Court Enjoins Club Operator From Playing Amplified Music

In a Decision, dated November 7, 2022, in 42 W. Group v. 510 W42 Hotel Operating LLC, Index No. 652713/2022, Justice Joel Cohen granted a preliminary injunction in a commercial landlord tenant proceeding to prohibit plaintiff from using amplification devices that would make sound audible from outside of the premises, in accordance with the terms of the commercial lease between defendant and plaintiff. The Court set the undertaking required for the preliminary injunction at $10,000, explaining:

CPLR 6312(b) requires that the Court fix an undertaking that is "rationally related to the potential damages recoverable if the preliminary injunction is later determined to have been unwarranted" (Witham v. VFinance Investments, Inc., 52 AD3d 403, 404 [1st Dept 2008] citing Kazdin v. Putter, 177 AD2d 456, 457 [1st Dept 1991]). In a business litigation such as this one, an application for an undertaking should be supported by "competent evidence of the potential losses" (Spivak v. Bertrand, 147 AD3d 650, 652 [1st Dept 2017]).

Counsel for tenant proposes that the undertaking should be "10 percent of the Tenants monthly gross sales from the time of the preliminary injunction up to the end of this case" which counsel estimates to be thirteen months (Affirmation of Rodney R. Austin 3 [NYSCEF 58]). Counsel suggests that the undertaking should be in an amount between $236,762.00-$291,946.21 or ten percent of historical monthly gross sales multiplied by thirteen (Austin Aff. 4-5). Tenant has not submitted a client affidavit in support of its supplemental papers in support of an undertaking.

On November 1, 2022, counsel for Landlord submitted a memorandum in opposition (NYSCEF 61). Landlord argues that the Tenant's application is not supported by adequate or admissible evidence; that Tenant's argument as to the amount of the bond is similarly unsupported given the Court's directives to consider prospective harm; and, finally, that Tenant may continue to operate a business without violating the injunction and is nevertheless likely to violate the injunction given that it has parties planned for future dates. Landlord suggests a nominal bond of $500.

Having reviewed the parties' submissions with respect to the undertaking, as well as the record on the preliminary injunction motion more broadly, the Court finds that an undertaking of ten thousand dollars ($10,000.00) is appropriate.

The attorneys at Schlam Stone & Dolan frequently litigate commercial landlord and tenant disputes. The undertaking required for a preliminary injunction is often overlooked, but necessary for any injunction to be effective. Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning such issues.