning concern that the virus could have been in the newsstand and she needed to get it cleaned. The texts show a tenant who consistently asserted its rights to the tenancy and had no intention of abandonment. The tenant's representative went so far as to explain he would commence an unlawful eviction proceeding, but she was not dissuaded.
During the trial, Sprauer introduced photographs purporting to show the newsstand had been abandoned. However, that is not how they are viewed. The photos show a small tight space with many items packed and stacked inside. This does not bespeak of an abandonment. Moreover, the text messages make it clear there was no intent to abandon the subject premises. Threatening a landlord with calling the police if they enter the space and bringing an illegal lockout proceeding does not create the impression of a tenant who is abandoning their leased premises. If there was any inkling of a thought in Sprauer's mind that the petitioner abandoned the subject premises, Sprauer had contact information of the petitioner to confirm or deny it.
If Sprauer truly believed the newsstand had been vandalized or burglarized, requiring the locks to be changed, she would have been justified in doing so, had she then immediately apprised the tenant of the situation and offered them the keys. However, upon inquiry from the Court, she admitted she never offered the keys to the tenant.
Sprauer's testimony took an extreme leap into the world of the fantastic and out of the world of credibility when she perjured herself by claiming the signature on the lease was not hers. Once again, her text messages with the tenant's representative shed light on this subject. In six separate texts, Mavashev made mention of having a signed lease; and in a couple of them he reminded her of them going to a bank to have their signatures notarized on the lease. Sprauer did not deny this in any way shape or form. She either attempted to negate the legitimacy of the executed lease because of the rent arrears or merely responded to other aspects of the text messages concerning the rent.
Sprauer also perjured herself with her insistent testimony that the petitioner never requested to be restored to possession. The May 4, 2020 text message from Mavashev could not have been more certain. If accusing a landlord with an illegal lockout coupled with threatening a landlord with police involvement if they do not put the tenant's possessions back in place after having removed them, is not a request to be restored to possession, then only a neon sign would suffice.
As if her contempt for the judicial system was not clear enough from her text messages, Sprauer made this abundantly apparent by her testimony on cross examination. In response to simple questions from opposing counsel, Sprauer answered in a mocking tone with a sing song voice. While her behavior would be shocking for other witnesses, it was almost predicable from the tenor of her text messages.
Sprauer's counsel has raised a threshold issue of standing in this proceeding. He has disputed whether Smart Coffee has standing to sue because, it is Sprauer's contention, that the actual tenant was Mavashev. The body of the lease has one reference to a named tenant and the tenant named is Smart Coffee, Inc. Mavashev signed his name where it was typewritten on the signature page. There is no reference to his status as a corporate officer or any mention of Smart Coffee Inc., at the space provided for signatures of the parties to the lease.
Sprauer insisted she had never heard of Smart Coffee, Inc. She maintained she had always dealt with Mavashev in his individual capacity. Therefore, Sprauer's position has been that Mavashev is the proper party petitioner, not Smart Coffee, Inc. Mavashev executed the lease. He did not list his representative capacity in Smart Coffee beneath or beside his signature. Although Sprauer's testimony was completely untrustworthy, the Court would be remiss if the standing issue was not addressed.
This is not a case in which the petition should be dismissed, because the wrong petitioner commenced the proceeding. Mavashev, as an individual, was not a party to the contract. Smart Coffee, Inc., is the named tenant in the lease. It is obvious that Mavashev was not the intended tenant. Read as a whole, the lease, which appears to be a form pulled from the internet, was completed by Sprauer and sent to the petitioner by Sprauer, shows that the intended party was the corporation. The absence of a reference to a corporate office above or below petitioner's personal signature does not prove otherwise. Newman v. Berkowitz, 50 AD3d 479, 857 NYS2d 75, Slip Op. 03493 (1st Dept 2008), (See 150 Broadway NY Assoc., L.P. v. Bodner, 14 AD3d 1, 7, 784 NYS2d 63 ; PNC Capital Recovery v. Mechanical Parking Sys., 283 AD2d 268, 270—271, 726 NYS2d 394 , lv. dism. 96 NY2d 937, 733 NYS2d 376, , app. dism. 98 NY2d 763, 751 NYS2d 846 ).
