Hamawi Deli, Inc. v Psaras

[*1] Hamawi Deli, Inc. v Psaras 2006 NY Slip Op 52411(U) [14 Misc 3d 1205(A)] Decided on December 15, 2006 Supreme Court, Nassau County Palmieri, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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, Nassau County

Hamawi Deli, Inc., Plaintiff,

against

Mary Psaras and NEELA TRADING CORP., Defendants



9251/06



La Reddola, Lester & Associates, LLP

Steven M. Lester, Esq.

Attorneys for Plaintiff

600 Old Country Road, Ste. 224

Garden City, NY 11530

Law Offices of Devang C. Shah, P.C.

Attorneys for Defendant Neela Trading116-55 Queens Boulevard, Ste. 201

Forest Hills, NY 11375

Kokolakis & Associates, P.C.

John Kokolakis, Esq.

Attorneys for Defendant Mary Psaras

Grand Avenue Plaza

31-16 30th Avenue, Ste. 204

Astoria, NY 11102

Daniel Palmieri, J.

Upon the foregoing papers it is ordered that this motion by the defendant Neela Trading Corp. for summary judgment dismissing the complaint as to it, and for costs pursuant to 22 NYCRR 130-1 (seq. 001)is granted to the extent that the complaint is dismissed, and is otherwise denied. The motion by defendant Mary Psaras for summary judgment dismissing the complaint as to her, for summary judgment on her first counterclaim for rent arrears and, in effect, for summary judgment on her second counterclaim for costs pursuant to 22 NYCRR 130.1 (seq. 002) is granted to the extent that the complaint is dismissed and summary judgment is granted on the first counterclaim for rent, and is otherwise denied. Upon a search of the record, the second counterclaim is dismissed. The first counterclaim is severed and continued for purposes of an inquest and entry of judgment thereon.

This suit concerns a dispute between a retail store tenant, plaintiff corporation Hamawi Deli, Inc. ("Hamawi"), and its landlord, defendant Mary Psaras, and Hamawi's next-[*2][*3]door neighbor tenant, defendant Neela Trading Corp. ("Neela"), also a tenant of Psaras. The essential facts are simple and undisputed.

Psaras owns realty known as 73-83 Roosevelt Avenue in Valley Stream, New York. Neela's lease dates from the year 2000, when it assumed the rights of its predecessor in interest. [FN1] Hamawi's lease dates from 2001. Defendant Neela's stated business is as a gift shop. Plaintiff Hamawi runs a "take out" delicatessen. However, sometime after Hamawi occupied its space Neela began to sell certain beverages and food items that directly competed with Hamawi's business

Neela's lease states on its first page that "Tenant shall use and occupy demised premises for Gift Shop, Cards, Healthy & Beauty Aids, and for no other purpose." A rider to the Neela lease contains a provision restricting the landlord's ability to lease space to a business similar to Neela's. That clause provides as follows: 47. Landlord represents that during the term herein he will not rent or permit any new tenant to operate a similar business to the Tenant's herein in the premises known as 73-83 Roosevelt Avenue, Valley Stream, New York, nor would allow new tenant to carry the following items:

Greeting Cards, Gift Wrap Paper, Gift Bows, and Gift Tags.

In its complaint the plaintiff asserts that it, Hamawi, "knew about and relied upon the use clause in the Stationery [Neela] Lease at the time it entered into the Deli [Hamawi] Lease. The use clause in the Stationery Lease was consideration for Hamawi Deli entering into the Deli Lease with defendant Psaras." (Complaint, ¶ 6).

