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FILED: NEW YORK COUNTY CLERK 04/13/ :02 AM INDEX NO /2020 NYSCEF DOC. NO. 63 RECEIVED NYSCEF: 04/12/2021

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The following e-filed documents, listed by NYSCEF document number 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 50, 53, 54, 55, 56, 57, 58, 59, 60, and 62 (Motion 002)

were read on this motion to/for

REARGUMENT/CROSS MOTION FOR LEAVE TO AMEND COMPLAINT .

The defendant landlord (the landlord) moves pursuant to CPLR 2221(d) for leave to

reargue its opposition to the motion of the plaintiff tenant (the tenant) for a Yellowstone

injunction (First National Stores, Inc. v Yellowstone Shopping Center, Inc., 21 NY2d 630 [1968])

that had been granted by order dated December 21, 2020. The tenant opposes the motion, and

cross-moves pursuant to CPLR 3025(b) for leave to amend the complaint both to streamline its

prior allegations and to add a cause of action for reformation of the underlying lease, based on

an alleged one-digit mutual mistake in the lease’s tax escalation provisions.

The landlord’s motion is granted to the extent that leave to reargue is granted and, upon

reargument, the court (a) adheres to its determination in the December 21, 2020 order granting

the Yellowstone injunction, and (b) directs the tenant to post an undertaking in the sum of

$7,500 as a condition of continuing the injunction, as such an amount is rationally related to the

quantum of damages that the landlord would sustain were it to be determined that the injunction

was wrongfully issued. The landlord’s motion otherwise is denied. The tenant’s cross motion is

granted, the tenant is granted leave to serve an amended complaint in the form set forth in

SUPREME COURT OF THE STATE OF NEW YORK

NEW YORK COUNTY

PRESENT: HON. JOHN J. KELLEY PART IAS MOTION 56EFM

Justice

---X INDEX NO. 653967/2020

MOTION DATE 04/12/2021

MOTION SEQ. NO. 002

DECISION AND ORDER 188 AVE. A TAKE OUT FOOD CORP. and TARIK FALLOUS

Plaintiffs,

v

-LUCKY JAB REALTY CORP.,

Defendant.

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INDEX NO. 653967/2020 188 AVE. A TAKE OUT FOOD CORP. v LUCKY JAB REALTY CORP. Page 2 of 7 MOT SEQ 002

Docket Entry No. 56, and that amended complaint is deemed served upon the landlord as of the

date of entry of this order.

In addition, in accordance with L 2021, ch 73, this action is stayed until June 12, 2021 to

give the tenant an opportunity to serve and file a declaration of hardship should it be so advised.

Hence, the tenant’s obligation to post the required undertaking is stayed until 20 days after June

12, 2021, or until July 2, 2021.

As explained in detail in the court’s December 21, 2020 order, the tenant entered into a

commercial lease with the landlord on May 1, 2017 for the purpose of operating an indoor dining

restaurant in the landlord’s premises. On March 16, 2020, Governor Andrew Cuomo issued

Executive Order 202.3 that, in relevant part, suspended indoor dining within the State of New

York until further notice to prevent the spread of the COVID-19 pandemic. In accordance with

the Executive Order, the tenant suspended its indoor restaurant operations, and has not

employed the premises for such purposes at least until November 2020. In particular, the

tenant was compelled to shut its business due to the COVID-19 pandemic in March 2020, and

partially reopened for take-out service in mid-May, but could not sustain its business, thus again

closing down until mid-July, when it reopened solely for outdoor dining services.

During April 2020, the landlord, without express permission from the tenant, drew down

the sum of $14,935 from the tenant’s security deposit, and applied it to allegedly outstanding

rent. In May 2020, and again in June 2020, July 2020, and August 2020, the landlord similarly

drew down the sum of $15,383.05 each month from the tenant’s security deposit and applied it

to allegedly outstanding rent. On August 7, 2020, the landlord served a 15-day notice upon the

tenant, demanding that the tenant replenish the security deposit, and notifying the tenant and its

principal that “if Tenant fails to replenish the Security Deposit on or before August 24, 2020,

Landlord will terminate this Lease pursuant to Article 17(1) of the Lease.”

The tenant and its principal commenced this action on August 20, 2020, seeking a

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virtue of the fact that the premises were rendered partially unusable due to a “casualty,” a term

that was left undefined in the lease, but construed by the plaintiffs to include the state of

emergency in New York engendered by the COVID-19 pandemic and consequent suspension

of all indoor dining for several months and (2) directing the landlord to replenish the tenant’s

security deposit and pay a rent credit to the tenant, inasmuch as the terms of the subject lease

did not permit the landlord to demand replenishment of the deposit from the tenant when the

landlord drew it down.

