FILED: NEW YORK COUNTY CLERK 07/28/ :05 PM INDEX NO /2017 NYSCEF DOC. NO. 55 RECEIVED NYSCEF: 07/28/2017

Transcription

1 FILED NEW YORK COUNTY CLERK 07/28/ PM INDEX NO /2017 NYSCEF DOC. NO. 55 RECEIVED NYSCEF 07/28/2017 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK X WEST 13 th STREET, LLC, Plaintiff, -against- 9 th AVENUE OWNERS, LLC, 9 th AVENUE DELAWARE OWNER LLC, AURORA CAPITAL ASSOCIATES, LLC, RESTORATION HARDWARE, INC. and RESTORATION HARDWARE HOLDINGS, INC., Defendants X Index No /2017 MEMORANDUM OF LAW IN SUPPORT OF RESTORATION HARDWARE, INC. S AND RH S MOTION TO DISMISS THE FIFTH CAUSE OF ACTION OF PLAINTIFF S COMPLAINT Defendants Restoration Hardware, Inc., and RH, incorrectly sued as Restoration Hardware Holdings, Inc. (collectively, Restoration Hardware ), submit this memorandum in support of their motion pursuant to New York Civil Practice Law & Rules ( CPLR ) Sections 3211(a)(1) and (7) to dismiss the Fifth Cause of Action of Plaintiff West 13 th Street, LLC s ( Plaintiff ) Complaint the only cause of action alleged against Restoration Hardware for failure to state a cause of action. I. Introduction Plaintiff s only claim against Restoration Hardware is for allegedly tortiously interfering with the construction access agreement between Plaintiff and Defendants 9 th Avenue Owners, LLC and 9 th Avenue Delaware Owners, LLC, (together with Defendant Aurora Capital Associates, LLC, the Owner Defendants ). The claim fails to state a cause of action because Plaintiff has not alleged at least two of the requisite elements for tortious interference. Specifically, Plaintiff fails to allege adequately (i) that Owner Defendants breached the access agreement and (ii) that Restoration Hardware intentionally procured any such breach. Plaintiff s claim of an alleged breach of a so-called Roof Plan is not supported by the actual terms of the 1 of 9

2 FILED NEW YORK COUNTY CLERK 07/28/ PM INDEX NO /2017 NYSCEF DOC. NO. 55 RECEIVED NYSCEF 07/28/2017 access agreement, which trumps anything to the contrary in the Complaint. Nothing in the access agreement can be interpreted to limit Owner Defendants to a specified Roof Plan that prohibits installing certain heating, ventilation, and air conditioning equipment or restaurant exhaust equipment on the subject building (collectively, the HVAC Equipment ). Accordingly, Plaintiff s claim against Restoration Hardware fails as a matter of law and should be dismissed. II. Plaintiff s Allegations Plaintiff s action concerns a newly constructed four-story building located at 9 Ninth Avenue in Manhattan owned by the Owner Defendants (the Subject Building ). Compl. 18. Restoration Hardware leases the Subject Building from Owner Defendants and presently is completing construction of a Restoration Hardware gallery there. Compl. 14, 18, 20. Plaintiff owns a building adjacent to the Subject Building (the Adjacent Property ). Compl. 18. Because of the proximity of the two buildings, Plaintiff and Owner Defendants, after eight months of negotiations, entered into a Construction Access Agreement, dated April 14, 2016 (the Access Agreement ), that allowed Owner Defendants access to the Adjacent Property during the construction of the Subject Building in order to install vibration monitors and protection over the Adjacent Property. Compl. 27, 28. Restoration Hardware is not a party to the Access Agreement. Compl. 27. The Access Agreement curiously is not attached to the Complaint but, as discussed below, because the Agreement is the crux of Plaintiff s claims, it can be considered by the Court for purposes of this motion to dismiss. (The Access Agreement is attached as Exhibit 2 to the accompanying Affirmation of Cary B. Samowitz, dated July 28, 2017, submitted in support of this motion.) The Complaint alleges that Owner Defendants are violating or will violate the Access Agreement because Restoration Hardware has installed or will install the HVAC Equipment for the Restoration Hardware gallery and an associated rooftop café on the roof of the Subject 2 2 of 9

