Opinion
L & T 64032/19
09-16-2019
MARIE FRANCE REALTY CORP., Petitioner, v. 325 EAST 14TH STREET CORPORATION, Respondent-Tenant, and "ABC Corp," AND "XYZ Corp," Respondents-Undertenants.
Petitioner Counsel, Robinson Brog Leinwand Greene Genovese & Gluck P.C., 875 Third Ave., 9th Floor, New York, NY 10022-6225 Respondent Counsel: Joseph Alan Altman, Esq., 951 Bruckner Blvd Fl 1, Bronx, NY 10459-4515
Petitioner Counsel, Robinson Brog Leinwand Greene Genovese & Gluck P.C., 875 Third Ave., 9th Floor, New York, NY 10022-6225
Respondent Counsel: Joseph Alan Altman, Esq., 951 Bruckner Blvd Fl 1, Bronx, NY 10459-4515
Judy H. Kim, J.
Recitation, as required by CPLR § 2219(a), of the papers considered in the review of this motion:
Papers/Numbered
Notices of Motion and Memorandum of Law 1
Order to Show Cause and Affidavits Annexed
Notice of Cross-Motion and Memorandum of Law 2
Replying Affidavits 3
Exhibits
Other
Upon the foregoing papers, the Decision and Order of the Court on Petitioner's motion for summary judgment and Respondent's cross-motion to dismiss the Petition is as follows:
Petitioner Marie France Realty Corp is the owner of the building located at 325 East 14th Street, New York, New York (the "Building"). On April 19, 2003, Petitioner entered into a lease (the "Lease") with John R. McGillion to lease the ground floor restaurant and basement storage area of the Building (the "Premises").
The Lease provided, in relevant part, that "[t]he Tenant agrees that he will not make any alterations, additions, installations and improvements in or upon the premises or any part therefor without the Landlord's written consent to each and every such alteration" (Simpson Affirm. at Ex. B [Lease at ¶44] ).
The Lease further provided that
The Tenant shall be solely responsible for making any repair and/or renovations and/or improvements upon the leased premises Any renovations and improvements made by the Tenant under this lease are to be done at the sole cost and expense of the Tenant, and they shall be done diligently and in conformity with all legal safety requirements in a good and worklike manner, and in accordance with the standards required by the Department of Buildings of the City of New York. Any and all permits required by any governmental agency shall be secured by the Tenant and any and all violations which result from any renovation or structural or non-structural change effected by the Tenant shall be cured by the Tenant. There shall be no structural renovation or construction, however, unless the required permits and comprehensive general liability insurance policies are obtained
(Simpson Affirm. at Ex. B [Lease at ¶43] ).
Pursuant to an Agreement and Assignment of Lease dated August __, 2003 [sic] (the "Assignment"), McGillion assigned the Lease to Respondent 325 East 14th Street Corporation. While the initial term of the Lease was ten years, expiring on August 31, 2013, Respondent exercised an option to renew the Lease for an additional ten-year term, thereby extending the Lease to August 31, 2023.
On March 4, 2014, Petitioner served Respondent with a "Thirty (30) Days' Notice of Cancellation of Lease" (the "Termination Notice") which notified Respondent that its tenancy would be terminated on April 9, 2014, unless Respondent cured the defaults enumerated in the Termination Notice by 5:00 p.m. on that date. These defaults, as relevant here, included the: installation of a walk-in cooler in the basement; illegal installation of electric ceiling fans and conduits without permits from the New York City Department of Buildings ("DOB"); installation of a water heater and boiler without DOB approval; use of basement beyond the "storage area" demised to respondent; construction of a free-standing structure with roof at rear courtyard of building without DOB approval; removal and reinstallation of two bathrooms without DOB approval; installation of gas fired cooking equipment without a fire suppression system and without approval from DOB or the New York City Fire Department; and perforation of masonry walls under the front entry stairs (Simpson Affirm. at Ex. I [Termination Notice] ).
