Opinion
3428-04.
Decided September 19, 2005.
Michael Solomon, Esq., Freeport, New York, Counsel for Plaintiff.
George M. Gavalas, Esq., Mineola, New York, Counsel for Defendant.
ORDER
The following papers were read on Plaintiff's motion for summary judgment and Defendant's cross motion to transfer this action to District Court pursuant to CPLR 325 (d) and to waive compliance with the rules of the Commercial Division:
Notice of Motion dated June 23, 3005;
Affirmation of V. Roy Cacciatore, Esq. dated June 23, 3005;
Affidavit of Michael Price sworn to on June 23, 2005;
Plaintiff's Memorandum of Law;
Notice of Cross-motion dated July 21, 2005;
Affidavit of Vincenzo Maggio sworn to on July 21, 2005;
Affirmation of George M. Gavalas, Esq. dated July 22, 2005;
Affirmation of V. Roy Cacciatore, Esq. dated August 4, 2005.
Plaintiff, Riccardo's Lounge Inc. ("Riccardo's"), moves for summary judgment declaring its rights to use and occupy a portion of the basement at the premises known as 1 West Sunrise Highway, Freeport, New York; granting it a permanent injunction enjoining the Defendant/landlord from interfering with its use and occupancy of that portion of the basement during the term of the lease; granting it summary judgment on the issue of liability on its cause of action alleging a breach of the covenant of quiet enjoyment; and declaring that Riccardo's has properly exercised its right to extend the lease.
Defendants, Vinzcenzo Maggio (Vincenzo") and Michele Maggio (collectively "Maggio"), the owners of the premises, move to have this action transferred to District Court pursuant to CPLR 325(d) and to waive the rules of this Part regarding preparation of trial exhibit books, pre-trial memoranda, etc. (Nassau Commercial Division Rules 28-31)
BACKGROUND
By lease ("Lease") dated December 1, 1998, Riccardo's leased the office or restaurant space on the first floor, east end of the building at 1 West Sunrise Highway, Freeport, New York from Reflections Properties, Inc. ("Reflections) for a term of six (6) years running from December 1, 1998 through November 30, 2004. Pursuant to the Lease, Riccardo's could extend the term of the lease for one four (4) year period running from December 1, 2004 through November 30, 2008, provided that Riccardo's gave the landlord written notice of its intent to extend the lease not less than ninety (90) days prior to the expiration of the initial term.
Although Riccardo's lease did not include the basement at the premises, Riccardo's asserts that it has been using the basement at the premises since the inception of the lease.
The premises has been occupied by a bar or restaurant since the 1920's. The bar or restaurant occupying the premises has always used the portion of the basement directly beneath the bar to store its equipment and supplies.
In or about September 2003, Reflections sold the premises to Maggio.
On or about November 11, 2003, Vincenzo Maggio visited the premises and advised Michael Price ("Price"), Riccardo's President, that he was taking back approximately one-third of the first floor, one bathroom, a hallway and the basement, even though Riccardo's had been using these areas since the commencement of the Lease. Riccardo's asserts that these areas had been occupied and used by the bar or restaurant at the premises for the past eighty (80) years.
There are two exterior entrances to the basement. One goes into the portion of the basement that was occupied by Riccardo's. The other goes directly into the boiler room. There is also an interior entrance to the portion of the basement that is occupied by Riccardo's. This entrance is located in the portion of the premises leased to Riccardo's.
There was a door between the portion of the basement occupied by Riccardo's and the boiler room which gave Riccardo's access to the boiler room.
On November 16, 2003, Vincenzo went to the property and removed the exterior basement door to the boiler room, removed the wall between the boiler room and the oil tanks and took down the oil tanks. He also cut locks on doors and removed the grease trap.
Since the door to the basement had been removed, Riccardo's portion of the property was no longer secure. Price rehung the door and dead-bolted it from the inside thereby securing the portion of the basement being used by Riccardo's.
Riccardo's claims that Vincenzo has also done plumbing and demolition work at the premises without first obtaining the necessary permits. Riccardo's claims that the removal of the grease trap places the business in violation of the Nassau County sewer ordinances which exposes Riccardo's to fines or closure. The removal of the door and the destruction of the wall negatively impacted the security of the premises. These actions are alleged to constitute a violation of the covenant of quiet enjoyment.
