Three Way Plumbing, Bath & Design Ctr. of Jericho, Inc. v 61 Jericho, Inc.

[*1] Three Way Plumbing, Bath & Design Ctr. of Jericho, Inc. v 61 Jericho, Inc. 2006 NY Slip Op 50395(U) Decided on February 1, 2006 Supreme Court, Nassau County O'Connell, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. As corrected in part through April 11, 2006; it will not be published in the printed Official Reports.

Decided on February 1, 2006
Supreme Court, Nassau County

Three Way Plumbing, Bath & Design Center of Jericho, Inc., Plaintiff(s),

against

61 Jericho, Inc., Defendant(s).



12730/05

Geoffrey J. O'Connell, J.

Defendant 61 Jericho, Inc. applies to the Court for an order dismissing the complaint on the grounds that there is a defense founded upon documentary evidence (CPLR 3211(a)(1) and vacating the lis pendens. Plaintiff Threeway Plumbing, Bath & Design Center of Jericho ("Threeway Plumbing") opposes.

Plaintiff Threeway Plumbing is a commercial tenant that entered into a written lease dated Sept. 29, 2003 with Defendant 61 Jericho, Inc. as Landlord. The lease describes the demised premises as, "The First Floor in the building known as 61 Jericho Turnpike." The lease also provided that, "Tenant shall have the non-exclusive, revocable common or joint use of all Common Areas . . . of the land and building." The term "Common Areas" was broadly defined in Article 27.06 of the lease so as to be apparently inclusive of all the land and improvements located at 61 Jericho Turnpike, Jericho, New York except those leased to other tenants or occupied by the Landlord. Handwritten after Paragraph 19 of Exhibit "B" to the lease was the

following: "Landlord and tenant agree to cooperate with each other and use their best efforts with respect to the use of the parking facility to serve as many customers of the landlord and tenant as possible." [*2]

Central to the issues on this motion is Article 41 of the Lease which is entitled, "Option to Purchase." Actually, Article 41 purports to confer upon the tenant both an "option to purchase" and "a Right of First Refusal." Paragraphs 41.01 and 41.02 deal with the "option to purchase" and provide as follows: " 41.01 Provided Tenant is not otherwise in default of any of the terms of this lease, at the time of exercising the option herein, Tenant shall have the option to purchase the Building in which the Premises are located for the sum of Three Million ($3,000,000.00) Dollars, pursuant to separate contract to be agreed upon between the parties. 41.02 Said option to purchase shall be exercisable only upon Tenant's serving written notice of its exercise thereof upon Landlord no later than 120 days prior to November 30, 2005. The purchase is further conditional upon the Closing taking place on or before Dec. 30, 2005."

Tony Fotou, one of the principals of Plaintiff Threeway, avers that in May of 2005 the Landlord requested that the Tenant execute a "Tenant Estoppel Agreement" that stated, inter alia; "Tenant has no option or right to purchase the property of which the demised premises are a part, or any part thereof." The Tenant refused and instead notified the Landlord by letter dated May 12, 2005 that; "tenant hereby elects to exercise its option to purchase the premises for the sum of $3 million, pursuant to the terms of the lease agreement. Kindly have your attorney prepare a contract of sale . . . ." (Plaintiff's Exhibit "C") The Landlord's attorney responded by letter dated May 18, 2005 that asserted, inter alia, that the option to purchase was unenforceable. Plaintiff Tenant thereafter commenced this action for specific performance.

Defendant Landlord contends that there was no binding option to purchase the premises, but only an unenforceable agreement to agree and relies upon the language of the lease.

Discussion

The issue to be determined is whether the option provision of the lease created a binding contract. An option is essentially a contract offer which is, by its terms, kept open. (Lin Broadcasting v Metromedia, 74

NY2d 54 60 [1989]). Where the contract is an agreement creating an estate or interest in real property, other than a lease for a term not exceeding one year, it must be in writing. (GOL § 5-703(1)). An option agreement,

like any other contract, must be reasonably definite in its material terms for it to be enforceable. (Cobble Hill Nursing Home v Henry and Warren Corp., 74 NY2d 475, 482 (1989). To satisfy the requirements of the Statute of Frauds, the writing must identify the parties to the transaction, express all of the essential terms of the agreement and include a sufficient description of the [*3]property. (Penny v Saxe, 2 AD3d 1076 [3d Dept, 2003]; see, Bright Beginnings Day Care v. Driftwood Day Camp, 16 AD3d 449 [2d Dept, 2005]). However, the requirement of definiteness is not to be applied in such a heavy-handed manner as to defeat the reasonable expectations of the parties. (Cobble Hill Nursing Home v Henry and Warren Corp., supra at 74 NY2d 483; Marder's Nurseries v Hopping, 171 AD2d 63, 68 [2d Dept, 1991]).

