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Soundview Cinemas, Inc. v. AC I Soundview, LLC

Supreme Court of New York, Second Department

April 26, 2017

Soundview Cinemas, Inc., respondent,
v.
AC I Soundview, LLC, etc., defendant, LBUBS 2007-C7 Shore Road, LLC, appellant. Index No. 601464/14

          Kilpatrick Townsend & Stockton LLP, New York, NY (Keith M. Brandofino and Maximiliano Rinaldi of counsel), for appellant.

          Abrams, Fensterman, Fensterman, Eisman, Formato, Ferrara & Wolf, LLP, Lake Success, NY (Howard Fensterman and Keith J. Singer of counsel), for respondent.

          RANDALL T. ENG, P.J., L. PRISCILLA HALL, SHERI S. ROMAN, SYLVIA O. HINDS-RADIX, JJ.

          DECISION & ORDER

         In an action, inter alia, to recover damages for breach of a commercial lease, the defendant LBUBS 2007-C7 Shore Road, LLC, appeals, as limited by its brief, from so much of an order of the Supreme Court, Nassau County (Adams, J.), entered February 3, 2015, as granted that branch of the plaintiff's motion which was pursuant to CPLR 6301 to preliminarily enjoin it from terminating the subject lease, and directed the plaintiff to pay rent in the reduced sum of $10, 000 per month in lieu of the full amount of rent due under the lease from January 2015 until final resolution of the action.

         ORDERED that the order is reversed insofar as appealed from, on the law and in the exercise of discretion, with costs, that branch of the plaintiff's motion which was pursuant to CPLR 6301 to preliminarily enjoin the defendant LBUBS 2007-C7 Shore Road, LLC, from terminating the subject lease is denied, and the provision directing the plaintiff to pay rent in the reduced sum of $10, 000 per month in lieu of the full amount of rent due under the lease from January 2015 until final resolution of the action is vacated.

         The plaintiff operates a multiplex movie theater in a shopping center located in Port Washington, known as the Soundview Marketplace. The plaintiff alleges that prior to taking occupancy of the premises in March 2013, it expended more than $750, 000 on renovations. As a means of reimbursing the plaintiff for its renovation costs, the plaintiff's lease with its landlord, the defendant LBUBS 2007-C7 Shore Road, LLC (hereinafter LBUBS), permitted the plaintiff to occupy the premises for a period of approximately 10 months without paying rent. After the expiration of the rent abatement period on January 31, 2014, the lease required the plaintiff to pay a base rent of $20, 049.17 per month, plus certain additional costs. Approximately two months after the expiration of the rent abatement period, the plaintiff commenced this action against both LBUBS and the prior owner of the premises alleging, inter alia, that they had breached the lease by delivering the premises with an inoperative and dilapidated HVAC system, and by failing to repair leaks in the roof of the premises which had caused flooding.

         On June 6, 2014, after the plaintiff failed to remit rent payments due under the lease, LBUBS served the plaintiff with a notice of termination effective June 13, 2014. On June 9, 2014, the Supreme Court issued a temporary restraining order enjoining LBUBS from terminating the lease for 45 days, and directing LBUBS, in essence, to resolve problems related to the HVAC system and roof leaks. Prior to the expiration of the temporary restraining order, the plaintiff moved, inter alia, pursuant to CPLR 6301 for a preliminary injunction staying the termination of the lease. In support of the motion, the plaintiff's principal alleged that the plaintiff had suffered a "significant loss of business" as a result of problems caused, inter alia, by the malfunctioning HVAC system, and that "[a]ny inability" to pay rent was due to the defendants' breach of the lease. In the order appealed from, the Supreme Court granted that branch of the plaintiff's motion, and further directed the plaintiff to pay rent in the reduced sum of $10, 000 per month in lieu of the full amount of rent due under the subject lease from January 2015 until final resolution of the action. LBUBS appeals.

         Although the purpose of a preliminary injunction is to preserve the status quo pending a trial, the remedy is considered a drastic one, which should be used sparingly (see Armanida Realty Corp. v Town of Oyster Bay, 126 A.D.3d 894; Trump on the Ocean, LLC v Ash, 81 A.D.3d 713, 715; McLaughlin, Piven, Vogel v Nolan & Co., 114 A.D.2d 165, 172). As a general rule, the decision to grant or deny a preliminary injunction lies within the sound discretion of the Supreme Court (see Doe v Axelrod, 73 N.Y.2d 748, 750; Chase Home Finance, LLC v Cartelli, 140 A.D.3d 911; Matter of Armanida Realty Corp. v Town of Oyster Bay, 126 A.D.3d 894). In exercising that discretion, the Supreme Court must determine if the moving party has established: (1) a likelihood of success on the merits, (2) irreparable harm in the absence of an injunction, and (3) a balance of the equities in favor of the injunction (see Aetna Ins. Co. v Capasso, 75 N.Y.2d 860, 862; W.T. Grant Co. v Srogi, 52 N.Y.2d 496, 517; Trump on the Ocean, LLC v Ash, 81 A.D.3d at 715).

         Furthermore, "[t]he obligation of a commercial tenant to pay rent is not suspended if the tenant remains in possession of the leased premises, even if the landlord fails to provide essential services" (Westchester County Indus. Dev. Agency v Morris Indus. Bldrs., 278 A.D.2d 232, 232; see Prakhin v Fulton Towers Realty Corp., 122 A.D.3d 601, 603; but see 34-35th Corp. v 1-10 Indus. Assoc., LLC, 16 A.D.3d 579, 580). Before a tenant may withhold rent, the tenant must prove actual or constructive eviction (see Prakhin v Fulton Towers Realty Corp., 122 A.D.3d at 603; 34-35th Corp. v 1-10 Indus. Assoc., LLC, 16 A.D.3d at 580; Westchester County Indus. Dev. Agency v Morris Indus. Bldrs., 278 A.D.2d at 232).

         Applying these principles here, we find that the Supreme Court improvidently exercised its discretion in granting the plaintiff preliminary injunctive relief staying termination of the lease, and in further directing the plaintiff to pay rent in the reduced sum of $10, 000 per month in lieu of the full amount of rent due under the lease. Although the plaintiff may ultimately be successful on the merits, it failed to establish that it would suffer irreparable harm or that the balance of the equities favor an injunction since its alleged damages are compensable in money damages and capable of calculation (see Trump on the Ocean, LLC v Ash, 81 A.D.3d at 716). Moreover, the plaintiff's vague and conclusory allegations regarding its inability to pay the full rent under the lease were insufficient to establish irreparable injury (see id.). Furthermore, the court went beyond preserving the status quo, which is the essence of a preliminary injunction, and impermissibly rewrote the terms of the lease by directing that the plaintiff be permitted to pay only part of the rent due under the lease while it continued to occupy the premises (see Board of Mgrs. of the Britton Condominium v C.H.P.Y. Realty Assoc., 101 A.D.3d 917, 919; 306 Rutledge, LLC v City of New York, 90 A.D.3d 1026, 1028; Trump on the Ocean, LLC v Ash, 81 A.D.3d at 717).

         Accordingly, the Supreme Court should have denied that branch of the plaintiff's motion which was pursuant to CPLR 6301 to preliminarily enjoin LBUBS from terminating the lease, and should not have directed the plaintiff to pay rent in the reduced sum of $10, 000 per month in lieu of the full amount ...


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