Matter of Diamondstein
Annotate this CaseDecided on January 24, 2005
Surrogate's Court, Nassau County
In the Matter of Application of MICHAEL GOLDSTEIN, as preliminary executor of the Last Will and Testament of MILTON DIAMONDSTEIN, deceased, to discover property withheld, to compel the continuation of the business, to direct the examination of JEROME DIAMONDSTEIN and to enjoin litigation.
333745
John B. Riordan, J.
In this discovery proceeding (SCPA 2103), the estate seeks to establish the existence of a leasehold interest in commercial real property and to enforce its provisions. The property is located at 64-11 Queens Boulevard, Woodside, New York, on which a motel is operated. Petitioner now seeks an injunction enjoining the respondent, the owner of the property, from initiating proceedings evicting the motel business from the premises asserting that the motel business holds a long-term lease interest of unspecified duration in the real property.
The decedent Milton Diamondstein died on May 2, 2004 survived by three children, Barbara Ostrick, Joanne Goldstein and Jerome Diamondstein (respondent). A petition has been filed for probate of an instrument dated July 2, 2002. The probate petition sets forth an approximate value of decedent's gross estate of between $3,250,000 and $3,500,000. Preliminary letters issued to petitioner Michael Goldstein, Joanne's husband, on September 3, 2004. The instrument provides that Barbara Ostrick and Joanne Goldstein each receive 25% of the residuary estate in trust. The balance is bequeathed to the decedent's grandchildren in various percentages. The instrument further provides that no provision was made for respondent Jerome Diamondstein as decedent "helped provide for him during his lifetime."
The instant proceeding involves the interrelationship of various corporate entities either owned by the decedent or by the respondent concerning the operation of the motel business and the real property. Decedent was the sole shareholder of Queens Motor Inn Corporation which owns and operates the Queens Motor Inn at the subject property. The shares of the Queens Motor Inn Corporation are part of the residuary estate. The decedent had also been the owner of the real property on which the motel business is situated but in 1997 the decedent sold the real property to Queemo Corporation for $1,100,000. Respondent Jerome Diamondstein is the president and sole owner of Queemo Corporation. The decedent took back a $1,050,000 purchase money, self-amortizing mortgage requiring Queemo to make monthly installment payments of $8,665.80, which payments inure to the beneficiaries of the estate. The final payment on the note is due December 10, 2012. Jerome is also an officer of Queens Motor Inn Corporation and receives a salary in addition to a share in the profits pursuant to a written agreement dated June 26, 1995. The agreement was entered into between Queens Motor Inn Corporation and Jerome for a term of 15 years and contained a provision for payment of certain monies to respondent in the event of his early termination from employment.
In August 2004, Jerome, as president of Queemo Corporation, the owner of the subject [*2]real property, executed a thirty-day notice of termination of the tenancy, effective September 30, 2004, which was addressed to Queens Motor Inn Corporation. Jerome alleges that there is not now and never has been a lease between the owner of the real property and Queens Motor Inn Corporation, rendering the motel corporation's occupancy of the premises a month-to-month tenancy. The instant discovery proceeding was commenced on September 24, 2004 wherein petitioner seeks a preliminary injunction prohibiting the respondent from evicting the Queens Motor Inn Corporation and for other relief. In this proceeding, the petitioner seeks to establish that there is a lease. The order to show cause commencing the proceeding, which is still in effect, restrains the respondent from commencing a judicial proceeding to evict Queens Motor Inn Corporation.
By order of this court dated October 21, 2004, petitioner was afforded the opportunity to depose Jerome as well as to examine certain books and records of Queemo Corporation. Pursuant to that order, such discovery has been completed and a transcript of the examination of Jerome has been furnished to the court. In addition, the parties have submitted memoranda in support of their respective positions.
At his deposition, Jerome testified that he has worked at the motel business for the most part since he graduated from college in 1971. He currently is the day-to-day head of operations of the motel business. He explained the circumstances surrounding the execution of the 1995 employment agreement with Queens Motor Inn Corporation stating that he was interested in protecting his future at the motel. He testified that to further protect his future, he purchased the property from the decedent in 1997, utilizing a 1995 appraisal figure of $1,100,000. At that time, discussions were had with decedent concerning respondent's purchase of the motel business but the purchase never reached fruition. Discussions were also had concerning the drawing up of a lease for the property but these discussions did not result in the execution of a lease, albeit a proposed lease was drafted for a period of 15 years ending in 2012.