Defendant argues that the option clause is not an enforceable agreement because it fails to address many essential terms including the amount of the deposit, the terms of payment, the quality of the title, risk of loss pending closing of title, a closing date and a description of the premises. Defendant also contends that since the Option Clause contemplates a "separate contract" of sale, it is an unenforceable "agreement to agree." The mere fact that the parties contemplated a more complete writing does not impair the enforcement of the agreement provided it embodies all the essential terms. (160 Chambers St. Realty Corp. v Register of the City of New York, 226 AD2d 606 [1st Dept, 1996]; see, Sabetfard v Djavaheri, 18 AD3d 640 [2d Dept, 2005]).

As Defendant acknowledges, few, if any, of the omissions about which the complaint is made are necessarily fatal to the enforcement of the agreement. (O'Brien v West, 199 Ad2d 369, 371 [2d Dept, 1993]; Dahm v Miele, 136 AD2d 586, 587 [2d Dept, 1988]). Inasmuch as the option is not, according to its terms, contingent on the obtaining of any mortgage financing, the omission of any reference to a mortgage has no significance. (F & S Pharmacy v Dandra Beauty Corp., 302 AD2d 204, 205 [1st Dept, 2003]; 160 Chambers St. Realty Corp. v Register of the City of New York, 226 AD2d 606, 607 [1st Dept, 1996]). The failure to specify a closing date may be cured by the law presuming that the closing will take place within a reasonable time. (Dahm v Miele, supra at 587). Such a presumption is particularly apt in this case where the option

clause specifies an outside date for the closing of title. Similarly the failure to specify the quality of title is curable because every purchaser is entitled to marketable title and such a contract provision may be inferred.

(O'Brien v West, supra at 371; see, Vought v Williams, 120 NY 253 (1890)). The risk of loss pending closing of title and the effect of existing tenancies are matters of law.

A closer issue is posed by Defendant's claim that the property subject to the option is not identified with sufficient specificity. To satisfy the Statute of Frauds the property need only be described with reasonable certainty. (Maccioni v Guzman, 145 AD2d 415 [2d Dept, 1988]). If the property is sufficiently identified, then extrinsic evidence is admissible to apply, rather than vary, the agreement. (Waring v Ayres, 40 NY 357, 361 (1869)). The sufficiency of the description may depend upon its context. An isolated reference to "the house" has been held too indefinite (Sieger v Prehay, 16 AD3d 575 [2d Dept, 2005]), while the description "my property house and land" in a written option was held sufficient. (Hackal v Adler, 234 AD2d 341 [2d Dept, 1996]). A description of the property as "approximately 84 acres" was held insufficient where its representation on a hand-drawn map contained 95.9 acres (J&J Builders & Developers v D'Alesio & Sons, 158 AD2d 674 [2d Dept, 1990]; see also, Cohen v Swenson, 140 AD2d 407 [2d Dept, 1988]), but an option to purchase a five acre parcel located in two hundred fifty acres owned by [*4]the seller was held a sufficient description to permit extrinsic evidence to identify the particular five acre parcel with exactness. (Frank v Katz, 145 AD2d 597 [2d Dept, 1988], see also, Wells v Ronning, 269 AD2d 690 [3d Dept, 2000]).

The Court finds that, reading the lease as a whole, the subject property is identified with reasonable certainty. The Landlord's very name helps identify it. Thus, the lease fails to conclusively establish the Statute of Frauds defense. (See, Arnav Retirement v Brown, 96 NY2d 300, 304 (2001)).

Defendant argues that,u even if there is no single missing term that renders the option unenforceable, the omission of so many material terms establishes that the parties did not intend the option clause to be a complete and binding agreement citing O'Brien v West (199 Ad2d 369, 371 [2d Dept, 1993]). Plaintiff, however, offers documentary evidence that demonstrates that the option clause was the product of bargaining. Nothing within its four corners suggests that the parties did not consider it complete and binding other than the reference to a "separate contract" and, as noted above, that alone does not render the Option Clause unenforceable.

Defendant's motion is denied.

It is, SO ORDERED.

Dated: _________________________________

HON. GEOFFREY J. O'CONNELL, J.S.C.