White Plains Plaza Realty, LLC v Cappelli Enter., Inc.

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White Plains Plaza Realty, LLC v Cappelli Enter., Inc. 2012 NY Slip Op 33216(U) March 13, 2012 Sup Ct, Westchester County Docket Number: 57039/2011 Judge: Mary H. Smith Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. [*FILED: WESTCHESTER COUNTY CLERK 03/13/2012 I 1] NYSCEF DOC. NO. 26 INDEX NO. 57039/2011 RECEIVED NYSCEF: 03/13/2012 DECISION AND ORDER FILED & ENTERED /1//-</12 To commence the statutory period of appeals as of right (CPLR 5513[a]), you are advised to serve a copy of this Order, with notice of entry, upon all parties. .J l./ SUPREME COURT OF THE STATE OF NEW YORK lAS PART, WESTCHESTER COUNTY Present: HON. MARY H. SMITH Supreme Court Justice ~~~~~~~~~~~~~~~~~-~~~~~~~~~~~~~~~~~~~~~~~-~--x APPLICATION OF WHITE PLAINS PLAZA REALTY, LLC, Petitioner, MOTION DATE: 3/2/12 INDEX NO.: 57039/11 For a Judgment Pursuant to CPLR 5227 to Compel Payment to Petitioner of Debt Owed to Judgment Debtor -against~ CAPPELLI ENTERPRISES, INC., Respondent. -~~--~~~~~--~~--~---~--~~~-~~~--~~--~---~---~X The followin9 papers numbered 1 to 13 were read on this motion for an Order pursuant to CPLR 3211, subdivision (a), paragraphs 1 and 7 dismissing this special proceeding. Papers Numbered Notice of Motion - Affirmation (Benowich) - Exhs. (1-2) Memorandum of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-4 Answering Affidavi.t (Shapiro) - Exhs. (A-L) - Memorandum of Law 5-7 Replying Affirmation (Benowich) - Memorandum of Law . . . . . . . . . 8-9 Sur-Replying Affidavit (Shapiro) - Exhs. (A-F) . . . . . . . . . . . . . . 10-11 Let ters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12, 13 ~1- [* 2] Upon the foregoing papers, it is Ordered that respondent's dispositive motion is disposed of as follows: A jUdgment, dated July 31, 2009, had been entered against nonpar t y TSI Wh 1't e Pl' .alns, Plains Plaza $683,239.56. Realty, I nco LLC ("TSI") ("WPP") ln favor of plaintiff White and othersl ln the sum of This liability had arisen from and in connection with a 2003 MetLife Lease between non-party MetLife as landlord and TSI as tenant. TSI, which is a wholly-owned subsidiary of Town Sports International LLC ("Town Sports"), had operated a sports club at the premises and the subj ect Lease was to expire in 2018. connection with the execution of said Lease, Town Sports In had executed, on April I, 2003, a "Guaranty" wherein, up to a maximum liability not exceeding $400,000, the term of without the the Lease full requirement of it had agreed to guarantee for performance notice thereunder of to MetLife, non-payment or non- performance, and that its obligations would not be terminated or in any way affected by landlord MetLife's asserting against TSI any of the rights and remedies reserved to MetLife pursuant to the Lease. In 2004, plaintiff White Plains Plaza Realty, had purchased the subj ect building from MetLife, various leases were assigned to WPPR, LLC ("WPPR"), and thereupon including TSI' s Lease. IThe other named defendants are Town Sports International, LLC, TSI White Plains City Center, LLC and TSI White Plains, LLC. -2- [* 3] sometime in 2004, TSI had been induced by respondent to relocate its sports club thereupon a the then newly developed new subsidiary, ( "TS IWP") (f /k/ a It created. to TS I White TSI white Plains is alleged that, city Center, city center, Plains and LLC City Center, at this time, Inc.), had been TSI had been left inactive, insolvent and unable to pay its debts. In connection with this relocation and TSIWP's ensuing operation of a sports club at the city Center, respondent and Town Sports had entered Agreement" Lease into a "Lease harmless against to "indemnify, Guaranty Indemnification Respondent had agreed in said ("Lease Agreement"). Agreement and defend and hold [Town Sports] any losses and/or liabilities of [TSI] under, pursuant to, or in connection with the MetLife Lease (including any losses and/or liabilities of Tenant under, pursuant to or in connection with the MetLife lease; but not arising out of or in connection with the MetLife Guaranty) Tenant vacates the Demised Premises from and after " Further, the date respondent as indemnitor thereunder, had agreed that the guaranty "constitutes a guaranty of payment, and not merely a guaranty of collection." In 2006, TSI had failed to make the required rent payments to plaintiff pursuant to