Four Asteria Realty, LLC v BCP Bank of N. Am.

[*1] Four Asteria Realty, LLC v BCP Bank of N. Am. 2009 NY Slip Op 50315(U) [22 Misc 3d 1127(A)] Decided on February 26, 2009 Supreme Court, Kings County Demarest, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 February 26, 2009
Supreme Court, Kings County

Four Asteria Realty, LLC, Plaintiff,

against

BCP Bank of North America, Paul Kalamaras in His Individual and Corporate Capacity and Jose Valente in His Individual and Corporate Capacity, "XYZ Corp No.1" Through "XYZ Corp. #10.", Defendants,



43060/2007



Attorney for Plaintiff

Marc A. Merolisi, Esq.

Law Office of Thaniel J. Beinert

155 Bay Ridge Ave.

Brooklyn, NY 11220

Attorney for Defendant

Nativ Winiarsky, Esq.

Kucker & Bruh, LLP

747 Third Ave., 12th Floor

New York, NY 10017

Carolyn E. Demarest, J.

Plaintiff Four Asteria Realty, LLC ("Asteria Realty") is the owner of a property located 8721 5th Avenue, Brooklyn, NY 11209. Defendants Paul Kalamaras, Jose Valente and BCP Bank of North America ("BCP"), as tenant, move pursuant to CPLR 3212 for summary judgment dismissing plaintiff's complaint and granting the defendants summary judgment on their counterclaim in this action concerning BCP's attempt to terminate a commercial lease between the parties. Defendants also move for sanctions against the plaintiff due to the interposition of claims against defendants Kalamaras and Valente in their individual capacities. For the reasons set forth below defendants' motion is denied in part and granted in part.

[*2]THE LEASE

On May 13, 2006 BCP and Asteria Realty executed a lease dated April 24, 2006 (the "Lease") for commercial space located at 8721 5th Avenue, Brooklyn, NY 11209 (the "subject premises"). Defendant Paul Kalamaras signed the lease on behalf of BCP and Stavroula Bakalis, a member of Asteria Realty, signed on its behalf. The Lease term was effective June 1, 2006 terminating May 31, 2021 at the cost of $13,566 per month. Paragraph five of the Lease indicates that The Tenant shall use and occupy the Demised Premises for the purpose of carrying on, either by it or by controlled corporations, a commercial bank, savings bank, savings and loan association, guaranty, depositary, trust, safe-deposit, ATM facility, investment, securities, and/or other similar or allied business or any combination of the foregoing, and not for any other purpose.

BCP moves for summary judgment claiming that it had an unconditional right to terminate the Lease pursuant to paragraph 61. Paragraph 61 of the Lease provides:

In the event Tenant does not receive within thirty (30) days from execution of this Lease Agreement approval from the N.Y.S. Department of Banking, the FDIC, OCC, or any other regulatory authority for the branch location at the subleased premises, then and in such event Tenant may withdraw from this lease and obtain refund of the security deposit, and no party shall have any further rights or obligations hereunder.

However, BCP was obligated under Paragraph 55(A) of the Lease, contained in the section entitled "Tenants [sic] Operating Obligations", to: obtain and maintain throughout the term of this Lease all professional licenses, permits and authorizations required in order to enable it to Properly and lawfully conduct its business in the Demised Premises, it being expressly understood and agreed, however that the failure on the part of Tenant to obtain or to maintain any of such licenses, permits or authorizations . . . shall not release or relieve tenant from the performance and observance by it of all of its obligations under this Lease.

According to defendants, in order to operate the subject premises as a bank it would first need to seek approval from the Office of the Comptroller of the Currency ("OCC"), a federal entity that charters, regulates and supervises all national banks .

