Campaniello v Greene St. Holding Corp.

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Campaniello v Greene St. Holding Corp. 2013 NY Slip Op 33682(U) March 6, 2013 Supreme Court, New York County Docket Number: 113289/11 Judge: Paul Wooten Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various state and local government websites. These include the New York State Unified Court System's E-Courts Service, and the Bronx County Clerk's office. This opinion is uncorrected and not selected for official publication. [* 1] SUPREME COURT OF THE ST ATE OF NEW YORK . . .NEW YORK COUNTY PRESENT: PART _ HON. PAUL WOOTEN ___;;.7_·_ Justice INDEX NO. 113289/11 THOMAS CAMPANIELLO, Plaintiff MOTION SEQ. NO .. -2QL -against- GREENE STREET HOLDING CORP. and the BOARD OF DIRECTORS OF GREENE STREET HOLDING CORP., . . UNFILED JUDGMENT . . This JUd.gment has not been entered by the County Clerk Defendantknot1ce of entr cannot served based hereon. To . .. }he following papers were read o . rm~n ~i4>CMlllSttflf fJrr a~~~MOOi~rff&~·motion for summary Judgment Notice of Motion/Order to Show Answering Affidavits-. Exhibits Replying Affidavits - Exhibits appear m person at the Judgment Clerk's Desk (Room Ji\~h_Affidavits - Exhibits ¢' . . * ......,.. ......_ _ . .. .· INo(s). _ ____._;_,__,_ --·--~---..... ~.ti.., ~~"-'ili_Ji_·~·--- _________··_·_··_-·.....__ · · '" ·-''1 Klo(sr·_-.._---~-__,.· .Before the Court is a.n Order: to Show Cause (OSC) brought by Thomas Campaniello w (:) != ~·.· (plaintiff), a commercial tenant~shareholder, for a Yellowstone Injunction seeking to enjoin and. """') 0 6 restrain the cooperative housing corporation Greene Street Holding Corp. (the,cooperative or ~ ffi defendant) and the Board of Di.rectors of·Green Street Holding Corp. (the Board).( collectively, u. ~.:..:... ..J ..J z re. g t3L5 ~ ct: Cf) UJ defendants) from taking any ac.tion to terminate plaintiff's leasehold or tenancy, and from !e. commencing summary eviction proceedings, of the commercial space (leased premises) located at 136 Green Street, New York, New York (tl)e .building). Greene Street is the owner and landlord. of (.!) z . ~' ~ a the building, and .the Board is elected. by the shareholders of Gree:me St reef to manage and operate UJ .J ~ -w (.) u.. 5~ != Ct:'. Oo ::E u. the building. Defendants are .in opposition to plaintiff's motion, and cross-move pursuant to CPLR 3212, for summary judgment on the first, second and third causes of action contained within the complaint. Plaintiff and defendant entered into a written lease. agreement on August 30, 2006 for the Page 1 of 8 [* 2] leased premises. Plaintiff maintains that he w.as provided a copy of Greene Street's by-laws when he became .a shareholder .and proprietary .lessee of defendants. Plaintiff states in h.is complaint that sometime prior to August.of 2010, he sought permission from defendants to sublet the leased premises to a subtenant .at a.monthly rental of $60,000.00, and defen~ants refuse6 consent of.the . proposed sublet unless plaintiffagreed to pay an "exorbitant sublet. fe¢" (see Complaint at .,-r 20, 21). Paragraph 15 of the lease and Article V, Section. 1O ofthe by-laws .state the terms under which plaintiff may sublet the space. Defendants maintain that they are permitted to implement .a monthly sublet fee of 10% under an amendment to Article V, Section 10 oft.he by-laws· of the cooperative, ad~pted by the Board (see Defendant's Cross-Motion [Cross-Motion], ExhibitD). Plaintiff alleg~s that he was "forced to agree in a written consent to .sublet agreement to pay the exorbitant sublet fee and to pay $3,000.00 for Greene Street's claimed attorneys' fees or .be denied permission, to sublet and lose [the sµb]tenant" (id. at ,-r 24). Plaintiff avers that after multiple requests to. have alleged water leaks anc:l floods addressed at the leased premises, anc;I because plaintiff maintains ' ! ' , I : that the by-laws and the lease agreement do not .aLJthqrize the subl.et tee, plaintiff withheld the sub.let . . fee payments. This action arises out of a noti.ce to cure, dated October 28, 2011, which defendant served upon plaintiffthat stated plaintiff had breached provisions in the proprietary lease, .by subletting his premises without paying the required sublet fee of 10% ofthe monthly sublet rentfor his premises. . . Greene Street claimed that plaintiff.owed sublet fee.sin the amount of.