United States Bankruptcy Court,
S.D. New York.

In re AMES DEPARTMENT STORES, INC., Eastern Retailers Service Corporation, et
al., Debtors.
BOND STREET ASSOCIATES LIMITED, Plaintiff,
v.
The TJX COMPANIES, INC., Defendants.

Reorganization Nos. 90 B 11233 to 90 B 11285 (JAG).
Adv. No. 91-6699A.

Aug. 10, 1993.


 Lessor brought action in the Supreme Court of the State of New York, Nassau 
County, seeking to recover under lease from assignor, which had assigned lease.   
Motion was removed to the District Court, and upon assignor's further motion, 
proceeding was referred to the Bankruptcy Court based on assignee's Chapter 11 
case.   The Bankruptcy Court, 148 B.R. 756, granted partial summary judgment.   
Assignor moved for reconsideration.   The Bankruptcy Court, James A. Goodman, 
J., sitting by designation, held that:  (1) factual dispute concerning whether 
lease had been terminated precluded summary judgment on that issue, and (2) 
lessor had no duty to mitigate damages.

 So ordered.


West Headnotes

[1] Federal Civil Procedure  2505
170Ak2505 Most Cited Cases

Disputed factual issue existed in a lease assignee's Chapter 11 bankruptcy 
proceeding as to whether lessor had "terminated" the lease, precluding summary 
judgment on issue of original lessee's liability under the lease.

[2] Landlord and Tenant  195(1)
233k195(1) Most Cited Cases

Under New York law, commercial lessors have no duty to mitigate damages upon 
tenants' abandonment.

[3] Principal and Surety  143
309k143 Most Cited Cases

Defense of federal law calculation of damages was personal to debtor, and, thus, 
could not be used by a surety, where debtor's ability to use federal calculation 
of damages was solely a consequence of its reorganization proceeding.
 *36 Luc A. Despins, Skadden, Arps, Slate, Meagher & Flom, New York City, for 
debtors.

 Ira Levine Kirschenbaum & Kirschenbaum, P.C., Garden City, NJ, for plaintiff.

 Douglas H. Meal, Ropes & Gray, Boston, MA, for defendants.


MEMORANDUM OF DECISION

 JAMES A. GOODMAN, Bankruptcy Judge. [FN*]


FN* Sitting by designation.


 This matter is before the Court upon the motion of TJX Companies, Inc.  ("TJX") 
for this Court to reconsider its ruling issued in Bond Street Assoc., Ltd. v. 
TJX Cos., 148 B.R. 756 (Bankr.S.D.N.Y.1993).   Therein, this Court granted 
partial summary judgment as to TJX's liability to Bond Street Associates, Ltd. 
("Bond Street") on Count I of the Complaint, but left the issue of damages open.   
TJX moves for reconsideration on several grounds which this Court will take in 
order.

 Genuine Issue of Material Fact as to Termination of Lease by Bond Street.

 [1] TJX first complains that this Court weighed the evidence and decided the 
facts which, at this stage, would be improper.   After carefully reviewing the 
pleadings submitted in connection with this matter and the underlying motion for 
summary judgment, it appears that when originally deciding this issue, this 
Court looked to TJX's argument regarding the filing of the proof of claim as 
having legal ramifications, rather than as evidence itself of a termination.   
When viewed in this light, there is in fact a disputed factual issue as to 
whether the Lease has been terminated, and therefore this Court's previous order 
granting summary judgment for Bond Street shall be vacated, and summary judgment 
shall hereby be denied. [FN1]


FN1. TJX's argument regarding its lack of discovery is thereby mooted by this 
discussion.


 Mitigation of Damages Under New York Law.

 [2] This Court has also reviewed it decision regarding Bond Street's duty to 
mitigate damages under New York state law and concludes that, as a commercial 
lessor, Bond Street is under no obligation to do so.   Although this is a harsh 
rule and one which this Court does not necessarily endorse, it is the state of 
the law in New York today.   A few lower courts have begun to utilize a more 
"modern" rule by imposing a mitigation obligation.  Grays v. Brooks, 148 Misc.2d 
646, 561 N.Y.S.2d 515 (N.Y.Civ.Ct.1990);  Forty Exchange Co. v. Cohen, 125 
Misc.2d 475, 479 N.Y.S.2d 628 (N.Y.Civ.Ct.1984).   However, one case cited by 
TJX, which itself has been the basis for other courts' decisions to impose a 
mitigation obligation, has been reversed.  Rubin v. Dondysh, 146 Misc.2d 37, 549 
N.Y.S.2d 579 (N.Y.Civ.Ct.1989), rev'd, 153 Misc.2d 657, 588 N.Y.S.2d 504 
(N.Y.Sup.1991).   Recent Appellate Division cases have confirmed the traditional 
rule that commercial lessors have no duty to mitigate upon tenants' abandonment.  
Rubin v. Dondysh, supra (2d Dept.); Sage Realty Corp. v. Kenbee Management-New 
York, Inc., 182 A.D.2d 480, 582 N.Y.S.2d 182 (1st Dept.1992);  Centurian Dev. 
Ltd. v. Kenford Co., Inc., 60 A.D.2d 96, 400 N.Y.S.2d 263 (4th Dept.1977).   But 
cf., Paragon Industries, Inc. v. Williams, 122 Misc.2d 628, 473 N.Y.S.2d 92 
(N.Y.App.Term 2d Dept.1983) (involving residential lease).   Therefore, this 
Court in good faith cannot conclude that Bond Street must mitigate its damages 
under New York law.

 TJX's Status as Surety and Entitlement to Defense of Federal Law Calculation of 
Damages.

 [3] Finally, TJX argues that this Court's decision that it is not a surety for 
*37 Ames' performance under the leaseshould be reconsidered.   However, even 
assuming that TJX is a surety, the particular defense claimed is not available 
to TJX because it is personal to Ames.   TJX has cited no case for its proposed 
standard for determining when a defense should be considered "personal" to an 
obligor.   This Court finds that Ames' ability to utilize a federal calculation 
of damages is solely a consequence of its reorganization proceeding, thereby 
rendering this defense as personal to Ames as other bankruptcy-related defenses.   
See, e.g., Aaron v. Bankers & Shippers Ins. Co., 475 So.2d 379 (La.Ct.App.1985) 
(surety prohibited from using automatic stay as defense because it is personal 
to debtor/principal);  American Oil Co. v. Valenti, 179 Conn. 349, 426 A.2d 305 
(1979) (bankruptcy discharge is a personal defense unavailable to surety).

 The foregoing constitutes findings of fact and conclusions of law pursuant to 
F.R.Bky.P. 7052.

 An appropriate order shall issue.

ORDER

 In accordance with a Memorandum of Decision executed on even date herewith, and 
upon reconsideration of this Court's previously-entered order dated January 12, 
1993, granting partial summary judgment to Bond Street Associates Ltd. (the 
"January 12, 1993 Order"), it is hereby

 ORDERED that the January 12, 1993 Order is hereby vacated, and it is further

 ORDERED that summary judgment shall be denied, consistent with the accompanying 
Memorandum of Decision, on the basis that there exist genuine issues of material 
fact, and it is further

 ORDERED that the parties shall be responsible for scheduling a telephonic final 
pretrial conference in order to establish a trial date.

158 B.R. 35

END OF DOCUMENT