The Lease also contains a default provision if the tenant (BCP) fails to fulfill any covenant of the Lease. Pursuant to paragraph 32(A)(b), an "Event of Default" occurs If Tenant shall default in the observance or performance of any term, covenant or condition of this Lease on Tenant's part to be observed or performed . . . and Tenant shall fail to remedy such default within thirty (30) days after notice by Landlord to Tenant of such default, or if such default is of such nature that it cannot be completely remedied within said period of thirty (30) days and Tenant shall not commence curing such default within said period of thirty (30) days, or shall not thereafter diligently prosecute to completion, all steps necessary to remedy such default[*3]

An extensive "No Waiver" provision is found in paragraph 35 which provides, in part, "[t]he failure of the landlord to seek redress for violation of, or insist upon the strict performance of, any covenants or conditions of this Lease . . . shall not prevent a subsequent act, which would have originally constituted a violation, from having all the force and effect of an original violation." The same provision also clearly states that "[n]o Provision of this Lease shall be deemed to have been waived by the Landlord, unless such waiver be in writing signed by Landlord." Moreover, a no waiver clause is found in the "Events of Default" section, paragraph 32(C), which provides that "[a]ny monies received by Landlord from or on behalf of Tenant during the pendency of any proceeding hereunder shall be deemed paid as compensation for the use and occupancy of the Demised Premises and the acceptance of any such compensation by Landlord shall not been deemed a waiver on the part of the Landlord of any rights under this Article." Finally, the Lease contains a merger clause in paragraph forty-three which states, "This Lease contains the entire agreement between the parties and all negotiations and agreements are merged herein, except as set forth herein."

BACKGROUND

Prior to entering into the Lease, BCP intended to open bank branches at various locations along the east coast. To this end, on March 16, 2006, defendant Jose Valente, on behalf of BCP, submitted a proposal for a branch site in Astoria, New York to Fred Campo, BCP's Vice President and Corporate Secretary responsible for submitting branch applications to OCC. According to defendants, on March 21, 2006 Campo submitted an application for the Astoria site to OCC. OCC approved the Astoria branch on April 3, 2006, less than 30 days after the application was submitted. Subsequently, BCP claims that it entered into a fifteen year lease for the Astoria branch and undertook to expend approximately $500,000 in improvements on the property.

Following the approval of the Astoria branch, BCP made further efforts to open other branches. On April 14, 2006 Campo submitted an OCC application for a BCP branch located in North Dartmouth, Massachusetts. On May 22, 2006, nearly ten days after BCP entered into the instant Lease, defendant Valente submitted a site proposal to Campo for the BCP Brooklyn branch but defendants admit that the Brooklyn branch application was never forwarded to OCC.[FN1]

On May 18, 2006, just five days after BCP entered into the subject Lease, OCC, as part of an enforcement action against BCP, required BCP to enter into a agreement, designed to "further protect the interests of the depositors, other customers, and shareholders of BCP." (Bello Supplemental Affidavit in Support at ¶ 18), which required, inter alia, BCP to seek the prior written approval of the Comptroller before purchasing or leasing any bank premises. As of early May 2006, BCP still had received no response from the Comptroller regarding the approval of their proposed site in Massachusetts. Furthermore, according to defendants, during a May 25, 2006 conference call with OCC personnel, OCC indicated that the North Dartmouth application would be rejected and suggested that BCP withdraw their application. Defendants also claim that [*4]OCC personnel told them that no new branches would be approved "until such time as OCC determines otherwise" and that BCP should focus on fulfilling their obligations under the OCC agreement (Belo Supplemental Affidavit ¶ 24). Despite indications that OCC would not approve any new branch applications, defendants continued preparations for a Brooklyn branch at the subject premises. To this end, they allegedly purchased six automated teller machines at a cost of $187,438.97 and, on August 7, 2006, consulted an architect regarding the redesign of the subject premises.

