Opinion
103909/09
05-31-2016
N.N. International (USA) Corp., d/b/a DILLON'S RESTAURANT & LOUNGE and PURNIMA, Plaintiff, v. Gladden Properties, LLC, BOSTON PROPERTIES INC., CHAI, LLC, BOVIS LEND LEASE LMB INC., and JOHN DOE CONTRACTORS, 1-10, Defendants.
Hecht, Conklin & Gallagher, LLP, White Plains (Kevin T. Conklin, Esq.), for plaintiff. Barry S. Schwartz, Esq., New York, for defendant Chai, LLC. Cerussi & Spring, White Plains (Richard W. Ashnault), for defendants Gladden Properties, LLC, Boston Properties, Inc., and Bovis Lend Lease LMB Inc.
Hecht, Conklin & Gallagher, LLP, White Plains (Kevin T. Conklin, Esq.), for plaintiff. Barry S. Schwartz, Esq., New York, for defendant Chai, LLC. Cerussi & Spring, White Plains (Richard W. Ashnault), for defendants Gladden Properties, LLC, Boston Properties, Inc., and Bovis Lend Lease LMB Inc. Gerald Lebovits, J.
Recitation, as required by CPLR 2219 (a), of the papers reviewed on: (1) defendant Chai, LLC's CPLR 3212 motion for summary judgment (Motion Sequence 7); (2) plaintiff's CPLR 3212 motion for summary judgment against defendants Gladden Properties, LLC, Boston Properties, Inc., Bovis Lend Lease LMB Inc.'s, and John Doe Contractors, 1-10 (Motion Sequence 8); (3) defendants Gladden, Boston, and Bovis's cross-motion for partial summary judgment against plaintiff on the issue of lost profit damages (Motion Sequence 8); and (4) defendant Chai's motion to strike plaintiff's demand for a jury trial. (Motion Sequence 9).
PapersNumbered
Defendant Chai's Notice of Motion & Affirmation in Support1 Plaintiff's Notice of Motion & Affirmation in Support2 Defendant Chai's Affirmation in Opposition3 Gladden Defendants' Affidavit in Opposition4 Gladden Defendants' Notice of Cross-Motion & Affidavit in Support5 Gladden Defendants' Affidavit of Gary Karlitz in Support6 Plaintiff's Affirmation in Opposition to Chai's Motion / Gladden Defendants' Cross-Motion7 Plaintiff's Reply Affirmation8 Plaintiff's Affidavit of Mohammad Islam in Support9 Plaintiff's Affidavit of Abed Mansoor in Support10 Gladden Defendants' Reply Affidavit11 Defendant Chai's Reply Affirmation in Further Support12 Plaintiff's Sur-Reply to Gladden Defendants' Reply Affidavit13 Defendant Chai's Notice of Motion to Strike Jury Demand14 Plaintiff's Affirmation in Opposition to Chai's Motion to Strike Jury Demand15 Defendant Chai's Reply Affirmation16 Gerald Lebovits, J.
Upon the foregoing papers the court consolidates for disposition motion sequence 7, 8, and 9.
Plaintiff, N.N. International (USA) Corp., d/b/a Dillon's Restaurant & Lounge and Purnima, occupied the subject premises, the basement and ground floor of the four-story building known as 241-245 West 54th Street, pursuant to a commercial lease. Defendant Chai, LLC (Chai), purchased the building in or around January 2000 and assumed all rights and obligations under plaintiff's lease. Residential tenants occupy the building's upper floors. Plaintiff occupied the subject premises from April 1, 1998, until it surrendered the property on April 22, 2009, in advance of the April 30, 2013, lease expiration. (Chai's Aff, Complaint at ¶ 36.) In this action, plaintiff seeks to recover damages allegedly caused by demolition and excavation work performed as part of a development project on the adjoining property, 250 West 54th Street/ 243 West 55th Street (the construction site). Defendant Gladden Properties, LLC (Gladden), as owner of the construction site, hired Boston Properties, Inc. (Boston), as the developer for the project, and hired Bovis Lend Lease LMB, Inc. (Bovis), as supervising agent for all aspects of the demolition, excavation, and foundation work that was performed by the contractors named in this action as John Doe Contractors 1-10. (Plaintiff's Aff, Exh F at 52.) Gladden Properties, Boston Properties, and Bovis Lend Lease, are hereinafter known collectively as the Gladden Defendants.
