Preview
FILED: WESTCHESTER COUNTY CLERK 01/11/2019 06:00 PM INDEX NO. 51573/2015
NYSCEF DOC. NO. 342 RECEIVED NYSCEF: 01/11/2019
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF WESTCHESTER
----- --------------- -------------------X
CDC DEVELOPMENT PROPERTIES, INC.
Plaintiff,
- against - Index No.: 51573/2015
AMERICAN INDEPENDENT PAPER MILLS
SUPPLY CO., INC.
X
MEMORANDUM OF LAW
Re Preliminary Injunction
On behalf of
PLAINTIFF CDC DEVELOPMENT PROPERTIES, INC.
J hn U. H. Blumenstock, Esq.
ALLO VITUCCI KLAR LLP
Attorneys for the Plaintiff
CDC DEVELOPMENT PROPERTIES, INC.
90 Broad Street, 12th floor
New York, New York 10004
683 - 7100
(212)
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PRELIMINARY_STATEMENT:
1. This action concerns a series of breaches of a commercial lease contract.
Defendant landlord AMERICAN INDEPENDENT PAPER MILLS SUPPLY CO., INC.,
("A.I.P."
hereafter,) having charged over market rent, and after having accepted additional rent
for local real estate tax increases, failed to comply with its reciprocal contractual obligation to
lower rent when taxes were decreased and further failed to reimburse CDC for its proportional
share of tax refunds as specified in $37 of the lease. Additionally, defendant A.I.P. repeatedly
failed to maintain the premises structurally (inchiding the roof) causing the plaintiff CDC
DEVELOPMENT PROPERTIES, INC. ("CDC") to have to expend its own money for repairs,
replace the boiler on the premises, and curtail its sports facilities business from time to time.
2. Plaintiff CDC has moved for a Preliminary Injunction, enjoining the defendant
A.I.P. (having sold its business in 2014,) from selling its last asset (real property at 15 South
Depot Plaza in Tarrytown, New York currently currently scheduled to be sold January 22, 2019,)
to avoid rendering a judgment ineffectual, or in the alternative, for an Order directing defendant
A.I.P. to either post a bond to secure a potential verdict or upon the sale of the realty, to place a
portion of the proceeds in escrow, pending the final resolution of this action.
3. Defendant A.I.P. has cross-moved for similar relief, without a showing of
irreparable harm, probability of success or balance of equities in its favor. As part of its claim,
defeñdañt asserts entitlement to over $200,000 in legal fees, despite the contract providing for
legal fees only in the instance of a summary proceeding involving a default, providing the
defendant landlord, A.I.P. prevails.
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THE ISSUES PRESENTED:
4. The issues before the court are threefold. First, does CPLR §6301 apply to
motions for Preliminary Injunctions (as plaintiff maintains,) or does CPLR §6201 apply (as
maintained by defendant)?
5. Second, in order to prevail on an application for a Preliminary Iñjüñction, must a
plaintiff show (as plaintiff claims,) the danger of irreparable harm without an injunction, the
probability of success in its underlying claim(s), and that the balance of equities favor the
plaintiff; or as defendant asserts, must plaintiff offer specific evidence of an intent to defraud or
an intent to frustrate the enforcement of a judgment by defendant?
6. Third, in view of the law favoring each party to pay for its own legal fees, are
contractual provisions requiring one party to pay legal fees under certain specified coñditions, to
be narrowly construed?
THE LAW:
Point I: only CPLR 66301 is ap_plicable here
7. As specified in the Order to Show Cause drafted by plaintiff, and as spelled out in
its supporting papers, plaintiff CDC moved pursuant to CPLR §6301 for a Prelliniñãry
Injunction. The statute is titled, "§ 6301. Grounds for pre"-ª=nf injunction and temporary
order."
restraining The rest of the statute reads:
A preliminary injunction may be granted in any action where it appears that the
defendant threatens or is about to do, or is doing, procuring or suffering to be
done, an act in violation of the plaintiffs rights respecting the subject of the
action, and tending to render the judgment ineffectual, or in any action where the
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plaintiff has demanded and would be entitled to a judgment restraining defendant
from the commission or continuance of an act, which committed or continued
during the pendency of the action, would produce injury to the plaintiff. A
temporary restraining order may be granted pending a hearing for a preliminary
injunction where it appears that it immediate and irreparable injury, loss or
damage will result unless defendant is restrained before the hearing can be had.