On June 12, 2007, defendant Jose Valente signed an Estoppel Certificate certifying that the Lease term commenced on June 1, 2006 and expires on May 31, 2021. However, having occupied the subject premises for four hundred and fifty-six days and having paid $190,737.96 in rent, BCP informed Asteria Realty, by letter dated June 26, 2007, that it intended to terminate the lease effective July 31, 2007 pursuant to paragraph 61 of the Lease. Asteria Realty rejected defendant's attempt to terminate and formally responded by letter from plaintiff's attorney dated July 18, 2007, stating: Paragraph 61 of the Lease, to which you site [sic] . . . does not provide the option to terminate four hundred fifty six (456) days after Lease execution, rather the option to terminate within thirty (30) days of said date. It is absurd to think that you can rely on Paragraph 61 of the Lease to attempt to terminate the Lease. Your letter dated June 26, 2007 was the first and only notice you have provided seeking to terminate. Said notice clearly falls beyond what was contemplated within the provisions of your Lease . . . Nevertheless, you are obligated under the full terms of the Lease and if you fail to abide by same, legal action will be taken. (Kalamaras Affidavit in Support, Exhibit H, emphasis in original).

On August 13, 2007 BCP's attorney at the time, Brian N. Gurtman, replied by letter stating that The Lease does not require Tenant's notice of termination to be delivered within thirty days following execution of the Lease in order for the termination to be effective; it merely requires that that [sic] aforesaid approvals not be obtained with [sic] thirty days following Lease execution. The Lease does not provide any limitations on when Tenant may exercise this termination right once it vests, and Tenant's exercise of its rights under Section 61 of the Lease is therefore valid. (Kalamaras Affidavit in Support, Exhibit I).

Soon thereafter, on or about August 20, 2007, plaintiff commenced a summary non-payment proceeding in the Civil Court of the City of New York against BCP and defendant Kalamaras (see Kalamaras Affidavit in Support, Exhibit J). However, on October 1, 2007, the attorneys for plaintiff and defendant stipulated to discontinue the proceeding without prejudice (see Kalamaras Affidavit in Support, Exhibits K and L). Subsequently, plaintiff commenced this action on November 26, 2007.

Plaintiff enumerates five causes of action in its complaint. The first sounds in breach of contract alleging that defendants breached the terms of the Lease, specifically paragraph 55(a) of the Lease, by failing to apply for the requisite licenses permits or approvals required to operate a bank at the subject premises. Plaintiff's second cause of action is for breach of the covenant of [*5]good faith and fair dealing. Plaintiff claims that defendant's attempt to terminate the Lease was in bad faith because they never applied for the requisite permits to operate the premises as a bank. Plaintiff claims in the third cause of action that "defendants intentionally interfered with contractual obligations between Plaintiff and BCP without justification or excuse by entering into the Agreement with the OCC, frustrating the purpose for which the Plaintiff and BCP contracted" (Complaint ¶ 52). The fourth cause of action is for tortious interference with prospective economic advantage, alleging that defendants' breach of the Lease prevented it from realizing the "full economic benefit of the Lease" (Complaint ¶ 62). Plaintiff's fifth cause of action claims that defendants should be equitably estopped from terminating the Lease due to the their failure to obtain the requisite licenses and approvals. Defendants counterclaim requesting a "declaration" 1) perpetually enjoining the plaintiff from seeking to enforce the Lease; 2) perpetually enjoining the plaintiff from seeking damages and 3) that the Lease has been terminated.

DISCUSSION

On a motion for summary judgment the burden of proof is on the movant to establish, by evidentiary proof in the form of affidavits or other evidence, that no issues of material fact exist and judgment, as a matter of law, should be granted in its favor (CPLR 3212(b); Zuckerman v City of New York, 49 NY2d 557, 560 [1980]). Once a movant meets its burden, the burden shifts to the nonmovant to establish, with evidentiary support, the existence of a factual issue requiring trial of the action (Vermette v Kenworth, 68 NY2d 714, 717 [1986]). The parties' competing contentions are viewed in a light most favorable to the nonmovant (Marine Midland Bank, N.A. v Dino & Artie's Automatic Transmissions Co., 168 AD2d 610 [2d Dept 1990]). Defendants move for summary judgment on their counterclaim which seeks a declaration that the Lease has been terminated pursuant to what they claim is an unconditional termination clause found in paragraph 61 of the Lease.