$6,000.00 per month from October of 2010 through and including Septerhper of 2011, as well as. $6 1500.00 per month from I . ¢ J. ,' I ,_,, I ', ¢ ', ,:, October of 2011 to the present. The notice to cure info~med plaintiffthat if he failed to cure the default by paying the amounts owed within 30 days, the defendant w9uld terminate the lease. On or about November· 23, 2011, plaintiff .commenced this proceeding by.Summons and Complaint. The complaint asserts five causes of action. and seeks various relief,Jncluding, inter a/ia, ''I,' (1) a declaratory judgment against oefe,ndants. declaring .that. the amehdrrient.t6 the shareholder I i Page 2 of 8 [* 3] adopted by~laws which purports to allow for a sublet fee is unauthorized· by the Business Corporations Law .under the cooperative's certificate of incorporatiqn, and is therefore unenforceable (First Cause of Action); (2) a declaratory judgment declaring that the cooperative's lease does. not permit the imposition of a ~ublet fee (Second Cause of Action); and (3) an order enjoining the cooperative from collecting a sublet fee from the plaintiff (the Third Cause of Action). The complaint also seeks an injunction against the defendants compelling.them to make repairs to the rear exterior wall, which plaintiff maintains defendants have not done after multiple requests. Subsequently, on or about November 28, 2011, plaintiff moved by Order to Show Cause (OSC) seeking a Temporar:y Restraining Order (TRO) and a Yellowstone Injunction tolling his time ', to cure the alleged default and preventing the defendants from I I' t~king any steps ta terminate the . . plaintiff's tenancy during the pendency of this acticm. The Court granted plaintiff a TRO pending the hearing on the OSC. In it.s 0$C, plaintiff seeks a Yellowstone injunction which would permit him to cure the alleged violations.of his lease if it is determined by th.e Courtthat he has failed ta pay' the required sublet fees to the defendants. In support ¢. plaintiff contEmds . that the imposition .of the amendment allowing for. a sublet fee vio.lates the cooperative's certificate .of incorporation, ArticleV, Section 1Oof .the by~laws and the paragraph 15 of the proprietary lease. (se~ Complalnt at 1f 32). Plaintiff.also argues that the imposition of a sublet fee is unr~asonable where the proprietary lease . . ' \ does not permit the cooperative board to withhold consent to a sublease unrea~onably ..· Def~ndants oppose the motion and cross-move for an order granting summary judgment ahd dismissing the first, second and ~hi rd causes of action of the complaint. 1 Defendants Cross-Motion .for Summary Judgment Defendants cross-move pursuant to CPLR 3212, for summaryjudgment on the first, second and third causes of action contained within the complaint. Summary judgment is a drastic remedy that should be granted only if no triabfe issues of fact exi.st and the movant is entitJed to judgment as .:i ·,' ,'' ' ¢ ', a matter of law (see Alvarez v ProspectHosp., 68 NY2d 320, 324J1986]; Andre v Pomeroy,. 35 . . . Page 3 of 8 [* 4] NY2d 361, 364 [1974]). The party moving for summary judgment must make a prima facie showing· of entitlement to judgment as a matter of law, tendering sufficient evidence in a.dmissible form demonstrating the abse.nbe of material i.ssues of fact (see Winegrad v New York Univ. Med: Ctr., 64 NY2d 851, 853 [19$5]; CPLR 3212[bJ). Afailure to make such a showing requires denial of the motion, regardless of the sufficiency of the opposing papers (see Smalls v AJI Indus. Inc., 10 NY3d · 733, 735 [2008]). Once a prima facie showing has been made, however, "the burden shifts to the nonmoving party to produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact that require a trial for resolution" (Giuffridav Citibank Corp., 100 NY2d 72, 81 [2003]; se.e also Zuckerman v City of New York, 49 NY2d 557, 562 [1980}; CPLR 3212[b]). When deciding a summary judgment motion, the Court's role is solely to determine if any triable issues ex.ist . ¢ not to. determine the merits of any such Issues (see Sillman v Twentieth Century~Fox Film Corp., 3 NY2d 395, 404 [19571). The Court views the evidence in the light most favorable to the nonmoving party, and gives the nonmoving party.the benefit of all reasonable inferences that can be drawn from the evidence (see Negriv Stop & Shop, Inc., 65 NY2d 625, 626 [1985]). Inhere is.any doobt as to the existence of a triable issue, summaryjuc;fgment should be denied (see f?otuba Extruders, Inc, v Ceppos, 46 NY2d 223, 231[1978)). In accordance with the term.s of Paragraph 15 of the Lease, a commercial unit owner such as the plaintiff may sublet his unit after obtaining the consent of the Board, which consent "shall not be unreasonably withheld" (OSC, exhibit 8). The lease further provide$ that "[aJny consent to subletting may be subject to such conditions as the Directors or lessees, as the cas.e may