By order to show cause dated November 9, 2005, petitioner Echelon Photography, LLC (Echelon) commenced a proceeding pursuant to RPAPL 853 against respondents seeking to be restored to immediate possession of premises it leased from them and damages resulting from its wrongful eviction. By decision and order dated January 20, 2006, I granted petitioners' motion dated December 22, 2005 for an order adding its principal Gordon Gooch (Gooch) as a party-petitioner, and I restored Gooch to possession and ordered a hearing on damages sustained by Gooch as a result of the eviction. The hearing was held before me on September 21, 2006, June 20, 2007, August 20, 2007, and January 29, 2008. [*2]

Gooch maintains that as a result of the eviction, he sustained damages in the form of broken contracts, the loss of business and rental income, his personal property and Echelon's property, and damage to his business and professional reputation. He also seeks reimbursement for legal fees, costs, and disbursements, and the return of November rent, the security deposit, and the final month's rent.

Respondents deny any liability for any of Gooch's losses and counterclaim for rent arrears, use and occupancy, and attorney fees.

Gooch testified on his own behalf as did John Carlino and Kevin Fox. Mark Epstein testified for respondents.

On or about April 30, 2003, Gooch, a commercial photographer and holder of a master's degree in business administration, founded Echelon, a limited liability company of which he is the sole member. (Pet. Exh. 13). By written assignment dated November 24, 2003, respondents granted Gooch permission "to take over the responsibilities and liabilities" of what was characterized as a license, held by one Nellens for a studio, number 502, at 515 Greenwich Street, New York, New York. (Pet. Exh. 1). Nellens's license was to expire February 28, 2005. Gooch agreed to pay respondents $4,000 per month and paid respondents a security deposit of $4,000 and $4,000 for the final month.

By written agreement dated November 21, 2003, Echelon sublet a portion of the space for one year to Laura Day at a monthly fee of $2,000 plus utilities. (Pet. Exh. 14D).

Echelon, using the brand name, DatingHeadshots.com, conducted a pilot project commencing in March 2004 with JDate, an online dating service, whereby Echelon took head shots of JDate's clients for online publication. An average of eight to ten head shots were taken per day. Revenues for the head shots were generated through SmartTix, a provider of online reservation services. (Pet. Exh. 30A, 30B).

At or around the same time, Gooch negotiated an agreement between Echelon and America Online (AOL) to create and publish online head shots for clients of AOL subsidiary online service provider Love@AOL. In anticipation thereof, Echelon, doing business as DatingHeadshots, began contracting with specially selected photographers nationwide to take 25 percent of the head shots. Gooch hoped to take 75 percent of the head shots in the space.

Gooch also created a dedicated website which he modeled on those operated by MovieFone in order to facilitate the scheduling of the AOL head shot sessions, and paid to use the website's domain name, AOLDatingHeadshots.com. Incident to its agreement with AOL, Echelon contracted with SafeDate to provide online security for the project.

By written agreement dated August 4, 2004, Echelon sublet a portion of the premises for seven months to Clare Fisher Photography LLC for a monthly fee of $600 plus utilities. (Pet. Exh. 14A).

By late 2004, Gooch had spent a considerable amount of time promoting the AOL venture and incurred some $12,520 in expenses on travel ($330), advertising ($1,100 [Pet. Exh. 10]), press releases ($2,480), search engine optimization ($240 [Pet. Exh. 11]), editorial services ($333), Google ad words ($325), customization of the reservation system, creation of the website ($142), a press consultant ($1,830), miscellaneous services ($1,070), and out of pocket expenses [*3]($6,750). Some expenses were paid by Gooch personally. As a result of Gooch's efforts, the venture received a great deal of publicity. (Pet. Exhs. 16A, B).

SmartTix's weekly settlement reports for 2004 reflect payments to Echelon totaling $4,807.00. (Pet. Exh. 30A).

