Four Cees Jewelry Inc. v 1537 Realty LLC
Annotate this CaseDecided on December 28, 2005
Supreme Court, New York County
Four Cees Jewelry Inc., Filigio, Inc. and Daryan Enterprises, Inc., Plaintiffs,
against
1537 Realty LLC as successor in interest to 1537 Associates and Kamber Management Company, LLC, Defendants.
101780/05
Rolando T. Acosta, J.
Plaintiffs Four Cees Jewelry Inc. ("Four Cees"), Filigio Inc. ("Filigio"), and Daryan Enterprises, Inc. ("Daryan") sue defendants 1537 Realty LLC as successor in interest to 1537 associates ("1537") and Kamber Management Company LLC ("Kamber"), the managing agent for Daryan, for monetary damages allegedly suffered as a result of defendants wrongfully disconnecting electricity at plaintiffs' premises. On or about January 15, 1998 Daryan and 1537entered into a 10 year commercial lease for the entire 12th floor of 15 West 37th Street, New York, New York. The lease provided, inter alia, for Four Cees' quiet enjoyment of the premises and gave defendants, as landlord, the right to disconnect electrical service to the premises both without notice to the tenant, and without incurring any liability for any damages or loss sustained as a result of such action should the tenant (in this case plaintiffs) fail to pay its electric bills. [*2]
According to Daryan, which is in the business of jewelry design and manufacturing, defendant 1537 shut off the electrical power to the subject premises on November 23, 2004 due to a dispute over rent payments, and did not restore power for over 24 hours. The consequence of such action by 1537, according to Daryan, was that a fatal interruption occurred to a jewelry product fabrication process which caused total loss damage to the materials involved, namely, Daryan's customer's diamonds valued at $75,000.00. Moreover, Daryan alleges that entry to the premises by Daryan's officers, directors, and employees was denied by 1537's security personnel from November 24, 2004 until November 29, 2004. Daryan employees were later permitted to enter the premises for the limited purpose of determining the extent of the damages allegedly caused by defendants and to arrange for vacatur of the premises. Thus, the plaintiffs assert that apart from the damages to its customers, Daryan as well as Four Cees and Filigio, both who shared the premises with Daryan, were effectively out of business as of November 24, 2004. All plaintiffs claim that customer relations and their credibility were severely damaged; they also claim to have lost significant business opportunities.
Defendant's respond to plaintiffs' allegations by their pre-answer motion to dismiss the complaint pursuant to CPLR § 3211 (a)(1),(3),(5), and (7) or in the alternative, dismissing each cause of action individually on grounds that, inter alia, there is a defense based upon documentary evidence and for legal insufficiency.
In a motion to dismiss based on documentary evidence pursuant to CPLR § 3211(a)(1), the Court will construe every fact alleged by plaintiff as true. Fern v. International Business Machines Corp., 204 AD2d 907 (3rd Dept. 1994). The motion will be granted only where the documentary evidence unequivocally contradicts plaintiff's factual allegations and conclusively establishes a defense as a matter of law. Goshen v. Mutual Life Ins. Co. of New York, 98 NY2d 314 (2002); 511 West 232nd Owners Corp. v. Jennifer Realty Co., 98 NY2d 144 (2002); Landenburg Thalmann & Co., Inc. v. Tim's Amusements, Inc., 275 AD2d 243 (1st Dept. 2000).
In the instant action the documentary evidence presented by defendants, namely, the lease executed by Daryan and 1537, conclusively establishes a defense as a matter of law against Filigio and Four Cees' claim against defendants. The lease was entered into by Daryan and 1537, and neither Filigio nor Four Cees were a party to the agreement. Thus, there is no privity of contract between defendants and Filigio and Four Cees. Consequently, neither Filigio nor Four Cees have a cause of action against defendants for breach of the contract to which they were not signatories. See Decker v. Chuang, 185 AD2d 613 (4th Dept. 1992) (no privity of [*3]contract existed where petitioner was not a party to the lease between the landlord and tenant). Filigio and Four Cees provide this Court with no viable legal theory which would render defendants liable to them as a result defendants' alleged breach of a contract in which 1537 and Daryan were the only parties. Rather, Filigio and Four Cees merely state that they were damaged by defendants' conduct without any specificity or basis of support.
Nor do Filigio or Four Cees state a cause of action against defendants even if the Court were to assume that they were parties to the lease. In evaluating a motion to dismiss for failure to state a claim under CPLR § 3211(a)(7), the Court must accept the allegations of the complaint as true, and accord plaintiff the benefit of every possible favorable inference and determine only whether the facts as alleged fit within a cognizable legal theory. CBS Corp. v. Dumsday, 268 AD2d 350 (1st Dept. 2000); see also Polonetsky v. Better Homes Depot, Inc., 97 NY2d 46 (2001) (motion must be denied if "from [the] four corners [of the pleading] factual allegations are discerned which taken together manifest any cause of action cognizable at law"). Both Filigio and Four Cees have failed to meet this standard. Filigio and Four Cees merely assert conclusorily that they were damaged by way of injured customer relations and ruined perceived credibility, and that they have lost significant business opportunities without specifying or providing any evidence of these alleged damages. Such "vague and conclusory allegations are insufficient to sustain a breach of contract cause of action." Gordon v. Dino Laurentiis Corp., 141 AD2d 435, 436 (1st Dept. 1988). Moreover, although the facts pleaded in a motion to dismiss are presumed to be true and are afforded every possible favorable inference, allegations consisting of bare legal conclusions, as well as factual claims that are contradicted by documentary evidence, are not entitled to such consideration. CIBC Bank & Trust Co. (Cayman) Ltd. v. Credit Lyonnais, 270 AD2d 138 (1st Dept. 2000) (internal citations omitted).