8. By contrast, defendant A.I.P.'s opposition and cross-moving papers rely on CPLR
§6201, and cite cases referring to that statute. That statute is titled, "§ 6201. Grounds for
Attachment."
In pertinent part, the statute reads:
An order of sitachmeñt may be granted in any action, except a matrimonial
action, where the plaintiff has demañded and would be entitled, in whole or in
part, or in the alternative, to a money judgment against one or more defendants,
when...
3. the defendant, with intent to defraud his creditors or frustrate the enforcement
of a judgment that might be rendered in plaintiffs favor, has assigned, disposed
of, encumbered or secreted property, or removed it from the state or is about to do
any of these acts;
9. As noted, plaintiff moves (and indeed, defendant cross-moves) for a Preliminary
Injunction. By the very titleand text of both statutes, itis clear that only CPLR §6301 applies to
plaintiffs application. Plaintiff moved for a Preliminary Injunction. Plaintiff has not sought the
harsh remedy of attachment, and indeed, has moved in the alternative for either a bond or
placement of a portion of the proceeds of the anticipated sale of defendant's last asset, to afford
the least inconvenient, least harsh measure possible to secure a judgment while avoiding such a
judgment from being rendered ineffectual.
Point II: the Standard for PreMmMs-y Iniunction
10. A Preliminary Injunction is not a punishment. Nor is itan attempt to change the
relative positions of the parties. Indeed, rather than determine ultimate issues, the purpose of a
Preliminary Injunction is just to preserve the status quo between parties until ultimate issues are
decided. Swarts v. Board of Education, 42 Misc.2d 461, 249 N.Y.S.2d 44 (New York Supreme
4 of 6
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Court, 1964); St. Paul Fire & Marine Ins. Co. v. York Claims Serv., 308 A.D.2d 347, 765
N.Y.S.2d 573 (1st Dept., 2003.
11. Thus, interpreting CPLR §6301, the requisite showing for entitlement to a
Preliminary Injunction is less than the showing required for the harsher remedy of attachment.
The Courts have long held, "to be entitled to preliminary injunction, plaintiffs had to show a
probability of success, danger of irreparable injury in the absence of injunction, and a balance of
favor."
equities in their Aetna Ins. Co. v. Capasso, 75 N.Y.2d 860, 552 N.Y.S.2d 918, 552
N.E.2d 166 (1990); Nobu Next Door. LLC v. Fine Arts Hous., Inc., 4 N.Y.3d 839, 800 N.Y.S.2d
48, 833 N.E.2d 191 (2005); Town of Goshen v. Serdarevic, 17 A.D.3d 576, 793 N.Y.S.2d 485
(2nd Dept., 2005). Intent, unlike the requisite showing for attackñêist, is simply not required to
obtain a Preliminary Injunction.
Point III: Contractual Provisions Concerning Legal Fees are Strictly Construed
attorneys'
12. In general, parties typically have to pay for their own fees, win, lose or
draw. It is well settled law in New York State that a prevailing party in a lawsuit, may not
recover legal fees from the losing party, unless it is authorized by statute, agreement or court
rule. U.S. Underwriters Ins. Co. v. City Club Hotel. LLC, 3 N.Y.3d 592, 789 N.Y.S.2d 470, 822
N.E.2d 777 (2004); Chapel v. Mitchell, 84 N.Y.2d 345, 349, 837 N.Y.S.2d 634 (1st Dept., 2007);
Hooper Assoc. v. AGS Computers, 74 N.Y.2d 487, 549 N.Y.S.2d 365, 548 N.E.2d 903 (1989).
