Defeating a Landlord’s Demand for Interim Rent Despite Applebee’s Owing $1M+ In Arrears

We recently represented Applebee’s in its commercial lease dispute with its landlord relating to $1M+ in arrears from the COVID-19 pandemic.

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 by removing Applebee’s outdoor dining furniture including brandishing firearms at customers leading to the arrest of one of the landlord’s security guards.

Now it sought ongoing rent despite preventing Applebee’s from generating revenue to clear their arrears.

So we 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.