Court Grants Summary Judgment To Landlord On Breach Of Lease But Denies Consequential Damages

Posted: October 24, 2025 / Written by: Jeffrey M. Eilender, Joshua Wurtzel, Samuel L. Butt, Channing J. Turner, Thomas A. Kissane / Categories Breach of Contract, Summary Judgment, Guaranty , Attorney Fees

Court Grants Summary Judgment To Landlord On Breach Of Lease But Denies Consequential Damages

On September 10, 2025, Justice Andrea Masley granted summary judgment to the plaintiff landlord on liability, and awarded attorneys’ fees under a lease, while granting summary judgment to defendant tenants to the extent of striking the landlord’s claim for consequential damages. The case is 1101-43 Ave Acquisition LLC v. Sonder Hospitality USA Inc., Index No. 653840/2020.

Plaintiff 1101-43 Ave Acquisition LLC (“Landlord”) entered into a lease for 100 rooms at a hotel in Long Island City with defendant Sonder Hospitality USA Inc. (“Tenant”) and certain of its affiliates/guarantors. Paragraph 33 of the lease provided that “‘[i]f Landlord shall fail to provide a Non-Disturbance Agreement from Landlord’s existing Mortgagee in a form acceptable to Tenant within thirty (30) days following the Effective Date, Tenant shall have the right to terminate this Lease.” (Id. [emphasis added and omitted].)’” Slip Op. 2 (emphasis in opinion).

Lender declined to sign the NDA as presented to it by Landlord, Tenant terminated the lease for failure to deliver the NDA, and Lender foreclosed. Alleging that foreclosure was caused by Tenant’s cessation of payments in violation of the lease’s 30-day notice/cure provision, Landlord sued for breach of the lease, seeking various forms of damages, including consequential damages of $36 million, as well as attorneys’ fees and enforcement of the guarantees.

Justice Masley granted summary judgment striking the complaint’s demand for consequential damages. Slip op. 12 (quoting §46[f] of the lease): “‘In no event under this Lease shall either Landlord or Tenant be liable for, and each party hereby waives any claim for, any indirect, consequential or punitive damages, including loss of profits or business opportunity, arising under or in connection with this Lease.’” She otherwise granted summary judgment to Landlord/Plaintiff for breach of contract and attorneys’ fees, based on Tenant’s failure to abide by the lease’s 30-day notice/cure provision:

The court rejects Tenant’s argument that the notice to cure provision in §21 of the Lease did not apply to §33. The court must interpret a contract “so as to give full meaning and effect to the material provisions” and “not render any portion meaningless” and the contract “should be read as a whole, and every part [] interpreted with reference to the whole.” (Beal Sav. Bank v Sommer, 8 NY3d 318, 324 [2007] [internal quotation marks and citations omitted], rearg denied 8 NY3d 993 [2007].) Tenant’s reading impermissibly excises §21 from the Lease without reason.

The court rejects Tenant’s argument that a cure notice would be futile. Tenant’s futility argument presumes that the Lease had automatically terminated on February 29, 2025. However, as discussed above, termination was not automatic. Tenant had a right to terminate which may be exercised after giving Landlord a notice and opportunity to cure. There is no issue of fact as to futility. Indeed, by failing to give Landlord the requisite notice, Tenant robbed Landlord of the opportunity to procure Lender’s signed NDA.. . .

Accordingly, Tenant’s termination of the Lease without 30 days’ notice coupled with its abandonment of the Lease constitutes a breach of the Lease and summary judgment is granted to Landlord on liability for its first, second, and third causes of action.

Slip op. 7-8.

Defendants failed to effectively contest any of the guarantors’ liability, id. 11-12, and the case would therefore proceed to a trial as to damages and the attorney fees to which Landlord, as the prevailing party, was entitled under the lease. Id. 13-14.

Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning leases, guaranties, summary judgment or attorneys’ fees.