Landlord & Tenant

AppDiv, First Dept.

(Opinion by Moskowitz, J.)

In an action by prospective landlord against prospective commercial tenant for breach of a lease agreement, tenant appealed from Supreme Court's award of partial summary judgment to prospective landlord. The Appellate Division affirmed, holding that tenant's anticipatory breach made it unnecessary to determine whether landlord was ready, willing, and able to perform.

Prospective landlord planned to buy the subject building, but was unwilling to do so until it had a committed commercial tenant. Landlord entered into a letter agreement with prospective tenant on Aug. 12, 2008, acknowledging that landlord did not yet own the building, but intended to contract the building shortly after executing the lease. The agreement also made it clear that landlord was unwilling to execute the contract to buy the building until after signing of the lease with tenant. The agreement provided that if landlord did not sign a contract to acquire the property by Sept. 15, 2008, or did not close on the property by Sept. 14, 2009, tenant could walk away from the agreement without liability. Six days later, on Aug. 18, 2008, the parties executed the contemplated lease, and tenant's parent company executed a guarantee of all obligations under the lease and side letter. On Aug. 27, 2008, landlord contracted to purchase the building. Then, on June 15, 2009, tenant's lawyer sent landlord a notice that tenant would not take possession of the premises, complaining that landlord did not own the building. Tenant also asked for rescission of the agreement. Landlord then brought this action for anticipatory breach of the lease and side letter, seeking damages totaling $20 million. Supreme Court awarded summary judgment against both the tenant and the guarantor on the issue of liability. Supreme Court also denied tenant's motion to compel discovery both from the landlord and the non-party seller with respect to landlord's willingness and ability to close on the sale contract. Tenant and guarantor appealed both from the grant of summary judgment and from denial of the discovery motion.

In affirming, the Appellate Division held that because of tenant's anticipatory breach, landlord's ability to close on the sale contract is irrelevant, both with respect to liability and with respect to damages. The court emphasized that tenant had expressly agreed that landlord had until Sept. 14, 2009 to close on the deal, and tenant breached before giving landlord an opportunity to perform. Moreover, the court emphasized that a party cannot prevent the fulfillment of a contract condition and then rely on failure of that condition as a defense to a breach of contract claim. Finally, the court held that tenant's breach triggered guarantor's liability under the guaranty.

COMMENT

In American List Corp. v. U.S. News & World Report Inc. 75 N.Y.2d 38, the Court of Appeals held that when a party anticipatorily repudiates a contract, the non-breaching party may recover damages without proving its ability to perform the contract when performance would have come due. U.S. News & World Report Inc. contracted to rent from American List mailing lists of the names of college students for 10 years. After paying American List for a year and a half, U.S. News indicated that it would no longer pay. The Court of Appeals held that Supreme Court had mistakenly discounted American List's damages to factor in the risk that American List would be unable to perform the contract in the future. In no uncertain terms, the court wrote that in cases on anticipatory breach, “[t]he nonrepudiating party need not ' tender performance nor prove its ability to perform the contract in the future.” Id. at 44. In 150/160 Assoc. v. Mojo-Stumer Architects Inc., 174 A.D.2d 658, the court applied the rule in the landlord-tenant context. When the tenant who had signed a 10-year lease to begin in the future anticipatorily breached by informing the landlord that it would not take possession, the court held that tenant was responsible for three months' rent, representing the time it took the landlord to re-let the premises to another tenant. The court found that tenant had anticipatorily breached, and held that landlord was neither required to tender performance nor prove its ability to perform.

