Opinion
21715/09.
Decided August 5, 2010.
Kennedy Gillen, Esqs., Attorneys for Plaintiff, Garden City, NY.
Tip Henderson, Esq., Attorney for Defendants, Glen Cove, NY.
Upon the foregoing papers, it is ordered that this motion by plaintiff King Kullen Grocery Co., Inc. ("King Kullen") for an order pursuant to CPLR 3212 granting summary judgment in favor of plaintiff against defendants LaStella Pizzeria Restaurant III, Inc. and Salvatore Guastella (collectively "LaStella defendants") is granted as hereinafter provided.
Cross motion by the LaStella defendants for an order pursuant to CPLR 3025(b) granting them leave to amend their answer and pursuant to CPLR 3212 awarding summary judgment in their favor dismissing the plaintiff's complaint, is denied.
Pursuant to a lease executed in June, 1998 between LaStella Pizzeria Restaurant III, Inc. as tenant and King Kullen's predecessor-in-interest Bobrow Bros., LLC (Bobrow) as landlord, the LaStella defendants operated a pizzeria/restaurant [Forest Avenue Pizza] at a commercial storefront known as 79 Forest Avenue, Glen Cove, New York located in a strip mall. In or about January, 2002, Bobrow leased the shopping center to Cove Associates ("Cove") pursuant to a ground lease. At the same time Bobrow assigned its interest in the LaStella lease to Cove. Thereafter, in or about December, 2002, Cove assigned its interest in both the LaStella lease and the ground lease for the entire shopping center to plaintiff King Kullen which purchased Cove's supermarket business and took control of the premises.
The term of the lease was for a period of ten years: to wit: July 1, 1998 through June 30, 2008.
The original shopping center consisted of a total of seven stores. After the ground lease was assigned to Cove, Cove began to remove tenants from the shopping center in preparation for construction of a supermarket. When the LaStella defendants refused to relocate, Cove proceeded to construct the supermarket around the pizzeria/restaurant.
Subsequently, a dispute arose between King Kullen and LaStella regarding its obligation to pay for electrical utilities under the terms of the lease which resulted in a lawsuit brought by LaStella as plaintiff against King Kullen. In that action, bearing the caption LaStella Pizzeria Restaurant III, Inc. v King Kullen Grocery Co., Inc. [index number 06/017366], LaStella sought, inter alia, a judicial declaration that it was not in default under the lease for refusing to pay the cost of electrical usage at the demised premises for the period December, 2002 through January, 2006. In connection with the lawsuit, King Kullen was enjoined from taking any action to remove LaStella from the premises by order of the Hon. Kenneth A. Davis entered April 6, 2007.
The lawsuit was settled pursuant to a Surrender and Settlement Agreement entered July 23, 2008. Under the Agreement, LaStella agreed:
that the term of the lease was wholly extinguished as of June 30, 2008;
that King Kullen was entitled to possession of the demised premises as of the surrender date i.e., December 31, 2008;
that it would remove all personal property from the premises on or before the surrender date;
that it would pay per diem use and occupancy at the rate of $130.43 (inclusive of taxes and common charges) until the occurrence of the surrender date; and
that it would pay liquidated damages in the amount of $250. per day, in addition to all reasonable attorney's fees incurred by King Kullen in connection with any holdover by LaStella beyond 5:00 p.m. of the surrender date, which liability would survive the surrender date.
LaStella further agreed, inter alia, that the lease, having terminated on June 30, 2008, King Kullen had the right from and after that date, to commence a summary holdover proceeding to obtain a warrant of eviction against LaStella to which LaStella would not interpose any defenses or counterclaims or attempt, in any way, to delay issuance of the warrant. The Agreement also contains a provision stating that it constituted
"the entire agreement of the parties with respect to the subject matter * * * and [might] not be amended except by a written agreement signed by each of the parties hereto."
Notwithstanding the aforementioned terms, LaStella failed to surrender possession of the premises on the surrender date and remained thereat until September 9, 2009.
In this breach of contract action, plaintiff King Kullen seeks to recover liquidated damages arising from defendant LaStella's use and occupancy of the premises, the costs of labor and material incurred in the removal of LaStella defendants' personal property from the premises after their departure as well as attorney's fees arising from defendants' failure to vacate the premises on the surrender date.
Plaintiff King Kullen now seeks summary judgment based on LaStella defendants' undisputed failure to timely vacate the premises by the surrender date of December 31, 2008.
In opposition to plaintiff's motion, defendants have cross moved to dismiss the complaint and to amend their answer to add an eighth affirmative defense, i.e., split cause of action, to the seven originally alleged including: creation of month-to-month tenancy; unenforceability of the liquidated damages clause of the Surrender and Settlement Agreement; accord and satisfaction; waiver, no agreement to pay cost of electrical usage; premature re-entry of the premises by King Kullen; unenforceability of Surrender and Settlement Agreement as contract of adhesion.