As explained in the court’s prior order, the court was without authority to permit the

landlord to seek ejectment of the tenant from the subject leasehold by virtue of both the

Governor’s series of executive orders placing a moratorium on commercial evictions, a

moratorium that lasted from March 20, 2020 until January 29, 2021, and Admin. Code of City of

N.Y. (Ad Code) § 22-902(a), a local law that prohibits commercial landlords from engaging in

commercial harassment of a commercial tenant that has been adversely affected by the

COVID-19 pandemic. The court held that, in any event, the tenant established its entitlement to

Yellowstone relief under common-law principles. The court now notes that, on March 9, 2021,

and thus subsequent to the entry of its prior order, the Legislature codified the Governor’s

moratorium until May 1, 2021 (see L 2021, ch 73).

The landlord now argues that the issuance of a Yellowstone injunction presupposes that

the tenant remain obligated to continue paying rent as a condition of the injunction. Although

the court explained in its prior order that a tenant is not required to establish its ability to cure a

default in its obligations under a commercial lease prior to obtaining a Yellowstone injunction, it

neglected to explain that, unlike the general requirements for obtaining a preliminary injunction

in other contexts, a tenant is not required to demonstrate a likelihood of success on the merits of

its action in order to secure a Yellowstone injunction (see Sokoloff Arts Found. Inc. v Nur Ashki

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INDEX NO. 653967/2020 188 AVE. A TAKE OUT FOOD CORP. v LUCKY JAB REALTY CORP. Page 4 of 7 MOT SEQ 002

Realty Corp., 102 AD2d 737 [1st Dept 1984]). The court nonetheless analyzed and approved

the tenant’s contention that, even if it were obligated to make such a showing, it did so by,

among other things, demonstrating that the pandemic constituted a “casualty” within the

meaning of the subject lease that obviated its obligation to pay rent during the period of

emergency.

Consequently, the court rejects the landlord’s contention that the court erred in relieving

the tenant of its rent obligations during the continuation of the emergency in accordance with the

terms of a lease that was drafted by the landlord itself. Upon reargument, the court thus

adheres to its determination granting the requested Yellowstone injunction to the tenant and its

principal.

The landlord, however, correctly argues on this motion that, upon reargument, the court

should require the tenant to post an undertaking as a condition of the continuation of the

injunction (see 61 W. 62nd Owners Corp. v Harkness Apt. Owners Corp., 173 AD2d 372, 372

[1st Dept 1991]; see also Sokoloff Arts Found. Inc. v Nur Ashki Jerrahi Community, 2021 NY

Slip Op 01524]). The amount of the undertaking must be fixed in an amount that is “rationally

related to the quantum of damages which [landlord] would sustain in the event that [tenant] is

later determined not to have been entitled to the injunction” (61 W. 62nd Owners Corp. v

Harkness Apt. Owners Corp., 173 AD2d at 373; see CPLR 6212[b]; Margolies v Encounter, Inc.,

42 NY2d 475, 479 [1977]; Weitzen v 130 E. 65th St. Sponsor Corp., 86 AD2d 511, 511 [1st

Dept 1982]). In those Yellowstone cases where, unlike here, a tenant continues to be obligated

to pay rent during the pendency of the injunction, it may be proper for a court to fix the

undertaking in the amount of unpaid rent plus interest, or even in a multiple of the amount of

unpaid rent (see 61 W. 62nd Owners Corp. v Harkness Apt. Owners Corp., 173 AD2d at 372).

Here, however, where the court has already determined that it is likely that the tenant will prevail

on the merits of its claim that its rent obligation was obviated pursuant to the terms of the lease,

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undertaking in the sum of $7,500, a sum that is equal to approximately 50% of one month’s rent

under the lease.