13. As New York favors parties paying their own way, contract and commercial lease
attorneys'
provisions pertaining to the award of fees to the prevailing party are strictly construed.
attorneys'
Thus, when a contract provision (in a lease or otherwise) provides that fees are to be
given to a prevailing party, in case of a default, fees will not be awarded for matters unrelated to
parties'
the losing default(s). Andrews 44 Coffee Shops Inc. v. TST/TMW 405 Lexington. L.P.,
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40 A.D.3d 544, 837 N.Y.S.2d 634 (1st Dept, 2007); Gottlieb v. Such, 293 A.D.2d 297, 740
N.Y.S.2d 44 (1st Dept., 2002).
14. Consistent with the cases above, where the contract provision relied upon by the
attorneys'
defendant landlord A.I.P. in its claim for fees, specifically states that it pertains to
proceediñgs" "defaults"
"summary and by the Tenant, and where this case is not a summary
proceeding, nor does it pertain to default by the plaintiff, strict construction of the contract
attorneys'
provision bars recovery of fees.
WHEREFORE, it is respectfully requested that this Honorable Court issue an Order
directing the parties to proceed to jury selection and upon completion of jury selection, try this
action before a jury.
Respectfully Submitted,
John U. H. Blumenstock, Esq.
GALLO VITUCCI KLAR LLP
Attorneys for the Plaintiff
CDC DEVELOPMENT PROPERTIES, INC.
90 Broad Street, 12th floor
New York, New York 10004
683 - 7100
(212)
6 of 6
Preview
FILED: WESTCHESTER COUNTY CLERK 01/11/2019 06:00 PM INDEX NO. 51573/2015 NYSCEF DOC. NO. 342 RECEIVED NYSCEF: 01/11/2019 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF WESTCHESTER ----- --------------- -------------------X CDC DEVELOPMENT PROPERTIES, INC. Plaintiff, - against - Index No.: 51573/2015 AMERICAN INDEPENDENT PAPER MILLS SUPPLY CO., INC. X MEMORANDUM OF LAW Re Preliminary Injunction On behalf of PLAINTIFF CDC DEVELOPMENT PROPERTIES, INC. J hn U. H. Blumenstock, Esq. ALLO VITUCCI KLAR LLP Attorneys for the Plaintiff CDC DEVELOPMENT PROPERTIES, INC. 90 Broad Street, 12th floor New York, New York 10004 683 - 7100 (212) 1 of 6 FILED: WESTCHESTER COUNTY CLERK 01/11/2019 06:00 PM INDEX NO. 51573/2015 NYSCEF DOC. NO. 342 RECEIVED NYSCEF: 01/11/2019 PRELIMINARY_STATEMENT: 1. This action concerns a series of breaches of a commercial lease contract. Defendant landlord AMERICAN INDEPENDENT PAPER MILLS SUPPLY CO., INC., ("A.I.P." hereafter,) having charged over market rent, and after having accepted additional rent for local real estate tax increases, failed to comply with its reciprocal contractual obligation to lower rent when taxes were decreased and further failed to reimburse CDC for its proportional share of tax refunds as specified in $37 of the lease. Additionally, defendant A.I.P. repeatedly failed to maintain the premises structurally (inchiding the roof) causing the plaintiff CDC DEVELOPMENT PROPERTIES, INC. ("CDC") to have to expend its own money for repairs, replace the boiler on the premises, and curtail its sports facilities business from time to time. 2. Plaintiff CDC has moved for a Preliminary Injunction, enjoining the defendant A.I.P. (having sold its business in 2014,) from selling its last asset (real property at 15 South Depot Plaza in Tarrytown, New York currently currently scheduled to be sold January 22, 2019,) to avoid rendering a judgment ineffectual, or in the alternative, for an Order directing defendant A.I.P. to either post a bond to secure a potential verdict or upon the sale of the realty, to place a portion of the proceeds in escrow, pending the final resolution of this action. 