A lease, like any contract, must be interpreted in accordance with the purposes sought to be attained by the parties (Farrell Lines v City of New York, 30 NY2d 76, 82 [1972]). It is the Court's duty to interpret a written contract as a matter of law where it is unambiguous and the intent of the parties is discernible from the four corners of the agreement (see Matter of Wallace v. 600 Partners Co., 86 NY2d 543, 548 [1995]; R/S Assoc. v. New York Job Dev. Auth., 98 NY2d 29, 32 [2002]). When the language of a lease is clear the writing should be "enforced according to its terms" (W.W.W. Assoc. v Giancontieri, 77 NY2d 157, 162 [1990]; South Road Associates, LLC v International Business Machines Corp., 4 NY2d 272, 277 [2005]). "In interpreting the provisions of a lease, the court should refrain from rewriting the lease under the guise of construction, should not construe the language of the lease in such a way as would distort its meaning, and should not construe the language in a manner that would render one or more of its provisions meaningless" (Poughkeepsie Sav. Bank v G.M.S.Y. Assoc., 238 AD2d 327 [1997]).

In this case there is no ambiguity with respect to the accrual of BCP's alleged right to terminate. Paragraph 61 of the Lease states that BCP may "withdraw" from the lease if it "does not receive within thirty (30) days from execution of this Lease . . . approval" to operate the premises as a bank. According to paragraph five of the Lease, the parties agreed that BCP would operate the premises as a bank and for no other purpose and paragraph 55 of the Lease obligates BCP to seek approval to operate the premises as such. Moreover, under paragraph 32 of the [*6]Lease, Asteria Realty could elect to hold BCP in default if BCP failed to seek approval. Thus, it follows that BCP was obligated to apply for OCC approval upon execution since a party cannot "receive" approval if it does not first apply for it. Therefore, reading the Lease provisions together as a whole and discerning the party's intent from the four corners of the agreement itself, the Court finds that, as a matter of law, BCP's obligation to seek approval was clearly a condition precedent to any right to terminate (see Norgate Homes, Inc. v Central State Bank, 82 AD2d 849, 850 [2d Dept 1981][finding that seller's obligation to obtain approval to subdivide the premises prior to closing was a condition precedent to the its right to terminate]).

In opposition to defendants' motion to dismiss, plaintiff compellingly argues that BCP could not exercise any right to terminate since it failed to seek approval from OCC. Defendants admit that OCC is the regulatory authority responsible for authorizing it to operate the subject premises as a bank and admit that they never applied for OCC approval. "Although the law does not require a party to fulfill a condition of a contract that is incapable of fulfillment and is not that party's fault, there must be a genuine effort to fulfill the condition" (Buffardi vParillo, 168 AD2d 812 [3d Dept 1990]). BCP's failure to fulfill the condition precedent to termination (application for OCC approval) forecloses its right to now seek a declaration that the Lease has been terminated since its right to terminate never accrued (see Silverman v Isaac Goldmann Realty Corp., 232 AD 292 [1st Dept 1931]; cf. Jefpaul Garage Corp., v Presbyterian Hospital City of New York, 61 NY2d 442, 448 [1984][reciting the same logic with respect to renewal:

"The general rule is that if a tenant's right to renew is conditional . . . it cannot be exercised validly unless the tenant is in full compliance with the conditions"]).[FN2] [*7]

