Fucile v L.C.R. Dev., Ltd.

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Fucile v L.C.R. Dev., Ltd. 2011 NY Slip Op 32256(U) August 11, 2011 Sup Ct, Nassau County Docket Number: 000525/11 Judge: Stephen A. Bucaria 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. [* 1] SHORT FORM ORDER SUPREME COURT - STATE OF NEW YORK Present: HON. STEPHEN A. BUCAR Justice TRIALIIAS, PART NASSAU COUNTY LEONAR FUCILE and JOSEPH FUCILE Plaintiffs INEX No. 000525/11 MOTION DATE: June 16, 2011 Motion Sequence # 002 , 003 -againstL.C. R. DEVELOPMENT , LTD. Defendant. The following papers read on this motion: Notice of Motion....................... ................ X Cross- Motion............................................. X Affirmation in Opposition......................... X Reply Affirmation...................................... XX ranted Motion by defendant to dismiss the complaint is Cross-motion by plaintiffs for sanctions is in part and denied in part. denied This is an action for a declaratory judgment that plaintifftenant is in compliance with the terms ofa lease with respect to the payment of rent. On September 30, 1997 , defendant L.C. R. Development , Ltd leased premises located at 1619 Jericho Turnpike in New Hyde Park to Child Site Corp for a term of 20 years. The lease provided that the tenant had two options to renew for additiona15- year periods. The lease further provided that landlord shall provide the tenant with a " turnkey facilty" in substantial compliance with the " Tutor Time Plans and Specifications Book." [* 2] FUCILE v L. R. DEVELOPMENT, LTD. Index no. 000525/11 Plaintiffs Leonard and Joseph Fucile are franchisees of Tutor Time Child Care , 2001 , plaintiffs Systems , Inc and operate a child care center at the premises. On January 4 entered into an assignment and assumption agreement, whereby they assumed the tenant's obligations under the lease provisions (Reply aff of Kevin Walsh, ex A). The lease provided that the base rent was $15 208.33 per month. Commencing in the , provided third year , the rent was to be adjusted in accordance with the consumer price index that the increase did not exceed 4%. The consumer price index to which the lease refers is , Northern New Jersey, Long that for "Urban Wage Earners and Clerical Workers (New York Island Average). " The lease provided that it was a net lease , and tenant was responsible for real taxes, maintenance, and insurance. Addendum 1 to the lease provided that the rent for the first six months was 18% of triple net gross income or 1/4 of the rent, whichever is greater , capped at base rent plus " charges. " The addendum further provides that for the next six months the rent was 18% of , capped at base rent plus triple net charges. gross income or 1/2 rent , whichever is greater , which The addendum provides that for the second year the rent was $18. 25 per square foot corresponds to the " base rent" provided in the lease. The lease provides if the tenant defaults in fulfillng any of the covenants of the lease " landlord may serve a other than the covenants for the payment of rent or additional rent The lease further provides that if tenant 15 day notice specifying the nature of the default. cancellation of the lease. fails to cure within 15 days , landlord may serve a five day notice of On November 4 , 2010, the landlord served plaintiffs with notice that they were in , the landlord asserted default in the payment of rent , effective January 4 2004. In the letter 831. 50. The rent arrears that the total arrears, including rent , taxes , and insurance , was $279, were calculated based upon an annual increase of 4% each year. The landlord demanded that lease. On plaintiffs cure the default within ten days , or landlord would terminate the , after deducting December 23, 2010 , the landlord wrote to the plaintiffs again and stated that a payment in the amount of$60 000, the balance due of$2l9, 831.50 was required to be paid within 15 days or the lease would be terminated. On Januar 13, 2011 , plaintiffs commenced this action seeking a declaratory judgment that they are not in default in the payment of rent. Plaintiffs assert that rent is to be calculated based upon an initial lease year commencing June 1, 2001. Plaintiffs further assert that the consumer price index is to be calculated based upon the ratio of the index for the prior month [* 3] FUCILE v L. R. DEVELOPMENT, LTD. Index no. 000525/11 plaintiffs assert that , under the terms to the index for the previous 13 month period. Finally, In their second cause of of the lease , non- payment