Lims, Inc. v 460 Old Town Rd. Owners Corp.

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Lims, Inc. v 460 Old Town Rd. Owners Corp. 2015 NY Slip Op 31193(U) July 8, 2015 Supreme Court, Suffolk County Docket Number: 12-23626 Judge: Daniel Martin 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] INDEX No. 12-23626 CAL No . 14-00540CO SUPREME COURT - STATE OF NEW YORK I.A.S. PART 9 - SUFFOLK COUNTY PRESENT: Hon. DANIEL MARTIN ~~~----"~~==='-"-'-=..:.~-=-'--~~~ MOTION DATE 8-26-14 ADJ. DATE 9-30-14 Mot. Seq. # 001 - MotD;CaseDisp . ---------------------------------------------------------------X UMS. INC.. Plaintiff, ROBERT L. DOUGHERTY, ESQ . Attorney for Plaintiff 226 Seventh Street, Suite 200 Garden City, New York 11530 - against 460 OLD TOWN ROAD OWNERS CORP ., Defendant. IRWIN S. IZEN, ESQ. Attorney for Defendant 357 Veterans Memori al Highway Cammack, New York 11725 ---------------------------------------------------------------X Upon th e fo ll owing papers numbered I to _]_Q__ read on this motion for summary judgment ; Notice ofMotior ' Order to Show Ca use and supporting papers I - 20 ; Noti ce of Cross Motion and supporting papers _ ; Answering Affida its and sup porting papers 2 1 - 26 ; Replying Affidavits and suppo11ing papers 27 - 30 ; Other_; (and 11fte1 he111 i11g eou11sel in upport <111d opposed to tlte rnotio11) it is, ORDERED that the motion by plaintiff LIMS , Inc. , for, inter alia, summary judgment in it~ favor un its cause of action for breach of contract is granted to extent indicated herein, and is otherwise c :!nied. In this action for breach of contract, plaintiff LIMS, [nc., seeks recovery of damages it a lle~ ~dly incurred when defendant 460 Old Town Road Owners Corp. (hereinafter referred to as "460 Old Town''). allegedly breached an agreement to provide property management services for a cooperat ve complex known as Stony Hollow . On January 30, 2008 , the parties amended the ir existing m anag :ment sen ices agreement by extending the durati on of the agreement to a period of two years, and fixing LIMS · management fees at the sum of $69,500 annually. The amendm ent also extended all other erms of the ag reement for two years, including a termination clause which provided that either party cm Id terminate the agreement for cause upon written notice "within 60 days fro m the date of the contra< :." Following the election of a new president to the board of 460 Old Town, by e-mail dated Septemb :r 9, 200 8. its attorney requested that LIMS consent to a further amendment of the parti es' agreement. grn11ti11g 460 Old Town the right to terminate the agreement, with or without cau se, upon 30 days vritten notice fro m the board. LIMS subsequently rejected the proposed amendment, and by letter dated ScptcIT1bcr 15. 2008. 460 Old Town advised LIMS that its management serv ices wo uld be termim :ed [* 2] Lims v 460 Old !'own Road Index No. 12-23626 Page No. 2 effective October 30. 2008. Thereafter, LIMS brought this action seeking damages. By its compla 1t, LIMS asserts causes of action for breach of contract, breach of the covenant of good faith and fair dealing. violation of Labor Law§ 198, and attorneys· fees. UMS now moves for summary judgment on its breach of contract action on the grounds it' ms within its right to reject the proposed amendment, and that it did not engage in any conduct warraff ng termination or the contract. LIMS also seeks an award of compensatory damages in the sum of $9: ,666. as well as attorneys' fees and sanctions based on 460 Old Town's alleged frivolous conduct and ba , faith defense. 460 Old Town opposes the motion, arguing that CPLR 4519 precludes plaintiff frorr offering any evidence concerning communications held with its past-president, decedent Frank De Stefano. in support of its motion. 460 Old Town also asserts triable issues exist as to whether L MS failed to comply with numerous provisions of the parties' original agreement and, if so, whether it ,ad the right to terminate the agreement based on such failure. Alternatively, 460 Old Town asserts, in er alia. that the termination clause contained in the original agreement permitting it to terminate LIM~ services "within sixty (60) days from the date of [the] contract" was unconscionable and ambiguou :, and that any ambiguity in the contract should be interpreted against LIMS, which drafted the agreemen The original management services agreement entered by the parties, dated March 1, 2007, states. in pertinent part, as follows: SEVENTH: (A) Either party shall have the right to terminate this contract for cause within sixty (60) days from the date of this contract, only with written notice. EIGHT: The sole compensation which the MANAGEMENT COMPANY shall receive for management services provided in this agreement shall be as stated below: Payments shall be made in equal monthly installments due and payable by the first day of each month Management Fees: From Mach L 2007 up to and including