Filigio and Four Cees have also failed to demonstrate that they have the legal capacity to maintain an action in a New York Court. Pursuant to CPLR § 3211(a)(3), a defendant's motion to dismiss will be granted when the party asserting the claim lacks the legal capacity to sue. A foreign corporation lacks the capacity to maintain an action or special proceeding in New York State if that corporation is doing business in the State without authority. BCL § 1312(a). In their unverified complaint, Filigio and Four Cees have failed to set forth any proof in the record that they are foreign corporations authorized to do business in New York. Pergament Home Centers, Inc. v. Net Realty Holding Trust, 171 AD2d 736 (2nd Dept. 1991). The affirmation by plaintiffs' attorney that Filigio and Four Cees are New York corporations as well as the affidavit of the president of Filigio and [*4]Four Cees that the companies are incorporated in New York are insufficient to rebut documentary evidence provided by defendants that neither Filigio or Four Cees are domestic corporations or authorized to do business in New York, and thus insufficient to withstand defendants' CPLR § 3211(a)(3) motion to dismiss. See Cron v. Hargro Fabrics, Inc., 91 NY2d 362, 366 (Plaintiff's affidavit submitted in opposition to motion to dismiss is limited to the sole purpose of remedying defects in the pleading and preserve inartfully but nonetheless meritorious claims).
Daryan Enterprises, the party that executed the lease agreement with defendants has also failed to withstand defendants' motion to dismiss pursuant to CPLR § 3211(a)(1). Paragraph 19 of the lease between the parties provides, in pertinent part, that "[i]n the event that such [electrical bills] are not paid within five (5) days after the same are rendered, Landlord, may, without further notice, discontinue the service of electric current to Demised Premise without releasing Tenant from any liability under this lease and without Landlord or its agent incurring any liability for any damage or loss sustained by Tenant by such discontinuance of service." Paragraph 19 notwithstanding, Daryan argues that although they entered into the lease and were bound by its provisions, the actions on the part of 1537 in disconnecting the electricity was a breach of the lease agreement in that defendants breached the covenant of quiet enjoyment. Daryan's argument is without merit.
Although the lease provided for Daryan's quiet enjoyment, a condition precedent to this covenant was Daryan's obligation to fully perform all of its obligations under the lease. Silken v. Farrell, 281 A.D. 718 (2nd Dept. 1952). Daryan, as the tenant under the lease, had an obligation to pay its electrical bills pursuant to the terms of the lease. The lease between the parties expressly provided that failure by Daryan to fulfill this condition precedent gave the landlord the right to disconnect the electricity without any further notice to Daryan. See Dave Herstein Co. v. Columbia Pictures Corp., 4 NY2d 117 (1958) ("The cases make it quite clear that unless there is an eviction, actual or constructive, there is no breach of covenant of quiet enjoyment; and further, to maintain action on the covenant, plaintiff must have performed all covenants which are conditions precedent to his right to insist upon the covenant, unless these conditions have been waived."). Here, there is no evidence that the condition precedent to pay the electrical bills within 5 days after they are rendered by the landlord was waived. Indeed, Daryan cannot on the one hand negotiate a lease with 1537 which provides for 1537's unilateral right to disconnect electricity and then on the other hand claim a breach of the covenant of quiet enjoyment upon 1537's exercise of that same right. Therefore, Daryan, by failing to provide the Court with evidence that it fulfilled all [*5]its obligations under the lease, particularly, prompt payment of its electrical bill, is precluded from maintaining an action for breach of the covenant of quiet enjoyment.
The Court is mindful of the fact that parties should be allowed to chart their own conduct and that the courts should enforce contract terms in the interest of not undermining the "stability of contract obligations". First National Stores Inc. v. Yellowstone Shopping Center Inc., 21 NY2d 630, 638 (1968). Thus, once a landlord first makes a demand for rent, the landlord is permitted to exercise a lease provision permitting reentry when there is a breach by the tenant as long as the landlord reenters peacefully. Jovana Spaghetti House v. Heritage Co. of Massena, 189 AD2d 1041 (3rd Dept. 1993). However, while agreements between parties will be given deference, the Court is nonetheless weary when, as in the instant case, parties contract to engage in conduct which may lead to the breach of peace. RPAPL § 713(10): See also Fultz v. Munro, 95 N.E. 23 (1911) ( forcible entry statutes were designed to prevent landlords from taking the law into their own hands and evicting tenants, thereby possibly disturbing the peace without judicial intervention). Landlords would be better served to seek judicial intervention to protect their contractual rights against uncooperative tenants rather than engaging in self-help.
Finally, Daryan Enterprises, like Filigio and Four Cees, has also failed to allege any specific damages resulting from 1537's conduct. Instead, Daryan merely states conclusorily allegations that defendants' actions resulted in damages to its unknown customers. Moreover, Daryan fails to prove who these alleged customers were, what specific jewelry was damaged, or how it was damaged. Likewise, Daryan's bare allegations that it was damaged in terms of injured customer relations and ruined perceived credibility, and that it has lost significant business opportunities without more are too vague to maintain a cause of action. Gordon v. Dino Laurentiis Corp., supra, 141 AD2d 435, 436 (1st Dept. 1988). Accordingly, it is hereby
ORDERED that the motion to dismiss is GRANTED and the complaint is dismissed with costs and disbursements to defendant as taxed by the Clerk of the Court; and it is further
ORDERED that the Clerk is directed to enter judgment accordingly.
This Constitutes the decision and judgment of the court.
Dated: December 28, 2005 ENTER
__________________________[*6] Rolando T. Acosta, J.S.C.
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