| F&T Mgt. & Parking Corp. v Flushing Plumbing Supply Co.,Inc. |
| 2009 NY Slip Op 09424 [68 AD3d 920] |
| December 15, 2009 |
| Appellate Division, Second Department |
| 13—F&T Management & Parking Corp.,Appellant, v Flushing Plumbing Supply Co., Inc., et al., Respondents, et al.,Defendants. |
—[*1] Lynch Legal Associates, LLP, Williston Park, N.Y. (Kyle T. Lynch of counsel), forrespondents Flushing Plumbing Supply Co., Inc., Paul Brown Properties, Ltd., 37-25, LLC, andPaul Brown. Law Offices of Michael P. Berkley, P.C., Garden City, N.Y. (Melanie C. Alphonso ofcounsel), for respondents Chien Yang Development Group, Inc., Shoho J, LLC, and Chien TsangLin.
In an action, inter alia, in effect, to enforce a stipulation of settlement, and for a judgmentdeclaring that a right of first refusal granted to the defendant Chien Yang Development Group,Inc., under a certain lease is extinguished, the plaintiff appeals from an order of the SupremeCourt, Queens County (Kitzes, J.), entered January 29, 2009, which granted the motion of thedefendants Flushing Plumbing Supply Co., Inc., Paul Brown Properties, Ltd., 37-25, LLC, andPaul Brown, in effect, pursuant to CPLR 3211 (a) (1) and (7) to dismiss the first cause of actioninsofar as asserted against the defendants 37-25, LLC, and Paul Brown, and the second cause ofaction insofar as asserted against all of those defendants, granted those branches of the separatemotion of the defendants Chien Yang Development Group, Inc., Shoho J, LLC, and Chien TsangLin which were, in effect, pursuant to CPLR 3211 (a) (1) and (7) to dismiss the first cause ofaction insofar as asserted against the defendants Chien Yang Development Group, Inc., andChien Tsang Lin, and the second cause of action insofar as asserted against all of thosedefendants, to cancel a notice of pendency filed by the plaintiff with respect to certain parcels ofreal property, and upon converting that branch of the motion of the defendants Chien YangDevelopment Group, Inc., Shoho J, LLC, and Chien Tsang Lin which was, in effect, pursuant toCPLR 3211 (a) (1) and (7) to dismiss the third cause of action asserted against them into one forsummary judgment declaring that the right of first refusal granted to the defendant Chien YangDevelopment Group, Inc., under the lease is not extinguished, granted that branch of the motion.
Ordered that the order is modified, on the law, (1) by deleting the provision thereof grantingthat branch of the motion of the defendants Chien Yang Development Group, Inc., Shoho J,LLC, and Chien Tsang Lin which was to cancel the notice of pendency filed by the plaintiff[*2]with respect to certain parcels of real property, andsubstituting therefor a provision denying that branch of the motion, and (2) by deleting theprovision thereof granting the converted branch of the motion of the defendants Chien YangDevelopment Group, Inc., Shoho J, LLC, and Chien Tsang Lin which was for summaryjudgment declaring that the right of first refusal granted to the defendant Chien YangDevelopment Group, Inc., under the lease is not extinguished and substituting thereforprovisions denying the converted branch of the motion and searching the record and awardingsummary judgment to the plaintiff declaring that the right of first refusal granted to the defendantChien Yang Development Group, Inc., under the lease is extinguished; as so modified, the orderis affirmed, with one bill of costs payable by the plaintiff to the defendants Flushing PlumbingSupply Co., Inc., Paul Brown Properties, Ltd., 37-25, LLC, and Paul Brown, and the matter isremitted to the Supreme Court, Queens County for further proceedings on the second cause ofaction insofar as asserted against the defendants Leavitt Enterprise, Inc., and Asia Bank, N.A.,and the entry thereafter of a judgment, inter alia, declaring that the right of first refusal granted tothe defendant Chien Yang Development Group, Inc., under the lease is extinguished.
On June 17, 2005 the plaintiff and the defendants Flushing Plumbing Supply Co. (hereinafterFlushing Plumbing Supply), Paul Brown Properties, Ltd. (hereinafter Paul Brown Properties),37-25, LLC (hereinafter 37-25), and Chien Yang Development Group, Inc. (hereinafter CYD),entered into a so-ordered stipulation that settled a prior action (hereinafter the stipulation ofsettlement). Pursuant to the stipulation of settlement, the plaintiff was given an option topurchase three commercial properties owned by Flushing Plumbing Supply, Paul BrownProperties, and 37-25, and leased to CYD for a term of 98 years pursuant to a written agreement(hereinafter the lease). The plaintiff could exercise that option during the period commencingAugust 1, 2052 and ending on July 30, 2053. The plaintiff's exercise of that option was,however, subject to a right of first refusal granted in the lease to CYD.
On December 17, 2007 one of the properties was sold to the defendant Shoho J, LCC(hereinafter Shoho J). The other two properties (hereinafter the Leavitt properties) were sold tothe defendant Leavitt Enterprise, Inc. (hereinafter Leavitt), which financed its purchase with amortgage loan from the defendant Asia Bank, N.A. (hereinafter Asia Bank).
In addition, on December 17, 2007, CYD subleased the two Leavitt properties back toLeavitt. The term of the sublease ended one day before the end of the term of the lease.
