R.U.M.C. Realty Corp. v JCF Assoc., LLC

[*1] R.U.M.C. Realty Corp. v JCF Assoc., LLC 2006 NY Slip Op 52426(U) [14 Misc 3d 1206(A)] Decided on December 15, 2006 Supreme Court, Kings County Rivera, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on December 15, 2006
Supreme Court, Kings County

R.U.M.C. Realty Corp., Plaintiffs,

against

JCF Associates, LLC, Defendants,



7336/04

Francois A. Rivera, J.

Plaintiff, R.U.M.C. Realty Corp. (hereinafter RUMC), moves for an order directing that defendant JCF ASSOCIATES, LLC (hereinafter JCF) serve a more detailed bill of particulars, submit to a deposition; and permit access to the subject premise by RUMC's appraiser. RUMC also seeks an order imposing sanctions and striking JCF's first and third affirmative defense. JCF does not oppose the striking of their first and third affirmative defenses.

JCF cross moves for sanctions against RUMC based on the alleged frivolous nature of the instant discovery motion, and for an order dismissing the complaint and granting summary judgment on their counterclaim pursuant to CPLR §3212.

On March 5, 2004, RUMC commenced this action by filing a summons with notice. By notice of appearance filed March 19, 2004, JCF demanded a copy of the complaint. RUMC complied and provided JCF with a verified complaint. The first cause of action seeks punitive damages for defendant's alleged interference with plaintiff's right to purchase a building. The second cause of action seeks damages for defendant's disposal of plaintiff's property from the building.

By answer dated October 12, 2005, JCF asserted seven affirmative defenses and one counterclaim. JCF's counterclaim alleges plaintiff owes rent from June 2003 through January 2004. JCF also alleges damages from fines imposed by the Environmental Control Board caused by RUMC and from the cost of removing RUMC's abandoned property from the premises. By reply dated October 14, 2005, RUMC acknowledges that they have withheld rent payments to JCF

The Motion Papers

RUMC's motion papers consist of their attorney's affirmation and five annexed exhibits. Exhibit A is the underlying complaint, JCF's answer and RUMC's reply to the counterclaim. Exhibit B is RUMC's demand for a bill of particulars. Exhibit C is JCF's bill of particulars. Exhibit D is a copy of a published legal decision. Exhibit E is a prior decision and order of this court on the instant case. Exhibit F is a preliminary conference order. Exhibit G are three facsimile communications from RUMC's counsel to JCF's counsel.

JCF responded to the motion by a cross-motion. The cross motion papers consist of their attorney's affirmation, their manager's affidavit and twenty seven exhibits. Exhibit A is the pleadings. Exhibit B is a recorded deed showing a transfer between Robson Sales Corporation (hereinafter Robson) and JCF. Exhibit C is an assignment of leases and claims by the estate of [*2]Claire Slomowitz, Tag Realty Corporation and Robson to JCF. Exhibit D is an amendment of the contract of sale between the estate of Claire Slomowitz and Robson as seller and Jim Tampakis, Chris Georgoulis and Frank Martino as purchaser. Exhibit E is correspondence to JCF's counsel. Exhibit G is a lease agreement between Robson as landlord and RUMC as tenant. Exhibit H is correspondence from RUMC's counsel to Robson. Exhibit I is correspondence from JCF's managing agent to the Environmental Control Board. Exhibits J, N and O, T and U are facsimile communication from RUMC's counsel to JCF's counsel. Exhibit K and W are facsimile communication from RUMC's counsel to Robson's counsel. Exhibit L is a surrender agreement between Robson and RUMC. Exhibit M is eight photographs purporting to show the condition of the premise in question. Exhibit P are copies of two checks showing payment of twenty thousand dollars from the IOLA account of Mr. Schrag and five thousand dollars from the estate of Claire Slomowitz to RUMC's counsel. Exhibit Q appears to be a spread sheet. Exhibit R and S are a number of invoices billed to JCF.Exhibit V is a letter from JCF's counsel to RUMC's counsel. Exhibit X is RUMC's demand for a bill of particulars. Exhibit Y is RUMC's notice for discovery and inspection. Exhibit Z is JCF's response to exhibit Y. Exhibit AA is the identical preliminary conference order annexed as exhibit F to RUMC's motion.

RUMC submitted an answer in opposition to the cross motion. The answer consisted of seven annexed exhibits and two sworn statement by Robert Usdin. The first is his affidavit in his capacity as an officer and director of RUMC. The second is his affirmation in his capacity as counsel to RUMC. Exhibit A and B are copies of RUMC's lease with Robson. Both copies are identical and contain twenty seven paragraphs. Exhibit A includes a rider containing four paragraphs numbered twenty nine to thirty two and bears signatures on behalf of Robson and RUMC. Exhibit B includes a rider containing two paragraphs numbered thirty four and thirty five and bears undated signatures on behalf of Robson and RUMC.

