Opinion
INDEX NUMBER: 36516-2010
07-17-2013
HUDSON CITY SAVINGS BANK, Plaintiff, v. END OF THE ROAD LLC and MATTITUCK DEVELOPMENT CORP., Defendant.
Attorney for Plaintiff Keegan Keegan Ross & Rosner 315 Westphalia Ave Attorney for Defendants Kushnick Pallaci PLLC By: Jeffrey A. Lhuillier, Esq.
SHORT FORM ORDER Present: HON.
J. S. C.
Original Motion Date: 11 -27-2012
Motion Submit Date: 06-25-2013
Motion Sequence Nos.: 015 MG
016 MD
[ ] FINAL
[x ]NON FINAL
Attorney for Plaintiff
Keegan Keegan Ross & Rosner
315 Westphalia Ave
Attorney for Defendants
Kushnick Pallaci PLLC
By: Jeffrey A. Lhuillier, Esq.
ORDERED that the branch of the motion (015) by the plaintiff Hudson City Savings Bank seeking partial summary judgment against the defendant End of the Road, LLC is granted to the extent that the LLC's fourth affirmative defense and counterclaim are dismissed; and it is further
ORDERED that the branch of the motion (015) by the plaintiff Hudson City Savings Bank seeking partial summary judgment against the defendant Mattituck Development Corp. is denied as academic; and it is further
ORDERED that the cross motion (016) by the defendant End of the Road, LLC for summary judgment is denied.
In this breach of contract action, the plaintiff, Hudson City Savings Bank (hereinafter referred to as "HCSB") alleges that the defendant End of the Road, LLC (hereinafter referred to as "the LLC") and Mattituck Development Corporation (hereinafter referred to as "Mattituck") breached its Lease Agreement with HCSB by failing to complete construction of a bank located at 11700 Main Road in Mattituck, New York ("the premises").
The record reveals that the LLC was formed in 2007 for the purpose of developing and maintaining 5 parcels that it owned, one of which is the subject premises. Pursuant to the Operating Agreement, the members of the LLC were as follows: Maureen Mooney, Kiernan Mooney, Brendan Mooney and Deirdre Mooney. The Operating Agreement was drafted by Daniel Mooney, the husband of Maureen Mooney and father of the remaining members, who acted as attorney for the LLC from approximately 2007 through 2009 . The LLC began to develop the subject premises with two buildings consisting of a bank and an office building. The LLC obtained a mortgage and a building loan to finance the project. The LLC began to negotiate with HCSB to lease the bank building.
Mr. Daniel Mooney is now deceased.
The record further reveals that Daniel Mooney negotiated a Lease Agreement with HCSB on behalf of the LLC on September 26, 2007, wherein the LLC would construct the bank building, parking lot, landscaping, and utilities, and HCSB would construct the interior of the bank, to include installation of a bank vault, drive-up window, pass-through box, ATM, and teller storage cabinets. The parties agreed that the rent for the premises would be $27.62/square foot for a twenty-year term.
The Lease Agreement provides, in pertinent part:
Commencement: The commencement date of the lease shall be the first day of the month following the completion of the building, parking areas and the completion of the landscaping to the premises, it being understood that the Town of Southold shall not issue a Certificate of Occupancy for the building until such time as the interior is completed. Rent shall be due on the first day of the month after the Tenant is given occupancy * * *.
Daniel Mooney, on behalf of the LLC, obtained all permits necessary to begin construction, and hired non-party Glenn Heidtmann to be the general contractor on the project. At some point in 2010, the LLC had completed its portion of the construction of the bank building, although it did not finish the remaining outside work to the parking areas and landscaping. HCSB alleges that it obtained permission from Heidtmann and Daniel Mooney to begin its interior construction beginning with the installation of a vault. Subsequently, HCSB constructed a teller window and drive-up area. In or about August, 2010, the LLC, through its attorney, Daniel Mooney, informed HCSB that it was experiencing financial difficulties and attempted to renegotiate the Lease Agreement with HCSB to increase the rent. Sometime in September, 2010, the LLC sent HCSB a Notice of Default and a Notice to Cure to HCSB which accused HCSB of breaching the lease agreement by performing the interior construction without the LLC's consent, and without the requisite insurance policies in place. The Notice to Cure demanded that the construction be removed and the bank be placed in its original condition within ten days or the Agreement would be terminated. Prior to the end of the cure period, HCSB commenced the instant action by order to show cause on September 28, 2010, on which date, the instant action was commenced. On September 29, 2010, the LLC sold its interest in the premises to Mattituck.
The amended verified complaint alleges four causes of action, seeking: 1) a judgment declaring that a notice of default was improperly issued; 2) a judgment directing the LLC to specifically perform its obligations under the Agreement; 3) an injunction enjoining the LLC and/or Mattituck from selling, transferring or otherwise encumbering the premises; and 4) a judgment awarding HCSB money damages against the LLC in the amount of $3,500,000.
