45-02 Food Corp.v.45-02 43rd Realty LLC

Supreme Court of the State of New York, Queens CountyFeb 22, 2010
22272/09 (N.Y. Misc. 2010)
22272/092010 N.Y. Slip Op. 30454


February 22, 2010.

The following papers numbered 1 to 14 read on this motion by plaintiff for an order pursuant to CPLR 3126 striking defendants' answer for refusing to appear and be examined before trial; and cross-motion by defendant Philip Pilevsky for an Order pursuant to CPLR 3212 granting him summary judgment dismissing the complaint as against him on the grounds that the complaint fails as a matter of law to state a claim against Pilevsky; and granting Pilevsky a protective order quashing the notice of deposition served by plaintiff requesting Pilevsky's deposition.


PAPERS Notice of Motion-Affirmations-Exhibits....................... 1-4 Notice of Cross-Motion-Affirmation-Exhibits.................. 5-8 Affidavit in Opposition to Cross-Motion-Exhibit.............. 9-10 Memorandum in Opposition to Cross-Motion..................... 11-12 Reply Affidavit.............................................. 13

Upon the foregoing papers, the motion by plaintiff for an order pursuant to CPLR 3126 striking defendants answer for refusing to appear and be examined before trial; and cross-motion by defendant Philip Pilevsky for an Order pursuant to CPLR 3212 granting him summary judgment dismissing the complaint as against him on the grounds that the complaint fails as a matter of law to state a claim against Pilevsky; and granting Pilevsky a protective order quashing the notice of deposition served by plaintiff requesting Pilevsky's deposition, are decided as follows:

This action for a declaratory judgment and other related relief stems from a 1973 lease between Milbern Mercantile Ltd. (hereinafter Milbern), as landlord, and the supermarket chain The Bohack Corporation (hereinafter Bohack), as tenant, with respect to certain commercial real property in Sunnyside, Queens. The initial term of the lease was for 26 years and expired on January 31, 1999. The lease granted Bohack the option, over several renewal periods, to extend the term for up to 50 additional years. During the initial term, Bohack was responsible for paying, inter alia, a fixed annual rental of $49,252 and the real estate taxes for the premises. Following a series of assignments, the plaintiff acquired Bohack's interest in the lease, and the defendant 45-02 Realty LLC (hereinafter, "LLC") acquired Milbern's interest. In 1995, the plaintiff ceased its supermarket operations at the premises, and entered into a sublease with Rite Aid of New York, Inc. (hereinafter Rite Aid).

During 1999, the LLC notified the plaintiff that it was terminating the lease for nonpayment of Percentage Rent, and the plaintiff commenced an action for a judgment declaring the rights of the parties under the original lease. Defendant claimed that, pursuant to the lease, additional rent was due from the tenant based on a percentage of the gross sales of the subtenant. Plaintiff disagreed and also argued that it was entitled to offset against any additional rent real estate taxes paid by the subtenant. The Supreme Court held that the plaintiff's Percentage Rent obligation must be calculated on the basis of Rite Aid's gross sales, but that the plaintiff could offset, against that obligation, any real estate taxes paid by Rite Aid. On appeal, the court modified the trial court's order, finding that, because the provision at issue in the lease specifically referred to the gross sales of the "tenant" and the language of the lease indicated that such a term did not refer to subtenants, the court held that any additional rent could not be calculated based on the gross sales of the subtenant. However, because the provision regarding the offset only referred to the "tenant" as well, the court determined that the tenant was not entitled to offset the real estate taxes paid by the subtenant.

In a letter, dated July 13, 2009, defendant LLC, informed plaintiff that it was its understanding that the options contained in the Lease violate the Rule Against Perpetuities. Defendant LLC stated that, "Landlord does not have to take any action to void the options because they were never valid, from the very start of the Lease, and therefore you cannot rely on any purported renewal option referred to above in Paragraph 3 of the Lease. Accordingly, demand is hereby made for you to surrender exclusive possession of premises to Landlord on or before September 1, 2009, with time being of the essence, vacant, in broom clean condition, and as otherwise provided for in the law." The letter specifically stated it was not a notice of tenant default, rather, it was a notice that clearly indicated that any renewal option exercised by plaintiff, was not deemed valid by the LLC.

Subsequently, plaintiff brought the instant action setting forth three causes of action. The first cause of action claims "defendants have maliciously breached and anticipatorily breached the subject Lease by their frivolous threat to terminate the leasehold and their disregard of the heretofore recognized options to extend the Lease all based on grounds which have not merit and are or should be known by defendants to be frivolous. By virtue of the foregoing, a justiciable controversy exists between the parties as to whether defendant is or is not entitled to terminate it Lease with plaintiff and injunctive relief is required restraining defendants from acting to terminate plaintiff's Lease or interfering with the Rite Aid tenancy." The second cause of action is for breach of the warranty of quiet enjoyment for malicious breach of lease and for interference with contract. Under this action, plaintiff claims that, "defendants' acts and conduct, including defendant Pilevsky's acts and conduct were motivated solely by malice and/or pecuniary gain for themselves and himself and by the desire to obtain better and higher rentals from the leased premises, to take advantage of the improvements made by plaintiff under it Lease, and to interfere with plaintiff's sublease to Rite Aid." The third cause of action is for tortious inducement of breach of contract. Under this action, plaintiff claims that "defendant Pilevsky wholly owns Realty and/or is the sole person to control its acts" and he committed certain acts solely for his own pecuniary gain. In particular, the acts by Pilevsky include, "falsely and maliciously notified [sic] Rite Aid that the lease with plaintiff had in fact been terminated and that Rite Aid's tenancy was an at end and willfully misdescribed to Rite Aid the orders of this Court. . . ."

