Opinion
No. 103215/08.
2010-04-29
STELLAR SUTTON LLC, v. Linda DUSHEY, Jack Dushey, Craig Dushey, Raymond Dushey, Rachel Dushey, Sara Dushey and Andrew Dushey, Defendants.
Stephen B. Meister, Esq., Meister Seelig & Fein LLP, New York, for Plaintiff. Jerome Tarnoff, Esq., Morrison Cohen LLP, New York, for Defendants.
Stephen B. Meister, Esq., Meister Seelig & Fein LLP, New York, for Plaintiff. Jerome Tarnoff, Esq., Morrison Cohen LLP, New York, for Defendants.
DEBRA A. JAMES, J.
Plaintiff Stellar Sutton LLC (Stellar Sutton) moves to strike defendants' amended answer with counterclaims, or, alternatively, pursuant to CPLR 3211, to dismiss defendants' first and second counterclaims.
The underlying facts and allegations were set forth in a prior decision in this action, dated January 28, 2009 (Cahn, J.). In sum, on May 18, 2005, Stellar Sutton, a Delaware limited liability company, purchased from Sutton Realty Associates LLC (Sutton), an entity directly or indirectly owned by defendants Jack DuShey and Linda DuShey (together, DuSheys), fee title to the property known as 320 East 52nd Street, New York, New York (Building). The purchase was made pursuant to a “Contract of Sale,” dated as of March 10, 2005 (Contract of Sale). In connection with the sale of the Building, Sutton Stellar entered into six leases, each dated May 18, 2005 (Lease), with various combinations of the DuSheys and their five adult children for Apartments 6A, 6C, 6E, 11E, 14B, and 14C/D at the Building.
Paragraph 33 (a) of each Lease grants those DuSheys who are tenants under a given Lease, options (Terraced Unit Options) to lease, pursuant to separate lease agreements to be entered into in the future, apartments 12A, 12D, 15A, and 15B, each of which contain a terrace (Terraced Units). Paragraph 33(c) of each Lease grants to these same parties the additional option to lease any of the “Adjacent Units” and “Professional Units” (together, Adjacent Unit Options) upon the vacancy of any such units. Paragraph 33(e) further grants the option to purchase the Terraced Units, Adjacent Units, or Professional Units (Sale Unit Options).
Apartment 15A has become vacant, and the DuSheys have demanded the right to lease that apartment pursuant to their option. Stellar Sutton, the landlord, has not complied, contending that the option is invalid, in that it purports to grants an option to create and obtain in the future an estate in property, not now existing, which may vest after the maximum permissible remote vesting period prescribed by Section 9–1.1(b) of the New York Estates Powers'and Trusts Law (EPTL), commonly known as the Rule against Perpetuities. Thus, rather than acceding to the demand, Stellar Sutton commenced this action, the complaint of which contained three causes of action.
The now-dismissed first cause of action sought a declaration that the options are invalid and unenforceable, pursuant to Section 9–1.1(b) of the EPTL, and that, as such, Stellar Sutton is free to lease the “Terraced Units” to anyone.
The second cause of action seeks a declaration that the “Adjacent Unit Options” are invalid and unenforceable, pursuant to Section 9–1.1(b) of the EPTL, and, as such, Stellar Sutton is free to lease the Adjacent Units and Professional Units to anyone.
The third cause of action seeks a declaration that the Sale Unit Options are invalid and unenforceable, again pursuant to Section 9–1 .1(b) of the EPTL, and that, as such, Stellar Sutton is free to sell the Terraced Units, Adjacent Units, and Professional Units to anyone.
This court granted a prior motion by defendants to the extent of dismissing the first cause of action, and denied Stellar Sutton's cross motion to dismiss defendants' then sole counterclaim to recover reasonable attorney's fees.
Presently at issue is the amended answer, which contains three counterclaims. The first seeks to recover the reasonable amount of legal fees incurred in defending this action, pursuant to the Contract of Sale. The second counterclaim seeks specific performance of the Leases. The third counterclaim seeks, in the alternative, damages for breach of contract. Allegedly Stellar Sutton has violated the terms of the Leases by failing to offer defendants the opportunity to lease Apartment 15A pursuant to Paragraph 33(a) of the Lease.
For the reasons discussed below, the motion is denied.
Stellar Sutton first argues that the answer with counterclaims should be stricken, because defendants did not verify the answer, as required by CPLR 3020(a). CPLR 3020(a) provides that when a pleading is verified, each subsequent pleading shall also be verified. Stellar Sutton served a verified complaint, but the amended answer was not verified by any of the defendants. The court need not dwell on this issue. The request to strike the answer on this ground is denied (without prejudice), based on the representation by counsel at oral argument that defendants will re-serve a verified answer.