It is axiomatic that when parties set down their agreement in a clear, complete document, their writing should be enforced according to its terms. ( Riverside South Planning Corp. v CRP/Extell Riverside, L.P. , 60 AD3d 61 , 66, affirmed 13 NY3d 398). The initial interpretation of a contract is a matter of law for the court to decide. ( International Multifoods Corp. v Commercial Union Ins. Co., 309 F3d 76, 83 [2d Cir. 2002]). Where the language of a contract is unambiguous, the parties' intent is determined within the four corners of the contract. ( In re Matco-Norca, Inc., 22 AD3d 495, 496).
Plaintiff King Kullen has sustained its burden of establishing its entitlement to judgment as a matter of law based on the LaStella defendants' breach of the Surrender and Settlement Agreement.
In this case, the ordinary and natural meaning of the words of the Surrender and Settlement Agreement are dispositive. It is undisputed that the lease terminated on June 30, 2008; LaStella was to pay per diem use and occupancy for the period July 23, 2008 to December, 2008 for each day it remained at the premises beyond the surrender date. Further, LaStella was obligated to pay liquidated damages in the amount of $250.00 per day, in addition to all reasonable attorney's fees, in connection with such holdover. LaStella agreed to pay, and King Kullen agreed to accept, $30,000.00 in full satisfaction of past electrical charges. With respect to the electricity charges, the parties agreed that it was to be paid in six monthly installments of $5,000.00 beginning July 1, 2008. The language of the Agreement is clear and unambiguous. The parties having mutually assented to its terms, the terms of the Agreement should be enforced.
The Surrender and Settlement Agreement at issue herein is not a contract of adhesion, and its terms are valid and enforceable. Typical contracts of adhesion are standard form contracts offered by large economically powerful corporations to unrepresented, uneducated and needy individuals on a take-it-or-leave-it basis, with no opportunity to change or negotiate the contract terms. Here, there is no allegation that the LaStella defendants were not represented by counsel or that the terms of the Agreement were not negotiated. Allegations of adhesion may not be invoked to trump the clear language of an agreement unless there is a showing, not here present, of unfairness, undue oppression or unconscionability. ( Sablonsky v Edward S. Gordon Co., Inc., 73 NY2d 133, 138; Precision Mechanical Inc. v Dormitory Authority of the State of New York, 5 AD3d 653, 654). The record here is totally devoid of any evidence that plaintiff King Kullen employed high pressure tactics or that grossly unequal bargaining power existed such that the parties' agreement was tainted by adhesion.
Contrary to defendants' assertions, plaintiff's acceptance of LaStella's monthly check of $4,000.00 from January through June 2009 bearing the notation "Rent" did not create a month-to-month tenancy nor constitute a waiver of King Kullen's right to collect liquidated damages arising from LaStella's failure to abide by the surrender date. Both contentions fly in the face of the plain language of the parties' Agreement setting forth LaStella's obligations post lease termination. LaStella defendants have failed to present any viable proof refuting plaintiff King Kullen's allegations that LaStella failed to comply with the terms of the Surrender and Separation Agreement.
§ 232-c of the Real Property Law is instructive in that it provides that
"Where a tenant whose term is longer than one month holds over after the expiration of such term, such holding over shall not give to the landlord the option to hold the tenant for a new term solely by virtue of the tenant's holding over. In the case of such a holding over by the tenant, the landlord may proceed, in any manner permitted by law, to remove the tenant, or, if the landlord shall accept rent for any period subsequent to the expiration of such term, then, unless an agreement either express or implied is made providing otherwise, the tenancy created by the acceptance of such rent shall be a tenancy from month to month commencing on the first day after the expiration of such term."
Here the parties have, in fact, agreed "otherwise" having executed a formal Surrender and Settlement Agreement delineating their respective rights and obligations subsequent to expiration of the lease term. As part of that Agreement, defendants acknowledged expiration of the lease term on June 30, 2008; agreed to a surrender date of December 31, 2008; agreed to pay use and occupancy on the premises prior to the surrender date; and to pay liquidated damages in the event LaStella continued to occupy the subject premises beyond the surrender date. Moreover, there is no manifestation of intent by the parties that the monies paid were accepted in full satisfaction of defendants' obligations under the Agreement such that an accord and satisfaction was established. A party asserting the defense of accord and satisfaction must establish that there was a genuine dispute regarding an unliquidated claim between the parties which they mutually resolved through a new contract discharging all or part of their obligations under the original contract. ( Profex, Inc. v Town of Fishkill , 65 AD3d 678 ). The parties have clearly not resolved their dispute and there is no evidence of any agreement discharging any of defendants' obligations under the Surrender and Settlement Agreement.