3 FILED NEW YORK COUNTY CLERK 07/28/ PM INDEX NO /2017 NYSCEF DOC. NO. 55 RECEIVED NYSCEF 07/28/2017 Building. Compl. 2, 4. Specifically, Plaintiff asserts that the HVAC Equipment will interfere with Plaintiff s use of its own rooftop deck by emitting unacceptable noises and odors and by blocking views from Plaintiff s rooftop deck and 5th floor windows. Compl. 45. Plaintiff asserts four claims against Owner Defendants, all of them arising out of the Access Agreement (i) breach of the Access Agreement, (ii) anticipatory repudiation of the Access Agreement, (iii) breach of the implied covenant of good faith and fair dealing, and (iv) fraud in the inducement. The only claim asserted against Restoration Hardware in this action is for an alleged tortious interference with the Access Agreement. Compl Plaintiff does not, and cannot, allege that Restoration Hardware owes any duties under the Access Agreement. Nonetheless, Plaintiff seeks to enforce the Access Agreement against Restoration Hardware by asserting that Restoration Hardware s development activities are inconsistent with Owner Defendants duties under the putative Roof Plan allegedly established by the Access Agreement. According to Plaintiff, because Restoration Hardware is carrying out construction that allegedly would violate the Roof Plan if performed by Owner Defendants, then Restoration Hardware procured a breach of the Access Agreement by Owner Defendants. But the Access Agreement does not limit construction to the Roof Plan. The actual Access Agreement, which trumps Plaintiff s mischaracterizations, lacks any of the restrictions that Plaintiff alleges are contained in the Roof Plan. As a result, Plaintiff fails to allege a breach of the Access Agreement or that Restoration Hardware procured a breach. III. Argument A. The Motion to Dismiss Standard. For purposes of considering Restoration Hardware s motion, this Court must presume the allegations of the Complaint to be true and accord them every favorable inference, except 3 3 of 9

4 FILED NEW YORK COUNTY CLERK 07/28/ PM INDEX NO /2017 NYSCEF DOC. NO. 55 RECEIVED NYSCEF 07/28/2017 insofar as they consist of bare legal conclusions or are inherently incredible or flatly contradicted by documentary evidence. Gotham Boxing Inc. v. Finkel, 18 Misc. 3d 1114(A), 2008 WL , at *4 (Sup. Ct. N.Y. Cnty. 2008) (quoting Beattie v. Brown & Wood, 243 A.D.2d 395, 663 N.Y.S.2d 199 (1st Dep t 1997)). In assessing the validity of claims for breach of contract, the Court is not limited to the plaintiff s characterizations of a contract; it may and should consider the terms of the contract itself. See McMahan v. McMahan, 131 A.D.3d 593, 594, 15 N.Y.S.3d 190, 192 (2d Dep t 2015) (affirming dismissal where the agreement submitted by the defendant did not contain the terms that the plaintiff alleged ); Deer Consumer Prods., Inc. v. Little, 32 Misc. 3d 1243(A), 2011 WL , at *4 (Sup. Ct. N.Y. Cnty. 2011) ( [I]t is undisputed that the Court... may consider documents referred to in a Complaint. ). A motion to dismiss should be granted where it is based on the terms of an unambiguous contract that indisputably undermines the causes of action. McMahan, 131 A.D.3d at 594, 15 N.Y.S.3d at 192; Country Pointe at Dix Hills Home Owners Ass n, Inc. v. Beechwood Org., 80 A.D.3d 643, 649, 915 N.Y.S.2d 117 (2d Dep t 2011) (affirming dismissal in part based on terms of agreement, despite the allegations to the contrary made by the plaintiff); McGuire v. Sterling Doubleday Enters., L.P., 19 A.D.3d 660, 662, 799 N.Y.S.2d 65, 66 (2d Dep t 2005) (affirming dismissal based on terms of agreement supplied by the defendants). Where the documentary evidence contradicts the plaintiff s allegations, the pertinent issue is whether the plaintiff has a cause of action, not whether the plaintiff has stated one. McMahan, 131 A.D.3d at 594, 15 N.Y.S.3d at of 9

