102 Elmont Realty Corp. v Berikal, Inc.
Annotate this CaseDecided on March 29, 2006
District Court of Nassau County, First District
102 Elmont Realty Corp., Petitioner(s)
against
Berikal, Inc., Respondent(s)
SP 681/05
Scott Fairgrieve, J.
The parties previously entered into a stipulation of settlement on June 6, 2005 which basically obligated respondent to construct a canopy and install four new Wayne three product gasoline pumps at 653 Hempstead Turnpike, Elmont, New York. Construction had to be completed by November 23, 2005. Subsequently, petitioner obtained a judgment of possession and warrant based upon respondent's default in complying with the stipulation of settlement. Respondent moved by order to show cause, dated December 27, 2005, to vacate the judgment of possession and warrant. This Court denied respondent's order to show cause in its decision dated February 1, 2006; see, 102 Elmont Realty Corp. v. Berikal, 10 Misc 3d 1078, 2006 WL 236336, 2006 NY Slip Op 50113.
Respondent has now brought another order to show cause dated March 1, 2006 which seeks to vacate the said order dated February 1, 2006 and the said stipulation of settlement because: ". . . on the grounds of newly discovered evidence which demonstrates that the petitioner fraudulently misrepresented to the respondent in both the lease and in the Stipulation of Settlement that there was filed at the time of the execution of the lease on or about December 3, 2003 all the requisite permits, licenses and certificates for the operation of a gasoline refilling station which were valid through 2005, when in [*2]fact there was no gasoline service station permit filed at any time for the subject gas station granting the station Gasoline Service Station District status such, that pursuant to Article XXXIII, Section 346 of the Building Zone Ordinance of the Town of Hempstead, the station was illegally operated, that by reason of the illegal status of the station, the requirements of the Stipulation of Settlement, obligating the respondent to obtain permits from the Building Department of Hempstead for the installation of gas pumps and a canopy at the station, were impossible to perform as barred by statute, that the said Stipulation was defective as based on said fraudulent representation or on the grounds of mutual mistake by the parties as to a material element of the stipulation that the Gasoline Service Station permit had been obtained and the station was legally operated such that the required permits form [sic] the Buildings Department for the installation and alterations at the station was possible to obtain within the six month period required by the Stipulation."
Respondent also seeks to vacate the judgment of possession and warrant of eviction which is based upon the violation of the stipulation of settlement which allegedly was procured by fraud and misrepresentation or mutual error.
Respondent further seeks to rescind the lease dated December 3, 2003 between petitioner and respondent due to misrepresentation and a judgment for a return of all deposit monies, rental payments and for monies spent by respondent to improve the property.
Respondent relies upon paragraphs "2" and "52" of the lease which state as follows to accomplish the foregoing requested relief: 2.The demised premises may be used only as a gasoline service station and convenience store. The operation of the gasoline refilling station maintains all necessary governmental permits and licenses and certificates valid until 2005.52.Throughout the term of this lease, TENANT shall continue to operate a gasoline service station upon the demised premises and cause the gasoline service station permit, permits for all tanks and the certificate of occupancy or certificate of existing use to remain in full force and effect. The provisions of this paragraph are material obligations of TENANT under this lease.
Respondent claims that these lease provisions created a representation that a gasoline service station permit was in existence. Respondent states, "it executed the stipulation of settlement which contained a material term the requirement of the respondent to obtain permits for installation and alteration in violation of the law which was impossible to perform, illegal and void."
Virinder Kalra writes that he checked the records of the Town of Hempstead on February 10, 2006 and the subject premises were not included in the Gasoline Service Station District and that [*3]the use of the premises terminated on January 1, 2005. Respondent argues strenuously that petitioner failed to submit any application to the Town of Hempstead to continue the use as a gasoline station. Thus, operation of the property as a gasoline station became illegal on and after January 1, 2005. Based upon the foregoing, the respondent attacks the stipulation of settlement because petitioner "was aware that the subject station was not included in the Gasoline Service Station District while the respondent was relying on the petitioner's representations in paragraph "2" of the lease that all necessary governmental permits and licenses of the maintenance of the gas station had been procured."
Nejdet Yetim, an officer of petitioner, argues in his affidavit, dated March 10, 2005, that there was no violation of the lease based upon the wording of paragraph "2" of the lease. Paragraphs "21" - "26" of Mr. Yetim's affidavit set forth petitioner's interpretation of events: 21.That when the lease was signed, December of 2003, the premises had a valid non conforming use for a gas station, pursuant to Section 346(C) of the Building Zone Ordinance of the Town of Huntington [sic]. See Building Zone Ordinance of the Town of Huntington [sic], current as of March 9, 2004, annexed to respondent's moving papers as respondent's Exhibit "I".22.That in 2003, the Building Zone Ordinance, Section 346(C) provided that the non conforming use would expire on January 1, 2005.23.That because of the non conforming use that existed in 2003 no GSS permit was required, until the non conforming use expired as of January 1, 2005. See Building Zone Ordinance, Section 346.24.That because the non conforming use was set to expire as of January 1, 2005, the representation in the lease specifically stated that the station only had the necessary permits until 2005.25.That the representation made in the lease as to the status of the permits of the station was accurate. The respondent knew that as of 2005 the station would need new permits. It says so in paragraph 2 of the lease. The respondent also knew in June of 2005, when a stipulation of settlement was signed that the respondent had not obtained new permits. How can the respondent now claim a that he did not know this?26.That no representation was made that the station had a GSS permit anywhere in the lease. As is apparent from a review of the lease, the respondent's claim that such a representation was made in the lease is a lie.
