Opinion
LT-01543-11
08-11-2011
Green Acres Mall, L.L.C., Petitioner(s) v. Sevenfold Enterprises, LLC d/b/a DUNN'S RIVER DAY SPA, "ABC CORP." and "JOE ENTERPRISE,", Respondent(s)
Berkman, Henoch, Peterson, Peddy & Fenchel, P.C., Attorneys for Petitioner; Roach Bernard, PLLC, Attorneys for Respondent.
Berkman, Henoch, Peterson, Peddy & Fenchel, P.C., Attorneys for Petitioner; Roach Bernard, PLLC, Attorneys for Respondent.
, J.
Petitioner Green Acres Mall L.L.C. has commenced a holdover proceeding against Respondent Sevenfold Enterprises, LLC d/b/a Dunn's River Day Spa, to recover possession of Green Acres Mall, Space No.2057A, Valley Stream, NY Petitioner also seeks to recover use and occupancy at the rate of $4,400 per month.
Respondent entered into a License Agreement, dated April 30, 2010 for the period from July 15, 2010 and terminating October 31, 2010. This License Agreement granted permission to the Respondent to use on a temporary basis the space designated as 2057A at the Green Acres Mall.
Paragraph 20(c) of the License Agreement has a merger clause which states:
"This Agreement constitutes the entire agreement between the parties and all representations relating to the License Area and to this Agreement are contained herein."Paragraph 27 of the License Agreement provides that if Respondent doesn't surrender the premises upon expiration of the License Agreement, then Respondent shall be considered a month-to-month Licensee:
27.Holdover. In the event the Licensee does not surrender the Licensed Area upon the expiration or other termination of this Agreement pursuant to Section 9, Licensee shall be deemed in holdover of this Agreement. Such holding over shall be construed as a month-to-month license arrangement, subject to all of theAdditionally, Petitioner had the right under Paragraph 27 to double the monthly charge if Respondent holds over.
provisions, conditions, and obligations of this Agreement, except that Licensor, at its sole option and at any time during the month-to-month arrangement, may increase the monthly License Fee to twice the monthly installment of Licensee Fee payable for the last month of the License Period, and the Percentage Fee shall be payable monthly by the tenth (10th) day of the following month (based on the amount that monthly Gross Sales exceed 1/12th of the Breakpoint).
Petitioner and Respondent entered into a further License Agreement, dated November 17, 2010, which extended the License Agreement from November 1, 2010, and terminating December 31, 2010. Both License Agreements are mirror images including the merger clause expressed in Paragraph 20(c) and the holdover provisions expressed in Paragraph 27.
Petitioner moves for summary judgment for possession and for a money judgment for use and occupancy. Respondent claims that Petitioner is not entitled to summary judgment because questions of fact exist precluding summary judgment.
Respondent filed a Verified Answer, dated April 29, 2011, wherein Respondent claims that an oral agreement existed whereby Petitioner promised to give Respondent a five (5) year lease if Respondent performed faithfully under the said License Agreements. This argument is set forth in Paragraph #3 of Respondent's counterclaim contained in the Verified Answer:
3.That on or about May 1, 2010, Respondent entered into an oral agreement with Petitioner to rent commercial space at Green Acres Mall, 1051 Green Acres Mall, Valley Stream, New York 11581 (the "Green Acres Mall"); and that in furtherance of that, the parties agreed to enter into a short term agreement for Respondent to demonstrate that it can faithfully pay the monthly rent obligation and with a guarantee that if Respondent did maintain the license agreement in good standing for the initial three months, and upon all renewals, that the Petitioner guaranteed that Petitioner would lease Respondent the same commercial space for an additional extended period or term of five (5) years.Respondent further contends in Paragraph 8 of the counterclaim contained in the Verified Answer that on or about December 30, 2010, Petitioner and Respondent orally agreed again to extend the expiration date of the License Agreement "until such time that the permanent Lease agreement was signed by the parties."
Respondent further claims in Paragraphs 10 - 16 of the counterclaim contained in the Verified Answer, that Petitioner forwarded a five (5) year Lease to Respondent on or about January 4, 2011. Respondent further contends that all negotiations for the five (5) year agreement were finalized. However, the five (5) year agreement was never executed because a former tenant offered Petitioner more money.
Respondent also contends that it relied upon the Petitioner's promises and invested approximately $85,000 to improve the premises described in Paragraph 16 of the counterclaim.
16.That Respondent relied upon Petitioner's foregoing promises, to invest $85,000 (approximately) in building out the space and effecting certain structural repairs and for renovating and decorating the Licensed Area for opening and operating the spa, to lease and purchase equipment to open and operate spa and to hire employees and expend other sums for operating spa salon.The foregoing claims are also set forth in the Affidavit of Conroy Champagnie, who is the managing member of Respondent, dated June 1, 2011.
