Fuzailov v Mann

[*1] Fuzailov v Mann 2016 NY Slip Op 50656(U) Decided on April 26, 2016 Supreme Court, Queens County Nahman, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 April 26, 2016
Supreme Court, Queens County

Maxim Fuzailov and L.T. MOTORS AUTO SALES, INC., Plaintiffs,

against

Michael Mann, ROSLYN MANN, KAPLON-BELO ASSOCIATES, INC., 50 SHOT, LLC, and MICHAEL HOLDINGS, INC., Defendants.



1987-2013
Robert L. Nahman, J.

Motion

Date:February 2, 2016

Motion

Cal. No.:8

Motion

Seq. No.:4Upon, the following papers read on this motion by defendants Kaplon-Belo Associates, Inc. (Kaplon-Belo) and 50 Shot, LLC (50 Shot) pursuant to CPLR 3212 for summary judgment dismissing the complaint insofar as asserted against them, and to impose sanctions, including attorneys' fees, against plaintiffs; and this cross motion by plaintiffs for specific performance of the contract of sale, and to direct an inquest for an assessment of damages:

Papers

Numbered

Notice of Motion - Affidavits - Exhibits .............................................1-5

Notice of Cross Motion - Affidavits - Exhibits ...................................6-10

Answering Affidavits - Exhibits ..........................................................11-13

Reply Affidavits ...................................................................................14-16

Plaintiffs L.T. Motors Auto Sales, Inc. (L.T. Motors) and Maxim Fuzailov, the president of plaintiff corporation, commenced this action on January 30, 2013 asserting various causes of action, including two causes of action against defendants Kaplon-Belo and 50 Shot for specific performance of a commercial lease and purchase option agreement therein and to recover damages for breach of the lease (the twelfth and thirteenth causes of action respectively). Plaintiffs allege that in 2000, plaintiff L.T. Motors entered into a commercial lease for the premises known as 43-42 37th Street, Long Island City, New York (the subject property), with defendant Michael Holdings, Inc. (Michael Holdings), as the owner of the premises, and thereafter, a renewal lease was executed and made effective July 1, 2006 (the lease). Plaintiffs further allege that an amendment to the lease was executed on August 1, 2006 (the amendment), granting plaintiff L.T. Motors an option to purchase the premises (the option). Plaintiffs also allege that defendant Michael Holdings defaulted in paying real estate taxes on the subject property, resulting in tax liens which became the subject of a tax lien foreclosure action entitled NYCTL 1998-2 Trust v Michael Holdings, Inc., (Supreme Court, Queens County, Index No. 17109/2006).

A default judgment of foreclosure and sale dated February 8, 2007 was obtained in that foreclosure action (Index No. 17109/2006), and defendants Kaplon-Belo and 50 Shot received a referee's deed after being assigned the winning bid at the foreclosure sale. It is alleged that plaintiff L.T. Motors exercised the option to purchase prior to the judgment of foreclosure and sale, but Kaplon-Belo and 50 Shot commenced a holdover summary proceeding against L.T. Motors to terminate its tenancy. After a non-jury trial, the petition was dismissed.

Defendants Kaplon-Belo and 50 Shot served a joint answer, asserting various affirmative defenses, including the fifth and ninth affirmative defenses based upon claim and issue preclusion, and interposing a counterclaim for sanctions for frivolous conduct pursuant to CPLR §8303(a) and 22 NYCRR §130—1.1. It is unclear from the submissions whether plaintiffs served a reply to the counterclaim.

Defendants Rosyln Mann and Michael Holdings also served a joint answer, asserting various affirmative defenses. Plaintiffs obtained an order dated June 30, 2014, granting leave to enter a default judgment against defendant Michael Mann on the issue of liability, and directing an inquest for the assessment of damages be held during the trial of the main action.

Defendants Kaplon-Belo and 50 Shot move for summary judgment dismissing the twelfth and thirteenth causes of action asserted against them. Plaintiffs oppose the motion and cross move for, in effect, summary judgment against defendants Kaplon-Belo and 50 Shot on the twelfth cause of action for specific performance of the option to purchase and the thirteenth cause [*2]of action for damages for breach of the lease.

It is well established that the proponent of a summary judgment motion "must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact," (Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]; Winegrad v New York Univ. Med. Ctr., 64 NY2d 851 [1985]; Zuckerman v City of New York, 49 NY2d 557 [1980]). If the proponent succeeds, the burden shifts to the party opposing the motion, which then must show the existence of material issues of fact by producing evidentiary proof in admissible form, in support of its position (see Zuckerman, 49 NY2d 557).

Plaintiff Maxim Fuzailov is not a party to the lease or amendment, and signed the lease and amendment on behalf of plaintiff L.T. Motors and not in his individual capacity (see Natoli v NYC Partnership Housing Development Fund Co., Inc., 103 AD3d 611 [2d Dept 2013]; Blank v Noumair, 239 AD2d 534 [2d Dept 1997]; Walz v Todd & Honeywell, 195 AD2d 455 [2d Dept 1993]). Accordingly, it is

ORDERED that branch of the cross motion by plaintiff Maxim Fuzailov for, in effect, summary judgment in his favor against defendants Kaplon-Belo and 50 Shot on the twelfth cause of action for specific performance and the thirteenth cause of action for damages for breach of the lease is denied.