Service of the Termination Notice was effected by certified mail, return receipt requested, to Respondent and McGillion (Simpson Affirm. at Ex. J [Affidavit of Service] ). Upon receiving the Termination Notice, Respondent commenced an action against Petitioner in Supreme Court, New York County — entitled 325 East 14th Street Corporation v Marie France Realty Corp. et al, Index Number 651074/2014 — seeking a Yellowstone injunction and a declaratory judgment that, inter alia, the violations complained of in the Termination Notice were caused by Petitioner and were not, in any event, substantial violations of the Lease (the "Supreme Court Action").
By order dated March 2, 2015, Supreme Court (Hon. Marcy S. Friedman) granted Respondent's motion for a Yellowstone injunction. Supreme Court then conducted a non-jury trial on February 14, 15, 16, and 24, 2017. In a Decision, Order, and Judgment after trial (the "Judgment"), the Supreme Court found that Respondent had performed alterations to the Premises without written permission from Petitioner. Specifically, the Court found that Tenant made unauthorized and illegal alterations in the basement, installed a pizza oven and gas line extension without a permit, "punched a hole" in the staircase leading to the first floor parlor, without a permit, constructed an extension in the Premises back yard without a permit, installed HVAC, refrigeration, and venting equipment on the roof of that extension without permits, emolished and reconstructed the kitchen and bathrooms on the Premises, and constructed an addition to the Premises within the rear yard, all without DOB approval (Simpson Affirm. at Ex. K [Judgment at pp. 7, 9, 12, 19]. The Supreme Court also held that "tenant's extensive alterations to the premises, without prior written consent of Landlord and without permits clearly caused lasting and permanent injury to the premises, and constituted a substantial violation of the lease" (Id. at p. 19). The Court further found, however, that since "the alterations were virtually all made at the outset of the tenancy" with Petitioner's knowledge, "Landlord's long-standing, knowing forbearance from objecting to the alterations was tantamount to approval" and constituted a waiver (Id. at pp. 5, 21). Accordingly, "[a]s Landlord was complicit in the illegal alterations, Tenant cannot be evicted provided that it legalizes the alterations pursuant to this court's directives (Id. at p. 5). The Supreme Court qualified this determination, however, by noting that "although Landlord waived the no-waiver and no-alteration provisions of the Lease, Landlord could not effectively waive compliance with DOB regulations enacted for protection of the public, because "public safety [was] clearly implicated by [Respondent's] extensive alterations involving structural supports and mechanical, electrical, and gas systems" (Id. at p. 24).
As a result, the Supreme Court ordered Tenant to cure all alterations that the Court found to be illegal, and to act in strict compliance with all requirements of the DOB and any other interested governmental agency in so doing (Id. at pp. 30-31). It further ordered Landlord to confer in good faith with Tenant regarding applications to the DOB, plans, and any other requirements for legalization of illegal alterations and must not unreasonably withhold consent (Id. ).
Finally, the Supreme Court held that the Yellowstone injunction would remain in effect provided that Respondent submitted "an application and detailed plan(s) by a licensed architect or engineer to legalize all of the work referred to" in the Judgment to Petitioner within thirty days after service of the Judgment with notice of entry upon it (Id. at p. 33).
Petitioner subsequently moved to vacate the Yellowstone injunction and draw against the bond posted by Respondent in connection with the Yellowstone injunction In its Decision and Order dated April 28, 2019 (the "Vacatur Order"), Supreme Court found that Respondent had failed to comply with its directives in the Judgment and subsequent orders "by producing facially deficient and untimely plans [and failing to] provide a legally sufficient excuse for its noncompliance" (Simpson Affirm. at Ex. L [Vacatur Order at p. 3] ). As a result, the Court vacated the Yellowstone injunction and ordered Landlord to legalize the alterations and correct the outstanding violations (Id. at p. 7).
On May 29, 2019, Petitioner filed a petition in this Court under L & T Index Number 62449/2019. On June 21, 2019, Respondent moved to dismiss that petition as procedurally defective on the grounds that it failed to attach copies of the Termination Notice and affidavit of service of the Termination Notice to the petition. This Court granted that motion without opposition, at which point Petitioner announced its intent to file the instant Petition. Petitioner subsequently filed the instant Petition on June 24, 2019, the next business day after the dismissal of the prior proceeding.