the MetLife Lease, resulting in plaintiff's formal termination of the Lease, on October 25, 2006. In February, 2007, petitioner commenced the underlying action against TSI and -3- [* 4] the other related defendants for damages arising from the breach. As previously noted, a judgment, dated July 31, 2009, in favor of petitioner/plaintiff against had respondents/defendants been entered (Hon. Scheinkman presiding) Thereafter, 2010, by 5 -page Letter Agreement, respondent dated Janua:cY 25, and three other affiliated entities, and TSI, TSIWP and a related TSI entity, each had acknowledged the July 31, 2009 judgment, and that thereunder TSI has liability to plaintiff in the sum of $683,239.56, plus interest, and that Town Sports had liability to plaintiff on a joint and several liability basis in the sum of $488,767, plus interest, that TSI and Town Sports had "satisfied the Judgment in full by a payment to the plaintiff in the amount of $683,576.50," and that respondent, "without admitting any liability under harmless from thE! harmless from a interest." the Judgment" and agrees Indemnity, portion of "agrees Judgment to to hold equal to hold [TSI] [Town Sport s] $400,00 plus The express terms of respondent's payment agreement are thereafter detailed. Petitioner/plaintiff Scheinkman's December 21, judgment, 2010, thereafter had appealed and the Appellate Division, had granted same to the .Just ice on or about extent that petitioner/plaintiff had been awarded additional damages and costs against TSI. A judgment in accordance therewith had been entered -4 - ---------------- [* 5] by the Clerk of W'estchester County, on August 29, 2011. This judgment has remained unsatisfied. Petitioner since has commenced the instant special proceeding pursuant to CPLR 5227, seeking to have respondent pay the 2011 judgment in the total sum of $900,561.53, together with interest at the statutory rate from August 29, 2011. Respondent presently is moving to dismiss the petition based upon the documentary evidence and petitioner's having failed to Specifically, state a viable cause of action. respondent argues that it itself owes no debt to petitioner, that the judgment-debtor is TSI, which is not a party to the Indemnification Agreement, that the only "indemnitee" in the Indemnification Agreement is Town Sport, and finally that, even if TSI had been an indemnitee, under the express terms of the Indemnity Agreement, any such obligation by respondent had terminated in 2006 upon petitioner's termination of the underlying Lease with TSI. Petitioner vigorously opposes the motion, arguin9 that respondent's arguments are "after-the-fact fabrications belied by the provisions conduct over 0ยท:: the the Indemnity course Indemnity was executed." intended beneficiary of of the and [respondent's] nearly eight years undisputed since the Petitioner claims that TSI had been an the Indemnity, that respondent has explicitly acknowledged and ratified in writings its agreement to -5- - - - _.._ _--_. .. [* 6] indemnify TSI and, indeed, that respondent actually has par~ially fulfilled its indemnification obligation by having previously paid the first judgment in the sum of According $683,239.56. to petitioner, respondent's reliance on the termination provision in the Indemnity is misplaced because same had been contingent upon respondent's "timely promptly when due" compliance" all of TSI' s with its rents, tax obligation to "pay increase payments, operating increase payments and any and all charges of any nature" due under the MetLife Lease, and that respondent consistently had failed to timely pay in accordance therewith. It is well-settled that on a motion to dismiss for failure to state a cause of action, the Court initially must accept the facts alleged in the complaint as true and then determine whether those facts fit whether within the any cognizable plaintiff Campaign for Fiscal will Eguity, legal theory, likely prevail Inc. v. State, on irrespective the of merit:;. See 86 N.Y.2d 307, 318 (1995); Leon v. Martinez, 84 N.Y.2d 83, 87-88 (1994); People v. New York City Transit Authority, 59 N.Y.2d 343, 348 (1983); Morone v. Morone, 50 N.Y.2d 481 (1980); Guggenheimer v. Ginzburg, 43 N.Y.2d 268, 274-275 (1977); Cavanaugh v. Doherty, 243 A.D.2d 92, 98 (yd Dept. 1989); Klondike Gold, Inc. v. Richmond Associates, 103 A.D.2d 821 (2 nd Dept. 1984). The complaint must be given a liberal construction and will be deemed to allege whatever cause of action -6- -----------_.