Based upon the foregoing, Hamawi claims that it was an intended third-party beneficiary of the use clause in the Neela lease, that Neela's sale of food and beverages violated its (Neela's) lease, and that Neela ignored Psaras's demand that Neela cease its sale of such items. However, it is apparent that beyond this demand by her managing agent, Psaras took no additional steps against Neela.Finally, it is not disputed that Hamawi has not paid all the rent due Psaras. As of the date of the answer and counterclaims, the plaintiff is stated to owe $15,356.26; the figure is not disputed, although the right to any rent is.[FN2]

In its complaint, Hamawi makes the following claims: breach of its lease by Psaras [first cause of action]; breach of its rights as a third-party beneficiary of the Neela lease by [*4][*5]both Neela (by selling food) and by Psaras (in failing to enforce the Neela use clause against Neela) [second cause of action]; tortious interference of contract as against Neela [third cause of action]; and common-law unfair competition as against Neela [fourth cause of action].

Both defendants now move separately for summary judgment.

It is well settled that summary judgment is a drastic remedy which should not be granted where there is any doubt about the existence of a triable issue of fact (Bhatti v. Roche, 140 AD2d 660 [1988]). It is nevertheless an appropriate tool to weed out meritless claims (Lewis v. Desmond, 187 AD2d 797 [1992]; Gray v. Bankers Trust Co. of Albany, N. A., 82 AD2d 168 [1981]). Even where there are some issues in dispute in the case which have not been resolved, the existence of such issues will not defeat a summary judgment motion if, even when the facts are construed in the nonmoving party's favor, the moving party would still be entitled to relief (Brooks v. Blue Cross of Northeastern New York, Inc., 190 AD2d 894 [1993]).

Generally speaking, to obtain summary judgment it is necessary that the movant establish its claim or defense by the tender of evidentiary proof in admissible form sufficient to warrant the court, as a matter of law, in directing judgment in its favor (CPLR 3212 [b]). The burden then shifts to the non-moving party. To defeat the motion for summary judgment the opposing party must come forward with evidence to demonstrate the existence of a material issue of fact requiring a trial (CPLR 3212 [b]); see also GTF Marketing, Inc. v. Colonial Aluminum Sales, Inc., 66 NY2d 965 [1985]; Zuckerman v. City of New York, 49 NY2d 557 [1980]). The non-moving party must lay bare all of the facts at its disposal regarding the issues raised in the motion (Mgrditchian v. Donato, 141 AD2d 513 [1988]). Conclusory allegations are insufficient (Zuckerman v. City of New York, supra), and the defending party must do more than merely parrot the language of the complaint or bill of particulars. Although on such a motion the court must draw all reasonable inferences in favor of the nonmoving party (Nicklas v Tedlen Realty Corp., 305 AD2d 385 [2003]; Rizzo v. Lincoln Diner Corp., 215 AD2d 546 [1995]), there must be evidentiary proof in support of the allegations (Fleet Credit Corp. v. Harvey Hutter & Co., Inc., 207 AD2d 380 [1994]; Toth v. Carver Street Associates, 191 AD2d 631 [1993]).

Applying these well-established standards to the case at bar, it is apparent that the motions must be granted with respect to the merits of the dispute.

Initially, the Court notes the procedural objection raised by the plaintiff against both moving defendants that all pleadings were not annexed to the moving papers, as required by CPLR 3212(b). However, on motions such as the ones at bar a failure to annex the pleadings may be overlooked by a court if the record is otherwise sufficiently complete (Welch v Hauck, 18 AD3d 1096 [2005]; see CPLR 2001) and should not lead to denial in any event but, rather, dismissal of the motion without prejudice to renewal (Green v Wood, 6 AD3d 976 [2004]). The Court has before it a sufficiently complete record, which includes copies of all the pleadings; the co-movant Psaras annexed the complaint, its answer and the plaintiff's reply to her counterclaims, and Neela's answer was supplied in Neela's reply. The Court thus [*6][*7]will overlook the procedural defect and address the merits.