February 28, 2008, $68,200.00 per annum NINTH: This agreement shall constitute the entire agreement between the contracting parties and no variance or modification thereof shall be valid and enforceable, except by supplemental agreement in writing, executed and approved in the same manner as this agreement. .. ELEVENTH: Any notices given by either party under the terms of this agreement shall be in writing and mailed to the address above written for each of the parties by Certified Mail, Return Receipt Requested. Th'-' t':dcnsion agreement executed by the parties, dated January 30, 2008, provides as follows: [* 3] Lirns v 460 Old Town Road Index No. 12-23626 Page Nu. 3 FIRST: OWNER and the AGENT vvish to extend all of the terms, conditions, and covenants as set forth in the original Agreement dated March 1, 2007 for a two (2) year addendum. A two year addendum is agreed upon, then the per annum management fees from March l, 2008 through February 28, 2010 shall be $69,500.00 On a motion for summary judgment the court's function is to determine whether issues off: ct exist not to resolve issues of fact or to determine matters of credibility; but merely to determine the existence of such issues (see Sillman v Twentieth Century Fox Film Corp., 3 NY2d 395, 165 NY: 2d 498 [1957L Rivers v Birnbaum, 102 AD3d 26, 953 NYS2d 232 [2d Dept 2012]). Therefore, in determining the motion for summary judgment, the facts alleged by the nonmoving party and all inferences that may be drawn are to be accepted as true (see Doize v Holiday Inn Ronkonkoma, 6 1.D3d 573. 774 NYS2d 792 [2d Dept 2004]; Roth v Barreto, 289 AD2d 557, 735 NYS2d 197 [2d Dept 2 01]). Once the movant' s burden is met, the burden shifts to the opposing party to establish the existence 1f a material issue of fact (see Alvarez v Prospect Hosp., 68 NY2d 320, 508 NYS2d 923 [1986]; Wine~ rad v New York Univ. Med. Ctr., 64 NY2d 851, 487 NYS2d 316 [1985]). However, mere allegations, unsubstantiated conclusions, expressions of hope or assertions are insufficient to defeat a motion fc · summary judgment (see Zuckerman v New York, 49 NYS2d 557, 427 NYS2d 595 [1980]). 1 Initially, the court finds, pursuant to CPLR 4519, that the evidence proffered by nonparty w tness Linda Donato, president and owner of LIMS, concerning her transactions and communications witl 460 Old Town's deceased past-president Frank DeStefano is inadmissible for the purpose of establishin ~ LIMS' entitlement to summary judgment (see Phillips v Joseph Kantor & Co., 31 NY2d 307, 338 NYS2d 882 [ l 972]: Miller v Lu-Whitney, 61 AD3d 1043, 876 NYS2d 211 [3d Dept 2009]; Aceve, 'o v Audubon ·Mgmt., Inc., 280 AD2d 91, 721NYS2d332 [1st Dept 2001]). While evidence excludat eat trial under the Dead Man's Statute may be considered in opposition to a motion for summary judgrr ent (see Phillips v Joseph Kantor & Co., supra at 314; Marsza/ v Anderson, 9 AD3d 711, 713, 780 N 7 S2d 432 [3 Dept 2004]), such evidence "should not be used" to support a summary judgment motion (Phillips v Joseph Kantor & Co., supra at 313; see Acevedo v Audubon Mgt., Inc., supra; Friedn 111 v Sills, 112 AD2d 343. 491 NYS2d 794 [2d Dept 1985]; Moyer v Briggs, 47 AD2d 64, 364 NYS2d 32 11 st Dept 1975]). The court, therefore, will not consider such evidence in reaching its determinatic 1. The common law elements of a cause of action for breach of contract are ( 1) formation of a contract between plaintiff and defendant, (2) performance by plaintiff, (3) defendant's failure to pe form, dnd (4) resulting damage (see e.g. J.P. Morgan Chase v J.H. E/ec. of N. Y., Inc., 69 AD3d 802, 89 l NYS2d 23 7 I2d Dept 201 OJ). "[W]hen parties set down their agreement in a clear, complete doCLu tent, their \\Tiling should ... be enforced according to its terms" (Vermont Teddy Bear Co. v 538 Madi: on Real~r Co .. 1 NY3d 470, 475, 775 NYS2d 765 [2004]). The contract "should be read as a whole t< ensure that undue emphasis is not placed upon particular words and phrases'' (Bailey v Fish & Net ve, 8 NY:1d 523. 528. 868 NE2d 956, 837 NYS2d 600 [2007]). Indeed. where a contract provides that a party must fulfill specific conditions precedent before it can terminate an agreement, those conditions sh mid he enforced as vvritten and the parties must comply with them (see A.S. Rampell, Inc. v Hyster Co , 3 [* 4] Lims \ -1-60 Old Town Road Index No. 12-23626 Page No.-+ :\Y2d 369. 382.165 NYS2d 475 [1957]; Summit Dev. Corp. v Fownes, 74 AD3d 563, 903 NYS2c 33 I !st Dept 2010]). Moreover. '"[ w ]hether a contract is ambiguous is a question of law and extrinsic evidence n ay not be con::;idered unless the document itself is ambiguous" (South Rd. Assocs., LLC v IBM, 4 N'r 3d 272. 278. 