| British Am. Dev. Corp. v Schodack Exit Ten, LLC |
| 2011 NY Slip Op 02988 [83 AD3d 1247] |
| April 14, 2011 |
| Appellate Division, Third Department |
| British American Development Corporation,Respondent, v Schodack Exit Ten, LLC, Appellant. Jed B. Wolkenbreit et al., asCotrustees of the John P. Bayly Credit Shelter Trust, ProposedIntervenors-Appellants. |
—[*1] Read & Laniado, L.L.P., Albany (Howard J. Read of counsel), for proposedintervenors-appellants. Whiteman, Osterman & Hanna, Albany (Neil L. Levine of counsel), for respondent.
McCarthy, J. Appeals (1) from an order of the Supreme Court (McNamara, J.), enteredDecember 11, 2009 in Albany County, which granted plaintiff's motion for partial summaryjudgment, and (2) from an order of said court, entered [*2]December 11, 2009 in Albany County, which denied a motion bythe cotrustees of the John P. Bayly Credit Shelter Trust to, among other things, intervene.
The parties each own a 50% share of B.A. Capital Corporate Campus, LLC (hereinafterBACCC), a limited liability company created for the purpose of developing a 106-acre parcel inthe Town of Schodack, Rensselaer County as commercial realty. Plaintiff commenced this actionseeking, among other things, a declaratory judgment regarding plaintiff's obligation to purchaseland from defendant. Plaintiff moved for summary judgment on its first cause of action seeking adeclaration that it was not obligated to make additional payments to defendant for prior yearswhen plaintiff did not purchase any lots from defendant. Supreme Court granted the motion.Defendant appeals.
The cotrustees of the John P. Bayly Credit Shelter Trust (hereinafter collectively referred toas the Trust), which owns 35% of the shares of defendant, moved to intervene in this action, aswell as to consolidate it with two other actions, including the Trust's action to dissolve defendant.Supreme Court denied the motion in its entirety. The Trust appeals.
Initially, Supreme Court properly denied the Trust's motion to intervene. A person canintervene as of right "[w]hen the representation of the person's interest by the parties is or may beinadequate and the person is or may be bound by the judgment" (CPLR 1012 [a] [2]). The Trustalleged that defendant would not protect its rights because the other members of defendant hadpreviously disagreed with the Trust's interpretation of the disputed language of the BACCCoperating agreement. Contrary to this argument, however, the Trust's proposed answeracknowledges that defendant has, in this action, "asserted an interpretation of the BACCC[o]perating [a]greement more in accord with the interpretation asserted by the Trustees."Although defendant disagreed with that interpretation in papers filed in the Trust's dissolutionaction, defendant is asserting the Trust's interpretation here. The Trust alleges that it mustseparately appear to contest plaintiff's argument that defendant should be judicially estoppedfrom asserting a different position here than in the related dissolution litigation. But defendantattacks plaintiff's argument in this regard, obviating the need for the Trust to raise the issue.
While the Trust mentions on appeal other arguments that it would raise in opposition toplaintiff's motion for summary judgment, the Trust did not include those arguments in itsproposed answer or motion papers. Some of the arguments were included in the complaint andsupporting papers in the Trust's dissolution action, but merely attaching those documents fromanother action as exhibits on the motion to intervene—which was also a motion toconsolidate the present action with the dissolution action—did not alert Supreme Courtthat the Trust intended to raise those issues in this action. Accordingly, the Trust did not preservefor appeal its reliance upon those arguments (see Matter of New York State Crime Victims Bd. v Sookoo, 77 AD3d1227, 1227 [2010]). As the Trust failed to show that defendant's representation of the Trust'sinterests would be inadequate, the court properly denied the motion to intervene (see [*3]Geary v Hunton & Williams, 245 AD2d 936, 939[1997]).[FN*]
Supreme Court properly granted plaintiff partial summary judgment and declared thatplaintiff does not currently owe defendant any additional payments. The BACCC operatingagreement provided that plaintiff would pay its proportionate share for the land that would bedeveloped. Plaintiff's share would normally be covered without cash outlays, instead arising as acharge against its share of the cash flow allocated to it from the development of the property. Incertain circumstances, plaintiff would be obligated to annually purchase a single two-acre lot andpay its proportionate share for that lot by cash outlay.
As Supreme Court found, it is irrelevant whether these terms of the BACCC operatingagreement are ambiguous, because the parties modified that portion of the agreement when theyexecuted three promissory notes to address plaintiff's payments for all of the land on the propertycapable of being developed. The modification created a new agreement which supplanted theaffected provisions of the operating agreement (see Benipal v Herath, 251 AD2d 933,934 [1998]). Defendant transferred all of that land to BACCC and the parties executedpromissory notes evidencing plaintiff's indebtedness for its proportionate share of the land.Pursuant to those notes, plaintiff agreed to pay its indebtedness evidenced by the notes "throughthe distributions generated from new buildings built" on the portions of the property representedby each note. The notes unambiguously require plaintiff to pay its proportionate share of thevalue of the land capable of development, set that value, and provide that it will be paid throughdistributions generated by development—not by cash outlays.
One of defendant's members submitted an affidavit acknowledging that by transferring all ofthe developable land to BACCC and executing the notes, "the BACCC [o]perating [a]greementwas modified so as to temporarily suspend the obligation under the [disputed] clause in exchangefor [plaintiff] sharing the property tax obligation." Regardless of the reason for the transfer of theland and the related execution of the notes, it is undisputed that those transactions occurred.While defendant and its averring member assert that this was a temporary modification of theoperating agreement, the notes require any modification of them to be in writing. The partieshave not provided any proof that the modification was canceled and that they reverted back to theterms of the operating agreement. Based on the clear language of the notes, it would be improperfor us to consider extrinsic evidence to determine the parties' intentions when executing thosedocuments (see R/S Assoc. v New York Job Dev. Auth., 98 NY2d 29, 33 [2002]). Thenotes modified the operating agreement by deleting any requirement for plaintiff to ever purchasea single lot by cash outlay, instead providing that plaintiff would pay all of its [*4]proportionate share of the value of the land through distributionsgenerated by development of new buildings on that land. Supreme Court properly issued adeclaration to that effect.
Defendant argues, in the alternative, that the notes should be applied only prospectively fromthe date of issuance. According to that argument, plaintiff would still owe defendant the value ofa single two-acre lot for each year prior to the execution of the notes, if the conditions for thepurchase of such a lot arose. This interpretation is not supported by the language of the notes.The acreage and value of the land mentioned in the notes includes all of the land on the propertycapable of development. If plaintiff was required to pay for two-acre lots in addition to theamounts in the notes, plaintiff would be paying defendant twice for certain lots. The partiesexecuted the notes to address payment for all of the developable land after plaintiff presumablyshould have purchased some two-acre lots and had not done so. Thus, the parties could havespecifically addressed plaintiff's failure to annually purchase such lots, but they did not. We willnot rewrite the notes to include terms that the parties did not insert (see Matter of 17thGlenville Corp. v Board of Assessors of Town of Glenville, 214 AD2d 792, 793 [1995];see also United States Fid. & Guar. Co. v Annunziata, 67 NY2d 229, 232 [1986]).
Mercure, J.P., Rose and Egan Jr., JJ., concur. Ordered that the orders are affirmed, withcosts.
Footnote *: Because the Trust is not a party,it can only address denial of its motion to intervene. We will not consider its arguments on themerits of Supreme Court's order partially granting plaintiff's motion for summary judgment(see Hope v Perales, 82 NY2d 680, 681 [1993]).