3. Defendant A.I.P. has cross-moved for similar relief, without a showing of irreparable harm, probability of success or balance of equities in its favor. As part of its claim, defeñdañt asserts entitlement to over $200,000 in legal fees, despite the contract providing for legal fees only in the instance of a summary proceeding involving a default, providing the defendant landlord, A.I.P. prevails. 2 of 6 FILED: WESTCHESTER COUNTY CLERK 01/11/2019 06:00 PM INDEX NO. 51573/2015 NYSCEF DOC. NO. 342 RECEIVED NYSCEF: 01/11/2019 THE ISSUES PRESENTED: 4. The issues before the court are threefold. First, does CPLR §6301 apply to motions for Preliminary Injunctions (as plaintiff maintains,) or does CPLR §6201 apply (as maintained by defendant)? 5. Second, in order to prevail on an application for a Preliminary Iñjüñction, must a plaintiff show (as plaintiff claims,) the danger of irreparable harm without an injunction, the probability of success in its underlying claim(s), and that the balance of equities favor the plaintiff; or as defendant asserts, must plaintiff offer specific evidence of an intent to defraud or an intent to frustrate the enforcement of a judgment by defendant? 6. Third, in view of the law favoring each party to pay for its own legal fees, are contractual provisions requiring one party to pay legal fees under certain specified coñditions, to be narrowly construed? THE LAW: Point I: only CPLR 66301 is ap_plicable here 7. As specified in the Order to Show Cause drafted by plaintiff, and as spelled out in its supporting papers, plaintiff CDC moved pursuant to CPLR §6301 for a Prelliniñãry Injunction. The statute is titled, "§ 6301. Grounds for pre"-ª=nf injunction and temporary order." restraining The rest of the statute reads: A preliminary injunction may be granted in any action where it appears that the defendant threatens or is about to do, or is doing, procuring or suffering to be done, an act in violation of the plaintiffs rights respecting the subject of the action, and tending to render the judgment ineffectual, or in any action where the 3 of 6 FILED: WESTCHESTER COUNTY CLERK 01/11/2019 06:00 PM INDEX NO. 51573/2015 NYSCEF DOC. NO. 342 RECEIVED NYSCEF: 01/11/2019 plaintiff has demanded and would be entitled to a judgment restraining defendant from the commission or continuance of an act, which committed or continued during the pendency of the action, would produce injury to the plaintiff. A temporary restraining order may be granted pending a hearing for a preliminary injunction where it appears that it immediate and irreparable injury, loss or damage will result unless defendant is restrained before the hearing can be had. 8. By contrast, defendant A.I.P.'s opposition and cross-moving papers rely on CPLR §6201, and cite cases referring to that statute. That statute is titled, "§ 6201. Grounds for Attachment." In pertinent part, the statute reads: An order of sitachmeñt may be granted in any action, except a matrimonial action, where the plaintiff has demañded and would be entitled, in whole or in part, or in the alternative, to a money judgment against one or more defendants, when... 3. the defendant, with intent to defraud his creditors or frustrate the enforcement of a judgment that might be rendered in plaintiffs favor, has assigned, disposed of, encumbered or secreted property, or removed it from the state or is about to do any of these acts; 9. As noted, plaintiff moves (and indeed, defendant cross-moves) for a Preliminary Injunction. By the very titleand text of both statutes, itis clear that only CPLR §6301 applies to plaintiffs application. Plaintiff moved for a Preliminary Injunction. Plaintiff has not sought the harsh remedy of attachment, and indeed, has moved in the alternative for either a bond or placement of a portion of the proceeds of the anticipated sale of defendant's last asset, to