Plaintiff's first and second causes of action are against the Gladden Defendants for negligence and private nuisance, respectively. For its fifth cause of action, plaintiff alleges breach of contract against Gladden, Bovis, and John Doe Contractors 1-10. Gladden asserts a cross-claim against Chai for contribution under CPLR 1401. Plaintiff's third and fourth causes of action are against Chai for breach-of-contract and constructive eviction, respectively. Chai asserts a single counterclaim for attorney's fees pursuant to the parties' lease. Chai does not assert a counterclaim for the rent arrears alleged in its motion papers. (Chai's Aff, ¶ 8.)
I. Chai's Motion for Summary Judgment
Chai's CPLR 3212 motion for summary judgment is denied in all respects. Chai has not demonstrated its entitlement to judgment as a matter of law on plaintiff's breach-of-contract claim. Material issues of fact remain regarding the parties' respective performance under the lease. Chai has not demonstrated its entitlement to judgment as a matter of law on plaintiff's constructive-eviction claim. Material issues of fact exist about plaintiff's alleged property damages and about Chai's performance under the lease.
Plaintiff's third and fourth causes of action are for breach-of-contract and constructive eviction against Chai for its alleged failure to repair and maintain the premises for plaintiff's continued use as a "table service restaurant" as contemplated by the parties' lease. (Chai's Aff, Exh C at ¶ 2.)
For a court to grant a motion for summary judgment, the movant bears the initial burden of demonstrating its entitlement to judgment as a matter of law "by tender of evidentiary proof in admissible form" sufficient to eliminate any material issues of fact about the claim or claims at issue. (Zuckerman v City of New York, 49 NY2d 557, 562 [1980].) Once the initial burden is established, the burden shifts to the opposing party to "show facts sufficient to require a trial of any issue of fact." (Id.) In support of its motion, Chai offers (1) a copy of the parties' fully executed lease; (2) the January 14, 2014, examination before trial (EBT) transcript of plaintiff's president, Mohammad Islam; and (3) a tenant ledger, prepared by a third party, showing plaintiff's alleged rent arrears. (Chai's Aff, Exhs C, D, E.) The arrears report is not attested to or otherwise authenticated by the third-party preparer. Plaintiff argues that the lease and rent arrears report should not be considered. According to plaintiff, they are in inadmissible form. (Plaintiff's Aff, ¶ 5.)
The copy of the lease and the rent arrears report are properly before the court. For the purposes of a summary-judgment motion, "unsworn reports, letters, transcripts and other documents do not constitute evidentiary proof in admissible form." (Rue v Stokes, 191 AD2d 245, 246-247 [1st Dept 1993].) However, "evidence, otherwise excludable at trial, may be considered to deny a motion for summary judgment provided that this evidence does not form the sole basis for the court's determination." (Largotta v Recife Realty Co., N.V., 254 AD2d 225, 225 [1st Dept 1998].) A court may consider evidence upon which the party opposing its admissibility relies in support of its own case. (See B.N. Realty Assoc. v Lichtenstein, 96 AD3d 434, 435 [1st Dept 2012] [finding that motion court properly considered evidence of lease and rent arrears when opposing party testified to amount of rent owed and based its counterclaims on same lease].) Plaintiff does not dispute the contents or validity of the lease. Indeed, both of plaintiff's claims against Chai arise out of the lease. Islam authenticated the lease at his EBT and testified that he "didn't pay [rent] for a few months" before plaintiff vacated the premises prematurely, on April 22, 2009. (Chai's Aff, Exh D, EBT at 12, 95.) Although plaintiff does not admit the exact amount of rent arrears that Chai's report alleges, the information contained therein is supported by the terms of the lease itself and by Islam's admission about plaintiff's default.
