Preview
FILED: NEW YORK COUNTY CLERK 01/25/2023 05:42 PM INDEX NO. 653391/2022
NYSCEF DOC. NO. 32 RECEIVED NYSCEF: 01/25/2023
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
–––––––––––––––––––––––––––––X
:
WASSERSTEIN ENTERPRISES LLC, : Index No. 653391/2022
:
Plaintiff, :
Motion Seq. No. 001
:
-against- :
:
JOSEPH A. PETRILLO, JR.,
:
Defendant. :
:
–––––––––––––––––––––––––––––X
MEMORANDUM OF LAW IN OPPOSITION TO CROSS-MOTION AND
IN FURTHER SUPPORT OF MOTION FOR SUMMARY JUDGMENT
ROSENBERG & ESTIS, P.C.
Attorneys for Plaintiff
733 Third Avenue
New York, New York 10017
(212) 867-6000
NORMAN FLITT
ALEX M. ESTIS
Of Counsel
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TABLE OF CONTENTS
Page
TABLE OF AUTHORITIES .......................................................................................................... ii
PRELIMINARY STATEMENT .....................................................................................................2
POINT I PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT SHOULD
BE GRANTED ...................................................................................................2
POINT II LANDLORD IS ALSO ENTITLED TO AN AWARD OF ITS
ATTORNEYS’ FEES .......................................................................................12
POINT III DEFENDANT’S CROSS-MOTION SHOULD BE DENIED .........................13
CONCLUSION ...........................................................................................................................18
STATEMENT OF COMPLIANCE WITH RULE 17 ...................................................................19
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TABLE OF AUTHORITIES
Page(s)
Cases
1407 Broadway Real Estate LLC v Tsui,
36 Misc 3d 1219(A) (Sup Ct, NY County 2012) .......................................................................4
18-20 Park Corp. v Kim,
2017 WL 3159020 (Sup Ct, NY County 2017) .......................................................................16
35 East 75th Street Corp. v Christian Louboutin LLC,
2020 WL 7315470 (Sup Ct, NY County 2020) .....................................................................6, 7
407 East 61st Garage, Inc. v Savoy Fifth Ave. Corp.,
23 NY2d 275 (1968) ..................................................................................................................7
Admiral Indem. Co. A/S/O the Franklin Tower Condominium v The Wynne
Group, Ltd.,
2007 NY Slip Op 32073(U) (Sup Ct, NY County 2007) .........................................................15
Alvarez v Prospect Hospital,
68 NY2d 320 (1986) ..................................................................................................................3
Banco Popular North Am. v Victory Taxi Mgt., Inc.,
1 NY3d 381 (2004) ....................................................................................................................3
Brennan v City of New York,
99 AD2d 445 (1st Dept 1984) ..................................................................................................14
Broadway 36th Realty, LLC v London,
29 Misc 3d 1238(A) (Sup Ct, NY County 2010) .......................................................................5
CAB Bedford LLC v Equinox Bedford Ave, Inc.,
2020 WL 7629593 (Sup Ct, NY County 2020) .........................................................................6
Citizens and Southern Commercial Corporation v Catapano,
164 AD2d 812 (1st Dept 1990) ................................................................................................12
City of New York v Clarose Cinema Corp.,
256 AD2d 69 (1st Dept 1998) ....................................................................................................3
Clark v Foley,
240 AD2d 458 (2d Dept 1997) ................................................................................................15
Cooperatieve Centrale Reiffeisen-Boerenleenbank, B.A. v Navarro,
25 NY3d 485 (2015) ..................................................................................................................3
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Davimos v Halle,
35 AD3d 270 (1st Dept 2006) ....................................................................................................4
E.D. & F. Man Sugar Inc. v ZZY Distribs., Inc.,
2014 WL 3709628 (Sup Ct, NY County 2014) .......................................................................16
Ehrlich v American Moninger Greenhouse Mfg. Corp.,
26 NY2d 255 (1970) ..................................................................................................................4
Flemming v Barnwell Nursing Home & Health Facilities, Inc.,
15 NY3d 375 (2010) ................................................................................................................13
Guzman v Mike’s Pipe Yard,
35 AD3d 266 (1st Dept 2006) ......................................................................................14, 15, 16
Inoa v Metro Prop. Group,
LLC, 2008 WL 11175781 (Sup Ct, NY County 2008)............................................................16
International Plaza Assoc., L.P. v Lacher,
104 AD3d 578 (1st Dept 2013) ................................................................................................12
Kate Spade & Co., LLC v G-CNY Group LLC,
63 Misc 3d 1205(A) (Civ Ct, NY County 2019) .......................................................................7
Kel Kim Corp. v Central Markets, Inc.,
70 NY2d 900 (1987) ..................................................................................................................7
Lantino v Clay LLC,
No. 1:18-CV-12247 (SDA), 2020 WL 2239957 (SDNY May 8, 2020)....................................8
In re M&M Transp. Co.,
13 BR 861 (Bankr SDNY 1981) ................................................................................................8
Marinelli v Shifrin,
260 AD2d 227 (1st Dept 1999) ................................................................................................15
McBride v KPMG Intl.,
135 AD3d 576 (1st Dept 2016) ................................................................................................15
Moon 170 Mercer, Inc. v Vella,
122 AD3d 544 (1st Dept 2014) ................................................................................................12
Nichols v Curtis,
104 AD3d 526 (1st Dept 2013) ..........................................................................................14, 15
Non-Linear Trading Co. v Braddis Assocs., Inc.,
243 AD2d 107 (1st Dept 1998) ................................................................................................14
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One Ten West Fortieth Associates v Isabel Ardee, Inc.,
124 AD3d 500 (1st Dept 2015) ................................................................................................12
Pimpinello v Swift & Co.,
253 NY 159 (1930) ....................................................................................................................4
Plaza 52, LLC v Cohen,
2009 WL 2587519, 2009 NY Slip Op 31849(U) (Sup Ct, NY County 2009) ..........................4
PRA III, LLC v Gonzalez,
54 AD3d 917 (2d Dept 2008) ..................................................................................................17
Raven Elevator Corp. v Finkelstein,
223 AD2d 378 (1st Dept 1996) ..................................................................................................5
Reliance Construction Ltd v Kennelly,
70 AD3d 418 (1st Dept 2010) ....................................................................................................3
Rivers v Birnbaum,
102 AD3d 26 (2d Dept 2012) ..................................................................................................16
RSB Bedford Associates, LLC v Ricky’s Williamsburg, Inc.,