On January 21, 2004, Riccardo's sent a letter to Maggio by certified mail, return receipt requested advising Maggio that it was exercising its option to extend the lease. Maggio refused delivery of the letter.
Riccardo's mailed a second letter to Maggio by certified mail, return receipt requested and regular first class mail with the March 2004 rent payment advising Maggio of Riccardo's intent to exercise its option to extend the lease. Although Maggio has not acknowledged receipt of the letter, the March rent check was deposited.
By letter dated March 1, 2004, Maggio advised Riccardo's to cease and desist from performing any work at the premises without Maggio's consent and without obtaining the appropriate permits from the Village of Freeport. Maggio's letter was intended to serve as notice to Riccardo's the performance of such work without the necessary permits would be considered a violation of the terms of the lease.
Upon receipt of the March 1, 2004 letter, Riccardo's commenced this action and moved for and obtained a Yellowstone injunction.
Riccardo's seeks a declaratory judgment determining its rights under the terms of the Lease to use those portions of the premises over which Maggio seeks possession, money damages for breach of the covenant of quiet enjoyment and a declaratory judgment declaring the Riccardo's has properly exercised its option to extend the lease.
DISCUSSION
A. First Cause of Action — Declaratory Judgment/Permanent Injunction
Plaintiff seeks a declaration of its rights to use and occupy a portion of the basement at the premises directly below the demised premises.
Where a landlord permits a tenant to use and occupy the basement and use and occupancy of the basement is essential to the tenant's use and enjoyment of the premises, the basement is part of the leased premises as an appurtenance. Florgus Realty Corp. v. Reynolds, 187 N.Y.S. 188 (App.Term, 1st Dept. 1921); and 18th Avenue Pharmacy, Inc. v. Wilmant Realty Corp., 95 NYS2d 534 (Sup.Ct., Kings Co. 1950); See also, Rasch's Landlord Tenant § 7:11; and Friedman on Leases § 3.2, Appurtenances.
In this case, it is very clear that Riccardo's use of the basement is appurtenant to and an necessary element of it's business. From the beginning of the lease up until the time the property was transferred to Maggio, Riccardo's was using the basement for storage with the knowledge and consent of the landlord. The plumbing and pipes in the basement and the grease trap in the basement were and are an integral part of the Riccardo's business. Riccardo's must maintain the grease trap. Failure to maintain the grease trap would put Riccardo's in violation of Nassau County sewer ordinances and would expose it to fines or closure. Riccardo's needs and uses the plumbing for its daily operation.
Vincenzo Maggio's deposition testimony makes clear that he knew, or should have known, that Riccardo's was using and occupying a portion of the basement at the premises when Maggio purchased the premises. He also testified that he did a walk through of the premises two or three times prior to entering into the contract to purchase the premises. During at least one of these pre-contract walk-throughs, Vincenzo went to the basement of the building. The leases for the premises were attached to the contract and reviewed by Maggio prior to his signing the contract of sale. Vincenzo did a walk-through with Mary Smith, a Reflections representative, prior to closing. Vincenzo testified that during the walk-through prior to closing he spent at least ten (10) to fifteen (15) minutes in the basement.
The basement wall that Vincenzo removed was present when they purchased the property.
Riccardo's has established that it has occupied and used the basement directly under its premises since the beginning of the lease. Riccardo's continued legal operation is dependent upon it being able to use the plumbing, maintain a grease trap and store items used in its business in the basement. Defendants have failed to reaise any questions of fact as to whether the use of the basement is appurtenant to the lease. Thus, the Court declares that leasehold includes not merely the first floor but also the portion of the basement that Riccardo's has used and occupied since the commencement of its lease.
The landlord/Defendant shall be enjoined, during the term of the lease, from interfering with Riccardo's exclusive possession, use and occupancy of the portion of the basement that Riccardo's has used and occupied since the inception of the lease.
