This decision has been referenced in a table in the New York Supplement.
Stuart S. Perry, Esq., Stuart S. Perry, PC, for plaintiffs.
Thomas Torto, Esq., for Defendant Soho Room Group, LLC.
S. Edmund Resciniti, Esq. Garden City, for Defendants Gans and Progressive.
BARBARA JAFFE, J.
By notice of motion dated May 14, 2012, defendant Soho Room Group, LLC (Soho) moves pursuant to CPLR 3212 for an order granting it summary judgment on its counterclaim to retain, as liquidated damages, plaintiffs' contract down payment for the purchase of a restaurant/bar, and dismissing plaintiffs' complaint as to it. Plaintiffs oppose, and by notice of cross motion dated June 8, 2012, move pursuant to CPLR 3212 for an order granting them summary judgment on their claim for the return of the down payment, and sanctions against Soho. Soho opposes.
By notice of motion dated May 22, 2012, defendants Gans and Progressive Business Brokers (Progressive) move pursuant to CPLR 3212 for an order granting them summary judgment dismissing the complaint and all cross-claims against them and sanctions against plaintiffs and/or their attorneys. The motions are consolidated for disposition.
I. UNDISPUTED FACTS
Soho owns and operates Soho Room, a restaurant/bar located on the ground floor of a residential cooperative building at 203 Spring Street in Manhattan. By lease dated July 20, 2005, Soho leases the premises from 124 Commercial, LP. (Affirmation of Thomas Torto, Esq., dated May 14, 2012; Affidavit of Joseph Desena, dated May 10, 2012 [Desena Affid.]; NYSCEF Doc. 19).
On March 4, 2011, Joseph Desena, Soho's principal, agreed to sell Soho Room to plaintiff Park, a computer programmer, on behalf of Gnosh, Inc. (Gnosh) for $550,000. Upon execution of the agreement, Park paid Soho's lawyer Martin Mehler $55,000 for the contract down payment, now held in escrow. ( Id. ). Defendant Progressive, through its chief executive officer Gans, was the broker for the transaction.
Pursuant to paragraph 13 of the agreement, the closing of the sale was conditioned on the State Liquor Authority's (SLA) approval of Park's application for an on-premises liquor license, and an assignment to Park by Soho's landlord of the existing lease and an extension for an additional five years after expiration of the existing lease at similar terms and conditions. And, " if the on-premises liquor license is not obtained, through no willful default or misrepresentation of [plaintiffs], or the assignment of the lease is not obtained, all payments made hereunder shall be returned." ( Id. ).
Pursuant to paragraph 14, the parties agreed that in the event plaintiffs' application for a liquor license was disapproved, so long as plaintiffs were not in default of the agreement, they would have the right to cancel the agreement within 10 days of the date of SLA's denial, by written notice to Soho. And upon such cancellation, Soho would promptly return all monies paid under the agreement, with no further liability resulting to either party " unless of a willful default or misrepresentation by [plaintiffs] in which event the contract down payment shall be retained by [Soho] as and for its liquidated damages." ( Id. ).
In May 2011, defendants Gans, Park, Park's attorney, and Desena met to discuss the assignment and extension of the lease. At the meeting, Park and his lawyer were told that the landlord wanted to meet with the individual who would be responsible for running the restaurant/bar on a daily basis. By email dated May 19, 2011, Desena stated that it was expected that Park would bring his financial records, an experienced restaurant worker, and a menu to the landlord, and by email dated May 24, 2011, Park agreed to do so. By email dated May 20, 2011, Park's lawyer agreed that Park and one Logan McHenry, an experienced restaurant worker, should meet the landlord. ( Id. ).
At a Community Board Two (CB2) meeting held in June 2011, Desena learned that Soho Room's liquor license required that the sale of liquor on the premises stop at two a.m., and not at four a.m. He and Mehler explained to Park and his attorney that there would be no problem amending the license to extend the hour of sales to four a.m.
At the meeting held on June 23, 2011, all were present but McHenry. Among other issues discussed, the landlord reiterated to Park her desire to meet McHenry, articulating her concerns that the restaurant/bar succeed so that rent would be regularly paid. ( Id., Affidavit of Liz Herzog, dated March 20, 2012).
In an email to the co-op board dated July 7, 2011, the landlord forwarded Soho's notice that it intends " to assign their lease with 124 Commercial to a new party who intends to ...