lNED ON 311612012

SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY

.----....

/J

PART
Justlce

/ 5

Index Number : 116533/1995 MORRIS, BRUCE

INDEX NO.
MOTION DATE

vs.

702 EAST FIFTH STREET SEQUENCE NUMBER : 025

VACATE

MOTION SEQ. NO.

The followlng papen, numbered I to Notlce of MotlonlOrder to Show Cause Answering Affldavb Roplylng Affldavlts

-Affldavita - Exhlblta

, were read on thlr motion tolor

- Exhlblta

IWr). 2 INO($). L

I NOW.

Upon the foregolng paperp, it I ordered that this motlon Is s

;
v)

I-

Dated:
I CHECK ONE: .

&
..................................................................... ................................................
CASE DISPOSED NON-FINAL DISPOSITION

2. CHECK A3 APPROPRIATE: ...........................MOTION IS: [7 GRANTED

3. CHECK IF APPROPRIATE:

0DENIED

0GRANTED IN PART
SUBMIT ORDER

OTHER

SElTLE ORDER

0DO NOT POST

0FIDUCIARY APPOINTMENT

0REFERENCE

Plaintiff,

- against 702 EAST FIFTH STREET,

Index No. 116533/95

DECISION and ORDER Mot. Seq.: 025

Defendant.

FlLED

6 , 201 1, granted The Hon. Saliann Scarpulla, by use o f action on the issue of Plaintiffs motion for summary judgment on liability and directed a jury trial-onthe issue of damages. A trial was held before this Court on November 14,16, and 17,2011, and concluded with a jury verdict awarding Plaintiff $706,997.50 for lost profits and consequential damages . Defendant moves, -. pursuant to C.P.L.R. 4404(a) to set aside that award. Defendant asserts that Plaintiffs failure to produce tax returns, financial records and/or other documents showing financial loss suffered by him, compels the conclusion that he suffered no lost profits or revenue. Defendant indicates that Plaintiffs sole support for the damages awarded by the jury was sales tax returns prepared by Trudy Silver, Plaintiffs wife, filed on behalf of an entity called 5C Cafk. C.P.L.R. 4404(a) states as follows: After a trial of a cause of action or issue triable of right by a jury, upon the motion of any party or on its own initiative, the court may set aside a verdict or any judgment entered thereon and direct that judgment be entered in favor of a party entitled to judgment as a matter of law or it may order a new trial of a cause of action or separable issue where the verdict is contrary to the weight of the evidence, in the interest of justice or where the jury cannot agree after being kept together for as long as is deemed reasonable by the court.

The burden in a motion brought pursuant to C.P.L.R. 4404 is on the moving party. It is well-settled that a motion to set aside a jury verdict shall not be granted unless the preponderance of the evidence in favor of the moving party is so great that the verdict could not have been reached upon any fair interpretation of the evidence. (See, Baker v. Turner,200 A.D.2d 52 1 [ lSt Dept 19943). In the absence of indications that substantial justice has not been done, a successful litigant is entitled to the benefits of a favorable jury verdict.
The jury's verdict, in the amount of $706,997.50 for lost profits and consequential damages, is contrary to the weight of the evidence, because Plaintiff presented no evidence of his lost profits. Sales tax returns are not indicative of profits without evidence of underlying expenses. Indeed, the sales tax returns presented showed nothing more than what 5C Cafk collected on behalf of the City and State by way of sales tax. While plaintiff points out that lost profits need not be proven to a certainty, but rather an approximation, the sales tax returns fail as a vehicle to ascertain even an approximation of lost profits. While the sales tax records may show changing volume of sales, there is nothing from which to conclude that an item was marked up one percent, ten percent or even 100 percent and yielded a profit. Businesses, from time to time, lose money on an item in order to draw customers. Those sales, even without profit, are still subject to sales tax, which is collected by the vendor on behalf of the City andor State. The expenses of the coffee house in procuring, preparing and serving what it sold were never elicited. There was simply no evidence of what, if any, profits there were in those sales, or how those demonstrated Bruce Morris' lost profits. The jury verdict based solely on sales volume was speculation. This Court directs a new trial to determine Plaintiffs damages.

Wherefore it is hereby

ORDERED that the motion is granted and a new trial is directed on the issue of damages.
This constitutes the decision and order of the court. All other relief requested is denied. Dated: March

1b

sad

EILEEN A. RAKOWER, J.S.C.

