Commercial Tenant Services, Inc. v. Penske Business Media, LLC

Background

Commercial Tenant Services, Inc. (CTS) and Penske Business Media, LLC (PBM) entered into an agreement under which CTS would audit PBM’s building operating expenses, rent taxes, and related charges. The agreement provided that CTS would receive 30% of refunds, credits, savings, or other benefits obtained by PBM as a result of CTS’s findings.

PBM leased several floors in a Manhattan building. In 2019, CTS identified a possible real-estate-tax overcharge involving the tenth floor. The alleged overcharge resulted from the landlord’s failure to account for a New York City tax abatement. CTS claimed that the landlord later reduced PBM’s real-estate-tax liability for other floors because of CTS’s finding and that CTS was therefore owed $215,372.27 in fees, plus interest.

CTS sued PBM for breach of contract, payment based on the value of services provided, a declaration of the parties’ rights, and attorneys’ fees. CTS moved for summary judgment on its contract and attorneys’ fees claims. PBM cross-moved for partial summary judgment, arguing that it was not liable for fees connected to the second, third, fourth, fifth, fourteenth, sixteenth, nineteenth, and twenty-fourth floors and seeking judgment on CTS’s contract, payment, and declaratory-judgment claims concerning those floors. PBM did not move for summary judgment concerning the tenth floor.

Court’s analysis

The court applied New York law. It held that the agreement covered past or existing overcharges, not future or hypothetical overcharges. But the agreement also stated that future reductions in bills or lease liabilities caused by changes in the landlord’s calculation method could count as refunds when calculating CTS’s fees.

For the second, third, fourteenth, sixteenth, nineteenth, and twenty-fourth floors, the court found genuine disputes of material fact. The evidence did not establish whether the landlord changed its method for calculating PBM’s real-estate taxes for those floors or, if it did, whether the change resulted from CTS’s tenth-floor finding. The court also found an ambiguity in the agreement about whether PBM’s right to decide not to pursue a refund eliminated its obligation to pay CTS. Because those factual and legal issues could be resolved by a jury, the court denied summary judgment to both sides on those issues.

For the fourth and fifth floors, the court granted PBM summary judgment. CTS had not included those floors in its complaint, and the court held that CTS could not add claims concerning them merely by presenting new facts and theories in opposition to the motion. The court also granted PBM summary judgment on CTS’s payment claim because the written agreement covered the disputed services and alleged commissions. It granted PBM summary judgment on the declaratory-judgment claim because that claim duplicated the contract claim and would not provide a useful resolution of the dispute; the court declined to exercise jurisdiction over it.

Disposition

The court denied CTS’s motion for summary judgment in its entirety. It granted PBM’s motion for partial summary judgment in part and denied it in part. The court stated that the claims remaining for trial were CTS’s breach-of-contract claims concerning commissions for the second, third, fourteenth, sixteenth, nineteenth, and twenty-fourth floors, and CTS’s claim for attorneys’ fees. The court stated that PBM’s summary judgment disposed of CTS’s claims concerning the fourth and fifth floors, the payment theory, and declaratory judgment. The opinion scheduled trial to begin on March 13, 2023.