While, under normal circumstances, a tenant’s failure timely to post such an undertaking

would result in the denial or dissolution and vacatur of the preliminary injunction, on March 9,

2021, the New York State Legislature enacted L 2021, ch 73, which materially affects deadlines

otherwise applicable to actions and proceedings in which a claim for ejectment or eviction is

made. That statute, among other things, codified the anti-eviction provisions of the series of

Executive Orders that the Governor had issued from March 2020 through December 2020. The

statute stayed all commercial evictions and ejectments until May 1, 2021. The statute also

provides, in relevant part, that

“Any eviction proceeding pending on the effective date of this act, including eviction proceedings filed on or before March 7, 2020, or commenced within thirty days of the effective date of this act shall be stayed for at least sixty days, or to such later date that the chief administrative judge shall determine is necessary to ensure that courts are prepared to conduct proceedings in compliance with this act and to give tenants an opportunity to submit the

hardship declaration pursuant to this act. The court in each case shall promptly issue an order directing such stay and promptly mail the respondent a copy of the hardship declaration in English, and, to the extent practicable, the language in which the commercial lease or tenancy agreement was written or negotiated, if other than English”

(L 2021, ch 73, Part A, § 3). In other words, where, as here, a proceeding involving a

commercial tenant may result in ejectment or eviction, the proceeding must be stayed for 60

days to provide the tenant with an opportunity to serve and file a declaration of hardship in the

form annexed to this order. Hence, all proceedings in this action are stayed until June 12,

2021, and the court grants the tenant an additional 20 days after the stay is dissolved, or until

July 2, 2021, to post the undertaking.

Leave to amend a pleading is to be freely given absent prejudice or surprise resulting

from the amendment (see CPLR 3025[b]; McCaskey, Davies and Assocs., Inc v New York City

Health & Hospitals Corp., 59 NY2d 755 [1983]; 360 West 11th LLC v ACG Credit Co. II, LLC, 90

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INDEX NO. 653967/2020 188 AVE. A TAKE OUT FOOD CORP. v LUCKY JAB REALTY CORP. Page 6 of 7 MOT SEQ 002

2008]; Daniels v Kromo Lenox Assoc., 275 AD2d 608 [1st Dept 2000]; Bellini v Gesalle Realty

Corp., 120 AD2d 345 [1st Dept 1986]). Thus, leave to amend should granted unless the

proposed amended pleading is “palpably insufficient or clearly devoid of merit” (MBIA Ins. Corp.

v Greystone & Co., Inc., 74 AD3d 499, 500 [1st Dept 2010]; see Hill v 2016 Realty Assoc., 42

AD3d 432 [2d Dept 2007]) or the amendment would prejudice the opposing party (Blue

Diamond Fuel Oil Corp. v Lev Mgt. Corp., 103 AD3d 675, 676 [2d Dept 2013]). Here, the

proposed amended complaint is not palpably insufficient or clearly devoid of merit and would not

prejudice the defendant. In the first instance, the pleading seeks to streamline prior allegations.

It also seeks to add a cause of action for reformation of the lease based upon mutual mistake,

arising from the alleged mistranscription of one digit in the tax escalation provisions of the lease.

A court may reform a contract based on mutual mistake (see 106 Spring St. Owner, LLC v

Workspace, Inc., 188 AD3d 588, 589 [1st Dept 2020]). “A claim of mutual mistake is stated

where the allegations indicate that the parties have reached an oral agreement and, unknown to

either, the signed writing does not express that agreement” (Friedland Realty, Inc. v 416 W,

LLC, 120 AD3d 1185, 1186 [2d Dept 2014] [internal quotation marks omitted]; see 106 Spring St. Owner, LLC v Workspace, Inc., 188 AD3d at 589). Inasmuch as the tenant’s proposed new

cause of action for reformation is not “clearly devoid of merit,” leave to amend the complaint to

add that cause of action must be granted.

In light of the foregoing, it is

ORDERED that the defendant’s motion is granted to the extent that leave to reargue is

granted and, upon reargument, the court adheres to its prior determination in the order dated

December 21, 2020 granting the plaintiff’s motion for a Yellowstone injunction, and modifies that

order by adding a provision directing the plaintiff to post an undertaking with the court in the sum

of $7,500 in accordance herewith as a condition of the continuation of the injunction, and the

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ORDERED that the plaintiff’s cross motion is granted, the plaintiff is granted leave to

serve an amended complaint in the form set forth in Docket Entry No. 56, and that amended

complaint is deemed served upon the defendant on the date of entry of this order; and it is

further,

ORDERED that this action is stayed until June 12, 2021 to provide an opportunity to the

plaintiff to serve and file a declaration of hardship in the form annexed to this order; and it is

further,

ORDERED that, upon dissolution of the stay, the preliminary injunction is conditioned

upon the plaintiff’s posting of an undertaking in the sum of $7,500 on or before July 2, 2021;

such undertaking may be in the form of a surety bond or a deposit of cash, money order, or

bank check with the County Clerk of the County of New York, and such undertaking shall

remain in effect until further order of this court; and it is further,

ORDERED that in the event the undertaking is not posted in accordance herewith, the

injunction currently in force and effect shall be dissolved, and the plaintiff’s motion for a

preliminary injunction will be denied in its entirety.

