Defeating a Landlord’s Demand for Interim Rent in a Seven-Figure Lease Dispute

In defense of commercial tenant, Applebee’s pandemic-related commercial lease dispute with its landlord, Lawson defeated the landlord’s attempt to compel monthly rent payments despite the landlord having secured judgment on liability.

By November 2021, the landlord had already obtained summary judgment on liability but now sought to compel pendente lite during the pendency of the litigation. Applebees owed more than $1.16 million in unpaid rent due to the Covid-19 pandemic. Aside from the arrears, Applebees was struggling to make payroll and keep the restaurant operational. Were it forced to also make ongoing rent payments, it would have been forced to close its doors just as outdoor dining began to take effect.

Compounding on their current arrears, the landlord actively obstructed its ability to generate revenue, including sending twelve security guards to remove Applebee’s outdoor dining furniture. On one instance, the landlord’s security team brandished their firearm at a customer. The security guard was later arrested for possessing an unlicensed weapon. Additionally, the landlord placed equipment and cars to block Applebee’s outdoor seating space including prohibiting neighbor establishments from sharing their space with the restaurant. , instructed neighboring businesses not to allow the restaurant to use adjoining sidewalk space, and threatened daily fines over window signs displaying pandemic safety protocols, its health grade, and operating hours.

Rather than capitulating, Lawson moved for leave to add counterclaims that the landlord interfered with Applebee’s outdoor dining operations and that the restaurant’s damages may exceed the current arrears owed.. The court agreed. Recognizing that Applebee’s claims could offset—or exceed—the rent claimed, the court granted the amendment over the landlord’s objections.

Justice Arlene Bluth denied the landlord’s request for interim payments. Requiring payment before resolving the counterclaims could force the restaurant to claw back money later. The landlord would have to pursue its damages through the litigation. The result: The restaurant defeated the demand for court-ordered monthly rent payments while preserving counterclaims that could eliminate the landlord’s net recovery.

Bay Plaza Community Center, LLC v. Bay Plaza Apple, LLC, Supreme Court, New York County, Index No. 650040/2021. Decision dated August 26, 2021.