afford the least inconvenient, least harsh measure possible to secure a judgment while avoiding such a judgment from being rendered ineffectual. Point II: the Standard for PreMmMs-y Iniunction 10. A Preliminary Injunction is not a punishment. Nor is itan attempt to change the relative positions of the parties. Indeed, rather than determine ultimate issues, the purpose of a Preliminary Injunction is just to preserve the status quo between parties until ultimate issues are decided. Swarts v. Board of Education, 42 Misc.2d 461, 249 N.Y.S.2d 44 (New York Supreme 4 of 6 FILED: WESTCHESTER COUNTY CLERK 01/11/2019 06:00 PM INDEX NO. 51573/2015 NYSCEF DOC. NO. 342 RECEIVED NYSCEF: 01/11/2019 Court, 1964); St. Paul Fire & Marine Ins. Co. v. York Claims Serv., 308 A.D.2d 347, 765 N.Y.S.2d 573 (1st Dept., 2003. 11. Thus, interpreting CPLR §6301, the requisite showing for entitlement to a Preliminary Injunction is less than the showing required for the harsher remedy of attachment. The Courts have long held, "to be entitled to preliminary injunction, plaintiffs had to show a probability of success, danger of irreparable injury in the absence of injunction, and a balance of favor." equities in their Aetna Ins. Co. v. Capasso, 75 N.Y.2d 860, 552 N.Y.S.2d 918, 552 N.E.2d 166 (1990); Nobu Next Door. LLC v. Fine Arts Hous., Inc., 4 N.Y.3d 839, 800 N.Y.S.2d 48, 833 N.E.2d 191 (2005); Town of Goshen v. Serdarevic, 17 A.D.3d 576, 793 N.Y.S.2d 485 (2nd Dept., 2005). Intent, unlike the requisite showing for attackñêist, is simply not required to obtain a Preliminary Injunction. Point III: Contractual Provisions Concerning Legal Fees are Strictly Construed attorneys' 12. In general, parties typically have to pay for their own fees, win, lose or draw. It is well settled law in New York State that a prevailing party in a lawsuit, may not recover legal fees from the losing party, unless it is authorized by statute, agreement or court rule. U.S. Underwriters Ins. Co. v. City Club Hotel. LLC, 3 N.Y.3d 592, 789 N.Y.S.2d 470, 822 N.E.2d 777 (2004); Chapel v. Mitchell, 84 N.Y.2d 345, 349, 837 N.Y.S.2d 634 (1st Dept., 2007); Hooper Assoc. v. AGS Computers, 74 N.Y.2d 487, 549 N.Y.S.2d 365, 548 N.E.2d 903 (1989). 13. As New York favors parties paying their own way, contract and commercial lease attorneys' provisions pertaining to the award of fees to the prevailing party are strictly construed. attorneys' Thus, when a contract provision (in a lease or otherwise) provides that fees are to be given to a prevailing party, in case of a default, fees will not be awarded for matters unrelated to parties' the losing default(s). Andrews 44 Coffee Shops Inc. v. TST/TMW 405 Lexington. L.P., 5 of 6 FILED: WESTCHESTER COUNTY CLERK 01/11/2019 06:00 PM INDEX NO. 51573/2015 NYSCEF DOC. NO. 342 RECEIVED NYSCEF: 01/11/2019 40 A.D.3d 544, 837 N.Y.S.2d 634 (1st Dept, 2007); Gottlieb v. Such, 293 A.D.2d 297, 740 N.Y.S.2d 44 (1st Dept., 2002). 14. Consistent with the cases above, where the contract provision relied upon by the attorneys' defendant landlord A.I.P. in its claim for fees, specifically states that it pertains to proceediñgs" "defaults" "summary and by the Tenant, and where this case is not a summary proceeding, nor does it pertain to default by the plaintiff, strict construction of the contract attorneys' provision bars recovery of fees. WHEREFORE, it is respectfully requested that this Honorable Court issue an Order directing the parties to proceed to jury selection and upon completion of jury selection, try this action before a jury. Respectfully Submitted, John U. H. Blumenstock, Esq. GALLO VITUCCI KLAR LLP Attorneys for the Plaintiff CDC DEVELOPMENT PROPERTIES, INC. 90 Broad Street, 12th floor New York, New York 10004 683 - 7100 (212) 6 of 6