ANNEDON 111112011

SUPREME COURT

OF THE STATE OF NEW YORK

- NEW YORK COUNTY

MORRIS, BRUCE
vs
INDEX N O . MOTION DATE MOTION SEQ. NO. MOTION CAL. NO.

702 EAST FIFTH STREET

Sequence Number : 022 DISMISS

The following papers, numbered 1 to

were reaa on

IIIIS

rnotlon to/for
PAPERS NUMBERED

Notice of Motion/ Order to Show Cause Answering Affidavits Replying Affidavits

-

Affidavits

Exhibits

...
_ I

Exhibits
-I
~

-_

--

Cross-Motion: ,&-Yes

El

No

Upon the foregoing papers, it is ordered that this motion

"t

Check one: FINAL DISPOSITION , I ' d NON-FINAL DISPOSITION Check if appropriate: 1 1 DO NOT POST REFERENCE

[.-I

1 7

SUBMIT ORDER/ JUDG.

I SETTLE ORDER/ JUDG.

-against-

DECISION & ORDEH

702 EAST STHSTREEIHOUS lNG I.)EVEL,OPMENT FI.JND CON.,

Jcronie Grecnberg, ksq. 209 Clinton Avenue /#9B Brooklyn, New York I 1205 91 7-548-8797 tapcrs considercd in review o f h i s motion for a d

Jaines Briscoe V. A, 11 C H y James Hriscoe, Esq. 100 Lafiiyctte St., # B O I

Fmpcrs Nii 111 he red Affirm. in Supp. witti Gxhih, Attached ........................................... Notice oFCross-Moi. Affirm. in Supp..,...................................... atid 3 Mciiio. of Law in Supp, of Cross-Mot ................. ...... -. fit.;. IrV . v G F Def. Affimi in Furthcr Supp. and Opp. lo Cross-

GG. . .&~.p.~~~~..,~
~

QWcIF;,

HON SALIArVN SCARPULLA, J.: Defendant 702 East 5 Street IIousing Development Fund Corp. (702 East 5 Strcet) brings this inotioii to dismiss tlic first cause of action in the supplemental complaint oil the ground olstatute of limitations undcr CPLR 203(f), for suimmary judgment pursuant to CPLR 32 12 011 the first arid third causes oiaction in the suppleimcntal complaint, arguing that thcrc are 110 triable issues of fact, and to strike

Plaintiff consented to dismiss the sccond cause ol action by stipulalion, dated February 5 ,

2007.

plaintifts detnand for jury trial iiicludcd with thc May 14, 2010 notc olissuc on the basis of contractrial waiver ofjury trial. Plaintiff Hruce Morris (Morris) opposes 702 East 5 Streets motion entirely arid crownloves for partial suininary judgment
011

the third cause

of action in the suppleinenla1 coiiiplaiiit for breach of the partial settlement agreement
dated March 22, 2000. This action traces its roots to a commercial lease the parties cntcrcd into on March
30, 1988. This tiftccn-year-old proceeding has rcsultcd in nuineroiis decisions by this
Court and the First Department. See Morris v 702 Em1 Fifth Strtet HDFC, 8 A.D.3d 27

( I Dept 2004) (Morris I) arid Morris v 702 East F$/z Strpet HDFC, 46 A.D.3d 478
(1Dcpt 2007) (Morris 11). In Morris 11, the First Ilepartmelit rejected 702 East 5hStreets argument that Morris first ciiiisc of action, for brcach of the lease arising out of 702 Easl 5hStreets rcfusal to sign requests for the Department o f h i l d i n g s permits, was barred by thc statutc

of limitations. Thc First Jlepartment ruled that the supplemental cornplaint related back
to thc origiiial complaint, and Morris lirst ciiusc of action was timely. lheFirst

Department also ruled that Morris sufficiently pled the third cause ol action for brcach of
the March 22, 2000 settlemcnt agrccmcnt. The First Departinelit did not consider 702

East SthStreets argirinent that Morris would not be ablc to establish entitlement to darnages in the fomi of lost profits, deferring this issue to the summary judgment motion.

