Louis Foodservice Corp. v 5423 First Ave. LLC
Annotate this CaseDecided on December 8, 2009
Supreme Court, Kings County
Louis Foodservice Corp., Plaintiff,
against
5423 First Avenue LLC, Defendant.
33565/08
Plaintiff was represented by Paul Golden, Esq. of Hagan, Coury & Associates. Defendant was represented by Michael T. Conway, Esq. of LeClairRyan, A Professional Corporation.
Jack M. Battaglia, J.
Plaintiff Louis Foodservice Corp. was the Tenant under a Lease dated as of February 15, 2003 with defendant 5423 First Avenue LLC as Landlord for premises at 5423 First Avenue, Brooklyn. Plaintiff's Verified Complaint seeks return of a security deposit of $120,000, the Lease having terminated effective November 30, 2008. Defendant's Answer to Verified Complaint and Verified Counterclaim seeks damages in excess of $625,000, representing the value of three diesel generators, a transfer switch, and a freezer/refrigerator allegedly removed by Plaintiff from the premises without authority and damage caused to the premises by removal. Plaintiff's Verified Reply asserts six "Affirmative Defenses," including that the counterclaim is "barred by the terms of the lease." (Verified Reply, First Affirmative Defense.)
Plaintiff now moves for an order, pursuant to CPLR 3212 (e), for "partial summary judgment, dismissing that portion of defendant's counterclaim that seeks compensation and/or the value of [the equipment] which plaintiff removed from the subject premises," on the ground that "the parties' lease bars defendant from claiming that plaintiff lacked the right to remove those items." (Notice of Motion dated July 8, 2009.) Plaintiff's motion does not address "[t]he other basis for defendant's counterclaim," i.e., "for damages that the plaintiff allegedly caused to the property." (Affirmation in Support, ¶ 6.)
The motion is based upon the following language, which appears as part of Paragraph 46 of a Rider to the Lease executed in April 2006:
"Upon the expiration or other termination of the term hereof all non-fixtures, including personal property of the Tenant, including but not limited to pallet racks, equipment, freezers, [*2]refrigeration, machinery or generators, shall become the property of the Landlord unless such personalty is removed from the Demised Premises prior to the Tenants [sic] surrender of the Demised Premises to the Landlord."
Plaintiff contends, "Since the defendant itself defined the refrigeration unit, generators, and related equipment (including the transfer switch as (1) the plaintiff's personal property' and (2) non-fixtures' there is no question that the plaintiff was permitted to remove them." (Affirmation in Support, ¶ 10.)
"Contrary to the general rule that fixtures become part of the realty and pass with it, trade fixtures remain the personal property of the tenant and are removable by the tenant at the expiration of the term." (J.K.S.P. Rest. v County of Nassau, 127 AD2d 121, 126 [2d Dept 1987].) "[I]n order to properly meet the definition of a trade fixture, it must be shown (1) that the property was annexed to the leased realty by the tenant, and (2) for the purposes of the tenant's trade or business." (Id. at 125.) "However, a trade fixture may not be removed unless this can be accomplished without substantial or material injury to the freehold." (Id. at 125-26; see also Orange County-Poughkeepsie Ltd. P'ship v Bonte, 301 AD2d 583, 583-84 [2d Dept 2003].)
A provision in a lease that, in effect, designates an object as "a trade rather than an ordinary fixture" "is enforceable as between the parties to the lease and supersedes the general rules of law in this regard." (See J.K.S.P. Rest. v County of Nassau, 127 AD2d at 127-28; see also Chittenden Falls Realty Corp. v Cray Valley Prods., 208 AD2d 1114, 1115 [3d Dept 1994].) According to Plaintiff, that is what the parties did here, i.e., designated the generators, transfer switch, and refrigerator/freezer at issue as "trade fixtures," removable by Plaintiff.