In its answer to the amended verified complaint, the LLC asserts the following eleven affirmative defenses: 1) that HCSB's second cause of action is moot because the defendant no longer owns the property; 2) that the third cause of action is moot because the LLC no longer owns the property; 3) that HCSB has unclean hands, and that HCSB was aware that the terms of the agreement were practically impossible for the LLC to fulfill; 4) that HCSB owes rent for the months of July, August and September 2010; 5) that no written notice was given by the LLC to HCSB for the turnover of the space; 6) that HCSB violated Paragraph 30 of the Agreement in that no oral modification to the Agreement could be made; 7) there were no modifications or changes to the Lease Agreement except for two written extensions; 8) that the LLC never authorized a modification or change to the Agreement; 9) that the plaintiff overreached in the negotiation of the Lease Agreement; 10) that the sale of the premises to Mattituck was for good and valuable consideration; and 11) that the Lease Agreement provided that the commencement of the lease would not occur until the completion of the parking area and landscaping. The LLC also asserts a counterclaim for rent in the amount of $22,399 for the months of July, August and September 2010. In is answer, Mattituck asserts several affirmative defenses and one counterclaim.
HCSB now moves for partial summary judgment, dismissing the counterclaims by the LLC and Mattituck, dismissing the LLC's third, fourth, fifth, ninth, and tenth affirmative defenses and dismissing Mattituck's first, second, third and fourth affirmative defenses. The LLC now cross-moves for summary judgment dismissing the amended complaint on the grounds that Daniel Mooney had no authority to act on behalf of the LLC, and that HCSB failed to provide proof of insurance at the start of construction on the interior of the bank.
Initially, by order dated April 21, 2011 (Mayer, J.), the Court granted HCSB's application for a preliminary injunction preventing the LLC and Mattituck from transferring the premises. Again, by order dated October 6, 2011 (Mayer, J.), the Court granted a preliminary injunction on HCSB's favor preventing the LLC and Mattituck from transferring the premises and terminating the lease with HCSB. By order dated February 11, 2013 (Pines, J.), this Court granted a default judgment against Mattituck. As a result, the branch of the plaintiff's motion which seeks partial summary judgment dismissing Mattituck's affirmative defenses and counterclaim is denied as academic.
Summary judgment is a drastic remedy that deprives a litigant of his or her day in court. It should only be employed when there is no doubt as to the absence of triable issues. Andre v Pomeroy, 35 NY2d 361, 364, 362 NYS2d 131 (1974). A party seeking summary judgment must make a prima facie showing of entitlement to judgment as a matter of law by tendering sufficient evidence to eliminate any material issues of fact. Alvarez v Prospect Hosp., 68 NY2d 320, 324, 508NYS2d 923 (1986). For the movant to prevail, it must clearly appear that no material and triable issue of fact is presented. Nicholas DiMenna & Sons v New York, 301 NY 118, 121, 301 NY (NYS) 118 (1950). The failure to make such a showing requires denial of the motion regardless of the sufficiency of the opposing papers. Winegrad v N. Y. Univ. Med. Center, 64 NY2d 851, 853, 487 NYS2d 316 (1985).
HCSB has made a prima facie case entitling it to partial summary judgment dismissing the LLC's counterclaim for rent and the LLC's fourth affirmative defense, which asserts that the plaintiff tendered no payments for rent to the LLC for the months of July, 2010 through September, 2010. HCSB contends that no rent is due inasmuch as the LLC failed to obtain a Certificate of Occupancy, as required by the lease, which was the condition precedent for commencing the lease term. In support, HCSB submits a copy of the Lease Agreement, and the deposition of Maureen Mooney. The Court finds that a plain reading of the Lease Agreement reveals that the lease term would not commence unless the LLC obtained a Certificate of Occupancy after all construction was complete and the parking areas and landscaping were also completed.
Maureen Mooney testified at her deposition to the effect that she is the managing member of the LLC. She stated that the parking areas and the landscaping were not completed due to financial problems. She conceded that the Certificate of Occupancy was not obtained.
In opposition, the LLC has failed to raise a triable issue of fact and submits Maureen Mooney's personal affidavit. Maureen Mooney avers that she is the managing member of the LLC, and provides no opposition to HCSB's application to dismiss the counterclaim. Therefore, the LLC's fourth affirmative defense and counterclaim are dismissed.
Turning to HCSB's application to dismiss the third, fourth, fifth, ninth, and tenth affirmative defenses, the evidence submitted by HCSB is insufficient to demonstrate, prima facie, its entitlement to judgment as a matter of law. Winegrad v N. Y. Univ. Med. Center, supra. Accordingly, HCSB's motion for partial summary judgment is granted to the extent that the LLC's fourth affirmative defense and counterclaim are dismissed.
Turning to the LLC's cross motion to dismiss the complaint, the LLC has failed to establish, prima facie, its entitlement to judgment as a matter of law. In support of their motion, the LLC submits, inter alia, depositions of Maureen Mooney, Daniel Mooney, and Ronald Butkovich. The LLC's assertions are speculative and lack evidentiary detail, thereby warranting denial of its cross motion for summary judgment. Furgang & Adwar, LLP v Fiber-Shield Indus., Inc., 27 AD3d 692 810 NYS2d 923 (2d Dept 2006). In any event, whether apparent authority exists is a fact-based determination requiring inquiry into the conduct of the principal. Hallock v State, 64 NY2d 224, 231, 485 NYS2d 510 (1984). Although it is not necessary to consider the sufficiency of the opposing papers, under these circumstances, the Court notes that those papers raise triable issues of fact. Id. At 693; Winegrad, supra. Accordingly, the LLC's cross motion is denied.
In sum, HCSB's motion for partial summary judgment is granted to the extent that the LLC's fourth affirmative defense and counterclaim are dismissed; and the LLC's cross motion for summary judgment is denied.
Dated: July 17, 2013
Riverhead, New York
____________
EMILY PINES
J. S. C.