As for dismissal of the first two counterclaims, it is unclear as to whether Stellar Sutton is basing its entitlement to dismissal on CPLR 3211(a)(1) (defense founded on documentary evidence) or CPLR 3211(a)(7) (failure to state a cause of action). Nevertheless, neither of these grounds warrant dismissal of the counterclaims.
The first counterclaim seeks an award of attorney's fees pursuant to Paragraph 39 of the Contract of Sale which provides:
39. Litigation. In connection with any litigation arising out of this Agreement; the prevailing party shall be entitled to recover all costs, including reasonable attorneys' fees for services rendered in connection with such litigation, including appellate proceeding (sic] and post judgment proceedings.
Stellar Sutton argues that this counterclaim should be dismissed, because defendants are not parties to the contract, and the terms did not survive the closing, in that Paragraph 16 provides:
16. Merger. Except as otherwise expressly provided to the contrary in this Agreement, no representations, warranties, covenants or other obligations of Seller set forth in this Agreement shall survive the Closing, and no action based thereon shall be commenced after the Closing. The delivery and acceptance of the Deed at the Closing, without the simultaneous execution and delivery of a specific agreement which by its terms shall survive the Closing, shall be deemed to constitute full compliance by the parties with all of the terms, conditions and covenants of this Agreement on their part to be performed.
Although defendants are not parties to the Contract of Sale, Paragraph 22 refers to “Jack and Linda Dushey (or one or more members of Linda and Jack Dushey's immediate family) (the Dushey Tenants),” and it pertains to the Leases that are the subject of this action. Moreover, attached to the Contract of Sale as Exhibit I–1 is a form of the Lease. Furthermore, that very same Paragraph 22, in subdivision (f), states that. the “terms of this Paragraph 22 shall survive Closing.” Because the counterclaim states a claim for attorney's fees ( see Spindel v. Shor & Assoc., 297 A.D.2d 244, 245 [1st Dept 2002] ), and the documentary evidence submitted does not conclusively establish a defense to the claims asserted as a matter of law; dismissal at this stage of the litigation is not warranted ( 511 W. 232nd Owners Corp. v. Jennifer Realty Co., 98 N.Y.2d 144, 153 [2002];Leon v. Martinez, 84 N.Y.2d 83, 87 [1994] ).
As for the second counterclaim, which seeks specific performance of the Lease Agreements, Stellar Sutton argues that this should be dismissed because, unlike the case of real estate purchase contracts, there is no right to equitable relief in connection with contracts to lease real property. This assertion is without merit; as demonstrated by the very case upon which Stellar Sutton relies, namely Van Wagner Adv. Corp. v. S & M Enters. (67 N.Y.2d 186 [1986] ).Van Wagner Adv. Corp; v. S & M Enters involved the leasing of advertising space on an exterior wall on East 36th Street in Manhattan. Subsequent to the execution of the lease, the lessor sold the building to defendant, and sent a letter to plaintiff purporting to cancel the lease. Plaintiff abandoned the space under protest, and commenced the action seeking specific performance and damages. At trial, and on appeal, plaintiff prevailed on the issue of liability. The Court of Appeals considered only the issue of the appropriate remedy, i.e., damages or specific performance. In doing so, it stated:
While specific performance is available, in appropriate circumstances, for breach of a commercial or residential lease, specific performance of real property leases is not in this State awarded as a matter'of course.
Id. at 192.
Acknowledging that specific performance could be awarded, it denied to award such remedy because it found that the “value of the ‘unique qualities' of the demised space could be fixed with reasonable certainty and without imposing an unacceptably high risk of undercompensating the injured tenant.” Id. at 194; see also Straisa Realty Corp. v. Woodbury Assoc., 154 A.D.2d 453, 454 [2d Dept 1989] ). Here, the issue of whether the value of the unique qualities of the space could be “fixed with reasonable certainty” remains unresolved. Thus, the assertion that the counterclaim must be dismissed; because “there is no right to equitable relief in connection with contracts to lease real property” is in error. The crux of Stellar Sutton's argument is that the subject matter of the Lease is not unique, and that, if defendants prevail, money damages will be adequate. That is an issue to be raised on a motion for summary judgment and/or at trial.
Defendants' informal request in Point V of their Memorandum of Law in Opposition-that the court grant summary judgment to them, dismissing the second and third causes of action of the complaint pursuant to CPLR 3212(c)-is denied. The posture of the motion does not come within the ambit of CPLR 3212(c). It would be an error to search the record and grant summary judgment on an issue not raised by the motion (Baseball Off. of Commr v. Marsh & McLennan, 295 A.D.2d 73, 82 [1st Dept 2002] ). This is especially true here, because there is no motion for summary judgment on the complaint (for which defendants request that the court search the record) but only a motion as to the counterclaims. If, as defendants assert, the court erred on the prior motion by neglecting to dismiss the second and third causes of action, the appropriate response would have been an appeal or a motion for reargument.
Accordingly, it is
ORDERED that the motion is denied.
This is the decision and order of the court.