Despite American List, a number of cases have held that, after an anticipatory breach, the non-breaching party cannot recover unless it shows that it was ready, willing, and able to perform. For instance, in Emposimato v. CIFC Acquisition Corp, 932 N.Y.S.2d 33, a recent First Department case, after the court concluded that plaintiff had anticipatorily breached a stock purchase agreement, the court denied defendant summary judgment on its counterclaim because it failed to demonstrate that but for the alleged wrongful repudiation, it would have been ready, willing and able to fulfill its obligations under the SPA. The court never cited or discussed American List. In Randolph Equities LLC v. Carbon Capital Inc., 648 F. Supp. 2d 507, the federal court denied summary judgment on plaintiff's claim for losses resulting from defendant's anticipatory repudiation of its commitment to provide a loan. Unlike the court in Emposimato, the court cited American List, but noted that other courts had not followed it, and held that plaintiff would have to establish that it was ready, willing, and able to close on the loan in order to recover damages. See also Ross Bicycles v. Citibank, 200 A.D.2d 379 (holding that non-breaching party would be entitled to recover so long as it could establish, but for the wrongful repudiation, that it would have been ready, willing, and able to fulfill its obligations).

The court in RSB Bedford Associates, following American List, held that plaintiff did not have to prove that it could have closed on the date of the repudiation. American List, however, was a case in which plaintiff had performed services for over a year before defendant announced that it would no longer perform. In RSB Bedford, by contrast, performance had not yet started. In this respect, the case more closely resembled Randolph Equities and Emposimato. Moreover, even Randolph Equities and Emposimato would not have required plaintiff to prove that it could have closed on the date of repudiation; instead, the issue for damages is whether the plaintiff could have closed on Sept.14, 2009 as provided by the contract. Thus, Corbin on Contracts, ' 978 (Ability to Perform Remains a Condition Even Though Actual Tender of Performance is Eliminated) specifically distinguishes being ready and willing at the date of repudiation from having the ability to perform when the time comes.

Failure to Renew on Time

135 E. 57th St. LLC v. Daffy's Inc.

NYLJ 11/25/11

AppDiv, First Dept.

(Opinion by Saxe, J.)

In landlord's action for a judgment declaring that tenant had failed to timely renew its lease, landlord appealed from Supreme Court's determination that tenant was entitled to equitable relief permitting it to renew the lease. The Appellate Division affirmed, holding that tenant was entitled to equitable relief to avoid a forfeiture.

Tenant entered into a retail lease for its retail store on Nov. 7, 1994. The lease term was to expire on Jan. 31, 2011, but the lease gave tenant the option for two five-year renewal terms, the first of which had to be exercised no later than Jan. 31, 2010. Tenant did not provide written notice until Feb. 4, 2010, because its controller failed to calendar the option date. Landlord took the position that the renewal was untimely, and brought this declaratory judgment action. Supreme Court issued a declaration excusing tenant's lateness, relying on the alterations tenant had made to the premises to establish that tenant would suffer a forfeiture unless it were permitted to exercise its renewal option.

In affirming, the Appellate Division found no support in the record for a finding that tenant had made significant alterations to the space. Nevertheless, the court concluded that preservation of tenant's long-standing location for a retail business justified equitable relief from the untimely renewal notice. The loss of good will that might result if tenant were unable to find a suitable alternative location constituted a forfeiture and merited equitable relief.

COMMENT

New York courts grant equitable relief from late exercise of the renewal option if the default was caused by an honest mistake or was otherwise excusable, non-renewal would result in a forfeiture to the tenant, and the landlord would not be prejudiced by the tenant's default. The delay is excusable if it was inadvertent or if it was caused by the tenant's negligence, but in J. N. A. Realty Corp. v. Cross Bay Chelsea, Inc., 42 N.Y.2d 392, the Court of Appeals indicated, in dictum, that an intentional delay seeking to exploit market conditions would not be excused. In J.N.A. Realty itself, the Court of Appeals held that the tenant's default was a result of a “mere venial inattention” and therefore the four-and-a-half-month delay was excusable.