Echelon received $8,210 in gross revenue for 2004. Gooch filed no separate tax return for Echelon but Schedule C ("Profit or Loss from Business") of his 2004 personal federal income tax return reflects for Echelon $8,410 in gross receipts, $10,729 in gross expenses including $7,500 for "other business property," and a net loss of $2,319. No rental income is reported. (Resp. Exh. A). Gooch claimed that any inaccuracies reflected in the return were attributable to his accountant.

In February 2005, Echelon and SmartTix entered into an agreement to facilitate online reservations services for the AOL venture.

By written agreement dated March 3, 2005, Echelon sublet a portion of the premises to Kevin Fox for one year at $659.34 per month plus utilities. (Pet. Exh. 14C). By written agreement dated March 15, 2005, Echelon sublet a portion of the premises to Heather Brand for one year at a monthly fee of $659.34 plus utilities. (Pet. Exh. 14B). Gooch never received respondents' written consent to any of the subleases, although respondents' superintendent listed the subtenants' names on the building directory.

On June 22, 2005, Echelon, doing business as DatingHeadshots.com, entered into a contract with Fuji Film (Fuji) whereby Fuji would provide it with photographic and digitization services. (Pet. Exh. 6). Gooch intended to use the services for the AOL venture.

In August 2005, Echelon was hired by a food magazine to shoot photographs. It completed one session for which the magazine owes it $4,000 and Gooch agreed to another session in exchange for $3,000.

By agreement dated September 9, 2005, Echelon entered into an agreement with Date.com for advertising services for $5,000. (Pet. Exh. 25). By agreement dated September 26, 2005, Gooch and J Soul Mate formed a partnership. (Pet. Exh. 18). By check dated November 1, 2005, Echelon paid respondent Dara Partners (Dara) $4,060.60 for November rent and electric charges. (Pet. Exh. 21A). Echelon received from its subtenants for November $4,613.49 ($2,322.80 from Day, $757.99 from Fox, $774.71 from Fisher, and $757.99 from Brand). (Pet. Exhs. 15A-15D).

On November 3, 2005, respondents unlawfully evicted Gooch from the premises. As a result, Gooch was unable to do the second shoot for the food magazine. By that time, Echelon had received $1,405 from SmartTix in connection with Datingheadshots. (Pet. Exh. 30B).

Upon gaining temporary access to the premises on November 9, 2005, Gooch discovered that two air cushion stands and a lucite-bound portfolio of his work were missing. He has not yet fully reconstructed the portfolio but estimates that it will take a total of 50 hours of his time at $125 an hour to do so. Without the space, no shooting could be done as the backdrops had been designed for it.

Dara issued two checks, each dated November 10, 2005, one to reimburse Echelon for November rent (Pet. Exh. 19), and the other to reimburse Gooch for the security deposit. (Pet. Exh. 20). The parties agreed that Gooch's attorney would hold the checks.

SmartTix's weekly settlement reports reflect payments to Echelon totaling $562.45 for [*4]November and December 2005. (Pet. Exh. 30B).

Although Gooch claims that Echelon could not proceed with the AOL venture without the space, he nonetheless considered six comparable spaces, He used his apartment as Echelon's office.

By contract dated December 19, 2005,the Philip Stark Studio (Stark) agreed to provide Echelon/DatingHeadshots.com with photography services for the entire metropolitan area including areas within 20 miles of Columbus Circle in Manhattan in exchange for 75 percent of the proceeds. (Pet. Exh. 12).

At around the same time, Fuji informed Gooch that it intended to terminate its contract with Echelon due to an insufficient number of clients for the project. Despite Gooch's efforts to retain its services, Fuji terminated the contract on January 3, 2006. (Pet. Exh. 7). As a result of the damage to Gooch's reputation stemming from the termination of this contract, Match.com, JDate, and other online services declined to do business with him or Echelon.

Upon being restored to possession of the space on February 6, 2006, Gooch found that a new couch and rug were missing, that walls and doors to the waiting room and a large closet had been removed, new furniture had been placed therein, that there were holes in the walls and ceiling, and that the space was filled with debris, thereby rendering it useless to him as a photography studio. (Pet. Exhs. 3A, B).