Constructive Eviction Claim
A "constructive eviction exists where . . . the landlord's wrongful acts substantially and materially deprive the tenant of the beneficial use and enjoyment of the premises." (Barash v Pennsylvania Term. Real Estate Corp., 26 NY2d 77, 83 [1970].) The tenant is required to abandon those portions of the premises from which the tenant is constructively evicted and may abate the rent according to the part of the premises abandoned. (See Minjak Co. v Randolph, 140 AD2d 245, 248 [1st Dept 1988] [holding that tenant may claim partial constructive eviction without abandoning entire leasehold and is then not required to pay full amount of rent].) A landlord's breach of its duty to repair may give rise to a claim for constructive eviction if the breach results in a substantial and material deprivation of plaintiff's use of its premises. (Cut-Outs, Inc. v Man Yun Real Estate Corp., 286 AD2d 258, 262-263 [1st Dept 2001].) The landlord's repair obligations are questions of law to be determined by the plain and unambiguous terms of the lease. (Searle Blatt & Co. v Zurich Holding Co., 241 AD2d 303, 303 [1st Dept 1997].)
Plaintiff's constructive-eviction claim is predicated on Chai's alleged breach of its repair obligations under the lease. (Chai's Aff, Complaint at ¶¶ 44, 45.) Chai argues that plaintiff waived its right to claim constructive eviction or, alternatively, that it is not liable for plaintiff's constructive eviction because, it argues, it did not cause plaintiff's alleged damages. (Chai's Aff, Exh C at ¶ 9.)
Under paragraph four of the parties' lease, the Repairs Clause, Chai was required to "maintain and repair the public portions of the building, both exterior and interior" while plaintiff was required to "take good care of the demised premises and . . . make all non-structural repairs thereto." (Chai's Aff, Exh C at ¶ 4.) The lease defines "demised premises" as the ground floor, the Retail Space, and the portion of the basement that plaintiff occupied. (Chai's Aff, Exh C at 1.) The lease does not state what constitutes the "public portions" of the building but because both commercial and residential tenants occupy Chai's building, Chai was obligated to keep the building, including the roof and other structural elements, in good repair. (See Worth Distributors, Inc. v Latham, 59 NY2d 231, 237-38 [1983] [holding the landlord's non-delegable repair duty under Multiple Dwelling Law § 78 is not affected by partial use of building for commercial purposes]; see accord Searle Blatt & Co., 241 AD2d at 303.)
Under paragraph nine, the Casualty Clause, if the premises are rendered partially unusable by fire or other casualty, "the damages thereto shall be repaired by and at the expense of Owner and the rent and other items of additional rent shall be apportioned . . . according to the part of the premises which is unusable." (Chai's Aff, Exh C at ¶ 9.) When the premises are "totally damaged or rendered wholly unusable," the tenant may withhold rent entirely if "rent shall be proportionately paid up to the time of the casualty . . . until the date when the premises shall have been repaired and restored by Owner." (Chai's Aff, Exh C at ¶ 9.)
Chai's argument that plaintiff waived any and all rights to its constructive eviction claim based on plaintiff's express waiver of RPL § 227 misconstrues the nature of the waiver in question. Section 227 merely "bestows upon the constructively evicted tenant the opportunity to terminate its lease without further obligation," but a commercial tenant may waive the statute by the terms of its lease agreement. (Schwartz, Karlan & Gutstein v Venture, 172 AD2d 226, 228 [1st Dept 1991].) The parties' agreement provides unambiguously that the Casualty Clause shall control in lieu of RPL § 227. Plaintiff's waiver of section 227 affects only plaintiff's choice of remedy in cases where the premises are destroyed, not whether plaintiff can state a claim or defense of constructive eviction.