Forfeiture would result when the tenant made valuable improvements to the leased premises with the intent to renew the lease, or when non-renewal of the lease would cause the tenant a substantial loss, including a loss of goodwill. For example, in J. N. A. Realty, the tenant made valuable improvements to the premises in the amount of $55,000, and some of the expenditures were made after the option to renew had expired. On these facts the Court of Appeals concluded that refusing to grant equitable relief would result in a forfeiture to the tenant because the improvements were made in reliance on the ability to renew the lease. On the other hand, in Soho Development Corp. v. Dean & DeLuca Inc., 131 A.D.2d 385, the First Department held that strict adherence to the renewal option's time requirement would not result in a forfeiture to the tenant because all valuable improvements to the premises were made at the commencement of the lease, and hence it was not clear that they were made in reliance on the lease renewal option; the court concluded that the improvements were likely amortized during the initial lease term. Moreover, the availability of alternative locations in the same area, combined with Dean & DeLuca's brand recognition, precluded an argument that loss of the lease at issue would result in substantial loss of goodwill.

Although J.N.A. Realty suggests that equitable relief is not available to tenant when prejudice to landlord would result, courts have construed prejudice narrowly. Loss of the “windfall” resulting from the ability to rent for market value rather than the rent specified in the option provision of the lease does not constitute prejudice, presumably because by giving tenant the option, landlord assumed the risk that landlord would not be able to reap market rent at the expiration of the initial lease period. Instead, courts insist on some reliance by landlord on tenant's failure to exercise the option on time. (See Nanuet National Bank, Respondent, v. Saramo Holding Co., 153 AD2d 957, indicating that loss of financial windfall does not preclude award of equitable relief). Thus, a landlord who has negotiated a new lease with an interested tenant before the original tenant exercises the option to renew can show sufficient prejudice to avoid equitable relief. Thus, in Dan's Supreme Supermarkets, Inc. v. Redmont Realty Co., 216 A.D.2d 512, the Second Department refused to award a preliminary injunction to tenant who attempted to exercise a renewal option nine months after it had expired, noting that landlord had already negotiated many key provisions of a lease with a new tenant at a higher rate and received approval of the Chairman of the board of the new tenant. (see also Dan's Supreme Supermarkets, Inc. v. Redmont Realty Co., 240 AD2d 460, awarding summary judgment to same landlord after previously denying equitable relief to tenant). Similarly, when landlord had hired an architect to draw plans to reconfigure the premises in reliance on tenant's failure to timely exercise the renewal option, the First Department has held that landlord established sufficient prejudice to preclude an award of equitable relief to tenant. 5 East 41 Check Cashing Corp. v. Park & Fifth Owner, LLC, 44 AD3d 373. However, the Second Department's decision in Mass Properties Co. v. 1820 New York Ave. Corp., 152 AD2d 727, suggests that tenant might be able to avoid prejudice to landlord by reimbursing landlord for expenditures incurred in reliance on the tenant's lateness. In Mass Properties itself, the court held that any potential prejudice to the landlord was obviated when the trial court directed the tenant to reimburse the landlord for all proven expenses., which it incurred due to the tenant's default.

Prohibition on Short-Term Rentals

Dexter 345 Inc. v. State of New York

NYLJ 12/12/11

U.S. Ct. of Appeals, Second Circuit

(Opinion by Newman, J.)

In an action by owners contending that a 2010 amendment to the Multiple Dwelling Law violated the Takings, Due Process, and Equal Protection clauses of the constitution, owners appealed from the District Court's denial of their motion for a preliminary injunction. The Second Circuit affirmed, concluding that owners had failed to demonstrate irreparable injury.

Until 2010, Multiple Dwelling Law section 4(8) required that class A multiple dwellings be “occupied, as a rule, for permanent residence purposes.” Many owners of class A buildings interpreted this provision to permit rental of some portion of their buildings as budget hotel rooms. In 2009, the First Department endorsed this view, interpreting the rule to permit transient rentals so long as the majority of the rooms were rented for more than 30 days. City of New York v. 330 Continental LLC, 60 AD3d 226. In response to the decision, the state legislature amended MDL section 4(8) to prohibit rental of any unit in a class A multiple dwelling for less than 30 days. Owners of two class A multiple dwellings, both of whom rented out a large number of dwellings for transient purposes, then brought this action challenging the constitutionality of the state on taking, due process, and equal protection grounds. When owners sought a preliminary injunction, federal district court denied the requested relief. Owners appealed.

