Commercial Division Blog

Posted: July 4, 2015 / Categories Commercial, Contracts

When Plaintiff Causes Defendant's Failure to Perform it Cannot Base a Claim Upon That Failure

On June 24, 2015, the Second Department issued a decision in Frank Brunckhorst Co., LLC v. JPKJ Realty, LLC, 2015 NY Slip Op. 05439, applying the doctrine of prevention.

In Frank Brunckhorst Co., the plaintiff sought to recover damages arising from the defendant's breach of a lease. The Second Department affirmed the trial court's denial of the plaintiff's motion for summary judgment on the defendant's counterclaims, explaining:

On or about November 1, 2007, the plaintiff and the defendant entered into a commercial lease, pursuant to which the defendant leased to the plaintiff the ground floor, cellar, and "rear yard roof area" of a building situated in Brooklyn. Paragraph 44(c) of the rider to the lease provided that if a permanent certificate of occupancy for the building was not issued within 12 months following the "Commencement Date," elsewhere defined as the date that the defendant delivered the demised premises vacant and broom clean to the plaintiff, the plaintiff had the right to terminate the lease without liability or obligation. By letter dated July 13, 2009, the plaintiff wrote to the defendant, stating that since a permanent certificate of occupancy had not been issued, the plaintiff was terminating the lease pursuant to paragraph 44(c).

. . .

The plaintiff established its prima facie entitlement to judgment as a matter of law dismissing the first, third, fourth, and sixth counterclaims. In support of its motion, the plaintiff submitted the affidavit of a building consultant, who opined that, as of July 2009, the premises had various "open issues" and outstanding violations which would have "prevented a permanent certificate of occupancy from issuing." The building consultant further stated that "each of these issues would have to be resolved by the building's owner, not by a tenant such as the plaintiff, before a [permanent certificate of occupancy] could be issued."

In opposition, the defendant raised a triable issue of fact as to whether the plaintiff's conduct caused the defendant's failure to obtain a permanent certificate of occupancy. Under the doctrine of prevention, when a party to a contract causes the failure of the performance of the obligation due, it cannot in any way take advantage of that failure. Here, the defendant submitted, inter alia, the affidavit of a licensed certified engineer, who stated, among other things, that all of the work that needed to be completed by the defendant in order to obtain a permanent certificate of occupancy had been completed. The engineer further stated that, in order to submit an application for a permanent certificate of occupancy, the defendant was required to submit paperwork showing that the core construction work being performed by the plaintiff had been completed and conformed to the plans submitted by the plaintiff's architect. The engineer stated that, although the defendant attempted to obtain sign-off forms from the plaintiff confirming that this work had been completed in conformance with the plans submitted by the plaintiff's architect, the plaintiff never provided the sign-off forms.

(Internal quotations and citations omitted) (emphasis added).