be, shall impose'' (id.). The cooperative also has a se.ries of By~Laws. Amendments tb. the By-Laws are permitted under the authority of Article XII, Section 1 which provides, in pertinent part, as follows: These By-Laws may be amended, enlarged or diminished either (a) at any shareholders' meeting. by vote of shareholders-owning two-t.hirds of the amount of outstanding shares ... , provided that the proposed amendment or the su.bs.Umce thereof .shall have .been inserted in th.e. notice of. meeting or that. all .of the shareholders be prese,nt in person Page 4 of 8 [* 5] or by prdxy, or (b) at any meeting offhe Board of [Jirettors by a majority vote, provided tha't the proposed amendment the substance thereof shall hav.e been ir)Sertec:J in the notice Of meeting or that all Of the directors are present in. person, except that the Board of Directors may not repeal a By-Law amendment adopted by .the shareholders as provided above (OSC, exhibit 0). or The original By~Laws provided that upon the transfer of or ~ublettiDg of any lease, "the Board of Directors has the authority to fix and assess a reasonable fee to cover actual expens.es and attorneys' fees of the .Corporation in connection with such a transaction ... ' . ($ee Cross-Motion, Exh.ibit D at Article V, Section 10). The defendants maintain that the cooperative board met in 1979 and voted to impose a new ~ublet fee upon any new subleases,. ·and institute a new sublet fee for <, I ,' I existing subleases one year, thereafter (id., Exhibit I). This vote was dJstriboted to the shareholders ,, ,' ,' ', ,' ,, ' (id., Exhibit J). The Board. also claims it voted to amend the By~Laws in order to enforce the .sublet fee after informing all of the shareholders of the proposed amendment (id., Exhibits N, K). Plaintiff does not dispute t.hat since 1980, the cooperative has collectf;ld a sublet fee from all .. ' tenant-shareholders that sublet any portion of their units, inclUding the tenant shareholde.rs who own shares to the commercial spaces. In August of 2010, plaintiff asked the coope~ative to co.nsef"!t t<:) his subleasing his comm~rcial space. The cooperative co.nsented on the condition that the plaintiff execute an agreement .in which he acknowledged that he was responsible for pc:iying a sublet fe.e to the cooper;;itive equaling ten percent of the monthly rent payable by,the subtenant under the sublease. Plaintiff signed the agreement which. i.;ilso acknowledged thatthe S!:Jblet fee constitut.ed additional maintenance due and owing under the lease (id., Exhibit P). ¢ I ' ' In support of its cross-motion for summary judgment, defendants argue that the a·mendment " I "' ' to the By-Laws imposing a sublet Jee is a valid and enforceable amendment and therefore the defendants are entitled to summary judgment and a dismissal of the plaintiff's first, second and third Page 5 of 8 [* 6] defendants that plaintiff's arguments are without merit As stated above., paragraph 15 .of the lease directs that the lessee qf a commercial space may not sublet its premises without .the consent of the board .and "[A]ny consent to subletting ma.y be subject tq such conditions.as the Directors ... may impose." (id:, Exhibit G). This broad language in the propri.etary lease; clearly givesthe cooperative the right to col.lect and impo.se sublet fees e\/en without a shareholder vote (see Jones v Southgate Owners Corp, 289 AD2d 73 [1st Dept 2001]; Zuckerman v 33072 Owners Corp., 97 AD2d 736, 737 [1st Dept 1983]. Plaintiff has not cited to any contrary authority. Furthermore, the amendment to the By-Laws permitting the. collection of a sublet fee was validly imposed. Plaintiff argues that the Board lacked the authority to amend the By-Laws ' I \ '' ,, ' ., without shareholder approval. This argument is without legal merit Section 601 (a) of the Business Corporation Law allows a corporation's board to amend its By-Laws if such an action is permihed by the corporation's certificate of incorporation or a by-law adopted byfhe shareholders. The Cooperative's By-Laws, in compliance with BCL 601 (a), permit am$ndments by Board vote (Cross" I \ " ,. Motion, Exhibit D). Artie.le XII, Section. 