It is settled law that when a disclosed principal's agent acts on behalf of its principal, the agent will not be personally liable for a breach of contract unless there is clear and explicit evidence of the agent's intention to be bound as an individual. (Weinreb v. Stinchfield, 19 AD3d 482, 483 [2nd Dept 2005]; Palisades Off. Group v. Kwilecki, 233 AD2d 490, 491, 650 NYS 2d 990 ). Sprauer has not presented any credible evidence that the tenant was intended to be any individual or entity other than Smart Coffee, Inc.
Even where there is a buried clause that attempts to bind an individual personally within a contract where the contract was intended to bind a corporate entity, the individual will not be bound personally unless there is a clear intent to do so. Salzman Sign Co. v. Beck, 10 NY2d 63, 217 NYS2d 55 (1961). In the Salzman case, the Court of Appeals of New York State held that an individual signed solely as an agent of his principal, the corporation, thereby binding only the corporate entity and not the individual. The Salzman court recognized that in modern times most commercial business is conducted between corporations and the general business community knows an individual officer is not liable for his corporation's transactions unless they sign individually. Where individual responsibility is wanted, it is commonplace for the officer to sign twice, once as an officer and then also as an individual.
The Governor's initial Executive Order 202.8, placed a 90 day moratorium on the enforcement of "eviction orders", regardless of whether the summary eviction proceeding was grounded in nonpayment of rent or a holdover. The provisions relating to a moratorium on evictions based upon nonpayment of rent have been extended on a monthly basis continuously since the expiration of the initial one in March 2020. This did not however, grant landlords carte blanche to resort to self-help and take back possession of their rental properties in situations where tenants did not pay their rent.
Sprauer's attempt to rely upon 110-45 Queens Blvd. Garage, Inc. v. Park Briar Owners, 265 AD2d 415, 696 NYS2d 490 (2nd Dept 1999) as justification for her re-entry is misguided. It is inapplicable to the case at bar on that issue. That case held "the law permits a commercial landlord to reserve its common-law right to peaceably re-enter commercial premises upon termination of the lease". Here, there was no termination of the lease. No notice was served upon the tenant. Moreover, the notice would have been ineffective due to the Governor's Executive Orders which placed a moratorium upon commencing new summary eviction nonpayment proceedings or enforcing then existing "eviction order."
Respondent also looks for support for resorting to self-help in the recent case of The Shack Collective Inc v. Dekalb Market Hall, LLC., 69 Misc 3d 1202(A), 130 NYS3d 925, 2020 NY Slip Op. 51156(U) (Civ Kings 2020). However, that case is also inapposite to the instant scenario. The Shack Collective involved a licensor-licensee relationship where the licensor served a notice upon the licensee, prior to the commencement of a summary eviction holdover proceeding. In the instant case, the parties have a landlord tenant relationship, the landlord never served a predicate notice and the basis for the landlord locking out the petitioner, despite her testimony to the contrary, was obviously due to the tenant's nonpayment of rent.
The NYS Governor's Executive Orders have consistently been applicable to nonpayment summary eviction proceedings. The moratorium on evictions based upon nonpayment of rent has been in place since mid-March 2020 and continues today. Moreover, the moratorium was recently extended into May 2021 by legislation. Prior to the enactment of the state legislation, holdover proceedings such as The Shack Collective, were not covered by the Governor's Executive Order. The only thing this case has in common with The Shack Collective is that both landlords resorted to self-help.
While there may be some instances in which a commercial landlord may re-enter a rented space and take back possession, this is not one of them. The Governor's Executive Orders placed a moratorium on the commencement of eviction proceedings and enforcement of judgments of possession and warrants of eviction issued by courts in summary eviction nonpayment proceedings. They did not have a carve out or exception for landlords who chose to ignore the legal process, behave like they are in the Wild West and resort to self-help. Yet, this is exactly what Sprauer did.
