958 Avenue of the Americas, LLC v. ABASIC, S.A.

Background

958 Avenue of the Americas, LLC brought a breach-of-contract action against ABASIC, S.A., formerly ABASIC, S.L., and NTS W. USA Corp., doing business as Desigual. In an earlier order, the court granted 958 summary judgment on its first, second, and fourth causes of action and denied Defendants’ motion for partial summary judgment on their first through sixth defenses. The court directed additional briefing on damages, attorney’s fees, and indemnification under the sublease.

Motion for Reconsideration

Defendants moved under Federal Rule of Civil Procedure 54(b) for clarification or reconsideration of the period for which they were liable. They argued that the Fifth Amendment to the sublease gave NTS an unconditional right to terminate the sublease as of April 1, 2022, and that NTS’s exercise of that right ended NTS’s and ABASIC’s rent obligations as of that date.

The court denied the motion. It explained that Defendants had not opposed 958’s amendment seeking rent, additional rent, and legal fees through October 31, 2022, and that 958 had clearly sought summary judgment for amounts owed through that date. The court also noted that Defendants were raising the termination argument and supporting exhibits for the first time after the summary-judgment proceedings, even though they could have raised the issue earlier. Under the rules governing reconsideration, parties generally may not present new facts or arguments that they previously failed to present. The court concluded that Defendants had waived the argument.

Damages

958 sought $2,709,397.09 in rent and additional-rent damages. For the period through October 31, 2022, it sought $1,102,676.31 in rent, gross-sales rent, real-estate taxes, repair costs and fines, interest, and late fees, plus $172,479.96 in additional interest through November 24, 2023. Those amounts totaled $1,189,288.70 for the period through October 31, 2022.

958 also sought $1,521,059.23 for November 1, 2022, through September 30, 2023. That request included fixed rent, real-estate taxes, renovation work, a tenant-improvement allowance, a brokerage commission, interest, and late fees. Because 958 had re-let the building to M&J Trimming Company, Inc. under a 15-year lease, the court agreed with Defendants that the reletting costs should be prorated to the 12 months overlapping the original sublease period. The court stated that 958 was entitled to recover 12/180, or 6.67%, of those reletting costs. The court also ruled that 958 was not entitled to damages for July through September 2023, when the replacement tenant’s rent overlapped with the original sublease period, because 958 did not seek damages for those months.

Attorney’s Fees and Indemnification

958 sought $101,445 in attorney’s fees from ABASIC under the guaranty, as amended by the Fifth Amendment. Because the billing summary appeared reasonable and Defendants did not dispute the request, the court held that 958 was entitled to $101,445 in attorney’s fees from ABASIC.

The court rejected Defendants’ indemnification arguments. It had previously determined that 958 did not breach the sublease provision concerning the validity of the overlease, so Defendants were not entitled to indemnification under that provision. Defendants also argued that 958 breached the sublease’s covenant of quiet enjoyment because of an action involving the overlease. The court held that Defendants could not benefit from that covenant because NTS had defaulted on its rent obligations, which failed a condition required by the covenant.

Disposition

Defendants’ motion for reconsideration was DENIED. The court directed the parties to confer and submit a joint proposed judgment. The clerk was directed to close the motion.