Furthermore, since the lease and amendment demonstrate that plaintiff Fuzailov was not a party to them, defendants Kaplon-Belo and 50 Shot are entitled to summary judgment dismissing the twelfth and thirteenth causes of action asserted against them by plaintiff Fuzailov. Accordingly, it is

ORDERED that branch of the motion by defendants Kaplon-Belo and 50 Shot for summary judgment dismissing the twelfth and thirteenth causes of action asserted against them by plaintiff Fuzailov is granted.

With respect to the twelfth cause of action asserted by plaintiff L.T. Motors against defendants Kaplon-Belo and 50 Shot, the foreclosure sale conducted pursuant to the judgment of foreclosure and sale in the tax lien foreclosure action (Index No. 17109/2006) resulted in surplus moneys. Michael Holdings filed a notice of claim to the surplus moneys, and moved to confirm the referee's report of sale and for the distribution of the surplus moneys to it. L.T. Motors also filed a notice of claim to the surplus moneys, and commenced an action entitled LT Motors Auto Sales v Kaplon-Belo Associates, Inc., (Supreme Court, Queens County, Index No. 7898/2008), seeking, among other things, a judgment declaring that Kaplon-Belo and 50 Shot are bound by the purchase option in the amendment, and are obligated to tender a deed to it upon completion of payment of the purchase price.

L.T. Motors moved pursuant to CPLR §5015, to vacate the judgment on the ground that it was an indispensable party which had not been joined, and consolidate the foreclosure action [*3]with the declaratory judgment action (Index No. 7898/2008). In support of its motion, L.T. Motors asserted it came into possession of the property as a tenant pursuant to the lease. L.T. Motors also asserted it had exercised the option to purchase and as a consequence, held equitable title to the subject property. L.T. Motors further asserted that it had made payments of real estate taxes and for improvements on the subject property.

By memorandum decision dated January 16, 2009, the Hon. Phyllis Orlikoff Flug found L.T. Motors was a non-party to the foreclosure action, and the option to purchase had expired on its own terms without having been exercised. The court determined L.T. Motors had no claim of an ownership interest in the property under the amendment, and therefore no meritorious defense. It also determined that vacatur of the judgment was unwarranted. The court further determined that L.T. Motors had no claim to the surplus as the owner of the equity of redemption, and no legal lien with respect to the subject property. The court additionally determined that to the extent L.T. Motors claimed an equitable lien on the surplus moneys, neither its payments to Michael Holdings, nor its payments of real estate taxes, or expenditures for improvements, gave rise to an equitable lien, and that only Michael Holdings demonstrated entitlement to the surplus moneys. By order entered on February 13, 2009, the motion by L.T. Motors was denied, and the motion by Michael Holdings was granted to the extent of confirming the report of sale, and directing the distribution of the surplus moneys to defendant Michael Holdings and its counsel, after first deducting the fees and commissions allowed by law to the Commissioner of Finance.

L.T. Motors thereafter moved for leave to renew and reargue its prior motion to vacate the judgment and its opposition to the motion by Michael Holdings to confirm the referee's report of sale and for distribution of the surplus money. By order of Justice Flug entered May 8, 2009, the branch of the motion for leave to renew was denied, and that branch of the motion for leave to reargue was granted, and upon reargument, the court adhered to its original determination.

L.T. Motors filed an appeal of so much of the order entered May 8, 2009 which denied its motion for leave to renew, and in effect, upon granting leave to reargue, adhered to the original determination. The Appellate Division, Second Department, affirmed the order entered May 8, 2009 insofar as appealed from (see NYCTL 1998-2 Trust v Michael Holdings, Inc., 77 AD3d 805 [2d Dept 2010]). The Appellate Division determined that the Supreme Court had properly denied the branch of the motion for leave to renew because none of the new facts relied upon was sufficient to change the original determination, and L.T. Motors failed to demonstrate the Supreme Court misapprehended any of the relevant facts that were before it or misapplied any controlling principle of law. The Appellate Court explained that a tenant is not an indispensable party to a foreclosure action, and the failure to name a tenant does not render the judgment of foreclosure and sale defective. The Appellate Court determined that the Supreme Court properly determined that L.T. Motors was not a contract vendee with equitable title to the property and an equitable lien in the amount of the consideration it allegedly paid.

Pursuant to the doctrine of res judicata, or claim preclusion, a valid final judgment bars future actions between the same parties, or those in privity, on the same cause of action (see [*4]Gramatan Home Invs. Corp. v Lopez, 46 NY2d 481, 485 [1979]; Farren v Lisogorsky, 87 AD3d 713 [2d Dept 2011]; Matter of Field Home—Holy Comforter v De Buono, 238 AD2d 589 [2d Dept 1997]). In this instance, plaintiff L.T. Motors was neither a party to, nor in privity with a party to the foreclosure action.