Moreover, although the Lease specifies a 30-day time-limit for BCP to apply and "receive" approval, it is silent with respect to the time within which BCP was to serve notice to terminate if its right to terminate were to accrue. However, it is well-settled that "when a contract does not specify a time for performance, the law implies a reasonable time" (Savasta v 470 Newport Associates, 82 NY2d 763, 765 [1993]; see Spectrum Manufacturing, Inc., 172 AD2d 747 [1991]). What constitutes a reasonable time for performance depends on the facts and circumstances of the particular case (Savasta, 82 NY2d at 765). In the circumstances at issue, BCP waited four hundred and fifty-six days before sending notice to terminate, having paid up to $190,737.96 in rent. It also signed an estoppel certificate over a year into the lease term certifying that the Lease was in full force and effect. Even if BCP had met the condition precedent to its right to terminate by making an application to OCC, its extensive delay in notifying Asteria Realty of its intention to exercise such right was unreasonable and it would not be entitled to seek termination (see Savasta, 82 NY2d at 765 [finding that even if plaintiffs' right to terminate a partnership agreement were triggered, its 22-month delay before seeking termination was unreasonable and thereby foreclosed its right to terminate]).

Furthermore, as plaintiff argues, defendants have waived the right to terminate. "Contractual rights may be waived if they are knowingly, voluntarily and intentionally abandoned" (Fundamental Portfolio Advisors v Tocqueville Asset Mgt., 7 NY3d 96, 104 [2006] citing Nassau Trust Company v Montrose Concrete Products Corp., 56 NY2d 175, 184 [1982]). Waiver may be established by affirmative conduct, a failure to act on a purported benefit of a contract or failure to comply with a condition included in a contract solely for one party's benefit (General Motors Acceptance Corp. v Clifton-Fine Cent. School Dist., 85 NY2d 232, 236 [1996]; W.W.W. Assoc., 77 NY2d at 162). "Generally, the existence of an intent to forgo such a right is a question of fact" (Fundamental, 7 NY3d at 104). However, in this case there is no dispute that paragraph 61 was included in the Lease for BCP's benefit and that BCP failed to apply for OCC approval so as to satisfy the condition precedent to its obtaining the benefit of such provision. In addition to BCP's unreasonable delay in notifying Asteria Realty of its intent to terminate, it is not disputed that, nearly a year after the Lease was executed, Valente, on behalf of BCP, signed an estoppel certificate certifying that the Lease was in full force and effect and also continued to pay rent for over a year after the Lease was executed. BCP's behavior clearly evidences an intent to forego its contractual right to terminate the Lease. Accordingly, the Court finds that, even if BCP's right to terminate had accrued, BCP's actions constitute a de facto waiver of the right to terminate, thereby defeating defendants' claim for judgment as a matter of law.

In light of the foregoing, defendants' motion for summary judgment on its counterclaim is denied and, upon the analysis set forth above, and the Court's interpretation of the unambiguous language of the contract, pursuant to CPLR 3212(b), ("If it shall appear that any party other than the moving party is entitled to a summary judgment, the court may grant such judgment without the necessity of a cross-motion"), the Court dismisses the counterclaim in its entirety. [*8]

Defendants have also moved for summary judgment dismissing the complaint in its entirety. Plaintiff's first cause of action for breach of contract is premised upon defendants' failure to obtain approval for a bank branch in the demised premises and BCP's agreement with OCC that allegedly frustrated the contractual purpose. While "severe financial loss" is claimed, no explanation of this loss has been articulated. However, as this Court has already determined that defendant breached the contract in failing to seek the necessary OCC approval, this cause of action is clearly viable and will not be dismissed.

Similarly, to the extent that plaintiff's fifth cause of action requests relief enjoining defendants from seeking to terminate the lease, such request is rendered moot by the Court's finding that defendant does not have the right to terminate the Lease. The fifth cause of action seeking equitable relief is therefore dismissed.

