Opinion
603718/2006.
Decided September 28, 2007.
Defendants 601 West 137th Street, LLC ("601 West") and Vinegar Hill Baking Company Restaurant LLC s/h/a Vinegar Hill Baking Company, LLC t/a Café Largo ("Vinegar Hill") move, pursuant to CPLR 3211 (a)(1) and (a)(7), to dismiss the first through fifth and ninth causes of action asserted against them in the amended complaint. This motion does not address the sixth through eighth causes of action because plaintiff does not assert these claims against the movants.
601 West is the owner and landlord of the building at 601 West 137th Street a/k/a 3383 Broadway, New York, New York ("the Building") and of Store No. 4 within the Building ("the Premises"). The movants state that from August 2006 through early October 2006, 601 West engaged in negotiations with 3383 Broadway Restaurant Corp. ("3383 Broadway Corp.") as a prospective tenant for a 10-year lease at the Premises. After 601 West chose not to execute the lease agreement with 3383 Broadway Corp., plaintiff commenced this action. On November 3, 2006, this court denied plaintiff's motion for a preliminary injunction enjoining 601 West from leasing the Premises to another party. 601 West and Vinegar Hill entered into and executed a lease for the Premises on January 8, 2007.
Plaintiff brings the following causes of action against the movants: (1st) specific performance of the purported lease between 601 West and 3383 Broadway Corp.; (2nd) fraud; (3rd) a permanent injunction restraining 601 West from leasing and performing renovations at the Premises; (4th) tortious interference with prospective business opportunities; (5th) fraudulent concealment and (9th) promissory estoppel.
The complaint names plaintiff as "Yoany Arias, Individually and as Principal of 3383 Broadway Restaurant Corp. (to be formed at closing)." Movants state that 3383 Broadway Corp. was the proposed tenant, and that plaintiff, in her individual capacity, therefore lacks standing to assert her claims against 601 West because she was not the proposed tenant on the lease she now seeks to enforce.
In addition to the issue of standing, movants maintain that all of the claims against them warrant dismissal on the merits. Movants argue that the documentary evidence indisputably shows that: (a) 601 West terminated all negotiations prior to 3383 Broadway Corp.'s tender of a signed lease; (b) 601 West never signed the lease; (c) there was a provision in the lease that explicitly stated that the delivery of the lease to 3383 Broadway Corp. did not constitute an offer to tenant and further stated that the lease would not be valid and binding unless and until 601 West signed it; (d) 3383 Broadway Corp. never took, nor did it receive, occupancy of the Premises; (e) 601 West never received or accepted any payment in connection with the proposed lease; and (f) notwithstanding that 601 West was free to negotiate with whomever it wanted regarding leasing of the Premises, 601 West did not commence substantive lease negotiations with Vinegar Hill until after terminating the lease negotiations with plaintiff.
Plaintiff states that she owned and operated a restaurant/sandwich shop located at 3401 Broadway (at 138th Street) for 10 years. She explains that the City of New York, that owns the property, evicted her and all of the other tenants in order to renovate the building. Plaintiff asserts that she could not find a suitable location in the area until she learned about the Premises from defendant Edward Espinal ("Espinal"), who was associated with defendant Weichert Realtors ("Weichert"), who approached her and held himself out as an agent for 601 West.
Plaintiff argues that she has standing to bring this action because 601 West, individually and through its agent Weichert, negotiated with her about the Premises. Plaintiff states that, in its correspondence, 601 West's attorney failed to differentiate between her as an individual and 3383 Broadway Corp. as the corporation. Plaintiff further asserts that movants accepted that 3383 Broadway Corp. did not yet exist and was a company to be formed at the closing. According to plaintiff, she was always the proposed tenant.
Plaintiff states that Weichert held itself out as 601 West's representative. She states that she deposited the sum of $9,000 in cashier's checks with Weichert, at the request of 601 West through its agent Weichert. She further states that 601 West required that it approve any suppliers of services, including the architect, engineers and electricians, who developed plans for plaintiff's occupancy of the Premises. Plaintiff states that she timely submitted to 601 West the plans of the professionals she retained.
Plaintiff states that 601 West sent her the final draft of the lease and that she executed and delivered the lease, along with the architectural plans and other information 601 West required. According to plaintiff, 601 West then determined that it would not proceed with the lease because it claimed that it did not receive the documents by a given deadline.
