Opinion
LT-052012-19/NY
04-15-2019
159 WEST 23RD LLC, Petitioner, v. SPA CIEL DE NY CORP.; "XYZ Corp.", Respondents.
Rosenberg & Estis, Attorneys for Petitioner, By: Joshua Kopelowitz, Esq., 733 Third Avenue, New York, NY 10017 David Rozenholc & Associates, Attorneys for Respondent, By: Michael B. Terk, Esq., 400 Madison Avenue, 19th Floor, New York, NY 10017
Rosenberg & Estis, Attorneys for Petitioner, By: Joshua Kopelowitz, Esq., 733 Third Avenue, New York, NY 10017
David Rozenholc & Associates, Attorneys for Respondent, By: Michael B. Terk, Esq., 400 Madison Avenue, 19th Floor, New York, NY 10017
Judy H. Kim, J.
BACKGROUND
Petitioner is the owner and landlord of 159 West 23rd Street, New York NY (the "Premises"). Respondent Spa Ciel De NY Corp ("Spa Ciel") is the tenant of the basement, first floor and second floor of the Building ("the Premises") pursuant to a fifteen-year lease between Petitioner's predecessor and Spa Ciel dated November 9, 2017 (the "Lease"). "XYZ Corp." is the undertenant of Spa Ciel.
Under the terms of the Lease, Spa Ciel was obligated to, among other things: obtain all required approvals and certificates prior to any alterations, additions, installations or improvements to the Premises; ensure all contractors and sub-contractors carried the insurance required by the Landlord as set forth in the Lease; and maintain commercial general liability insurance against claims for bodily injury or death or property damage on the Premises from the date Tenant entered into possession through the term of the Lease (See Terk Affirm. in Supp. at Ex. C [Lease at ¶¶ 3, 7, 63] ).
Spa Ciel leased the Premises with the intention of converting it to a high-end day spa. In April 2018, after work on the conversion was underway, Petitioner bought the Building from the former landlord. Petitioner maintains that, in May 2018, it discovered that Spa Ciel had proceeded with the construction on the Premises without first obtaining the permits required by the New York City Department of Buildings (the "DOB") and had failed to maintain and deliver to Petitioner commercial general liability insurance effective from the date Respondent entered into possession of the Premises. Spa Ciel claims that these allegations are "false and wholly devoid of merit" but "decline[s] to address them in detail in this motion as they are not the grounds upon which dismissal is sought and, accordingly, not relevant to this pre-answer motion to dismiss" (Terk Reply Affirm. at ¶ 4).
Petitioner acknowledges that, in response to Spa Ciel's alleged failure to procure insurance, it has refused to sign a form Respondent needs to gain DOB approval for the installation of new air condition equipment in the Premises. Respondent maintains that its inability to install air condition equipment is the only impediment to opening its day spa business. Petitioner was informed of this claim by Respondent's attorneys in a letter, dated August 17, 2018 (See Terk Affirm. in Supp. at Ex. F). Respondent claims that, in light of this delay, it has not occupied the Premises since August 2018. Respondent concedes, however, that at least one of its employees has met Petitioner's superintendent at the Premises on multiple occasions between August 2018 and February 2019 to address various issues (e.g. , to fix an alarm ringing at the Premises and an intercom problem, and to inspect and repair the Building's boiler).
On or about December 7, 2018, Petitioner sent Respondent a five-day Notice of Cancellation of the Lease. In the Notice of Cancellation, Petitioner represented that Respondents were in breach of their obligations under paragraphs 3, 7, and 63 of the Lease as they had failed to: obtain the required commercial general liability insurance and ensure that all contractors and contractors were properly insured prior to commencing construction at the Premises,.
After receiving the Notice of Cancellation, Respondent remained in possession of the Premises. On January 23, 2019, Petitioner filed the Notice of Petition and Petition with the Court, seeking a final judgment awarding petition possession of the premises and a money judgment against tenant for rent arrears in the sum of $ 107,279.00.