Chai's argument that it cannot be liable for a constructive eviction claim because it did not cause the conditions complained of is unpersuasive. The wrongful act alleged in this case is a breach of Chai's duty to repair and plaintiff alleges structural damages and a lack of maintenance falling within the scope of Chai's duty under the Repairs Clause. Specifically, plaintiff asserts that beginning in March 2008, the construction work caused "apertures, cracking and damage to the exterior and interior walls" and damage to the building's foundation. (Chai's Aff, Complaint at ¶ 11.) Plaintiff also alleges that the construction work caused roof damage that led to persistent leaks and water damage in plaintiff's bathrooms and the back room of the restaurant where parties and stage performances were held (hereinafter, the stage area). (Chai's Aff, Complaint at ¶¶ 11, 15.) It is undisputed that the stage area was damaged, after a substantial amount of grout poured in connection with the construction work seeped in through a crack in plaintiff's wall and damaged the stage and floor. (Chai's Aff, Exh D, EBT at 111.) Islam testified at his EBT that construction-related dust infiltrated the premises and interfered with plaintiff's ability to serve food. (Chai's Aff, Exh D, EBT at 94.) Islam also testified that construction-related dust and debris on the roof damaged the condenser units of plaintiff's HVAC and walk-in coolers and interfered with plaintiff's ability operate its business. (Chai's Aff, Exh D, EBT at 28.) Because, in this case, plaintiff's constructive-eviction claim is based on the landlord's duty to repair, plaintiff must also show that the landlord knew, or should have known, about the need for repairs. (See Thomas v Kingsland, 108 NY 616, 617 [1888].) Chai does not refute Islam's testimony that Chai had notice of the ongoing construction related issues or that it did not respond to plaintiff's employees' numerous requests to repair the damages the construction work caused. (Chai's Aff, Exh D, EBT at 70.)
Of the alleged injuries to plaintiff's premises that fall within the scope of the Repairs Clause, plaintiff asserts that it was deprived of the use and benefit only of the stage area following the grout incident in December 2008. (Chai's Aff, Exh D, EBT at 111.) Whether Chai's undisputed failure to repair that portion of plaintiff's premises "substantially and materially" deprived plaintiff of its use thereof is a question of fact that precludes summary disposition of plaintiff's constructive eviction claim.
Whether plaintiff's premises were made untenantable, destroyed in whole or in part, within the meaning of the Casualty Clause, is a question of fact. (See Lathers v Coates, 18 Misc 231, 232 [1st Dept 1896].) Although "the continued occupation by a tenant is some evidence of its fitness for rent or occupation . . . it is not conclusive evidence on this point." (Reischmann v L.N. Hartog Candy Co., 132 NYS 435, 437 [App Term 1911].) It is undisputed that plaintiff remained in possession of the premises, at least in part, until April 22, 2009. Whether plaintiff's alleged damages triggered Chai's repair obligations under the Casualty Clause is a question of fact to be determined at trial.
Breach-of-Contract Claim
The essential elements of a breach-of-contract claim are "the existence of a contract, the plaintiff's performance thereunder, the defendant's breach thereof, and resulting damages." (Harris v Seward Park Hous. Corp., 79 AD3d 425, 426 [1st Dept 2010].) In Vermont Teddy Bear Co. v 538 Madison Realty Co., the Court stated that, notwithstanding the tenant's waiver of section 227, the tenant "could have properly terminated the lease if [landlord] did, in fact, fail to restore the premises" under the terms of a destruction clause similar to the Casualty Clause at issue in this case. (See Vermont Teddy Bear Co. v 538 Madison Realty Co., 1 NY3d 470, 476 [2004].) Plaintiff argues that it was excused from paying rent because Chai failed to repair or remediate the damages allegedly caused by the construction work. According to plaintiff, Chai's alleged failure to make repairs constituted a material breach of the lease. (Chai's Aff, Complaint at ¶ 44.) Chai contends that regardless of its own actions, plaintiff's failure to pay rent and plaintiff's early surrender of the lease constitutes an unexcused breach thus precluding plaintiff's breach-of-contract claim. (Chai's Aff, at ¶ 7.)
Chai is not entitled to summary judgment on plaintiff's breach-of-contract claim because material issues of fact exist about the parties' respective performances under the lease. It is undisputed that plaintiff's last rent payment was January 1, 2009, and that plaintiff surrendered the premises on April 22, 2009. (Chai's Aff, Exh D, EBT at 95; Exh E.) It is also undisputed that Chai had notice of the need for repairs but did not attempt any repairs to plaintiff's premises, to the extent required by the Repairs Clause, despite its contractual obligation to do so. If the Casualty Clause were applicable in this case, Chai's undisputed failure to repair the premises would permit plaintiff to surrender the leasehold irrespective of the waiver provision, i.e., plaintiff's default after January 2009, would not constitute a breach of the lease.