"It is settled that the interpretation of the provisions of a lease is governed by the same rules of construction applicable to other agreements . . . , and in those instances where the intent of the parties is clear and unambiguous from the language employed on the face of the agreement, the interpretation of the document is a matter of law solely for the court." (Horowitz v 1025 Fifth Ave., Inc., 34 AD3d 248, 249 [1st Dept 2006]; see also George Becher Management Corp. v Acme Quilting Co., 46 NY2d 211, 217 [1978]; Star Nissan, Inc. v Frishwasser, 253 AD2d 491, 492 [2d Dept 1998].) Where, however, a lease is ambiguous, evidence of "events leading up to the execution of the lease [is] admissible as extrinsic evidence of the parties' intent to resolve the ambiguities" (see Coliseum Towers Assocs. v County of Nassau, 2 AD3d 562, 564 [2d Dept 2003]), as is the parties' "course of conduct" under the lease (see Citibank, N.A. v 666 Fifth Ave. Ltd. P'ship, 2 AD3d 331, 332 [1st Dept 2003].)
"Whether or not a writing is ambiguous is a question of law to be resolved by the courts." (W.W.W. Assoc. v Giancontieri, 77 NY2d 157, 162 [1990]; see also Nappy v Nappy, 40 AD3d 825, 826 [2d Dept 2007].) "[T]he rule that ambiguous language in a contract will be construed against the drafter is not applicable [where] the subject lease resulted from negotiations between commercially sophisticated entities." (See Shadlich v Rongrant Assoc., LLC, 2009 NY Slip Op 7394, * 1 [2d Dept October 13, 2009]; see also Fair Oaks, L.L.C. v Greenpoint Fin. Corp., 26 [*3]AD3d 458, 459 [2d Dept 2006].)
The Lease provision upon which Plaintiff relies is ambiguous, susceptible to at least two interpretations. One possible interpretation is that for which Plaintiff contends, i.e., that any "pallet rack[ ], equipment, freezer[ ], refrigeration, machinery or generator[ ]" on the premises is agreed by the parties to be a "non-fixture[ ]" and "personal property of the tenant," which, by implication, the Tenant was permitted to remove "upon the expiration or other termination" of the Lease term. Another possible interpretation is that any "pallet rack[ ], equipment, freezer[ ], refrigeration, machinery or generator[ ]" that in fact and law is a "non-fixture[ ]" and "personal property of the Tenant" must be removed by the Tenant upon expiration or termination. It is noteworthy that the Lease provision does not use the term "trade fixture," nor does it specifically identify or describe any particular item at the premises.
Since the provision at issue was clearly intended to primarily benefit Landlord by deeming Tenant's property as Landlord's property if it is not removed at the end of the lease, so as to allow its removal by Landlord and relieve Landlord of any obligation to care for the property for Tenant's benefit, the latter of the two possible interpretations suggested may more likely comport with the parties' intent. "In interpreting a contract, the court must read the document as a whole to determine the parties' purpose and intent, giving a practical interpretation to the language employed so that the parties' reasonable expectations are realized." (Gutierrez v State of New York, 58 AD3d 805, 807 [2d Dept 2009].)
In any event, Plaintiff supports its interpretation of the Lease provision with only the Affidavit of Simon Vouyiouklis, its "principal" (Affidavit in Support, ¶ 1.) Although the Affidavit states Plaintiff's interpretation of the provision (id., ¶ 4), it does not describe any discussion, negotiation, or statement by either party when the Lease was executed, apparently in April 2006, or at the time prior thereto when Plaintiff actually took possession of the premises; nor does Plaintiff provide any writing that would provide evidence that Plaintiff's interpretation was the mutual understanding of the parties. The further statements, "This was a crucial portion of the lease, because the plaintiff had used its own funds for that equipment, and the parties agreed that at the end of the lease, the plaintiff should be permitted to remove the property" are not sufficient in themselves to support a conclusion that Defendant shared Plaintiff's intent.
Plaintiff has not established prima facie that it is entitled to judgment as a matter of law as to the meaning and effect of the Lease provision relied upon.
Plaintiff's motion is, therefore, denied.
December 8, 2009____________________
Jack M. Battaglia
Justice, Supreme Court
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