On January 24, 2019 at approximately 4:41 p.m., Joshua Kopelowitz, Esq., counsel for Petitioner, went to the Premises to serve the Notice of Petition and Petition but was unable to gain admittance to the Premises (See Kopelowitz Aff. in Opp. at Ex. J [Affidavit of Service] ). Kopelowitz went to the Premises again on January 25, 2019, at approximately 10:10 a.m., and was again unable to gain admittance so he affixed two copies of these documents to the entrance door of the Premises (Id. ). Kopelowitz also subsequently mailed the same documents to the Premises on January 25, 2019 by First Class Mail, Certified Mail, and Certified Mail, Return Receipt Requested (Id. at Ex. J [Affidavit of Service] and Ex. N [Mailing Receipt] ).
Kopelowitz also attempted service at Respondent's President, Myoung Joo Yi's residence, located at 48A Arleigh Road, Great Neck New York (the "Yi Residence", on January 24, 2019, at 6:09 p.m., and January 25, 2019, at 9:05 a.m. (Id. at Ex. J [Affidavit of Service] ). As Kopelowitz was unable to gain admittance on either occasion, he left copies of the Notice of Petition and Petition at the Yi Residence on January 25, 2019 and also mailed copies of these documents to the Yi Residence by Certified Mail, Return Receipt Requested later that day (Id. at Ex. J [Affidavit of Service] and Ex. N [Mailing Receipt] ).
Respondent now moves to dismiss the Petition pursuant to CPLR §§ 3211(a)(1), 3211(a)(7) and 3211(a)(8), on the grounds that: (i) Petitioner failed to serve a Notice to Cure required by the Lease; and (ii) Petitioner's service of the Petition and Notice of Petition failed to satisfy the requirements of RPAPL § 735.
DISCUSSION
CPLR § 3211 provides, as relevant here that "[a] party may move for judgment dismissing one or more causes of action asserted against him on the ground that: a defense is founded upon documentary evidence; the pleading fails to state a cause of action; or the court has not jurisdiction of the person of the defendant" ( CPLR § 3211[a][1], [7], [8] ). "On a motion to dismiss pursuant to CPLR § 3211
the pleading is to be afforded a liberal construction. [The Court] accept[s] the facts as alleged in the complaint as true, accord[s] plaintiffs the benefit of every possible favorable inference, and determine[s] only whether the facts as alleged fit within any cognizable legal theory. Under CPLR § 3211(a)(1), a dismissal is warranted only if the documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law. In assessing a motion under CPLR § 3211(a)(7), however, a court may freely consider affidavits submitted by the plaintiff to remedy any defects in the complaint and the criterion is whether the proponent of the pleading has a cause of action, not whether he has stated one
( Leon v. Martinez , 84 NY2d 83, 87-88 [1994] [internal quotations omitted] ).
Respondent argues that, as a threshold matter, this proceeding must be dismissed because Petitioner failed to serve a predicate notice of default required by the Lease. Paragraph 17 of the Lease provides, as relevant here, that:
if Tenant defaults in fulfilling any of the covenants of this lease other than the covenants for the payment of rent or additional rent then in any one or more of such events, upon Owner serving a written fifteen (15) days notice upon Tenant specifying the nature of said default, and upon the expiration of said fifteen (15) days period, and if Tenant shall not have diligently commenced curing such default within such fifteen (15) day period, and shall not thereafter with reasonable diligence and in good faith proceed to remedy or cure such default, then Owner may serve a written five (5) days notice of cancellation of this lease upon Tenant, and upon the expiration of said five (5) days, this lease and the term thereunder shall end and expire
(Terk Affirm. at Ex C [Lease at ¶ 17] ).
Petitioner concedes that it did not serve a notice of default but claims that no such notice was necessary because the default at issue here was incurable. The Court agrees. In general, "where a landlord fails to serve a requisite notice to cure, the lease remains in effect and the tenancy cannot be terminated" ( 2215-75 Cruger Apartments, Inc. v. Stovel , 196 Misc 2d 346, 347 [App Term 1st Dept 2003] ). An exception exists, however "in circumstances where a cure is impossible" (Id. ). The rationale for this exception is that, although a lease or statute provides time for a cure, the existence of such a provision "does not necessarily imply that a means or method to cure must exist in every case" of default ( Adam's Tower Ltd. Partnership v. Richter , 186 Misc 2d 620, 622 [App Term, 1st Dept 2000] [internal citations omitted] ). Where no such means or method of cure exists, "[t]o insist upon the service of a formal notice to cure in such circumstances is to compel the performance of a useless and futile act" ( 326-330 E. 35th St. Assoc. v. Sofizade , 191 Misc 2d 329, 331 [App Term 1st Term 2002] ).
