Pike Realty Co., LLC v Cardinale

[*1] Pike Realty Co., LLC v Cardinale 2008 NY Slip Op 52422(U) [21 Misc 3d 1139(A)] Decided on November 18, 2008 Supreme Court, Suffolk County Whelan, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 November 18, 2008
Supreme Court, Suffolk County

Pike Realty Company, LLC, Plaintiff,

against

Philip J. Cardinale, TOWN OF RIVERHEAD COMMUNITY DEVELOPMENT AGENCY, TOWN OF RIVERHEAD PUBLIC PARKING DISTRICT NO. 1, and TOWN OF RIVERHEAD, Defendants.



07-31749



MAIMONE & ASSOCIATES PLLC

Attorneys for Plaintiff

170 Old Country Road, Suite 609

Mineola, New York 11501

DAWN C. THOMAS, ESQ.

Attorney for Defendants

200 Howell Avenue

Riverhead, New York 11901

Thomas F. Whelan, J.

ORDERED that this motion (#

002) by the defendants for an order awarding them partial summary judgment on their counterclaim for a judgment confirming the defendants' exercise of a reverter and directing the plaintiff to execute deeds and all other documents necessary to effect a conveyance of the subject premises to the defendant, Town of Riverhead CDA, is considered under CPLR 3212 and is granted.

The plaintiff commenced this action for a judgment reforming certain reverter clauses contained in an Agreement of Sale and other documents including a deed executed by the parties in connection with the sale of the historic theater building situated on Main Street in Riverhead and its development into a performing arts center. The plaintiff also demands permanent injunctive relief prohibiting the defendants from exercising the reverter and an award of damages incurred by reason of the defendants' purported breaches of the implied covenant of good faith and fair dealing, including their purported violations of the plaintiff's due process rights. By way of counterclaim, the defendants demand a judgment confirming their exercise of the subject reverter and directing the plaintiff to execute all documents necessary to effect a conveyance of the subject premises in favor of defendant, Town of Riverhead CDA. The facts underlying such claims are detailed below.

In November of 2004, the plaintiff was designated as the qualified and eligible sponsor for those portions of the Town of Riverhead's downtown urban renewal plan, which were aimed at renovating, restoring and transforming the historic theater building situated on Main Street into a performing arts center. On February 2, 2005, an Agreement of Sale setting forth the terms of the plaintiff's purchase of the theater building and the land on which it sits, was executed by the plaintiff and defendant Town of Riverhead Community Development Agency (hereinafter the "CDA"). By deed dated February 17, 2005, the CDA conveyed title to the subject premises to the plaintiff. In December of 2006, the parties executed a contract Addendum in conjunction with the Town's conveyance of an easement over town land to the plaintiff enabling it to comply with certain zoning requirements.

In the Agreement of Sale and the deed, the CDA retained a reverter interest in the premises. The reverter clauses contained in these documents provide that the premises would revert to the CDA in the event, inter alia, the plaintiff "does not restore, reconstruct and improve the theater and develop the premises as a theater and performing arts center within and maintain said premises in this use for three years from the date of closing." While the deed incorporated by reference this reverter clause, the December 8, 2006 Addendum to the Agreement of Sale required that the plaintiff "completes the redevelopment project outlined in the contract of sale such that the building can be opened as a performing arts center as set forth in the Agreement of Sale dated February 2, 2005; i.e. no later than February 18, 2008." Upon a reading of these documents together, it appears that the plaintiff was required to complete its redevelopment of the of the theater not later than February 18, 2008. [*2]

As a result of prior motion practice, the plaintiff's claims for a judgment reforming the reverter clauses contained in the February 2, 2005 Agreement of Sale and all subsequent documents including the February 12, 2005 deed, so as to provide that the right of reverter conferred upon the defendants could not be exercised until two years and nine months have expired from the date final permits are issued and its demands for permanent injunctive relief prohibiting the defendants from, among other things, exercising the reverter clauses, were dismissed. The defendants' demands for judgment on their counterclaim for declaratory and mandatory injunctive relief were denied without prejudice to the interposition of a formal motion for such relief.

By the instant motion (#

002), the defendants seek partial summary judgment on their counterclaim for declaratory and mandatory injunctive relief compelling the plaintiff to convey and otherwise execute all documents necessary to restore title to the subject premises to the defendant Town of Riverhead CDA by reason of their exercise of their right of reverter. The defendants also seek a hearing on the issue of monies due the parties under the terms of their agreement in light of the defendants' exercise their right of reverter.