The Court finds Sprauer engaged in an illegal lockout of the petitioner. Therefore, the Court must now examine the fairness, and consider the possible consequences of, restoring the petitioner to possession of the subject premises. At the time Sprauer changed the locks, on or about May 4, 2020, approximately 6 months remained on the petitioner's lease. The instant proceeding was commenced on October 9, 2020 and the lease expired during the pendency of the proceeding. Although the petitioner was out of possession at the time when it ought to have exercised its option to renew the lease, the petitioner did not act in this regard. Therefore, what the petitioner has is an expired lease.
Sprauer directly and willfully violated the Governor's Executive Order by locking out the petitioner in the midst of the eviction moratorium. Nonetheless, the new tenant entered into a bona fide lease agreement after Smart Coffee's eviction and prior to the commencement of this proceeding. There is no basis to warrant this Court to disturb their tenancy (See, Parkash v. Lorenzo, NYLJ, 10/12/94, p. 24, col. 4; See, 90—115 West Gramercy Assoc. v. Simeonov, NYLJ, 6/18/90, p. 26, col. 4 (AT1); Sirak Co. v. Santiago, NYLJ, 4/2/87, p. 16, col. 4 [AT2] ). Kohl v. Fusco, 164 Misc 2d 431, 440, 624 NYS2d 509, 514 (Civ. Ct. 1994)
The Court now directs its attention to petitioner's claim under RPAPL § 853, which provides:
If a person is disseized, ejected, or put out of real property in a forcible or unlawful manner, or, after he has been put out, is held and kept out by force or by putting him in fear of personal violence or by unlawful means, he is entitled to recover treble damages in an action therefor against the wrongdoer.
In an alleged illegal lockout, the use of unusual force or threat thereof was determined to be an essential element by the Court of Appeals in earlier cases of this nature and that standard was followed for many years. Randall-Smith, Inc. v. 43rd St. Estates,17 NY2d 99, 268 NYS2d 306 (1966); Drinkhouse v. Parka Corp., 3 NY2d 82, 164 NYS2d 1 (1957); Statement, Inc. v. Pilgrim's Landing, Inc., 49 AD2d 28, 370 NYS2d 970 (4th Dept 1975); Chapman v. Johnson, 39 AD2d 629, 331 NYS2d 184 (4th Dept 1972); Pisano v. Nassau County, 41 Misc 2d 844, 246 NYS2d 733 (NY Sup Nass 1963), aff'd 21 AD2d 754, 252 NYS2d 22 (2nd Dept 1964); Brande v. de Kosenko, 57 Misc 2d 574, 293 NYS2d 489 (AT 1 1992); Launikitis v. Garcia,18 Misc 2d 409, 189 NYS2d 751 (NY Co. 1959).
Then, in 1981, the Legislature enacted a significant change which made the statute more inclusive by providing relief to a tenant when they are kept out without the use of force or threat of force. In their 1981 amendment, the Legislature manifested the intent to provide broader and expanded coverage to allow recovery in cases where no force or threat is employed but a lock-out or other wrongful eviction takes place. See Carter v. Andriani, 84 AD2d 513, 443 NYS2d 157 (1st Dept 1981).
Therefore, a tenant is not required to prove "forcible" eviction to come within the provisions of RPAPL § 853. They must only prove that the eviction was unlawful or that unlawful means were used. Whether the newsstand was operational with the tenant present or there was a peaceful re-taking of possession is not relevant.
Sprauer testified she was not certain whether the Governor's eviction moratorium order applied, because she wasn't sure if the newsstand was a nonessential business. She also testified that her concern was to secure the newsstand which she believed had been ransacked. The photos submitted by respondent do not demonstrate a ransacked newsstand, but rather a tiny premises with limited space to place inventory. In any event, if Sprauer genuinely was not sure if the moratorium covered the newsstand, the more prudent approach would have been to err on the side of caution. Instead, she acted in a high-handed fashion that gives landlords a bad reputation in the business.
