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Adam Leitman Bailey, P.C. Forces America’s Leading Submarine Sandwich Chain To Fork Over Largest Payout In Its History Background


In need of a top New York City commercial landlord-tenant firm to evict the biggest national submarine franchise, together with its franchisee from one of its commercial buildings in the Financial District, the client retained Adam Leitman Bailey, P.C. After having swiftly evicted the franchise and its franchisee from the space by forcing them to stipulate to a warrant of eviction and a money judgment for all rents owed, Adam Leitman Bailey, P.C. immediately commenced post-judgment enforcement proceedings. Simultaneously therewith, Adam Leitman Bailey, P.C. initiated a collection action against the submarine chain in the Supreme Court of New York County to collect, inter alia, the substantially accelerated rents due and owing through the expiration date of the underlying lease, plus its counsel fees.

When negotiating their leases with landlords, the submarine franchise always places a provision in the lease or rider capping its potential future liability to a nominal sum. However, in negotiating this particular lease, the submarine franchise inadvertently left out its standard cap on damages. Without having the benefit of availing itself to a capped de minimis figure as it does under all of its other leases, the franchise resorted to the argument that the lease’s default provision limited the client’s damages to the lesser of one of three alternative damage calculations.

The Default Clause

Three diverse damage calculations existed in the relevant default provision of the lease. Crucially, the first damage calculation, which was tabulated by adding four different damage values and yielded the lowest sum of damages, was separated from the two following damage calculations by the word “or.” The remaining two damage calculations, also divided by the word “or,” produced the higher damage sum and were followed by the words “whichever is less.”

Thus, to win the case, Adam Leitman Bailey, P.C. needed to show the court that based upon the plain language of the subject default provision, the “whichever is less” language strictly applied to the second and third alternative damage calculations only since those calculations were separated by the first damage calculation by the word “or.”  Luckily for Adam Leitman Bailey, P.C.’s client, Adam Leitman Bailey, P.C. won the case at the deposition stage by outwitting the franchise’s witness who conceded to the client’s interpretation on damages, thereby saving the client substantial fees and costs.

The Deposition

Although the franchise continued to maintain that the client was merely entitled to the lesser of the three damage calculations, during the deposition of the franchise’s principal, Adam Leitman Bailey, P.C. coaxed the witness to concede to the client’s position on the construction of damages, entitling it to the larger damage figure under the lease.

Critically, prior to showing the default provision to the witness, Adam Leitman Bailey, P.C. cleverly asked the witness to define the word “or,” which the deponent defined as an “alternative” and “options.” Having walked the witness into a trap, the witness was then constrained into admitting that pursuant to the plain language of the default provision, the client was entitled to choose the lesser of the second and third damage calculations since those calculations were separated from the first calculation by the word “or.”

In addition, before the deposition, Adam Leitman Bailey, P.C. performed extensive research on other litigations that were brought against the franchise and discovered that the franchise had been sued on several other occasions for fraud in connection with its franchise agreements. Adam Leitman Bailey, P.C. utilized these cases at the deposition, and in particular, the cases in which the franchise was actually found to have defrauded its franchisees, thereby showing the franchise’s bad faith and unclean hands.

The Settlement

In light of the concessions that Adam Leitman Bailey, P.C. cajoled the witness into making during the deposition, the franchise was forced into forking over its largest settlement payout to date according to its general counsel.  Consequently, through the use of innovative lawyering and assiduousness, Adam Leitman Bailey, P.C. expeditiously resolved the matter and obtained the best possible result for the client.

Adam Leitman Bailey, P.C. attorney Adam Leitman Bailey handled the matter for the client.

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