91 AD3d 16 (1st Dept 2011) ....................................................................................................12
S.J. Capelin Assocs., Inc. v Globe Mfg. Corp.,
34 NY2d 338 (1974) ..................................................................................................................2
Schulte Roth & Zabel v Kassover,
28 AD3d 404 (1st Dept 2006) ..................................................................................................16
The Gap, Inc. v 44-45 Broadway Leasing Co., LLC,
191 AD3d 549 (1st Dept 2021) ............................................................................................9, 10
The Gap, Inc. v Ponte Gadea New York LLC,
No. 20 CV 4541-LTS-KHP, 2021 WL 861121 (SDNY 2021)................................................10
Trinity Centre, LLC v Wall St. CorTenants, Inc.,
4 Misc 3d 1026(A) (Sup Ct, NY County 2004) .........................................................................8
Urban Archaeology Ltd. v 207 E. 57th St. LLC,
68 AD3d 562 (1st Dept 2009) ....................................................................................................7
Valentino U.S.A., Inc. v 693 Fifth Owner LLC,
70 Misc 3d 1218(A) (Sup Ct, NY County 2021),
affd 203 AD3d 480 (1st Dept 2022) ..........................................................................................9
Vandergrand Properties Co., L.P. v Warnock,
206 AD3d 597 (1st Dept 2022) ................................................................................................12
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Victoria's Secret Stores LLC et al. v Herald Square Owner LLC et al.,
70 Misc 3d 1206(A) (Sup Ct, NY County 2021),
affd “---NYS3d----”, 2022 WL 17981423 (First Dept 2022) ...............................................8, 9
Zuckerman v City of New York,
49 NY2d 557 (1980) ..............................................................................................................3, 4
Other Authorities
CPLR 3025(b) ................................................................................................................................14
CPLR 3211(b) ..................................................................................................................................1
CPLR 3212.......................................................................................................................................1
CPLR 3212(b) ..................................................................................................................................4
NYCRR § 202.8-g(d) .....................................................................................................................14
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SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
–––––––––––––––––––––––––––––X
:
WASSERSTEIN ENTERPRISES LLC, : Index No. 653391/2022
:
Plaintiff, :
Motion Sequence 001
:
-against- :
:
JOSEPH A. PETRILLO, JR.,
:
Defendant. :
:
–––––––––––––––––––––––––––––X
MEMORANDUM OF LAW IN SUPPORT OF
MOTION FOR SUMMARY JUDGMENT
Plaintiff Wasserstein Enterprises LLC (“Plaintiff” or “Landlord”) submits this
Memorandum of Law1 in opposition to defendant Joseph A. Petrillo, Jr.’s (“Defendant” or
“Guarantor”) cross-motion and in support of Landlord’s motion for an Order, as follows:
(a) pursuant to CPLR 3212, awarding Plaintiff summary judgment against
Defendant on the first cause of action in Plaintiff’s complaint dated
September 16, 2022 (the “Complaint”), and awarding Plaintiff a money
judgment against Guarantor in an amount to be determined by the Court,
but no less than $1,448,067.40, plus interest;
(b) pursuant to CPLR 3212 and/or CPLR 3211(b), dismissing Guarantor’s
affirmative defenses asserted in his answer dated November 2, 2022
(“Answer”); awarding Plaintiff its attorneys’ fees, costs and disbursements,
in an amount to be subsequently determined upon submission to the Court
or at a hearing; and
(c) for such other and further relief as this Court deems just and proper.
1
All capitalized terms herein shall have the same meaning ascribed to them in the Affidavit of Jenifer S. Brooks,
sworn to on December 9, 2022 (NYSCEF Doc. No. 8) (the “Brooks Affidavit”) unless specifically defined herein.
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PRELIMINARY STATEMENT
This is a straightforward plenary action for damages and attorneys’ fees based upon an
undisputed breach of an unconditional guaranty agreement by Guarantor in connection with
Tenant’s ongoing failure and refusal to pay Fixed Rent and Additional Rent due to Landlord under
Tenant’s commercial lease.
Defendant’s arguments in opposition to the motion for summary judgment and in support
of his cross-motion consist of illogical, irrelevant, self-serving blanket statements with no legal
basis to support them, and are wholly defective. Defendant’s cross-motion is misleading in that
its sole purpose is to create issues in an attempt to delay the inevitable granting of summary
judgment in Plaintiff’s favor.
None of these supposed “new facts” are anything that was not already available or known
to Defendant at the time Defendant filed its answer.
Moreover, Defendant seeks summary judgment in his favor while at the same time
Defendant claims that discovery is necessary. Defendant cannot have it both ways. Any assertion
that Defendant should be entitled to discovery while having summary judgment in its favor to
dismiss the complaint is wholly disingenuous.
POINT I
PLAINTIFF’S MOTION FOR SUMMARY
JUDGMENT SHOULD BE GRANTED
A motion for summary judgment cannot be defeated by conclusory or unsupported
allegations, but only by evidentiary proof in admissible form. See S.J. Capelin Assocs., Inc. v
Globe Mfg. Corp., 34 NY2d 338 (1974).
A motion for summary judgment must be granted where the movant has established a
prima facie case entitling the movant to the relief requested as a matter of law, and the opposition
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fails to rebut this showing or create an issue of fact. See Zuckerman v. City of New York, 49 NY2d
557, 562 (1980). Accordingly, mere conclusions of law or fact are insufficient to defeat a motion
for summary judgment. See Banco Popular North Am. v. Victory Taxi Mgt., Inc., 1 NY3d 381
(2004); Alvarez v. Prospect Hospital, 68 NY2d 320, 324 (1986).
Summary judgment is especially appropriate, and is routinely granted, in actions based on
absolute and unconditional guaranty agreements. “On a motion for summary judgment to enforce
a written guaranty, all that the creditor need prove is an absolute and unconditional guaranty, the
underlying debt, and the guarantor’s failure to perform under the guaranty.” City of New York v
Clarose Cinema Corp., 256 AD2d 69, 71 (1st Dept 1998). Here, the Guaranty is, by its terms,
absolute and unconditional, and was expressly given so as to induce Landlord to enter into the
Lease with Tenant.
As the Appellate Division, First Department, stated in Reliance Construction Ltd v
Kennelly, 70 AD3d 418, 419 (1st Dept 2010), “Plaintiff made a prima facie showing for summary
judgment by proving the absolute and unconditional guaranties and the guarantors’ failure to
perform.” See also Cooperatieve Centrale Reiffeisen-Boerenleenbank, B.A. v Navarro, 25 NY3d
485, 492 (2015) (“To meet its prima facie burden on its summary judgment motion, [Plaintiff]
must prove the existence of the guaranty, the underlying debt and the guarantor’s failure to perform
under the guaranty” [internal quotations and citations omitted]).
Defendant has expressly waived defenses to his unconditional liability under the Guaranty
and is unequivocally bound to pay fixed rent and additional rent as required by the Lease and
Guaranty. Defendant’s claims that he was a minority owner and that the rent was not paid because
of the COVID-19 pandemic are not only frivolous and misleading, but entirely disingenuous.
