Mondshein's
Clothing Center, Inc., Petitioner/Landlord,
against
City of New York, et al,
Respondent/Tenant
|
081404/13
ATTORNEY FOR PETITIONER:
CORNICELLO, TENDLER & BAUMEL-CORNICELLO, LLP
TWO WALL STREET
20TH FLOOR
NEW YORK, N.Y. 10005-2072
ATTORNEYS FOR RESPONDENT:
MICHAEL A. CARDOZO
Corporation Counsel of the City of New York
100 CHURCH STREET
NEW YORK, N.Y. 10007
Katherine A. Levine, J.
In this summary holdover proceeding, petitioner/landlord Mondshein's Clothing
Center, Inc. ("landlord," "petitioner" or "Mondshein") seeks to recover the commercial
premises located at 152 Manhattan Avenue, Brooklyn, from the respondent/tenant City
of New York ( "tenant," "respondent" or "City") on the grounds that the term for which
said premises was rented expired on July 14, 2013.
The City moves to dismiss the petition on the ground that there is a written
lease in effect. The landlord cross-moves for summary judgment and argues that it
revoked its offer to renew the [*2]lease, before the City's
attempted acceptance.[FN1]
Alternatively, the landlord argues that the City rejected the offer with a counter offer,
which expired due to the passage of seven (7) months.
When the 10-year lease between the parties expired on May 15, 2011, the
City negotiated a new lease for an additional six-year term. Upon the completion of
negotiations, the City prepared the new renewal lease ("lease renewal") and sent an un
executed copy to the landlord to sign and return. The landlord signed the lease renewal
and returned it to the City on or about July 5, 2012 for signature. Paragraph 5 of the lease
renewal states: "this Lease Renewal is subject to public hearing and Mayoral
approval...to be scheduled subsequent to the execution of this Lease Renewal by
Landlord." Paragraph 6 provides: "[t]his Lease Renewal may be
executed by the Deputy Commissioner of the Department of Citywide Administrative
Services ("DCAS") after public hearing and Mayoral approval" (emphasis added).
Upon receiving the lease renewal signed by the landlord, the City's Associate
General Counsel, by letter dated July 6, 2012, asked the landlord for Exhibit A, the
affirmation and the W-9 form. The letter also stated: "[n]either this Lease Renewal, nor
any prior or subsequent draft of Lease Renewal, is binding upon the City of New York
until executed by a duly authorized representative of the City in accordance with all then
prevailing City policies and procedures." The landlord subsequently sent its affirmation
and the W-9 tax form on or about July 10, 2012 to the City and also consented to attach
the original lease as Exhibit A.
Having received the landlord's consent, and pursuant to Paragraph 5 of the lease, the
City initiated its internal approval process, which culminates in a sign off by DCAS. The
public hearing schedule was delayed due to the aftermath of Hurricane Sandy until
December 5, 2012. Following the public hearing, the Mayor's Office of Contract
Services ("MOCS") authorized DCAS to execute the lease renewal on December 11,
2012.
By e-mail dated December 13, 2012, the City notified the landlord that it had
obtained the interagency sign-offs as well as the Mayoral Approval, "permitting the City
to now execute the Lease Renewal." However, since the City had improperly listed and
typed in the name of the former Deputy Commissioner of DCAS below the signature line
on the lease renewal, the e mail requested the landlord to re-execute, re-notarize and
return to the City seven new copies of the lease renewal which listed the name of the
current Deputy Commissioner on the signature line. Curiously, the City did not actually
send the landlord the new signature pages. As the landlord did not reply to this e mail,
the City sent another e-mail, dated December 21, 2012, apologizing for "the procedural
complication" and requesting that Mr. Mondshein "finalize this matter." The email
further inquired whether the landlord wanted the City to forward "just the signature
pages [*3]for re-execution or all original Lease Renewal
Agreements with new signature/notarization pages." Again, the landlord did not respond.
