Charlotte Ave. Assoc., LLC v Advance Nissan, LLC

[*1] Charlotte Ave. Assoc., LLC v Advance Nissan, LLC 2008 NY Slip Op 52552(U) [21 Misc 3d 1148(A)] Decided on December 22, 2008 District Court Of Nassau County, First District Fairgrieve, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 22, 2008
District Court of Nassau County, First District

Charlotte Avenue Associates, LLC, Petitioner(s)

against

Advance Nissan, LLC; WESTBURY NISSAN, LLC; and SMITHTOWN NISSAN, INC., Respondent(s)



SPF 005859/07



Salamon, Gruber, Blaymore & Strenger, P.C., Attorneys for Petitioner, 97 Powerhouse Road, Roslyn Heights, New York 11577, (516) 625-1700; Bellavia, Gentile & Associates, LLP, Attorneys for Respondent, 200 Old Country Road, Suite 400, Mineola, New York 11501, (516) 873-3000.

Scott Fairgrieve, J.

MOTION

The Petitioner moves to strike the Respondent's 2nd and 3rd affirmative defenses and counterclaim.

BACKGROUND

Petitioners-Landlords commenced this non-payment proceeding against Respondent-Assignee in this Court on November 9, 2007 concerning the commercial premises located at 200 Charlotte Avenue, Hicksville, New York. Initially, Petitioner entered into a lease agreement with Assignor, Westbury Nissan, LLC on December 2, 2000. With the consent of Petitioner, Westbury Nissan assigned its lease rights to Respondent, Advance Nissan on May 16, 2006 for use as an automobile dealership. Petitioner alleges that in the assignment agreement, Respondent promised to pay to Petitioner as additional rent Respondent's share of insurance premiums. As a result of Respondent's failure to pay the additional rent due Petitioner has commenced this suit seeking a final judgment awarding it possession of the premises; a warrant of eviction against Respondent, and a money judgment against Respondent-Assignee, Respondent-Assignor, and Respondent-Guarantor, jointly and severally for rental arrears in the amount of $28,082.01.

Conversely, Respondent-Tenant alleges that the additional rent, which is payment for insurance on the premises requires Respondent to pay two duplicative liability insurance [*2]policies. In its two affirmative defenses, the Respondent seeks that the lease be reformed due to either unilateral mistake on the Respondent's part and the culpable conduct of the Petitioner, as well as on the grounds of mutual mistake of both parties to include duplicative liability insurance policies in the lease. In addition, the Respondent asserts a counterclaim which seeks a money judgment against the Petitioner in the amount of $23,123.00 for additional rent mistakenly paid under Respondent's protest because the duplicative insurance provisions in the lease.

DISCUSSION

According to 3 Dolan, Rasch's Landlord and Tenant-Summary Proceedings, §9:24, at 356 [4th Ed] " When an assignee accepts an assignment of a lease of real property, he thereupon, by virtue of the assignment, becomes liable to the lessor for the rent stipulated to be paid' "(Citing, 78th St. & Broadway Co. v. Pursell Mfg. Co., 166 A.D. 684, 152 N.Y.S. 52 (1st Dep't 1915).Furthermore, when "An assignee . . . does not come in to privity of contract with the landlord unless the assignee expressly assumes the tenant's obligations under the lease." Ann Peldo Cargile, Michael B. Noble, Leasing and Property Management, Assignments and Subleases, 17-OCT Prob. & Prop.40 (September/October 2003).

§44 of the lease rider clearly states:

LIABILITY INSURANCE: Tenant shall secure and maintain for the entire term of the Lease, at its own cost and expense, comprehensive general liability insurance including bodily injury and property damages of not less than one million dollars ($1,000,000.00) per name Owner (and such others as are designated by Owner) as additional names insured. The policy shall contain the standard cancellation clause with a thirty (30) day notification. Such policy shall be issued in a liability insurance company satisfactory to the Owner. The insurance company shall be at least A VIII rated per A.M. Best and licensed to do business in the State of New York. Tenant shall deliver to Owner a duplicate original of the policy or a certificate of insurance evidencing same.

§49 of the lease rider states:

ADDITIONAL PROVISIONS RE: INSURANCE:(A)The Tenant agrees to pay Owner (in the manner hereinafter set forth), as additional rent, "Tenant's Insurance Charge" (as hereinafter defined). As used herein Tenant's Insurance Charge shall mean an amount equal to Tenant's Proportionate Share (namely `100%) of Owner's Insurance Costs (as hereinafter defined). For purposes hereof, Owner's Insurance Costs shall include the aggregate premiums payable by Owner for any and all types of insurance which Owner may maintain at any time during the term of this Lease, including without limitation, liability, personal injury, property damages, fire, casualty, rent, extended coverage in limits, upon such terms, and with deductibles selected by Owner in its sole and absolute discretion and/or as may be required by Owner's mortgagee from time to time. Owner shall have the right, in its sole and absolute discretion, to maintain any and all insurance under one or more blanket policies and/or under any one or more underlying and/or umbrella policies. Tenant's Proportionate Share shall be one hundred (100%) percent.