- [* 7] can be implied by fair and reasonable intendment. See Shields v. School of Law of Hofstra University, 77 A.D.2d 867, 868 1980) i Penato v. George, 52 A.D.2d 939 (2 nd Dept. 1976). (2 nd Dept. "Whether the complaint will later survive a motion for summary judgment, or whether the plaintiff will ultimately be able to prove its claim, is irrelevant to the determination of a pre-disclosure motion to dismiss." Porcelli v. Key Food Stores Co-op., Inc., 44 A.D.3d 1020 ( 2 nd De pt. 2 0 0 7) . Where extrinsic evidentiary material is considered, the Court need not assume the truthfulness of the pleaded allegations. The criterion to be applied in such a case is whether the plaintiff actually has a cause of action, not whether he has properly stated See one. Guggenheimer v. Ginzburg, supra International Business Machines Corp., 1983), affd. 61 N.Y.2d Playtex Corporation, 930 (1984); 43 A.D.2d 393, at 275; 97 A.D.2d 925 Rappaport 395 v. Kauf:nan v. (3 rd Dept. International (3 rd Dept. 1974). Thus where it has been shown that a material fact or facts as claimed by the plaintiff "have been negated beyond substantial questi_on" by the documentary submissions, evidence or affidavits and other evidentiary and/or where the very allegations set forth in the complaint fail to support any cause of action, the complaint should be dismissed. Corp. v. SeE~ Vitale, CPLR 3211, subd. 66 A.D.3d 816, 818 -7- (a), par. 1; DePaulis Holding (2 nd Dept. 2009); Biondi v. [* 8] Beekman Hill House Apartment Corp., 257 A.D.2d 76 (pt Dept. 1999), affd. 94 N.Y.2d 659 (2000); Robinson v. Robinson, 303 A.D.2d 234 (1 st Dept. 2003). In order to prevail upon a defense founded upon documentary evidence, the documents relied upon must resolve all of the factual issues as a matter of law and conclusively establish a defenE:e. See Arnav Industries, Millstein, Felder Inc. Retirement steiner, & Trust 96 N.Y.2d 300, Raysman, v. Brown, 303 (2000); Of man v. Katz, 89 A.D.3d 909 (2 nd Dept. 2011); Scott v. Bell Atlantic Corp., (1 st Dept. 2001); Weiss v. Cuddy 282 A.D.2d 180, 183 A.D.2d 665 evidence (2nd Dept. must be (citation omitted) 1994) . Feder, 200 "[T]O be considered 'documentary,' unambiguous " & and of undisputed See Springer v. Almontaser, authenticity 75 A.D.3d 539, 540 (2 nd Dept. 2010); see, also Fontanetta v. Doe, 73 A.D.3d 78, 86 (2 nd Dept. 2010). Neither affidavits, deposition testimony, nor letters are considered "documentary evidence" within the intendment of CPLR 3211 (a) (1)." 78 A.D.3d 996 Granada Condominium III Ass'n. v. Palomino, (2 nd Dept. 2010). CPLR 5227 permits a judgment creditor to commence a special proceeding "against any person who it is shown is or will become indebted to the judgment debtor." Manifestly, TSI had not been a party to the Indemniflcation -8- ._------ [* 9] ---- Agreement between respondent and Town Sports, but that fact alone does not mandate the finding that respondent is not obligated to indemnify TSI. Notwithstanding that indemnity agreements must be "strictly construed to avoid reading into it a duty which the parties did not intend to be assumed," Miranda v. Norstar Building Corp., 79 A.D.3d 42, 50 (3 rd Dept. 2010), here, multiple provisions set forth in the Lease and Guaranty Indemnification Agreement, as well as respondent's unrefuted actions, support petitioner's claim that TSI had been an intended Indemnification Agreement, Blank, 25 A.d.3d 364, N.Y.3d 864 (2006), see direct Edge 368 1 st Dept. beneficiary Mgmt. 2006), under said Consulting, Inc. Iv. dsmd. to app. v. 7 and that respondent is obligated to indemnify TSI with respect to the 2011 judgment in petitioner's favor, and that it therefore properly is named as a respondent in this CPLR 5227 special proceeding. The best support for finding that TSI had been an intended beneficiary under the Guaranty Indemnification Agreement includes the following provisions of said Agreement, see Polsuk v. CBR Systems, Inc., 2006 WL 2796789 (S.D.N.Y. 2006), none of which, this Court agrees, would have been necessary or otherwise can be viewed as making any sense beneficiary under the if TSI had not been an Indemnification Agreement: intended direct that provision which requires respondent to pay promptly and directly to Town -9- [* 10] Sports, for the entirety of the duration of the Indemnification Agreement, all of the rents and other expenses due from TSI under the Lease, that