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Educational Ctr. for New Ams., Inc. v 66th Ave. Realty Co.
2013 NY Slip Op 51276(U) [40 Misc 3d 1222(A)]
Decided on July 24, 2013
Supreme Court, Queens County
Kitzes, J.
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and will not be published in the printed Official Reports.


Decided on July 24, 2013
Supreme Court, Queens County


Educational Center for New Americans, Inc., Plaintiff,

against

66th Avenue Realty Co., 66th AVENUE REALTY CO. LLC, 99th STREET REALTY CO., 99th STREET REALTY CO. LLC and JERRY ROTHSCHILD, Defendants.




703222/2012

Orin R. Kitzes, J.



Upon the foregoing papers it is ordered that the motion is determined as follows:

This is an action in which plaintiff seeks monetary damages for breach of a lease, breach of the duty of good faith and fair dealing, damage to plaintiff's reputation, and breach of plaintiff's oral right of first refusal.

On December 18, 2001, defendants, 66th Avenue Realty Co. (66th Realty) and 99th Street Realty Co. (99th Realty), landlord-owners, leased space in the building located at 98-12 66th Avenue, Forest Hills, New York (the property) to Educational Center for Russian Jewry, Inc., tenant, to be used as a main sanctuary/multi purpose room, kosher food catering (no retail sale of food), offices, meeting rooms and classrooms. The lease commenced on December 18, 2001 for a ten year term with an option to renew for an additional five year term. The building has one certificate of occupancy for the four separate tax lots and is divided into multiple rentable commercial spaces. Plaintiff claims that it was formerly known as the tenant named in the lease. In or about November 2005, 66th Realty and 99th Realty were converted to Limited Liability Companies now known as 66th Avenue Realty Co. LLC and 99th Street Realty Co. LLC. Jerry Rothschild is a partner or member of the entity defendants.

In the complaint, plaintiff contends that as a result of defendants failure to cure building code violations on the building and other unresolved issues on record with the Department of Buildings (DOB), as well as delay in signing DOB work application and amendments, plaintiff could not obtain a modified certificate of occupancy, which prevented plaintiff from using the space for its intended purpose, and from obtaining grants, public funds and contributions from private donors. Plaintiff also expended $2,000,000 in renovations and alterations to the property based on the fact that the landlord would cure the building code violations. In addition, plaintiff maintains that it had an oral right of first refusal if defendants were to sell the property, which was violated when defendants contracted to sell the property to a third party.

Defendants move to dismiss pursuant to CPLR 3211(a)(1) and (a)(7) on the grounds that a defense is founded upon documentary evidence and the pleading fails to state a cause of action. CPLR 3211(a)(1) gives this court the authority to dismiss an action if the movant presents proof that a defense is based on documentary evidence. To prevail on a CPLR 3211(a)(1) motion, the documentary evidence submitted "must be such that it resolves all the factual issues as a matter of law and conclusively and definitively disposes of the plaintiff's claim" (Berger v Temple Beth-El of Great Neck, 303 AD2d 346, 347 [2d Dept 2003] quoting Trade Source v Westchester Wood Works, 290 AD2d 437 [2d Dept 2002]).

Generally, on a CPLR 3211(a)(7) motion to dismiss, the pleadings are afforded liberal construction, the facts alleged in the complaint are accepted as true, and the plaintiffs are accorded the benefit of every possible favorable inference, so long as the allegations are not bare or conclusory (Leon v Martinez, 84 NY2d 83 [1994]; Morone v Morone, 50 NY2d 481, 455 [1980]; Guwenheimer v Ginzburg, 43 NY2d 268 [1997]; Rovello v Orofino Realtv Co., 40 NY2d 633 [1976]; Lakeville Pace Mechanical. Inc. v Elmar Realty Corp, 276 AD2d 673 [2d Dept [*2]2000]; Kantrowitz & Goldhamer v Geller, 265 AD2d 529 [2d Dept 1999]; Scomello v Caronia, 210 AD2d 214 [2d Dept 1994]). In addition, affidavits submitted by a plaintiff may be considered by the court to remedy any defect in the complaint, not to provide evidentiary support for the complaint (see Cron v Hargro Fabrics, 91 NY2d 362, 366 [1998]; Leon v Martinez, supra; Rovello v Orofino Realty Co., supra).

The basis of Rothschild's motion to dismiss is the lease provision limiting the tenant's remedy to "Landlord's estate and interest in the Building for the satisfaction of any judgment in the event of any default by Landlord under the Lease." The provision goes further to state that "no other property or assets of Landlord shall be subject to levy, execution or other enforcement procedure for the satisfaction of same. Neither the members comprising Landlord nor their managers, agents or employees shall be liable for the nonperformance of Landlord's obligations under the Lease."

While a provision limiting liability by restricting or barring recovery by means of an exculpatory provision is subjected to close judicial scrutiny, it is generally enforceable provided it does not offend public policy (Banc of Am. Sec. LLC v Solow Bldg. Co. II, L.L.C., 47 AD3d 239, 244 [1st Dept 2007] quoting Lago v Krollage, 78 NY2d 95, 99-100 [1991]). Enforcement of such a provision is precluded where conduct is willful, grossly negligent, fraudulent, malicious or arising out of the intention to act in bad faith (Id.)