In the case at bar, the parties executed the lease assignment, wherein it was agreed that: [*3] "It is expressly understood and agreed that Assignor, Assignee and the undersigned Guarantor shall be and remain liable jointly and severally for the payment of all rent and additional rent and any and all other charges and adjustments of rent and for the due performance, observance of, and compliance with all of the terms, covenants, conditions and other provisions and other agreement contained in the Lease and this Consent on tenant's part to be paid, performed, observed, or complied with."

Based upon a review of the above, it is clear that Respondent clearly consented to all the terms and conditions of the subject lease, including payment of all rent and additional rent. Respondent clearly had the opportunity to raise any objection to the lease provisions, but chose not to do so. Such actions constitute a waiver and estoppel to any claim or affirmative defense asserted in the answer. See, International Chimney Corp. v. 26 West Spring Street Associates, 167 AD2d 816, 561 NYS2d 933 (4th Dep't, 1990).

Furthermore, it is well-established that if an express covenant is made by the assignee, then the assignee is liable to the Landlord by both privity of estate and privity of contract Hart v. Socony-Vacuum Oil Co., Inc., 291 NY 13, 16, 50 NE2d 285 (1943) (citing, Frank v. New York, L.E. & W.R. Co., 122 NY 197, 219, 25 N.E. 332; 2 Taylor on Landlord & Tenant (9th Ed.) p. 14. In addition, "[A]n assignee never stands in any better position then his assignor TPZ Corporation v. Dabbs, 25 AD3d 787, 789 808 NYS2d 746 (Sup.Ct,App.Div. 2nd Dept 2006) (citing, Matter of International Ribbon mills, 36 NY2d 121, 126, 365 NYS2d 808, 325 NE2d 137) and takes an assignment subject to any pre-existing liabilities" TPZ Corporation, 25 AD3d. at 789, (see also, Richard T. Blake & Assoc. v. Aetna Cas. & Sur. Co., 255 AD2d 569, 570, 681 NYS2d 73). Accordingly, in the case at bar, the Petitioner entered into the initial lease with the present Assignor, Westbury Nissan, LLC, on December 1, 2000. During the time that the Assignor occupied and operated business out of the subject premises it never raised any dispute as to the terms within the lease, especially any discrepancies found in regards to duplicate insurance policies paid on the subject premises.

Accordingly, the Doctrine of Laches of CPLR §213(1) gives an action in equity, such as reformation of contract, a six-year statute of limitation. Siegel, New York Practice, §36 at 47-48 (4th Ed. 2005). As a result of the Assignor's failure to bring forward a suit in regards to the duplicative insurance policies being paid on the subject premises, the statute of limitations has run for the assignee. Since it has been established that the assignee is not put in a better position than the Assignor, supra , the assignee is now barred from raising the defense of mistake. This situation could have been avoided if the Respondent has protested the provisions of the lease regarding the duplicative insurance premiums when it first took possession of the premises on May 16, 2006. If the Respondent had done so, it would have avoided the Statute of Limitations bar on raising a defense of mistake.

Furthermore, subsequent to Petitioner's filing of its motion on November 9, 2007 in this Court, the Respondent filed a motion to remove this non-payment proceeding from this Court to the Nassau County Supreme Court to consolidate this action with the Respondent's action in the Supreme Court seeking declaratory and ancillary relief. In his July 30, 2008 decision, Justice Adams dismissed the Respondent's case and refused to remove the case from this Court's docket. [*4]In his decision, Justice Adam's posits:

CPLR 213(6) provides that an action based upon mistake must be brought within six years of its accrual. When applying this limitation period to an action seeking reformation of a lease, it has been held that such an action accrues upon execution of the lease; therefore, an action grounded in mistake and brought more than six years after a lease was executed is time-barred" (Arrathoon v Ease New York Savings Bank, 169 AD2d 804, 805; see First National Bank of Rochester v Volpe, 217 AD2d 967; Black v Mill Road Assoc., 86 AD2d 621). The lease which the plaintiff assumed on May 16, 2006 ( see defendant's Exhibit A) was executed on December 1, 2000 ( see plaintiff's Exhibit 4) or more than six (6) years before the May 9, 2008 commencement of this action ( see plaintiff's Exhibit 2). Moreover, its reliance upon CPLR §203(g) is misplaced since the alleged mistake could, with due diligence, have been reasonably discovered within two years of the May 16, 2006 assignment.

Since the Respondent filed an identical action in Nassau County Supreme Court which was decided on is merits before Justice Adams, supra , the Respondent is precluded by the Doctrine of Res Judicata from relitigating its counterclaim and affirmative defenses, which is identical to the action previously litigated before Justice Adams, now before this Court.

CONCLUSION

The Petitioner's motion to strike the Respondent's 2nd and 3rd affirmative defenses and counterclaim is granted. The affirmative defenses and counterclaim are dismissed with prejudice.

This case is set down for trial for Wednesday, January 21, 2009, at 9:30 a.m. in the Landlord/Tenant Part of First District Court, County of Nassau, 99 Main Street, Hempstead, New York.

So Ordered:

/s/ Hon. Scott Fairgrieve

DISTRICT COURT JUDGE

Dated:December 22, 2008

cc:Salamon, Gruber, Blaymore & Strenger, P.C.

Bellavia, Gentile & Associates, LLP

SF/jmc