FILED: NEW YORK COUNTY CLERK 10/19/2016 04:59 PM INDEX NO. 653169/2016 NYSCEF DOC. NO. 11 RECEIVED NYSCEF: 10/19/2016 EXHIBIT 2
[FILED: NEW YORK COUNTY CLERK 08/29/2016 02:33 PMl NYSCEF DOC. NO. 6 INDEX NO. 653169/2016 RECEIVED NYSCEF: 08/29/2016 SUPREME COURT OF the STATE OF NEW YORK COUNTY OF NEW YORK NEW WTC RETAIL OWNER LLC, Plaintiff, -against- X Index No.: 653169/2016 VERIFIED ANSWER, AFFIRMATIVE DEFENSES, AND COUNTERCLAIMS PACHANGA, INC., Defendant. X Defendant, by its attorneys, Oved & Oved LLP, answers Plaintiffs complaint in this action (the Complaint ), upon information and belief, as follows:.1 1. Denies the allegations contained in paragraph 1 of the Complaint, except admits that Plaintiff purports to seek the relief set forth therein, but specifically denies that Plaintiff is entitled to such relief or any other relief against Defendant, and refers to the document referred to therein for the true and complete contents thereof. 2. The allegations in paragraph 2 of the Complaint contain conclusions of law and, therefore, no response is required. To the extent a response is deemed necessary, Defendant denies the allegations, except admits that Plaintiff seeks the relief set forth therein, but specifically denies that Plaintiff is entitled to such relief or any other relief against Defendant. 3. The allegations in paragraph 3 of the Complaint contain conclusions of law and, therefore, no response is required. To the extent a response is deemed necessary, Defendant denies tire allegations, except refers to the document referred to therein for the true and complete contents thereof. 4. The allegations in paragraph 4 of the Complaint contain conclusions of law and, therefore, no response is required. To the extent a response is deemed necessary, Defendant The introductory paragraph of the Complaint improperly refers to the Defendant as Dune London. 1 of 22
denies the allegations, except admits that Plaintiff seeks the relief set forth therein, but specifically denies that Plaintiff is entitled to such relief or any other relief against Defendant, and refers 5. Denies knowledge and information sufficient to form a belief as to the allegations contained in paragraph 5 of the Complaint. 6. 7. Admits the allegations contained in paragraph 6 of the Complaint. The allegations in paragraph 7 of the Complaint contain conclusions of law and, therefore, no response is required. To the extent a response is deemed necessary, Defendant denies knowledge and information sufficient to form a belief as to the allegations, and refers to the statutory provisions cited therein for the true and complete contents thereof. 8. The allegations in paragraph 8 of the Complaint contain conclusions of law and, therefore, no response is required. To the extent a response is deemed necessary, Defendant denies knowledge and information sufficient to form a belief as to the allegations, and refers to the statutory provisions cited therein for the true and complete contents thereof. 9. Denies the allegations contained in paragraph 9 of the Complaint, except refers 10. Denies the allegations contained in paragraph 10 of the Complaint, except refers to the document referred to therein for the tme and complete contents thereof. 11. Denies the allegations contained in paragraph 11 of the Complaint, except refers to the document referred to therein for the tme and complete contents thereof. 12. Denies the allegations contained in paragraph 12 of the Complaint, except refers Page 2 of 15 2 of 22
13. Denies the allegations contained in paragraph 13 of the Complaint, except refers 14. Denies the allegations contained in paragraph 14 of the Complaint, except refers 15. Denies the allegations contained in paragraph 15 of the Complaint, except refers 16. Denies the allegations contained in paragraph 16 of the Complaint, except refers 17. Denies the allegations contained in paragraph 17 of the Complaint, except refers 18. Denies the allegations contained in paragraph 18 of the Complaint, except refers 19. Denies the allegations contained in paragraph 19 of the Complaint, except refers 20. Denies the allegations contained in paragraph 20 of the Complaint, except refers 21. Denies the allegations contained in paragraph 21 of the Complaint, except refers 22. Denies the allegations contained in paragraph 22 of the Complaint, except refers 23. Denies the allegations contained in paragraph 23 of the Complaint, except refers 24. Denies the allegations contained in paragraph 24 of the Complaint. Page 3 of 15 3 of 22