Exhibit C is a copy of a Real Property Transfer tax Return for the subject premise. Exhibit D is a New York State Tax form. Exhibit E is a letter from JCF's counsel to Robson's counsel. Exhibit F is a surrender agreement between RUMC and Robson and is identical to the aforementioned exhibit L in JCF's cross motion papers. Exhibit G are copies of a number of photographs. JCF's replied to RUMC's answer in opposition by an affirmation of their counsel.

UNDISPUTED FACTS

The instant motion and cross motion establish the following undisputed facts. Attorney Robert Usdin is an officer and director of RUMC as well as RUMC's counsel of record in the underlying action. RUMC, a corporation organized and existing under the laws of the State of New York, was the tenant in a commercial building located at 181-85 Van Brunt Street, Brooklyn, New York (hereinafter the subject premise). The premises were used as a commercial warehouse. Paragraph 35 of a rider to RUMC's lease contains a "right of first refusal" clause to purchase the premises in the event the landlord sought to sell the property. On September 12, 2003, JCF purchased the property from Robson, the owner and landlord. JCF had a copy of the lease containing the provision before taking title to the property, regardless. RUMC relies on these alleged facts to support its first cause of action against JCF for tortious interference with contract.

On March 3, 2006, plaintiff demanded a bill of particulars. On March 22, 2003, defendant produced the bill of particulars. RUMC, in the instant motion, alleges that the bill of [*3]particulars is deficient in that defendant should have moved for a protective order for those items it claims are not being provided in the bill of particulars. JCF claims that its bill of particulars is sufficient and has also disclosed and provided all relevant documentation in response to plaintiff's demand for discovery and inspection.

DISCUSSION OF THE MOTION

Pursuant to CPLR §3041, any party may require any other party to give a bill of particulars of his claim, or a copy of the items of the account alleged in a pleading. The purpose of a bill of particulars is to amplify the pleading, limit the proof and prevent surprise at the trial (State of New York v. Horsemen's Benevolent and Protective Ass'n, 34 AD2d 769 [1st Dept. 1970]). It enables adverse parties to get a more detailed picture of the claim or defense confronting them.

Technically, the bill cannot be used to obtain evidence (see Yardarm Club Hotel, Inc. v Morgan, 22 A?D2d 700 [2nd Dept. 1964]). The party may not use a demand for a bill of particulars as a means for disclosure of evidence because disclosure of evidentiary detail is not the office of a bill of particulars (State of New York v. Horsemen's Benevolent and Protective Ass'n, supra). Courts may be liberal about which device a party uses to obtain the information they need and may treat a bill of particulars as a discovery device. Here, however, defendant responded both to plaintiff's demand for a bill of particulars and a demand for discovery and inspection.

The court finds that the defendant's production of all relevant documents in response to plaintiff's demand for discovery and inspection, along with its bill of particulars served on the plaintiff, is sufficient.

JCF does not dispute that it is properly subject to an examination before trial. Rather, they contend that pursuant to the terms of the preliminary conference order, they were to be deposed by April 18, 2006 and the instant motion was prematurely brought on March 30, 2006. They contend that the motion is therefore frivolous.

Pursuant to the Rules of the Chief Administrator of the Courts Part 130 as set forth in 22 NYCRR 130.1.1, the court may award to any party or attorney in a civil matter costs in the form of reimbursement for actual expenses reasonably incurred and reasonable attorney fees, resulting from frivolous conduct. For the purpose of this Part, conduct is frivolous if: (1) it is completely without merit in law and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law; (2) it is undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another; or (3) it asserts material factual statements that are false.

The court find RUMC's discovery motion may have been premature but does not constitute frivolous conduct. Sanctions are therefore denied and JCF is directed to submit to an examination before trial within thirty days of the entering of this decision.

Plaintiff moves for permission to gain access to the subject premises to conduct an appraisal. CPLR §2214(a), states that a notice of motion shall specify the supporting papers upon which the motion is based, the relief demanded, and the grounds thereof. Plaintiff does not provide any legal authority for the relief requested. Plaintiff's motion for access to the premises is therefore denied.

[*4]DISCUSSION OF THE CROSS-MOTION

It is well settled in New York that a prevailing party may not recover attorney's fees from a losing party except where authorized by statute, agreement, or court rule (U.S. Underwriters Ins. Co v. City Club Hotel, LLC, 3 NY3d 592 at 597 [2004]. Here the plaintiff has not prevailed and has offered no other basis for an awarding of attorney's fees or costs. RUMC's motion for attorney's fees is denied. RUMC's motion to strike JCF's first and third affirmative defense is unopposed and is therefore granted.

