CRS Realty Assoc. Inc. v 235 Tenth Ave. Car Wash Inc.
Annotate this CaseDecided on May 16, 2014
Civil Court of the City of New York, New York County
CRS Realty Associates Inc., Petitioner-Landlord,
against
235 Tenth Avenue Car Wash Inc., Respondent-Overtenant, -and- MANHATTAN CAR WASH INC., et al., Respondent-Undertenant.
L & T 54129/14
The attorneys for:
Petitioner/landlord:
Robert H. Leventhal, Esq.
Novick, Edelstein, Lubell, Reisman, Wasserman & Leventhal, PC
733 Yonkers Avenue, Yonkers, NY 10704
(914) 375-0100
Respondent/tenant:
Jaime D. Ezratty, Esq.
Ezratty, Ezratty & Levine
80 East Old Country Road, Mineola, NY 11501
(516) 747-5566
Respondent/undertenant:
Daniel D. Kim, Esq.,
Law Offices of Daniel D. Kim
1 University Plaza Dr., Suite 118, Hackensack, NJ 07601
Lynn R. Kotler, J.
Recitation, as required by CPLR 2219 [a], of the papers considered in the review of this (these) motion(s):
Papers Numbered
Pet's mot, RHL affirm, CK affid, exhs... .. . ... ... ... 1
JDE opp affirm, MH affid, exhs.. ..... . ... ... ... 2
DDK opp affirm, MSH affid, exhs....... . ... ... ... 3
RHL reply affirm, exhs . ..... . ... ... ... 4
LYNN R. KOTLER, J.:
This is a commercial landlord/tenant holdover proceeding. Petitioner moves to strike respondents' affirmative defenses and for summary judgment in its favor. Respondents oppose the motion.[FN1] For the reasons that follow, the motion is granted.
Petitioner is the owner of the subject premises located at 235 Tenth Avenue, New York, New York 10011. Respondent 235 Tenth Avenue Car Wash Inc. ("Overtenant") is the tenant of said premises pursuant to a lease dated September 20, 1991. Respondent Manhattan Car Wash Inc. ("Undertenant") executed a sublease agreement between Overtenant and itself and thereby agreed to be subject to the terms of the lease.
Petitioner served respondents with a Fifteen Day Notice to Cure dated December 23, 2013 claiming:
PLEASE TAKE NOTICE that you are violating a substantial obligation of your tenancy and lease, in part, contrary to paragraphs 6 and 8 of the form lease and paragraph 9 of the rider to your lease dated September 20, 1991, which runs for the term July 1, 1991 through June 30, 2016. You have failed to correct violations of record annexed hereto and you have failed to obtain insurance as required under paragraph 9 and 9a of the rider to your lease. Specifically you have not corrected the sidewalk violation; you have not obtained a work permit for your plumbing modifications a; and you have failed to provide proof of liability insurance for your business operations with limits of no less than $1,000,000.00 per occurrence for bodily injury or property damage. You have also failed to provide proof of full replacement fire and casualty insurance with extended coverage of at least $500,000.00
Petitioner gave respondent until January 14, 2014 to cure these violations. On January 15, 2014, petitioner served respondent with a Five Day Notice of Termination. This proceeding thereafter ensued.
In its motion, petitioner argues that respondents' defenses predicated on improper service must be dismissed because they are alleged in a conclusory fashion. Petitioner maintains that the insurance coverage respondents claim to have obtained, proofs of which are annexed to respondents' respective answers, were cancelled. Petitioner has provided copies of cancellation notice for the insurance policy number 01CPS076493 which indicated that this was cancelled effective November 19, 2013. Further, even if not cancelled, the Fire and Casualty insurance policy is for $460,000 which is below the minimum required of $500,000. Petitioner states that neither respondent repaired the sidewalk, and has provided the affidavit of Mohammed Uddin, a NYC licensed contractor who maintains that cold weather cannot hinder the sidewalk repairs. Petitioner also highlights the plumbing work violation, which was issued December 10, 1998, and claims that the violation was not remedied within the cure period.
Overtenant maintains that the notice of petition and petition were not properly served, that the Notice to Cure was not sufficiently particular and, in any event, respondents did not violate the subject lease/lease rider provisions. Undertenant outlines the efforts it made to repair the sidewalk, to wit: [1]; attempting to hire a first contractor; [2]; the second contractor couldn't perform the work because of the wintry weather conditions; and [3]; a third contractor was hired and the work is scheduled to begin on April 14, 2014. Undertenant further maintains that the necessary insurance, evidenced by a Certificate of Liability Insurance, has been maintained and has not been cancelled. Respondents also argue that the plumbing work violation has been waived by petitioner's failure to raise it sooner.