Chai's evidence is insufficient to refute plaintiff's allegations that Chai breached its duty to repair under the Repairs Clause. Moreover, the court cannot fully determine whether plaintiff's undisputed default and early termination of the lease constituted a breach because a threshold issue of fact exists about whether plaintiff's alleged property damages fall within the scope of the Casualty Clause. For these reasons, Chai's motion for summary judgment is denied.
II. Defendant Chai's Motion to Strike Plaintiff's Jury Demand
Plaintiff's July 24, 2014, note of issue contains a demand for a jury trial on all five of plaintiff's causes of action. Chai now moves to strike the jury demand with respect to the claims against it.
Because plaintiff has alleged property damages, albeit arising out of a breach of the parties' lease, Chai's motion to strike plaintiff's jury demand is denied. Paragraph 25 waives the parties' right to a trial by jury on any claim arising out of the lease "except for personal injury or property damage . . .." (Chai's Aff, Exh C at ¶ 25.) On its face, the waiver in question does not violate RPL § 259-c inasmuch as the clause specifically excepts actions involving personal injury or property damage. (See Phoenix Garden Rest., Inc. v Chu, 234 AD2d 233, 233 [1st Dept 1996].) RPL § 259-c "draws no line between tortiously and contractually based property damage claims." (Phoenix Garden Rest., Inc., 234 AD2d at 233.) In breach-of-contract cases in which these waivers were enforced, the claim for property damages was coupled with a claim for equitable relief. (See Paralegal Inst., Inc. v Big Sol Mfg. Co., 190 AD2d 595, 596 [1st Dept 1993] [holding that jury waiver was valid and enforceable in action alleging property damage because plaintiff sought both legal and equitable relief].) In this case, the waiver is inapplicable because plaintiff seeks only legal remedies in the form of monetary damages for out-of-pocket losses to repair portions of the premises for which Chai was responsible under the terms of the lease. (Chai's Aff, Complaint at ¶ 11.) Plaintiff also seeks consequential damages in the form of lost revenues, which further constitutes an injury to plaintiff's personal property. (See 81 Franklin Co. v Ginaccini, 149 Misc 2d 124, 126 [Civ Ct, NY County 1990]; Hannibal Gen. Contractors, Inc. v St. Matthew & St. Timothy's Hous. Corp., 83 Misc 2d 53, 54 [Sup Ct, NY County 1975], affd, 55 AD2d 583, 583 [1st Dept 1976].)
III. Plaintiff's Motion for Summary Judgment
The court deems the subject of plaintiff's current motion plaintiff's first and second causes of action, for negligence and private nuisance respectively, against the Gladden Defendants and John Does 1-10, and plaintiff's fifth cause of action for breach-of-contract against defendants Gladden, Bovis, and John Does 1-10. Although plaintiff's evidence is directed at the issue of liability against the Gladden Defendants, plaintiff's notice of motion reiterates each of its five causes of action and does not by its own terms limit the motion to any particular issue (e.g., liability) or defendant. (Plaintiff's Notice of Motion, at ¶ 6.) The Gladden Defendants have opposed every cause of action asserted against them. A.To the extent that plaintiff's motion seeks summary judgment on its fifth cause of action for breach of contract against defendants Gladden, Bovis, and John Does 1-10, plaintiff's CPLR 3212 motion is denied.
Plaintiff has not demonstrated its prima facie entitlement to judgment as a matter of law concerning the defendants' alleged breach or a resulting injury. Plaintiff's breach-of-contract claim arises out of the July 17, 2008, so-ordered stipulation between Gladden and Chai in which Gladden agreed that it would direct its contractors to add plaintiff as an additional insured on the contractors' respective insurance policies. (Defs' Aff, Exh B.) Plaintiff has not offered any evidence regarding an essential element of its breach-of-contract claim: that defendants breached the contract by failing to direct its contractors in accordance with the stipulation or that plaintiff was not added to said policies. (See Harris, 79 AD3d at 426 [stating the essential elements of a breach-of-contract claim].) Plaintiff does not assert, let alone prove, any basis for its knowledge about defendants' performance under the stipulation, e.g., that plaintiff contacted defendants' insurance carriers or that plaintiff was denied a claim.
