San-Dar Assoc. v Fried

[*1] San-Dar Assoc. v Fried 2012 NY Slip Op 52229(U) Decided on December 7, 2012 Supreme Court, New York County Ling-Cohan, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 7, 2012
Supreme Court, New York County

San-Dar Associates, Plaintiff,

against

Jacqueline Fried and RIVER 52, LLC, Defendants.



150850/12



Attorney for Plaintiff:

Kaufman Friedman Plotnicki & Grun, LLP

300 East 42nd Street, New York, NY 10017

direct dial: (212) 973-3324

tel: (212) 687-1700

fax: (212) 687-3179

Attorney for defendant

Weltcheck Law

450 Seventh Avenue, 13th Floor

New York, NY 10123

359 Prospect Street

South Orange, NJ 10123

tel: (212) 792-6579

fax: (888) 338-5364

Doris Ling-Cohan, J.

In this real property action, defendants River 52, LLC (River 52) and Jacqueline Fried (Fried) move to dismiss the complaint, pursuant to CPLR 3211(a)(7) for failure to state a cause of action, and to cancel a notice of pendency, pursuant to CPLR 6514 (a) (motion sequence number 001). For the following reasons, this motion is granted with leave to replead.

BACKGROUND

Plaintiff San-Dar Associates (San-Dar) is the net lessee of a building located at 429 East 52nd Street in the County, City and State of New York (the 429 building). See Notice of Motion, Exhibit A (complaint), ¶ 4. River 52 is the owner of the adjacent building, located at 425 East 52nd Street in the County, City and State of New York (the 425 building). Fried is the 425 building's former owner, and San-Dar claims that Fried transferred the 425 building to River 52, via a deed dated September 25, 2009. Id., ¶¶ 7-9. [*2]

San-Dar claims that, on September 28, 1973, one of River 52's predecessors in interest to the 425 building, John Weeden (Weeden), leased the 425 building to non parties Bea-Tay Holding Corp. (Bea-Tay) and the Cousins Company (Cousins), pursuant to a 50-year lease (the 425 lease). See Memorandum of Law in Opposition to Motion, Exh. C, at 2. The relevant portion of the 425 lease is paragraph 2, which sets forth a restrictive covenant that forbids either party to perform any construction work to increase the size of the 425 building beyond its original four-story height, specifically stating that: 2.The Landlord [i.e., Weeden] and the Tenant [i.e., Bea-Tay and Cousins], each for himself and itself to the other, covenant that neither shall at any time construct upon the demised premises, nor authorize nor permit any other party to construct, whether as an addition to or in repair, replacement or substitution of any now or hereafter existing structure on the demised premises, any structure or improvement which shall increase the floor area, height or lot coverage over the present structure, this covenant to run with the land and for the benefit of the adjoining premises hereinafter described, owned by the Tenant [i.e., the 429 building], it being expressly understood and agreed that the purpose of this lease is to enable the tenant, its successors and assigns and any owner or lessee of the adjoining premises to incorporate the unused floor area herein with the ground area of such adjoining premises as a single zoning lot and for no other purpose, and that, if such purpose is not approved by the Building Department of the City of New York or any other public body having jurisdiction, or, if such approval is granted and shall be subsequently rescinded, in either event at any time during the term hereof or any renewal hereof, the Tenant shall have the privilege to cancel this lease upon three months written notice. The Tenant shall pay any increase in taxes of any kind by reason of the incorporation of the unused floor area herein with the ground area of the adjoining premises hereinafter described.

See Grun Affidavit in Opposition, Exhibit C. San-Dar next claims that, also on September 28, 1973, Bea-Tay and Cousins immediately subleased the 425 building back to Weeden (the 425 sublease), who then sold the 425 building, and assigned the 425 sublease, and that, after several transactions that are detailed in the instant complaint, Fried eventually acquired both a fee interest in the 425 building and the position of net lessee under the 425 sublease,[FN1] both of which interests she eventually transferred to River 52. See Memorandum of Law in Opposition to Motion, at 1-3; Grun Affirmation in Opposition, Exhibit B.

As reflected in paragraph 2 of the 425 lease, Bea-Tay and Cousins were the original owners of the 429 building. San-Dar presents a copy of the October 15, 1973 net lease agreement for the 429 building that Bea-Tay and Cousins executed with non party the Berkeley Associates Company (Berkeley), and of the December 31, 1986 assignment from Berkeley to San-Dar whereby San-Dar became the 429 building's net lessee. See Grun Affirmation in [*3]Opposition, Exhibit A. San-Dar notes that the current owner of the 429 building is non party S & M 52nd Fee, LLC (S & M). Id.; Exhibit G.