25. Denies the allegations contained in paragraph 25 of the Complaint, except refers 26. Denies the allegations contained in paragraph 26 of the Complaint, except refers 27. Denies the allegations contained in paragraph 27 of the Complaint, except admits that Defendant did not take possession of the subject premises. 28. Denies the allegations contained in paragraph 28 of the Complaint. 29. Denies the allegations contained in paragraph 29 of the Complaint, except admits that Plaintiff purports to seek the relief set forth therein, but specifically denies that Plaintiff is entitled to such relief or any other relief against Defendant. 30. Repeats and realleges each and every admission, denial and statement in response to those paragraphs of the Complaint referred to in paragraph 30 thereof as though fully set forth herein. 31. 32. 33. 34. Denies the allegations contained in paragraph 31 of the Complaint. Denies the allegations contained in paragraph 32 of the Complaint. Denies the allegations contained in paragraph 33 of the Complaint. Denies the allegations contained in paragraph 34 of the Complaint, except admits that Plaintiff purports to seek the relief set forth therein, but specifically denies that Plaintiff is entitled to such relief or any other relief against Defendant. 35. Denies each and every allegation set forth in the so-called WHEREFORE paragraph, and specifically denies that Plaintiff is entitled to the relief stated therein or any other relief against the Defendant. Page 4 of 15 4 of 22
36. Denies each and every other allegation contained in the Complaint not expressly admitted in this answer. AFFIRMATIVE DEFENSES FIRST AFFIRMATIVE DEFENSE Plaintiff fails to state a cause of action for which relief may be granted. SECOND AFFIRMATIVE DEFENSE Plaintiffs claims are barred for lack of standing. THIRD AFFIRMATIVE DEFENSE Plaintiffs claims are barred based on Plaintiffs failure to comply with the conditions precedent to the delivery of possession of the subject premises. FOURTH AFFIRMATIVE DEFENSE Plaintiffs claims are barred based on Plaintiffs failure to comply with the conditions precedent necessary to assert of any of its claims against Defendant. FIFTH AFFIRMATIVE DEFENSE Plaintiff failed to deliver the subject premises in tenant-ready condition. SIXTH AFFIRMATIVE DEFENSE Plaintiff failed to perform and/or unreasonably delayed performance of its own obligations under the Lease. SEVENTH AFFIRMATIVE DEFENSE Plaintiff accepted surrender of the subject premises. EIGHTH AFFIRMATIVE DEFENSE The subject premises were deemed surrendered to Plaintiff by operation of law. Page 5 of 15 5 of 22
NINTH AFFIRMATIVE DEFENSE Plaintiffs claims are barred, in whole or in part, by Plaintiffs failure to mitigate its claimed damages, its entitlement to which being expressly denied. TENTH AFFIRMATIVE DEFENSE Plaintiffs claims are barred by the doctrine of mistake, frustration of purpose, impossibility and/or illegality. ELEVENTH AFFIRMATIVE DEFENSE Plaintiffs claims are barred to the extent of Plaintiff s fraud, fraudulent inducement, bad faith, misrepresentations, and/or unclean hands. TWELFTH AFFIRMATIVE DEFENSE Plaintiffs claims are barred by the doctrines of waiver, estoppel, or laches. THIRTEENTH AFFIRMATIVE DEFENSE Plaintiffs alleged injuries and/or damages, its entitlement to which being expressly denied, were caused by Plaintiffs own actions, omissions or conduct. FOURTEENTH AFFIRMATIVE DEFENSE Plaintiffs claims are barred, in whole or in part, by documentary evidence. FIFTEENTH AFFIRMATIVE DEFENSE Plaintiffs claims are barred because Plaintiff has failed to sustain any damages. SIXTEENTH AFFIRMATIVE DEFENSE Although Defendant does not owe any monies to Plaintiff, if Defendant is found to owe any monies to Plaintiff, whatever monies are said to be owed should be offset by the amounts awarded to Defendant on its counterclaims against Plaintiff. Page 6 of 15 6 of 22
RESERVATION OF RIGHTS Defendant gives notice that he intends to rely on any additional affirmative defenses that become available or apparent during discovery and thus reserves the right to amend this answer to assert such additional defenses. COUNTERCLAIMS Defendant, by way of counterclaims against Plaintiff, alleges as follows, upon information and belief: SUMMARY OF CLAIMS 1. Plaintiff, one of the world s largest shopping center companies, has fraudulently induced a small, privately held coffee shop business into signing a top-of-the-market lease in the newly constructed World Trade Center by expressly misrepresenting and omitting critical facts during the parties negotiations. Unbeknownst to Defendant at the time it signed the lease, Plaintiff knew full well that it had no viable plan or intention of delivering the subject premises to Defendant within the time frame or in the manner it had represented, and that Defendant s build-out costs would be more than twice what Defendant had estimated and projected. 