Neela's Motion

As noted above, the second, third and fourth causes of action are asserted against Neela. The second cause of action must be dismissed because Hamawi is not an intended third-party beneficiary of the lease between Neela and its landlord, Psaras. In order to demonstrate that a plaintiff enjoys this status, it must show the existence of a valid and binding contract between the other parties (a lease, in this case), that the contract was intended for its benefit, and that the benefit was sufficiently immediate and not incidental, such that it indicates an assumption by the contracting parties of a duty to compensate the plaintiff if the benefit is lost (Mendel v Henry Phipps Plaza W., Inc., 6 NY3d 783, 786 [2006], citing Burns Jackson Miller Summit & Spitzer v Lindner, 59 NY2d 314, 336 [1983]).

Aside from the existence of a valid lease between Psaras and Neela, it is apparent that the lease presented by Neela on its motion provides for no benefit flowing to any other tenant, let alone Hamawi in particular. In response, no issue of fact is presented. Hamawi asserts that the restrictions imposed by use clauses are intended to protect neighboring tenants, including Hamawi in this case. However, it presents no authority in support of this dubious proposition - which is especially weak here because plaintiff's lease is wholly silent not only with respect to the duties of any other tenants, but does not even mention that the landlord has any other tenants at all. It is a "stand alone" document.

Indeed, and ironically, Neela, not Hamawi, was the tenant protected from competition from other stores, by way of the rider paragraph set forth above. It is this type of clause that is absent from Hamawi's lease. In any event, a breach of such a paragraph could lead to a claim against the landlord, but not against the competing tenant, unless the competing tenant's lease itself specifically forbade competing with the tenant asserting third-party beneficiary status, which might arguably support this type of a claim (cf., Benipal v Herath, 251 AD2d 933 [1998]). As noted, however, no such provision is to be found in Neela's lease.

The third cause of action asserts tortious interference with contract. As explained by the Court of Appeals, where there is an enforceable contract between the plaintiff and another, and the defendant deliberately interferes with that contract and causes a breach, the plaintiff may recover damages even if the defendant had been engaged in lawful behavior (NBT Bancorp v Fleet/Norstar Financial Group, Inc., 87 NY2d 614, 621 [1996], citing Israel v Wood Dolson Co., 1 NY2d 116 [1956]). Where there has been no breach, but only interference with prospective contractual rights, the plaintiff must show more culpable conduct, as "greater protection [is] accorded enforceable contract rights and greater deference accorded free competition where the contract rights are only prospective" (NBT Bancorp v Fleet/Norstar Financial Group, Inc., 87 NY2d 614, supra, at 622, citing Guard-Life Corp. v Parker Hardware Mfg. Corp., 50 NY2d 183). Consequently, the conduct that much be shown where there has been no breach must amount to a crime or an independent tort; if the conduct does not rise to that level, a claim sounding in tortious interference with prospective contractual rights will not lie (see Carvel Corp. v Noonan, 3 NY3d 182, 190 [*8][*9][2004]).

In the present case the plaintiff alleges, in effect, that Neela's breach of its lease contract with Psaras, specifically the use clause, induced a breach by landlord Psaras of the landlord's lease with Hamawi. However, there is no breach of any provision of Hamawi's lease with Psaras to which Hamawi can point; no specific obligation is referred to in its opposing papers. Further, and as is discussed below, no action for breach lies at all.

In addition to its inability to demonstrate a breach of its own lease by the landlord by dint of this alleged failure, Hamawi also does not demonstrate that Neela was the actor in any such breach, that is, Hamawi has not shown that Neela induced the breach, as is required by the claim made in the third cause of action. Specifically, Hamawi complains that it was the landlord's failure to enforce its lease with Neela that caused the breach by the landlord of Hamawi's own lease without explaining the mechanism by which Neela somehow induced the landlord not to enforce the landlord's own rights against Neela.

Finally, even if the complaint and opposing papers are read generously as a claim that Neela interfered with Hamawi's relations with prospective customers, the only behavior cited is Neela's offer of similar products to members of the public. At best, this may be a breach of Neela's own lease, but the act is neither illegal nor tortious on its own (Carvel Corp. v Noonan, 3 NY3d 182, supra). Accordingly, the third cause of action must be dismissed.