San-Dar also presents a copy of the 425 building's original certificate of occupancy (C of O), dated September 10, 1968, which recites that the 425 building has four stories. See Grun Affirmation in Opposition, Exhibit D. Defendants present a copy of the building's temporary C of O, which was effective for the period of April 2, 2012 through July 1, 2012, that recites that the 425 building has five stories. See Notice of Motion, Exhibit B.

San-Dar claims that the reason for the restrictive covenant in the 425 lease was that the parties intended to create "zoning lot merger agreement," whereby the owner of the lot that the 429 building sits on would be able to include the floor space of the 425 building on any zoning application to the City regarding the development of the 429 building. See Memorandum of Law in Opposition to Motion, at 3. San-Dar further claims that it learned in January of 2010 that defendants were in the process of adding a fifth floor to the 425 building. See Notice of Motion, Exhibit A (complaint), ¶ 19. San-Dar asserts that defendants' actions both violate the terms of the restrictive covenant set forth in paragraph 2 of the 425 lease, and encroach upon the development rights that San-Dar acquired thereunder. Id., ¶ 22.

San-Dar commenced this action on March 12, 2012 by filing a summons and complaint that sets forth causes of action for: 1) a declaratory judgment; and 2) money damages. See Notice of Motion, Exhibit A. Rather than file an answer, defendants have submitted the instant motion to dismiss.

DISCUSSION

When evaluating a defendant's motion to dismiss, pursuant to CPLR 3211 (a), the test " is not whether the plaintiff has artfully drafted the complaint but whether, deeming the complaint to allege whatever can be reasonably implied from its statements, a cause of action can be sustained.'" Jones Lang Wootton USA v LeBoeuf, Lamb, Greene & MacRae, 243 AD2d 168, 176 (1st Dept 1998), quoting Stendig, Inc. v Thom Rock Realty Co., 163 AD2d 46, 48 (1st Dept 1990). To this end, the court must accept all of the facts alleged in the complaint as true, and determine whether they fit within any "cognizable legal theory." See e.g. Arnav Indus., Inc. Retirement Trust v Brown, Raysman, Millstein, Felder & Steiner, 96 NY2d 300, 303 (2001). It has been held, however, that where the documentary evidence submitted flatly contradicts the plaintiff's factual claims, the entitlement to the presumption of truth and the favorable inferences are both rebutted. Scott v Bell Atl. Corp., 282 AD2d 180, 183 (1st Dept 2001), affd as mod Goshen v Mutual Life Ins. Co. of NY, 98 NY2d 314 (2002), citing Ullmann v Norma Kamali, Inc., 207 AD2d 691, 692 (1st Dept 1994).

Here, as previously mentioned, San-Dar's complaint sets forth a cause of action for a declaratory judgment. Declaratory judgment is a discretionary remedy which may be granted "as to the rights and other legal relations of the parties to a justiciable controversy whether or not further relief is or could be claimed." CPLR 3001; see e.g. Jenkins v State of NY, Div. of Hous. and Community Renewal, 264 AD2d 681 (1st Dept 1999). It has long been the rule that, in an action for declaratory judgment, the court may properly determine respective rights of all of the affected parties under a lease. See Leibowitz v Bickford's Lunch Sys., 241 NY 489 (1926). Nevertheless, in their motion, defendants raise three arguments as to why San-Dar's cause of action should be dismissed. [*4]