In February 2006, AOL terminated its contract with Echelon and declined to renew it as it was too late to redirect the AOL website links to the Stark studio. From March to September 2006, Gooch paid fees to retain his rights to the domain name, which rights expired on October 26, 2007. (Pet. Exh. 24).

Gooch thus claims to have lost, as a result of the eviction, $95,623 in anticipated AOL venture revenue, $3,091 for the proportionate use of his apartment as Echelon's office, $27,680.94 in rental income from November 2005 to April 2006, $4,000 for the second magazine shoot, $6,250 for the portfolio, and $7,500 in attorney fees. Schedule C of Gooch's personal federal tax return for 2005 reflects $52,934 in Echelon's gross receipts, gross expenses of $57,677, including $41,642 in expenses for "other business property," and a net loss of $4,743. No rental income is reported. (Resp. Exh. B). Gooch again denied responsibility for any inaccuracies in the returns.

Although the Stark contract was scheduled to expire in December 2007, Stark canceled it in or around January 2007.

Carlino testified that he was Gooch's business partner, that he helped develop Echelon's relationship with Match.com and JDate, and that he served as the main photographer of head shots in the studio.

Respondents argue that Gooch may not recover for any damages sustained by Echelon and that, in any event, absent a history of profit for the AOL venture, Gooch's evidence was insufficient to establish a recoverable loss of future profits. They rely on Gooch's personal income tax returns and observe that in an affidavit submitted in support of Gooch's motion for an order of protection as to certain documents sought by respondents in discovery, Gooch stated in paragraph 22 that "[p]etitioners are not seeking as for their damages, profits but are seeking [*5]actual out-of-pocket losses incurred as a result of Respondents' unlawful eviction of [them]." (Affidavit of Gordon Gooch, dated Feb. 13, 2006). Respondents also maintain that as Echelon's expenses would have been incurred regardless of the eviction, they do not constitute compensable damages, and assert that having failed to obtain their permission to sublet the space and having received rental income, Gooch may not claim losses related thereto. They also deny responsibility for the loss of Gooch's portfolio.

Gooch argues that as respondents accepted rent from Echelon, he is entitled to any damages stemming from the eviction and denies having failed to establish a history of profit sufficient for a finding of a loss of future profits for the AOL venture. He observes that having permitted the listing of Echelon's subtenants on the building directory and having provided them with services, respondents waived their objection to the subtenancies.

Respondents argue that as Gooch filed no insurance claim or police report for the portfolio, and failed to prove that they were responsible for its loss, they may not be held liable for it. They rely on the January 20 decision as precluding the recovery of any post-restoration losses and oppose Gooch's request for attorney fees.

Epstein, a general partner of Dara, testified that he believed he was entitled to change petitioners' locks given the number of months Gooch had failed to pay rent. He claims that Echelon's November 2005 check was cashed in error and that once he learned of it, he had a check cut and returned to it. (Resp. Exh. 19).

Respondents did not object to the subtenants because Epstein was not aware of them. After the eviction, respondents received $2,322.80 from Day for no more than three months, $757.99 a month from Fox, and $774 a month from Fisher. Epstein did not know when Brand surrendered her keys or whether he received any rent from her.

Epstein denied that he or any of his employees removed any personal property from the space and testified that he ordered the removal of the wall forming petitioners' closet as it was too close to the sprinkler and would have violated the fire code. (Resp. Exh. H; Pet. Exh. 2D). In his opinion, there was nothing about the space that precluded its use as a photography studio when Gooch was restored to possession.

Kevin Fox, one of Echelon's subtenants, testified that he was first in the premises in August 2003 and that Gooch was there only part of the time. Fox described the arrangement among the subtenants as follows: Day had one-half of the space and he shared the other half with Gooch and Fisher, with the three using the space on a first-come, first-served basis. Gooch used the space for taking head shots "once in a while." Approximately three months before the eviction, Gooch assigned his share to Brand and told Fox that he was working at home.