Defendant has claimed that he was a minority investor with “no notice” as to what was going on
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at the subject premises. Whatever his status as an investor, Defendant signed an unconditional
Guaranty and expressly waived defenses to liability under the Guaranty.
Guarantor has admittedly signed the Guaranty which provides, inter alia, that he
unconditionally guaranteed the payment of rent and waived his defenses. It is irrelevant that he
was a minority investor or did not intend to waive any defenses. See Pimpinello v Swift & Co.,
253 NY 159 at 162-163 (1930) (The signer of an instrument, expressive of a jural act, is
conclusively bound thereby. That the signer’s mind never gave assent to the terms is not material
as if the signer could read the instrument, not to have read it was gross negligence. The signer is
thus bound).
Once a movant demonstrates its entitlement to summary judgment, the burden then shifts
to the non-movant, to “show facts sufficient to require a trial of any issue of fact.” Zuckerman v
City of New York, 49 NY2d 557, 562 (1980) (citing to CPLR 3212[b]). Unsupported, conclusory
allegations do not create an issue of fact that warrants a trial, and such allegations will not defeat
a motion for summary judgment. Ehrlich v American Moninger Greenhouse Mfg. Corp., 26 NY2d
255, 259 (1970).
It is well-settled that:
“On a motion for summary judgment to enforce an
unconditional guaranty, the creditor must prove the
existence of the guaranty, the underlying debt and the
guarantor’s failure to perform under the guaranty.”
Davimos v Halle, 35 AD3d 270, 272 (1st Dept 2006). See also 1407 Broadway Real Estate LLC
v Tsui, 36 Misc 3d 1219(A) (Sup Ct, NY County 2012).
In Plaza 52, LLC v Cohen, 2009 WL 2587519, 2009 NY Slip Op 31849(U) (Sup Ct, NY
County, Aug. 11, 2009), in finding that the landlord had established its prima facie entitlement to
summary judgment against the guarantors of the tenant’s obligations under the lease:
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“On a motion for summary judgment to enforce an
unconditional guaranty, the creditor must prove the
existence of the guaranty, the underlying debt and the
guarantor’s failure to perform under the guaranty.
Here, [landlord] as presented a copy of the guaranty
and the affidavit of its managing agent…that sets
forth a calculation of the amount of unpaid rent and
other charges that [tenant] is liable for, and states that
neither [tenant] nor defendants has ever made any
payments towards these amounts. Defendants do not
contest that neither [tenant] nor themselves has ever
reimbursed [landlord] for [tenant’s] debts. Thus, it is
clear that [landlord] has established all of the
elements of its breach of guaranty claims against
defendants” [internal citations omitted].
See also Broadway 36th Realty, LLC v London, 29 Misc 3d 1238(A) (Sup Ct, NY County 2010)
(granting the landlord summary judgment on claim under unconditional guaranty of tenant’s
obligations under the lease to pay all rent, additional rent and other charges).
Landlord’s first cause of action seeks a money judgment pursuant to the Guaranty. Under
the terms of the Guaranty, Defendant unconditionally agreed to be personally liable to Plaintiff for
the full and prompt payment of all Fixed Rent and Additional Rent due and owing under the Lease.
Thus, it is irrelevant as to whether or not the COVID-19 pandemic was the reason that
Tenant did not pay the rent, because Guarantor is precluded from ever asserting the defense. See
Raven Elevator Corp. v Finkelstein, 223 AD2d 378 (1st Dept 1996) (the liability of a guarantor
may be broader than and exceed the scope of that of the principal where the guarantee, which is a
separate undertaking, is, by its unqualified language, enforceable against the guarantor).
Accordingly, where, as here, the Guaranty provides that Defendant unconditionally and
irrevocably guaranteed the payment of Fixed Rent and explicitly waived defenses to such
unconditional liability, Defendant is liable for the rent arrears. Even ifsuch COVID defenses
could be asserted by Guarantor, such defenses have routinely been rejected when asserted by
tenants, as will be explained herein.
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Courts have consistently rejected these types of “COVID-19 defenses” asserted by a
commercial tenant where the parties allocated the risk and the tenant agreed to assume the risk by
agreeing to pay rent in any such type of event. For example, in CAB Bedford LLC v Equinox
Bedford Ave, Inc., 2020 WL 7629593 (Sup Ct, NY County 2020), the Court rejected the
commercial gym tenant’s defenses of frustration of purpose and impossibility based upon the
identical “Inability to Perform” clause that is present in the Lease. Equinox, like Tenant, is a
commercial gym operating in Manhattan during the pandemic. The Court held:
“Nothing in the lease itself provides for the Tenant to
avoid its obligation to pay rent…In fact, the lease
contains an ‘Inability to Perform’ paragraph that
states, in part, that ‘the obligation of Tenant to pay
rent, and to perform all of the other covenants and
agreements hereunder on the part of the Tenant to be
performed shall in no wise be affected, impaired or
excused because Landlord is unable to fulfill any of
its obligations under this Lease expressly or
impliedly to be performed by Landlord…’ This same
paragraph also mentions that rent is not excused if
the Landlord is prevented from fulfilling its
obligations by ‘laws, governmental preemption in
connection with a national emergency or by reason
of any rule, order or regulation of any federal state,
county or municipality authority. Simply put, the
parties did not contract to absolve the Tenant of its
obligation to pay rent if it were forced to shut down
due to governmental orders.” (emphasis supplied).
Id.
Likewise, in 35 East 75th Street Corp. v Christian Louboutin LLC, 2020 WL 7315470 (Sup
Ct, NY County 2020), plaintiff-landlord sought summary judgment on causes of action seeking
rent, additional rent and legal fees against defendant-tenant. The tenant sought to avoid its rental
obligations because “no one could have predicted that [the COVID-19 Pandemic] would shut down
the vast majority of businesses” and argued that because “its entire business was built on a highly
visible and well trafficked retail location” its store is “no longer profitable because there are
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dramatically fewer people walking around due to the pandemic.” Id. The court granted the
landlord’s motion for summary judgment and dismissed tenant’s defenses, noting “that the parties
included a force majeure clause for unforeseen events in the lease but this provision did not relieve
defendant of its obligation to pay rent” (emphasis suppled). Id at 2.
Even if Guarantor could assert defenses such as frustration of purpose, impossibility or
failure of consideration (hereinafter, the “COVID Defenses”), such defenses are inapplicable in
any event. For example, in Kel Kim Corp. v Central Markets, Inc., 70 NY2d 900, 902 (1987), the
Court of Appeals stated:
“Generally, once a party to a contract has made a
promise, that party must perform or respond in
damages for its failure, even when unforeseen
circumstances make performance burdensome; until
the late nineteenth century even impossibility of
performance ordinarily did not provide a defense.