Defendants' motion to dismiss the second cause of action for breach of the covenant of good faith and fair dealing must be granted as such claim is subsumed in the first cause of action for breach of contract. "[A]ll contracts imply a covenant of good faith and fair dealing in the course of performance." (511 W. 232nd Owners Corp., v Jennifer Realty Co., 98 NY2d 144, 152 [2002]). Plaintiff asserts that the individually sued defendants and BCP "breached their contractual obligations by preventing and interfering with the obtainment of licenses, permits and authorizations required under the terms of the Lease." (Complaint ¶ 47). While plaintiff argues that this claim is distinct from its breach of contract claim, the plaintiff clearly alleges in its breach of contract claim that at least one of the contributory factors to defendants' alleged breach was the failure to obtain approval to operate the premises as a bank (See Complaint ¶ 36). Therefore, the conduct of which plaintiff complains in its second cause of action is a predicate for its breach of contract claim and the second cause of action for breach of a covenant inherent in the contract must be dismissed as redundant and duplicative of its first cause of action for breach of contract (See Deer Park Enterprises, LLC v Ail Sys., Inc., 57 AD3d 711, 712 [2d Dept 2008]).

Defendants also move for dismissal of plaintiff's third cause of action for tortious interference with contract and fourth cause of action for tortious interference with prospective economic advantage. Turning first to plaintiff's fourth cause of action, a claim for tortious interference with prospective economic advantage must contain allegations of a specific prospective business relationship which the defendant purportedly frustrated (see Business Networks of New York, Inc. v Complete Network Solutions, Inc. 265 AD2d 194, 195 [1st Dept 1999]; see also Kevin Spence & Sons, Inc. v Boar's Head Provisions Co., Inc., 5 AD3d 352, 353 [2d Dept 2004]). The complaint here is devoid of any allegations that plaintiff had a specific prospective business opportunity and, in opposition to the motion, plaintiff provides only a conclusory allegation that it was "concurrently involved in negotiations with several other brokers and local banks in connection with the Premises" prior to entering into the Lease with BCP (Bakalis Affidavit in Opposition ¶ 6). Without actual, evidentiary proof of other negotiations or prospective business arrangement, these bare allegations are insufficient to defeat the motion (Zuckerman, 49 NY2d at 562 [finding that mere conclusions or unsubstantiated allegations raised by an opponent of summary judgment are insufficient to raise issues of fact]; see Federal Deposit Ins. Corp. v Jacobs, 185 AD2d 913 [2d Dept 1992][finding that bald and conclusory allegations are insufficient to defeat a motion for summary judgment]). In any event, [*9]plaintiff's decision to rent to defendant instead of other prospective lessees does not constitute an interference with prospective economic advantage on the part of defendant. Plaintiff's fourth cause of action is dismissed.

Similarly, plaintiff's third cause of action for tortious interference with contract also fails as a matter of law. A claim for 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 Company v Smith Barney Inc., 88 NY2d 413, 424 [1996]). In this case, plaintiff alleges that defendants Paul Kalamaras and Jose Valente tortiously interfered with plaintiff Asteria Realty's Lease with corporate defendant BCP by entering into the agreement with OCC on behalf of BCP. It is not disputed that defendants Paul Kalamaras and Jose Valente are corporate officers of BCP. It is well-settled that an agent cannot be held liable for inducing his principal to breach a contract with a third party unless he or she engaged in independently tortious acts or acted for his or her own benefit (Karthiganer Associates, P.C. v Town of New Windsor, 108 AD2d 898, 899 [2d Dept 1985]; Courageous Syndicate, Inc., v People-to-People Sports Commitee, Inc., 141 AD2d 599, 600 [2d Dept 1988]). There are no such allegations in the complaint.

Plaintiff claims that defendants' failure to procure approval from OCC and their failure to disclose the details of BCP's agreement with OCC renders Kalamaras and Valente individually liable. However, these acts and omissions are only relevant to BCP's breach of contract claim because they relate to BCP's obligations under the Lease. They are not allegations that Kalamaras and Valente committed an independent tort outside the alleged breach of contract or induced the alleged breach for their personal gain. Plaintiff fails to allege any facts to support a piercing of the corporate veil theory or independent wrong which would make Kalamaras and Valente individually liable for breach of the Lease. There is no dispute that both of the individual defendants were acting within the scope of their corporate responsibilities and in their employer BCP's interest. Inasmuch as the tortious interference claims were the only causes of action alleged against Kalamaras and Valente as individuals, the complaint is dismissed in its entirety as to the individual defendants. Therefore, the third cause of action must be dismissed.

