| 2632 Realty Dev. Corp. v 299 Main St., LLC |
| 2012 NY Slip Op 02480 [94 AD3d 743] |
| April 3, 2012 |
| Appellate Division, Second Department |
| 2632 Realty Development Corporation et al.,Respondents, v 299 Main St., LLC, et al., Appellants. |
—[*1] Farrell Fritz, P.C., Uniondale, N.Y. (Charlotte A. Biblow and John C. Armentano ofcounsel), for respondents.
In an action to recover damages for breach of contract and for a judgment declaring that thedefendants are obligated to indemnify the plaintiff 2632 Realty Development Corporation for,inter alia, the costs of defending an action entitled State of New York v Next MillenniumRealty, LLC, pending in the United States District Court for the Eastern District of NewYork, under docket No. CIV 03-5985, the defendants appeal from an order of the Supreme Court,Nassau County (Woodard, J.), dated September 13, 2010, which denied their motion forsummary judgment, in effect, declaring that they are not obligated to indemnify the plaintiff 2632Realty Development Corporation for, among other things, the costs of defending the underlyingaction and dismissing the first and second causes of action insofar as asserted by the plaintiff2632 Realty Development Corporation, and for summary judgment dismissing the complaintinsofar as asserted by the plaintiff BelleSys, Inc.
Ordered that the order is modified, on the law, by deleting the provision thereof denying thatbranch of the defendants' motion which was for summary judgment dismissing the complaintinsofar as asserted by the plaintiff BelleSys, Inc., and substituting therefor a provision grantingthat branch of the motion; as so modified, the order is affirmed, without costs or disbursements.
In March 2005 the plaintiff 2632 Realty Development Corporation (hereinafter Realty)agreed to sell a parcel of real property to the defendant 299 Main St., LLC (hereinafter Main St.).The subject property (hereinafter the property) was located in the New Cassel Industrial Area(hereinafter the NCIA) in Westbury. Main St. financed the purchase with a mortgage loan andnote from Realty to Main St. and the defendant 19 Liberty, Ltd. (hereinafter Liberty). Theindividual defendants, Samuel Padilla and Alexander Holuka, signed a guaranty relating to theobligations under the mortgage and note, and their signatures appeared on the contract of sale(hereinafter the contract), as "guarantors." The parties were aware of certain environmentalconditions affecting the property, as well as liabilities arising from those conditions, so theynegotiated detailed provisions, including indemnification agreements, to account for thoseconditions. The contract reflected, [*2]among other things, thatRealty was presently involved in an environmental cleanup of the property pursuant to certainobligations it assumed in a 1999 consent order with the New York State Department ofEnvironmental Conservation, and provided that, upon purchasing the property, Main St. wouldassume the cleanup obligations required in the 1999 consent order. In August 2007 Realtyassigned its rights under the mortgage and note to the plaintiff BelleSys, Inc. (hereinafterBelleSys).
In June 2008 Realty notified the defendants that it had been named as a defendant formerowner of contaminated premises in an action commenced by the State of New York in the UnitedStates District Court for the Eastern District of New York pursuant to state law and section 107(a) (2) (42 USC § 9607 [a] [2]) of the Comprehensive Environmental Response,Compensation, and Liability Act, known as CERCLA, 42 USC § 9601 et seq.(hereinafter the Federal Action). The State sought to recover the costs of remediatinggroundwater pollution emanating from the area in which the property was located, which wasalleged to have commingled with groundwater pollution from other sites within the NCIA toform a "plume" of pollutants that contaminated areas south of the NCIA.
Realty demanded that the defendants indemnify it for the costs of defending the FederalAction pursuant to the indemnity provision in the contract and the guarantees which theindividual defendants signed. The defendants refused Realty's demand, and Realty and BelleSys(hereinafter together the plaintiffs) commenced this action to recover damages for breach ofcontract and for a judgment declaring that the defendants are obligated to indemnify Realty for,inter alia, the costs of defending the Federal Action. After issue was joined, the defendantsmoved for summary judgment, in effect, declaring that they were not obligated to indemnifyRealty for, among other things, the costs of defending the Federal Action and dismissing the firstand second causes of action to recover damages for breach of contract. The defendantscontended, inter alia, that the contract did not require them to indemnify Realty forenvironmental conditions that emanated from the property and caused off-site contamination.
"Interpretation of an unambiguous contract provision is a function for the court, and mattersextrinsic to the agreement may not be considered when the intent of the parties can be gleanedfrom the face of the instrument" (Teitelbaum Holdings v Gold, 48 NY2d 51, 56 [1979];see U.S. Home Corp. v Elm FarmAssoc., LLC, 71 AD3d 667, 668-669 [2010]; Pierson v Empire State Land Assoc., LLC, 65 AD3d 1114 [2009];Charter Realty & Dev. Corp. v New Roc Assoc., 293 AD2d 438, 439 [2002]). A courtshould not imply a term which the parties themselves failed to include (see Aivaliotis v Continental Broker-DealerCorp., 30 AD3d 446 [2006]). Further, in the absence of a legal duty to indemnify, acontract for indemnification should be strictly construed to avoid imputing any duties which theparties did not intend to assume (seeMikulski v Adam R. West, Inc., 78 AD3d 910, 911 [2010]; Quality King Distribs., Inc. v E & M ESR,Inc., 36 AD3d 780, 782 [2007]).
The defendants failed to establish their prima facie entitlement to judgment as a matter oflaw with respect to Realty (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851[1985]; Blanche, Verte & Blanche, Ltd.v Joseph Mauro & Sons, 79 AD3d 1082 [2010]; Qlisanr, LLC v Hollis Park Manor Nursing Home, Inc., 51 AD3d651 [2008]). Specifically, the defendants failed to establish, prima facie, that theindemnification provisions of the contract, including sections 5.04, 5.05, 5.07, and 5.08, whenread together, did not obligate them to indemnify Realty with respect to the subject matter of theFederal Action. Consequently, the Supreme Court properly determined that the defendants werenot entitled to summary judgment with respect to Realty.
The Supreme Court erred, however, in denying that branch of the defendants' motion whichwas for summary judgment dismissing the complaint insofar as asserted by BelleSys. AlthoughBelleSys is the proper assignee of the obligations owed under the note and the mortgage, therewas no allegation that the defendants breached any of these obligations. The plaintiffs' relianceon paragraph 41 (g) of the mortgage is misplaced. That provision requires the mortgagor toindemnify the mortgagee and its assigns from any claims relating to the mortgagor's breach of theindemnity provisions of the contract, but it is undisputed that BelleSys is not a party to theFederal Action. Accordingly, the defendants established their prima showing of entitlement tojudgment as a matter of law dismissing the complaint insofar as asserted by BelleSys bydemonstrating that BelleSys has no cause of action for indemnification for claims relating toRealty's defense of the [*3]Federal Action (see Winegrad vNew York Univ. Med. Ctr., 64 NY2d 851 [1985]; Zuckerman v City of New York,49 NY2d 557, 562 [1980]). In opposition, the plaintiffs failed to raise a triable issue of fact.
The defendants' remaining contention is without merit. Skelos, J.P., Balkin, Roman andSgroi, JJ., concur. [Prior Case History: 2010 NY Slip Op 32654(U).]