Respondent further testified that since 1971, there has been no written lease on the subject property. Respondent acknowledged filing certain government forms, relating to property income and expense, tax assessments and housing reports, wherein it is indicated that Queemo Corporation is the lessor and Queens Motor Inn Corporation is the lessee of the subject property. Respondent further acknowledged that Queens Motor Inn Corporation paid the insurance, real estate taxes, and utilities, and paid for certain repairs as, for example, painting, landscaping and air conditioning. Jerome testified that this was consistent with past practice, i.e., that is how the businesses had always been operated.
It is well settled that to be entitled to a preliminary injunction, the petitioner must establish (1) the likelihood of success on the merits (2) irreparable injury absent granting the preliminary injunction and (3) a balancing of the equities (W.T. Grant Co. v Srogi, 52 NY2d 496, 517 [1981]; Pearl Green Corp. v Yau Chi Chu, 8 AD3d 460 [2004]; Albini v Solork, Assoc., 37 AD2d 835 [1971]). It is equally well settled that a petitioner should be denied an injunction where it lacks equitable standing to obtain affirmative equitable relief (Fischel & Co. v Macy & Co., 20 NY2d 180, 187 [1967]). Here, petitioner's standing to enjoin Jerome from evicting Queens Motor Inn Corporation from the premises is dependent upon the existence of a lease.
Jerome Diamondstein, the head of day-to-day operations of the Queens Motor Inn Corporation and sole owner of Queemo Corporation, consistently testified that there was no lease [*3]in place concerning the motel's right to possess the subject property. Rather, the entities were essentially operated as in the past, i.e., the motel business paid the monthly rent and other associated expenses related to the property without the benefit of a lease. Petitioner places great reliance on the various government documents completed by Queemo Corporation indicating a lessor-lessee relationship between it and Queens Motor Inn Corporation. In the court's view, such reliance to establish a long-term lease is misplaced, as the conduct of the corporate entities is equally consistent with a month-to-month tenancy as it is with a long-term lease, particularly considering that these were family- run businesses. The central distinguishing characteristic of a lease is the surrender of absolute possession and control of property to another party for an agreed upon rental (Feder v Caliguira, 8 NY2d 400 [1960]; Matter of Dodgertown Homeowners Assn, Inc. v City of New York, 235 AD2d 538 [1997]). It is clear that such possession has occurred herein. What is in question, however, is the duration of the tenancy and Queemo Corporation's reference to a lessor-lessee relationship is as consistent with a month-to-month tenancy as it is with a long-term lease arrangement. Further, in order for an agreement, oral or written, to be enforceable as a lease, all of the essential terms must be agreed upon (Matter of Davis v Dinkins, 206 AD2d 365, 366 [1994]), including duration.
Petitioner argues that the part performance of the Queens Motor Inn Corporation, to wit, its payment of large sums for improvement of the premises over the years and payment of real estate taxes, warrants this court to grant relief from the applicable statute of frauds (GOL §5-703). Certainly, acts of part performance may be of such a character as to relieve a party from the production of a writing (cf., Sleeth v Sampson, 237 NY 69, 73 [1923]). The evidence establishes that Queens Motor Inn Corporation paid for a variety of repairs, improvements and taxes on the premises. These acts necessarily must be "unequivocally referable" to the oral agreement (Burns v McCormick, 233 NY 230, 232 [1922]. "An act which admits of explanation without reference to the alleged oral contract or a contract of the same general nature and purpose is not, in general, admitted to constitute a part performance" (Wilson v La Van, 22 NY2d 131, 134 [1968], quoting, Woolley v Stewart, 222 NY 347, 351 [1918]; Onorato v Lupoli, 135 AD2d 693, 694 [1987]). Based upon the evidence adduced, the acts of Queens Motor Inn Corporation are not unequivocally referable to an agreement for a long-term lease to either 2010, the date for the completion of the employment agreement, or to 2012, the date of the last mortgage payment by Queemo Corporation. Decedent, who at one time owned both the property and the motel business, operated the entities in such a manner that the motel business paid the various expenses associated with the property, and respondent, the operating officer of the motel business and the subsequent owner of the property, continued the same business practices. At this juncture, the court finds that the petitioner has not established the right to equitable relief. Accordingly, the motion is denied.
The stay contained in the order dated September 24, 2004 is hereby vacated.
The matter will appear on the court's calendar for a conference on February 4, 2005 at 9:30 a.m.
This is the decision and order of the court.
Dated: January 24 , 2005
[*4]
JOHN B. RIORDAN
Judge of the
Surrogate's Court
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