The plaintiff opposes the motion on the following grounds: 1) that the plaintiff satisfied the conditions of the reverter clauses contained in the Agreement of Sale and Deed; 2) triable issues of fact exist regarding whether the defendants breached the contract by frustrating the plaintiff's performance of its obligations; and 3) the discovery demanded by the plaintiff remains outstanding and bears upon the critical issues in this case. The court, however, rejects these contentions of the plaintiff and grants the instant motion by the defendants for partial summary judgment on their counterclaim.

Review of the record adduced on the instant motion by the defendants reveals that there is no dispute that the subject premises were not redeveloped into a performing arts center by February 18, 2008. Moreover, the record reveals the existence of three separate clauses in the documents executed by the parties which, when read together, obligated the plaintiff to renovate, restore and transform the subject premises into a performing arts center within three years of the closing of title, namely, by February 18, 2008. Under these circumstance, the court finds that the defendants established, prima facie, their entitlement to partial summary judgment on their counterclaim for a judgment confirming their rightful exercise of the reverter contained in the deed and other agreements and for an order compelling the plaintiff to convey the subject premises to the defendant, Town of Riverhead CDA (see City of Peekskill v Schurr, 14 AD3d 643, 789 NYS2d 308 [2d Dept 2005]; see also Alvarez v Prospect Hosp., 68 NY2d 320, 508 NYS2d 923 [1986]).

It was thus incumbent upon the plaintiff to rebut the defendants' prima facie showing of its entitlement to the partial summary judgment demanded by proof in admissible form sufficient to raise genuine questions of fact or a legal defense in bar to the defendants' claims (see Zuckerman v City of New York, 49 NY2d 557, 427 NYS2d 595 [1980]). Unfortunately, [*3]the plaintiff's opposing papers failed to satisfy this burden.

It is axiomatic that the fundamental, neutral precept of contract interpretation is that agreements are construed in accord with the parties' intent and the best evidence of what the parties to a written agreement intend is that which they say in their writing (see Slatt v Slatt, 64 NY2d 966, 488 NYS2d 645 [1985]; Henrich v Phazar Antenna Corp., 33 AD3d 864, 827 NYS2d 58 [2d Dept 2007]). A written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms (see Greenfield v Phillies Records, 98 NY2d 562, 750 NYS2d 565 [2002]). Such agreements should be read as a whole and interpreted to give effect to their general purposes without undue emphasis being placed upon particular words and phrases since the meaning of the agreement may be distorted where undue force is given to single words or phrases (see Bailey v Fish & Neave, 8 NY2d 523, 837 NYS2d 600 [2007]; Matter of Westmoreland Coal Co. v Entech, Inc, 100 NY2d 352, 763 NYS2d 525 [2003]). Circumstances or evidence extrinsic to the agreement will not be considered where the parties' intent is clear from the four corners of their agreement (see W.W.W. Assoc. v Gianconieri, 77 NY2d 157, 565 NYS2d 440 [1990]; Katina, Inc. v Famiglietti, 306 AD2d 440, 761 NYS2d 327 [2d Dept 2003]).

Here, the plaintiff s claim that it complied with the "three years from closing date" limitations period within which the plaintiff agreed to "restore and improve the Premises as a performing arts center" is predicated upon counsel's assertion that "opening and operating the center is not the requirement in the contract or the deed." Continuing, counsel claims that "Pike met the actual stated condition in the contract and deed because for three years after the closing, Pike took steps to develop the building as a performing arts center, and did so consistently." Noticeably absent from such assertions is any reference to the reverter clause set forth in the Addendum to the Contract dated December 8, 2006, which clause clarified the reverter clauses contained in Agreement of Sale and Deed so as to clearly and unambiguously fix the date on which the performing arts center had to be up and running.

As noted above, the December 8, 2006 Addendum to the Agreement of Sale required the plaintiff to "complete[s] the redevelopment project outlined in the contract of sale such that the building can be opened as a performing arts center as set forth in the Agreement of Sale dated February 2, 2005; i.e. no later than February 18, 2008." The court thus finds upon a reading of the three reverter clauses together and the plain meaning of their terms that the law date on which the defendants' reverter would arise was fixed as February 18, 2008. The plaintiff was thus required to complete its redevelopment of the of the theater as a performing arts center not later than February 18, 2008. That the plaintiff understood the plain meaning of these clauses meant that the defendants' right to exercise their reverter arose on February 18, 2008 is apparent from paragraph 9 of the plaintiff's complaint wherein it alleged that "the reverter deadline is February 18, 2008" and from the position it advanced on its prior motion for preliminary injunctive relief. Under theses circumstances, the court rejects as unmeritorious the plaintiff's claim that it complied with the conditions of the reverter clauses "because for three years after the closing, Pike took steps to develop the building as a [*4]performing arts center, and did so consistently."