The fourth cause of action alleged against Neela is common-law unfair competition. Such a claim requires a wrongful misappropriation and distribution of a party's name or product (i.e., passing them off as one's own) and a commercial benefit flowing from that misappropriation, and/or deception of the public (see Capitol Records v Naxos of America, Inc., 4 NY3d 540, 563-564 [2005]; Telford Home Assistance, Inc. v TPC Home Care Svcs., Inc., 211 AD2d 674 [1995]; Flamingo Telefilm Sales, Inc. v United Artists Corp., 22 AD2d 778 [1964]). The movant has demonstrated, prima facie, that none of the facts alleged amounts to such a claim, and the plaintiff has been unable to rebut this initial showing. Once again, the complaint is based on the alleged violation of the Neela lease and the sale of the same or similar goods, but this has nothing to do with a claim of unfair competition.

Accordingly, the action as against Neela must be dismissed in its entirety. However, the Court cannot find that the action was wholly frivolous, and therefore denies that branch of the motion that is for costs pursuant to 22 NYCRR 130-1.

The Psaras Motion

The plaintiff alleges two causes of action against the landlord, Psaras. The first is breach of contract, and the second is a founded on a breach of defendants' duty to plaintiff as a third-party beneficiary of the Psaras-Neela lease.

By presenting the lease, Psaras has demonstrated, prima facie, that the key factual allegation made by the plaintiff that it had relied on the use clause in the Neela lease in entering into its own lease with Psaras is negated by the plaintiff's lease itself. Specifically, Hamawi's lease contains a standard provision entitled "No Representations By Owner" which recites that the landlord has made no representations or promises regarding the demised [*10][*11]premises except as expressly set forth in the lease. The intent of this provision is clear, and the Court can not rewrite the agreement to include the contrary provision urged by the plaintiff (see, e.g., Matter of Matco-Norca, Inc., 22 AD3d 495 [2005]; Tantleff v Truscelli, 110 AD2d 240 [1985). Accordingly, there is no basis for finding that there was a breach of contract by Psaras based upon its alleged failure to enforce the use clause in Neela's lease. As indicated above, Neela itself had the type of clause that might give rise to such a breach of contract claim, but the plaintiff did not, and the Court cannot write one in.

The second cause of action must be dismissed for the reasons stated above with regard to Neela.

Accordingly, the complaint is dismissed as against Psaras. However, that branch of the motion that is for costs pursuant to 22 NYCRR 130.1 is denied, and summary judgment is granted to the plaintiff dismissing the second counterclaim seeking such an award (CPLR 3212[b] [upon a search of the record, summary judgment may be granted to non-moving party]).

Finally, the movant has made a prima facie showing of entitlement to judgment on its first counterclaim for rent arrears. The plaintiff has not presented any contrary proof to the effect that the amount sought is not owed, beyond reference to the claims made in its complaint as a defense to this counterclaim. However, that complaint is by this order now dismissed. Accordingly, summary judgment on the first counterclaim is granted. The Court hereby severs and continues the first counterclaim for purposes of an inquest and entry of judgment thereon.

Submit order for inquest, on notice.

This shall constitute the Decision and Order of this Court.

E N T E R

DATED: December 15, 2006

_____________________________

HON. DANIEL PALMIERI

Acting Supreme Court Justice

TO: Footnotes

Footnote 1: The lease provided to the Court bears a date of 2005, but there is no dispute that Neela's tenancy began in 2000. No party has asserted that the terms and conditions set forth in the Neela lease provided to the Court vary in any way from that of lease signed in 2000.

Footnote 2: It should be noted that by order dated November 3, 2006 the District Court, Nassau County (Miller, J.) dismissed a non-payment summary proceeding brought by landlord Psaras because this present action was pending in the Supreme Court. The merits were not reached.