On January 9, 2012, the City finally mailed the landlord a cover letter and a
package containing the updated signature pages and instructed the landlord to "return
[them]...for further processing" due to the need to have the newly appointed Deputy
Commissioner sign off on the lease renewal on behalf of the City This letter contained
the same afore stated paragraph that "[n]either this Lease Renewal, nor any prior or
subsequent draft of Lease Renewal, is binding upon the City of New York until executed
by a duly authorized representative of the City in accordance with all then prevailing City
policies and procedures." Curiously, the new Deputy Commissioner did not sign the
signature page prior to sending the new copies of the renewal to the landlord.
The package was returned since the City inadvertently sent the package to
577 Grand Avenue as opposed to 577 Grand Street, the landlord's actual address. The
City therefore resent the package to the landlord on January 30, 2013 with a new cover
letter requesting the landlord to re-execute, and "cause to be notarized" the lease renewal
pages if "the Lease Renewal is acceptable to you" (emphasis added). The letter
reiterated that the lease renewal was not binding upon the City until its was executed by
an authorized representative. For some unknown reason, the revised signature pages sent
to the landlord id not contain the actual signature of the new Deputy Commissioner.
On February 14, 2013, the City finally received a letter from the landlord
indicating that he was no longer interested in renewing the lease with the City and
inquiring when the City could vacate the premises. In response to this letter, the new
Deputy Commissioner signed the original lease renewal that had previously been signed
by the landlord, hand wrote her name below the signature line, and crossed out the name
of the former Deputy Commissioner. The City then mailed the fully signed original lease
to the landlord with a cover letter which stated "I am sending a second fully executed
original-signature Lease Renewal Agreement...in light of [your] letter of February 13,
2013, which [the City] received today." This letter confirms that the City had received
the landlord's rejection before its new Deputy Commissioner executed and mailed back
to the landlord the lease renewal. The affidavit of Scott Bernstein, the City's Senior Lease
Negotiator, also confirms that the City received the landlord "rejection" of the lease prior
to the City's new Deputy Commissioner signing the lease.
Summary judgment may not be granted unless the pleadings, depositions,
answers to interrogatories, and admissions on file, together with the affidavits... show
that there is no genuine issue as to any material fact and that the moving party is entitled
to judgment as a matter of law." Marks v. New York University, 61 F. Supp.2d
81, 87 (S.D. NY, 1999). On a summary judgment motion, the moving party must set
forth evidence that there is no factual issue and that it is entitled to summary judgment.
Forrest v. Jewish Guild for the
Blind, 3 NY3d 295, 315 (2004) citing Zuckerman v City of New York,
49 NY2d 557 (1980). If the moving party establishes a basis for a grant of summary
judgment, the opposing party must present evidence [*4]that there is a triable issue of fact. Forrest v. Jewish
Guild for the Blind, supra, 49 NY2d at 315. The facts must be viewed in the light
most favorable to the nonmoving party. Id.
A lease is a hybrid document involving both a conveyance of an interest in
land for a fixed period of time and a contract requiring the parties to fulfill certain
obligations. Dlugosz v.
O'Brien, 36 AD3d 1035 (3rd Dept. 2007) citing 219 Broadway Corp v.
Alexander's Inc., 46 NY2d 506, 509 (1979). Therefore, a lease does not become
effective unless it is signed, delivered and accepted, satisfying both contract and property
law parameters. Penny Lane Owners Corp v. Conthur Development Co., Ltd,
2000 U.S. Dist. LEXIS 1503 (S.D.NY 2000). If parties to an agreement do not intend it
to be binding until it is reduced to writing and signed by both of them, they are not bound
and may not be held liable "until it has been written out and signed." Scheck v.
Francis, 26 NY2d 466 (1970); ADCO Electrical Corp. V. HRH Construction,
LLC, 61 AD3d 653, 654 ( 2d Dept. 2009); Lone Creek Associates, LLC v
Marine Midland Bank, 293 AD3d 719 ( 2d Dept. 2002). The parties intent to be
bound by a contractual agreement can be determined by either the words of the written
agreements, or, if the agreement is unclear, by inferences outside the written words of the
instrument." ADCO Electrical Corp., supra, 61 AD3d at 654. See Mallad
Constru. Corp. v. County Fed. Sav. & Loan Assn. 32 NY2d 285, 291 (1973).