On August 19, 2019, Respondent interposed a Verified Answer, asserting as affirmative defenses that: (i) the Notice of Petition and Petition were improperly served; (ii) the Termination Notice was improperly served; (iii) Petitioner has improperly relied upon the Termination Notice in the prior proceeding; (iv) dismissal is mandated under the "law of the case" doctrine because Supreme Court already determined that Petitioner waived all claims for breach of the Lease based upon the unapproved alteration; (v) Petitioner failed to serve a Notice to Cure as required by Lease; (vi) failure to state a claim; (vii) Petitioner is limited to seeking monetary award for work that Respondent was to perform with respect to any violations Respondent was ordered to cure; (viii) Petitioner must seek relief in Supreme Court action; (ix) predicate notice is vague and conclusory; (x) estoppel (based on Petitioner's failure to cooperate with Respondent's efforts to cure).
Thereafter, both parties served and filed the instant motions. In motion sequence 001, Respondent moves, pursuant to CPLR §§ 3212 and 3211(a)(2), (a)(5) and (a)(7), to dismiss the Petition. In motion sequence 002, Petitioner moves, pursuant to CPLR § 3212, for an order granting Petitioner summary judgment dismissing Respondent's affirmative defenses, a judgment of possession in favor of Petitioner, and a money judgment in an amount to be determined by the Court. These motions are consolidated for disposition.
DISCUSSION
Summary judgment is a drastic remedy which should not be granted where there is any doubt as to the existence of material and triable issues of fact ( Sillman v Twentieth Century—Fox Film Corp , 3 NY2d 395, 404 [1957] ). The proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence in admissible form to demonstrate the absence of any material issues of fact ( Winegrad v. New York Univ Med Center , 64 NY2d 851, 853 [1985] ). Once this showing has been made, the burden shifts to the party opposing the motion for summary judgment to produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact which require a trial of the action ( Alvarez v Prospect Hospital , 68 NY2d 320, 324 [1986] ).
Petitioner argues that it is entitled to summary judgment because no triable issues of fact exist as to Respondent's breach of the Lease through its unapproved construction without DOB approval. This Court agrees and finds that Respondent is collaterally estopped from re-litigating its breaches of the Lease, as determined by the Supreme Court. In opposition, Respondent makes much of the fact that the Supreme Court reiterated in its Vacatur Order that "Landlord had waived any claim that Tenant had violated the Lease by making the alterations." Respondent argues that, as a result of this determination, Petitioner is precluded from bringing a claim based upon Respondent's breaches of the Lease. However, Respondent omits the next sentence in the Vacatur Order, in which the Supreme Court specifically notes that "[t]he injunction is vacated because Tenant did not ultimately comply with the court's directive to cure violations of DOB regulations that Landlord could not legally waive" (impson Affirm. at Ex. L [Vacatur Order at p. 7] [emphasis added] ). In other words, the Supreme Court found that while Petitioner had waived any objection to paragraph 44 of the Lease rider — which required Respondent to get permission for any alterations — it had not waived the requirement set forth in paragraph 43 of the Lease that all alterations must be approved by DOB. Finally, while the Supreme Court found that Petitioner had not cooperated with Respondent in getting DOB approvals, this finding was determinative only in that court's denial of Petitioner's request to draw from Respondent's bond, and did not cause Respondent's failure to obey the directives set out in the Judgment. Accordingly, as Respondent breached the Lease, and was properly served with the Termination Notice, its right to possession terminated on May 14, 2019 (See Petition ¶¶19-20).
In opposition, Respondent raises a number of defenses, none succesful. Respondent argues that dismissal is required because Petitioner may not base this proceeding upon the Termination Notice used in the prior proceeding which was dismissed on June 21, 2019. "While it may be the general rule that predicate notices from one holdover proceeding may not be used in a subsequent holdover proceeding that is commenced after the termination, dismissal or discontinuance of the former proceeding" this is not a bright line rule — rather, "it is the timing of the commencement of the second proceeding that becomes the crucial factor to be considered" ( Ctr. for Behavioral Health Services, Inc. v Bock , 18 Misc 3d 1111(A) [Civ Ct, Kings County 2008] ).