1 of the By-Laws provides, in pertinent part, as follows: These By-Laws may be amended, enlarged or qiminish~deither (a) at any shareholders' meeting by vote of shareholders owning tWC>:'thirds of the amount of outstanding shares .. , provided that the proposed amendment. or the s.ubstance thereof sha.11 have been inserted i.n the notice of meeting or that all of the shareholders be present in person. or by proxy, or (b) at any meeting of the Board of Directors by a m(3jority vote, provided that the proposed amendment or the. substance thereof shall have been inserted in .the notice of meeting or that all of the directors are present in pers<;>n1 except thatthe. Board of Direotdrs may not repeal a By-law amendment adopted by the . sh.areho!ders as provided above (id.) (emphasis added). The cooperative's By-Laws permit the Soard to amend .the By:'Laws Without seeking shareholder approval. Thus the cooperative can amend its bylaws to impose a sublet fee (see Quirin v 123 Apartments Corp., 128 AD2d 360, 363~364 [1st Dept 1987). The remaining arguments by the plaf ntiff are without merit. Plaintiff argues that there is ·" ,, " ' .insufficient evidence that the Board noticed the 1.979 meeting where it purported to .impose a suble.t Page 6 of 6 ,' [* 7] fee. While. the Board claims the original notice was lost, defendants have introduced affidavits from three individuals who attest that they receiVecl notice of the 1979 ~eeting which s.et forth the.sum and substance of the propoi:;;ed amendment to the By~Laws. Thus, the defendants have satisfied ·their burden on this motion for summary judgment by introducing. evidence in admissible form that notice was.give:n, and in opposition, plaintiff has fai.led to .introduce any evidence rebutting that showing. The. By~Laws were properly amended and proper notice. was given to shareholders of the intention to impose sublet fees. The cooperative has also demonstrated that it has collected a sublet fee from all shareholders who have tried to sublet their unit~ for the past .32 years. The Notice to Cure was properly served, and therefore there is .no basis to grant the plaintiff any relief related to the imposition of sublet fees. Accordingly, the motion for summary judgment is granted and the first, second and third causes of action are hereby dismissed. Yellowstone Injunction As the Court has now determined that the sublet .fee was validly imposed and that the plaintiff is required to tender payment of the fee, plaintiff's motion for Yellowstone injunctive relief' is moot and should be denied. In view of the fact that this Court i.s t.h~refore unable to grant Yellowstone relief, .the complaint must be dismissed (see Gold-Land, Inc., v. Haskell, 248 AD2d 132 [1st Dept 1998)). As the Court of Appeals has stated, "Civil Court has jurisdiction of landlord tenant disputes .... and when it can .decide the dispute, as in this case, if is .desirable that it do so" (Postv. 120 E. End Ave. Cprp .. 62 NY2d 19, 28 [1984]; see also Cox v. J.D. Realty Assocs,, 217 AD2.d 179, 181 [1st Dept 1995)). In this respect, there is nothing in pli:tintiff's papers which suggests that the .Civil Court, in a holdov,er proceeding, would be unable to entertain the arguments which plaintiffhas raised herein against its eviction, or in support of its claim of entitlement to an offset of its maintenance obligation due to the alleged lack of repairs to the rear wall. On the c9ntrary, the' issues raised herein fall squarely within the Civil Court's jurisdiction. Although this Court may have general jurisdiction over this matter, the Appellate Division, First Departmerit has nevertheless Page 7 of 8 [* 8] observed, "[t]hat judicial proceedings might be commenced is not a sufficient basis .for th.e ·exercise of Supreme Court's equitable powers" (Cox v. JO. Realty Assocs., 217 AD2d at 181} Indeed, in Handwerker v. Ensley, 261 AD2d 190 (1st Dept 1999) ancJ in Gold~Land, Inc v. Haskell, 248 A02d at 132, the First Department held that a landlord~te.nant dlspute .. brought in Supreme Court but resolvable in Civil Court should be dismissed even though no Ci\1il Court action was pendirig. Accordingly, it is hereby ORDERED that plaintiff's motion for a Yellowstone injunction is denied; and it is further, ORDERED that the defendants' cross-motion for summary judgment is granted and the first, second .and third causes of action are hereby dismissed with prejudice; an.d it is further, ADJUDGED ANDPECLARED that the amendmentto the By-Laws Which imposed a sublet fee on all shareholders of Greene Street is enforceable; and it is further, ORDERED that the reminder of the complaint is dismissed without prejudice, should the · ·· de.fendants choose to. bring an action in Civil Court, and plaintiff may .assert said claims in defense · of any such proceeding and. in support of any counterclaim which it may wish to assert therein. < ' , > ,, '' ' .' This constitutes the Decision and Order .of. the Co.urt. Dated: Check one: II Fl.NAL DISPOSITION Check if appropriate: 0 D Psge 8 of 8. NON-FINAL DISPOSITION DO .NOT POST I

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