The Court finds that the purported oral agreement concerning the five (5) year Lease is barred by the merger clauses contained in the License Agreements contained in Paragraph 20(c), set forth above. This principal of law is set forth in Primex International Corp. v. Wal-Mart Stores, Inc., 89 NY2d 594, 657 N.Y.S.2d 385 (1997) wherein the following is expressed by the Court of Appeals:
[4][5]Courts and commentators addressing the substantive and procedural aspects of New York commercial litigation agree that the purpose of a general merger provision, typically containing the language found in the clause of the parties' 1995 Agreement that it "represents the entire understanding between the parties," is to require full application of the parol evidence in order to bar the introduction of extrinsic evidence to vary or contradict the terms of the writing (see, Citibank v. Plapinger, 66 NY2d 90, 94-95, 495 N.Y.S.2d 309, 485 N.E.2d 974 [1985]; Judnick Realty Corp. v. 32 W. 32nd St. Corp., 61 NY2d 819, 822, 473 N.Y.S. 2d 954, 462 N.E.2d 131 [1984], S. Kaye, The Parol Evidence Rule Generally, in 3 Commercial Litigation in New York State Courts § 36.3, at 390, n 82 [Haig, et al., eds. 1995]). The merger clause accomplishes this objective by establishing the parties' intent that the Agreement is to be considered a completely integrated writing (see, Fogelson v. Rackfay Constr. Co., 300 NY 334, 340, 90 N.E.2d 881 [1950]; Restatement [Second] of Contacts § 216, comment c.; 3 Corbin Contracts § 578, at 411; 2 Farnsworth, Contracts § 7.3, at 205). A completely integrated contract precludes extrinsic proof to add to or vary its terms (W.W.W. Assocs. v. Giancontieri, 77 NY2d 157, 162, 565 N.Y.S.2d 440, 566 N.E.2d 639 [1990]).In Balzaso v. Lublin, 162 AD2d 252, 556 N.Y.S.2d 610 (1st Dep't 1990), the court precluded introduction of evidence concerning a purported oral agreement that payment of rent was abated while repairs were being completed because of a merger clause in the agreement.
In the case at bar, there is no mention of any five (5) year lease in the License Agreements between the parties. In fact, the License Agreements state that the Respondent becomes a holdover Licensee if Respondent fails to vacate timely and subject to a doubling of the monthly License Fee being changed (see Paragraph 27).
The purported five (5) year oral agreement is barred by General Obligation Law, Section 5-703(2) which reads:
2.A contract for the leasing for a longer period than one year, or for the sale, of any real property, or an interest therein, is void unless the contract or some note or memorandum thereof, expressing the consideration, is in writing, subscribed by the party to be charged, or by his lawful agent thereunto authorized by writing.In Rosen v. 250 West 50 Street Corporation, 270 A.D. 171, 59 N.Y.S.2d 33 (1st Dep't 1945), aff'd 296 NY 567, 68 N.E.2d 868 (1946), the court refused to enforce an oral lease for three (3) years which allegedly extended an existing lease, because there was no writing subscribed by the party to be charged which was in violation of the Statute of Frauds. In the case at bar, there is no writing subscribed by Petitioner concerning the purported five (5) year Lease.
The court in Rosen also refused to extend the part performance exception to the Statute of Frauds.
In 745 Nostrand Retail Ltd. v. 745 Jeffco Corp., 50 AD3d 768, 854 N.Y.S.2d 773 (2nd Dep't 2008), the court refused to extend the equitable doctrine of part performance to a purported ten (10) year lease, because there was no evidence of conduct by tenants that was unequivocally referable to a ten (10) year lease and inconsistent with any other explanation.
In Pertony v. Saxe, 2 AD3d 1076, 769 N.Y.S.2d 636 (3rd Dep't 2003), the court held that the prospective purchaser's improvements to the real property during the tenancy was not unequivocally referable to purchase of the property to avoid application of the Statute of Frauds, because the expenditures were equally referable to the tenancy as to sale of the property.
Respondent's expenditures of approximately $85,000 to improve the location is equally referable to Respondent's operation under the two (2) License Agreements as it is referable to the purported five (5) year Lease. The Court notes that the License Agreement dated January 4, 2011 is for a period of January 1, 2011 until January 15, 2011 and is not executed.
Conclusion
Petitioner is granted summary judgment and is awarded an immediate judgment of possession with no stay of execution.
This matter is set down for an assessment of damages on August 24, 2011 to be proven by proper testimony and evidence.
So Ordered:
Hon. Scott Fairgrieve
DISTRICT COURT JUDGE
CC:Berkman, Henoch, Peterson, Peddy & Fenchel, P.C.
Roach Bernard, PLLC