Also rejected as unmeritorius is the plaintiff's claim that partial summary judgment in favor of the defendants is precluded by the existence of genuine questions of fact regarding whether the defendants frustrated the plaintiff's performance of its obligations under the contract such that said defendants may not rely upon the plaintiff's failure to meet stated conditions necessary to extinguish the defendants' right of reverter.

It is well established that a party to a contract may not rely on the failure of another person to perform or otherwise satisfy a condition precedent where that party has frustrated or otherwise prevented the performance or satisfaction of the condition precedent (see ADC Orange, Inc. v Coyote Acres, Inc., 7 NY3d 484, 824 NYS2d 192 [2006]; see also Rachmani Corp. v 9 East 96th St. Apt. Corp., 211 AD2d 262, 629 NYS2d 382 [1st Dept 1995]). A party who frustrates the occurrence of a condition is not only precluded from using the failure of the condition to avoid the contract, but also subjects itself to a claim for breach of the implied covenant of fair dealing and good faith (see Koolaire Serv. & Installation Corp. v Board of Educ. of City of New York, 28 NY2d 101, 320 NYS2d 46 [1971]; Merzon v Lefkowitz, 289 AD2d 142, 735 NYS2d 106 [1st Dept 2001]).

Here, the record is devoid of any proof in admissible form that the defendants frustrated or wrongfully interfered with the plaintiff's ability to satisfy the condition which would have effected the extinguishment of the defendants' reverter rights. All of the plaintiff's complaints about the defendants' purportedly wrongful conduct are predicated upon bald, conclusory allegations of the defendants' purported delays in processing the plaintiff's applications for municipal approvals and in misguiding the plaintiff on how to proceed. Said allegations, which are contradicted by the plaintiff's agreement to the terms of contract addendum and other evidentiary matter set forth in the record, are insufficient to defeat the defendants' prima facie showing of their entitlement to the summary judgment demanded by them (see Orange County-Poughkeepsie Ltd. Partnership v Bonte, 37 AD3d 684, 830 NYS2d 571 [2d Dept 2007]; 110 Sand Co. v Nassau Land Improvement Co. Inc., 7 AD3d 497, 775 NYS2d 578 [2d Dept 2004]). The plaintiff thus failed to raise a question of fact regarding the defendants' forfeiture of their right or reverter by reason of their engagement in any wrongful conduct which frustrated the plaintiff's ability to satisfy the condition and thereby extinguish said right of reverter.

The plaintiff's further claim that the lack of engagement in meaningful discovery warrants a denial of the defendants' motion is also rejected as unmeritorius. The record is devoid of any evidentiary showing that discovery may lead to relevant evidence and that facts essential to justify opposition exclusively are within the knowledge and control of the defendants (see Gasis v City of New York, 35 AD3d 533, 828 NYS2d 407 [2d Dept. 2006]).

In view of the foregoing, the instant motion by the defendants for partial summary judgment on their counterclaim for a judgment confirming the defendants' exercise of a [*5]reverter and directing the plaintiff to execute deeds and all other documents necessary to effect a conveyance of the subject premises to the defendant, Town of Riverhead CDA, is granted and said counterclaim is severed from all other claims interposed this action. The court thus declares that the defendants properly exercised the right of reverter contained in the February 2, 2005 Sales Agreement and February 17, 2005 Deed as modified by the contract Addendum dated December 8, 2006. The defendants' further request for a hearing on the issue of monies due between the parties is referred to the next conference date of December 16, 2008. The plaintiff is thus directed to convey title to the premises and to otherwise execute all documents necessary to effect a reconveyance of the subject premises to defendant, Town of Riverhead CDA, within thirty (30) days after service of a copy of the judgment to be entered herein on the defendants' severed counterclaim.

Pursuant to CPLR 3212(e), the defendants are directed to settle a judgment, upon a copy of this order, reflecting the severance of their counterclaim and the award of partial summary judgment thereon as set forth herein.

DATED: __________________________________________________________

THOMAS F. WHELAN, J.S.C.