As with any other bilateral contract, a lease which provides for the signature of both
parties is "executed" only when it is signed by both parties and delivered. East 56th
Plaza, Inc v. NY City Conciliation and Appeals Bd., 80 AD2d 389, 393 (1st Dept.
1981)(rev'd on other grounds). Furthermore, the transaction is not complete and it is not
binding when the evidence surrounding the parties' negotiations shows that they agreed
to it being non-binding until it is so reduced to writing and formally executed.
Municipal Consultants v. Ramapo, 47 NY2d 144, 148 (1979).
On its face, the lease renewal required the signatures of both parties as the last page
had two signature lines. The lease renewal provided that even after the landlord signed
the lease renewal drafted by the City, the renewal would not be effective until it
underwent a public hearing and mayoral hearing. While the lease stated that it
may be executed by the Deputy Commissioner of DCAS, any ambiguity as to
the necessity that both parties sign the renewal was resolved by the City's subsequent
e-mails and letters to the landlord which repeatedly stated that the lease renewal would
not be binding upon the City "until executed by a duly authorized representative of the
City." Having repeatedly set forth the conditions upon which the lease renewal would be
binding — i.e. the signature of the current Deputy Commissioner of DCAS
— the City cannot now argue that its signing of the lease renewal was a mere
formality and that the lease renewal became binding after the Mayoral Approval.What is
even more confounding is the City's repeated failure to have the current DCAS Deputy
Commissioner actually sign the revised signature pages prior to sending the same to the
landlord. Akin to the nonsensical tea party in Alice In Wonderland, the City wasted
approximately one and a half months by repeatedly apprising the landlord that it had
made a [*5]mistake by sending the original signature
page with the typed in name of the former Deputy Commissioner, without ever sending
the revised signature page with the actual signature of the current Deputy Commissioner!
It was only after the landlord rejected the lease renewal on February 13, 2012, that the
City had an epiphany that both parties were bound by the original lease renewal and that
the new Commissioner need only cross out the name of the former Commissioner and
sign her name to make the binding nature of the renewal official.
The City's contention, via the Bernstein affidavit, that the update to the signature
page was "not essential or substantive" to the lease renewal and that the City "did not
insist upon the change" is contradicted by the multitude of e mails and letters that the
City annexes to its Motion to Dismiss. Under the doctrine of judicial estoppel, " a party is
precluded from inequitably adopting a position directly contrary to or inconsistent with
an earlier assumed position in the same proceeding." Nestor v. Britt, 270 AD2d
192,193 (1st Dept. 2009); See Neumann v Metropolitan Medical Group. 153 AD2d
888, 889 (2d Dept. 1989) (a party who assumes a certain position in a legal
proceeding may not hereafter assume a contrary position simply because his interests
have changed).If the City believed that the lease renewal was binding after
Mayoral Approval, it should have so informed the landlord immediately and/or written to
the landlord that any subsequent sign off on the lease renewal was superfluous to the
binding nature of the agreement. Having failed to do so, the City is now estopped from
claiming that its repeated e-mails and letters concerning the need for the landlord to
reexecute the new signature pages were mistaken or an oversight, and that the Deputy
Commissioner's signature was merely ministerial.
Accordingly, this Court rules that the parties did not renew the lease and that
City must leave the premises. The City's motion to dismiss is denied and the landlord's
cross motion for summary judgement is granted.The foregoing constitutes the Decision
and Order of the Court.
Dated: May 30, 2014______________________________KATHERINE A.
LEVINEActing Justice Supreme Court
Footnotes
Footnote 1:In light of the different
paradigm that comes into play when the City acts as tenant but drafts the initial lease the
court need not and will not rule in the instant matter whether its was the City or Landlord
who offered the lease.