Defendant cross moves, pursuant to CPLR§ 3212 for summary judgment, dismissing plaintiff's complaint. It is well settled that a party moving for summary judgment must make a prima facie showing that it is entitled to judgment as a matter of law (Zarr v. Riccio, 180 AD2d 734 [2nd Dept. 1992]). Once a showing has been made, the burden shifts to the party opposing the motion to produce evidentiary proof, in admissible form, sufficient to establish the existence of material issues of fact which require a trial of the action (Romano v. St. Vincent's Medical Center of Richmond, 178 AD2d 467 [2nd Dept. 1991]).

JCF alleges that they are entitled to summary judgment on the first cause of action because they were unaware of the plaintiff's "right of refusal" stated in a rider to the lease when they signed the contract of sale with Robson. They further contend that based on their lack of knowledge, they could not possess the requisite intent to procure Robson's breach (Gluckman v. Gillespie, 209 AD 48 [1st Dept. 1924]).

Tortious interference with contract requires the existence of a valid contract between the plaintiff and a third party, defendant's knowledge of that contract, defendant's intentional procurement of the third-party's breach of the contract without justification, actual breach of the contract, and damages resulting therefrom (Lama Holding Corp. v. Smith Barney Inc., 88 NY2d 413, 424 [1986]).

Here the contract in question is the lease agreement between Robson and RUMC which contained the provision giving RUMC a right of first refusal. The general rule is that "a right of first refusal or preemptive rightas distinguished from an optiondoes not 'give its holder the power to compel an unwilling owner to sell; it merely requires the owner, when and if he decides to sell, to offer the property first to the party holding the preemptive right so that he may meet a third-party offer or buy the property at some other price set by a previously stipulated method' "(Yudell Trust I v. API Westchester Associates, 227 AD2d 471 [2nd Dept 1996]) citing LIN Broadcasting Corp. v. Metromedia, Inc., 74 NY2d 54, 56. However, this does not compel the owner to sell the property as the owner may revoke the offer prior to acceptance (Yudell Trust I v. API Westchester Associates, supra, citing LIN Broadcasting Corp. v Metromedia, Inc., supra). Moreover, the right of first refusal may be extinguished where the offer is declined by the holder (see, McPeady & Co., v. Chestnut St. Props., 179 AD2d 915 [3rd Dept 1992] or where the third-party offer is not matched (see, Story v. Wood, 166 AD2d 124 [3rd Dept 1991]).

JCF admits that before signing the contract, they noticed there was a reference to a rider in the lease. They claim that they were informed that no rider existed. They do admit, however, that they became aware of the plaintiff's claim before they closed title on the purchase of the subject property.

JCF contends that RUMC cannot establish that there was a breach of the rider provision because RUMC settled its claim with Robson, rendering proof of an alleged breach impossible. This argument, while couched in terms of problems in plaintiff's proof, encompasses a broader [*5]basis for consideration.

The facts and circumstances surrounding RUMC's settlement with Robson may indeed extinguish the very rider provision relied upon by RUMC to support its first cause of action. Does the right of first refusal exist independent of the lease agreement? If not, does the lease contain language which limits the right? Does the right survive termination of the lease? What do the terms of settlement between RUMC and Robson say regarding the right?

JCF's motion papers contains as exhibit G the lease agreement between RUMC and Robson, without the salient rider provision. It also contains as exhibit L the surrender agreement between RUMC and Robson signed by RUMC..

RUMC attaches as exhibit A and B in its opposition papers to JCF's cross motion, two copies of its lease with Robson. Both copies are identical and contain twenty seven paragraphs. The first copy includes a rider containing four paragraphs numbered twenty nine to thirty two and bears signatures on behalf of Robson and RUMC. The second copy includes a rider containing two paragraphs numbered thirty four and thirty five and bears undated signatures on behalf of Robson and RUMC. This rider in paragraph 35 contains the following provision: "during the terms of this lease, as well as ant [sic] option periods exercised by Tenant, the tenant shall have the right of first refusal to purchase said premises on the same terms abd [sic] subject to the same condition as may be offered to the Landlord by any bona fide third party offer or [sic]. In the event that the landlord shall receive any third party offer the Landlord shall send a copy of same to the Tenant and Tenant shall have Forty Five Days from the receipt of such offer to accept that offer at which time Tenant and Landlors [sic] shall enter into a definitive Contract of Sale...".

