Delshah 60 Ninth, LLC v. Free People of PA LLC

Background

This opinion concerns a commercial rent dispute arising from the first months of the COVID-19 pandemic. In an earlier order, the court granted summary judgment for Delshah on liability and referred damages to Magistrate Judge Sarah Cave for an inquest, meaning a proceeding to determine the amount of damages. In that earlier order, the court treated several affirmative defenses in Free People’s answer as abandoned, including the defense that Delshah had failed to mitigate its damages.

Motion for Reconsideration

Free People moved for reconsideration of the decision treating the failure-to-mitigate defense as abandoned. It argued that neither party raised the defense in the summary-judgment briefing and that Magistrate Judge Cave’s Report and Recommendation did not address it.

The court agreed that it had erred in treating the defense as abandoned. It explained that the issue had not been raised in Delshah’s summary-judgment briefing or in Delshah’s objections to the Report and Recommendation. The court also noted that failure to mitigate concerns damages, not liability, and that Delshah agreed the mitigation issue could be addressed during the damages inquest under the parties’ lease.

Ruling

Judge Furman granted Free People’s motion for reconsideration. The court reinstated the failure-to-mitigate defense and directed the clerk to terminate the reconsideration motion from the docket. This opinion did not change the earlier summary judgment on liability or decide the amount of damages.