While such defenses have been recognized in the
common law, they have been applied narrowly, due
in part to judicial recognition that the purpose of
contract law is to allocate the risks that might affect
performance and that performance should be
excused only in extreme circumstances.”
New York courts require an “objective impossibility” standard with regard to impossibility
of performance: “[i]mpossibility excuses a party’s performance only when the destruction of the
subject matter of the contract or the means of performance makes performance objectively
impossible (emphasis added).” Id. “Thus, where impossibility or difficulty of performance is
occasioned only by financial difficulty or economic hardship, even to the extent of insolvency or
bankruptcy, performance of a contract is not excused.” 407 East 61st Garage, Inc. v Savoy Fifth
Ave. Corp., 23 NY2d 275, 281 (1968) (emphasis added). See also Urban Archaeology Ltd. v 207
E. 57th St. LLC, 68 AD3d 562 (1st Dept 2009)
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(granting a motion to dismiss and denying an “impossibility” argument where plaintiff’s
claim boiled down to financial hardship); Kate Spade & Co., LLC v G-CNY Group LLC, 63
Misc 3d 1205(A) (Civ Ct, NY County 2019) at *8 (granting a motion to dismiss holding “there is
no basis to rescind the Sublease based on Subtenant’s theory that the purpose of the Sublease was
frustrated. … Subtenant’s nonperformance is based not on impossibility, but its own, unsupported
determination of economic infeasibility.”); Lantino v Clay LLC, No. 1:18-CV-12247 (SDA), 2020
WL 2239957 (SDNY May 8, 2020), at *3 (denying defendants’ argument that doctrine of
impossibility premised on inability to pay occasioned by the COVID-19 pandemic and Governor
Cuomo’s PAUSE Executive Order excused them from performing under Settlement Agreement).
In Trinity Centre, LLC v Wall St. CorTenants, Inc., 4 Misc 3d 1026(A) (Sup Ct, NY County
2004), at *6, the Court denied the tenant’s summary judgment motion seeking to void its lease
based upon the impossibility of performance after the 9/11 attacks, finding that “although the
terrorist act caught the whole city by surprise, the lease between the parties in fact anticipated a
potential casualty.” See also In re M&M Transp. Co., 13 BR 861, 871 (Bankr SDNY 1981)
(rejecting a frustration of purpose defense on summary judgment because “a person who makes
an absolute promise is not to be excused from performance when an event destroys the value of
the stipulated consideration”).
Most courts have been rejecting the COVID Defenses in commercial situations. For
example, in Victoria’s Secret Stores LLC et al. v Herald Square Owner LLC et al., 70 Misc 3d
1206(A) (Sup Ct, NY County 2021), affd “---NYS3d----”, 2022 WL 17981423 (First Dept 2022),
Justice Borrok granted the landlord’s motion for summary judgment dismissing the tenant’s
complaint in its entirety, holding as follows:
“The Complaint is premised on the mistaken theory
that the parties did not allocate the risk of tenant not
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being able to operate its business and that tenant is
therefore somehow forgiven from its performance by
virtue of a state law. This is contrary to the express
allocation of these risks set forth in Paragraph 26 of
the Lease Agreement, dated as of August 22, 2001,
by and between Herald Square Owner LLC’s
predecessor-in-interest, as landlord, and Victoria’s
Secret Stores, LLC’s predecessor-in-interest, as
tenant, as amended (collectively, hereinafter, the
Lease…). It is of no moment that the Lease as
drafted is broad and encompasses what happened
here - a state law that temporarily caused a closure of
the tenant’s business (see, e.g., Urban Archeology,
Ltd. v 207 E. 57th St. LLC, 2009 WL 8572326, at *5
(Sup Ct NY Cnty Sept. 10, 2009) (Sherwood, J.
[citing General Electric Co. v Metals Resources
Group Ltd., 293 Ad2d 417 (1st Dept 2002)], affd, 68
Ad3d 562 (1st Dept 2009)]. The parties agreed that
this would not relieve the tenant’s obligation to pay
rent. Thus, the Complaint must be dismissed in its
entirety. (emphasis supplied).”
Justice Borrok also granted summary judgment in a landlord’s favor in Valentino U.S.A.,
Inc. v 693 Fifth Owner LLC, 70 Misc 3d 1218(A) (Sup Ct, NY County 2021), affd. 203 AD3d 480
(1st Dept 2022), where, in rejecting the COVID Defenses asserted by the tenant, Justice Borrok
held that “the parties expressly allocated the risk that Valentino would not be able to operate its
business and that Valentino is therefore not forgiven from its performance, including its obligation
to pay rent by virtue of a state law,” citing Victoria’s Secret.
Two relatively recent cases involving The Gap, Inc. (“The Gap”) are also relevant in
establishing the inapplicability of the COVID Defenses to thwart Guarantor’s liability. In The
Gap, Inc. v 44-45 Broadway Leasing Co., LLC, 191 AD3d 549 (1st Dept 2021), the Appellate
Division held that The Gap and Old Navy were required to pay monthly use and occupancy to
their landlord for the tenants’ continued occupancy of their flagship stores in Times Square. The
tenants argued that the leases had terminated on March 19, 2020 as a result of the pandemic and
that the tenants were not obligated to pay anything. These contentions were rejected by the
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FILED: NEW YORK COUNTY CLERK 01/25/2023 05:42 PM INDEX NO. 653391/2022 NYSCEF DOC. NO. 32 RECEIVED NYSCEF: 01/25/2023 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK –––––––––––––––––––––––––––––X : WASSERSTEIN ENTERPRISES LLC, : Index No. 653391/2022 : Plaintiff, : Motion Seq. No. 001 : -against- : : JOSEPH A. PETRILLO, JR., : Defendant. : : –––––––––––––––––––––––––––––X MEMORANDUM OF LAW IN OPPOSITION TO CROSS-MOTION AND IN FURTHER SUPPORT OF MOTION FOR SUMMARY JUDGMENT ROSENBERG & ESTIS, P.C. Attorneys for Plaintiff 733 Third Avenue New York, New York 10017 (212) 867-6000 NORMAN FLITT ALEX M. ESTIS Of Counsel RE\04670\0109\4770255v4 1 of 25 FILED: NEW YORK COUNTY CLERK 01/25/2023 05:42 PM INDEX NO. 653391/2022 NYSCEF DOC. NO. 32 RECEIVED NYSCEF: 01/25/2023 TABLE OF CONTENTS Page TABLE OF AUTHORITIES .......................................................................................................... ii PRELIMINARY STATEMENT .....................................................................................................2 POINT I PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT SHOULD BE GRANTED ...................................................................................................2 POINT II LANDLORD IS ALSO ENTITLED TO AN AWARD OF ITS ATTORNEYS’ FEES .......................................................................................12 POINT III DEFENDANT’S CROSS-MOTION SHOULD BE DENIED .........................13 CONCLUSION ...........................................................................................................................18 STATEMENT OF COMPLIANCE WITH RULE 17 ...................................................................19 -i- RE\04670\0109\4770255v4 2 of 25 FILED: NEW YORK COUNTY CLERK 01/25/2023 05:42 PM INDEX NO. 653391/2022 NYSCEF DOC. NO. 32 RECEIVED NYSCEF: 01/25/2023 TABLE OF AUTHORITIES Page(s) Cases 1407 Broadway Real Estate LLC v Tsui, 36 Misc 3d 1219(A) (Sup Ct, NY County 2012) .......................................................................4 18-20 Park Corp. v Kim, 2017 WL 3159020 (Sup Ct, NY County 2017) .......................................................................16 35 East 75th Street Corp. v Christian Louboutin LLC, 2020 WL 7315470 (Sup Ct, NY County 2020) .....................................................................6, 7 407 East 61st Garage, Inc. v Savoy Fifth Ave. Corp., 23 NY2d 275 (1968) ..................................................................................................................7 Admiral Indem. Co. A/S/O the Franklin Tower Condominium v The Wynne Group, Ltd., 2007 NY Slip Op 32073(U) (Sup Ct, NY County 2007) .........................................................15 Alvarez v Prospect Hospital, 68 NY2d 320 (1986) ..................................................................................................................3 Banco Popular North Am. v Victory Taxi Mgt., Inc., 1 NY3d 381 (2004) ....................................................................................................................3 Brennan v City of New York, 99 AD2d 445 (1st Dept 1984) ..................................................................................................14 Broadway 36th Realty, LLC v London, 29 Misc 3d 1238(A) (Sup Ct, NY County 2010) .......................................................................5 CAB Bedford LLC v Equinox Bedford Ave, Inc., 2020 WL 7629593 (Sup Ct, NY County 2020) .........................................................................6 Citizens and Southern Commercial Corporation v Catapano, 164 AD2d 812 (1st Dept 1990) ................................................................................................12 City of New York v Clarose Cinema Corp., 256 AD2d 69 (1st Dept 1998) ....................................................................................................3 Clark v Foley, 240 AD2d 458 (2d Dept 1997) ................................................................................................15 Cooperatieve Centrale Reiffeisen-Boerenleenbank, B.A. v Navarro, 25 NY3d 485 (2015) ..................................................................................................................3 - ii - RE\04670\0109\4770255v4 3 of 25 FILED: NEW YORK COUNTY CLERK 01/25/2023 05:42 PM INDEX NO. 653391/2022 NYSCEF DOC. NO. 32 RECEIVED NYSCEF: 01/25/2023 Davimos v Halle, 35 AD3d 270 (1st Dept 2006) ....................................................................................................4 E.D. & F. Man Sugar Inc. v ZZY Distribs., Inc., 2014 WL 3709628 (Sup Ct, NY County 2014) .......................................................................16 Ehrlich v American Moninger Greenhouse Mfg. Corp., 26 NY2d 255 (1970) ..................................................................................................................4 Flemming v Barnwell Nursing Home & Health Facilities, Inc., 15 NY3d 375 (2010) ................................................................................................................13 Guzman v Mike’s Pipe Yard, 35 AD3d 266 (1st Dept 2006) ......................................................................................14, 15, 16 Inoa v Metro Prop. Group, LLC, 2008 WL 11175781 (Sup Ct, NY County 2008)............................................................16 International Plaza Assoc., L.P. v Lacher, 104 AD3d 578 (1st Dept 2013) ................................................................................................12 Kate Spade & Co., LLC v G-CNY Group LLC, 63 Misc 3d 1205(A) (Civ Ct, NY County 2019) .......................................................................7 Kel Kim Corp. v Central Markets, Inc., 70 NY2d 900 (1987) ..................................................................................................................7 Lantino v Clay LLC, No. 1:18-CV-12247 (SDA), 2020 WL 2239957 (SDNY May 8, 2020)....................................8 In re M&M Transp. Co., 13 BR 861 (Bankr SDNY 1981) ................................................................................................8 Marinelli v Shifrin, 260 AD2d 227 (1st Dept 1999) ................................................................................................15 McBride v KPMG Intl., 135 AD3d 576 (1st Dept 2016) ................................................................................................15 Moon 170 Mercer, Inc. v Vella, 122 AD3d 544 (1st Dept 2014) ................................................................................................12 Nichols v Curtis, 104 AD3d 526 (1st Dept 2013) ..........................................................................................14, 15 Non-Linear Trading Co. v Braddis Assocs., Inc., 243 AD2d 107 (1st Dept 1998) ................................................................................................14 - iii - RE\04670\0109\4770255v4 4 of 25 FILED: NEW YORK COUNTY CLERK 01/25/2023 05:42 PM INDEX NO. 653391/2022 NYSCEF DOC. NO. 32 RECEIVED NYSCEF: 01/25/2023 One Ten West Fortieth Associates v Isabel Ardee, Inc., 124 AD3d 500 (1st Dept 2015) ................................................................................................12 Pimpinello v Swift & Co., 253 NY 159 (1930) ....................................................................................................................4 Plaza 52, LLC v Cohen, 2009 WL 2587519, 2009 NY Slip Op 31849(U) (Sup Ct, NY County 2009) ..........................4 PRA III, LLC v Gonzalez, 54 AD3d 917 (2d Dept 2008) ..................................................................................................17 Raven Elevator Corp. v Finkelstein, 223 AD2d 378 (1st Dept 1996) ..................................................................................................5 Reliance Construction Ltd v Kennelly, 70 AD3d 418 (1st Dept 2010) ....................................................................................................3 Rivers v Birnbaum, 102 AD3d 26 (2d Dept 2012) ..................................................................................................16 RSB Bedford Associates, LLC v Ricky’s Williamsburg, Inc., 91 AD3d 16 (1st Dept 2011) ....................................................................................................12 S.J. Capelin Assocs., Inc. v Globe Mfg. Corp., 34 NY2d 338 (1974) ..................................................................................................................2 Schulte Roth & Zabel v Kassover, 28 AD3d 404 (1st Dept 2006) ..................................................................................................16 The Gap, Inc. v 44-45 Broadway Leasing Co., LLC, 191 AD3d 549 (1st Dept 