In light of the lack of evidence about essential elements of this claim and that disclosure has concluded in this post-note-of-issue case, in searching the record the court finds that the nonmoving defendants, Gladden, Bovis, and John Does 1-10, are entitled to summary judgment on plaintiff's breach-of-contract claim. (See Dunham v Hilco Const. Co., 89 NY2d 425, 429-430 [1996] [finding that court may direct summary judgment to nonmoving party if the issue or claim being dismissed is the subject of motions properly before the court].) B.To the extent that plaintiff seeks summary judgment on the issue of liability against the Gladden Defendants under NYC Construction Code §33-3309.4, plaintiff's CPLR 3212 motion for summary judgment is granted.
Plaintiff asserts for the first time in its bill of particulars, but not in its motion for summary judgment as defendants allege, that the Gladden Defendants "violated various provisions of the law and regulations governing [the construction work]" and that "plaintiff . . . will rely on all local and state laws applicable to defendants' construction work, including, but not limited to, relevant New York City Construction Code." (Defs' Aff, Exh E at 4.) Construction Code § 33-3309.4 (formerly Administrative Code § 27-1031) applies to "all soil and foundation work, including but not limited to excavations . . . and also to the underpinning or bracing of buildings or structures, . . ." and imposes absolute liability for damages caused by any person engaged in excavation work "regardless of the depth of such . . . provided such person is afforded a license . . . to enter and inspect the adjoining buildings and property, and to perform such work thereon as may be necessary for such purpose." (Construction Code § 33-3309.4) (See also Yenem Corp. v 281 Broadway Holdings I, 18 NY3d 481, 491 [2012].) This court finds unpersuasive the Gladden Defendants' arguments that plaintiff should not be permitted to proceed on its theory of absolute liability under the Construction Code because it constitutes a new theory of liability and that it is prejudicial is unpersuasive. (See Defs' Aff, at ¶ 48.)
Section 27-1031 was repealed effective July 1, 2008. Its equivalent is now contained in the New York City Construction Code § 33-3309.4. As the Court discussed in Yenem Corp. v 281 Broadway Holdings I, (18 NY3d 481, 490-491 [2012]) the text has been altered slightly and re-codified on multiple occasions. The newly codified version is substantively unchanged.
Although the complaint does not allege the exact Construction Code provisions on which plaintiff now relies, it provides sufficient "notice of the transaction . . . intended to be proved and the material elements of [the] cause of action" (CPLR 3013) inasmuch as it asserts the essential facts giving rise to absolute liability thereunder. (See Spano v Perini, 25 NY2d 11, 18-19 [1969] [holding that complaint was sufficiently pleaded despite its stating only a claim for common-law negligence because it alleged the specific conduct giving rise to strict liability and resulting damages]; Van Gaasbeck v Webatuck Cent. Sch. Dist. No. 1, 21 NY2d 239, 246 [1967] [holding that complaint was sufficiently pleaded despite its stating only a claim for common-law negligence and not a violation of a strict liability statute].) The complaint alleges that the "work performed at the Construction Site [, which] has included the demolition of buildings and excavation work," resulted in "apertures, cracking and damage to the exterior and interior walls and damage to the support underneath the rear of the premises." (Defs' Aff, Complaint at ¶ 11.) The Gladden Defendants' claim of prejudice is without merit. Plaintiff's bill of particulars amplified its initial pleadings by specifying the relevant Construction Code sections (see Kolb v Beechwood Sedgewick LLC, 78 AD3d 481, 482 [1st Dept 2010] [noting that a the bill of particulars is used to amplify the essential facts already pleaded]), thus providing defendants with additional notice of the basis for its claims. Moreover, the relevant Construction Code provisions are specifically cited in the July 2008 so-ordered stipulation, which plaintiff referenced in pleading its breach of contract claim (fifth cause of action). The primary purpose of the stipulation was to enable the Gladden Defendants' to comply with the Construction Code.