2. When confronted with the fact that Defendant s reliance on these misrepresentations and omissions had a devastating effect on this small, family-owned business, Plaintiff doubled down on its own misconduct. Knowing that it would cause employees to lose their jobs and would cripple Defendant s operations, Plaintiff commenced a pre-emptive lawsuit improperly seeking over $5 Million in damages under the Lease, despite the fact that Defendant was never able to take possession of the subject premises. Page 7 of 15 7 of 22
3. Based on Plaintiffs misconduct, set forth more fully herein, and the damage that Plaintiff has caused to Defendant and its employees, Defendant seeks a judgment: (i) rescinding the lease; (ii) releasing the deposits and fees paid by Defendant under the lease; and (iii) awarding Defendant damages for fraud, negligent misrepresentation, breach of contract, and breach of the covenant of good faith and fair dealing. FACTS A. The Lease and the Premises 4. On or about December 20, 2013, Plaintiff and Defendant entered into a lease (the Lease ). Under the Lease, Defendant agreed to lease from Plaintiff a 1,200 square foot space located at the premises known as Level 1 of the World Trade Center, Store # 1400 (the Premises ) to operate a FIKA brand coffee shop (the Shop ) and to license an adjacent patio for outdoor seating ( Patio ). 5. The Premises is one store in a large indoor/outdoor shopping mall known as Westfield World Trade Center ( WWTC ), which is still under construction. 6. The Premises has one customer entrance, which is from the street and along-side the Patio. 7. The Patio constitutes approximately 40% of the overall seating space available to Defendant under the Lease and spans across nearly the entire frontage of the Premises. A copy of the rendering of the fully constructed Premises provided by Plaintiff to Defendant is attached hereto as Exhibit A. Page 8 of 15 8 of 22
B. Plaintiffs Misrepresentations During Lease Negotiations 8. During lease negotiations in or about November 2013, Defendant explained to Plaintiff on repeated occasions that it would only be financially feasible for Defendant to lease the Premises under certain circumstances. 9. Insofar as the Patio provided for approximately 40% of available seating, and spanned across nearly the Premises entire frontage, the Patio had to be completed and ready for use - not under construction - at the time of Defendant s opening, to draw enough patronage to the Shop. 10. Given the relatively low price of the goods to be sold at the Shop, as compared to other high-end retail and fashion brands set to lease space at WWTC, the costs of construction could not exceed $600,000 to $750,000. This is what Defendant had projected would be the costs of the project, which Defendant fully disclosed to Plaintiff prior to signing the Lease. 11. In addition, given the enormous costs of opening the Shop at WWTC as compared to other Manhattan retail locations, Defendant required Plaintiffs assurance that the Premises would be delivered in tenant-ready condition within a year or less. As Defendant explained to Plaintiff, if the Premises could not actually be in tenant-ready condition within that time frame, the significant costs of delays, including opportunity costs of not having an operating shop during that period, would make it impossible for Defendant to ever realize any profits under the Lease. 12. In June 2013, Plaintiff, by and through its agents and representatives, including Rachel Belem, deliberately made numerous misrepresentations of material fact, including by omission, to Defendant s agents and representatives, including Lars Akerlund, in telephone discussions, in-person meetings and in emails, to induce Defendant to sign the Lease. Page 9 of 15 9 of 22
13. These material misrepresentations included the knowingly false statements that: (i) Plaintiff had planned to have the Premises delivered to Defendant in tenant-ready condition by November 1, 2014, if not earlier (the Ready Condition Deadline ); and (ii) that Plaintiff had planned to have the Patio available for use simultaneously with the Premises so that it could be utilized immediately upon opening the Shop and Defendant would not be forced to open the Shop before the Patio was available. 14. In addition, Plaintiff failed to disclose to Defendant material facts in Plaintiffs sole possession, which reveal that the true costs to Defendant for building out the space would be more than twice Defendant s estimates of $600,000 to $750,000. 15. At the time of these representations and omissions, Plaintiff knew that it would not and could not conceivably deliver either the Premises or the Patio to Defendant in ready condition anytime close to the Ready Condition Deadline and had no intention of doing so, and that based on the information in Plaintiffs exclusive possession, Defendant s build-out would cost well more than twice the amount of its projections. 16. Plaintiff intentionally made these misrepresentations and omissions to induce Defendant to signing the Lease, knowing fully well that if Defendant was not told these false statements and if Plaintiff did not make these material omissions, Defendant would not have signed the Lease. 17. Defendant reasonably relied on these misrepresentations and omissions of fact in electing to forego other business opportunities and sign the Lease. 18. But for these misrepresentations and omissions of fact, Defendant would have pursued these other business endeavors and would not have signed the Lease. Page 10 of 15 10 of 22
19. Defendant expended significant time, money and resources to prepare to operate the Premises and conduct business therein in accordance with the Lease, the amount of which exceeds $160,000. 20. Defendant also paid to Plaintiff a security deposit under the Lease in the amount of $122,000 and a fee of $6,000. 21. To date, neither the Premises nor the Patio are in tenant-ready condition. In fact, Plaintiff now projects that the Patio will not be in tenant-ready condition for several years. Not only that but, as illustrated by the photographs annexed hereto as Exhibit B, the area that was supposed to contain the Patio is an unsightly construction site, obscured by scaffolding, and a makeshift construction wall, covered partially in tarp, runs along-side the Premises, obstructing the side windows and creating an displeasing view from the inside of the Premises. THE FIRST CAUSE OF ACTION (Rescission and Restitution) 22. Defendant repeats, reiterates and re-alleges each and every allegation contained in the above paragraphs as if fully set forth herein. 23. 24. Plaintiff made the aforementioned material misrepresentations and omissions. Said misrepresentations and omissions were made by Plaintiff to induce Defendant to sign the Lease. 25. Defendant reasonably relied on these misrepresentations and omissions in signing the Lease. 26. But for these misrepresentations and omissions, Defendant would not have signed the Lease. 27. As a result of these representations and omissions, Defendant has incurred significant damages. Page 11 of 15 11 of 22
28. Based on the foregoing, Defendant is entitled to an order rescinding and cancelling the Lease and ordering Plaintiff to repay Defendant in restitution all deposits and fees paid pursuant to the Lease in an amount to be determined at trial. THE SECOND CAUSE OF ACTION (Fraud) 29. Defendant repeats, reiterates and re-alleges each and every allegation contained in the above paragraphs as if fully set forth herein. 30. Prior to entering into the Lease, Plaintiff made the aforementioned material misrepresentations and omissions. 31. Said misrepresentations and omissions were made by Plaintiff to induce Defendant to sign the Lease. 32. Defendant reasonably relied on these misrepresentations and omissions in electing to forego other business opportunities and signing the Lease. 33. But for these misrepresentations and omissions, Defendant would not have signed the Lease. 34. As a result of these representations and omissions, Defendant has incurred significant damages. 35. Defendant expended time, money and resources in preparing to operate the Premises and conduct business therein. 36. Based on the foregoing, Defendant is entitled to damages in an amount to be determined at trial. Page 12 of 15 12 of 22
THE THIRD CAUSE OF ACTION (Negligent Misrepresentation) 37. Defendant repeats, reiterates and re-alleges each and every allegation contained in the above paragraphs as if fully set forth herein. 38. Plaintiff had a duty to not provide false or misleading information to Defendant. 39. Plaintiff made the aforementioned material misrepresentations and omissions that Plaintiff knew or should have known were incorrect. 40. Said misrepresentations and omissions were made by Plaintiff to induce Defendant to sign the Lease. 41. Defendant reasonably relied on these misrepresentations and omissions in electing to forego other business opportunities and signing the Lease. 42. But for these misrepresentations and omissions, Defendant would not have signed the Lease. 43. As a result of these representations and omissions, Defendant has incurred significant damages. 44. Defendant expended time, money and expenses in preparing to operate the Premises and conduct business therein. 45. Based on the foregoing, Defendant is entitled to damages in an amount to be determined at trial. THE FOURTH CAUSE OF ACTION (Breach of Contract) 46. Defendant repeats, reiterates and re-alleges each and every allegation contained in the above paragraphs as if fully set forth herein. 47. Plaintiff and Defendant entered into the Lease. Page 13 of 15 13 of 22
48. 49. Defendant fully complied with its obligations under the Lease. Plaintiff breached the Lease by: (a) failing to deliver the Premises in accordance with the Lease; and (b) failing to deliver the Patio in accordance with the Lease. 50. As a result, Defendant has been damaged. 51. Based on the foregoing, Defendant is entitled to damages in an amount to be determined at trial, and rescission of the Lease. THE FIFTH CAUSE OF ACTION (Breach of the Covenant of Good Faith and Fair Dealing) 52. Defendant repeats, reiterates and re-alleges each and every allegation contained in the above paragraphs as if fully set forth herein. 53. Implied in every contract is a covenant of good faith and fair dealing, which imposed upon Plaintiff a duty to Defendant of good faith and fair dealing, and required that Plaintiff not do anything to deprive Defendant of the benefit of its Lease. 54. Plaintiff has breached the implied covenant of good faith and fair dealing by virtue of its conduct detailed more fully above. 55. By its failure to dutifully perform its obligations to Defendant as set forth more fully above, Plaintiff has deprived Defendant of the benefit of and consideration for which Defendant bargained. 56. 57. As a result, Defendant has been damaged. Based on the foregoing, Defendant is entitled to damages in an amount to be determined at trial, and rescission of the Lease. WHEREFORE, Defendant hereby requests that the Court grant the following relief: (i) A dismissal of the Complaint with prejudice; (ii) The rescission and cancellation of the Lease; Page 14 of 15 14 of 22
(iii) The restitution of deposits and fees paid and costs incurred, the exact amount to be determined upon the trial; (iv) (v) A money judgment in favor of Defendant and against Plaintiff for compensatory, consequential and punitive damages, the exact amount to be determined at trial; An award to Defendant for its costs and disbursements incurred in this suit; (Vi) An award to Defendant for its attorneys fees; and (vii) Any other and further relief the Court deems just and proper. Dated: August 29, 2016 New York, New York Respectfully submitted, OVED & OVED LLP By: /s/ Darren Oved Darren Oved, Esq. Andrew J. Urgenson, Esq. Attorneys for Defendant 401 Greenwich Street New York, New York 10013 Tel: 212.226.2376 Page 15 of 15 15 of 22
' ; % raw: Y7 : ;ra "... ' T'?; 7,: 70;;.Vijs D; i* r '. - 7 VERiKtombN-r:---v./ 777~ ' i, '..'-7;, 7.7 t.vi 7 5!i( Hi tm {-* K fcaggm II,y xi't* -mb s 5. i Lars Akerlund heteby affirms under the penalties of perjury lire following: ^. X i?;- xji 188 >vj 1. I am an officer of defendmit/coiinterclaimanipachanga, Inc., ' 7 : ',. 7y7;7y ' 0,,< y.y.r-y y. y0 ;;''v;:k 7707'Vy>007i i a; r.- - i The grounds of my belief as to all matters in said document is a general investigation, and review of the facts andrecords in this case:,......,, 7. f:. ' '. - Sworn to before me on this 39^ day of August 2016 L r *«X.' 27- I have read and know the contents of the foregoing document entitled VERIFIED,.. ANSWER, AFFIRMATIVE DEFENSES AND COUNTERCLAIMS and the same are,- ; 7 f., ; true belief, to and ray-own as «o those knowledge, matters except I betfeve as them to the be matters true. to be alleged on information... and '.V,- LarsAkerTimd A! O'" 7... Nota^ruBlIc" cw»^w2i~sa»^^ A JgfF 0UM0NJ ' 1 Notary Public - State of Msw York NO. 01DU82770S4 14 Qualified in Kings County 4 My Commission Expires &Q,iA ±.nfc I 1 v i & 7.. I b f. v.-r-, ". /.7;7'.'. 7 : ' ;77 r ; T77vT..e:?:;''7-p7-..-ri«b-':,fvV..: 7, -v- -yyyp?* ; '*, r.
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SUPREME COURT OF the STATE OF NEW YORK COUNTY OF NEW YORK Index No: 653169/2016 NEW WTC RETAIL OWNER LLC, Plaintiff, -against- PACHANGA, INC., Defendant. VERIFIED ANSWER, AFFIRMATIVE DEFENSES AND COUNTERCLAIMS OVED & OVED LLP Attorneys for Defendant / Counterclaimant 401 Greenwich Street New York, NY 10013 Tel: 212.226.2376 Fax: 212.226.7555 Dated: August 29, 2016 22 of 22