In relation to the doctrine of collateral estoppel, or issue preclusion, it is well settled that the doctrine of collateral estoppel precludes a party from relitigating an issue which was previously decided against him or her in a proceeding in which he or he or she had a fair opportunity to fully litigate the decision now alleged to be controlling (see Tydings v Greenfield, Stein & Senior, LLP, 11 NY3d 195, 199 [2008]; Buechel v Bain, 97 NY2d 295, 303—304 [2001], cert denied 535 US 1096 [2002]; Capellupo v Nassau Health Care Corp., 97 AD3d 619 [2d Dept 2012]; Mahler v Campagna, 60 AD3d 1009, 1011 [2d Dept 2009]; York v Landa, 57 AD3d 980 [2d Dept 2008]). The party seeking to invoke the doctrine must show that the identical issue was necessarily decided in the prior action and be decisive of the present action (see Buechel v Bain, 97 NY2d at 304; Capellupo v Nassau Health Care Corp., 97 AD3d 619 [2d Dept 2012]; Laing v Cantor, 1 AD3d 406 [2d Dept 2003]). Once the party invoking the doctrine discharges its burden in that regard, the party to be estopped bears the burden of demonstrating the absence of a full and fair opportunity to contest the prior determination (see id.).

In the foreclosure case, Justice Flug specifically considered whether L.T. Motors, a nonparty, had any interests under the lease and amendment, and in particular whether the option to purchase had expired before it could have been exercised. She also considered whether the payments by L.T. Motors to Michael Holdings, or its payments of real estate taxes and for improvements, created an equitable lien. Furthermore, she considered the argument of L.T. Motors in support of its motion for leave to renew and reargue that by virtue of the deletion of paragraph 40, which had a 30-day termination clause, Michael Holdings had accepted it as a purchaser. The court actually determined those issues in making the determination L.T. Motors was not an indispensable party, vacatur was unwarranted, the surplus moneys be distributed to Michael Holdings, and that L.T. Motors had failed to introduce new facts which would change the prior determination. The Appellate Division agreed.

To the extent plaintiff L.T. Motors asserts the dismissal of the holdover summary proceeding constitutes res judicata against defendants Kaplon-Belo and 50 Shot, the petition had been predicated upon the termination clause, and the court determined the clause had been deleted. That the petition was dismissed does not constitute res judicata as to plaintiff L.T. Motors's current causes of action for specific performance of the option and damages for alleged breach of the lease. Nor was the dismissal equivalent to a finding that the option to purchase had been timely exercised or that L.T. Motors was entitled to reimbursement for repairs to the demised premises.

Thus, the identical issue of whether plaintiff L.T. Motors has any rights pursuant to the option was necessarily decided against L.T. Motors in relation to its motion, in effect, to [*5]intervene in the foreclosure action as a contract vendee or equitable title holder, and vacate the judgment, and is determinative of the twelfth cause of action for specific performance of the option. Plaintiff L.T. Motors has failed to demonstrate the absence of a full and fair opportunity to contest that prior determination. Accordingly, it is

ORDERED that branch of the motion by defendants Kaplon-Belo and 50 Shot for summary judgment dismissing the twelfth cause of action asserted against them by plaintiff L.T. Motors based on preclusion grounds is granted.

To the extent plaintiff L.T. Motors alleges as its thirteenth cause of action, that it is entitled to damages pursuant to paragraph 9 of the lease, that paragraph relates to damages caused by fire or other casualty. Plaintiff L.T. Motors makes no allegation in the complaint or in its bill of particulars that the damages for which it seeks reimbursement were caused by fire or other casualty.

To the extent plaintiff L.T. Motors asserts that the roof, sewer and water pipes, and metal gate required repair, paragraph 4 of the lease, expressly obligates the tenant, and not the landlord, to make all non-structural repairs to the premises and maintain the same in good working order. In addition, at common law, there is no implied duty on the part of a landlord to put premises in repair (see 2 Dolan, Rasch's Landlord Tenant—Summary Proceedings, 4th Ed., § 18:1, at 26). Hence, that paragraph 4 also obligates the owner to maintain and repair only the public portions of the building, both exterior or interior, cannot be interpreted to imply a duty upon the owner to repair non-public portions of the building, whether structural or non-structural.

John Belo, the secretary and treasurer of defendant Kaplon-Belo, states the leased premises is a one-story industrial garage, with no public portions of the building. Plaintiff L.T. Motors does not offer anything in rebuttal. As a consequence, defendants Kaplon-Belo and 50 Shot are entitled to summary judgment dismissing the thirteenth cause of action asserted against them by plaintiff L.T. Motors. Accordingly, it is

ORDERED that branch of the motion by defendants Kaplon-Belo and 50 Shot for summary judgment dismissing the thirteenth cause of action asserted against them by plaintiff L.T. Motors is granted; and it is further

ORDERED that branch of the cross motion by plaintiff L.T. Motors to schedule an inquest to assess damages is denied; and it is further

ORDERED that branch of the motion by defendants Kaplon-Belo Associates, Inc. and 50 Shot, LLC for an award of sanctions and counsel fees is denied (see generally CPLR 83031-a; 22 NYCRR 130—1.1).

Dated: April 26, 2016

Robert L. Nahman, J.S.C.