B. Second Third Cause of Action — Breach of Covenant of Quiet Enjoyment
Paragraph 15 of the Lease specifically provides that if Riccardo's performs its obligations under the terms of the lease, landlord will keep and maintain Riccardo's in exclusive and peaceable quiet enjoyment of the premises during the term of the lease.
In order to establish a cause of action for breach of the covenant of quiet enjoyment, Plaintiff must establish either an actual or constructive eviction. 34-35th Corp. v. 1-10 Industry Assocs., LLC, 16 AD3d 579 (2nd Dept. 2005); and Grammar v. Turitis, 271 AD2d 644 (2nd Dept. 2000). A constructive eviction exists when the landlord's wrongful acts substantially and materially deprive the tenant of beneficial use and enjoyment of the leased premises. Incredible Christmas Store-New York, Inc. v. RCPI Trust, 307 AD2d 816 (1st Dept. 2003); and Silver v. Moe's Pizza, Inc., 121 AD2d 376 (2nd Dept. 1986). To be constructively evicted, the tenant must be deprived of something the tenant is entitled to pursuant to the terms of the lease. Barash v. Pennsylvania Terminal Real Estate Corp., 26 NY2d 77 (1970); and Silver v. Moe's Pizza, Inc., supra.
In this case, there are substantial questions of fact as to whether Riccardo's has been substantially and materially deprived of the beneficially use and enjoyment of the leased premises. While Vincenzo may have entered the premises and removed a wall and a door, there is no evidence that this had any direct effect on Riccardo's use of the premises. Riccardo's has failed to establish that it was unable to conduct business at the premises. Even though Riccardo's claims it was unable to use the basement, it fails to establish what portion of the basement it was unable to use or for what period of time it was deprived of the use of that portion of the basement.
The door which Vincenzo removed was replaced. The amount of time that it was missing is not clear. Riccardo's has not established that any of its property was stolen or destroyed as a result of the door being removed. Nor has it shown that its business was disturbed or interrupted.
Riccardo's claims that the landlord removed the grease trap. Vincenzo Maggio testified, at his deposition that the grease trap was improperly installed. Whatever the truth may be, the grease traps were replaced and the installation of the replacement grease traps was done properly. It does not appear that Riccardo's was closed for even one day of business as a result of the grease traps being removed or that Riccardo's was fined or closed as a result of the removal of the grease traps.
The party seeking summary judgment must make a prima facie showing of an entitlement to judgment as a matter of law. Alvarez v. Prospect Hosp., 68 NY2d 320 (1986); and Zuckerman v. City of New York, 49 NY2d 557 (1980). If the party seeking summary judgment fails to make a prima facie showing of entitlement to judgment as a matter of law, the motion must be denied. Winegrad v. New York Univ. Med. Ctr., 64 NY2d 851; Widmaier v. Master Products, Mfg., 9 AD3d 362 (2nd Dept. 2004); and Ron v. New York City Housing Auth., 262 AD2d 76 (1st Dept. 1999).
In this case, Riccardo's has failed to make a prima facie showing of entitlement to judgment as a matter of law on its claim to recover damages for breach of the covenant of quiet enjoyment or treble damages pursuant to Real Property Actions and Proceedings Law § 853. Therefore, summary judgment on this claim must be denied.
C. Fourth Cause of Action — Declaratory Judgment — Extension of the Lease
Riccardo's seeks a declaratory judgment declaring that it has properly exercised its option to extend the lease.
Paragraph 1(B) of the lease grants Riccardo's the option to extend the lease for one four (4) year term by providing the landlord with written notice of its intent to renew not less than ninety (90) days prior to the expiration of the initial term.
Paragraph 19 of the lease provides that notice is given by the tenant to the landlord by mailing the required notice to the landlord by certified mail, return receipt requested to the address designated by the landlord for that purpose.
Where notice must be given by certified mail, return receipt requested, notice is given when the addressee either refuses delivery or does not claim a properly addressed letter. See, Nunez v. Nunez, 145 AD2d 347 (1988). Where the letter is properly addressed and the a party refuses delivery, the party is deemed to have notice of the letter. La Vallee v. Peer, 104 Misc2d 943 (Sup.Ct. Oneida Co., 1980), aff'd., 80 AD2d 992 (4th Dept. 1981); and Executive Ins. Co. v. Yeshiva Mikdash Melech Inc., 164 Misc2d 764 (Civil Ct. Kings. Co., 1995). Compare with, Ross v. Hudson, 303 AD2d 393 (2nd Dept. 2003) where mail returned as "addressee unknown" or "addressee moved — forwarding time expired" or "addressee moved — no forwarding address" was insufficient to give notice.