Plaintiff is entitled to judgment as a matter of law on the issue of liability under the Construction Code. In support of its motion, plaintiff offered the testimony of Carlos Patino, Bovis's on-site project manager. Patino testified that the Gladden Defendants' construction work involved demolishing existing buildings, excavating the site, and laying a new foundation. (Plaintiff's Aff, Exh F, EBT at 52.) It is undisputed that Gladden was granted a license to enter the property to perform the underpinning necessary to secure plaintiff's premises under the July 2008 stipulation. (Defs' Aff, Exh B.) Patino testified about a report that was prepared by Bovis's site safety manager in December 2008. The report states that "[c]oncrete grout seeped into rear room of Purnima restaurant . . . and damaged wood flooring." (Plaintiff's Aff, Exh F, EBT at 77-78.) Patino further testified about a third-party engineering report that indicated the construction work had caused "collateral damage" to the supporting wall of plaintiff's premises. (Plaintiff's Aff, Exh F, EBT at 117-118.) The Department of Buildings in 2008-2009 issued multiple stop-work-orders for "shaking and vibrating" and "failure to safeguard" plaintiff's premises, among other things. (Plaintiff's Aff, Exh G.) C.To the extent that plaintiff seeks summary judgment on its first and second causes of action against the Gladden Defendants for negligence and private nuisance, plaintiff's CPLR 3212 motion for summary judgment is granted in part.
Plaintiff alleges physical damages and deprivation of the use and enjoyment of its premises by reason of the Gladden Defendants' intentional and unreasonable conduct or, alternatively, by reason of negligence. (Defs' Aff, Complaint at ¶¶ 29, 22.) A private nuisance results if the defendant's "conduct is a legal cause of the invasion of the interest in the private use and enjoyment of land and such invasion is (1) intentional and unreasonable, (2) negligent or reckless, or (3) actionable under the rules governing liability for abnormally dangerous conditions or activities." (Copart Indus. v Consol. Edison Co. of New York, 41 NY2d 564, 569 [1977]; see also McFarlane v City of Niagara Falls, 247 NY 340, 343 [1928] [finding that a nuisance claim may be based on an absolute duty].) In Copart Industries, the Court found that "nuisance, either public or private, based on negligence and whether characterized as either negligence or nuisance, is but a single wrong . . .." (Copart Indus., 41 NY2d at 569.) Plaintiff is therefore entitled to summary judgment on the issue of liability on its private nuisance claim in light of this court's determination that the Gladden Defendants' construction work, i.e., the substance of the private nuisance, is subject to absolute liability under the Construction Code.
D.Inasmuch as plaintiff's ordinary negligence claim sets forth an alternative theory of liability, this court need not determine whether plaintiff is entitled to summary judgment on that claim. For the reasons set forth above, plaintiff's evidence establishes that the Gladden Defendants owed plaintiff an absolute duty under the Construction Code and that they breached that duty by causing damage to plaintiff's premises.
IV. Gladden Defendants' Cross-Motion for Partial Summary Judgment
The Gladden Defendants' CPLR 3212 cross-motion for partial summary judgment on the issue of economic damages in the form of lost profits — which the Gladden Defendants refer to in parts of its cross-motion as lost income — is granted.
Plaintiff alleges compensatory damages for "costs and expenses associated with remedial work" to repair its premises and consequential damages for "lost customers, lost revenue . . . and other damages." (Defs' Aff, Complaint at ¶¶ 27, 34.) Inasmuch as plaintiff's "other damages" includes consequential damages for the loss of prospective profits, the Gladden Defendants' evidence demonstrates its entitlement to judgment as a matter of law, and plaintiff has not raised any genuine issue of material fact.
Where physical damage to the plaintiff's property is proven, economic losses are also recoverable. (532 Madison Ave. Gourmet Foods, Inc. v Finlandia Ctr., Inc., 96 NY2d 280, 290 [2001] [holding that under the pure-economic-loss rule plaintiff, a commercial tenant, may not recover economic damages absent actual damage to its demised property].) Plaintiff may recover lost profits as a measure of its economic damages by demonstrating, to a reasonable degree of certainty, that the defendant's wrongful act caused the interruption or destruction of plaintiff's business. (See Bates v Holbrook, 89 AD 548, 556-558 [1st Dept 1904].) Profits are calculated as the excess of plaintiff's receipts over costs. (See id at 557.)
