| 6243 Jericho Realty Corp. v AutoZone, Inc. |
| 2010 NY Slip Op 02539 [71 AD3d 983] |
| March 23, 2010 |
| Appellate Division, Second Department |
| 6243 Jericho Realty Corp., Respondent, v AutoZone, Inc.,Appellant. |
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In an action to recover damages for breach of a commercial lease, the defendant appealsfrom (1) a decision of the Supreme Court, Suffolk County (Copertino, J.), dated December 22,2008, made after a nonjury trial, and (2) a judgment of the same court (Jones, Jr., J.), enteredApril 29, 2009, which, upon the decision, is in favor of the plaintiff and against the defendant inthe principal sum of $867,920.55.
Ordered that the appeal from the decision is dismissed, as no appeal lies from a decision(see Schicchi v J.A. Green Constr. Corp., 100 AD2d 509 [1984]); and it is further,
Ordered that the judgment is affirmed; and it is further,
Ordered that one bill of costs is awarded to the plaintiff.
In January 2001 the plaintiff, as landlord, and the defendant, as tenant, entered into a"Ground Lease" (hereinafter the lease) for certain premises in the Town of Huntington.According to the terms of the lease, the defendant's "intended use" of the subject premises wasthe "construction of one of its prototypical store buildings measuring approximately 6,800 squarefeet in floor area and related improvements."
Paragraph 29 (A) of the lease provided that the defendant had 210 days to receive allauthorizations, permits, variances, and other approvals necessary for the intended use. If by suchdate the defendant had not received, or was denied or refused, any such approvals "necessary toassure that [its] intended use and development of the Demised Premises will not be physically orfinancially impaired, as determined in [its] sole discretion," the defendant was permitted toterminate the lease by furnishing written notice.
By letter dated July 11, 2001, the defendant provided written notice that it was terminating[*2]the lease, stating that it would be forced to either incur theextra time and expense of seeking a Special Use Permit or reduce the size of the intendedprototype to fit within the commercially zoned area of the site. The letter concluded that neitherof these options were acceptable to the defendant as they financially impaired its intended use.
The plaintiff commenced this action against the defendant to recover damages for breach ofthe lease. The parties stipulated to the amount of damages in the event that the plaintiffprevailed. After a nonjury trial, the Supreme Court found that the defendant did not make a goodfaith effort to explore obtaining the necessary approvals before deciding to exercise its option toterminate the lease and, therefore, that the defendant breached paragraph 29 (A) of the lease.
In reviewing a determination made after a nonjury trial, the power of the Appellate Divisionis as broad as that of the trial court and it may render the judgment it finds warranted by thefacts, taking into account that in a close case the trial judge had the advantage of seeing andhearing the witnesses (see Northern Westchester Professional Park Assoc. v Town ofBedford, 60 NY2d 492, 499 [1983]; Yonkers Contr. Co., Inc. v Romano Enters. of N.Y.,Inc., 40 AD3d 629 [2007]).
"In New York, all contracts imply a covenant of good faith and fair dealing in the course ofperformance. This covenant embraces a pledge that 'neither party shall do anything which willhave the effect of destroying or injuring the right of the other party to receive the fruits of thecontract' " (511 W. 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144, 153[2002] [citations omitted], quoting Dalton v Educational Testing Serv., 87 NY2d 384,389 [1995]). Here, contrary to the defendant's contention, the trial evidence supports theSupreme Court's conclusion that the defendant failed to make a good faith effort to exploreobtaining the necessary approvals for the contemplated 6,800 square foot building beforedeciding to exercise its option to terminate the lease (see generally 511 W. 232nd OwnersCorp. v Jennifer Realty Co., 98 NY2d at 153-154; Northern Westchester ProfessionalPark Assoc. v Town of Bedford, 60 NY2d at 499; Yonkers Contr. Co., Inc. v RomanoEnters. of N.Y., Inc., 40 AD3d 629 [2007]). The evidence showed, inter alia, that thedefendant did not attend preliminary meetings with Town officials regarding the subject site, thatplans for a 6,800 square foot building were never prepared, that the defendant was neverinformed that it would not be able to construct the proposed building without variances orspecial use permits, and that the defendant's employees signed the termination letter without anyknowledge that any good faith effort to obtain the necessary approvals was ever made. Inaddition, the plaintiff's expert prepared a site plan for a building exceeding 6,800 square feet,with a parking area containing more than the number of spaces required by the defendant'sprototype, within the commercially zoned portion of the subject site. Accordingly, the SupremeCourt properly concluded that the defendant breached paragraph 29 (A) of the lease. Dillon, J.P.,Florio, Miller and Austin, JJ., concur.