In affirming, the Second Circuit focused on owners' failure to prove that denial of a preliminary injunction would cause irreparable injury. The court noted that because both owners had been occupying their buildings for many years, it would be possible to compute monetary damages suffered as result of the new statute. Because money damages could make the owners whole, the owners had not established that any loss of good will would constitute irreparable injury.

Landlord Failed to Obtain Suitable Tenant for Neighboring Store

Staples the Office Superstore East, Inc. v. Flushing Town Center III, L.P.

NYLJ 12/12/11, p. 25, col. 6

AppDiv, Second Dept.

(memorandum opinion)

In tenant's action for a declaration that landlord failed to satisfy a cotenancy requirement in the lease, landlord appealed from Supreme Court's grant of summary judgment to tenant. The Appellate Division affirmed, holding that BJ's Wholesale Club is not a “national” retailer within the meaning of the lease.

Landlord entered into a commercial lease with tenant Staples. The lease required landlord to lease premises adjacent to the proposed Staples store to a national retailer having not less than 100 stores and occupying not less than 100,000 square feet. Landlord then leased the adjacent premises to BJ's. Staples then notified landlord that BJ's did not satisfy the lease's cotenancy requirement because it was not a national retailer. Staples then terminated its lease before taking possession of the premises, and brought this action for a declaration that it had properly terminated the lease. Supreme Court granted summary judgment to Staples.

In affirming, the Appellate Division credited the undisputed evidence that BJ's operated in only 15 states, largely along the eastern seaboard, and operated no stores west of Ohio. The court concluded that landlord had not raised triable issues of fact about whether BJ's was a “national retailer” within the meaning of the lease. As a result, Staples did not default in its obligation under the lease, and was entitled to summary judgment.

Tenant's Anticipatory Breach

RSB Bedford Associates, LLC v. Ricky's Williamsburg, Inc.

NYLJ 11/18/11

AppDiv, First Dept.

(Opinion by Moskowitz, J.)

In an action by prospective landlord against prospective commercial tenant for breach of a lease agreement, tenant appealed from Supreme Court's award of partial summary judgment to prospective landlord. The Appellate Division affirmed, holding that tenant's anticipatory breach made it unnecessary to determine whether landlord was ready, willing, and able to perform.

Prospective landlord planned to buy the subject building, but was unwilling to do so until it had a committed commercial tenant. Landlord entered into a letter agreement with prospective tenant on Aug. 12, 2008, acknowledging that landlord did not yet own the building, but intended to contract the building shortly after executing the lease. The agreement also made it clear that landlord was unwilling to execute the contract to buy the building until after signing of the lease with tenant. The agreement provided that if landlord did not sign a contract to acquire the property by Sept. 15, 2008, or did not close on the property by Sept. 14, 2009, tenant could walk away from the agreement without liability. Six days later, on Aug. 18, 2008, the parties executed the contemplated lease, and tenant's parent company executed a guarantee of all obligations under the lease and side letter. On Aug. 27, 2008, landlord contracted to purchase the building. Then, on June 15, 2009, tenant's lawyer sent landlord a notice that tenant would not take possession of the premises, complaining that landlord did not own the building. Tenant also asked for rescission of the agreement. Landlord then brought this action for anticipatory breach of the lease and side letter, seeking damages totaling $20 million. Supreme Court awarded summary judgment against both the tenant and the guarantor on the issue of liability. Supreme Court also denied tenant's motion to compel discovery both from the landlord and the non-party seller with respect to landlord's willingness and ability to close on the sale contract. Tenant and guarantor appealed both from the grant of summary judgment and from denial of the discovery motion.