Here, neither the complaint nor the affidavit of Nahum Kaziev (Kaziev) set forth the willful, grossly negligent, fraudulent, malicious or bad faith misconduct of Rothschild to warrant precluding the enforcement of the exculpatory provision.

Accordingly, the branch of the motion for dismissal of the complaint as against Rothschild is granted.

The branch of the motion for dismissal of the second for breach of the duty of good faith and fair dealing is granted. This cause of action is based on defendants failure to cure building code violations and other unresolved issues on record with the DOB, as well as defendants delay in signing DOB work application and amendments. Where, as here, the duty of good faith and fair dealing is implicit in the performance of contractual obligations (see Dalton v Educational Testing Serv., 87 NY2d 384, 389 [1995]; see also New York Univ. v Continental Ins. Co., 87 NY2d 308, 318 [1995]), it is dismissed as duplicative of the separately stated breach of contract cause of action (e.g. Levi v Utica First Ins. Co., 12 AD3d 256, 257-258 [1st Dept 2004]; McMahan & Co. v Bass, 250 AD2d 460, 462 [1st Dept 1998], lv denied, lv dismissed 92 NY2d 1013 [1998]).

The branch of the motion to dismiss the fourth cause of action for breach of plaintiff's right of first refusal to purchase the building is granted. This claim is based on an alleged oral agreement entered in 2002 at a meeting with Rothschild, Kaziev and two other individuals, who's identity has not been disclosed in the papers. In his affidavit, Rothschild denies entering into any [*3]such agreement and asserts that, even if such right was given, it is barred by the statute of frauds. Whereas, plaintiff claims that Rothschild made a promise granting it a right of first refusal, which was reiterated on subsequent occasions. Plaintiff also claims in an affidavit that it relied on that promise to his detriment by expending $2,000,000 on renovations to the building, instead of the $200,000 contemplated in the lease. Ultimately, plaintiff argues that the equitable estoppel exemption to the statute of frauds applies in this case. The complaint also states that, upon learning that defendants intended to sell the property, plaintiff made numerous offers to purchase the property, but a contract of sale was executed between defendants and an unknown third-party.

As stated by the Court of Appeals in Metropolitan Transp. Authority v Bruken Realty Corp. (67 NY2d 156, 163 [1986]),

A right of first refusal is "[a] preemptive right [that] . . . requires the owner, when and if he decides to sell, to offer the property first to the party holding the preemptive right so that he may meet a third-party offer or buy the property at some other price set by a previously stipulated method. Once the owner decides to sell the property, the holder of the preemptive right may choose to buy it or not, but the choice exists only after he receives an offer from the owner. If the holder decides not to buy, then the owner may sell to anyone" [citation omitted]).

General Obligations Law § 5-703(3) provides, in relevant part, that a contract to devise real property will be barred by the statute of frauds "unless the contract or some note or memorandum thereof is in writing and subscribed by the party to be charged therewith, or by his [or her] lawfully authorized agent" (see Pinkava v Yurkiw, 64 AD3d 690, 693 [2d Dept 2009]; Maynor v Pellegrino, 226 AD2d 883, 884 [3d Dept 1996]). "Promissory estoppel . . . is not available as an exception to the statute of frauds unless the acts taken in detrimental reliance are unequivocally referable to the . . . oral agreement'" (Jeremy's Ale House Also, Inc. v Joselyn Luchnick Irrevocable Trust, 22 AD3d 6, 20 [1st Dept 2005] quoting Richardson & Lucas, Inc. v New York Athletic Club, 304 AD2d 462, 463, 758 NYS2d 321 [1st Dept 2003]).

Here, it is undisputed that there is no right of first refusal contained in the lease agreement or any other writing entered into between these parties. If such an oral agreement was made it violates the General Obligations Law § 5-703(3) and thus any claims relating thereto are barred under the statute of frauds. Plaintiff fails to demonstrate the applicability of the estoppel exemption to the statute of frauds. Any improvements and renovations to the building were contemplated in lease and were undertaken at plaintiff's option. In this regard, plaintiff fails to state a cause of action for breach of the right of first refusal and said cause of action must be dismissed.

The branch of the motion to cancel the notice of pendency is granted (Braunston v Anchorage Woods, Inc., 10 NY2d 302 [1961]). It is well settled law that a notice of pendency is to be filed by a party to protect some right, title or interest claimed in or to the real property against which it is filed which might be lost in the event of a transfer of the subject property to a [*4]purchaser for value (Id. at 304-305).

Plaintiff's action seeks only monetary damages, making no claim to possession of the property. Accordingly, since "a judgment for the plaintiff would not affect the title to, or the use, possession, or enjoyment of, real property'", the notice of pendency must be canceled (Shkolnik v Krutoy, 32 AD3d 536, 537 [2d Dept 2006).

Thus, the County Clerk of Queens County is directed, upon the payment of any fees which may be due and owing, to cancel the notice of pendency filed in this action against the property located at 98-12 66th Avenue, Forest Hills, New York, and indexed under Block 5600 and Lots 562 and 571. The Clerk shall enter upon the margin of the record a notice of cancellation referring to this order.

The branch of the motion for costs incurred in connection with this motion pursuant to CPLR 6514(c) is denied. While the notice of pendency was canceled, an award of costs would be inappropriate under the circumstances of this case (see Shkolnik v Krutoy, 65 AD3d 1214, 1216 [2d Dept 2009]).

Dated: July 24, 2013

J.S.C.