In a holdover summary proceeding based upon tenant's failure to pay rent, the Appellate Term, First Department rejected "tenant's assertion, that the landlord's election to forego serving a prepetition notice to cure [was] fatal to its possessory claim," holding that "the cumulative pattern of tenant['s] course of conduct" was incapable of any meaningful cure ( Sofizade ,191 Misc 2d at 330 [App Term, 1st Dept 2002] citing Adam's Tower Ltd. Partnership v. Richter , 186 Misc 2d 620, 622 [App Term, 1st Dept 2000] and 3363 Sedgwick v. Medina , 187 Misc 2d 421 [App Term, 1st Dept] ). The Sofizade court found that the notice requirement of the lease — which was substantially similar to paragraph 17 of the Lease — was "intended to cover the not uncommon situation in which a full cure of a correctable lease default is not feasible within 10 days [but could not] reasonably be read to require the landlord to provide tenant with a prepetition cure opportunity of any duration where, as here, the alleged lease violation is not curable in the first instance" ( Sofizade , 191 Misc 2d at 331-32 [App Term, 1st Dept 2002] ).
Here, Spa Ciel's alleged failure to maintain insurance coverage as required by paragraph 17 of the Lease is an incurable default ( 210 E. 86th St. Corp. v. Eastside Exhibition Corp. , 59 Misc 3d 141(A) [App Term, 1st Dept 2018] ); see also Kyung Sik Kim v. Idylwood, NY, LLC , 66 AD3d 528, 529 [1st Dept 2009] [where "plaintiffs had not previously and continuously maintained insurance coverage as required by their commercial lease," violation was a material breach of the lease and an incurable violation providing "an independent basis for the denial of Yellowstone relief"] ). While Spa Ciel attempts to distinguish Sofizade by noting that it involved unpaid rent, which was a default expressly excluded from the landlord's obligation to provide a notice of default, the Sofizade court noted that "[e]ven assuming that [the notice provision], which by[it's] terms covers lease defaults other than those involving ‘the agreement to pay rent’ was triggered by the recurring rent defaults that occurred here" the landlord was still not required to serve a notice of default, given the incurable nature of the default at issue ( Sofizade , 191 Misc 2d at 331 ). Accordingly, this Court finds that Petitioner's failure to serve a notice of default pursuant to the Lease does not provide a basis for dismissal of this action.
The cases relied on by Respondent in support of its motion do not support a contrary conclusion. They stand only for the principle that, in general, provisions of a lease setting forth the method for termination of the lease will be enforced by the court as written (See e.g. , Grenadeir Parking Corp. v. Landmark Assoc. , 283 AD2d 379, 380 [1st Dept 2001] [where lease provided that tenancy could not be terminated unless tenant was served with seven-day notice to cure and three-day notice of cancellation, failure to serve such notices precluded termination]; Vermont Teddy Bear Co., Inc. v. 538 Madison Realty Co. , 1 NY3d 470 [2004] [where lease provided that landlord was required to restore premises upon tenant's demand but did not require landlord to notify tenant once restoration was complete, landlord's failure to send such notification within a year from the demand to restore did not provide tenant grounds to terminate lease] ) and do not address the specific circumstances at issue here. Accordingly, that branch of Spa Ciel's motion to dismiss the Petition based on Petitioner's failure to serve a notice of default is denied.