provision which specifically excludes therefrom respondent's obligation to pay for claims against TSI relating to the excessive wear of or damage to the demised premises, that provision which expressly includes respondent's "exclusive right" to exercise all of TSI's rights as tenant under the MetLife Lease, and to use, assign, sublet, terminate and amend the MetLife Lease, and that provision which requires TSI to send respondent copies of every notice, statement and other establishes that respondent, upon execution of the Indemnification Agreement, paid TSI's rent record from Landlord. had the received petitioner fact Further, communication obligations to Town Sports,2 in that respondent had paid directly to TSI $750,000 for the acquisition of TSI's rights with respect to its obtaining the rights demised premises and the improvements located therein, to the and that respondent in fact had hired and paid for counsel to represent TSI in the underlying litigation and had retained all decision-making with respect thereto,3 which litigation ultimately had resu:ted in 2It appears that respondent had paid rent through June, 2006, rent. ~ of the October, 2006 3It is notable that the, April, 2007, Retainer Agreement executed by respondent states that respondents' defenses to the underlying lawsuit "are governed by the Lease and guaranty Agreement, dated as of August 2, 2004," and that "pursuant to the -10- [* 11] the 2009 and 2011 judgments in petitioner's favor. Moreover, the Court further finds that respondent's reliance upon the formal termination of the Lease by petitioner, on october and 2006, the Guaranty the in language termination Indemnification Agreement as a defense herein to be misplaced, as some does not constitute a defense as a matter of law. The Guaranty Indemnification Agreement provides that: in the event Tenant and/or indemnitee shall be declared by MetLife to be in monetary default under the MetLife lease, beyond any applicable cure period, then any and all of the [respondent's] CEI Indemnitor's and/or the Cappelli Indemnitor's guarantees, obligations, and responsibilities under and pursuant to this Indemnification Agreement shall thereupon, and without separate action, be terminated, null and void. However, as petitioner correctly argues, the Guaranty Indemnification Agreement also expressly states that the terms set forth therein are based upon consideration of the "mutual promises and covenants" obligated to [Town Sports] set forth therein, and that respondent had been "pay promptly when due and directly to Indemnitee all the rents and that respondent's indemnification is "conditioned upon termination [respondent's] Indemnity, [respondent and others] have agreed to indemnify TSI (as defined below) against the claims asserted in this lawsuit, and to pay the legal fees and related expenses " -11- of [* 12] timely compliance with the foregoing since provisions respondent has failed to even assert, let alone establish, that it timely had paid its obligation for TSI's rent to Town Sports, it cannot rely upon the termination provision. Accordingly, respondent has not sustained its burden of establishing entitlement to dismissal of the petition based either upon the documentary evidence or upon petitioner's alleged failure to have stated a viable claim, and respondent's dispositive motion concomitantly is hereby denied. Within thirty shall serve thereafter its (30) days after the date hereof, answer promptly 4 to contact the the petition. PLC Part respondent Petitioner with respect shall to the scheduling of a conference. Dated: March , 2012 White Plains, New York 4The Court notes respondent's objection to petitioner's use of and reliance upon the deposition transcript of Gerard Buckley which had been obtained in supplementary proceedings conducted by petitioner with respect to the enforcement of the underlying judgment. The Court declines to decide the issue of the propriety of petitioner's reliance upon same since same has not been relied upon by this Court in reaching its Decision denying respondent's motion, which instead is founded upon the factual references and analyses set forth above. -12- [* 13] H. SMITH J.S.C. Benowich Law, LLP Attys. For Resp. 1025 Westchester Avenue White Plains, New York 10604 Shapiro Gettiner & Waldinger, LLP Attys. For Pet. 118 North Bedford Road P. O. Box 320 Mount Kisco, New York 10549 -13-

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