5 FILED NEW YORK COUNTY CLERK 07/28/ PM INDEX NO /2017 NYSCEF DOC. NO. 55 RECEIVED NYSCEF 07/28/2017 The Access Agreement is the centerpiece of Plaintiff s Complaint, and thus should be considered on this motion. 1 When the actual Access Agreement requirements are examined, as opposed to Plaintiff s inaccurate characterization of them in its Complaint, it is readily apparent that the acts alleged by Plaintiff do not violate the Agreement. B. Plaintiff s Complaint Fails to State a Cause of Action for Tortious Interference with Contractual Relations Because the Access Agreement Does Not Restrict the Restoration Hardware Roof Layout. Tortious interference with contract arises only when (1) there is a valid contract between the plaintiff and a third party, (2) the defendant has knowledge of that contract, (3) the defendant intentionally procures a breach by the plaintiff s counterparty, (4) there is a lack of justification, (5) there is a breach of the contract, and (6) there are damages that flow from the breach. Liberty on Warren LLC v. Dragon Estates Condo, 2016 N.Y. Slip Op (U), 2016 WL , at *2 (Sup. Ct. N.Y. Cnty. June 15, 2016); see also Meghan Beard, Inc. v. Fadina, 82 A.D.3d 591, 592, 919 N.Y.S.2d 156, 158 (1st Dep t 2011). Without a breach of the Access Agreement, there can be no tortious interference with the Agreement. Flower Publ g Grp. LLC v. APOC, Inc., 2017 N.Y. Slip Op (U), 2017 WL , at *3 (Sup. Ct. N.Y. Cnty. June 6, 2017); JJM Sunrise Auto., LLC v. Volkswagen Grp. of Am., Inc., 46 Misc. 3d 755, , 997 N.Y.S.2d 270 (Sup. Ct. Nassau Cnty. 2014). Moreover, even if a breach of contract could somehow be attributed to Owner Defendants, the Complaint fails to establish that Restoration Hardware unjustifiably procured a breach of the Access Agreement. Plaintiff alleges at best that Restoration Hardware is using 1 Although the Access Agreement decidedly is not a restrictive easement, Plaintiff treats it as one. In this respect, the law favors free and unencumbered use of real property, and covenants restricting use are strictly construed against those seeking to enforce them. Courts will enforce restraints only where their existence has been established with clear and convincing proof by the dominant landowner. Witter v. Taggart, 78 N.Y.2d 234, , 573 N.Y.S.2d 146 (1991) (citations omitted). 5 5 of 9

6 FILED NEW YORK COUNTY CLERK 07/28/ PM INDEX NO /2017 NYSCEF DOC. NO. 55 RECEIVED NYSCEF 07/28/2017 the Subject Building in a legal manner consistent with Restoration Hardware s rights as a tenant. Liberty on Warren, 2016 WL , at *2 (finding that a defendant was justified when exercising a legal right); Tess Color Hair Salon, Inc. v. First Sigma Capital Inc., 2008 N.Y. Slip. Op (U), 2008 WL , at *6 (Sup. Ct. N.Y. Cnty. July 31, 2008) (holding that the defendant did not interfere with the plaintiff s lease by legally accessing the property under a preexisting right even though this impeded the plaintiff s intended use of the property). Plaintiff alleges that Restoration Hardware procured Owner Defendants breach of the Access Agreement by installing the HVAC units in a two-tier layout and by installing kitchen exhaust equipment, which Plaintiff alleges was prohibited by the Access Agreement. Compl. 2. The problem with these allegations is the Access Agreement does not prohibit the two-tier HVAC layout, nor does it prohibit the kitchen exhaust equipment installed by Restoration Hardware. Plaintiff maintains that Paragraph 17 of the Access Agreement incorporates a supposed Roof Plan as Exhibit G, and that Owner Defendants are required to build whatever this Roof Plan in Exhibit G shows. This interpretation of Paragraph 17 s purpose is nonsense. It is readily apparent that Paragraph 17 s reference to the Exhibit G Roof Plan is solely to show the location of the partition Owner Defendants agreed to install around some of the HVAC Equipment, and nothing more. Exhibit G is, as Paragraph 17 refers to it, a Partition Plan. Paragraph 17 states, in relevant part Project Owner agrees to (i) erect a partition to vertically enclose and soundproof the entirety of the Rooftop Equipment in accordance with the plans and specifications attached hereto as Exhibit G (the Partition ); and (ii) ensure that the Rooftop Equipment is installed on appropriate noise and vibration isolators. The Partition design shall be subject to the review and reasonable approval of Adjacent Owner. Project Owner agrees to ensure that the Partition and noise isolation equipment are continually maintained in a good state of repair. The provisions of this Paragraph 17 shall survive termination of this Agreement. Project Owner further agrees to use reasonable efforts to direct rooftop exhaust equipment (including, without limitation, fans, blowers and precipitators) 6 6 of 9