Morris argires that 702 Easl 5 Street? breach or its obligations under the lease

and breach of the scttlcrnent agreement rcsultcd in distressing thc profitability of his jn77
club or cafeteria featuring livc music. At the hcart of Morris argunicnt lies a March I ,

I 996 preliminary irijunction en joining Morris from producing live niusic except on string
instruments bctwccn the hours of 4:00 p i n . and 9:OO p i i . on Friday, Saturday and Sunday

and piano lessons bctwccri 1 I :00 a.m. and 7:00 p.m. lhe March 22, 2000 settlement
agrcernent provided for 702 East Sth Street to withdraw this preliminary injunction once

Morris installed adequate soundprooling. ARer Morris expended about ten thousaiid
dollars soundproofing the premises, 702 East 5 Strect failcd to cooperate in sound tcsting, and instead insisted
Fcbruary 10,200 I .
011maintaining

the i1.j unction by corporate resolution, datcd

Eventually, on Jii~ie 2004, thc First Depnrtiiicnt in Morris 1 found that Morris 3,

fully complicd with the settlement agrccmcnt and that 507 East 5 Street breached the
settlement agreement. Morris v 7112 East Fifih Street HDFC, 8 A.D.3d 27, 29 ( Dcpt

2004). lheFirst I)epnrtment also riiled that the preliminary in-junction violated Morris

First Amendment righis, becausc the prcliiniiiary injunction was premised on the type of iiistrurncnts used, instcad o the iiiaxiiiiuin volut-ne of audible sound produced, as required C under thc Ncw York City noise control regulations. lheFirst Departinent ordered that the case bc remanded and the sound tests performed as required by thc settlement agrecrncnt.

--

On January 12, 2007, alZer reviewing the sound test results, this Court (Lehner, J.)
111

fiilly lifted the preliminary injunction.

thc period between March 22, 2000 and January

12, 2007, Morris alleges that lie iiicurred lost profits, because the illjunction pluced his
jazz cluh or cafeteria at a competitive clisadvmtagc
LO the

competing es~nblishments the in

area, which were not hurdencd by any restrictions on livc music entcrtainmcnt. 'ro detcrmine thc amount of allegcd lost profit, Morris offers copies of salcs tax returns that

show increase in sales at his cafeteria to coincide with the lifting of tlic restrictions on thc
type of instruments played.

The increasc becaiiic more markcd following tlic January 2007 lifting of the t i m e
of-day restrictions on musical performance a k r the definitive sound tests established Morris' compliance with New York City noise control regulations. Morris argues that his
losscs arc also augiiicrited by the fact that when he opened the cafeteria, there were almost

no similar establishments in the neighborhood, and by the time the injunction was lifted,
numerous coffee shops and jazz clubs had opened lip in the immediate vicinity. Morris, howcvcr, does not furnish an expert affidavit by an economist to support his claim.

In response, 702 East 5t'1 Street argues that Morris had no expcrience in running
eithcr a jazz club, a night club or any other food and cntcrtainmcnt establishment for that matter, with no proven track record of profit to ascertain prospective earnings. 702 ]last

5"' Strcd also points out that during the rclevant time frame, Moiris did not possess n

liquor license and in no event could have bccn successful in running his ja7z club or cafeteria. Decision
Under CPLK 3212(b), suinniary judgiiicnt shall be grantcd if, upon all papers and

proof submitted, the cause of action or deknsc shall be establishcd sufficiently lo warrant the court as a matter of law in directing judgment in favor of any party. The motion must be supported by ( 1 ) an affidavit, (2) by

copy of the pleadings and (3) by other

avaiJable proof, such iis depositions and written admissions. CILR 3212 (b). To warrant
a courts directing judginent as a matter of law, it must clearly appear that
110

material

issue is presented for trial. Ep,stein v ,7calZy, 99 A.D.2d 7 13 (1 Dept 1984). When a

party has made a prima facie showing to entitle it to suininary judgment, the burden shifts
to the opposing party to show by cvidcntiary facts that the delensc is real a d can be established at trial. See Indig v Finkelstcin, 23 N.Y.2d 728 (1968); see d s o Vogcl v

BZde Conlr. Inc., 293 A.D.2d 376, 377 (1 Dept 2002). Coiiclusory allegations or
denials are insuflicient to eithcr warrant or dcfeat suimnary judgment. McCahee v

Kenneiiy, 48 N.Y.2d 832, 834 (1979).

