Lake Park 135 Crossways Park Dr. LLC v Wheatley Capital Inc.

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[*1] Lake Park 135 Crossways Park Dr. LLC v Wheatley Capital Inc. 2012 NY Slip Op 51539(U) Decided on August 13, 2012 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 August 13, 2012
District Court of Nassau County, First District

Lake Park 135 Crossways Park Drive LLC and CLK-HP 135 CROSSWAYS PARK DRIVE LLC, Petitioner(s)


Wheatley Capital Inc., EKN FINANCIAL SERVICES, LOUIS OTTIMO, Respondent(s)


Daniels, Norelli, Scully & Cecere, P.C., Attorney for Petitioner, One Old Country Road, Suite LLC, Carle Place, New York 11514, 516-338-7520; Law Office of Bradley D. Schnur, Esq. P.C., Attorneys for Respondent, 380 North Broadway, Suite 203, Jericho, New York 11753, 516-932-4400.

Scott Fairgrieve, J.

Petitioner, Lake Park 135 Crossways Park Drive LLC moves for a court order to enter a money judgment against Wheatley Capital and Louis Ottimo in the amount of $555,000 ($670,000 less total amount paid of $115,000).

Petitioner and Respondents entered into a Stipulation of Settlement dated January 21, 2010. The Stipulation provides in part that the Respondents would pay $5,000 per month to satisfy the money judgment amount in the sum of $300,000.

The Stipulation provides in paragraph No.7 that Petitioner may enter judgment against Respondents in the sum of $670,000 in the event of a failure to timely pay on the 1st of the month and failure to pay. Paragraph #7 states: Wheatley Capital, Inc. (Louis Ottimo P.G.) agrees to pay $5,000.00 on the first of each month commencing May 1, 2010 towards the money judgment amount of $300,000.00 until paid. If at any time a payment is not made by the 1st of any [*2]month, Petitioner shall serve a 10 day notice of default, if payment is not received by expiration of that notice, judgment may be entered and the entire amount allegedly owed ($670,000.00) minus payments made against Wheatley Capital Inc. (Louis Ottimo P.G.).

The facts demonstrate that Petitioner served a 10 day Notice of Default dated April 4, 2012, due to the fact that Respondents failed to pay the $5,000 on April 1, 2012. The said Notice of Default provides that Petitioner will apply for a money judgment in the sum of $670,000 less sums paid if the $5,000 was not paid within 10 days.

Paragraph #6 of the Stipulation of Settlement provides: There shall be no extensions or OSC's. These dates are a major part of negotiations in this agreement, unless agreed to in writing.

Thus, the parties agreed that there would be no extensions of dates to pay unless agreed to in writing.

Respondent Louis Ottimo submits the Affidavit, dated July 18, 2012 wherein he states that he was away until April 13, 2012 (Friday). Respondent discovered the Notice of Default on April 16, 2012 and caused $5,000 to be wired to his attorney who then sent the $5,000 on April 18, 2012 and was received by Petitioners on April 19, 2012. The April payment of $5,000 was returned on April 20, 2012; the May payment was also returned.

Respondent points out in his Affidavit that he regularly paid the $5,000 per month late which was accepted by Petitioner. Respondent states in paragraph #13 of his Affidavit that he believed that Petitioner waived Petitioner's right to have payment on the 1st of the month: For months they accepted payments after the first of the month. I relied upon their action - - or inaction - - and believed that they had waived their right to have payment on the first of the month. They are now using a technicality in order to obtain a better bargain, which should not be permitted.

Petitioner submits the Affidavit of Antoinette Scarangella, dated June 25, 2012, wherein she states that she is the director of legal administration wherein she states in paragraph #4 that ". . . Respondents have failed to make timely payments pursuant to Paragraph 7" - referring to paragraph #7 of the Stipulation.

Petitioner's attorney argues in his Reply Affirmation, dated July 25, 2012, that it did not waive its right to have the payments made on the first of the month and cites to the language of paragraph #6 of the Stipulation which evidences an intention of "time is of the essence" for the payments. Petitioner further argues that there was no written agreement wherein it was agreed to [*3]waive the requirements of timely payment on the first of the month. Petitioner's attorney states in paragraph #5 of the Reply Affirmation that: In each case where the Petitioner may have accepted a late payment, payment was only made after a Notice of Default was submitted. The sending of each notice establishes an affirmative action by the Petitioner to force payment from the Respondent.

However, no factual support is provided by Petitioner concerning the foregoing claim.

The issue presented in the case at bar is the classic battle between the right to insist upon timely payment of monthly installments and the right to default another upon failure to make timely payments versus waiver to default another after failure to make timely payments where there is a history of accepting late payments.

The history between the parties demonstrates acceptance of the late payments by Petitioner without any proof that objection was made to the late payments over the course of dealing between the parties.