Relevant portions of the Lease are as follows:
Requirements of Law, Fire Insurance: 6. Prior to the commencement of the lease term, if Tenant is then in possession, and at all times thereafter, Tenant at Tenant's sole cost and expense, shall promptly comply with all present and future laws, orders and regulations of all state, federal, municipal and local governments, departments, commissions and boards and any direction of any public officer pursuant to law, and all orders, rules and regulations of the New York Board of Fire Underwriters or the Insurance Services Office, or any similar body which shall impose any violation, order or duty upon Owner or Tenant with respect to the demised premises, and with respect to the portion of the sidewalk adjacent to the premises, if the premises are on the street level, whether or not arising out of Tenant's use or manner of use thereof, or with respect to the building if arising out of Tenant's use or manner of use of the premises or the building (including the use permitted under the lease). [N];othing herein shall require Tenant to make structural repairs or alterations unless Tenant has by its manner of use of the demised premises or method of operation therein, violated any such laws, ordinances, orders, rules, regulations or requirements with respect thereto. Tenant shall not do or permit any act or thing to be done in or to the demised premises which is contrary to law, or which will invalidate or be in conflict with public [*2]liability, fire or other policies of insurance at any time carried by or for the benefit of Owner. Tenant shall pay all costs, expenses, fines, penalties or damages, which may be imposed upon Owner by reason of Tenant's failure to comply with the provisions of this article.
Tenant's Liability Insurance Property Loss, Damage, Indemnity: 8. Tenant agrees, at Tenant's sole cost and expenses, to maintain general public liability insurance in standard form in favor of Owner and Tenant against claims for bodily injury or death or property damage occurring in or upon the demised premises, effective from the date Tenant enters into possession and during the term of this lease. Such insurance shall be in an amount and with carriers acceptable to the Owner. Such policy or policies shall be delivered to the Owner. On Tenant's default in obtaining or delivering any such policy or policies or failure to pay the charges therefor, Owner may secure or pay the charges for any such policy or policies and charge the Tenant as additional rent therefor.
Paragraph 9 of the Lease Rider provides in pertinent part:
Insurance: In addition to the rental above provided, the Tenant agrees to obtain during the term of the lease, and every year thereof, insurance insuring both the interest of the Tenant and the Landlord (naming the Landlord as additional insured including a loss lenders payable clause, insuring the interest of the Landlord and shall, within thirty (30) days prior to the commencement date hereof, deliver to Landlord an appropriate policy or certificate attesting thereto. Such policy shall contain a provision that it may not be cancelled by the insurer except on thirty (30) days prior written notice to the Landlord. Tenant further agrees to furnish a renewal of such insurance policy to the Landlord not later than sixty (60) days prior to the expiration of the then existing policy. In the event that the Tenant shall fail to obtain such insurance and to deliver the policy or certificate as herein provided, then the Landlord may but shall not be required to obtain said insurance, and the cost of the premiums therefor shall be deemed additional rent to be paid by the Tenant to the Landlord ...Tenant shall obtain the following insurance:a) Full replacement fire and casualty insurance with extended coverage of at least $500,000
b) Public liability insurance with limits of not less than $1,000,000 for [*3]bodily injury or death to one person, $1,000,000 for bodily injury or death to more than one person and with property damage of $1,000,000.00.
Pursuant to the sublease, Undertenant agreed to be bound to all relevant provisions contained in the Lease. Further, Paragraph 14 of the Sublease provides, in pertinent part:
Undertenant shall at all times carry a policy of general liability insurance and other insurance as required by the Overlease designating Overlandlord and Overtenant as additional insured.Petitioner has established that respondents did not maintain the required insurance. In turn, respondents have failed to raise an issue of fact on this point. Although respondents have provided a copy of a Certificate of Liability Insurance for the subject premises on behalf of the Undertenant naming petitioner as an additional insured, there is no proof that the Overtenant obtained general liability insurance for its benefit. Thus there is no proof that the Overtenant cured the default identified in the Notice to Cure, to wit, "you have failed to provide proof of liability insurance for your business operations with limits of no less than $1,000,000.00 per occurrence for bodily injury or property damage. You have also failed to provide proof of full replacement fire and casualty insurance with extended coverage of at least $500,000.00.
Further, neither respondent has demonstrated proof that they obtained fire and casualty insurance. The Evidence of Property Insurance document annexed to the Overtenant's answer was cancelled effective November 16, 2013 according to the Endorsement provided by petitioner. A further issue here is that respondents' "proof"[FN2] of property insurance is only for $460,000, and it is only for replacement cost. Paragraph 9a of the Lease Rider requires respondents to obtain property insurance with extended replacement coverage of at least $500,000. Respondents' joint failure to obtain the requisite type of property insurance and in the required amount, as well as Overtenant's failure to obtain general liability insurance is a breach of the Lease and Lease Rider.