7 FILED NEW YORK COUNTY CLERK 07/28/ PM INDEX NO /2017 NYSCEF DOC. NO. 55 RECEIVED NYSCEF 07/28/2017 installed on the Project Premises away from the Adjacent Premises. In addition, at Adjacent Owner s option, Project Owner shall install a screen either on top of, or in front of the Partition (the Screen ). The design of the Screen shall be subject to approval by Adjacent Owner and the Screen shall be soundproofed with QB-12 EXT, as specified in Ex. G. The Screen design shall further be subject to approval by the New York City Landmarks Preservation Commission. Access Agreement 17 (emphasis in original). Paragraph 17 is very specific. It only requires that (a) the HVAC Equipment be installed on isolators, (b) a partition be installed around the HVAC Equipment, and (c) reasonable efforts be used to direct any rooftop exhaust equipment away from Plaintiff s property. Not only does Paragraph 17 lack a prohibition against two-tier HVAC Equipment, it imposes no requirements regarding the layout of the HVAC Equipment at all. Plaintiff nonetheless claims that Paragraph 17 s incorporation of Exhibit G extends beyond showing the location of the HVAC Equipment partition and requires that Owner Defendants build the entire Restoration Hardware rooftop exactly as depicted in Exhibit G. Compl. 75. This is a gross distortion of the Access Agreement. In reality, Exhibit G is referenced in Paragraph 17 solely to show the partition that Owner Defendants agreed to install around the HVAC Equipment. The only reference to Exhibit G in the Access Agreement is, Project Owner agrees to (i) erect a partition to vertically enclose and soundproof the entirety of the Rooftop Equipment in accordance with the plans and specifications attached hereto as Exhibit G (the Partition ) (emphasis in original). This sentence clearly relates only to the partition and does not require Owner Defendants or Restoration Hardware to install all HVAC Equipment exactly as depicted on Exhibit G. Plaintiff s logic would require Owner Defendants to construct the entire rooftop exactly as depicted on Exhibit G, and to maintain that exact rooftop layout in perpetuity. It is obvious that the mechanical equipment is depicted on Exhibit G only because the parties used a 7 7 of 9

8 FILED NEW YORK COUNTY CLERK 07/28/ PM INDEX NO /2017 NYSCEF DOC. NO. 55 RECEIVED NYSCEF 07/28/2017 preexisting rooftop drawing to draw the partition to show its location surrounding the HVAC Equipment. As evidence of this intent, the title Acoustic Treatment Drawing Prepared by SoundSense was added to the drawing. Indeed, Plaintiff s Complaint itself alleges that [p]lans and specifications for installation of the partition on the roof of the Project Premises were captured on the Roof Plan, which was incorporated into the Agreement as Exhibit G, together with the cut sheet for QB-12 EXT [the acoustic insulation for the partition]. Compl. 32 (emphasis added). If Plaintiff had intended to restrict the layout of all of the rooftop HVAC Equipment to what is depicted on Exhibit G, for all of time, it certainly would not have used limiting language relating to the partition when referring to Exhibit G. From the unambiguous language of Paragraph 17, there is no doubt that the sole purpose of Exhibit G is to show the partition that Owner Defendants agreed to install. 2 See DDS Partners, LLC v. Celenza, 6 A.D.3d 347, 348, 775 N.Y.S.2d 319 (1st Dep t 2004) ( [W]hen interpreting a contract, words and phrases used by the parties must be given their plain meaning. ). The same argument governs Plaintiff s claim that the exhaust system installed by Restoration Hardware violates the Access Agreement. Plaintiff relies on the same Exhibit G rooftop partition drawing to maintain that the exhaust as installed violates the Access Agreement. Yet, the Exhibit G partition drawing does not show the exhaust. The only reference to exhaust in the Access Agreement is a requirement that Owner Defendants use reasonable efforts to direct the exhaust away from Plaintiff s property. Plaintiff s Complaint does not allege that Owner Defendants failed to exercise reasonable efforts to direct the exhaust away from the Adjacent Property. 2 Plaintiff does not allege a failure to install the partition. 8 8 of 9

9 FILED NEW YORK COUNTY CLERK 07/28/ PM INDEX NO /2017 NYSCEF DOC. NO. 55 RECEIVED NYSCEF 07/28/2017 The Access Agreement, when examined, does not impose the restrictive Roof Plan that underpins the breach alleged in Plaintiff s Complaint. As a result, Plaintiff has not alleged a breach of the Access Agreement or that Restoration Hardware has procured a breach. IV. Conclusion For the reasons stated above, Restoration Hardware, Inc. and RH, incorrectly sued as Restoration Hardware Holdings, Inc., request this Court to dismiss the Fifth Cause of Action of Plaintiff s Complaint with prejudice, for the award of their costs incurred, and for all other relief the Court deems proper. Dated New York, New York July 28, 2017 DLA PIPER LLP (US) By /s/ Cary B. Samowitz Cary B. Samowitz cary.samowitz@dlapiper.com 1251 Avenue of the Americas New York, New York Tel. (212) Fax (212) and- Dennis Powers (pro hac vice) dennis.powers@dlapiper.com 444 West Lake Street, Suite 900 Chicago, IL Phone (312) Fax (312) Counsel for the Restoration Hardware Defendants EAST\ of 9