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NYSCEF DOC. NO. 16 REG F
Short Form Order 9/15/2021
COUNTY CLERK
NEW YORK SUPREME COURT - QUEENS COUNTY QUEENS COUNTY
Present: HONORABLE _JANICE A. TAYLOR IAS Part _15
Justice
-----------------+--------------------+-- x
Index No.: 707535/21
Plaintiff(s),
Motion Date: 8/10/21
- against - Motion Cal. No.: 16
Motion Seq. No.: 1
NANBEI FOOD, INC. and XIAO DONG PAN,
Defendant(s).
The following papers numbered 1 - 8 read on this motion by
defendant Xiao Dong Pan, pursuant to CPLR 3211 (a) (7), to dismiss
the complaint as to him.
PAPERS
NUMBERED
Notice of Motion-Affirmation-Exhibits-Service............ 1-4
Affirmation in Opposition-Service............ 0... eee eee 5 - 6
Reply Affirmation-Service....... cee eee ee eee 7-8
Upon the foregoing papers, it is ORDERED that the above-
referenced motion is decided as follows:
In this breach of contract action, plaintiff holds a leasehold
interest in what is known as the “Cellar Floor” food court within
the shopping center located at 136-20 through 136-30 Roosevelt
Avenue, County of Queens, City and State of New York. On or about
July 26, 2019, plaintiff entered into a purported “license
agreement” with defendant Nanbei Food, Inc. (“Nanbei”) to grant a
designated space in the food court, known as “Space 006” or “Suite
6,” to Nanbei to operate as a restaurant selling Tianjin and Fuzhou
cuisine. Defendant Xiao Dong Pan, the sole owner of Nanbei, signed
the agreement on its behalf. Mr. Pan also signed a separate
document in which he agreed to serve as a personal guarantor for
Nanbei’s obligations under the afore-mentioned agreement.
The agreement provides for a set term of August 1, 2019 to
April 30, 2021, during which Nanbei was to pay “license fees” of
$10,123.78 per month through April 30, 2020, and $10,528.73 per
month through the agreement’s end date. It is undisputed that
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Nanbei did not pay the monthly fee to plaintiff in April of 2020,
or for any month thereafter. Hence, plaintiff brought the instant
action against both defendants for breach of contract, claiming
monetary damages of $190,458.49, representing the monthly fees owed
by Nanbei from April of 2020 through April of 2021.
Defendants now move under CPLR 3211 (a) (7) to dismiss the
complaint as against defendant Xiao Dong Pan on the ground that it
fails to state a cause of action against him. “On a motion
pursuant to CPLR 3211 (a) (7) to dismiss a complaint, the
allegations in the complaint are accepted as true and accorded the
benefit of every possible favorable inference to determine if the
facts, as alleged, fit within any cognizable legal theory” (Datena
v JP Morgan Chase Bank, 73 AD3d 683, 684 [2d Dept 2010], lv denied
17 NY3d 704 [2011]; see also Leon v Martinez, 84 NY2d 83, 87-88
[1994] [instructing that the challenged pleading “is to be afforded
a liberal construction”]). In addition,
“[w]here evidentiary material is submitted and considered
on a motion to dismiss a complaint pursuant to CPLR
3211(a) (7), and the motion is not converted into one for
summary judgment, the criterion is whether the plaintiff
has a cause of action, not whether the plaintiff has
stated one, and, unless it has been shown that a material
fact as claimed by the plaintiff to be one is not a fact
at all, dismissal should not eventuate”
(Doe v Ascend Charter Schs., 181 AD3d 648, 650 [2d Dept 2020]).
Defendants argue that this action should be dismissed as
against Mr. Pan because he can no longer be held liable for
Nanbei’s failure to pay the fees owed under the agreement,
notwithstanding that he agreed to serve as Nanbei’s personal
guarantor. Section 22-1005 of the Administrative Code of the City
of New York provides as follows:
“A provision in a commercial lease or other rental
agreement involving real property located within the
city, or relating to such a lease or other rental
agreement, that provides for one or more natural persons
who are not the tenant under such agreement to become,
upon the occurrence of a default or other event, wholly
or partially personally liable for payment of rent,
utility expenses or taxes owed by the tenant under such
agreement, or fees and charges relating to routine
building maintenance owed by the tenant under such
agreement, shall not be enforceable against such natural
persons if [certain] conditions [] are satisfied ”
(NYC Administrative Code § 22-1005). As pertinent here, those
conditions include that “[t]he tenant was required to cease serving
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patrons food or beverage for on-premises consumption or to cease
operation under executive order number 202.3 issued by the governor
on March 16, 2020,” and “[t]he default or other event causing such
natural persons to become wholly or partially personally liable for
such obligation occurred between March 7, 2020 and June 30, 2021,
inclusive” (id).
Defendants argue that due to the COVID-19 pandemic and the
related shutdown of all non-essential businesses and services
within the state, Nanbei was forced to cease serving food in the
shopping center on or about March 16, 2020, and this is why it did
not pay the monthly fees from April of 2020 onward. Plaintiff does
not dispute defendants’ version of events, but argues’ that
defendants cannot avail themselves of NYC Administrative Code §
22-1005 because it only protects guarantors for tenants under
commercial leases, but Nanbei was a licensee, not a tenant,
pursuant to the parties’ agreement.