The Court further concludes that respondents' failure to procure the requisite insurance under the Lease and Lease Rider is a substantial default under the lease (see i.e. Kel Kim Corp. v Central Mkts., 70 NY2d 900 [1987]). Respondents do not argue that their performance constitutes substantial compliance with the insurance procurement provisions. Nor do they claim that petitioner waived respondents' compliance with the insurance procurement requiremens through prior conduct and acquiescence. And while petitioner was entitled to procure the insurance itself and charge respondents the cost as additional rent, it was not required to do so. Instead, petitioner chose not to exercise that option, but rather deem respondents in default of the insurance procurement provisions of the Lease and Lease Rider thereby giving rise to lease [*4]forfeiture.
Respondents' argument that the Notice to Cure was not sufficiently particular is rejected. The purpose of a Notice to Cure is to specifically apprise the tenant of claimed defaults in its obligation under the lease and of the forfeiture and termination of the lease if the claimed default is not cured within a set period of time (Filmtrucks, Inc. v. Express Industries and Terminal Corp., 127 AD2d 509 [1st Dept 1987]). Here, the Notice clearly explains that respondents failed to procure the necessary insurance, and references the operative Lease and Lease Rider provisions which respondents are in breach of.
As to petitioner's arguments that the respondents failed to obtain general liability insurance for petitioner's benefit, those arguments must be rejected because the Notice to Cure does not set forth such a default. Without giving respondents an opportunity to cure the default, such alleged defaults cannot form an independent basis for termination of the Lease in this summary proceeding.
Nonetheless, the Lease was properly terminated by petitioner.
Petitioner has also shown that respondents were required, but failed, to correct the sidewalk violation by the expiration of the cure period. Although respondents argue that it was impossible to repair the sidewalk within the cure period, respondents' argument must fail because they have wholly failed to establish that they are entitled to such a defense. Petitioner's affidavit by Mr. Uddin rebuts such a claim, and respondents have otherwise failed to demonstrate a triable issue of fact on this point. Moreover, respondents could have sought Yellowstone relief to toll the cure period, in light of the purported impossibility due to the winter weather, but they did not. Their failure to seek an extension of the cure period in order to perform the work supports the conclusion that they did not intend to cure within the time provided or a reasonable period thereafter. Therefore, respondents' failure to correct the sidewalk violation is also a material breach of the Lease forming a separate basis for termination.
Finally, as for the plumbing work violation, respondents have at least raised a triable issue of fact as to whether this Lease violation was waived by petitioner. However, since the Court has already found that the failure to procure the requisite insurance coverage and the failure to repair the sidewalk each constitute a separate basis to terminate the Lease, petitioner's motion must be granted. Further, even if the "plumbing work violation" was not a valid basis for lease forfeiture, there are two other independent grounds for termination and the Court finds that the "pluming work violation" default, even if invalid, does not render the Notice to Cure defective. While there are times when a substantive defect is so significant that it may render the entire notice deficient (542 Holding Corp. v. Prince Fashions, Inc., 46 AD3d 309 (1st Dept 2007), here, each basis set forth for termination is clear and separate. A fair reading of the Notice to Cure provisions related to the insurance and sidewalk issues clearly apprise respondents of the lease provisions involved and the action necessary to effect a cure of the violation.
Petitioner is entitled to a judgment of possession in its favor and against respondents with warrant of eviction forthwith.
Any requested relief not expressly addressed by the Court has nonetheless been considered and is hereby denied and this constitutes the decision and order of the Court.
Dated: May 16, 2014So Ordered:
New York, New York_____________________
Hon. Lynn R. Kotler, J.C.C. Footnotes
Footnote 1: To the extent that respondent 235 Tenth Avenue Car Wash, Inc. seeks affirmative relief, claiming to "cross move[];" in its attorney's affirmation, respondent has not filed a notice of cross-motion nor has it paid the requisite filing fees. Therefore, this request for relief is not properly before the Court. Respondent Manhattan Car Wash Inc. also asks for summary judgment in its favor without a proper notice of cross-motion. For the same reasons, that "motion" is also denied. In any event, had respondent's properly cross-moved, such motions would have been denied for the reasons stated in this decision/order (see infra).
Footnote 2: The subject certificates of insurance expressly state that they are "issued as a matter of information only and confers no rights upon the certificate holder" and therefore are insufficient to show that such insurance has been purchased. At best, the certificates raise an issue of fact which could defeat petitioner's motion for summary judgment.
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