While 702 East 5 Streets application is couched in the Iorm or a summary j~idgmerit motion under CIJ ,R 32 12, ils subinissions contain the same record and the same arguments that werc available hcfore the Appcllate Division, First Dcpartriient in Morris 11. lhc First Jlepartincnt conclusivcly ruled in Morris I1 that Morris first cause of

action i n the supplemental complaint was timely under the statute o f limitations.2 10thc extent this niotion is mostly xi nttempt to reargue Momis TI, it ~ilirst denied.> be

702 East 5 Strcct also argucs that Morris claims should be dismisscd because he
cannot prove lost profit damages as n matter ul law. In a brcach oicontract cnntcsl, lost proljts are recovcrablc illhey naturally llow from tlic brcach. SLY Levitze v Americcm

Federul Group, Ltd., 180 A.D.2d 575, 577 ( lht Dcpl 1992). 10

rccovcr damages for lost

profits, ii plaintiff must show that damagcs were caused by thc breach, that lost profits were contemplated by the parties whcn the contract was executed and that the alleged

loss can be measured with retzsonablc ccriainty and are not speculativc. Jurnbcttu Mzrsic,
Inc. v Nzgcnt, 2008 N.Y. Slip. Op. 30363U, * 14 (Sup. Ct., Ncw York County 2008),
citing Ashhrzd Mgrnt. Inc. v Jlrnien, 82 N.Y .2d 395, 404 ( 1993). If the contract is silent
as to recoverable damages, including lost p r o h , the courts inquire into the relcvant

circumstance surrounding cxecution of the contract to dctcrmint: the nature, purpose and
702 &st 5 Street appcars to be arguing in its papers fix the first timc ttial Morris third cause of action was also untinicly. This Court may not considcr this argument, becausc it could have and should have been placed before the First Dcpartment at the saiiie timc 702 East Sh Street argued that tlic first causc oPaction was untimely. Fur-thcr, 702 East 5 Street argucs that the Court should dismiss Morris claim of tortious intcrfcrence, but no such claim was ever raised in thc supplemental complaint, and Morris iicvcr raised this issue in any of his submissions.
1 its bricfing,702 East Sh 11 Strcet argues thal the lease agrccmcnt does not peimit Morris to maintain an entertainnient cstablishment opcn into an unspecified time during thc night or early morning. This Court may not consider this arguincnt as it was rejected by thc First Departnicnt in Morris 1 arid by this Court (Lehner, J,) in a subsequent decision lilting thc prelimiiiaiy in.jurictioii on January 12, 2007. In any event, tlic March 22, 2000 settlement agreement specifically pcrniittcd Morris such use after adequate sowidproofing

particular circumstances known by the parties. . . as well as what liability thc dehda11t fairly may be slipposed to have assumed consciously, or tu have warranted the plaintiff reasonably to suppose that it had nssumcd, when the conlract was made. Awards.corn v.

Kinko s, Inc., 42 A.JI.3d 178, 183-84 ( I S t Dept 2007) (citations omitted). The requirement of establishing damages with reasonablc certainty is not absolute.
Damages rcsultirig h m thc loss of future profits arc oftcn a n approxirnation. The law

docs not rcquirc that they be dcterrnined with iiiathematical precision. It requires only
that damages be capable olrneasurement bascd upon known reliable hctors without unduc speculation. Ashland Mgrnt. Inc. v Juizion, 82 N.Y.2d 395, 403 ( I 993), citing Rcstatcmcnt (Sccond) tj 352.

The court must i~iiplciiienta stricter evidentiary standard when damages for lost

profit derive from the failure of a new business venture, because there does not exist a
reasonable basis of experience upon which to estimate lost prollts with the required degree of certainty. See Zirik v Mark Goodson Productions, Inc., 26 1 A.D.2d 105, I06 (1 S t Dcpt 1999) (citation omittcdj. TTowcvcr, there is no pcr sc rule precluding a new business lrom recovering lost prolhs. C1ifom v City qf Pozghkwpsie, 234 A.D.2d 33 1,
33 1-32 (2ldDept 1994) (citations omitted). A claim bascd on thc loss of anticipated

profits in connection with a thwarted business venturc may be proved by methods other than by refercncc to the actual past profit-making cxpcricnce. . , CijOnc, 234 A.D.2d at