Subsequently, the plaintiff commenced the instant action, seeking, inter alia, to set aside boththe sublease and the deeds to Leavitt and Shoho J on the ground that the underlying transactionsviolated the stipulation of settlement. The plaintiff also sought a judgment declaring that CYD'sright of first refusal was extinguished in light of CYD's failure to exercise that right when theproperties were sold to Leavitt and Shoho J.
The Supreme Court properly granted those branches of the motions of Flushing PlumbingSupply, Paul Brown Properties, 37-25, and Paul Brown, and of CYD, Shoho J, and the defendantChien Tsang Lin (hereinafter collectively the Lin defendants) which were, in effect, pursuant toCPLR 3211 (a) (1) and (7) to dismiss the second cause of action, which alleged that thestipulation of settlement was breached. In opposition to those branches of the motions, theplaintiff alleged that the sale of the properties to Shoho J and Leavitt violated a provision of thestipulation of settlement prohibiting modification or termination of the lease without its priorwritten consent. The plaintiff argued that, consequently, the provision operated to preventFlushing Plumbing Supply, Paul Brown Properties, and 37-25 from selling their propertieswithout its consent.
The interpretation placed on that provision of the stipulation of settlement by the plaintiff isnot a reasonable construction of that provision, and there is no evidence that the parties to thestipulation of settlement intended that the plaintiff's consent to a modification or termination ofthe lease was required not only for a modification or termination, but also as a prerequisite to asale of the properties during the 98-year lease term. In the absence of an explicit restriction onthe ability of Flushing Plumbing Supply, Paul Brown Properties, and 37-25 to sell their property,this Court will not read such a restriction into the stipulation of settlement (see Tantleff vTruscelli, 110 [*3]AD2d 240, 244-245 [1985], affd69 NY2d 769 [1987]; see also Premium Point Park Assn. v Polar Bar, Inc., 306 NY507, 512 [1954]).
Moreover, and contrary to the plaintiff's contention, nothing in the stipulation of settlementprevented CYD from subleasing the properties. The lease expressly permitted CYD to subleasewithout the plaintiff's prior consent, and that lease provision, which was not amended by thestipulation of settlement, remains in effect.
The Supreme Court properly converted, pursuant to CPLR 3211 (c), that branch of the Lindefendants' motion which was pursuant to CPLR 3211 (a) (1) and (7) to dismiss the third causeof action asserted against them, which sought a judgment declaring that CYD's right of firstrefusal was extinguished, into one for summary judgment declaring that CYD's right of firstrefusal was not extinguished. Although the court did not give the parties notice of its intention toconvert that branch of the motion, such notice was not required because the cause of action,inasmuch as it rested entirely upon the construction and interpretation of an unambiguouscontractual provision (cf. Rahman v Park, 63 AD3d 812, 813-814 [2009]), "exclusivelyinvolve[d] issues of law which were fully appreciated and argued by the parties" (Moutafis vOsborne, 18 AD3d 723, 724 [2005]).
However, the Supreme Court erred in awarding the Lin defendants summary judgmentdeclaring that CYD's right of first refusal was not extinguished. The language of the leaseprovision granting CYD the right of first refusal cannot fairly be read as reviving or continuingthat right after CYD failed to exercise it, but instead allowed the properties to be sold to thirdparties notwithstanding CYD's desires or intentions. CYD does not deny that it was given anopportunity to purchase the properties on the same terms and conditions as those offered byShoho J and Leavitt. Thus, it is clear that CYD received the bargained-for performance under theprovision (see LIN Broadcasting Corp. v Metromedia, Inc., 74 NY2d 54, 62 [1989]) and,accordingly, no longer has any rights under that provision (see Blau-Par Corp. v RelianceChem. Corp., 170 AD2d 811, 813 [1991]; Allright N.Y. Parking v Shumway, 94AD2d 962, 963 [1983]; see also 3 Warren's Weed, New York Real Property §32.149, at 32-263 [5th ed]; cf. Sargent v Vought, 194 App Div 807, 809-810 [1920]).Under the circumstances, we search the record pursuant to CPLR 3212 (b) (see Dunham vHilco Constr. Co., 89 NY2d 425, 430 [1996]; Merritt Hill Vineyards v Windy Hgts.Vineyard, 61 NY2d 106, 110-111 [1984]), and award the plaintiff summary judgmentdeclaring that CYD's right of first refusal was extinguished.
The Supreme Court further erred in granting that branch of the Lin defendants' motion whichwas to cancel the notice of pendency filed by the plaintiff with respect to the properties,inasmuch as the second cause of action, insofar as asserted against the nonmoving defendantsLeavitt and Asia Bank, survives the instant motions (cf. CPLR 6501).
The plaintiff's remaining contentions are without merit.
Since this is, in part, a declaratory judgment action, the matter must be remitted to theSupreme Court, Queens County, for the entry of a judgment, inter alia, declaring that CYD'sright of first refusal under the lease is extinguished (see Lanza v Wagner, 11 NY2d 317,334 [1962], appeal dismissed 371 US 74 [1962], cert denied 371 US 901[1962]). Covello, J.P., Santucci, Chambers and Hall, JJ., concur.[Prior Case History: 22Misc 3d 1118(A), 2009 NY Slip Op 50174(U).]