It is a long-established principle that the measure for compensatory damages in a wrongful eviction case is the value of the unexpired term of the lease over and above the rent the lessee must pay under its terms (Long Island Airports Limousine Service Corp. v. Northwest Airlines,124 AD2d 711, 508 NYS2d 223 [2nd Dept 1986] and cases cited therein), together with any actual damages flowing directly from the wrongful eviction (See, Eten v. Luyster, 60 NY 252). In the case at bar, there was no testimony with respect to the value of the unexpired term over the rent the petitioner must pay under the terms of the lease.
With respect to actual damages, Mr. Torres testified that there were numerous items of machinery and equipment necessary to conduct a retail business which were present when they left the subject premises in March 2020. There was also a bag of his tools, an Ipad, a laptop, security camera, an electric delivery scooter and inventory items for the newsstand. However, Mr. Torres was unable to substantiate the purchase of any of these items. He did not testify that he was familiar with the current value of the various items or the condition of them and he did not demonstrate any expertise in otherwise being able to evaluate these items. See North Main Street Bagel Corp. v. Duncan, 37 AD3d 785, 831 NYS2d 239 (2nd Dep't 2007).
Mr. Torres' testimony was less than stellar as well. However, it was not so glaringly perjurious as Sprauer's. Torres first claimed he used his receipts to compile a list of items in the newsstand when the petitioner shut down the business in March. Petitioner attempted to introduce the list into evidence. When that failed, he then maintained all the receipts are in the computer, which Sprauer admittedly removed from the subject premises when she changed the locks.
While Sprauer testified she gave the petitioner the opportunity to claim the few items which she said were present when she entered the subject premises, this too is not borne out by her text messages. Sprauer's text messages repeatedly told Mavashev that if he did not pay the rent, he would be unable to retrieve his belongings. In any event, the petitioner was unable to prove the cost of any of the items as damages. The actual damages which were the direct consequence of the wrongful eviction were not substantiated.
It has long been held that the monetary recovery in a wrongful eviction proceeding may in part be allocable to loss of profits See, Snow v. Pulitzer, 142 NY 263 (1894); Smith v. Feigin, 276 AD 531, 96 NYS2d 123 (1st Dept 1950); O'Toole v. Crane & Clark, 245 AD 824, 281 NYS 1 (2nd Dept 1935), aff'd. 270 NY 559, 200 N.E. 317 (1936). However, the amount of the loss must be determined with a reasonable degree of certainty. It cannot be based on guesswork (Bromberger v. Empire Flashlight Co., Inc., 138 Misc. 754, 246 NYS 67 (Sup Bx.1930); See also, Schiffman v. Deluxe Caterers of Shelter Rock, 100 AD2d 846, 474 NYS2d 87 (2nd Dept 1984); R & I Electronics v. Neuman, 66 AD2d 836, 411 NYS2d 401 (2nd Dept 1978). There was also no testimony regarding loss of profits, although it is unlikely there would have been any profits to speak of considering the lack of traffic around the Mall during the shutdown of commerce and thereafter in the continuing pandemic. The petitioner's evidence fell far short of this standard.
The petitioner also seeks treble damages. Treble damages are discretionary under RPAPL § 853. Lyke v. Anderson, 147 AD2d 18, 541 NYS2d 817(2nd Dept 1989). In the case at bar, where the landlord engaged in self-help, this Court determines that treble damages would be appropriate. Clinkscale v. Sampson, 48 AD3d 730, 853 NYS2d 572 (2nd Dept 2008).
To arrive at the amount of treble damages, there must first have been ascertainable compensatory damages, which have not been substantiated. Mannion v. Bayfield Development Co., 134 Misc 2d 1060, 514 NYS2d 186 (Sup NY Co 1987); O'Hara v. Bishop, 256 AD2d 983, 682 NYS2d 291 (3rd Dept 1998). Unfortunately, zero multiplied by three amounts to zero.