This constitutes the Decision and Order of the court.

4/12/2021 $SIG$

DATE JOHN J. KELLEY, J.S.C.

MOTION: CASE DISPOSED X NON-FINAL DISPOSITION

GRANTED DENIED X GRANTED IN PART OTHER APPLICATION: SETTLE ORDER SUBMIT ORDER

CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT REFERENCE CROSS MOTION: CASE DISPOSED X NON-FINAL DISPOSITION

X GRANTED DENIED GRANTED IN PART OTHER APPLICATION: SETTLE ORDER SUBMIT ORDER

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NOTICE TO TENANT:

If you have lost income or had increased costs during the COVID-19 pandemic, or

moving would pose a significant health risk for you or a member of your household due

to an increased risk for severe illness or death from COVID-19 due to an underlying

medical condition, and you sign and deliver this hardship declaration form to your

landlord, you cannot be evicted until at least May 1, 2021 for nonpayment of rent

or for holding over after the expiration of your lease. You may still be evicted for

violating your lease by persistently and unreasonably engaging in behavior that

substantially infringes on the use and enjoyment of other tenants or occupants or

causes a substantial safety hazard to others.

If your landlord has provided you with this form, your landlord must also provide

you with a mailing address and e-mail address to which you can return this form. If

your landlord has already started an eviction proceeding against you, you can return

this form to either your landlord, the court, or both at any time. You should keep a

copy or picture of the signed form for your records. You will still owe any unpaid

rent to your landlord. You should also keep careful track of what you have paid and

any amount you still owe.

For more information about legal resources that may be available to you, go to

www.nycourts.gov/evictions/nyc/

or call 718-557-1379 if you live in New York City

or go to

www.nycourts.gov/evictions/outside-nyc/

or call a local bar association or

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TENANT’S DECLARATION OF HARDSHIP

DURING THE COVID-19 PANDEMIC

I am a tenant, lawful occupant, or other person responsible for paying rent, use

and occupancy, or any other financial obligation under a lease or tenancy agreement

at (address of dwelling unit):

YOU MUST INDICATE BELOW YOUR QUALIFICATION FOR EVICTION

PROTECTION BY SELECTING OPTION “A” OR “B”, OR BOTH.

A. I am experiencing financial hardship, and I am unable to pay my rent or

other financial obligations under the lease in full or obtain alternative

suitable permanent housing because of one or more of the following:

1. Significant loss of household income during the COVID-19 pandemic.

2. Increase in necessary out-of-pocket expenses related to performing

essential work or related to health impacts during the COVID-19 pandemic.

3. Childcare responsibilities or responsibilities to care for an elderly,

disabled, or sick family member during the COVID-19 pandemic have

negatively affected my ability or the ability of someone in my household

to obtain meaningful employment or earn income or increased my

necessary out-of-pocket expenses.

4. Moving expenses and difficulty I have securing alternative housing

make it a hardship for me to relocate to another residence during the

COVID-19 pandemic.

Index Number (if known/applicable):

County and Court (if known/applicable):

653967/2020

Supreme Court, New York County

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5. Other circumstances related to the COVID-19 pandemic have negatively

affected my ability to obtain meaningful employment or earn income

or have significantly reduced my household income or significantly

increased my expenses.

To the extent that I have lost household income or had increased expenses, any

public assistance, including unemployment insurance, pandemic unemployment

assistance, disability insurance, or paid family leave, that I have received since the

start of the COVID-19 pandemic does not fully make up for my loss of household

income or increased expenses.

B. Vacating the premises and moving into new permanent housing would

pose a significant health risk because I or one or more members of my

household have an increased risk for severe illness or death from COVID-19

due to being over the age of sixty-five, having a disability or having an

underlying medical condition, which may include but is not limited to

being immunocompromised.

I understand that I must comply with all other lawful terms under my tenancy,

lease agreement or similar contract. I further understand that lawful fees, penalties or

interest for not having paid rent in full or met other financial obligations as required

by my tenancy, lease agreement or similar contract may still be charged or collected

and may result in a monetary judgment against me. I further understand that my

landlord may be able to seek eviction after May 1, 2021, and that the law may provide

certain protections at that time that are separate from those available through this

declaration.

Signed:

Printed name:

Date signed:

NOTICE: You are signing and submitting this form under penalty of law. That

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