Plaintiff 1301 Properties Owner LP v. Philip Abelson, et al., Index No. 653342/2013, 04/01/2016 (Scarpulla, J.)

Motion to Dismiss; Breach of Contract; Contract Interpretation; Limited Liability Partnership; Partnership Tenancy; Original Tenancy.

By Janel Rottkamp | Staff Writer

Plaintiff is the landlord of 1301 Avenue of the Americas, New York, New York.  Defendant is a partner of Dewey & LeBoeuf LLP (“Dewey & LeBoeuf), and is named as one representative of three hundred and seventy-seven defendants collectively considered “tenants” of the Plaintiff’s property.  Plaintiff and Defendant’s relationship was governed by a lease created by the original landlord, Tishman Speyer, and the original tenant, Dewey, Ballantine, Bushby, Palmer & Wood (“DBBPW”). Pursuant to the original lease, if DBBPW were to breach the contract, their partners, successors and assigns would be held jointly and severally liable for damages.  Over approximately twenty-two years, the lease had undergone twelve amendments, two changes in the landlord, and four changes in tenancy. Over the years, DBBPW was renamed Dewey Ballantine, then converted to a limited liability partnership (“Dewey LLP”), and finally combined with LeBoeuf Lamb LLP to become Dewey & LeBoeuf LLP (“Dewey & LeBoeuf”).  Later, Dewey & LeBoeuf failed to pay Plaintiff the amounts due under the lease and subsequently filed for bankruptcy.  As a result of Defendant’s failure to pay, Plaintiff terminated the contract.

Plaintiff sued Defendant seeking damages on two grounds.  First, personal liability of Dewey & LeBoeuf partners and former partners for breach of contract.  Second, recovery of attorney’s fees.  Defendants moved to dismiss on the following grounds: first, Dewey LLP partners were not personally liable pursuant to the contract’s Non-Recourse provision; second, that Dewey LLP and Dewey & LeBoeuf partners who retired or withdrew before September 2007 were not liable pursuant to §29.1(b); and third partners are not personally liable because of failure to comply with New York Partnership Law §26(d).

The Court granted Defendants’ motions to dismiss for the retired or withdrawn former partners, or other individual partners of Dewey LLP and Dewey & LeBoeuf.  First, under the plain terms of the original lease and its amendments, Dewey LLP must be partners of the “original tenant” to be limited from personal liability by the Non-Recourse provision.  Here, Dewey was not the original tenant because it was a separate registered limited liability partnership and was not a reorganization into a professional corporation.  Second, the plain language of the lease indicates that partners who retired or withdrew prior to September 2007 needed only to have done so from Dewey LLP to escape personal liability because those partners were not original tenants.  Third, the parties failed to include an agreement that it is a safeguard from personal liability.  Here, the parties failed to update the lease to reflect this safeguard.

Therefore, despite Plaintiff’s argument that the lease is sufficient to evidence the parties’ intent to impose personal liability, the Court held the lease was not enforceable.  Plaintiffs were thus not entitled to attorney’s fees.  Accordingly, the Court granted Defendant’s motion to dismiss.
Plaintiff 1301 Properties Owner LP v. Philip Abelson, et al., Index No. 653342/2013, 04/01/2016 (Scarpulla, J.).

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