However, treble damages and punitive damages are not one and the same. They are separate and distinct forms of damages. See Rental & Management Associates, Inc. v. Hartford Ins. Co., 155 Misc 2d 547, 548-49, 588 NYS2d 982, 983 (Sup.NY Co. 1992), aff'd, 206 AD2d 288, 614 NYS2d 513 (1st Dept 1994); See also Lyke v. Anderson, 147 AD2d 18, 27-31, 541 NYS2d 817, 823-25 (2nd Dept 1989). See also Suffolk Sports Center, Inc. v. Belli Const. Corp., 212 AD2d 241, 246, 628 NYS2d 952, 955-56 (2nd Dept 1995) where it was held that a landlord's actions of blocking the tenant's ingress and egress, effectively forcing them out of business, were sufficiently reprehensible to justify imposing punitive damages against it.
Punitive damages of course are imposed for morally culpable or evilly motivated conduct. The purpose is to punish the individual wrongdoer and to deter others from engaging in similar conduct. Walker v. Sheldon,10 NY2d 401, 405, 223 NYS2d 488, 491 (1961). In the case at bar, punitive damages are warranted. Sprauer's behavior was both intentional and malicious. Under circumstances where a landlord acts with actual malice, punitive damages are appropriate. Lyke v. Anderson, supra.
Unfortunately, there is little guidance for a court to measure the appropriate amount of punitive damages to award. "There is no rigid formula by which the amount of punitive damages is fixed, although they should bear some reasonable relation to the harm done and the flagrancy of the conduct causing it." I.H.P. Corp. v. 210 Central Park South Corp., 16 AD2d 461, 467, 228 NYS2d 883 (1st Dept 1962), aff'd 12 NY2d 329, 239 NYS2d 547 (1963). Liberman v. Riverside Chapel, Inc., 225 AD2d 283, 650 NYS2d 194 (1st Dept 1996).
To accomplish the goals of punitive damages, i.e., punishment and deterrence, the amount of the award depends upon the degree of fault and intention of the actor, the circumstances that gave rise to the conduct, the sensibilities of those involved and the degree that the conduct offends a public sense of justice and decency. Micari v. Mann, 126 Misc 2d 422, 428, 481 NYS2d 967, 972 (Sup NY Co 1984). Here, Ms. Sprauer's intention was clear. Her concern was not about keeping the subject premises clean during the pandemic or securing it because she thought it had been abandoned or ransacked by a third party. Her only objective was to take back possession and relet the subject premises, in the face of the Governor's Executive Orders and despite Mavashev's entreaties and threats of legal action. She thumbed her nose at the judicial process and greatly offended the public sense of justice and decency.
Since the petitioner could not substantiate its monetary damages through proof of its financial expenditures, the Court is left to measure punitive damages by the only means possible, i.e., the amount of rent of the remaining term of the lease, which would have been payable to Sprauer. At the time of the lockout, there were 6 months remaining on the lease. The monthly rent was $1,000.00. At that rate, the damages would be $6,000.00. However, to convey to Sprauer that her malevolent actions are intolerable, that amount is trebled or $18,000.00.
The petitioner also seeks legal fees in this proceeding. In New York, the longstanding "American rule" only allows the prevailing party to obtain a legal fees award from the losing party "where authorized by statute, agreement or court rule" 214 Wall Street Associates LLC v. Medical Arts-Huntington Realty, 99 AD3d 988, 953 NYS2d 124 (2nd Dept 2012); Gotham Partners L.P. v. High River Ltd Partnership, 76 AD3d 203,906 NYS2d 205 (1st Dept 2010); U.S. Underwriters Ins. Co. v. City Club Hotel, LLC, 3 NY3d 592, 597, 789 NYS2d 470 (2004).
The lease provides "In the event legal action has to be instituted to enforce any terms or provisions under this Lease, then the prevailing party in said action shall be entitled to recover a reasonable attorney's fee in addition to all costs of said action." In the instant case, the petitioner has proven it was illegally locked out of the subject premises and in that sense, it is the prevailing party. It will be necessary for the court to conduct a hearing to determine the amount due to petitioner for attorney's fees.