Plaintiff states that 601 West did not inform her that it was negotiating with Vinegar Hill or any other third parties. Plaintiff maintains that Vinegar Hill, by entering into negotiations with 601 West, sought to interfere with 601 West's execution of a lease with plaintiff so as to avoid competition from plaintiff. Plaintiff contends that, despite her efforts, she has been unable to enter into a lease agreement with another landlord in the area. She assumes that 601 West used the lease that she executed and submitted as a bargaining tool to obtain additional rental income from Vinegar Hill.
Plaintiff states that she spent more than $15,000 to satisfy the demands of 601 West by hiring its approved architects and other professionals to draw up plans. She asserts that she spent this money in reliance on representations of 601 West and its agents. She states that she acted on their representations and that they told her "what [she] wanted to hear to keep [her] tied to that leasehold, while they were out negotiating with a potential competitor." (Affirmation of Yoany Arias, sworn to April 2, 2007, ¶ 14). Jose Northover, who assisted plaintiff in the search for a location for her sandwich shop, states that 601 West did not negotiate in good faith. He states that he and plaintiff expended time and money to comply with 601 West's requests because 601 West led them to believe that it would also comply.
Plaintiff argues that the statute of frauds should not apply to this transaction because 601 West obtained consideration for the lease in that it received the deposit monies and architectural plans and it required plaintiff to expend substantial money and time based on 601 West's assurance that it would execute the lease. According to plaintiff, the parties intended to bind themselves to the lease forwarded to plaintiff from 601 West's agent. Plaintiff further argues that she partially performed on the lease.
Plaintiff maintains that her allegations are specific and adequate to state a fraud claim. 601 West negotiated with plaintiff, permitted her to take measurements of the Premises and allowed her retained professionals access to the Premises to draw up plans for the kitchen and restaurant. According to plaintiff, 601 West took monies from her and directed her to use architects and other service suppliers that 601 West approved. Plaintiff states that, unbeknownst to her, 601 West did not intend to lease the Premises to plaintiff, but rather to Vinegar Hill. Plaintiff alleges that 601 West knew that she was relying on its good faith in leasing the Premises to her.
In her memorandum of law, plaintiff argues that even if this court does not find that the lease should be enforced based on her partial performance, she nonetheless seeks a reimbursement to make her whole as to her unnecessary expenses due to movants' requests. Plaintiff states that recovery is available not only when there has been an actual benefit to the other party, but also in the instance of a wrongdoing by the defendant. ( Heller v Kurz, 228 AD2d 263, 264 [1st Dept 1996]). Thus, she argues that she should recover the reasonable value of her performance. ( Farash v Sykes Datatronics, 59 NY2d 500, 505).
Vinegar Hill explains how it came to be the tenant of the Premises. It initially became a tenant in the Building in 2003, when it entered into two leases for parts of the Building other than the Premises. In 2006, while Vinegar Hill and 601 West were negotiating lease amendment agreements on those two leases, Vinegar Hill expressed possible interest in expanding into the then-vacant Premises. Vinegar Hill asserts that, in late October, it began serious negotiations with the property manager for 601 West. Vinegar Hill and 601 West executed a lease for the Premises on January 8, 2007, a few months after this court denied plaintiff's preliminary injunction application seeking to stay 601 West from renting the Premises to anyone else.
On November 3, 2006, at oral argument on the preliminary injunction motion, I noticed that Arias signed the tenant line on the lease in the name of 3383 Broadway Corp., "by Yoany Arias, title secretary." I stated, therefore, that "I don't see any likelihood that Yoany Arias . . . can possibly succeed on the claims in this lawsuit" because she lacked standing in her individual capacity. As the tenant, only 3383 Broadway Corp. could have standing to assert claims related to the lease. Thus, I dismiss those causes of action in which plaintiff attempts to enforce the lease because plaintiff lacks standing.
In addition, the court dismisses the first cause of action, seeking specific performance of the purported lease, the third cause of action, seeking a permanent injunction and the ninth cause of action, for promissory estoppel. When "the parties to an agreement do not intend it to be binding upon them until it is reduced to writing and signed by both of them, they are not bound and may not be held liable until it has been written out and signed." ( Scheck v Francis, 26 NY2d 466, 469-70; see also Jordan Panel Systems Corp. v Turner Construction Co., 2007 WL 2701901, ___ AD ___ [1st Dept Sept. 18, 2007] [finding no contract, even though the subcontractor had worked on the project where contractor did not intend to bind itself absent its signature]).