In a memorandum decision, dated October 9, 2009, and an Order of this Court, dated October 27, 2009, plaintiff's application for an order enjoining and restraining defendants, from terminating the lease dated February 12, 1973; enjoining defendants from treating as terminated the parties' lease as amended, or taking any action pursuant to its purported notice of its intention to terminate the Lease other than to litigate its Rule Against Perpetuities' claim in this action; and enjoining defendants from interfering with plaintiff's sublease with Rite Aid of New York Inc. was granted. Plaintiff now seeks an Order striking defendants' Answer for the failure of Pilevsky to appear for a deposition and defendant Pilevsky opposes this motion. Pilevsky has also cross-moved for summary judgment dismissing the action against him, and plaintiff opposes this motion.

In support of its motion to strike, plaintiff has shown that it served it Notice to depose defendant Pilevsky on December 16, 2009. However, defendants stated that Pilevsky will not appear and has refused to provide a date when he will appear. Defendant opposes this motion by claiming that Pilevsky has little, if any, personal knowledge of the facts and circumstances from which this action arises. He claims that even though he signed the Notice of Termination as a Member of Realty, the management of the property has been undertaken by Mr. Groothuis, who has principal responsibility and knowledge on behalf of Realty in overseeing the Lease. Defendant has offered to produce Mr. Groothuis for deposition, with the understanding that if he is unable to answer a question withing the knowledge of Pilevsky, Pilevsky will then be made available. Defendant has submitted an affidavit of Mr. Groothuis that supports this claim. Defendant argues that under CPLR 3106(d), a corporate party is in the first instance entitled to name and produce a representative and thus it can designate Mr. Groothuis. This argument, of course, assumes that defendant Pilevsky's summary judgment motion will be granted dismissing the causes of action against Pilevsky. Accordingly, the Court shall address the summary judgment motion first, since it will be dispositive on the issues in plaintiff's motion.

Defendant Pilevsky seeks summary judgment on the ground that plaintiff has no valid claim against Pilevksy, individually. He argues that the first and second cause of action involve only the parties to the Lease and Pilevsky is not such a party. Regarding the third cause of action, he claims it is not valid since an agent of an entity cannot be held liable for tortiously inducing the entity to breach a contract when the agent is acting on behalf of the principal and within the scope of the agent's authority. Here, Pilevsky was so acting when he allegedly did the acts claimed in the complaint.

Plaintiff opposes this motion by claiming defendant has failed to establish, prima facie, his entitlement to summary judgment and the complaint sets forth sufficient allegations to support the claims therein. Plaintiff points out that defendants have failed to submit any evidence that relates to the factual allegations in the complaint. Plaintiff emphasizes that the complaint clearly asserts that Pilevsky was motivated solely by malice and his own pecuniary gain, committed certain acts against the plaintiff in the attempt to coerce it to abandon its long term leasehold interest and also interfered with plaintiff's sublease to its tenant, Rite Aid and wrongfully threatened termination of the sublease. As such, the complaint is sufficient to establish causes of action for breach of contract and tortious interference against Pilevksy.

In pertinent part, CPLR 3212 (b), states that, "A motion for summary judgment shall be supported by affidavit, by a copy of the pleadings and by other available proof, such as depositions and written admissions. The affidavit shall be by a person having knowledge of the facts; it shall recite all the material facts; and it shall show that there is no defense to the cause of action or that the cause of action or defense has no merit. . . ." Here, defendant Pilevsky has failed to submit an affidavit, or any other sworn document to attest that the causes of action have no merit. The only sworn documents submitted in support of this motion are the affirmation from his attorney and his Answer, also verified by his attorney. These have no probative value and cannot support a summary judgment motion. See, Siegel Trust v Wallace, 10 AD3d 598 (2d Dept 2004.) Accordingly, the summary judgment motion is denied.

Furthermore, reviewing the motion to dismiss, it is incumbent upon the court to liberally construe a challenged pleading and accept as true the material allegations of fact and determine whether any cause of action cognizable at law exists. (See, Goshen v Mut. Life Ins., 98 NY2d 314; Leon v Martinez, 84 NY2d 83.) Initially, the Court notes that Pilevsky does not have "absolute immunity" for any conduct that he engaged in as a principal of defendant LLC. If his actions were wanton and in reckless disregard of plaintiff's rights under its lease, and motivated by his own pecuniary gain, an action for breach of the lease and tortious interference with the lease can be maintained. See, Serota v Mayfair Super Markets, Inc., 15 AD3d 385 (2d Dept 2005.) Upon review of the complaint, the Court finds that plaintiff has sufficiently pleaded the necessary elements to maintain these actions. Accordingly, the branch of the motion seeking to dismiss the complaint for failure to state a cause of action is denied.

Regarding the motion to strike defendants' Answer, it is granted to the extent that, the Court finds Pilevsky's failure to appear for a deposition was not wanton and capricious and thus does not warrant the severe sanction of dismissal of his pleadings. Rather, the Court orders him to appear for a deposition on or before March 31, 2010, at a time and location mutually agreed upon by the parties. Consequently, the branch of the cross-motion seeking a protective order quashing the subpoena to appear is denied. A copy of this Order is being sent to the parties, by means of facsimile transmission, on February 22, 2010.