RUMC also attached as exhibit F, the surrender agreement between itself and Robson. That agreement, dated September 2003, is identical to the aforementioned exhibit L in JCF's cross motion papers. The following language of that agreement is crucial to this court's consideration of the cross motion: "Landlord gives and the Tenant accepts $25,000.00 as payment for the surrender of the original lease...Landlord (Robson) releases tenant (RUMC) and tenant releases landlord from the obligations of the lease. ...All arrears of rent up to and including November 30, 2003 are waived by landlord and the current owner of the demised premise. The within Agreement and delivery and delivery of the keys to the premises by tenant shall constitute full performance by the tenant and remaining property in the premises shall be deemed abandoned by tenant and tenant's attorney shall be free to release $25,000.00 to tenant."

The court finds from the plain language of RUMC's lease agreement with Robson, that RUMC's right of first refusal was not independent of the lease agreement and indeed was viable [*6]only during the pendency of the lease agreement. Therefore, termination of the lease, either by breach or by agreement terminates the right of first refusal.

The surrender agreement dated September 2003, between RUMC and Robson purportedly released both sides from the obligations of the lease. It therefore terminated the lease and RUMC's right of first refusal contained therein. There was no express language in the surrender agreement stating anything to the contrary.

RUMC claims in its affidavit in opposition to JCF's cross-motion that the surrender agreement attached to JCF's cross motion was not signed by Robson and therefore ineffective. RUMC's two affidavits from Robert Usdin address this claim. The first in Robert Usdin's capacity as an officer and director of RUMC and stated in paragraph eleven the following. "Defendant ignores the terms of the settlement plaintiff made with the former landlord that specifically and affirmatively stated it was without prejudice to plaintiff's rights to pursue any and all remedies against purchaser."

The second stated in paragraph three the following. "Defendant chose not to execute this agreement and it is therefore not binding on any party. Plaintiff worked out a separate Agreement with the former owner that specifically provided that it was without prejudice to plaintiff's right to pursue its remedies against the defendant."

RUMC did not annex the settlement agreement described above to its answering papers in opposition to the cross motion. RUMC does not deny and indeed admits that it had entered into a surrender agreement with Robson that terminated their lease with them and preserved their right to go after JCF. At oral argument on the instant motions, Robert Usdin claimed that the surrender agreement between RUMC and Robson was similar to exhibit L annexed to defendant's cross motion in all respects except for the inclusion of language preserving RUMC's rights to pursue any and all remedies against the purchaser. RUMC does not deny that the surrender agreement was made in September 2003. Thus, JCF's motion papers establish that the lease between RUMC and Robson was terminated by agreement before JCF took title to the subject premise at the closing. The termination of the lease by a surrender agreement terminated the right of first refusal. Without such a right there can be no claim against JCF for tortious interference with RUMC's right of first refusal.

Furthermore, although not specifically raised as an argument by JCF in its cross motion, the court notes that RUMC's complaint does not allege that JCF engaged in conduct motivated by malice toward RUMC. Furthermore, the pleadings undisputably establish that JCF's conduct in purchasing the subject premise was motivated by economic self interest. A cause of action for prima facie tort or intentional interference with prospective economic advantage does not lie absent an allegation that the action complained of was motivated solely by malice or to inflict injury by unlawful means rather than by self-interest or other economic considerations (Entertainment Partners Group Inc., v. Davis, 198 AD2d 63 [1st Dept. 1993]). Therefore, JCF's defenses demonstrate entitlement to dismissal of the first cause of action as a matter of law. [*7]RUMC's opposition raises no genuine issue of fact which would require a trial.

JCF's cross-motion for dismissal of plaintiff's second cause of action for conversion must be denied. The motion is premised on the conclusion that the property found on the premise which JCF disposed of was either debris or abandoned. The allegations of fact in support of the motion are disputed by the sworn allegations of the plaintiff. It is axiomatic that summary judgment is a drastic remedy which should not be granted where triable issues of fact are raised and cannot be resolved on conflicting affidavits (Brunetti v. Musallam, 11 AD3d 280 [1st Dept 2004]).

JCF' cross motion also seeks summary judgment on its counterclaim premised on RUMC's alleged failure to pay rent from June 2003 through January 2004, and their alleged responsibility for certain Environmental Control Board fines and the cost of debris removal. The moving papers addresses these claims in a conclusory fashion and do not demonstrate prima facie entitlement to this relief as a matter of law. JCF's application for summary judgment on their counterclaim is therefore denied (Zarr v. Riccio, 180 AD2d 734 [2nd Dept. 1992]).

The foregoing constitutes the decision and order of this court.

_____________________________x

J.S.C.