Defendants request sanctions against plaintiff for individually suing defendants Kalamaras and Valente. Pursuant to 22 NYCRR §130-1.1, a court may award sanctions, in its discretion, for actual expenses reasonably incurred and reasonable attorney's fees resulting from frivolous conduct, which includes the assertion of false factual statements. Although the causes of action asserted against defendants Valente and Kalamaras are legally insufficient, it does not appear that these defendants have sustained any costs that would not have been incurred in defending the action against BCP. The Court therefore declines to impose sanctions.

CONCLUSION

For the reasons set forth above, defendants' motion for summary judgment is granted

dismissing plaintiff's second, third, fourth and fifth causes of action and denied as to plaintiff's first cause of action for breach of contract. The complaint is dismissed as to the individual defendants Kalamaras and Valente. Counsel are directed to appear for a conference on April 22, 2009 at 9:45 am at Commercial Part I, Room 756. [*10]

The foregoing constitutes the decision and Order of the Court.

E N T E R

Carolyn E. Demarest

J.S.C.

Footnotes

Footnote 1:Plaintiff also submits a letter from OCC dated May 9, 2008 responding to plaintiff's Freedom of Information Act request for any records pertaining to BCP's application. The letter indicates that "there was no record of an application filed by Millennium BCP Bank, N.A. to establish a branch located at 8721 5th Avenue, Brooklyn, New York." (Merolesi Supplemental Affidavit in Opposition, Exhibit A).

Footnote 2:Defendants rely on Mec-Guy Realty Corporation v Amerada Hess Corporation, 69 AD2d 812 (2d Dept 1979). In that case the defendant claimed that it was entitled to terminate a lease "without any further liability hereunder" if it could not procure necessary governmental approvals. Hess sent notice to terminate pursuant to that clause. In affirming the lower court's judgment in favor of Hess, the Appellate Division, Second Department, held "Since Hess, by giving notice of termination as called for in the contract, did precisely what the instrument permitted . . . any question of bad faith as claimed by the plaintiff is irrelevant" (Mec-Guy Realty, 69 AD2d at 813).

The Appellate Division's written decision in the Mec-Guy Realty caseprovides very little background facts beyond what is summarized above. However, defendants claim that Hess' appellate brief (which defendants do not attach to their motion papers despite representations to the contrary) reveals that Hess actually applied for governmental approval but was denied. Here, the situation is just the opposite; BCP never attempted to apply for approval for the Brooklyn branch due to OCC's dissatisfaction with its other branches. Mec-Guy Realty is, therefore, not applicable because, in Mec-Guy Realty, Hess fulfilled the condition precedent to its right to terminate (application for governmental approval), whereas here, BCP did not.

Defendants also rely on IXE Banco, 2008 U.S. Dist. Lexis 19806 (SDNY March 7, 2008). However, IXE Banco is inapplicable to this case because, unlike the Lease here, the joint venture agreement between plaintiff IXE Banco and defendant Bank of America gave either party the unconditional right to terminate at "the election of any party after June 30th 2005 (or such later dates as may be agreed by the parties)." Ancillary to the Court's finding that both parties had an unconditional right to terminate, was IXE Banco's obligation to procure governmental approvals prior to the June 30, 2005. Although it had applied for such approval, it did not procure them by that date. Therefore, the court held that in light of the plain language of the termination clause and the fact that governmental approval had not yet been secured, both parties had an unconditional right to terminate. Here, BCP did not apply for approval and, as discussed above, its right to terminate was not viable at the time it sent notice to terminate. Therefore, defendants' reliance on IXE Banco is unavailing.