On or about March 1, 2006, respondents served petitioners with a 30-day notice of termination and commenced a holdover proceeding against them, seeking possession of the premises, issuance of a warrant, a judgment for rent arrears in the amount of $8,000, fair value of use and occupancy, costs, and disbursements. (Resp. Exh. J). On June 12, 2006, the parties entered into a stipulation of settlement whereby petitioners surrendered the premises to [*6]respondents as of June 30, 2006 and respondents preserved their right to seek use and occupancy from February 3, 2006 to June 30, 2006. (Resp. Exh. K).

Epstein testified that petitioners owe respondents $12,000 in rent for November 2005 to January 2006, $20,000 in use and occupancy for February 2006 to June 2006, and attorney fees in the amount of $22,219 incurred with respect to the holdover proceeding (Resp. Exh. L).

Gooch testified that the condition of the space, post-eviction, was "under construction" given the debris, hanging wires, broken up flooring, and destroyed entrance. Respondents have not returned the last month's rent to him.

Epstein testified that Day has been gone from the space as of January 2007.

As respondents reconfigured the space and left it filled with debris, thereby rendering it useless to petitioners, petitioners seek an order dismissing respondents' claim for use and occupancy. They also observe that having received rent from the subtenants, respondents incurred no loss of rental income.

Respondents argue that as Fox had moved from the space by February 1, 2006 and used it in January, his testimony proves nothing about its condition thereafter and that absent credible or expert testimony as to its post-restoration condition, petitioners have failed to demonstrate that use and occupancy ought not be awarded. They maintain that they have received no more than $4,644 from the subtenants.

In reply, petitioners observe that Day's or any of the other subtenants' usage of the premises post-eviction does not prove that the space was usable for Echelon's purposes or that the premises had been restored to its pre-eviction condition.

Compensatory damages for wrongful eviction are "the value of the unexpired term of the lease over and above the rent the lessee must pay under its terms . . . together with any actual damages flowing directly from the wrongful eviction, which include lost profits ascertainable with a reasonable degree of certainty, and loss of personal property" (North Main St. Bagel Corp. v Duncan, 37 AD3d 785, 786 [2d Dept 2007]), as well as attorney fees (Schwartz v Certified Mgmt. Corp., 148 AD2d 387, 388 [1st Dept 1989]).

Here, Gooch seeks damages in the form of lost rental income, rather than the value of the unexpired term of the lease. Although he never obtained respondents' written consent to the [*7]subtenancies, given their open, ongoing, and notorious presence and respondents' acceptance of rent from them after the eviction, I find that respondents waive their objection to the subtenancies. (See Elite Gold, Inc. v TT Jewelry Outlet Corp., 31 AD3d 338 [1st Dept 2006]). Consequently, Gooch is entitled to the lost rental income.

Having testified that he received November rent from his subtenants, Gooch did not incur a loss of rental income for that month. He did, however, prove a monthly loss of $4,613.49 in rental income for December through March 2006, when his tenancy terminated. That he was restored to possession in February 2006, does not preclude an award of damages extending beyond that time, especially since the subtenants vacated the space as of February 1, 2006 as a result of its condition.

Gooch also seeks damages incurred as a result of his use of part of his home as Echelon's office. However, he never explained why all of the documentary evidence reflects that Echelon's office was always located at his home. Moreover, Gooch sublet the space to Day even before he took physical possession of it and, well before the eviction, sublet his remaining one-sixth share. As this evidence warrants a reasonable inference that Gooch never used the space as Echelon's office, I decline to credit Gooch's testimony that due to the eviction, he was obliged to use a portion of his home as Echelon's office.

Although Gooch testified that he lost future profits as a result of the eviction, having reported net losses for Echelon in 2004 and 2005, I find that he failed to establish a history of profits with respect to Echelon's photography business. Moreover, to the extent that he sufficiently established that Echelon lost future profits relating to the AOL venture, given the confluence of factors required to produce a profit such as the continued and uniform cooperation of the incidental service providers, even if not unduly speculative (see Suffolk Sports Ctr., Inc. v Belli Constr. Corp., 212 AD2d 241, 248 [2d Dept 1995] [calculation of lost profits for new business with nominal fiscal history unduly speculative]), such profits do not qualify as Gooch's lost earnings (NY PJI 2:295; Weir v Union Railway Co. of New York City, 188 NY 416 [1907]). The circumstances here significantly differ from those presented in Behrens v Metropolitan Opera Assn., 18 AD3d 47 (1st Dept 2005), where the plaintiff's corporate profits did not depend for the most part on the employment or capital or labor of others. In any event, Gooch has not demonstrated the specific value of his services to the venture. (16 NY Prac - Torts § 21:51 [2006]).