In affirming, the Appellate Division held that because of tenant's anticipatory breach, landlord's ability to close on the sale contract is irrelevant, both with respect to liability and with respect to damages. The court emphasized that tenant had expressly agreed that landlord had until Sept. 14, 2009 to close on the deal, and tenant breached before giving landlord an opportunity to perform. Moreover, the court emphasized that a party cannot prevent the fulfillment of a contract condition and then rely on failure of that condition as a defense to a breach of contract claim. Finally, the court held that tenant's breach triggered guarantor's liability under the guaranty.

COMMENT

In American List Corp. v. U.S. News & World Report Inc. 75 N.Y.2d 38, the Court of Appeals held that when a party anticipatorily repudiates a contract, the non-breaching party may recover damages without proving its ability to perform the contract when performance would have come due. U.S. News & World Report Inc. contracted to rent from American List mailing lists of the names of college students for 10 years. After paying American List for a year and a half, U.S. News indicated that it would no longer pay. The Court of Appeals held that Supreme Court had mistakenly discounted American List's damages to factor in the risk that American List would be unable to perform the contract in the future. In no uncertain terms, the court wrote that in cases on anticipatory breach, “[t]he nonrepudiating party need not ' tender performance nor prove its ability to perform the contract in the future.” Id. at 44. In 150/160 Assoc. v. Mojo-Stumer Architects Inc., 174 A.D.2d 658, the court applied the rule in the landlord-tenant context. When the tenant who had signed a 10-year lease to begin in the future anticipatorily breached by informing the landlord that it would not take possession, the court held that tenant was responsible for three months' rent, representing the time it took the landlord to re-let the premises to another tenant. The court found that tenant had anticipatorily breached, and held that landlord was neither required to tender performance nor prove its ability to perform.

Despite American List, a number of cases have held that, after an anticipatory breach, the non-breaching party cannot recover unless it shows that it was ready, willing, and able to perform. For instance, in Emposimato v. CIFC Acquisition Corp, 932 N.Y.S.2d 33, a recent First Department case, after the court concluded that plaintiff had anticipatorily breached a stock purchase agreement, the court denied defendant summary judgment on its counterclaim because it failed to demonstrate that but for the alleged wrongful repudiation, it would have been ready, willing and able to fulfill its obligations under the SPA. The court never cited or discussed American List. In Randolph Equities LLC v. Carbon Capital Inc. , 648 F. Supp. 2d 507, the federal court denied summary judgment on plaintiff's claim for losses resulting from defendant's anticipatory repudiation of its commitment to provide a loan. Unlike the court in Emposimato, the court cited American List, but noted that other courts had not followed it, and held that plaintiff would have to establish that it was ready, willing, and able to close on the loan in order to recover damages. See also Ross Bicycles v. Citibank, 200 A.D.2d 379 (holding that non-breaching party would be entitled to recover so long as it could establish, but for the wrongful repudiation, that it would have been ready, willing, and able to fulfill its obligations).

The court in RSB Bedford Associates, following American List, held that plaintiff did not have to prove that it could have closed on the date of the repudiation. American List, however, was a case in which plaintiff had performed services for over a year before defendant announced that it would no longer perform. In RSB Bedford, by contrast, performance had not yet started. In this respect, the case more closely resembled Randolph Equities and Emposimato. Moreover, even Randolph Equities and Emposimato would not have required plaintiff to prove that it could have closed on the date of repudiation; instead, the issue for damages is whether the plaintiff could have closed on Sept.14, 2009 as provided by the contract. Thus, Corbin on Contracts, ' 978 (Ability to Perform Remains a Condition Even Though Actual Tender of Performance is Eliminated) specifically distinguishes being ready and willing at the date of repudiation from having the ability to perform when the time comes.

Failure to Renew on Time

135 E. 57th St. LLC v. Daffy's Inc.

NYLJ 11/25/11

AppDiv, First Dept.

(Opinion by Saxe, J.)

In landlord's action for a judgment declaring that tenant had failed to timely renew its lease, landlord appealed from Supreme Court's determination that tenant was entitled to equitable relief permitting it to renew the lease. The Appellate Division affirmed, holding that tenant was entitled to equitable relief to avoid a forfeiture.