of rent is not a basis for termination. , the written lease agreement does not action , plaintiffs allege that because of mutual mistake ofthe lease to reflect the reflect what the parties intended. Thus, plaintiffs seek reformation paries ' true intention. By order dated April 15, 2011, the court granted plaintiffs a Yellowstone injunction restraining defendant from terminating plaintiffs ' tenancy, pending a determination as to whether plaintiffs were in default of the rent provisions of the lease. The court determined that plaintiffs had standing to seek the injunction because the lease contemplated that the tenant might assign its interest. Since defendant had served notice of default on plaintiffs, it was not prejudiced by the tenant' s failure to comply with the lease provision requiring the tenant to deliver a duplicate original of the assignment to the landlord. Defendant moves to dismiss the complaint based upon a defense founded upon , and statute of limitations. documentary evidence , failure to state a cause of action years and Defendants argue that the statute of limitations governing this action is six plaintiffs ' claim accrued when they assumed the lease on January 4 2001. In order to determine the statute of limitations applicable to a particular declaratory identify the judgment action , the court must examine the substance of that action to Save Pine Bush v Albanv, relationship out of which the claim arises and the relief sought 70 NY2d 193 202 (1987)). Ifthe court determines that the underlying dispute can or could have been resolved through a form of action or proceeding for which a specific limitation period is statutorily provided, that limitation period governs the declaratory judgment action (Id). Since plaintiffs ' claim arises out of the landlord- tenant relationship, the action sounds The general rule in breach of contract and is governed by a contract statute of limitations. is that a cause of action for breach of contract accrues at the time of the breach. However , the where a tenant challenges the method whereby lease escalation payments are calculated s method tenant' s claim accrues on the date it obtains constructive knowledge ofthe landlord' J.e. Pennev Corp. v Carousel Center Co. 635 F. Supp. 2d 126 (NDNY s method of calculating 2008)). Plaintiff acquired constructive knowledge of the landlord' , 2010. Since the rent escalation when the landlord served notice of default on November 4 , it is plaintiffs ' claim for a declaratory judgment was asserted within six years of that date of computation timely. [* 4] FUCILE v L. R. DEVELOPMENT, LTD. Index no. 000525/11 However , the statute of limitations on a claim of reformation based upon mistake is APF v Deer Stags. Inc. 39 AD3d 329 (1st Dept 2007)). The mistake occurred on January 4 , 2001 , the date on which plaintiffs assumed the lease. Because plaintiffs ' claim for reformation was not brought within six years of that date , it is untimely. Accordingly, defendants ' motion to dismiss the complaint ~ranted denied to the second cause of action. six years, accruing on the date of the mistake based upon the statute of limitations is (1414 as to the first cause of action but Tehan v Peters Print The duty to pay rent is a primar AD2d 101 , 106 (4th Dept 1979)). However , the non-payment of rent does not operate as a forfeiture of the leasehold or confer upon the lessor any right of re-entry in the absence of a provision in the lease or a statute so declaring (74A NY Juris2d 9 835). Real Propert Actions and Proceedings Law 9 711(2) provides for a summar eviction proceeding based upon a default in the payment of rent and three days written notice. Nevertheless , upon the present motion , the court cannot render a declaratory judgment as to whether defendant would be entitled to relief in a nonpayment proceeding. Defendant's motion to dismiss plaintiffs ' first cause of action for a defense founded upon documentary evidence or failure to state a cause of action is denied. obligation of the tenant On May 4 2011 , defendant served a thee day notice on the tenant, asserting that the rent outstanding was $219 831. 50, the same amount stated in the rent demand dated 2010. Since no other action to terminate plaintiffs ' tenancy was taken , the cour does not construe the three day notice as a violation of the Yellowstone injunction. December 23, Plaintiffs ' cross-motion for sanctions is denied. So ordered. Dated AU6 11-. 4h C( ENTERED AUO 12 201 NASSAU COUNTY GQUNTY CLERK' S OFFIC

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