332, citing Ashlund Mgrnt. Inc. v Junien, 82 N.Y .2d 395, 404 ( 1 9 3 ) . Further, this stricter

standard is applicd by cnuris most often in the contcxt ol'entertainnient and entrepreneurship in recently dcvelopcd industries and markcts. See Zink v Murk Goodson Productions, h c . , 26 1 A.D.2d I OS, 1Oh (1" I k p ' t 1999)(applying a stricter standard in a

case involving a proposed television game show featuring a host not well known to
American audienccs); sec also Awurds.com v. Kink0 's, lnc., 42 A.D.3d 178, 185 ( 1st Ilcp't 2007) (applying B stricter standard to a failed venture to distribute personalized corporate awards and proriiotioiial items). Here, Morris raiscs an issuc of fact as to thc existence of the lost profits as a result of dcrendant's violation ol'the March 22,2000 settleincnl agreement by submitting copies

of tax rcturns that show incrcased sales after the lifting of the time-of-day restrictions on
thc live music. The nature of Morris' business has a long and established history in the

City ol'New York and docs nor require application of a stricter standard reserved for new and untried ventures. The fact that Morris'cafeteria or jazz club does not have a long track record of profit making to serve as a basc line for dctcriination of damages is not dispositive and may bc attributable to this iiftteen-year-old protracted litigation, during
most of which Morris was subject lo injunction restraints not applicablc lo coinpcting

businesses. The lack of a liquor liceiicc until this year is also not dispositive on summary judgement, because this fiicl addresses the cxtent ol'the damages, not thc existencc ol' damagcs.

While Morris docs no1 submit an expert affidavit olan economist, such an affidavit is not an absolute rcquireiiicril in actiolis for loss ofprofit. Thc strength or Morris clairn should be tlie .cub-jectof a detcrrnination on trial, and not on summary
j udgnieiit.

In addition, Morris is eiililled to iijirry trial, as requested i n the notc of issue, on

Morris third caiise of action, the claim for lost profits, because that cause olaction is predicaled upon a breach of the scltleincnt agreement, not the leasc. Unlike the leasc, the settlcrnent agrcement docs not contain a jirry waiver, and the settlement agreement does not incorporate or rcference any leasc provisions. See Clohn v A d e r , 139 A.D.2d 48 I ,

483 (znd k p i 1988). In contrast, the first cause of action, for failure to sign requests for r
the Departiiicnt of Ruildings permits, is based on the breach of the lease arid is thus subjcct to the waiver ofjury trial. Therefore, the Court shall bifurcate tlie trial. Hie first causc of action shall be tried by the Court on the issire of both liability and damages. The third
C~USC olaction

shall be separately tried before the jury only on the issue ofdamages, because Morris has niadc out a prima facie cnlillemcnt to suiiiinary judgmcnt on the issuc of 702 East 5 Streets breach of the March 22, 2000 settleiiicnt agrccment, and 702 East gLhStreet did

not offer any opposition to this branch of Morris cross-motion for partial summary
judg~nent.~
Indeed, in Morris I, thc First Dcpartmcnt found that plaintiff. . . performed in accordancc with its [stiplation of setlleincnts] provisions, whereas dcfcndant did not.

. . Thus,

ORDT;,RlX) that thc motion lor siiinmary judgiiierit under CPT,R 32 12 brought by dclcndant 702 East SLh Slrccl Housing Jlevelopmcnt Fund Corp. is dcriied in its entirely;
and it is lirrther

ORDERED that thc cross-inolioii for partial suinmary judgment undcr CPLR 32 12
brought by plaintiff Bruce Morris on the issue ol liability on plaintiffs third cause of action and plaintiffs request for a jury trial is granted; and it is furthcr

ORDERED lliat counsel [or plaintiff shall serve a copy ofthis dccision and order
upon all partics and upon thc Clerk of Trial Support (60 Centre St., Rni. 158) who shall schedule this matter forthwith for a date in Part 40 lor ajiiry selection and a bifurcated trial in accordance with the above decision. Ihis constitutes the Decision and Order o f t h e Court. Dated: New York, New York January

b/

201 1

E N rE R:

on. Saliann Sca

NEW YOHK COUNT( CLERKS OFFlCE

the record cstablishcs that defendants dcfrlult prccludcd furthcr pcrfomiancc of tlic agrccincnt between the parties. Morris v 702 E~ist Fijih Street IDFC, 8 A.D.3d 27, 29 ( lStDept 2004).