2021) ............................................................................................9, 10 The Gap, Inc. v Ponte Gadea New York LLC, No. 20 CV 4541-LTS-KHP, 2021 WL 861121 (SDNY 2021)................................................10 Trinity Centre, LLC v Wall St. CorTenants, Inc., 4 Misc 3d 1026(A) (Sup Ct, NY County 2004) .........................................................................8 Urban Archaeology Ltd. v 207 E. 57th St. LLC, 68 AD3d 562 (1st Dept 2009) ....................................................................................................7 Valentino U.S.A., Inc. v 693 Fifth Owner LLC, 70 Misc 3d 1218(A) (Sup Ct, NY County 2021), affd 203 AD3d 480 (1st Dept 2022) ..........................................................................................9 Vandergrand Properties Co., L.P. v Warnock, 206 AD3d 597 (1st Dept 2022) ................................................................................................12 - iv - RE\04670\0109\4770255v4 5 of 25 FILED: NEW YORK COUNTY CLERK 01/25/2023 05:42 PM INDEX NO. 653391/2022 NYSCEF DOC. NO. 32 RECEIVED NYSCEF: 01/25/2023 Victoria's Secret Stores LLC et al. v Herald Square Owner LLC et al., 70 Misc 3d 1206(A) (Sup Ct, NY County 2021), affd “---NYS3d----”, 2022 WL 17981423 (First Dept 2022) ...............................................8, 9 Zuckerman v City of New York, 49 NY2d 557 (1980) ..............................................................................................................3, 4 Other Authorities CPLR 3025(b) ................................................................................................................................14 CPLR 3211(b) ..................................................................................................................................1 CPLR 3212.......................................................................................................................................1 CPLR 3212(b) ..................................................................................................................................4 NYCRR § 202.8-g(d) .....................................................................................................................14 -v- RE\04670\0109\4770255v4 6 of 25 FILED: NEW YORK COUNTY CLERK 01/25/2023 05:42 PM INDEX NO. 653391/2022 NYSCEF DOC. NO. 32 RECEIVED NYSCEF: 01/25/2023 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK –––––––––––––––––––––––––––––X : WASSERSTEIN ENTERPRISES LLC, : Index No. 653391/2022 : Plaintiff, : Motion Sequence 001 : -against- : : JOSEPH A. PETRILLO, JR., : Defendant. : : –––––––––––––––––––––––––––––X MEMORANDUM OF LAW IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT Plaintiff Wasserstein Enterprises LLC (“Plaintiff” or “Landlord”) submits this Memorandum of Law1 in opposition to defendant Joseph A. Petrillo, Jr.’s (“Defendant” or “Guarantor”) cross-motion and in support of Landlord’s motion for an Order, as follows: (a) pursuant to CPLR 3212, awarding Plaintiff summary judgment against Defendant on the first cause of action in Plaintiff’s complaint dated September 16, 2022 (the “Complaint”), and awarding Plaintiff a money judgment against Guarantor in an amount to be determined by the Court, but no less than $1,448,067.40, plus interest; (b) pursuant to CPLR 3212 and/or CPLR 3211(b), dismissing Guarantor’s affirmative defenses asserted in his answer dated November 2, 2022 (“Answer”); awarding Plaintiff its attorneys’ fees, costs and disbursements, in an amount to be subsequently determined upon submission to the Court or at a hearing; and (c) for such other and further relief as this Court deems just and proper. 1 All capitalized terms herein shall have the same meaning ascribed to them in the Affidavit of Jenifer S. Brooks, sworn to on December 9, 2022 (NYSCEF Doc. No. 8) (the “Brooks Affidavit”) unless specifically defined herein. RE\04670\0109\4770255v4 7 of 25 FILED: NEW YORK COUNTY CLERK 01/25/2023 05:42 PM INDEX NO. 653391/2022 NYSCEF DOC. NO. 32 RECEIVED NYSCEF: 01/25/2023 PRELIMINARY STATEMENT This is a straightforward plenary action for damages and attorneys’ fees based upon an undisputed breach of an unconditional guaranty agreement by Guarantor in connection with Tenant’s ongoing failure and refusal to pay Fixed Rent and Additional Rent due to Landlord under Tenant’s commercial lease. Defendant’s arguments in opposition to the motion for summary judgment and in support of his cross-motion consist of illogical, irrelevant, self-serving blanket statements with no legal basis to support them, and are wholly defective. Defendant’s cross-motion is misleading in that its sole purpose is to create issues in an attempt to delay the inevitable granting of summary judgment in Plaintiff’s favor. None of these supposed “new facts” are anything that was not already available or known to Defendant at the time Defendant filed its answer. Moreover, Defendant seeks summary judgment in his favor while at the same time Defendant claims that discovery is necessary. Defendant cannot have it both ways. Any assertion that Defendant should be entitled to discovery while having summary judgment in its favor to dismiss the complaint is wholly disingenuous. POINT I PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT SHOULD BE GRANTED A motion for summary judgment cannot be defeated by conclusory or unsupported allegations, but only by evidentiary proof in admissible form. See S.J. Capelin Assocs., Inc. v Globe Mfg. Corp., 34 NY2d 338 (1974). A motion for summary judgment must be granted where the movant has established a prima facie case entitling the movant to the relief requested as a matter of law, and the opposition -2- RE\04670\0109\4770255v4 8 of 25 FILED: NEW YORK COUNTY CLERK 01/25/2023 05:42 PM INDEX NO. 653391/2022 NYSCEF DOC. NO. 32 RECEIVED NYSCEF: 01/25/2023 fails to rebut this showing or create an issue of fact. See Zuckerman v. City of New York, 49 NY2d 557, 562 (1980). Accordingly, mere conclusions of law or fact are insufficient to defeat a motion for summary judgment. See Banco Popular North Am. v. Victory Taxi Mgt., Inc., 1 NY3d 381 (2004); Alvarez v. Prospect Hospital, 68 NY2d 320, 324 (1986). Summary judgment is especially appropriate, and is routinely granted, in actions based on absolute and unconditional guaranty agreements. “On a motion for summary judgment to enforce a written guaranty, all that the creditor need prove is an absolute and unconditional guaranty, the underlying debt, and the guarantor’s failure to perform under the guaranty.” City of New York v Clarose Cinema Corp., 256 AD2d 69, 71 (1st Dept 1998). Here, the Guaranty is, by its terms, absolute and unconditional, and was expressly given so as to induce Landlord to enter into the Lease with Tenant. As the Appellate Division, First Department, stated in Reliance Construction Ltd v Kennelly, 70 AD3d 418, 419 (1st Dept 2010), “Plaintiff made a prima facie showing for summary judgment by proving the absolute and unconditional guaranties and the guarantors’ failure