Pursuant to RPAPL § 853, a tenant who is wrongfully evicted may be restored to the premises. In determining whether to restore an illegally locked out tenant to its premises, the court must determine whether restoration would be an exercise in futility. In the event it would be futile to return the tenant to occupancy of the leased premises, the tenant will not be restored. Fitzgerald Edibles, Inc. v. Osborne Tenants Corp., 2018 WL 2163585, at 3 (NY Sup 2018), affd, 179 AD3d 451, 113 NYS3d 540 (1st Dept 2020) (citing 110-45 Queens Blvd. Garage, Inc. v. Park Briar Owners, Inc., supra).
In the case at bar, the tenant's lease expired during the pendency of the instant proceeding. Although there was an option to renew the lease for another one-year term, written notice was to be given to the landlord within 60 days in advance of the expiration of the current lease term. In this instance, the deadline for exercising the option was September 1, 2020, approximately 4 months after the petitioner was locked out.
This Court is troubled by the limits of its ability to provide justice to this petitioner. Clearly, the misdeeds of their landlord have not gone unnoticed. However, it would be futile to restore the petitioner to the subject premises, because the lease has expired, and summary eviction holdover proceedings are not subject to the moratorium on evictions. The Shack Collective Inc. v. Dekalb Market Hall, LLC., supra. Unfortunately, this Court does not have the authority to require Sprauer to extend their lease or grant the option to renew which was not exercised. Therefore, to restore the petitioner to the subject premises would only be an invitation for Sprauer to serve a predicate notice for a holdover the day after such restoration. In short, the petitioner does not have an enforceable leasehold interest and without an enforceable leasehold, restoring it to possession would be futile, because it would only result in certain eviction. Fitzgerald Edibles, Inc. v. Osborne Tenants Corp., supra. Moreover, another tenant is in occupancy of the subject premises.
As determined at the end of petitioner's prima facie case, the petitioner met its burden. Michelle Sprauer has not responded to the petitioner's evidence with any viable defense to the illegal lockout of the petitioner. Her testimony was largely incredible with contrived justifications for admittedly locking out the petitioner. The petitioner is the prevailing party in this proceeding. The Court awards a money judgment in favor of the petitioner and against Michelle Sprauer in the amount of $19,000.00. This is allocable to 6 months of rent multiplied by 3 as punitive damages, together with the petitioner's $1,000.00 security deposit, which was required to be paid at the time of the execution of the lease.
The petition is dismissed as to Leonardo Gil, Queenswood Newstand LLC, Destinee Julia Sanchez, John Doe and XYZ Corp. The evidence did not substantiate the petitioner's claim that they, as current occupants of the subject premises, came into possession after the issuance of the stay issued October 9, 2020. Petitioner did not prove they were aware of the litigation or the terms of the stay. Moreover, based upon the testimony adduced, they came into possession of the subject premises in September 2020, nearly a month before the instant proceeding was commenced.
As the prevailing party, petitioner's entitlement to legal fees has been established. The amount of legal fees and any other costs and fees to be awarded to petitioner will be determined at a hearing to be conducted on Teams on January 28, 2021 at 2pm.
Lastly, this Court is extremely distressed by the instant case. While recognizing the carnage that the Corona pandemic has wrought on small businesses throughout this City, the actions of this respondent must be condemned. We have a judicial process to remedy disputes between landlords and tenants. While this process may be frustratingly slowed by the pandemic, it still exists. The Court is so disturbed by the behavior of this respondent, which contravenes the Governor's Executive Orders, that this matter is being referred to the Office of the Attorney General of New York State for further investigation and potential enforcement of the Governor's Executive Orders.
This constitutes the Decision and Order of this Court.
Dated: January 8, 2021
SALLY E. UNGER, J.C.C./A.J.S.C.
Sally E. Unger, J.