793 NYS2d 835 [2005]). Therefore, when considering a contract, •·courts may not by construction add or excise terms, nor distort the meaning of those used and thereby make a new co tract for the parties under the guise of interpreting the writing" (Bailey v Fish & Neave, supra at 528 ). fhus, ··[a] contract is not rendered ambiguous simply because one of the parties attaches a different, subj1 ctive meaning to one of its terms" (Sasson v TLG Acquisition LLC 127 AD3d 480, 48 l ,_NYS2d [2, . Dept 2015]: Bajraktari Mgt. Corp. vAmerican Intl. Group, Inc., 81AD3d432, 916 NYS2d 771 1st Dept 2011 ]l. Additionally, "[t]he determination of unconscionability is a matter of law for the cou t to decide'· (lndustralease Automated & Scientific Equip. Corp. v R. ME. Enters., 58 AD2d 482, 4 8, 396 NYS2d 427 [1977]), and "[w]here the significant facts germane to the unconscionability issue ire essentially undisputed, the court may determine the issue without a hearing" (Scott v Palermo, 233 AD2d 869. 870. 649 NYS2d 289 [1996]). Here. LIMS met its prima facie burden on the motion by submitting evidence that 460 Old 'own breached the parties' agreement by failing to comply with the conditions of the termination clause ,efore it cancelled LIMS' property management service contract (see A.S. Rampell, Inc. v Hyster Co., su, ira; Ka/us v Prime Care Physicians, P.C., 20 AD3d 452, 799 NYS2d 115 [2d Dept 2005]; Scudder v. ack Hall Plumbing & Heating, Inc., 302 AD2d 848, 756 NYS2d 330 [3d Dept 2003]). Significantly, ~60 Old Town failed to comply with the conditions of the termination clause by seeking to terminate L MS' management agreement well beyond the first 60 days after the parties' extended their agreement or January 30. 2008. Further, while the termination letter purported to cancel LIMS' services for caw~ based on its alleged failure to "comply with numerous provisions of the contract," it failed to list ai y of those failures in its letter terminating the parties' agreement. Moreover, even assuming, arguendo, that such failures were listed, 460 Old Town's initial failure to comply with the requirement that it tern inate the contract within the first 60 days from the date of the renewal of the agreement was a breach of !1e parties· contract. In opposition. 460 Old Town failed to raise a triable issue warranting denial of the motion ( ;ee Alvarez v Prospect Hosp., supra; Winegrad v New York Univ. Med. Ctr., supra). Contrary to 46( Old Town ·s contention. the text of the agreement does not reveal any ambiguity, as it clearly sets forth he prncedure to be followed if either party desired to terminate the agreement. Additionally, there is 1 o textual basis for 460 Old Town's assertion that the termination agreement could be read to mean t11t termination was permissible at any time during the contract. upon 60 days prior written notice. Th :re are no internal inconsistencies between the termination clause and any other part of the agreement, anc the parties did not seek to alter the conditions set forth therein at the time they extended the agreement for a further two years. As stated above, "[a] contract is not rendered ambiguous simply because one of the parties attaches a different. subjective meaning to one of its terms"' (Sasson v TLC Acquisition LL C. supra at 48 l ). '"When the only extrinsic evidence asserted as the basis for creating a factual issue< s to the interpretation of a contract consists of a party's uncomrnunicated subjective intent, summary judgment is appropriate" (see Hudson-Port Ewen Assoc., L.P. v. Chien Kuo, 165 AD2d 301, 305 566 [* 5] Lims v 460 Old Town Road lndex No. 12-23626 Page No. 5 \JYS2d 774 [3d Dept 1991]). Furthermore. where. as here. there is no dispute as to whether LIMS engaged in any high pressure tactics or conduct permitting it to force 460 Old Town to agree to the conditions set forth in the termination clause, 460 Old Town fails to raise a triable issue as to whet] er the termination clause should be set aside based on unconscionability (see Emigrant Mtge. Co., In ~. v Fitzpatrick. 95AD3d1169, 945 NYS2d 697 [2d Dept 2012]; compare Simar Holding Corp. v GS:::', 87 AD3d 688. 928 NYS2d 592 [2d Dept 2012]). Accordingly, the branch of the motion by LIMS, Inc for summary judgment on its breach of contract claim is granted . LIMS , therefore, is entitled to $92,6 6, as compensatory damages for the income it lost during the 16 months that was remaining after the par ies ' extended contract was wrongfully terminated. As the other causes of action, although sounding in different legal theories. all seek damages in the same amount of $92,656, those causes of action are dismissed as moot. The remaining branch of the motion for imposition of sanctions and award of attorneys' fee ; is considered under 22 NYCRR 130-1.1, and is denied. The Court finds that defendants did not enga ~e in conduct which constitutes frivolous conduct as that term is defined in 22 NYCRR 130-1.1 (c) (sec McGee v J. Dunn Constr. Corp. , 54 AD3d 1009, 864 NYS2d 167 [2d Dept 2008]; cf Palumbo v Palumbo. 78 AD3d 1139, 911NYS2d665 [2d Dept 2010]; Mascia v Maresco, 39 AD3d 504, 833 NYS2d 207 [2d Dept 2007]) .. Dated: ;JUL'{ g ~OIS X FINAL DISPOSITION NON-FINAL DISPOSITION

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