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PLAINTIFF LANDLORD HAD AN ADEQUATE REMEDY AT LAW FOR AN ALLEGED BREACH OF THE LEASE BY THE TENANT; PLAINTIFF’S ALLEGED LOSS OF GOODWILL WAS NOT APPLICABLE; THE BALANCE OF EQUITIES FAVORED THE TENANT; THE PRELIMINARY INJUNCTION WAS NOT WARRANTED (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, over a two-justice dissent, determined a preliminary injunction was not warranted in this dispute over a lease. Defendant store leased space in plaintiff mall. The lease provided the store could terminate the lease before the end of the term if its gross sales were below a threshold. The store sought to terminate the lease on that ground, but the mall alleged the store’s gross sales did not fall below the threshold. The lease included a liquidated damages provision. The majority concluded the liquidated damages provision provided a remedy at law, the loss of goodwill was not applicable and the balance of the equities favored the store, not the mall. So the preliminary injunction should not have been granted:

… [T]he lease contains a liquidated damages provision that entitles plaintiff to certain money damages if defendants prematurely vacate the premises and cease operations. The lease also contains an integration clause stating that the lease is “the entire and only agreement between the parties.” Thus, because the lease specifically provides that plaintiff is entitled to certain money damages in the event that defendants vacate the premises in breach of the agreement—the very injury that serves as the predicate for plaintiff’s action—we conclude that plaintiff has an adequate remedy at law and, moreover, that plaintiff has not suffered irreparable harm because the liquidated damages clause was intended as the sole remedy for such a breach … .

We disagree with our dissenting colleagues that plaintiff established a likelihood of irreparable injury from the loss of goodwill that would occur if defendants were to cease operations by prematurely terminating the lease. The “loss of goodwill and damage to customer relationships, unlike the loss of specific sales, is not easily quantified or remedied by money damages” … and may warrant a finding of irreparable injury in cases such as those involving unfair competition tort claims … , the proposed demolition or alteration of the premises … , or the issuance of a Yellowstone injunction, in which it is a tenant, not the landlord, who seeks to enjoin the termination of a lease … . No such scenario is implicated here and, moreover, as already noted, the specific injury complained of by plaintiff was accounted for by the terms of the lease agreement. …

… [W]we conclude that the harm defendants will suffer if forced to keep their 6,000-square-foot store open against their will is greater than the injury plaintiff will suffer from the loss of one tenant in the mall, especially because plaintiff may still recoup its loss via the liquidated damages provision. Eastview Mall, LLC v Grace Holmes, Inc., 2020 NY Slip Op 02447, Fourth Dept 4-24-20

 

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