I also find that Carlino's credible testimony that he took most of the head shots in the space and helped Gooch develop other business relationships, and Fox's credible testimony that Gooch seldom used the space in the three months prior to the eviction, preclude a finding that Echelon's future profits for any of its other photography business constituted Gooch's lost earnings.

For all of these reasons, I find that Gooch is not entitled to damages in the form of lost profits or lost earnings for the AOL venture or for any of Echelon's other photography business. In any event, Gooch disavowed same in his February 13, 2006 affidavit. Additionally, Gooch failed to prove that any of Echelon's expenses were incurred as a result of the eviction.

As lost profits are measured by "the total receipts that [the plaintiff] would have produced in his business during the period of his disability and deducting therefrom only such business expenses as would necessarily be related to the production of that income" (Beilich v Winters, 95 [*8]AD2d 750 [1st Dept 1983], quoting Young v Utica Mut. Ins. Co., 86 AD2d 764 [4th Dept 1982]), absent any evidence as to the expenses that Gooch would have incurred for the second magazine shoot, there is insufficient proof of a net future profit in that regard. Moreover, given the magazine's failure to pay for the first shoot, it remains to be seen whether Gooch would have done the second shoot and whether he would have been paid for it. Consequently, he has failed to establish that he incurred a net loss as a result of being unable to do the second shoot.As respondents had sole access to the space from November 2 to 9, I find that they are liable to Gooch for the lost portfolio in the amount of $6,250, absent any contrary evidence as to the value of reconstructing it.

Having inexplicably failed to offer evidence of his attorney fees on his direct case, I find that Gooch waived his claim in that regard.

As it is undisputed that the lockout was intentional, I find that Gooch has established his right to treble damages. (See Clinkscale v Sampson, 2008 WL 538947, 2008 NY Slip Op 01695 [2d Dept 2008] [court below improvidently exercised its discretion in failing to award treble damages where unlawful eviction not unintentional]). I decline to award punitive damages.

Consequently, respondents' motion for an order dismissing petitioners' claim for damages is denied. Based on my findings, I hold that Gooch is entitled to judgment in the amount of $110,293.68 representing the trebling of rent paid for November 2005, the security deposit, the final month's rent which had been paid in advance, lost rental income for December through March 2006, and the reconstruction of the portfolio.

Once petitioners were served with the 30-day notice terminating their tenancy as of March 31, 2006, they became liable to respondents for use and occupancy until their surrender on June 30, 2006 (RPAPL §741[5]) and, as respondents sufficiently preserved in the June 2006 stipulation their claim to same, respondents are entitled to $12,000. As Echelon did not use the space for its own photography in the months before the eviction, I find that petitioners have failed to establish a defense to respondents' claim for use and occupancy.

Notwithstanding respondents' request for rent arrears in the holdover petition and their entitlement under the Nellens agreement to attorney fees in prosecuting the holdover proceeding, having failed to preserve these claims in the stipulation, they are not awarded here. (See JD Realty Assoc. v Shamley, 288 AD2d 27 [1st Dept 2001]; Harmir Realty Co. v Tesa, 2003 WL 139568, 2003 NY Slip Op 50015[U] [App Term, 1st Dept 2003]).

Accordingly, Gooch is granted a judgment in the amount of $110,293.68 and respondents are granted a judgment in the amount of $12,000. As Gooch's judgment is offset by respondents' judgment, the clerk is directed to enter judgment for Gooch in the amount of $98,293.93 with statutory interest from November 2, 2005, costs, and disbursements.

This constitutes the decision and order of the court.

______________________________

Barbara Jaffe, JCC [*9]

DATED:March 11, 2008

New York, New York