Plaintiff’s opposition is predicated on its claim that the
agreement is a license, and not a lease, due to the express
language in the agreement denominating itself as the former, and
not the latter, and also stating that it did not create a landlord-
tenant relationship between plaintiff and Nanbei.* However,
“[t]hat a writing refers to itself as a license or lease is not
determinative; rather, the true nature of the transaction must be
gleaned from the rights and obligations set forth therein” (Union
Sq. Park Community Coalition, Inc. v NY City Dept. of Parks &
Recreation, 22 NY3d 648, 656 [2014]). As the Court of Appeals has
explained,
“Generally, contracts permitting a party to render
services within an enterprise conducted on premises owned
or operated by another, who has supervisory power over
the method of rendition of the services, are construed to
be licenses”
(id, quoting Lordi v County of Nassau, 20 AD2d 658, 659 [2d Dept
1964], affd without op 14 NY2d 699 [1964] [emphasis added]).
Hence, “[a] license, within the context of real property law,
grants the licensee a revocable non-assignable privilege to do one
or more acts upon the land of the licensor, without granting
possession of any interest therein” (R.C. Church of Our Lady of
Sorrows v Prince Realty Mgt., LLC, 47 AD3d 909, 911 [2d Dept 2008]
[emphasis added]). In contrast, “[t]he central distinguishing
characteristic of a lease is the surrender of absolute possession
and control of property to another party for an agreed-upon rental”
‘plaintiff also argues that Nabei was a licensee under common-law, but
does not cite any supporting case law, and proffers no explanation for this
claim. The court, therefore, does not deem such a conclusory argument to have
merit or to have been properly raised in opposition to defendants’ motion.
3
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(Mirasola v Advanced Capital Group, Inc., 73 AD3d 875, 876 [2d Dept
2010] [quotation marks and citations omitted]).
There is nothing within the agreement which indicates that
plaintiff retained any “supervisory power” (Union Sq. Park
Community Coalition, Inc., 22 NY3d at 656) over the method by which
Nanbei was to carry out its business of serving food at the food
court. Moreover, paragraph 2 of the agreement provides that it was
revocable without cause, but only on five days’ prior written
notice, while paragraphs 28 and 29 provide that the agreement would
bind and inure to the benefit of the parties’ successors, assigns,
heirs, executors, administrators, and legal representatives, and
that Nanbei could assign the agreement with plaintiff’s consent,
which could not be unreasonably withheld. Such provisions
restricting plaintiff’s power to freely revoke the “license,” or to
prevent Nanbei from assigning the agreement to another party, who
would then be fully bound by it, militate against finding that the
agreement is a license (see R.C. Church of Our Lady of Sorrows, 47
AD3d at 911).
Additionally, paragraph 27 of the agreement provides that
Nanbei must allow plaintiff access to the premises only within the
last 30 days of the term for the purpose of showing the space to
prospective licensees, or to make inspections and perform repairs,
improvements, additions or alterations. Paragraph 26 provides that
plaintiff may relocate Nanbei to another space within the mall only
“[iln the event of construction, or renovation or other
circumstances concerning the Licensed Space.” Except for these
specific prerequisites, the agreement does not place other
restrictions on Nanbei’s use and control of Space 006 during the
19-month term, indicating that Nanbei was granted exclusive control
of the premises, thus, exhibiting the most salient feature of a
lease (see Mirasola, 73 AD3d at 876; cf. Karp v Federated Dept.
Stores, Inc., 301 AD2d 574, 575 [2d Dept 2003] [agreement held to
be a license, and not a lease, where “exclusive control and
dominion over a defined space” found lacking because licensor
“reserved the right to relocate or renovate the selling space at
any time with reasonable notice”]).
The agreement also contains several other provisions which are
more consistent with those commonly found in commercial leases (see
e.g. Nextel of NY, Inc. v Time Mgt. Corp., 297 AD2d 282, 283 [2d
Dept 2002] [holding that the motion court “properly determined that
the agreement was a lease and not a license” where it “contained
many provisions typical of a lease and conferring rights well
beyond those of a licensee or holder of a mere temporary
privilege”]). Such provisions include: those defining a fixed term
and monthly rent (called “license fees”); requirements that Nanbei
pay for its own utilities, as well as additional fees for common
area maintenance and a portion of the real estate taxes; that
Nanbei obtain insurance for it and plaintiff’s benefit; a casualty
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damage and injury clause protecting plaintiff; subordination of the
agreement to the ground lease; indemnification protecting
plaintiff, its over-landlord, and the property owner, against any
claims arising from Nanbei’s use of the space; and provisions
providing for lease renewal and holdover proceedings. Hence, on
this record, the parties’ agreement presents, in sum and substance,
as a commercial lease, rather than a mere license agreement (see
id; see also Women's Interart Ctr., Inc. v NY City Economic Dev.
Corp., 97 AD3d 17, 21 [lst Dept 2012], lv dismissed 20 NY3d 1034
[2013] [holding that agreement was a lease, and not a service
contract, because “Like a typical commercial net lease, the
agreement imposes the responsibility for all expenses arising from
the property, including the costs of repairs of every nature
utilities and insurance, upon the tenant”], citing, inter alia,
Nextel).
In the face of defendants’ showing, plaintiff’s insistence
that the agreement is a license solely because it refers to itself
as one, absent any other legal argument or evidentiary showing, is
insufficient to warrant denial of this motion. As the parties do
not dispute that the facts of this case satisfy the remaining
criteria under NYC Administrative Code § 22-1005, defendants have
established that plaintiff does not have a cause of action for
breach of contract against Mr. Pan for failure to satisfy the
personal guarantee he executed for the benefit of Nanbei under the
parties’ agreement.
Accordingly, the above-referenced motion is GRANTED to the
extent that it is
ORDERED that the complaint is dismissed as against defendant
Xiao Dong Pan.
The foregoing shall constitute the decision and order of this
FILED
court.
9/15/2021
. COUNTY CLERK
Ke QUEENS COUNTY
. TAYLOR, J.S.C.
Dated: September 9, 2021
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