First, defendants argue that San-Dar's claim should be dismissed pursuant to CPLR 3211 (a) (7) for failure to state a cause of action. See Defendants' Memorandum of Law, at 1-2. Defendants specifically cite the 1978 decision of the Appellate Division, First Department, in Frank B. Hall and Co. of NY v Orient Overseas Assoc. (65 AD2d 424 [1st Dept 1978], affd 48 NY2d 958 [1979]) for the proposition that San-Dar's claim constitutes a "collateral attack" on the validity of the 425 building's temporary C of O that defendants applied for when they began adding the fifth story to the 425 building. Id. at 2-4. Defendants assert that the C of O is valid, and that San-Dar has made no attempt to challenge it administratively, as required by law. Id. San-Dar replies that its claim does not constitute a collateral challenge to the 425 building's temporary C of O, but is instead one for equitable relief and damages based on breach of the 425 lease. See Memorandum of Law in Opposition to Motion, at 8. The court agrees. As was previously noted, a request for a declaratory judgment is an equitable and discretionary remedy which the courts of this state routinely grant where the issues involve the construction of a lease. Jenkins v State of NY, Div. of Hous. and Community Renewal, 264 AD2d 681, supra.; Leibowitz v Bickford's Lunch Sys., 241 NY 489, supra. Here, San-Dar's complaint pleads that it has an interest in the 425 lease, and requests to court to issue a declaratory judgment with respect to that interest. There does not appear to be any need for the court to pass upon the validity of the instant temporary C of O when rendering such a judgment. In any case, the court notes that the temporary C of O expired on July 1, 2012, and is evidently no longer in effect. Therefore, the court rejects defendants' argument that this action should be dismissed because it constitutes a collateral attack on the validity of the C of O.[FN2]

Next, defendants argue that San-Dar's claim should be dismissed pursuant to CPLR 3211 (a) (10) for failure to name a necessary party - i.e., the 429 building's current owner, S & M. See Defendants' Memorandum of Law, at 5-6. San-Dar responds that, as the net lessee of the 429 building and the successor net lessor of the 425 building, it - and not S & M - is the real party in interest with respect to the zoning and development rights that were purportedly safeguarded by the terms of the 425 lease. See Memorandum of Law in Opposition to Motion, at 10-11. The court disagrees. CPLR 1001 (a) provides that "parties who should be joined" in an action include those "who might be inequitably affected by a judgment in the action." Should San-Dar fail to prevail on its claims, it is clear that S & M would also lose the benefit of the zoning and development rights at stake herein. Therefore, it is equally clear that S & M is a "necessary party" that should be joined as a plaintiff in this action. In any case, San-Dar notes that both it and S & M have the same principal, so there will be no need to expend any great cost or effort to join S & M.

Finally, defendants argue that Fried was not properly served herein. See Defendants' Memorandum of Law, at 6. San-Dar responds that this argument is conclusory, and is also belied by the duly executed and filed affidavit of service that its process server prepared. See [*5]Memorandum of Law in Opposition to Motion, at 12-13; Grun Affirmation in Opposition, Exhibit I. The court rejects defendants' argument because of the documentary proof as to service, supplied by plaintiff, which has not been sufficiently refuted. Accordingly, defendants' motion is granted solely to the extent that this case will be deemed dismissed, unless, within 20 days of service of a copy of this order with notice of entry, San-Dar serves and files an amended complaint that names S & M as an additional plaintiff herein.

DECISION

ACCORDINGLY, for the foregoing reasons, it is

ORDERED that the motion, pursuant to CPLR 3211, of defendants Jacqueline Fried and River 52, LLC is granted and the complaint is dismissed, unless, within 20 days of service of a copy of this order, with notice of entry, plaintiff serves an amended complaint as provided herein; and it is further

ORDERED that plaintiff is granted leave to serve an amended complaint naming S & M 52nd Fee, LLC as an additional plaintiff, in this action within 20 days of service of a copy of this order with notice of entry; and it is further

ORDERED that, in the event that plaintiff fails to serve and file an amended complaint in conformity herewith within such time, the Clerk, upon service of a copy of this order with notice of entry and an affirmation/affidavit by defendant's counsel attesting to such non-compliance, is directed to enter judgment dismissing the action, with prejudice, and with costs and disbursements to the defendant as taxed by the Clerk; and it is further

ORDERED that within 30 days of entry of this order, defendants shall serve a copy of this order upon plaintiffs, with notice of entry.

Dated: New York, New York

December, 2012

_________________________

Hon. Doris Ling-Cohan, J.S.C. Footnotes

Footnote 1:Specifically, San-Dar claims Fried acquired a fee interest in the 425 building via a deed dated April 27, 1994. See Notice of Motion, Exhibit A (complaint), ¶ 9. San-Dar also claims that Fried also acquired a leasehold to the entire 425 building via a sublease assignment that was also dated April 27, 1994. Id., ¶ 14.

Footnote 2:The court also rejects, as a red herring,' defendants reply arguments that San-Dar's claim should be dismissed pursuant to either the rule against collateral attacks or the doctrine of primary jurisdiction, on the theory that the matters at issue in this action rest within the particular competence of the New York City Department of Buildings, since lease construction is clearly within this court's purview. See Weltchek Reply Affirmation.