Respondent also argues that dismissal is required because Petitioner's service of the Petition and Notice of Petition did not satisfy the requirements of RPAPL § 735. That statute provides that:
Service of the notice of petition and petition shall be made by personally delivering them to the respondent; or by delivering to and leaving personally with a person of suitable age and discretion who resides or is employed at the property sought to be recovered, a copy of the notice of petition and petition, if upon reasonable application admittance can be obtained and such person found who will receive it; or if admittance cannot be obtained and such person found, by affixing a copy of the notice and petition upon a conspicuous part of the property sought to be recovered or placing a copy under the entrance door of such premises; and in addition, within one day after such delivering to such suitable person or such affixing or placement, by mailing to the respondent both by registered or certified mail and by regular first class mail
( RPAPL § 735[1] [emphasis added).
Spa Ciel claims that Petitioner's service of the Petition and Notice of Petition at the Premises was insufficient to satisfy RPAPL § 735's requirement of reasonable application to gain admittance to the Premises. Specifically, Spa Ciel argues that service was inadequate because Petitioner knew, at the time service was attempted on Spa Ciel, that no one would be present at the Premises because the only work left to be done at the Premises was the installation of the air condition equipment that Petitioner allegedly prevented (Terk Affirm. in Supp. at pp. 9-11 citing Palumbo v. Clark's Estate , 94 Misc 2d 1, 3-4 [Civ Ct, Bronx County 1978] ; ZOT, LLC v. Crown Assoc. , 22 Misc 3d 133(A) [App Term, 2d & 11th Jud. Dists. 2009] ; Mark Stamping Corp. v. Mark Cabinet Mfg. Corp. , 160 Misc 2d 555, 557 [Civ Ct, Kings County 1994] ; 30 40 Assoc. Corp. v. Destefano, 2003 WL 1701527 [App Term, 1st Dept 2003] ).
Respondent's reliance on these cases in support of its position is misplaced, however. In Palumbo v. Clark's Estate , for example, the process server attempted to gain admittance to the premises at issue, a bar, at 6:22 a.m., a time when it is commonly understood that bars are closed ( Palumbo v. Clark's Estate , 94 Misc 2d 1, 3-4 [Civ Ct, Bronx County 1978] ). Here, service was attempted during normal business hours. Moreover, in this case, Petitioner disputes that it knew the Premises was closed at the time service was attempted (Cf. ZOT, LLC v. Crown Assoc. , 22 Misc 3d 133(A) [App Term, 2d & 11th Jud. Dists. 2009] [Petitioner conceded prior knowledge that restaurant was closed because of ceiling collapse]; Mark Stamping Corp. v. Mark Cabinet Mfg. Corp. , 160 Misc 2d 555, 557 [Civ Ct, Kings Coupronty 1994] [Petitioner submitted documentation establishing its knowledge that Respondent was "out of business" prior to attempt at service]; 30 40 Assoc. Corp. v. Destefano, 2003 WL 1701527 [App Term, 1st Dept 2003] ["Landlord knew the apartment was empty at the time it commenced the proceeding, as tenant Frank DeStefano had been removed by the police at landlord's instance"] ). In fact, Petitioner contends that Respondent continues to occupy the Premises and that people were, in fact, at the Premises when Kopelowitz attempted personal service on Spa Ciel but refused to answer the door.
Most compelling to the Court, however, is the undisputed fact that the Premises remains listed as the address for service of process on Spa Ciel by the New York State Department of State website and that Spa Ciel never provided an alternative business address to Petitioner (See 235 W. 22nd St., LLC v. Genshaft , 24 Misc 3d 145(A) [App Term, 1st Dept 2009] [Tenant's argument that landlord was required to serve him in Ukraine was unavailing where tenant never provided landlord with written information that he resided elsewhere] ).
In light of the foregoing, the Court finds that Petitioner made all reasonable efforts to serve Respondent. Petitioner's service of process at the only address provided by Respondent — the Premises — in addition to serving Spa Ciel's President at her residence satisfied RPAPL § 735 (See 156 Nassau Ave. HDFC v. Tchernitsky , 62 Misc 3d 140(A) [App Term, 2d. & 11th Jud. Dists. 2019] [process server's two attempts, made during normal business hours when there was a reasonable expectation of success in finding a person on the premises to whom delivery may be made, were sufficient to permit conspicuous-place service"] ).
Accordingly, Respondent's motion to dismiss is denied.
This constitutes the Decision and Order of the Court.