Tenant entered into a retail lease for its retail store on Nov. 7, 1994. The lease term was to expire on Jan. 31, 2011, but the lease gave tenant the option for two five-year renewal terms, the first of which had to be exercised no later than Jan. 31, 2010. Tenant did not provide written notice until Feb. 4, 2010, because its controller failed to calendar the option date. Landlord took the position that the renewal was untimely, and brought this declaratory judgment action. Supreme Court issued a declaration excusing tenant's lateness, relying on the alterations tenant had made to the premises to establish that tenant would suffer a forfeiture unless it were permitted to exercise its renewal option.

In affirming, the Appellate Division found no support in the record for a finding that tenant had made significant alterations to the space. Nevertheless, the court concluded that preservation of tenant's long-standing location for a retail business justified equitable relief from the untimely renewal notice. The loss of good will that might result if tenant were unable to find a suitable alternative location constituted a forfeiture and merited equitable relief.

COMMENT

New York courts grant equitable relief from late exercise of the renewal option if the default was caused by an honest mistake or was otherwise excusable, non-renewal would result in a forfeiture to the tenant, and the landlord would not be prejudiced by the tenant's default. The delay is excusable if it was inadvertent or if it was caused by the tenant's negligence, but in J. N. A. Realty Corp. v. Cross Bay Chelsea, Inc., 42 N.Y.2d 392, the Court of Appeals indicated, in dictum, that an intentional delay seeking to exploit market conditions would not be excused. In J.N.A. Realty itself, the Court of Appeals held that the tenant's default was a result of a “mere venial inattention” and therefore the four-and-a-half-month delay was excusable.

Forfeiture would result when the tenant made valuable improvements to the leased premises with the intent to renew the lease, or when non-renewal of the lease would cause the tenant a substantial loss, including a loss of goodwill. For example, in J. N. A. Realty, the tenant made valuable improvements to the premises in the amount of $55,000, and some of the expenditures were made after the option to renew had expired. On these facts the Court of Appeals concluded that refusing to grant equitable relief would result in a forfeiture to the tenant because the improvements were made in reliance on the ability to renew the lease. On the other hand, in Soho Development Corp. v. Dean & DeLuca Inc., 131 A.D.2d 385, the First Department held that strict adherence to the renewal option's time requirement would not result in a forfeiture to the tenant because all valuable improvements to the premises were made at the commencement of the lease, and hence it was not clear that they were made in reliance on the lease renewal option; the court concluded that the improvements were likely amortized during the initial lease term. Moreover, the availability of alternative locations in the same area, combined with Dean & DeLuca's brand recognition, precluded an argument that loss of the lease at issue would result in substantial loss of goodwill.

Although J.N.A. Realty suggests that equitable relief is not available to tenant when prejudice to landlord would result, courts have construed prejudice narrowly. Loss of the “windfall” resulting from the ability to rent for market value rather than the rent specified in the option provision of the lease does not constitute prejudice, presumably because by giving tenant the option, landlord assumed the risk that landlord would not be able to reap market rent at the expiration of the initial lease period. Instead, courts insist on some reliance by landlord on tenant's failure to exercise the option on time. ( See Nanuet National Bank, Respondent, v. Saramo Holding Co. , 153 AD2d 957, indicating that loss of financial windfall does not preclude award of equitable relief). Thus, a landlord who has negotiated a new lease with an interested tenant before the original tenant exercises the option to renew can show sufficient prejudice to avoid equitable relief. Thus, in Dan's Supreme Supermarkets, Inc. v. Redmont Realty Co., 216 A.D.2d 512, the Second Department refused to award a preliminary injunction to tenant who attempted to exercise a renewal option nine months after it had expired, noting that landlord had already negotiated many key provisions of a lease with a new tenant at a higher rate and received approval of the Chairman of the board of the new tenant. ( see also Dan's Supreme Supermarkets, Inc. v. Redmont Realty Co., 240 AD2d 460, awarding summary judgment to same landlord after previously denying equitable relief to tenant). Similarly, when landlord had hired an architect to draw plans to reconfigure the premises in reliance on tenant's failure to timely exercise the renewal option, the First Department has held that landlord established sufficient prejudice to preclude an award of equitable relief to tenant. 5 East 41 Check Cashing Corp. v. Park & Fifth Owner, LLC, 44 AD3d 373. However, the Second Department's decision in Mass Properties Co. v. 1820 New York Ave. Corp., 152 AD2d 727, suggests that tenant might be able to avoid prejudice to landlord by reimbursing landlord for expenditures incurred in reliance on the tenant's lateness. In Mass Properties itself, the court held that any potential prejudice to the landlord was obviated when the trial court directed the tenant to reimburse the landlord for all proven expenses., which it incurred due to the tenant's default.