A lease is a contract which must be interpreted in accordance with the intent of the parties. George Backer Mgt. Corp. v. Acme Quilting Co., 46 NY2d 211 (1978); and Martin v. Glenzan Assocs., Inc., 75 AD2d 660 (3rd Dept. 1980). If the terms of an agreement are clear and unambiguous, the court must determine the meaning of the agreement as a matter of law without resort to extrinsic evidence. Greenfield v. Philles Records, Inc., 98 NY2d 562 (2002); and Katina v. Famiglietti, 306 AD2d 440 (2nd Dept. 2003).
An option must be exercised within the time and in the manner established by the terms of the option. Raanan v. Tom's Triangle, Inc., 303 AD2d 668 (2nd Dept. 2003); and Mohring Enterprises, Inc., v. HSBC Bank USA, 291 AD2d 385 (2nd Dept. 2002).
In this case, Riccardo's established a timely and procedurally proper exercise of its option to extend. Notice was given in both January and March 2004. The initial term of the lease expired on November 30, 2004. The lease requires that notice of intent to exercise the option must be given at lease ninety (90) days prior to the expiration of the initial term. Notice given in January and March 2004 satisfies that requirement.
Notice had to be given by certified mail return receipt requested. This was done. Riccardo's has established that it gave written notice as required by the Lease by mailing such notice by certified mail, return receipt requested to Maggio at the address designated by Maggio as the address to which rent checks should be sent. The letters were returned as refused; not undeliverable.
There is no question but that Maggio received notice of Riccardo's intent to exercise its option to extend the lease since a copy of the letter indicating Riccardo's intent to exercise its option to extend the lease term was sent by regular mail with the March 2004 rent. The rent check was received and deposited by Maggio.
Since Riccardo's has conclusively demonstrated that it exercised the option to extend the lease in both a timely fashion and in the manner prescribed by the Lease, the Court must find that the option to extend the lease has been properly exercised. See, O'Rourke v. Carlton, 286 AD2d 427 (2nd Dept. 2001); and D.A.D. Restaurant Corp. v. Anthony Operating Corp., 139 AD2d 485 (2nd Dept. 1988).
D. Sanctions
Plaintiff seeks sanctions against Defendants' attorney for frivolous conduct pursuant to 22 NYCRR 130-1.1. In this regard, Plaintiff points to the fact that Defendant did not comply with various court orders and directives regarding discovery and failed to appear for several scheduled conferences. While good and courteous practice should have mandated that Defendant's counsel call Plaintiff's counsel in advance when he was unable to attend conferences, it does not appear that Defendants counsel's actions were specifically intended to unnecessarily delay this action or that they in any way prejudiced Plaintiff's rights.
The imposition of sanctions is one addressed to the discretion of the Court. Wagner v. Goldberg, 293 AD2d 527 (2nd Dept. 2005). In this case, although the conduct of Defendants' counsel was unprofessional and discourteous, it does not rise to the level necessary warrant the imposition of sanctions.
E. Defendants' Cross-Motion
1. Transfer to the District Court
Defendants cross-move to transfer this action to District Court pursuant to CPLR 325(d). CPLR 325(d) permits the Court to transfer an action for money damages to a court of limited jurisdiction where it appears that the amount of damages may be less than the amount demanded and lower court would have had jurisdiction but for the amount of damages demanded.
While the District Court may have jurisdiction over Riccardo's claim for money damages, the District Court would not have jurisdiction over this action since in both the first and fourth causes of action Plaintiff seeks a declaratory judgment.