A liquidated damages provision constitutes the compensation which the parties have agreed should be paid in order to satisfy any loss or injury flowing from a breach of their contract. ( Truck Rent-A-Center, Inc. v Puritan Farms 2nd, Inc., 41 NY2d 420, 423). It is, in effect, an estimate made by the parties at the time they enter into their agreement, of the extent of the injury that would be sustained as a result of a breach of the agreement. ( Crown It Services, Inc. v Koval-Olsen, 11 AD3d 263, 265). Whether a contractual provision represents an enforceable liquidation of damages or an unenforceable penalty is a question of law, giving due consideration to the nature of the contract and the attendant circumstances. ( JMD Holding Corp. v Congress Financial Corp. , 4 NY3d 373 , 379). Such a provision will be upheld where, as here, the amount fixed is a reasonable measure of the probable actual loss in the event of a breach, and the actual loss suffered is impossible or difficult to determine with precision. ( Central Irr. Supply v Putnam County Club Associates, LLC, 57 AD3d 934, 935).
The liquidated damages clause herein providing for LaStella's payment of liquidated damages in the amount of $250.00 per day in the event it did not surrender the premises by 5:00 p.m. on December 31, 2008 is not an unenforceable penalty. The amount represents a reasonable estimate at the time the Agreement was negotiated and executed. The LaStella defendants have made no showing that damages could have been anticipated when the Surrender Agreement was executed or that the amount fixed was plainly or grossly disproportionate to the probable loss. ( Truck Rent-A-Center, Inc. v Puritan Farms 2nd, Inc., supra at 425).
Defendants' assertion that plaintiff King Kullen waived its claim for liquidated damages by accepting and failing to object to LaStella's monthly payment of $4,000. 00 from January through June, 2009 is untenable. A waiver is an intentional abandonment or relinquishment of a known right or advantage which, but for such waiver, the party would have enjoyed. ( Nassau Trust Co. v Montrose Products Corp., 56 NY2d 175, 184; Alsens American Portland Cement Works v Degnon Contracting Co., 222 NY 34, 37). It is essentially a matter of intent which must be proved. The fact that plaintiff King Kullen accepted checks from LaStella bearing the notation "Rent" does not evidence an intent to waive LaStella's obligations under the Surrender and Settlement Agreement to pay use and occupancy/liquidated damages in accordance with the terms of that Agreement. Payments made after expiration of the lease term, including any made subsequent to the surrender date, do not constitute "Rent". This is not a situation where the landlord's acceptance of a rent from a tenant with knowledge of the violation of the terms of the lease results in a waiver of the violation ( Jefpaul Garage Corp. v Presbyterian Hosp. in City of New York, 61 NY2d 442, 446), as the lease was no longer in effect and the parties had established a new agreement setting forth their respective obligations which defendants breached.
Given that the Surrender and Settlement Agreement specifically provides that, in the event LaStella failed to comply with the surrender date, it was obligated to pay "all reasonable attorney's fees incurred by King Kullen in connection with any such holdover," defendants' claim that plaintiff is precluded from recovering such fees because it did not seek same in the summary proceeding to evict LaStella [Nassau County: District Court, index no. 004386/09] is devoid of merit.
The decision whether to grant leave to amend a pleading rests within the discretion of the court. ( Gitlin v Chirinkin , 60 AD3d 901 , 902). While leave to amend a pleading should be freely granted, where as here, the proposed amendment is patently devoid of merit, leave need not be granted. ( Kuslansky v Kuslansky, Robbins, Stechel and Cunningham, LLP , 50 AD3d 1101 ). Plaintiff has not impermissibly split its cause of action as defendants allege. Under paragraph 5 of the Surrender and Settlement Agreement, LaStella agreed that King Kullen had the right, from and after, the lease termination date [June 30, 2008],
"to commence a summary holdover proceeding (the " Summary Proceeding ") to obtain a warrant of eviction against LaStella (the " Warrant "). LaStella hereby consents to (1) accept service of process of the petition and notice of petition in the summary proceeding by certified mail to the Demised Premises; and (2) consents to the issuance of the Warrant and hereby agrees that it will in no event (x) seek to interpose any defenses or counterclaims it may have to King Kullen's right to the Warrant in the Summary Proceeding or (y) attempt to delay the issuance of the Warrant in any way. King Kullen agrees that as part of the Summary Proceeding it will inform the court that it is obtaining the Warrant pursuant to the terms of this Agreement, a copy of which will be provided to the court. In the event that the court declines to issue the Warrant based upon the terms of his Agreement, it is understood that the terms of this Agreement will not be altered without the consent of both parties."
Under the circumstances extant, and given the express language of the parties' Surrender and Settlement Agreement, there is no basis to conclude that plaintiff King Kullen's right to recover attorney's fees is limited to the right to collect only those fees incurred in connection with the summary proceeding. Nor is King Kullen precluded in this action, by the doctrine against splitting, from seeking the recovery of all attorney's fees incurred in connection with LaStella's holdover.
Accordingly, plaintiff King Kullen's motion for summary judgment is granted on the issue of liability. The matter shall be set down for an evidentiary hearing to determine the amount due and owing for use and occupancy, liquidated damages, removal costs and reasonable attorney's fees in accordance with the relevant provisions of the Surrender and Settlement Agreement herein. Therefore, a hearing is scheduled at IAS Part 4 of this court, before the undersigned Justice, on October 12, 2010 at 9:30 a.m.