Petitioner further points out that the lease required respondent to obtain all necessary permits to keep the premises operating as a gas station. Paragraphs "14" and "52" (quoted above) are cited [*4]for the proposition that respondent had an affirmative duty to apply to the Town of Hempstead. Paragraph "14" states: 14.TENANT at it's sole expense, shall comply with all laws, orders, rules and regulations of Federal, State, and municipal authorities, and with any direction of any public officer, pursuant to law, which shall impose any duty upon LANDLORD or TENANT with respect to the leased property. TENANT, at it's sole expense, shall obtain all licenses or permits which may be required for the conduct of it's business within the terms of this lease, or for the making of repairs, alterations, improvements, or additions and the LANDLORD, where necessary, will join with TENANT in applying for all such permits or licenses.
Finally, petitioner states that respondent never attempted to perform under the terms of the stipulation of settlement.
DECISION
Based upon a thorough review of all the papers and exhibits, this Court declines to vacate the judgment of possession, the warrant, the stipulation of settlement and the lease.
The evidence demonstrates that respondent continuously operated a gasoline station from 2003 until the present. The language in paragraph "2" of the lease is not worded in the most descriptive matter indicating that the gasoline station was a non conforming use under the Town of Hempstead Code. However, paragraph "2" does indicate in clear language that the permitted use as a gasoline station was effective until 2005. The lease places the affirmative duty upon respondent to maintain all zoning permits to operate the gasoline station. There is no evidence presented to this Court that respondent examined the records of the Town of Hempstead until February 10, 2006, after this Court had ruled that respondent violated the terms of the stipulation of settlement. The facts demonstrate that respondent timely failed to take any action to examine the records of the Town and take the necessary steps to keep the property in conformity with the Town Code after the non conforming use expired as of January 1, 2005. There is no evidence that petitioner made any representations concerning the property other than what appears in the lease. The Court is at a loss to understand the total lack of diligence on the part of respondent to take the necessary action to maintain the existing use especially when the lease warns that the permitted use was only effective until 2005.
Respondent knowingly entered into the stipulation of settlement, but failed to comply with same as this Court ruled in its prior decision. There is no evidence presented that any discussions or misrepresentations were made by petitioner concerning the permitted zoning use of the property when the parties negotiated the stipulation of settlement. This Court notes that respondent has been represented by counsel at all times. [*5]
Furthermore, there is no evidence of fraud or mutual mistake between the parties regarding the lease or the stipulation of settlement.
There exists no confidential relationship between the parties and there was nothing demonstrated to prevent respondent from checking the public records of the Town of Hempstead concerning the property. See, Alpha GMBH & Co. Schiffsbesitz KG v. BIP Industries Co., 25 AD3d 344, 807 NYS2d 73 (1st Dep't [2006]), wherein the court rejected the defense of fraudulent concealment because: However, without deciding, that the defense is not barred by the terms of the guaranty, we find it fails on the merits. The parties, businesses on opposite sides of a transaction, and each represented by counsel, were not in a confidential or fiduciary relationship, and the allegedly concealed information, plaintiff's insolvency and dissolution, were matters of public record that defendant could have discovered by the exercise of ordinary diligence (see National Union Fire Ins. Co. v. Red Apple Group, 273 AD2d 140, 141, 710 NYS2d 48 [2000]; Ferer & Sons v. Chase Manhattan Bank, 731 F2d 112, 123 [2d Cir. 1984]; WestRM-West Risk Mkts. v. Lumbermens Mut. Cas. Co., 314 F Supp 2d 229, 239 [SDNY 2004]). In dismissing the defense, the motion court did not improperly decide an issue of fact against defendant, but merely applied law concerning fraudulent concealment and public records, NYAD 1st Dept., 2006.
In National Union Fire Insurance Company of Pittsburgh, P.A. v. Red Apple Group, Inc., 273 AD2d 140, 710 NYS2d 48 (1st Dep't [2000]), the court rejected claims of fraudulent concealment concerning matters which were of public records:
Absent a confidential or fiduciary relationship, failure to disclose cannot be the basis of a fraud claim (see, Auchincloss v. Allen, 211 AD2d 417, 621 NYS2d 305; Levine v. Yokell, 245 AD2d 138, 665 NYS2d 962). In addition, as the IAS court also held, while plaintiff's theory of fraudulent concealment presupposes that it had notice of some manner of the dispute between defendants and their landlord, nowhere in its submissions does it assert that it made any inquiry about the nature or extent thereof. The existence of the litigation that plaintiff alleges defendants should have disclosed was a matter of public record that plaintiff could have been discovered by the exercise of ordinary diligence (see, Auchincloss v. Allen, id.). NYAD 1 Dept, 2000. National Union Fire Ins. Co. of Pittsburgh, P.A. v. Red Apple Group, Inc., 273 AD2d 140, 710 NYS2d 48, 2000 NY Slip Op 06389.
CONCLUSION
The order to show cause is denied. Petitioner may proceed to evict respondent forthwith without stay. [*6]
So Ordered:
DISTRICT COURT JUDGE
Dated: March 29, 2006
CC:Leonard Eli Bronner, Esq.
William R. Garbarino, Esq.
SF/mp
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