The Supreme Court may not transfer to the District Court an action pursuant to CPLR 325(d) which seeks relief which the District Court does not have the power to grant. See, Bank of New York v. Irwin International Imports, Inc., 197 AD2d 462 (1st Dept. 1993); and BLF Realty Holding Corp. v. Kasher, 183 Misc2d 953 (App. Term, 1st Dept. 2000). The Supreme Court has sole and exclusive jurisdiction over actions for declaratory judgments.
Since the District Court lacks subject matter jurisdiction over at least two of Plaintiff's causes of action, the motion to transfer the action to the District Court pursuant to CPLR 325(d) must be denied.
2. Relief from the Commercial Division Rules
Defendants also seek to be relieved from compliance with the trial rules of the Commercial Division, Nassau County. More specifically, Defendant seeks to be relieved of the obligations imposed by Rule 31 which requires counsel to file a pre-trial memorandum of law at the pre-trial conference and which requires counsel to submit at least three (3) copies an indexed book of exhibits.
The Rules of the Commercial Division are designed to expedite and simplify the trial. A trial book is required for this specific purpose. Exhibits are to be pre-marked. Rule 28. Exhibits to which the parties do not have objection are marked into evidence at the pre-trial conference. The attorneys need not ask the questions required to establish the authenticity of the exhibit. Voir dire regarding the exhibit is avoided. Attorneys may simply question the witnesses regarding these exhibits. The Rules are designed to streamline the trial.
To the extent that the parties do not agree as to the admissibility of an exhibit, the exhibit will be pre-marked for identification only. The appropriate background and voir dire questions regarding the admissibility of the exhibit can be asked at trial. However, the pre-marking of the exhibits for identification avoids the need for having to stop the trial to have the court reporter mark the exhibit during trial.
The requirement that the Court and one's adversary be provided with copies of the trial exhibit book permits all involved in the trial to have an orderly and organized system for referencing exhibits and following the testimony.
Where the exhibits will be voluminous, the parties are directed to consult with the Court regarding the preparation and submission of the trial exhibit book. However, there is no indication that Defendants' exhibits in this case will be voluminous. A reading of the depositions which were annexed as exhibits to the motion papers indicates that numerous photographs were marked as exhibits at the depositions. Both Price and Vincenzo were questioned regarding what was shown in the photographs. Under these circumstances, the Court believes it is appropriate that all parties have copies of these photos.
Additionally, Defendants' counsel has not indicated whether he has consulted with Plaintiff's counsel regarding the proposed exhibits prior to making this motion pursuant to Rule 28. There is no need to submit duplicate exhibits. It may very well be that the parties will agree as to most or all of the exhibits permitting the submission of a joint trial exhibit book.
A party is not compelled to submit a pre-trial memorandum of law. The purpose of a pre-trial memorandum of law is to provide the Court with the law that the party believes is relevant to the case. A party who fails to submit a pre-trial memorandum of law waives its opportunity to provide the Court with its position regarding the law applicable to the case. However, this does not prevent the Court from providing the parties with an opportunity to submit a post-trial memorandum of law.
Defendants' motion to waive the Rules of the Commercial Division regarding the submission of the a pre-trial exhibit book and a pre-trial memorandum of law must be denied.
Accordingly, it is,
ORDERED, that Plaintiff's motion for summary judgment on the first cause of action is granted. Plaintiff shall settle a judgment on ten (10) days notice on the first cause of action declaring that the portion of the basement at the subject premises that were previously used by the Defendant are appurtenant to the lease; and it is further,
ORDERED, that Plaintiff's motion for summary judgment on its second and third causes of action seeking money damages and treble damages for breach of the covenant of quiet enjoyment is denied and these causes of action are severed and continued for trial; and it is further,
ORDERED, that Plaintiff's motion for summary judgment on its fourth cause of action seeking a judgment declaring that the Plaintiff properly exercised its option to extent the lease is granted. The Lease is hereby declared to have been extended for an additional four (4) year period; and it is further,
ORDERED, that Defendants' cross-motion to transfer this action to the District Court pursuant to CPLR 325(d) and to waive compliance with the rules of the Commercial Division, Nassau County regarding the preparation of trial exhibit books and submission of a pre-trial memorandum of law is denied; and it is further,
ORDERED, that Plaintiff's application for sanctions is denied.
This constitutes the decision and order of this Court.