to perform.” See also Cooperatieve Centrale Reiffeisen-Boerenleenbank, B.A. v Navarro, 25 NY3d 485, 492 (2015) (“To meet its prima facie burden on its summary judgment motion, [Plaintiff] must prove the existence of the guaranty, the underlying debt and the guarantor’s failure to perform under the guaranty” [internal quotations and citations omitted]). Defendant has expressly waived defenses to his unconditional liability under the Guaranty and is unequivocally bound to pay fixed rent and additional rent as required by the Lease and Guaranty. Defendant’s claims that he was a minority owner and that the rent was not paid because of the COVID-19 pandemic are not only frivolous and misleading, but entirely disingenuous. Defendant has claimed that he was a minority investor with “no notice” as to what was going on -3- RE\04670\0109\4770255v4 9 of 25 FILED: NEW YORK COUNTY CLERK 01/25/2023 05:42 PM INDEX NO. 653391/2022 NYSCEF DOC. NO. 32 RECEIVED NYSCEF: 01/25/2023 at the subject premises. Whatever his status as an investor, Defendant signed an unconditional Guaranty and expressly waived defenses to liability under the Guaranty. Guarantor has admittedly signed the Guaranty which provides, inter alia, that he unconditionally guaranteed the payment of rent and waived his defenses. It is irrelevant that he was a minority investor or did not intend to waive any defenses. See Pimpinello v Swift & Co., 253 NY 159 at 162-163 (1930) (The signer of an instrument, expressive of a jural act, is conclusively bound thereby. That the signer’s mind never gave assent to the terms is not material as if the signer could read the instrument, not to have read it was gross negligence. The signer is thus bound). Once a movant demonstrates its entitlement to summary judgment, the burden then shifts to the non-movant, to “show facts sufficient to require a trial of any issue of fact.” Zuckerman v City of New York, 49 NY2d 557, 562 (1980) (citing to CPLR 3212[b]). Unsupported, conclusory allegations do not create an issue of fact that warrants a trial, and such allegations will not defeat a motion for summary judgment. Ehrlich v American Moninger Greenhouse Mfg. Corp., 26 NY2d 255, 259 (1970). It is well-settled that: “On a motion for summary judgment to enforce an unconditional guaranty, the creditor must prove the existence of the guaranty, the underlying debt and the guarantor’s failure to perform under the guaranty.” Davimos v Halle, 35 AD3d 270, 272 (1st Dept 2006). See also 1407 Broadway Real Estate LLC v Tsui, 36 Misc 3d 1219(A) (Sup Ct, NY County 2012). In Plaza 52, LLC v Cohen, 2009 WL 2587519, 2009 NY Slip Op 31849(U) (Sup Ct, NY County, Aug. 11, 2009), in finding that the landlord had established its prima facie entitlement to summary judgment against the guarantors of the tenant’s obligations under the lease: -4- RE\04670\0109\4770255v4 10 of 25 FILED: NEW YORK COUNTY CLERK 01/25/2023 05:42 PM INDEX NO. 653391/2022 NYSCEF DOC. NO. 32 RECEIVED NYSCEF: 01/25/2023 “On a motion for summary judgment to enforce an unconditional guaranty, the creditor must prove the existence of the guaranty, the underlying debt and the guarantor’s failure to perform under the guaranty. Here, [landlord] as presented a copy of the guaranty and the affidavit of its managing agent…that sets forth a calculation of the amount of unpaid rent and other charges that [tenant] is liable for, and states that neither [tenant] nor defendants has ever made any payments towards these amounts. Defendants do not contest that neither [tenant] nor themselves has ever reimbursed [landlord] for [tenant’s] debts. Thus, it is clear that [landlord] has established all of the elements of its breach of guaranty claims against defendants” [internal citations omitted]. See also Broadway 36th Realty, LLC v London, 29 Misc 3d 1238(A) (Sup Ct, NY County 2010) (granting the landlord summary judgment on claim under unconditional guaranty of tenant’s obligations under the lease to pay all rent, additional rent and other charges). Landlord’s first cause of action seeks a money judgment pursuant to the Guaranty. Under the terms of the Guaranty, Defendant unconditionally agreed to be personally liable to Plaintiff for the full and prompt payment of all Fixed Rent and Additional Rent due and owing under the Lease. Thus, it is irrelevant as to whether or not the COVID-19 pandemic was the reason that Tenant did not pay the rent, because Guarantor is precluded from ever asserting the defense. See Raven Elevator Corp. v Finkelstein, 223 AD2d 378 (1st Dept 1996) (the liability of a guarantor may be broader than and exceed the scope of that of the principal where the guarantee, which is a separate undertaking, is, by its unqualified language, enforceable against the guarantor). Accordingly, where, as here, the Guaranty provides that Defendant unconditionally and irrevocably guaranteed the payment of Fixed Rent and explicitly waived defenses to such unconditional liability, Defendant is liable for the rent arrears. Even ifsuch COVID defenses could be asserted by Guarantor, such defenses have routinely been rejected when asserted by tenants, as will be explained herein. -5- RE\04670\0109\4770255v4 11 of 25 FILED: NEW YORK COUNTY CLERK 01/25/2023 05:42 PM INDEX NO. 653391/2022 NYSCEF DOC. NO. 32 RECEIVED NYSCEF: 01/25/2023 Courts have consistently rejected these types of “COVID-19 defenses” asserted by a commercial tenant where the parties allocated the risk and the tenant agreed to assume the risk by agreeing to pay rent in any such type of event. For example, in CAB Bedford LLC v Equinox Bedford Ave, Inc., 2020 WL 7629593 (Sup Ct, NY County 2020), the Court rejected the commercial gym tenant’s defenses of frustration of purpose and impossibility based upon the identical “Inability to Perform” clause that is present in the Lease. Equinox, like Tenant, is a commercial gym operating in Manhattan during the pandemic. The Court held: “Nothing in the lease itself provides for the Tenant to avoid its obligation to pay rent…In fact, the lease contains an ‘Inability to Perform’ paragraph that states, in part, that ‘the obligation of Tenant to pay rent, and to perform all of the other covenants and agreements hereunder on the part of the Tenant to be performed shall in no wise be affected, impaired or excused because Landlord is unable to fulfill any of its obligations under this Lease expressly or impliedly to be performed by Landlord…’ This same paragraph also mentions that rent is not excused if the Landlord is prevented from fulfilling its obligations by ‘laws, governmental preemption in connection with a national emergency or by reason of any rule, order or regulation of any federal state, county or municipality authority. Simply put, the parties did not contract to absolve the Tenant of its obligation to pay rent if it were forced to shut down due to governmental orders.” (emphasis supplied). Id. Likewise, in 35 East 75th Street Corp. v Christian Louboutin LLC, 2020 WL 7315470 (Sup Ct, NY County 2020), plaintiff-landlord sought summary judgment on causes of