Where, as here, the prior proceeding was discontinued without prejudice, Respondents had no reasonable basis to believe that Petitioner would not pursue its claim, particularly since Petitioner announced its intention to start a new proceeding ( Arol Dev. Corp. v Goodie Brand Packing Corp. , 84 Misc 2d 493, 495-96 [App Term, 1st Dept 1975] [where first proceeding was attacked by respondent as a nullity; respondent could not subsequently cite that first proceeding as a bar to the second], affd, 52 AD2d 538 [1st Dept 1976] citing Ferrandino v. Cartelli , 12 AD2d 604 ) and a new proceeding was commenced within one day of dismissal, with no prejudice to Respondent (See Great Location New York, Inc. v Seventh Ave. Fine Foods, Inc. , 46 Misc 3d 150(A) [App Term, 1st Dept 2015] ; Culhane v Patterson , 54 Misc 3d 10, 12-13 [App Term, 2d Dept 2016] citing Bresciani v Corsino , 32 Misc 3d 463 [Civ Ct, Kings County 2011] ). The cases on which Respondent relies are inapposite, as they involve service of predicate notices in summary proceedings against residential tenants, actions which are governed by a separate regulatory scheme (See Colavolpe v Williams , 77 Misc 2d 430, 431 [Civ Ct, Kings County 1974] ; see also Mau v Stapleton , 136 Misc 2d 793, 795 [Civ Ct, Kings County 1987] ; Weinberger v Driscoll , 89 Misc 2d 675, 678 [Civ Ct, NY County 1977] ; Haberman v Wager , 73 Misc 2d 732, 732-33 [Civ Ct, NY County 1973] ; Brullo v Suen , 76 Misc 2d 896, 898 [Civ Ct, NY County 1973] ).
Respondent also argues that a ten-day notice to cure was required in addition to the thirty-day Termination Notice. This is contradicted by the Lease, which, as amended, extended the requirement of a ten-day Termination Notice to thirty days, rather than requiring two separate notices (Simpson Affirm. at Ex. B [Lease at ¶6] ).
Respondent's defense that the predicate notice was not properly served upon an employee or individual authorized to accept service is invalid. As this holdover action is brought pursuant to RPAPL § 711(1) it is only necessary that service is effected pursuant to the Lease ( Bogatz v Extra Touch Intern., Inc. , 179 Misc 2d 1029, 1032 [Civ Ct, Kings County 1999] ; 200 W. 112TH St. HDFC v 1842 7th Ave. Delicatessen Corp. , 30 Misc 3d 1216(A) [Civ Ct, NY County 2011] ) and it is undisputed that such service was made.
Respondent's defense that this Court lacks jurisdiction because the Notice of Petition and Petition were not properly served in accordance with RPAPL § 735 is belied by the uncontradicted affidavit of service of Ricardo Delpratt which states that service of the initiating papers was effected on June 25, 2019 at the Premises by personal service upon Michael Caldarera, a manager employed at the Premises.
Respondent's argument that the Petition, Notice of Petition and Termination Notice only partially describe the Premises is unavailing as the language in these documents mirrors that in the Lease.
In light of the foregoing, the Court grants Petitioner's motion for summary judgment on the Petition, awards Petitioner a judgment of possession to the Premises, and, as the Court finds that Petitioner is the prevailing party herein and entitled to attorneys' fees under paragraph 20 of the Lease, directs a hearing to determine the reasonable attorneys' fees to be awarded to Petitioner.
Accordingly, it is
ORDERED that Respondent's motion to dismiss the Petition and Notice of Petition is DENIED ; and it is further
ORDERED that Petitioner's motion for summary judgment is GRANTED and Respondent's affirmative defenses are dismissed and Petitioner is awarded a judgment of possession with the warrant of eviction to issue forthwith, with an earliest execution date of October 4, 2019; and it is further
ORDERED that Petitioner is to serve this decision and order with notice of entry on Respondent by certified mail return receipt within ten days of entry.
ORDERED that the parties are directed to appear for a hearing to determine reasonable attorneys' fees on October 7, 2019 at 10:00 am in Part 52.
This constitutes the Decision and Order of the Court.