The payment history shows the following:

Check NumberDateAmountPosted

Ck #12405-2-105,000not provided

Ck #12426-2-105,000not provided

Ck #12447-1-105,000not provided

Ck #12478-17-105,000not provided

Ck #12499-27-105,000not provided

Ck #125510-22-105,000not provided

Ck #125912-15-105,000not provided

Ck #12601-20-115,0001-24-11

Ck #12622-28-115,0003-15-11

Ck #12694-19-1110,0004-29-11

Ck #12704-27-115,0005-3-11

Ck #12725-9-115,0005-13-11

Ck #12735-26-115,0006-2-11

Ck #12747-7-115,0007-18-11

Ck #12758-11-115,0008-17-11

Ck #128510-4-115,00011-14-11

Ck #128711-4-115,00011-14-11

Ck #128912-15-115,0001-3-12

Ck #12952-29-11 [sic]15,0003-5-12

Ck #12963-9-125,0003-19-12

The above history demonstrates acceptance of late payments without protest. [*4]

Petitioner's conduct constitutes a waiver of the writing set forth in paragraph #6 of the Stipulation of Settlement and the right to default Respondent for the late payment in April of 2012. See Alside Aluminum Supply Co. v. Berliner, 32 AD2d 731, 302 NYS2d 180 (4th Dept 1969); Snide v. Larrow, 93 AD2d 959, 463 NYS2d 88 (1983), aff'd 62 NY2d 633, 476 NYS2d 112 (1984); and Madison Avenue Leasehold, LLC v. Madison Bentley Associates, LLC, 30 AD3d 1, 811 NYS2d 47 (2006), aff'd 8 NY3d 59, 828 NYS2d 254 (2006).

In Madison Avenue Leasehold, LLC, supra, the 1st Dept stated: It is well established that, "When rent is accepted with knowledge of particular conduct which is claimed to be a default, the acceptance of such rent constitutes a waiver by landlord of the default" (Atkin's Waste Materials v. May, 34 NY2d 422, 427, 358 NYS2d 129, 314 NE2d 871 [1974], citing Woollard v. Schaffer Stores Co., 272 NY 304, 312 5 NE2d 829 [1936] and Murray v. Harway, 56 NY 337 [1974], unless landlord has promptly demanded correction of the disputed conduct, in which case waiver is a question of fact (see Jefpaul Garage, 61 NY2d at 448-449, 474 NY2d 458, 462 NE2d 1176). Any provision of a contract is subject to waiver, particularly a provision requiring timely payment (Snide v. Larrow, 93 AD2d 959, 463 NYS2d 88 [1983] ["knowledgeable acceptance of late payments over an extended period of time . . . establishes the necessary elements to constitute a waiver of the right to insist upon timely payments"], citing Ford v. Waxman, 50 AD2d 585, 375 NYS2d 145 [1975], aff'd on other grounds 62 NY2d 633, 476 NYS2d 112, 464 NE2d 480 [1984]; see Calamari and Perillo, Contracts § 11.31, at 444 [4th ed]). The principle is equally applicable to lease (see East 4th St. Garage. v. L.B. Mgt. Co., 172 AD2d 292, 568 NYS2d 111 [1991], citing 61 E. 72nd St. Corp. v. Zimberg, 161 AD2d 542, 556 NYS2d 46 [1990]. The inclusion of a merger clause in an instrument is no bar to waiver because "acontractual provision against oral modification may itself be waived" (Rose v. Spa Realty Assoc., 42 NY2d 338, 343, 397 NYS2d 922, 366 NE2d 1279 [1977], supra). As here, a no-waiver clause is waived by the acceptance of rent (TSS-Seedman's, Inc. v. Elota Realty Co., 72 NY2d 1024, 1027, 534 NYS2d 925, 531 NE2d 646 [1988]; see also Lee v. Wright, 108 AD2d 678, 680, 485 NYS2d 543 [1985] ["parties may waive a 'no-waiver' clause"]).

Furthermore, in Madison Avenue Leasehold, supra, the Court held that a party must provide notice that it has withdrawn its acceptance of late payments before it may default a party: Out of simple fairness, a party that has repeatedly waived a condition of performance, particularly the timeliness of payment, is required to give notice that its waiver has been withdrawn before demanding strict compliance with the condition (see Bank Leumi Trust Co., 180 AD2d at 590, 580 NYS2d 299; Calamari and Perillo, Contracts § 11.32, at 447—448 [4th ed.] ). This requirement simply recognizes the reasonable expectations that arise from a course of conduct. This Court applied the [*5]rule to the relationship of landlord and tenant nearly a century ago in Montant v. Moore, 135 App Div 334, 341, 120 NYS 556 [1909], stating:

"where under a lease in which payment of the rent is required upon a day certain the parties by a course of conduct extending for years have acquiesced in a method by which the rent is to be paid, the provision for payment in the original contract is so far waived as to prevent a claim that a failure to pay upon the day named is a breach of the condition until the lessee has notice of the fact that such a custom will not in the future be continued and payment is required upon the day named in the contract." Having failed, over the course of three years, to give Bentley any notice that timely payment of rent would be required, landlord may not now insist that its tenant's failure to strictly comply with the timely payment condition of the lease constitutes a default.

Petitioner has totally failed to prove that it complied with the foregoing, i.e. - that it gave notice to Respondents that late payments would be no longer accepted before it defaulted Respondents. Thus, the Notice of Default, dated April 4, 2012 is of no force and effect.

Based upon the foregoing, Petitioner's Order to Show Cause is denied to enter judgment against Respondents.

So Ordered:

/s/ Hon. Scott Fairgrieve


Dated:August 13, 2012

cc:Daniels, Norelli, Scully & Cecere, P.C.

Law Office of Bradley D. Schnur, Esq., P.C.


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