action seeking rent, additional rent and legal fees against defendant-tenant. The tenant sought to avoid its rental obligations because “no one could have predicted that [the COVID-19 Pandemic] would shut down the vast majority of businesses” and argued that because “its entire business was built on a highly visible and well trafficked retail location” its store is “no longer profitable because there are -6- RE\04670\0109\4770255v4 12 of 25 FILED: NEW YORK COUNTY CLERK 01/25/2023 05:42 PM INDEX NO. 653391/2022 NYSCEF DOC. NO. 32 RECEIVED NYSCEF: 01/25/2023 dramatically fewer people walking around due to the pandemic.” Id. The court granted the landlord’s motion for summary judgment and dismissed tenant’s defenses, noting “that the parties included a force majeure clause for unforeseen events in the lease but this provision did not relieve defendant of its obligation to pay rent” (emphasis suppled). Id at 2. Even if Guarantor could assert defenses such as frustration of purpose, impossibility or failure of consideration (hereinafter, the “COVID Defenses”), such defenses are inapplicable in any event. For example, in Kel Kim Corp. v Central Markets, Inc., 70 NY2d 900, 902 (1987), the Court of Appeals stated: “Generally, once a party to a contract has made a promise, that party must perform or respond in damages for its failure, even when unforeseen circumstances make performance burdensome; until the late nineteenth century even impossibility of performance ordinarily did not provide a defense. While such defenses have been recognized in the common law, they have been applied narrowly, due in part to judicial recognition that the purpose of contract law is to allocate the risks that might affect performance and that performance should be excused only in extreme circumstances.” New York courts require an “objective impossibility” standard with regard to impossibility of performance: “[i]mpossibility excuses a party’s performance only when the destruction of the subject matter of the contract or the means of performance makes performance objectively impossible (emphasis added).” Id. “Thus, where impossibility or difficulty of performance is occasioned only by financial difficulty or economic hardship, even to the extent of insolvency or bankruptcy, performance of a contract is not excused.” 407 East 61st Garage, Inc. v Savoy Fifth Ave. Corp., 23 NY2d 275, 281 (1968) (emphasis added). See also Urban Archaeology Ltd. v 207 E. 57th St. LLC, 68 AD3d 562 (1st Dept 2009) -7- RE\04670\0109\4770255v4 13 of 25 FILED: NEW YORK COUNTY CLERK 01/25/2023 05:42 PM INDEX NO. 653391/2022 NYSCEF DOC. NO. 32 RECEIVED NYSCEF: 01/25/2023 (granting a motion to dismiss and denying an “impossibility” argument where plaintiff’s claim boiled down to financial hardship); Kate Spade & Co., LLC v G-CNY Group LLC, 63 Misc 3d 1205(A) (Civ Ct, NY County 2019) at *8 (granting a motion to dismiss holding “there is no basis to rescind the Sublease based on Subtenant’s theory that the purpose of the Sublease was frustrated. … Subtenant’s nonperformance is based not on impossibility, but its own, unsupported determination of economic infeasibility.”); Lantino v Clay LLC, No. 1:18-CV-12247 (SDA), 2020 WL 2239957 (SDNY May 8, 2020), at *3 (denying defendants’ argument that doctrine of impossibility premised on inability to pay occasioned by the COVID-19 pandemic and Governor Cuomo’s PAUSE Executive Order excused them from performing under Settlement Agreement). In Trinity Centre, LLC v Wall St. CorTenants, Inc., 4 Misc 3d 1026(A) (Sup Ct, NY County 2004), at *6, the Court denied the tenant’s summary judgment motion seeking to void its lease based upon the impossibility of performance after the 9/11 attacks, finding that “although the terrorist act caught the whole city by surprise, the lease between the parties in fact anticipated a potential casualty.” See also In re M&M Transp. Co., 13 BR 861, 871 (Bankr SDNY 1981) (rejecting a frustration of purpose defense on summary judgment because “a person who makes an absolute promise is not to be excused from performance when an event destroys the value of the stipulated consideration”). Most courts have been rejecting the COVID Defenses in commercial situations. For example, in Victoria’s Secret Stores LLC et al. v Herald Square Owner LLC et al., 70 Misc 3d 1206(A) (Sup Ct, NY County 2021), affd “---NYS3d----”, 2022 WL 17981423 (First Dept 2022), Justice Borrok granted the landlord’s motion for summary judgment dismissing the tenant’s complaint in its entirety, holding as follows: “The Complaint is premised on the mistaken theory that the parties did not allocate the risk of tenant not -8- RE\04670\0109\4770255v4 14 of 25 FILED: NEW YORK COUNTY CLERK 01/25/2023 05:42 PM INDEX NO. 653391/2022 NYSCEF DOC. NO. 32 RECEIVED NYSCEF: 01/25/2023 being able to operate its business and that tenant is therefore somehow forgiven from its performance by virtue of a state law. This is contrary to the express allocation of these risks set forth in Paragraph 26 of the Lease Agreement, dated as of August 22, 2001, by and between Herald Square Owner LLC’s predecessor-in-interest, as landlord, and Victoria’s Secret Stores, LLC’s predecessor-in-interest, as tenant, as amended (collectively, hereinafter, the Lease…). It is of no moment that the Lease as drafted is broad and encompasses what happened here - a state law that temporarily caused a closure of the tenant’s business (see, e.g., Urban Archeology, Ltd. v 207 E. 57th St. LLC, 2009 WL 8572326, at *5 (Sup Ct NY Cnty Sept. 10, 2009) (Sherwood, J. [citing General Electric Co. v Metals Resources Group Ltd., 293 Ad2d 417 (1st Dept 2002)], affd, 68 Ad3d 562 (1st Dept 2009)]. The parties agreed that this would not relieve the tenant’s obligation to pay rent. Thus, the Complaint must be dismissed in its entirety. (emphasis supplied).” Justice Borrok also granted summary judgment in a landlord’s favor in Valentino U.S.A., Inc. v 693 Fifth Owner LLC, 70 Misc 3d 1218(A) (Sup Ct, NY County 2021), affd. 203 AD3d 480 (1st Dept 2022), where, in rejecting the COVID Defenses asserted by the tenant, Justice Borrok held that “the parties expressly allocated the risk that Valentino would not be able to operate its business and that Valentino is therefore not forgiven from its performance, including its obligation to pay rent by virtue of a state law,” citing Victoria’s Secret. Two relatively recent cases involving The Gap, Inc. (“The Gap”) are also relevant in establishing the inapplicability of the COVID Defenses to thwart Guarantor’s liability. In The Gap, Inc. v 44-45 Broadway Leasing Co., LLC, 191 AD3d 549 (1st Dept 2021), the Appellate Division held that The Gap and Old Navy were required to pay monthly use and occupancy to their landlord for the tenants’ continued occupancy of their flagship stores in Times Square. The tenants argued that the leases had terminated on March 19, 2020 as a result of the pandemic and that the tenants were not obligated to pay anything. These contentions were rejected by the -9- RE\04670\0109\4770255v4 15 of 25 FILED: