FILED: NEW YORK COUNTY CLERK 07/16/2012 INDEX NO.

153389/2012
NYSCEF DOC. NO. 25 RECEIVED NYSCEF: 07/16/2012

SUPREME COURT OF THE STATE OF NEW YORK

COUNTY OF NEW YORK
x

122 EAST 42ND STREET, LLC, : Index No.: 153389/12

Plaintiff,

-against-

JONATHAN GOIDEL and ANDREW SIEGEL,

Defendants.
x

PLAINTIFF'S MEMORANDUM OF LAW IN SUPPORT OF

MOTION TO DISMISS DEFENDANTS' COUNTERCLAIMS

INGRAM YUZEK GAINEN CARROLL & BERTOLOTTI, LLP

Attorneys for Plaintiff 122 East 42nd Street, LLC
250 Park Avenue
New York, New York 10177
(212) 907-9600

412034_3/00390-0180
 TABLE OF CONTENTS

TABLE OF AUTHORITIES iv

PRELIMINARY STATEMENT 1

STATEMENT OF FACTS 2

A. The Lease and Guaranty 2

B. The Civil Court Non-Payment Proceeding 3

C. The Prior Supreme Court Action 5

D. Defendants' Duplicative Counterclaims Asserted In This Action 8

E. The RICO Action Recently Commenced By Defendants And Tenant 9

POINT I

THIS COURT SHOULD DISMISS DEFENDANTS'

COUNTERCLAIMS AS BARRED BY THE DOCTRINES
OF RES JUDICATA AND COLLATERAL ESTOPPEL 10

A. Defendants' Counterclaims Are Barred By Res Judicata 11

B. Defendants'Counterclaims Are Barred By Collateral Estoppel 11
C. Guarantors Have No Basis To Avoid The Res Judicata
And Collateral Estoppel Effects Of The Civil Court Order 13

POINT II

THIS COURT SHOULD DISMISS

GUARANTORS' COUNTERCLAIMS
BASED ON PRIOR PENDING ACTIONS 14

POINT III

GUARANTORS HAVE FAILED TO STATE

ANY VALID COUNTERCLAIMS AGAINST LANDLORD 15

A. Guarantors' First Counterclaim Fails To State A Cause Of Action

Because (1) The 4% Late Fee Provision Is Valid And Enforceable;
(2) Tenant Failed To Dispute Electric Charges As Required By
The Lease; And (3) The "Account Stated" Doctrine Bars
Objection To The Late Fees and Electric Charges Invoiced To Tenant 16

412034_3/00390-0180 1
 1. The Late Fee Provision Of The Lease Is Valid And
Enforceable 16

2. Guarantors Are Unable To Show That The

Electrical Charges Invoiced To Tenant Were Improper 18

3. The "Account Stated" Doctrine Bars Guarantors' Objection

To Late Fees And Electrical Charges Invoiced To Tenant 19

B. Guarantors' Second Counterclaim Is Legally Insufficient Because

(1) Guarantors Have Failed To State A Cause Of Action For Unjust
Enrichment, And (2) No Fiduciary Relationship Exists Between
Landlord And Guarantors That Would Entitle Guarantors To An Accounting 21

1. Guarantors Fail To State A Cause Of Action For

Unjust Enrichment 21

2. Guarantors Are Not Entitled To An Accounting 23

C. Guarantors' Third And Fourth Counterclaims

Fail to State A Cause of Action That Landlord
"Misled" Or "Defrauded" Guarantors 24

1. Guarantors Fail To Allege A

Material Misrepresentation Of Fact 25

2. Guarantors Fail To Allege An Intent To

Induce Reliance Or To Deceive Guarantors 26'

3. Guarantors Fail To Allege Justifiable

Reliance On Any Misrepresentation 27

4. Guarantors Fail To Allege Damages To

Support Causes of Action For Fraud 28

D. Guarantors' Fifth Counterclaim Fails to State

A Viable Cause of Action For Rescission 29

E. Guarantors Have Failed To State A Cause of Action

For Prima Facie Tort 29

POINT IV

THIS COURT SHOULD AWARD ATTORNEYS'

FEES AND EXPENSES UNDER SECTION 19 OF
THE LEASE AND ARTICLE SECOND OF THE GUARANTY 33

412034_3/00390-0180 11
CONCLUSION 35

412034_3/00390-0180 111
 TABLE OF AUTHORITIES

Cases Page

30 th Place Holdings, LLC v. 474431 Assocs.,

No. 0013436/2006, 2007 WL 2174838
(Sup. Ct. Queens County April 19, 2007) 22-23

600 W. 115 th St. Corp. v. 600 W. 115 th St. Condo.,

180 A.D.2d 598 (1st Dep't 1992) 32-33

767 Third Ave. LLC v. Grebel & Finger, LLP,

8 A.D.3d 75 (1st Dep't 2004) 24

Accurate Copy Serv. of Am., Inc. v. Fisk Bldg. Assocs. LLC,

72 A.D.3d 456 (1st Dep't 2010) 16, 22-23

All Terrain Props., Inc. v. Hoy,

265 A.D.2d 87 (1st Dep't 2000) 13

Broadway & 67th St. Corp. v. City of NY.,

100 A.D.2d 478 (1st Dep't 1984) 30

Brown v. Christopher St. Owner's Corp.,

256 A.D.2d 78 (1st Dep't 1998) 11

Buechel v. Bain,
97 N.Y.2d 295 (2001) 11-13

Cardo v. Bd. of Mgrs., Jefferson Vil. Condo 3,

29 A.D.3d 930 (2d Dep't 2006) 31-32

Ceit Indus. Co. v. Hessen,

136 A.D.2d 145 (1st Dep't 1988) 34

Chisholm-Ryder Co. v. Sommer & Sommer,

70 A.D.2d 429 (4th Dep't 1979) 20

Clark-Fitzpatrick, Inc. v. Long Is. R.R. Co.,

70 N.Y.2d 382 (1987) 21

Clifford v. Hughson,
992 F. Supp. 661 (S.D.N.Y. 1998) 23

Cohen v. Brown, Harris, Stevens, Inc.,

64 N.Y.2d 728 (1984) 28-29

412034_3/00390-0180
iv
Cohen v. Houseconnect Realty Corp.,
289 A.D.2d 277 (2d Dep't 2001) 24, 26-27

Cohen Tauber Spievak & Wagner, LLP v. Alnwick,

33 A.D.3d 562 (1st Dep't 2006) 20

Collins v. Bertram Yacht Corp.,

42 N.Y.2d 1033 (1977) 11

Corsello v. Verizon NY, Inc.,

18 N.Y.3d 777 (2012) 21-22

Del Vecchio v. Nelson,

300 A.D.2d 277 (2d Dep't 2002) 32

Emergency Enclosures, Inc. v. Natl. Fire Adj. Co., Inc.,

68 A.D.3d 1658 (4th Dep't 2009) 30

Epifani v. Johnson,
65 A.D.3d 224 (2d Dep't 2009) 30-31

Eurycleia Partners, LP v. Seward & Kissel, LLP,

12 N.Y.3d 553 (2009) 24, 26-27

Evergreen Bank NA. v. Dashnaw,

246 A.D.2d 814 (3d Dep't 1998) 13

Fariello v. Checkmate Holdings, LLC,

82 A.D.3d 437 (1st Dep't 2011) 25-26

Freihofer v. Hearst Corp.,

65 N.Y.2d 135 (1985) 29-30, 33

George Backer Mgt. Corp. v. Acme Quilting Co.,

46 N.Y.2d 211 (1978) 16

Gersten-Hillman Agency, Inc. v. Heyman,

68 A.D.3d 1284 (3d Dep't 2009) 23

Ginezra Assocs. LLC v. Ifantopoulos,

70 A.D.3d 427 (1st Dep't 2010) 11

Gordon v. Dino De Laurentiis Corp.,

141 A.D.2d 435 (1st Dep't 1988) 28

412034_3/00390-0180 v
Holy Props. v. Cole Prods.,
87 N.Y.2d 130 (1995) 16

IDT Corp. v. Morgan Stanley Dean Witter & Co.,

12 N.Y.3d 132 (2009) 21-22

In re Carolina Steel Corp.,

179 B.R. 413 (S.D.N.Y. 1995) 23

JC Mfg., Inc. v. NPI Elec., Inc.,

178 A.D.2d 505 (2d Dep't 1991) 14

K.LD.E. Assocs. v. Garage Estates Co.,

280 A.D.2d 251 (1st Dep't 2001) 4, 12, 17

Kaisman v. Hernandez,
61 A.D.3d 565 (2009) 29-30

Koren-Di Resta Constr. Co. v. Albert B. Ashforth, Inc.,

100 A.D.2d 760 (1st Dep't 1984) 14

Latzko v. Spector,
28 A.D.2d 1111 (1st Dep't 1967) 26

Leather Dev. Corp. v. Dun & Bradstreet,

15 A.D.2d 761 (1st Dep't 1962) 31

Luxonomy Cars, Inc. v. Citibank, NA.,

65 A.D.2d 549 (2d Dep't 1978) 33

Mandarin Trading Ltd. v. Wildenstein,

65 A.D.3d 448 (1st Dep't 2009) 27

Marchi Jaffe Cohen Ciystal Rosner & Katz v. All-Star Video Corp.,
107 A.D.2d 597 (1st Dep't 1985) 19-20

Matter of Amica Mut. Ins. Co.,

85 A.D.2d 727 (2d Dep't 1981) 13

Mech. Plastics Corp. v. Rawlplug Co., Inc.,

119 A.D.2d 641 (2d Dep't 1986) 28

Morrison Cohen Singer & Weinstein, LLP v. Waters,

13 A.D.3d 51 (1st Dep't 2004) 20

412034_3/00390-0180
vi
Nakamura v. Fujii,
253 A.D.2d 387 (1st Dep't 1998) 21

Nezry v. Haven Ave. Owner LLC,

150023/10, 2010 WL 3338545 (Sup. Ct. N.Y. County July 9, 2010) 22

Nissequogue Boat Club v. State,

14 A.D.3d 542 (2d Dep't 2005) 11-12

Parker v. Blauvelt Volunteer Fire Co., Inc.,

93 N.Y.2d 343 (1999) 12

Parks v. Leahey & Johnson,

81 N.Y.2d 161 (1993) 28-29

Paul, Weiss, Rifkind, Wharton & Garrison v. Koons,

4 Misc. 3d 447 (Sup. Ct. N.Y. County 2004) 20

Parkhurst v. Berdell,
110 N.Y. 386 (1888) 13

Posner v. Lewis,
18 N.Y.3d 566 (2012) 29-30

QFI, Inc. v. Shirley,

60 A.D.3d 656 (2d Dep't 2009) 11

Ring v. Arts Intl, Inc.,

7 Misc.3d 869 (Civ. Ct. New York County 2004) 23

Risk Mgt. Planning Group, Inc. v. Cabrini Med. Ctr.,

63 A.D.3d 421 (1st Dep't 2009) 20

Roberts v. Pollack,
92 A.D.2d 440 (1st Dep't 1983) 30, 32

Saunders v. AOL Time Warner, Inc.,

18 A.D.3d 216 (1st Dep't 2005) 23

Schulman v. Greenwich Assoc., LLC,

52 A.D.3d 234 (1st Dep't 2008) 25

Schwartz v. Pub. Adm'r of County of Bronx,

24 N.Y.2d 65 (1969) 12

412034_3/00390-10180 vii
Shea & Gould v. Burr,
194 A.D.2d 369 (1st Dep't 1993) 19

Sidley Holding Corp. v. Ruderman,

No. 08 Civ. 2513 (WHP)(MHD), 2009 WL 6047187
(S.D.N.Y. Dec. 30, 2009) 17

Singer v. Thuilot,
140 A.D.2d 235 (1st Dep't 1988) 27

Sirohi v. Lee,
222 A.D.2d 222 (1st Dep't 1995) 24, 26

Sullivan v. George Ringler & Co.,

69 A.D. 388 (2d Dep't 1902) 13

Sun Mei Inc. v. Chen,

21 A.D.3d 265 (1st Dep't 2005) 34

TAG 380, LLC v. ComMet, 380, Inc.,

10 N.Y.3d 507 (2008) 33-34

Top-All Varieties, Inc. v. Raj Dev. Co.,

173 A.D.2d 604 (2d Dep't 1991) 23

Trump Empire State Partners v. Empire State Bldg. Assocs.,

245 A.D.2d 188 (1st Dep't 1997) 14

Vigoda v. DCA Prods. Plus, Inc.,

293 A.D.2d 265 (1st Dep't 2002) 31

Wallace v. Crisman,
173 A.D.2d 322 (1st Dep't 1991) 27, 29

Walsh Bros. v. Ruppert,

7 A.D.2d 896 (1st Dep't 1959) 33

Watts v. Swiss Bank Corp.,

27 N.Y.2d 270 (1970) 13

Women's Interart Ctr., Inc. v. Clinton Hous. Dev. Fund Corp.,

No. 0113088/2007, 2008 WL 4103252
(Sup. Ct. N.Y. County July 14, 2008) 33

Yuko Ito v. Suzuki,

57 A.D.3d 205 (1st Dep't 2008) 25-26

412034_3/00390-10180 viii
Statutes and Rules

CPLR 3016 24

CPLR 3016(b) 25

CPLR 3211(a) 1

CPLR 3211(a)(4) 14-15

22 NYCRR § 130-1.1 10

N.Y. Judiciary Law § 487 10

4 N.Y. Jur.2d (Appellate Review) § 413 (2011) 13

412034_3/00390-0180 ix
 PRELIMINARY STATEMENT

Plaintiff 122 East 42 111 Street, LLC ("Landlord") leased certain space to the law firm of

Goidel & Siegel, LLP ("Tenant") at 122 East 42'1 Street, New York, New York, known as the

Chanin Building. Tenant defaulted on various of its lease obligations and ultimately vacated its

leased space, owing Landlord more than $250,000 in rent and additional rent. Landlord

commenced this action based on a guarantee of the subject lease provided by the two members of

Tenant, defendants Jonathan Goidel and Andrew Siegel ("Defendants" or "Guarantors").

Guarantors have now answered Landlord's complaint and have asserted counterclaims

for rescission of the lease and guarantee, an accounting, and damages based solely upon

assertions that Landlord has charged Tenant for allegedly illegal late fees and improper electric

charges (the "Counterclaims"). Guarantors' Counterclaims, however, are duplicative of claims

that have previously been asserted — and dismissed — in other pending litigations.

Landlord accordingly submits this memorandum of law in support of its motion for an

order, pursuant to CPLR 3211(a), dismissing Guarantors' Counterclaims on grounds that:

a. Guarantors' Counterclaims are barred by collateral estoppel and res judicata;

b. Guarantors' Counterclaims are the subject of prior pending actions; and

c. Guarantors' Counterclaims fail to state a cause of action.

In addition, Tenant and Guarantors have continued to multiply the litigations pending

with Landlord by recently commencing a new action in the Supreme Court, New York County,

asserting frivolous claims for fraud, prima facie tort, negligence, and violations of the federal

Racketeer Influenced and Corrupt Organizations Act ("RICO Act").

412034_3/00390-0180
 STATEMENT OF FACTS

The facts described below are set forth in the accompanying affidavit of Richard F.

Czaja, sworn to July 12, 2012 ("Czaja Aff") and the affirmation of John G. Nicolich, dated July

13, 2012 ("Nicolich Aff.").

A. The Lease And Guaranty

Landlord and Tenant are parties to an Agreement of Lease dated as of March 30, 2004

(the "Lease") for the premises known as Suite 4500 at the Chanin Building (the "Premises")

(Czaja Aff., Exh. A). As relevant herein, the Lease provided that:

a. Tenant leased Premises for a term to end on April 30, 2012;

b. Tenant was to pay Landlord annual Fixed Rent in amounts provided under the

Lease, exclusive of an Electricity Inclusion Factor, plus additional rent as provided under the

Lease;

c. Fixed Rent under the Lease shall be increased by an Electricity Inclusion Factor

calculated pursuant to Article 38D of the Lease;

d. The Electricity Inclusion Factor set forth in an Electricity Statement provided to

Tenant "shall be conclusive and binding upon Tenant, unless within thirty (30) days after the

receipt of such Electricity Statement, Tenant shall notify [Landlord] that it disputes the

correctness of the Electricity Statement" (Czaja Aff., Exh. A, Article 38D(3)(c));

e. Pursuant to a "Late Fee Provision," Tenant was required to pay Landlord a 4%

late fee for any installment of Fixed Rent or any amount of additional rent that Tenant failed to

pay for more than ten (10) Business Days after becoming due and payable (id., Article 37C(6));

and

f. Under Article 19 of the Lease, if Landlord "makes any expenditures or incurs any

412034_3/00390-0180 2
obligations for the payment of money, including but not limited to attorneys' fees, in instituting,

prosecuting or defending any action or proceeding" in connection with Tenant's default under

the Lease, Landlord is entitled to reimbursement by Tenant of such fees, costs, and expenses,

plus interest, which "shall be deemed to be additional rent" under the Lease, and "shall be paid

by Tenant to [Landlord] within five (5) days of rendition of any bill or statement to Tenant

therefor" (id., Exh. A, Article 19).

As a condition of, and as consideration for, Landlord entering into the Lease with Tenant,

Defendants entered into a written Ageement of Guarantee (the "Guaranty"), whereby

Defendants unconditionally guaranteed the payment of Tenant's monetary obligations under, and

in accordance with, the Lease, including, without limitation, the payment of rent and additional

rent, and all costs and expenses (including, without limitation, attorneys' fees and costs) due and

payable by Tenant to Landlord under the Lease up to the date on which Tenant surrenders to

Landlord vacant possession of the Premises in the condition required by the Guaranty. See Czaja

Aff, Exh. B, Article Second(A).

The Guaranty also provides that Landlord is entitled to recover reasonable attorneys' fees

and disbursements incurred in connection with any default by Guarantors under the Guaranty

(id., Exh.B, Article Second(I)), and that Guarantors' obligations under the Guaranty "shall not be

subject to any defense or set-off, counterclaim, recoupment or termination whatsoever by reason

of the invalidity, illegality or unenforceability of any of Guarantor's obligations hereunder or

otherwise" (id., Exh. B, Article Third).

B. The Civil Court Non-Payment Proceeding

In January 2011, Landlord commenced a commercial non-payment proceeding against

Tenant in the Housing Part of the Civil Court of New York County (the "Non-Payment

412034_3/00390-0180 3
Proceeding") based on Tenant's failure to pay rent and additional rent due for the period

November 2010 through December 2010 under the Lease. (Nicolich Aff., Iii2-3.) Tenant

answered the petition and asserted various affirmative defenses and counterclaims, including

claims based on Tenant's alleged overpayment of illegal late charges and improper electrical

("ERA") charges (id., Exh. A).

Landlord moved in the Non-Payment Proceeding for an order granting summary

judgment in Landlord's favor and entry of a final judgment of possession and a money judgment

in the amount of $61,794.77 then due for rent and additional rent owing through February 2011

("Landlord's Civil Court Motion"). Landlord also moved for an award of reasonable attorneys'

fees and dismissal of Tenant's affirmative defenses and counterclaims. Tenant opposed

Landlord's Civil Court Motion and cross-moved for summary judgment seeking dismissal of the

petition and a stay of the Non-Payment Proceeding pending its removal and consolidation with a

separate Supreme Court Action that Tenant had commenced in February 2011 ("Tenant's Civil

Court Motion"). See id., ¶ 5-7.

By Decision/Order dated May 16, 2011 (the "Civil Court Order"), the Civil Court (Hon.

Tanya R. Kennedy) determined Landlord's Civil Court Motion and Tenant's Civil Court Motion

(id., ¶8; Exh. C). Although the Civil Court denied Landlord's motion for summary judgment on

technical grounds (id., Exh. C, p. 3), the Civil Court Order dismissed all of Tenant's affirmative

defenses and counterclaims, including Tenant's defenses and counterclaims concerning the

allegedly illegal Late Fee Provision and allegedly improper electrical (ERA) charges (id., ¶9;

Exh. C, pp.3-9). Based on KI.D.E. Assocs. v. Garage Estates Co., 280 A.D.2d 251 (1st Dep't

2001), the Civil Court Order expressly upheld the validity of the Late Fee Provision because

Tenant "has not presented any evidence that the disputed provision is unreasonable or against

412034_3/00390-0180 4
public policy" (id., Exh. C, p. 7). The Civil Court Order also specifically dismissed Tenant's

counterclaims based on alleged improper electrical charges because "there is no evidence that

[Tenant] notified [Landlord] to dispute any ERA charges, as required under paragraph 38D(3)(c)

of the lease," and because Tenant "is not entitled to an accounting of ERA charges . . . since

there is no fiduciary relationship between the parties" (id., Exh. C, pp. 8-9).

Tenant noticed an appeal of the Civil Court Order to the Appellate Term, First Judicial

Department on May 23, 2011 (id., Exh. D). As of yet, however, Tenant has delayed in properly

perfecting its appeal for more than a year (strongly suggesting that Tenant has little hope of

receiving a favorable decision on appeal) (id., ¶10). Landlord has consented to the transfer of

further trial court proceedings in the Non-Payment Proceeding to this Court as discussed below.

C. The Prior Supreme Court Action

In February 2011, shortly after Landlord's commencement of the Non-Payment

Proceeding, Tenant commenced a separate action against Landlord in Supreme Court, New York

County (the "Supreme Court Action"). Tenant brought the Supreme Court Action as a putative

class action seeking a declaratory judgment declaring the Lease voidable, an accounting,

damages, and rescission of the Lease based on the purported unlawfulness of the Late Fee

Provision (id., Exh. E). Landlord answered the complaint and asserted various affirmative

defenses (id., Exh. F).

Shortly after commencement of the Supreme Court Action, while the motions in the Non-

Payment Proceeding were pending, Tenant filed a motion seeking to (1) remove and consolidate

the Non-Payment Proceeding with the Supreme Court Action, (2) stay the Non-Payment

Proceeding, and (3) certify a putative class ("Tenant's Supreme Court Motion"). Landlord

opposed Tenant's motion and cross-moved for summary judgment seeking dismissal of the

412034_3/00390-10180
5
complaint in its entirety ("Landlord's Summary Judgment Motion"). Tenant's Supreme Court

Motion and Landlord's Supreme Court Motion were fully briefed and submitted on June 27,

2011. See id., 11114-16.

This Court (Goodman, J.) held oral argument on the pending motions in the Supreme

Court Action on July 28, 2011. At the conclusion of oral argument, Justice Goodman issued an

order staying the Non-Payment Proceeding pending determination of the pending motions (id.,

Exh. G). Tenant also withdrew its request for class certification (id.). By letter dated August 23,

2011, Justice Goodman adjourned the pending Supreme Court motions to October 3, 2011 "for

submission of additional briefs as to why this Court should or should not declare the validity of

the late fee provision in light of the fact that Justice Tanya Kennedy has already ruled on the

issue . . ." (id., Exh. H).

Meanwhile, on August 8, 2011, Tenant served a purported motion to amend, returnable

on August 22, 2011 (the "Purported Motion To Amend") (id., Exh. I). Notwithstanding the prior

Civil Court Order dismissing Tenant's defenses and counterclaims based on allegedly improper

electrical charges, the proposed Amended Complaint submitted with the Purported Motion To

Amend sought to assert claims based on allegedly improper electrical charges (id.).

Landlord responded to Tenant's Purported Motion To Amend by preparing opposition

papers that were served on Tenant on August 19, 2011 (id., ¶23).

As noted above, Tenant noticed the Purported Motion To Amend to be returnable in this

Court on August 22, 2011 (see id., Exh. I, p. 1). Tenant's Purported Motion To Amend,

however, was not on the Court's calendar on August 22, 2011, and Landlord therefore was

unable to file opposition papers at that time. As later became apparent, Tenant neverfi/ed the

Purported Motion To Amend but instead only served the Purported Motion To Amend, thereby

412034_3/00390-0180 6
causing Landlord to expend time, effort, attorneys' fees and costs in preparing opposition to a

motion that Tenant served but never actually made (id., 125).

Notwithstanding that Tenant had noticed the Purported Motion To Amend for August 22,

2011, on August 17, 2011, Tenant served by mail a second motion to amend, returnable on

August 30, 2011 (the "Motion To Amend") (id., Exh. J). Tenant's Motion to Amend included a

proposed Amended Complaint that was identical to the Amended Complaint included with the

Purported Motion To Amend and thereby also sought to assert claims based on allegedly

improper electrical charges (Id.).

Tenant thus vexatiously served two separate motions for leave to serve the same

defective Amended Complaint — i.e., the proposed Amended Complaint in the Supreme Court

Action seeks to assert claims that the Civil Court previously dismissed and therefore are barred

by res judicata and collateral estoppel. Tenant also compounded its harassing tactics by serving

but not filing the Purported Motion To Amend, thereby causing Landlord to prepare and serve

opposition papers that ultimately were unnecessary. Landlord accordingly opposed the Motion

to Amend and moved for an award of sanctions against Tenant for such frivolous conduct,

including in particular conduct that is completely without merit in law and is undertaken to

harass Landlord (id., ¶1128-30 and Exh. K).

The Supreme Court Action was recently reassigned to Justice Shlomo Hagler, who heard

argument on all pending motions on May 17, 2012. In connection with those proceedings,

Landlord has agreed that further proceedings in the Non-Payment Proceeding may be transferred

to the Supreme Court for determination with the Supreme Court Action (id., T. 31).

412034_3/00390-0180 7
D. Defendants' Duplicative Counterclaims Asserted In This Action

As noted above, Landlord commenced this action against Defendants for recovery on

Defendants' Guaranty of Tenant's obligations under the Lease. Defendants have now answered

the Complaint and asserted counterclaims (the "Counterclaims") that are duplicative of claims

that were previously asserted or attempted to be asserted in the Non-Payment Proceeding and the

Supreme Court Action (see id., Exh. L).

More specifically, Defendants assert a total of six confusing Counterclaims that are all

predicated on the allegedly illegal Late Fee Provision and allegedly improper electrical charges

invoiced to Tenant. Defendants' six purported causes of action are as follows:

1. Defendants' First Counterclaim seeks a declaratory judgment that the Lease and

the Guaranty are void ab initio because of the allegedly illegal Late Fee Provision and allegedly

improper electrical charges (id., Exh. L, Tif 16-29);

2. Defendants' Second Counterclaim apparently seeks recovery for "unjust

enrichment" and/or "an accounting" based on the allegedly illegal Late Fee Provision and

allegedly improper electrical charges (id., Exh. L, firg 30-35);

3. Defendants' Third Counterclaim seeks rescission of the Lease and Guaranty based

on Defendants' conclusory allegation that Landlord purportedly "misled" Defendants to believe

that the rents alleged to be due and owing were an actual and legitimate statement of account (id.

Exh. L, ¶J 36-45);

4. Defendants' Fourth Counterclaim (incorrectly labeled "Fifth Counterclaim")

seeks damages based on Defendants' conclusory allegation that Landlord allegedly "defrauded"

Tenant and Defendants to believe that the rents alleged to be due and owing were an actual and

legitimate statement of account (id. Exh. L, ¶J 46-53);

412034_3/00390-0180 8
 5. Defendants' Fifth Counterclaim (labeled "As And For A Fifth Counterclaim")

seeks an order rescinding the Lease and Guaranty based on the allegedly illegal Late Fee

Provision and allegedly improper electrical charges (id., Exh. L, ¶1154-57);

6. Defendants' Sixth Counterclaim (incorrectly labeled "Fifth Counterclaim") seeks

damages, including punitive damages, based on allegations that Landlord committed a prima

facie tort by overcharging Tenant for late fees and electrical charges (id., Exh. L, ¶IJ 58-68).

E. The RICO Action Recently Commenced By Defendants And Tenant

At the same time that Defendants served their Answer and Counterclaims in this action,

Tenant and Defendants provided Landlord's counsel with a Summons and Complaint in a new

action, commenced in Supreme Court, New York County (the "RICO Action") (id., Exh. M).

The RICO Action asserts new purported claims not only against Landlord, but also against

Landlord's law firm in this action, Ingram Yuzek Gainen Carroll & Bertolotti, LLP ("Ingam

Yuzek"), and five unidentified "John Does," described to be members and/or associates of

Ingram Yuzek who allegedly participated with Landlord "in launching and accomplishing the

acts" described in the complaint (id., Exh. M, ¶ 4).

The complaint in the RICO Action purports to allege four claims for fraud, prima facie

tort, negligence, and violations of the RICO Act. Each of the claims asserted in the RICO Action

are predicated on the alleged failure of Landlord and its agents to credit Tenant with rent

payments made by Tenant as indicated in checks attached as Exhibit A to the complaint (the

"Checks"). More specifically, the complaint in the RICO Action makes the conclusory

allegation that defendants "have made false demands, rendered fraudulent invoices, fraudulent

account statements and rendered other, sundry, false and misleading writings in which they have

materially and intentionally misrepresented that [Landlord] or its designated agent have not

412034_3/00390-0180 9
received the Checks and the monies paid on account of the Checks" (id., Exh. M, ¶ 18).

In due course, and as becomes necessary, defendants in the RICO Action intend to show

that the complaint in the RICO Action fails to state an cognizable cause of action even if the

complaint correctly alleged that Landlord had not credited Tenant for all payments made by the

Checks. In fact, however, Landlord did credit Tenant for each payment made by each of the

Checks. Tenant accordingly has been provided documentary proof that Landlord in fact applied

all payments made by the Checks to Landlord's account (id., Exh. N). Prosecution of the RICO

Action therefore would be in bad faith, would constitute frivolous conduct as defined in 22

NYCRR § 130-1.1, and would subject plaintiffs in the RICO Action to sanctions and treble

damages, including attorneys' fees, under 22 NYCRR § 130-1.1, New York Judiciary Law §

487, and other applicable authorities. Demand therefore has been made on plaintiffs in the RICO

Action to withdraw and discontinue the RICO Action and all claims asserted therein, with

prejudice (id.).

POINT I

THIS COURT SHOULD DISMISS DEFENDANTS'

COUNTERCLAIMS AS BARRED BY THE DOCTRINES
OF RES JUDICATA AND COLLATERAL ESTOPPEL

Each of Defendants' Counterclaims in this action is based on assertions that the 4% Late

Fee Provision of the Lease is illegal and that Landlord has purportedly billed Tenant for

improper electrical charges. In the Non-Payment Proceeding, however, the Civil Court rejected

and dismissed identical claims, thereby establishing that Defendants' Counterclaims herein are

barred by the doctrines of res judicata and collateral estoppel.

412034_3/00390-0180 10
A. Defendants' Counterclaims Are Barred By Res Judicata

"Under New York's transactional approach to res judicata, 'once a claim is brought to a

final conclusion, all other claims arising out of the same transaction or series of transactions are

barred, even if based upon different theories or if seeking a different remedy." QFI, Inc. v.

Shirley, 60 A.D.3d 656, 657 (2d Dep't 2009) (citation omitted).

In the Non-Payment Proceeding, Tenant's defenses and counterclaims based on the

allegedly illegal Late Fee Provision and excessive electrical charges were dismissed on summary

judgment (Nicolich Aff., Exh. C). Defendants' Counterclaims herein therefore are barred by res

judicata. Collins v. Bertram Yacht Corp., 42 N.Y.2d 1033, 1034 (1977) ("The grant of summary

judgment, 'the procedural equivalent of a trial' . . . results in a final judgment on the merits,

which bars another action between the same parties based upon the same cause of action")

(citation omitted); Brown v. Christopher St. Owner's Corp., 256 A.D.2d 78, 78 (1st Dep't 1998)

(affirming dismissal of plaintiff's claim on res judicata grounds where the second action arose

out of the same transaction and "the earlier grant of summary judgment . . . resulted in a final

judgment on the merits").

B. Defendants' Counterclaims Are Barred By Collateral Estoppel

"Collateral estoppel precludes a party from relitigating in a subsequent action or

proceeding an issue raised in a prior action or proceeding and decided against that party."

Buechel v. Bain, 97 N.Y.2d 295, 303 (2001). "Under the doctrine of collateral estoppel, issues of

law and questions of fact necessarily decided by a court of competent jurisdiction remain binding

upon the parties . . . in all subsequent litigation in which the same issues are material." Ginezra

Assocs. LLC v. Ifantopoulos, 70 A.D.3d 427, 429 (1st Dep't 2010). Collateral estoppel applies

"whether or not the tribunals or causes of action are the same." Nissequogue Boat Club v. State,

412034_3/00390-0180 11
14 A.D.3d 542, 544 (2d Dep't 2005) (citing Parker v. Blauvelt Volunteer Fire Co., Inc., 93

N.Y.2d 343, 349 (1999)) (emphasis added).

Two requirements must be met for application of collateral estoppel: (1) "an identity of

issue which has necessarily been decided in the prior action and is decisive of the present

action"; and (2) "a full and fair opportunity to contest the decision now said to be controlling."

Buechel, 97 N.Y.2d at 303-04; Schwartz v. Pub. Adm'r of County of Bronx, 24 N.Y.2d 65, 71

(1969).

In the Non-Payment Proceeding, Judge Kennedy upheld the validity of the Late Fee

Provision, finding that Tenant "has not presented any evidence that the disputed provision is

unreasonable as against public policy" (Nicolich Aff., Exh. C, p. 7). See also KI.D.E. Assoc.,

280 A.D.2d at 251 (upholding validity of 5% per month late fee in commercial lease negotiated

by sophisticated business people).

Similarly, Judge Kennedy dismissed Tenant's defenses and counterclaims alleging

improper electrical charges because Tenant failed to notify Landlord of any dispute as to such

charges, as expressly required by the Lease (Nicolich Aff. , Exh. C, pp. 7-9).

Judge Kennedy also expressly held that Tenant "is not entitled to an accounting of

[the electrical] charges . . . since there is no fiduciary relationship between the parties" (id., Exh.

C, pp. 8-9).

The Civil Court therefore decided the same issues raised by Defendants' Counterclaims

herein, and the parties to the Non-Payment Proceeding had a "full and fair opportunity" to

litigate these very issues. Accordingly, based on Judge Kennedy's findings in the Civil Court

Order, Defendants' Counterclaims herein concerning the Late Fee Provision and electrical

charges are barred by collateral estoppel.

412034_3/00390-0180 12
C. Guarantors Have No Basis To Avoid The Res Judicata
And Collateral Estoppel Effects Of The Civil Court Order

Guarantors have no legitimate basis to avoid the res judicata and collateral estoppel

effects of the Civil Court Order.

More specifically, Tenant's prolonged delay in perfecting its appeal of the Civil Court

Order does not affect the preclusive effect of that order. See Parkhurst v. Berdell, 110 N.Y. 386,

392 (1888) ("the appeal did not suspend the operation of the judgment as an estoppel"); Matter

of Amica Mut. Ins. Co., 85 A.D.2d 727, 728 (2d Dep't 1981) ("The rule in New York . . . is that

the mere pendency of an appeal does not prevent the use of the challenged judgment ... in a

second proceeding"); Sullivan v. George Ringler & Co., 69 A.D. 388, 388 (2d Dep't 1902); 4

N.Y. Jur.2d (Appellate Review) § 413 (2011).

Similarly, Guarantors are bound by the Civil Court Order because Guarantors are the two

controlling members of the Tenant, which is a party to the Non-Payment Proceeding. Guarantors

accordingly are in privity with Tenant and are bound by the Civil Court Order. See, e.g.,

Buechel, 97 N.Y.2d at 304 ("Because for purposes of collateral estoppel, defendants were in

privity with their former law partner Rhodes as to the validity of the fee arrangements, we

conclude they should be bound"); Watts v. Swiss Bank Corp., 27 N.Y.2d 270, 277 (1970)

(judgments are binding on "those who control an action although not formal parties to it"); All

Terrain Props., Inc. v. Hoy, 265 A.D.2d 87, 96 (1st Dep't 2000) ("defendant's individual

concerns were represented in the bankruptcy proceeding to such an extent that he is bound by the

result"); see also Evergreen Bank. NA. v. Dashnaw, 246 A.D.2d 814, 816 (3d Dep't 1998)

("defendants, as general partners in [bankrupt debtor], are now bound by [confirmed

reorganization plan]").

412034_3/00390-0180 13
 This Court accordingly should dismiss Guarantors' Counterclaims as barred by res

judicata and collateral estoppel.

POINT II

THIS COURT SHOULD DISMISS

GUARANTORS' COUNTERCLAIMS
BASED ON PRIOR PENDING ACTIONS

Under CPLR 3211(a)(4), the Court may dismiss an action where "there is another action

pending between the same parties for the same cause of action in a court of any state or the

United States."

Dismissal pursuant to CPLR 3211(a)(4) is appropriate where there is "substantial identity

of parties" and "essential" identity of issue. Trump Empire State Partners v. Empire State Bldg.

Assocs., 245 A.D.2d 188, 188 (1st Dep't 1997); accord, Koren-Di Resta Constr. Co. v. Albert B.

Ashforth, Inc., 100 A.D.2d 760, 761 (1st Dep't 1984) (CPLR 3211(a)(4) applicable where claims

"seek the same relief and allege the same theories"); JC Mfg., Inc. v. NPI Elec., Inc., 178 A.D.2d

505, 506 (2d Dep't 1991) (CPLR 3211(a)(4) applicable when "there is substantial identity of the

parties, and the nature of the relief sought is substantially the same").

Here, the parties in this action are substantially identical to the parties in the Non-

Payment Proceeding and the Supreme Court Action. Landlord is a party to each action.

Defendants Jonathan Goidel and Andrew Siegel are parties to this action. The law firm that

Defendants manage and control, Goidel & Siegel, LLP, is a party to both the Non-Payment

Proceeding and the Supreme Court Action. Because Defendants Goidel and Siegel are in privity

with Goidel & Siegel, LLP, Defendants are bound by the res judicata and collateral effect of any

orders entered in the Non-Payment Proceeding and the Supreme Court Action (see Point I(C),

412034_3/00390-0180 14
supra). This Court accordingly should hold that the parties to the three litigations are

"substantially identical" for purposes of CPLR 3211(a)(4).

Similarly, the claims asserted or attempted to be asserted against Landlord in the Non-

Payment Proceeding, the Supreme Court Action, and this action all relate to allegations that

Landlord has applied an illegal Late Fee Provision or improper electrical charges against Tenant.

Thus, all of Guarantors' claims against Landlord have been resolved — or will be resolved — in

the Non-Payment Proceeding or the Supreme Court Action. Guarantors' assertion of claims

alleging identical theories of liability in this action therefore is unwarranted and will serve only

to unnecessarily multiply the costs and resources — including judicial resources — required for

resolution of the parties' disputes.

This Court therefore should dismiss Defendants' Counterclaims under CPLR 3211(a)(4)

based on the Non-Payment Proceeding and the Supreme Court Action, which are prior pending

actions involving substantially the same parties and similar requests for relief.

POINT III

GUARANTORS HAVE FAILED TO STATE

ANY VALID COUNTERCLAIMS AGAINST LANDLORD

Guarantors attempt to avoid their obligations under the Guaranty by asserting a series of

Counterclaims that seek to void not only the Guaranty, but also the underlying Lease entered into

by Tenant.

As an initial matter, Guarantors' assertion of the Counterclaims seeks to avoid the

provision of the Guaranty that "Guarantor's obligations hereunder. . . . shall not be subject to any

• . . counterclaim . . . whatsoever by reason of the invalidity, illegality or unenforceability of any

of Guarantor's obligations hereunder or otherwise" (Czaja Aff., Exh. B, p. 3, Article Third).

412034_3/00390-0180 15
 New York courts, however, respect ageements relating to negotiated commercial leases.

Accurate Copy Serv. of Am., Inc. v. Fisk Bldg. Assocs. LLC, 72 A.D.3d 456, 457 (1st Dep't

2010), citing Holy Props. v. Cole Prods., 87 N.Y.2d 130, 133-134 (1995). Accordingly, "[o]nce

a contract is made, only in unusual circumstances will a court relieve the parties of the duty of

abiding by it." George Backer Mgt. Corp. v. Acme Quilting Co., 46 N.Y.2d 211, 218 (1978).

The Court therefore should enforce Article Third of the Guaranty by dismissing

Guarantors' Counterclaims.

In any event, as demonstrated below, each of Guarantors' Counterclaims fail to state a

cognizable cause of action and should be dismissed.

A. Guarantors' First Counterclaim Fails To State A Cause Of Action

Because (1) The 4% Late Fee Provision Is Valid And Enforceable;
(2) Tenant Failed To Dispute Electric Charges As Required By
The Lease; And (3) The "Account Stated" Doctrine Bars
Objection To The Late Fees and Electric Charges Invoiced To Tenant

Guarantor's First Counterclaim alleges that the Lease and the Guaranty are void ab initio

because the 4% Late Fee provision allegedly is "unlawful" and because Landlord allegedly has

filed to properly charge and collect electrical charges under the Lease (Nicolich Aff, Exh. L, IT

16-29). Neither of Guarantors' contentions has merit.

1. The Late Fee Provision Of The Lease Is Valid And Enforceable

Article 37C(6) of the Lease contained the Late Fee Provision and provides, in relevant

part, as follows:

If Tenant shall fail to pay any installment of Fixed Rent or any amount
of additional rent for more than ten (10) Business Days after it shall
have become due and payable, then, whether or not a notice of default
has been given therefore, Tenant shall pay [Landlord] a late charge of
four (4) cents for each dollar of the amount of such Fixed Rent or
additional rent as shall not have been paid to [Landlord] within
ten (10) Business Days after becoming due and payable. Such late
charge shall be without prejudice to any of [Landlord's] rights and

412034_3/00390-0180 16
 remedies hereunder or at law for non-payment or late payment of rent,
including interest, and shall be in addition thereto. (Czaja Aff, Exh.
A, ¶ 37C(6), emphasis added.)

Accordingly, pursuant to this Late Fee Provision, the Lease provides for the assessment

of a 4% late fee. As clearly stated in Article 37C(6) in the Lease, this 4% late fee is charged only

once with respect to Rent not paid within 10 Business Days of becoming due, and therefore is

not compounded (contrary to Defendants' allegation in paragraph 17 of their Counterclaims).

Under New York law, the Late Fee Provision is not an unenforceable penalty. In

KI.D.E. Assocs., the court found that a contractual provision authorizing a late fee of 5% per

month was enforceable, and not a penalty, in a commercial lease negotiated by sophisticated

parties. 280 A.D.2d at 254 ("The JHO's finding that the late charge of five percent per month

was not unconscionable was correct, given that this case involves a commercial lease negotiated

by sophisticated business people and that KIDE submitted no evidence suggesting that the late

charge was unreasonable or against public policy in this situation"). Similarly, in Sidley Holding

Corp. v. Ruderman, No. 08 Civ. 2513 (WHP)(MHD), 2009 WL 6047187, at *9 (S.D.N.Y. Dec.

30, 2009), the court held that "[a] liquidated-damages clause in a commercial lease imposing a

one-time payment of three percent of past-due rent and related expenses is not unreasonable."

Here, the Late Fee Provision was included in a commercial lease negotiated by

sophisticated parties. Moreover, in the Non-Payment Proceeding, Judge Kennedy dismissed

Tenant's affirmative defense and counterclaim alleging that the Late Fee Provision was unlawful

and unenforceable because Tenant "has not presented any evidence that the disputed provision in

unreasonable or against public policy" (Nicolich Aff., Exh. C, p. 7).

This Court therefore should also hold that the 4% Late Fee Provision in the Lease is valid

and enforceable.

412034_3/00390-0180 17
 2. Guarantors Are Unable To Show That The
Electrical Charges Invoiced To Tenant Were Improper

Guarantors concede that the Lease requires Tenant to pay for electrical charges allocated

and/or charged to the Premises (Nicolich Aff., Exh. L, ¶ 17).

Under Article 38D of the Lease, electricity charges are calculated based on both an

"Electricity Inclusion Factor" and an "Electricity Statement," which increase the amount of

Tenant's Rent (Czaja Aff., Exh. A, Article 38D). Increases in the Electricity Inclusion Factor

may occur under circumstances described in Articles 38D(1), 38D(2), and 38D(3)(a) of the

Lease (id.).

Article 38D(3)(b) of the Lease provides, in relevant part, that any increase in the Electric

Inclusion Factor shall be furnished to Tenant in an Electricity Statement. Article 38D(3)(c) of

the Lease makes any such Electricity Statement "conclusive and binding upon Tenant" unless

Tenant disputes the Electricity Statement within thirty days:

Each such Electricity Statement given by [Landlord] pursuant to Article

38D(3)(b) above, shall be conclusive and binding upon Tenant,
unless within thirty (30) days after the receipt of such Electricity
Statement, Tenant shall notify [Landlord] that it disputes the
correctness of the Electricity Statement. If such dispute is based on
Tenant's demand and consumption of electric current, Tenant shall
submit a survey and determination of such adjustment, made at its sole
cost and expense, by a reputable and independent electrical engineer or
electrical consulting firm ("Tenant's Engineer") within thirty (30) days
after receipt of such Electricity Statement (id., Exh. A, I 38D(3)(c))
(emphasis added).

Guarantors also concede that, since commencement of the Lease, Landlord "has charged

and received payments under the . . . Electrical Charge provisions" of the Lease (Nicolich Aff.,

Exh. L, ¶ 20).

Guarantors, however, do not allege -- nor can Guarantors allege -- that Tenant disputed

any electrical charges by sending written notice to Landlord, as required by Article 38D(3)(c) of

412034_3/00390-0180 18
the Lease. Guarantors therefore are unable to state a claim that the electrical charges billed to

Tenant were improper.

In the Non-Payment Proceeding, Judge Kennedy dismissed Tenant's affirmative defenses

and counterclaim based on allegedly improper electrical charges because Tenant adduced "no

evidence that [Tenant] notified [Landlord] to dispute such charges" (id., Exh. C, pp. 7, 8). This

Court similarly should hold that Guarantors may not assert a cause of action relating to allegedly

improper electrical charges because Tenant never disputed those charges in writing to Landlord.

3. The "Account Stated" Doctrine Bars Guarantors' Objection

To Late Fees And Electrical Charges Invoiced To Tenant

Guarantors concede that, since the commencement of the Lease, Landlord "has charged

and received payments under the Late Fee and Electrical Charge provision" of the Lease (id.,

Exh. L, ¶ 20). Guarantors, however, do not allege -- and cannot allege -- that Tenant ever
objected to the invoices and statements that Landlord sent to Tenant to bill for late fees and

electrical charges. Guarantors therefore are unable to challenge those late fees and electric

charges based on the "account stated" doctrine.

Under New York law, "[a]n account stated is an agreement between the parties to an

account based upon prior transactions between them with respect to the correctness of the

separate item composing the account and the balance due, if any, in favor of one party or the

other." Shea & Gould v. Burr, 194 A.D.2d 369, 370 (1st Dep't 1993) (citations and internal
quotations omitted). In this regard, "receipt and retention of plaintiff's accounts, without

objection within a reasonable time, and agreement to pay a portion of the indebtedness, [gives]

rise to an actionable account stated ..." Id. (citations and internal quotations omitted); see also

Marchi Jaffe Cohen Crystal Rosner & Katz v. All-Star Video Corp., 107 A.D.2d 597, 599 (1st

Dep't 1985) ("Even if defendant had received plaintiff's accounts and did not expressly assent,

412034_3/00390-0180 19
but failed to object to them within a reasonable time, he would be bound by them as accounts

stated ...") (citations and internal quotations omitted).

Where, as here, there has been a partial payment of outstanding bills, an account stated is

established. See, e.g., Morrison Cohen Singer & Weinstein, LLP v. Waters, 13 A.D.3d 51, 52

(1st Dep't 2004) ("The rule to which we have adhered and which we now reiterate is that either

retention of bills without objection or partial payment may give rise to an account stated")

(emphasis added); see also Risk Mgt. Planning Group, Inc. v. Cabrini Med. Ctr., 63 A.D.3d 421,

421 (1st Dep't 2009) (same); Chisholm-Ryder Co. v. Sommer & Sommer, 70 A.D.2d 429, 433

(4th Dep't 1979) ("Plaintiff's acquiescence in the account for several months and its two

payments on account during the period of the dispute without questioning the balance constitute

implied agreement as to the whole"); Paul, Weiss, Rifkind, Wharton & Garrison v. Koons, 4

Misc. 3d 447, 450 (Sup. Ct. N.Y. County 2004) ("An implicit agreement to pay, warranting

summary judgment, will arise from either the absence of any objection to a bill within a

reasonable time or a partial payment of the outstanding bills") (emphasis added); Cohen Tauber

Spievak & Wagner, LLP v. Alnwick, 33 A.D.3d 562, 562-63 (1st Dep't 2006) (same).

Accordingly, Tenant's partial payment of Landlord's invoices did not constitute an

objection under the terms of the Lease, but instead gave rise to an account stated entitling

Landlord to the full amount of the late fees and electrical charges invoiced.

This Court therefore should hold that Guarantors have no basis to challenge the late fees

and electrical charges billed to Tenant, and accordingly should dismiss Guarantors' First

Counterclaim in its entirety.

412034_3/00390-0180 20
B. Guarantors' Second Counterclaim Is Legally Insufficient Because
(1) Guarantors Have Failed To State A Cause Of Action For Unjust
Enrichment, And (2) No Fiduciary Relationship Exists Between
Landlord And Guarantors That Would Entitle Guarantors To An Accounting

Guarantors' Second Counterclaim does not clearly indicate whether Guarantors seek to

assert a cause of action for unjust enrichment (Nicolich Aff., Exh. L, ¶ 32), an accounting (id., ¶

34), or both. The distinction, however, is ultimately unimportant for purposes of this motion

because Guarantors fail to state a cause of action for either unjust enrichment or an accounting.

1. Guarantors Fail To State A Cause Of Action For Unjust Enrichment

To state a cause of action for unjust enrichment, Guarantors must allege "that [they]

conferred a benefit upon [Landlord], and that [Landlord] will obtain such benefit without

adequately compensating [them] therefor." Nakamura v. Fujii, 253 A.D.2d 387, 390 (1st Dep't

1998) (citations omitted).

The "theory of unjust enrichment lies as a quasi-contractual claim," which operates "in

the absence of an actual agreement between the parties concerned." IDT Corp. v. Morgan

Stanley Dean Witter & Co., 12 N.Y.3d 132, 142 (2009) (citations and internal quotations

omitted). Thus, "[w]here the parties executed a valid and enforceable written contract governing

a particular subject matter, recovery on a theory of unjust enrichment for events arising out of

that subject matter is ordinarily precluded." Id. (emphasis added), citing Clark-Fitzpatrick, Inc.

v. Long Is. R.R. Co., 70 N.Y.2d 382, 388 (1987); see also Corsello v. Verizon NY, Inc., 18

N.Y.3d 777, 790 (2012) ("An unjust enrichment claim is not available where it simply

duplicates, or replaces, a conventional contract or tort claim").

Here, Guarantors allege that Landlord has been unjustly enriched based on its receipt of

late fee payments and its purported overcharges for electrical usage (Nicolich Aff., Exh. L, I 32).

Guarantors concede, however, that Landlord charged those amounts pursuant to the parties'

412034_3/00390-0180 21
Lease (id., Exh. L, ¶ 31). Because the disputed late fees and electric charges were incurred

pursuant to the parties' written Lease, Guarantors' Second Counterclaim, to the extent it asserts a

claim for unjust enrichment, is precluded by the Lease and must be dismissed. See, e.g., IDT, 12

N.Y.3d at 142; Corsello, 18 N.Y.3d at 790.

Accurate Copy Service of America v. Fisk Building Associates, L.L.C., 72 A.D.3d 456

(1st Dep't 2010), is instructive in this regard. In Accurate Copy, the plaintiffs, commercial

tenants, brought an action against their landlord alleging that they had been overcharged for

electricity in violation of their leases, and asserted claims for, among other things, breach of

contract and unjust enrichment. Id. at 456. Citing to New York's strong public policy for

respecting negotiated commercial leases and the preclusive effect of a written lease on unjust

enrichment claims, the court held that the complaint had failed to state a cause of action for

unjust enrichment, and affirmed the trial court's dismissal of same. Id. ("Dismissal of the second

cause of action for unjust enrichment was warranted because there is an enforceable agreement

between the parties") (citations omitted).

Similarly, in 301h Place Holdings, LLC v. 474431 Associates, No. 0013436/2006, 2007

WL 2174838 (Sup. Ct. Queens County April 19, 2007), the court held that the commercial

tenant's cause of action for unjust enrichment should be dismissed because "the parties had a

valid lease governing their relationship" and "a plaintiff may not assert a cause of action for

unjust enrichment to recover amounts it claims to have overpaid under a lease" (citations

omitted). See also Nezry v. Haven Ave. Owner LLC, 150023/10, 2010 WL 3338545, at *3 (Sup.

Ct. N.Y. County July 9, 2010) ("Plaintiffs' claim that defendants were unjustly enriched ...

should also be dismissed. This quasi-contractual claim is inapplicable since a written lease is the

source of the parties' dispute").

412034_3/00390-10180 22
 Here, as in Accurate Copy and 30 th Place Holdings, Guarantors' Counterclaim for unjust

enrichment relates to late fee and electric charges that are specifically addressed by the parties'

lease. (Nicolich Aff, Exh. L, TT 31-32.) Accordingly, as in those cases, Guarantors' unjust
enrichment cause of action should be dismissed.

2. Guarantors Are Not Entitled To An Accounting

To the extent that Guarantors' Second Counterclaim seeks an accounting, it also fails as a

matter of law.

It is well settled that, absent a fiduciary relationship, no cause of action for an accounting

exists. Saunders v. AOL Time Warner, Inc., 18 A.D.3d 216, 217 (1st Dep't 2005); Gersten-

Hillman Agency, Inc. v. Heyman, 68 A.D.3d 1284, 1286 (3d Dep't 2009) ("It is well settled that

an equitable action for an accounting will not lie in the absence of a fiduciary relationship

between the parties") (citations omitted); Top-All Varieties, Inc. v. Raj Dev. Co., 173 A.D.2d

604, 605 (2d Dep't 1991).

As a matter of law, "[a] landlord-tenant relationship is not per se a fiduciary one." In re

Carolina Steel Corp., 179 B.R. 413, 418 (S.D.N.Y. 1995). See also Clifford v. Hughson, 992 F.

Supp. 661, 670 (S.D.N.Y. 1998) ("A landlord is not inherently the fiduciary of his tenant")

(citations omitted). Where, as here, an action involves an arm's-length business transaction

between a commercial landlord and tenant, a fiduciary relationship does not exist. See, e.g., Ring

v. Arts Intl, Inc., 7 Misc.3d 869, 878 (Civ. Ct. New York County 2004) ("the parties' landlord-

tenant relationship on which this proceeding is based is distinctly not a fiduciary relationship but

an arm's length business transaction").

Nothing in Guarantors' Counterclaims even suggests that a fiduciary relationship existed

or was intended to be created by the Lease or the Guaranty. Indeed, Guarantors' Counterclaims

412034_3/00390-0180 23
allege neither the existence of a fiduciary relationship nor any facts that might support a finding

of a fiduciary relationship between the parties (Nicolich Aff, Exh. L, TT 30-34).

Guarantors are not entitled to an accounting as a matter of law, and their Second

Counterclaim therefore lacks merit and should be dismissed.

C. Guarantors' Third And Fourth Counterclaims

Fail To State A Cause of Action That Landlord
"Misled" Or "Defrauded" Guarantors

The "elements of a cause of action for fraud require a material misrepresentation of a

fact, knowledge of its falsity, an intent to induce reliance, justifiable reliance by the plaintiff and

damages." Eurycleia Partners, LP v. Seward & Kissel, LLP, 12 N.Y.3d 553, 559 (2009).

CPLR 3016 requires that where a cause of action is based upon misrepresentation or

fraud, "the circumstances constituting the wrong shall be stated in detail." Eurycleia Partners,

12 N.Y.3d at 559 ("A claim rooted in fraud must be pleaded with the requisite particularity under

CPLR 3016(b)"). Accordingly, "each of the foregoing elements [of a fraud cause of action] must

be supported by factual allegations containing the details constituting the wrong sufficient to

satisfy CPLR 3016(b)." Cohen v. Houseconnect Realty Corp., 289 A.D.2d 277, 278 (2d Dep't

2001) (citation omitted).

Failure to allege each of the required elements requires dismissal of a fraud claim. See,

e.g., 767 Third Ave. LLC v. Grebel & Finger, LLP, 8 A.D.3d 75, 75-76 (1st Dep't 2004)

(complaint dismissed where plaintiff "failed to plead with specificity the allegations underlying

its causes of action for fraudulent misrepresentation and fraudulent inducement"); Sirohi v. Lee,

222 A.D.2d 222, 222 (1st Dep't 1995) (affirming dismissal of fraud claim where plaintiff "failed

to state the circumstances constituting the wrong and to allege each of the elements of fraud . . .

with the particularity mandated by CPLR 3016(b)").

412034_3/00390-0180 24
 In this case Guarantors' Third Counterclaim makes only conclusory allegations that

Landlord "misled defendants to believe that the rents alleged to be due and owing were an actual

and legitimate statement of account" (Nicolich Aff., Exh. L, ¶ 39), that Guarantors "relied on the

representations of Defendant [sic] respecting alleged outstanding rent as aforesaid (id., Exh. L, at

¶ 41), and that Guarantors "have been damaged as aforesaid" (id., Exh. L, at ¶ 42). Guarantors'

Third Counterclaim therefore requests an order rescinding the Lease and Guaranty (id., Exh. L,

45).

Similarly, Guarantors' Fourth Counterclaim (erroneously labeled "Fifth Counterclaim")

makes only conclusory allegations that Landlord "defrauded [Tenant] and Defendants to believe

that the rents alleged to be due and owing were an actual and legitimate statement of account"

(id., Exh. L, ¶ 48), that Guarantors "relied upon the representations of [Landlord] respecting

alleged outstanding rent as aforesaid" (id., Exh. L, I 52), and that "Defendants and [Tenant] have

been damaged as aforesaid" (id., Exh. L, ¶ 53). Guarantors apparently allege the Fourth

Counterclaim as a basis for an award of monetary damages to Guarantors.

As demonstrated below, Guarantors' Third and Fourth Counterclaims fail to allege claims

that Landlord "misled" or "defrauded" Guarantors with specificity as required by CPLR 3016(b),

and therefore should be dismissed.

1. Guarantors Fail To Allege A

Material Misrepresentation Of Fact

A complaint fails to state a cause of action for fraud when the plaintiffs "have failed to

allege what misrepresentations, if any, were made by the individual defendant." Schulman v.

Greenwich Assoc., LLC, 52 A.D.3d 234, 234 (1st Dep't 2008); see also Fariello v. Checkmate

Holdings, LLC, 82 A.D.3d 437, 437 (1st Dep't 2011) (affirming dismissal of fraud claims that

"were not pleaded with particularity, and were 'bare-bones,' without referencing, for example,

412034_3/00390-0180 25
specific places and dates of the alleged misrepresentations") (citation omitted); Yuko Ito v.

Suzuki, 57 A.D.3d 205, 207 (1st Dep't 2008) (plaintiff failed to state cause of action for fraud

when complaint lacked "assertion of any misrepresentation . . . that was calculated to induce

plaintiff's detrimental reliance").

Here, as noted above, Guarantors merely allege that Landlord purportedly "misled" and

"defrauded" Guarantors, but Guarantors nowhere identify or specify any particular factual

statements or representations made by Landlord to Guarantors that were false.

For this reason alone, this Court should dismiss Guarantors' Third and Fourth

Counterclaims. See, e.g., Cohen, 289 A.D.2d at 278 (ordering dismissal of fraud claim where

"complaint does not contain any allegations setting forth the alleged material misrepresentations

that defendant Steve Gallin made to plaintiff'); see also Sirohi v. Lee, 222 A.D.2d at 222

(affirming dismissal of fraud claim where plaintiff failed to allege "misrepresentation of a

material fact . . . with the particularity mandated by CPLR 3016(b)"); Latzko v. Spector, 28

A.D.2d 1111, 1111 (1st Dep't 1967), aff'd, 22 N.Y.2d 710 (1968) (ordering dismissal of fraud

claim where it was not "alleged or particularized what work or letters were false and

misleading").

2. Guarantors Fail To Allege An Intent To

Induce Reliance Or To Deceive Guarantors

As noted above, one element of a cause of action for fraud is "an intent to induce

reliance." Eurycleia Partners, 12 N.Y.3d at 559; see also Cohen, 289 A.D.2d at 278 (fraud cause

of action requires showing "defendant knew representations were false and made them with the

intent to deceive the plaintiff") (emphasis added).

412034_3/00390-0180 26
 Here, Guarantors' Third and Fourth Counterclaims fail to make any allegation that

Landlord made any misrepresentation either "to induce reliance" or "with the intent to deceive"

Guarantors (Nicolich Aff., Exh. L, TT 36-53).

For this reason also, this Court should dismiss Guarantors' Third and Fourth

Counterclaims. See, e.g., Mandarin Trading Ltd. v. Wildenstein, 65 A.D.3d 448, 450 (1st Dep't

2009), aff d, 16 N.Y.3d 173 (2011) (complaint fails to state fraud cause of action because

complaint "fails to state that the appraisal was made to induce [plaintiff's] reliance, a necessary

element of fraudulent misrepresentation") (citation omitted); Wallace v. Crisman, 173 A.D.2d

322, 322 (1st Dep't 1991) ("Plaintiff did not adequately allege an intent to deceive"); Singer v.

Thuilot, 140 A.D.2d 235, 235 (1st Dep't 1988) (complaint "is defectively pleaded in the absence

of an allegation that defendants asserted the known false fact 'to deceive the other party and to

induce them to act upon it'") (citation omitted).

3. Guarantors Fail to Allege Justifiable

Reliance On Any Misrepresentation

A cognizable fraud cause of action requires "justifiable reliance" by the party claiming

fraud. Eurycleia Partners, 12 N.Y.3d at 559, see also Cohen, 289 A.D.2d at 277, 278 (fraud

claim requires that "plaintiff justifiably relied on the defendant's misrepresentations . . .

supported by factual allegations containing the details . . . sufficient to satisfy CPLR 3016(b)").

Here, Guarantors' Third and Fourth Counterclaims merely allege that "Defendants relied

on the representations of Defendant [sic] respecting alleged outstanding rent as aforesaid"

(Nicolich Aff., Exh. L, if 41) and that "Defendants relied upon the representations of Plaintiff
respecting alleged outstanding rent as aforesaid" (id. , Exh. L, ¶ 52).
Guarantors therefore fail to specify with any particularity the manner in which

Guarantors purportedly relied upon Landlord's alleged misrepresentations. Nor could

412034_3/00390-0180 27
Guarantors reasonably make such allegations of reliance because, as Guarantors allege as their

Fourth Affirmative Defense, Landlord purportedly "overcharged Goidel & Siegel, LLP" -- not

Guarantors -- for rent payments. Guarantors make no allegation -- and can make no allegation --

that Guarantors themselves made rent payments to Landlord on behalf of Tenant.

Guarantors' failure to plead justifiable reliance with sufficient particularity therefore

requires dismissal of the Third and Fourth Counterclaims. See, e.g., Mech. Plastics Corp. v.

Rawlplug Co., Inc., 119 A.D.2d 641, 643 (2d Dep't 1986) (dismissing fraud claim where

"complaint fails to state how the plaintiffs relied to their detriment upon the defendants'

allegedly false statement").

4. Guarantors Fail To Allege Damages To

Support Causes Of Action For Fraud

Dismissal of a fraud cause of action is required when "conclusory allegations of the

complaint do not contain any factual detail showing specific damages resulting from the

purported misrepresentations and therefore are insufficient to establish a claim in fraud."

Gordon v. Dino De Laurentiis Corp., 141 A.D.2d 435, 437 (1st Dep't 1988).

Here, Guarantors' Third and Fourth Counterclaims merely make conclusory allegations

that "Defendants have been damaged as aforesaid" (Nicolich Aff., Exh. L, ¶ 42) and "Defendants

and [Tenant] have been damaged as aforesaid" (id., Exh. L, ¶ 53). Guarantors, however, fail to

provide any details concerning how Guarantors were damaged — e.g., that Guarantors allegedly

made payments as a result of any purported misrepresentations, and the amounts of any such

payment made by Guarantors. Nor can Guarantors make any such allegations.

For this reason also, this Court should dismiss Guarantors' Third and Fourth

Counterclaims. See, e.g., Parks v. Leahey & Johnson, 81 N.Y.2d 161, 165 (1993) (fraud action

properly dismissed where "complaint was deficient because its allegations on the issue of

412034_3/00390-0180 28
damages were merely conclusory"); Cohen v. Brown, Harris, Stevens, Inc., 64 N.Y.2d 728, 731

(1984) (fraud cause of action "properly dismissed because of [plaintiffsl failure to allege any

injury inuring to them"); Wallace, 173 A.D.2d at 322) (fraud cause of action properly dismissed

when plaintiff did not "set forth factual details showing specific damages resulting from alleged

misrepresentations").

D. Guarantors' Fifth Counterclaim Fails To State

A Viable Cause Of Action For Rescission

Guarantors' Fifth Counterclaim (labeled "As And For A Fifth Counterclaim") seeks

rescission of the Lease and Guaranty ab initio because Tenant allegedly was charged illegal late

fees and improper electrical charges (Nicolich Aff., Exh. L, ¶ 54-57).

Guarantors' Fifth Counterclaim accordingly relies on the same theories of liability as

does Guarantors' First Counterclaim, which seeks judgment declaring that the Lease and

Guaranty are void ab initio.

For the reasons set forth in detail in Point III(A) above, this Court should reject

Guarantors' contentions and should accordingly dismiss Guarantors' Fifth Counterclaim.

E. Guarantors Have Failed To State A Cause Of Action For Prima Facie Tort

The elements of a cause of action for prima facie tort are "(1) the intentional infliction of

harm, (2) which results in special damages, (3) without any excuse or justification, (4) by an act

or a series of acts which would otherwise be lawful." Freihofer v. Hearst Corp., 65 N.Y.2d 135,

142-43 (1985); see also Kaisman v. Hernandez, 61 A.D.3d 565, 566 (2009). Here, Guarantors'

Counterclaim for prima facie tort fails for four reasons.

First, Guarantors cannot satisfy the first element of the cause of action. To show an

intentional infliction of harm, Guarantors were required to have alleged that disinterested

malevolence was "the sole motive for" Landlord's conduct. Posner v. Lewis, 18 N.Y.3d 566,

412034_3/00390-0180 29
570 n.1 (2012) (emphasis added) (citations omitted.) See also Epifani v. Johnson, 65 A.D.3d

224, 232 (2d Dep't 2009) (same); Emergency Enclosures, Inc. v. Natl. Fire Adj. Co., Inc., 68

A.D.3d 1658, 1660 (4th Dep't 2009) (same).

Instead, Guarantors have made only vague and conclusory allegations that Landlord's

allegedly fraudulent bills were rendered "intentionally" (Nicolich Aff, Exh. L, ¶f 59, 62, 65) and

"knowingly" (id., Exh. L, TT 60-61, 63, 65). Nowhere do Guarantors claim that Landlord acted
solely out of disinterested malevolence (id., Exh. L, ¶J 58-68). Guarantors' allegations, even if

true -- which they are not -- are therefore insufficient to state a cause of action for prima facie

tort. See Posner, 18.N.Y.3d at 570, n.1; see also Epifani, 65 A.D.3d at 232 ("While Oliverre

alleges that Johnson intentionally inflicted harm upon her without justification, she failed to

plead that Johnson's actions were motivated solely by disinterested malevolence") (citations

omitted); see also Roberts v. Pollack, 92 A.D.2d 440, 447 (1st Dep't 1983) (same).

Second, Guarantors cannot satisfy the second element of a cause of action for prima facie

tort because they have failed to plead special damages with particularity, as they must to

overcome a motion to dismiss. See, e.g., Freihofer, 65 N.Y.2d at 143 ("A critical element of the

cause of action is that plaintiff suffered specific and measurable loss, which requires an

allegation of special damages") (citations omitted); see also Kaisman, 61 A.D.3d at 566 (same);

Broadway & 67 th St. Corp. v. City of N.Y, 100 A.D.2d 478, 486 (1st Dep't 1984) ("An essential

element of [a cause of action for prima facie tort] is an allegation of special damages,fidly and

accurately stated with sufficient particularity as to ident)5i and causally relate the actual losses

to the allegedly tortious acts. Failure to do so lays the cause of action open to summary

dismissal") (emphasis added)(citations omitted); Emergency Enclosures, 68 A.D.3d at 1660

(same).

412034_3/00390-0180 30
 To plead special damages with particularity, Guarantors were required not only to

identify and causally link their actual losses to Landlord's allegedly tortious acts, but also to

itemize their damages -- round number estimations of damages are insufficient. See, e.g.,

Leather Dev. Corp. v. Dun & Bradstreet, 15 A.D.2d 761, 761 (1st Dep't 1962), aff'd 12 N.Y.2d

909 (1963) ("The allegations of the amended complaint are ones of general damages, and not of

special damages, asking the round sum of $500,000 on behalf of the corporate plaintiff and

$1,000,000 for the individual plaintiff ... damages pleaded in such round sums, without any

attempt at itemization, must be deemed allegations of general damages") (citations omitted); see

also Vigoda v. DCA Prods. Plus, Inc., 293 A.D.2d 265, 266 (1st Dep't 2002) (same).

Here, Guarantors seek "no less than $750,000" in damages, plus punitive damages in an

amount to be determined at trial, for alleged: (1) overpayments to Landlord, (2) time lost from

Guarantors' vocation to defend against Landlord's alleged misconduct, (3) expert witness

payments allegedly incurred in response to Landlord's conduct, (4) unspecified "emotional

distress," and (5) "dissention [sic] as between defendants regarding the operation of their

business" (Nicolich Aff., Exh. L, ¶ 66).

Guarantors have failed to itemize their damages, or to show any causal connection

between Guarantors' purported damages and Landlord's allegedly tortious conduct. See, e.g.,

Leather Dev. Corp., 15 A.D.2d at 761; see also Vigoda, 293 A.D.2d at 266. And, in any event,

the types of damages alleged all constitute either general damages for breach of contract or

noneconomic loss, or damages relating to the prosecution or defense of lawsuits against

Landlord, none of which constitute special damages. See, e.g., Epifani, 65 A.D.3d at 233

(insufficient to allege "merely general damages for noneconomic loss"); see also Cardo v. Bd. of

Mgrs., Jefferson Vil. Condo 3, 29 A.D.3d 930, 931 (2d Dep't 2006) (dismissing prima facie tort

412034_3/00390-0180 31
claim where "defendant failed to allege special damages beyond the physical, psychological, or

financial demands of defending a lawsuit") (citations and internal quotations omitted); Del

Vecchio v. Nelson, 300 A.D.2d 277, 278 (2d Dep't 2002) (same).

Third, Guarantors have failed to satisfy the third element of a cause of action for prima

facie tort because they have failed to allege that Landlord's actions were without excuse or

justification. In fact, Guarantors have pleaded facts that demonstrate that Landlord's actions

were motivated by a legitimate business purpose (Nicolich Aff., Exh. L, ¶11 16-30). In particular,

Guarantors allege that Landlord and Tenant entered into the Lease pursuant to which Tenant

leased commercial space from Landlord (id., Exh. L, ¶ 16). Guarantors further allege that the
Lease contained late fee and electrical inclusion provisions, that such provisions are considered

rent under the Lease, and that Landlord has, since the commencement of the Lease, charged and

received payments for late fees and electrical charges (id., Exh. L, TT 17-20). While Guarantors

challenge the legitimacy of the late fee and electrical charges (id., Exh. L, TT 21, 25), and the
Lease itself (id., Exh. L, TT 26-27), Guarantors do not specifically contend that Landlord was
acting other than in furtherance of a legitimate business purpose in assessing the fees and charges

of which Guarantors complain (id., Exh. L, ¶J 58-68).

Where, as here, legitimate business purpose supports the actions complained of, the third

element of a cause of action for prima facie tort is not satisfied. See, e.g., Roberts, 92 A.D.2d at

447 ("[w]here other motives exist, such as profit, self-interest, or business advantage, prima facie

tort does not lie") (citation omitted); see also 600 W 115 th St. Corp. v. 600 W. 115 th St. Condo.,

180 A.D.2d 598, 599 (1st Dep't 1992) ("In view of the obvious business purpose behind the

Condominium's objection to plaintiff's plans, plaintiff s conclusory allegations of malice fail to

412034_3/00390-0180 32
raise a triable issue of fact") (citations omitted); see also Luxonomy Cars, Inc. v. Citibank, NA.,

65 A.D.2d 549, 550 (2d Dep't 1978) (same).

Fourth, even if Guarantors could overcome their failure to have satisfied the first three

elements of a cause of action for prima facie tort, they would still not be entitled to an award of

punitive damages because such damages are simply not available for this cause of action. See,

e.g., Walsh Bros. v. Ruppert, 7 A.D.2d 896, 896 (1st Dep't 1959) ("While the second cause of

action alleges elements which set forth minimal requirements of a cause of action for prima facie

tort the recovery sought thereon is limited to punitive and exemplary damages. The law is clear

that for prima facie tort only actual damages may be recovered") (emphasis added) (citation

omitted); see also Women's Interart Ctr., Inc. v. Clinton Hous. Dev. Fund Corp., No.

0113088/2007, 2008 WL 4103252 (Sup. Ct. N.Y. County July 14, 2008) (same).

Prima facie tort "should not become a 'catch all' alternative for every cause of action

which cannot stand on its own legs." Freihofer, 65 N.Y.2d at 143 (citations and internal

quotations omitted). Moreover, "[w]here relief may be afforded under traditional tort concepts,

prima facie tort may not be invoked as a basis to sustain a pleading which otherwise fails to state

a cause of action in conventional tort." Id. (citations omitted). Here, for all of the reasons stated

above, Guarantors' Sixth Counterclaim seeking to recover damages for prima facie tort should be

dismissed.

POINT IV

THIS COURT SHOULD AWARD ATTORNEYS'

FEES AND EXPENSES UNDER SECTION 19 OF
THE LEASE AND ARTICLE SECOND OF THE GUARANTY

Where a lease or other contract so provides, a landlord is entitled to an award of

attorneys' fees incurred in enforcing obligations of a tenant or rights against the tenant. TAG

412034_3/00390-0180 33
380, LLC v. ComMet, 380, Inc., 10 N.Y.3d 507, 515-16 (2008); accord, Sun Mei Inc. v. Chen, 21

A.D.3d 265, 266 (1st Dep't 2005) (defendants entitled to award of attorneys' fees as provided by

leases because plaintiffs' claims challenging existence and validity of lease were barred by res

judicata and collateral estoppel).

Enforcement of contractual provisions for awards of attorneys' fees provides an

important deterrent to frivolous litigation, such as Defendants' assertions of the Counterclaims at

issue herein. Ceit Indus. Co. v. Hessen, 136 A.D.2d 145, 151 (1st Dep't 1988) (availability of

attorney fees "would constitute a significant restraint and important deterrent to the bringing of

frivolous [litigation]").

Landlord accordingly should be awarded all of its reasonable attorneys' fees and

expenses incurred in this action pursuant to Section 19 of the Lease and Article Second(I) of the

Guaranty (Czaja Aff., Exh. A, p. 3, § 19; id., Exh. B, Article Second(I)).

412034_3/00390-0180 34
 CONCLUSION

For the foregoing reasons, Landlord respectfully requests that the Court issue an order

dismissing Defendants' Counterclaims, awarding attorneys' fees and expenses pursuant to

Section 19 of the Lease and Article Second of the Guaranty, and granting such other relief and

this Court deems just and proper.

Dated: New York, New York

July 16, 2012

INGRAM YUZEK GAINEN

CARROLL & BERTOLOTTI, LLP

ohn G. Nicolich
Caitlin L. Bronner
Atto s for Plaintiff
122 East 42nd Street, LLC
250 Park Avenue
New York, New York 10177
(212) 907-9600

412034_3100390-0180 35