Prohibition on Short-Term Rentals

Dexter 345 Inc. v. State of New York

NYLJ 12/12/11

U.S. Ct. of Appeals, Second Circuit

(Opinion by Newman, J.)

In an action by owners contending that a 2010 amendment to the Multiple Dwelling Law violated the Takings, Due Process, and Equal Protection clauses of the constitution, owners appealed from the District Court's denial of their motion for a preliminary injunction. The Second Circuit affirmed, concluding that owners had failed to demonstrate irreparable injury.

Until 2010, Multiple Dwelling Law section 4(8) required that class A multiple dwellings be “occupied, as a rule, for permanent residence purposes.” Many owners of class A buildings interpreted this provision to permit rental of some portion of their buildings as budget hotel rooms. In 2009, the First Department endorsed this view, interpreting the rule to permit transient rentals so long as the majority of the rooms were rented for more than 30 days. City of New York v. 330 Continental LLC, 60 AD3d 226. In response to the decision, the state legislature amended MDL section 4(8) to prohibit rental of any unit in a class A multiple dwelling for less than 30 days. Owners of two class A multiple dwellings, both of whom rented out a large number of dwellings for transient purposes, then brought this action challenging the constitutionality of the state on taking, due process, and equal protection grounds. When owners sought a preliminary injunction, federal district court denied the requested relief. Owners appealed.

In affirming, the Second Circuit focused on owners' failure to prove that denial of a preliminary injunction would cause irreparable injury. The court noted that because both owners had been occupying their buildings for many years, it would be possible to compute monetary damages suffered as result of the new statute. Because money damages could make the owners whole, the owners had not established that any loss of good will would constitute irreparable injury.

Landlord Failed to Obtain Suitable Tenant for Neighboring Store

Staples the Office Superstore East, Inc. v. Flushing Town Center III, L.P.

NYLJ 12/12/11, p. 25, col. 6

AppDiv, Second Dept.

(memorandum opinion)

In tenant's action for a declaration that landlord failed to satisfy a cotenancy requirement in the lease, landlord appealed from Supreme Court's grant of summary judgment to tenant. The Appellate Division affirmed, holding that BJ's Wholesale Club is not a “national” retailer within the meaning of the lease.

Landlord entered into a commercial lease with tenant Staples. The lease required landlord to lease premises adjacent to the proposed Staples store to a national retailer having not less than 100 stores and occupying not less than 100,000 square feet. Landlord then leased the adjacent premises to BJ's. Staples then notified landlord that BJ's did not satisfy the lease's cotenancy requirement because it was not a national retailer. Staples then terminated its lease before taking possession of the premises, and brought this action for a declaration that it had properly terminated the lease. Supreme Court granted summary judgment to Staples.

In affirming, the Appellate Division credited the undisputed evidence that BJ's operated in only 15 states, largely along the eastern seaboard, and operated no stores west of Ohio. The court concluded that landlord had not raised triable issues of fact about whether BJ's was a “national retailer” within the meaning of the lease. As a result, Staples did not default in its obligation under the lease, and was entitled to summary judgment.