Rider 30 (J) to the lease explicitly states that the lease will not be in effect until both parties sign it:
J. Landlord has delivered a copy of this Lease to Tenant for Tenant's review only, and the delivery hereof does not constitute an offer to tenant or an option. This Lease shall not be effective until an original of this Lease executed by both Landlord and Tenant and an original Guaranty, in the form attached hereto executed by each Guarantor is delivered to and accepted by Landlord, and this Lease has been approved by Landlord's mortgagee, if required. ( See Affidavit of David Gill, sworn to February 13, 2007, Ex. E). At no point does plaintiff contest that this language is indeed part of the Lease or that this language somehow is ambiguous because it does not state that the Landlord is to execute the Lease before the Lease is operative. Accordingly, the court dismisses the first, third and ninth causes of action. ( See Jordan, supra, 2007 WL 2701901 at *10 "[h]aving chosen to begin work at a point when it knew that neither party was contractually bound (neither having executed a subcontract), Jordan voluntarily assumed the risk that defendant would enter into a subcontract with another entity.")
The court also dismisses the fraud claim for lack of particularity. (CPLR 3016 [b]). Plaintiff alleges that 601 West did not negotiate in good faith and that it did not intend to finalize negotiations with plaintiff. To state a fraud claim, however, plaintiff must set forth the representations that it relied upon to its detriment. Although plaintiff alleges that she relied and acted upon movants' representations, she does not set forth any specific details as to who made these alleged representations, what was represented, or to whom the representations were made. To the extent that plaintiff argues that she relied upon representations from Espinal or Weichert, she cannot attribute these representations to 601 West, because Espinal and Weichert were not brokers for 601 West.
That 601 West engaged in negotiations, that it allowed plaintiff and the professionals she hired access to the Premises and that it requested architectural plans from plaintiff are not sufficient to state a claim for fraud. Thus, the court dismisses the second cause of action. The related fifth cause of action, for fraudulent concealment, is dismissed because 601 West and plaintiff never had a contractual or fiduciary relationship. ( 900 Unlimited v MCI Telecom. Corp., 215 AD2d 227 [1st Dept 1995]).
The claim for tortious interference with prospective business relations also fails. First, the claim is utterly bereft of factual underpinnings. In addition, plaintiff has apparently asserted this claim against all defendants, but the court cannot discern how she can assert this claim against those defendants with whom she purports to have had a contractual relationship. Moreover, plaintiff does not allege that anyone acted with specific intent of harming her or that they employed wrongful means. (333 [1st Dept 2006]).
Plaintiff claims that she gave $9,000 to 601 West for one month's rent plus a security deposit. However, claims based on this circumstance are apparently moot because Espinal's attorneys subsequently returned her money on March 13, 2007. (Sur-Reply Affidavit of David M. Grill, sworn to April 12, 2007, ¶ 6).
Movants state that plaintiff, for the first time in her April 3, 2007 Memorandum of Law, claims that she is entitled to compensation for $15,000 in expenditures she made in connection with the negotiation of the proposed lease. According to movants, plaintiff mistakenly relies upon legal authority that stands for the proposition that a party may recover for expenses based upon a quantum meruit theory if certain specific criteria are met. Movants argue that the allegations do not satisfy the elements necessary to make out this claim.
In order to recover under a theory of quantum meruit, a party "must establish (1) the performance of the services in good faith, (2) the acceptance of the services by the person to whom they are rendered, (3) an expectation of compensation therefor and (4) the reasonable value of the services.'" ( Heller v Kurz, 228 AD2d at 264, quoting Moors v Hall, 143 AD2d 336, 337-38 [2nd Dept 1988]). Plaintiff, however, did not have any expectation of compensation for the drawing up and submitting of the plans to 601 West, and thus, she is not entitled to payment from movants for the money she spent.
This court is aware that plaintiff expended time and money in an effort that was not ultimately realized. Although such an outcome is inevitably disappointing and costly, it does not automatically follow that all of the other parties involved are legally liable. The movants herein have shown that the allegations against them are not sufficient to support the causes of action alleged, and thus, the court dismisses all of the claims against them. The case continues as to the other defendants in the case.
Accordingly, it is
ORDERED that the motion to dismiss is granted and the complaint is hereby dismissed as against defendants 601 West 137th Street, LLC and Vinegar Hill Baking Company Restaurant LLC s/h/a Vinegar Hill Baking Company, LLC t/a Café Largo; and it is further
ORDERED that the Clerk is directed to enter judgment in favor of these defendants; and it is further
ORDERED that the remainder of the action is severed and shall continue.