Plaintiff alleges that the demolition work, which began in late 2007, and the excavation and foundation work, which began around 2008, caused damages to plaintiff's property and business interests. (Defs' Aff, Complaint at ¶ 27.) It is undisputed that the Gladden Defendants' construction work damaged parts of Chai's building, including damage to the supporting walls and floors of plaintiff's premises. (Plaintiff's Aff, Exh F.) In support of its cross-motion, the Gladden Defendants offer the affidavit of an accountant, Gary Karlitz, who opines that plaintiff was forced out of business by poor economic conditions and a lack of working capital. (Defs' Aff, Karlitz Affidavit at 7, 8.) Karlitz states that the connection between plaintiff's alleged lost profits and the construction work is speculative, inasmuch as plaintiff's 2002-2009 tax returns indicate that plaintiff did not generate any "positive net income" in the six-year period before the Gladden Defendants' construction work commenced. (Defs' Aff, Karlitz Affidavit at 5.) Karlitz opines that plaintiff's continued operation thus depended entirely on Islam's capital contributions. (Defs' Aff, Karlitz Affidavit at 8.)
In opposition, plaintiff offers the affidavit of its own accountant, Abed Mansoor. (Plaintiff's Reply, Exh B, Mansoor Affidavit.) The Gladden Defendants oppose the consideration of plaintiff's accountant's affidavit because it was offered for the first time in plaintiff's reply affirmation. A court may consider an affidavit where, as here, the offering party's adversary has had an opportunity to respond to the new evidence. (See Matter of Kennelly v Mobius Realty Holdings LLC, 33 AD3d 380, 382 [1st Dept 2006].) The Gladden Defendants are not prejudiced by the court's consideration of the Mansoor affidavit, which is responded to in the Gladden Defendants' reply affidavit.
Nevertheless, the Mansoor affidavit does not raise any material issue of fact about plaintiff's lost profits. Mansoor states only that plaintiff's "gross sales" decreased significantly from 2007 to 2009 as a result of the Gladden Defendants' construction work. (Plaintiff's Reply, Exh B, Mansoor Affidavit at ¶ 11.) Mansoor makes no reference to plaintiff's operating costs or any other measure used to calculate plaintiff's profits, however. The remainder of Mansoor's affidavit concerns Islam's cash contributions, as plaintiff's sole shareholder, and the corresponding tax consequences to Islam in his individual capacity. (Plaintiff's Reply, Exh B, Mansoor Affidavit at ¶ 8, 13.) Because these items do not reflect plaintiff's lost profits and because plaintiff offers no other evidence in support of its claim therefor, plaintiff has failed to raise a material issue of fact on the issue of lost profits.
ORDERED that defendant Chai's CPLR 3212 motion to dismiss the third and fourth causes of action for breach-of-contract and constructive eviction is denied; and it is further
ORDERED that defendant Chai's motion to strike plaintiff's jury demand is denied; and it is further
ORDERED that plaintiff's CPLR 3212 motion for summary judgment on the fifth cause of action for breach of contract against defendants Gladden, Bovis, and John Does 1-10 is denied; and it is further
ORDERED that summary judgment on the fifth cause of action for breach-of-contract against nonmoving defendants Gladden, Bovis, and John Does 1-10 is granted; and it is further
ORDERED that plaintiff's CPLR 3212 motion for summary judgment on the issue of strict liability under the Construction Code is granted; and it is further
ORDERED that plaintiff's CPLR 3212 motion for summary judgment on the second cause of action for private nuisance is granted as to the issue of liability only; and it is further
ORDERED that the Gladden Defendants' CPLR 3212 cross-motion for partial summary judgment on the issue of lost profits damages is granted.
ORDERED that counsel for the Gladden Defendants is directed to serve a copy of this order with notice of entry upon the plaintiff and the Clerk of the Court, who is directed dismiss plaintiff's fifth cause of action for breach-of-contract against defendants Gladden, Bovis, and John Does 1-10.
This constitutes the decision and order of the court. Dated: May 31, 2016
J.S.C.