| Midorimatsu, Inc. v Hui Fat Co. |
| 2012 NY Slip Op 06587 [99 AD3d 680] |
| October 3, 2012 |
| Appellate Division, Second Department |
| Midorimatsu, Inc., Appellant, v Hui Fat Company,Respondent, et al., Defendants. |
—[*1] Mark Bastian, New York, N.Y., for respondent.
In an action, inter alia, to recover damages for breach of an implied covenant in a lease, for ajudgment declaring the rights of the parties, and injunctive relief, the plaintiff appeals, as limitedby its brief, from so much of an order of the Supreme Court, Queens County (Kitzes, J.), datedNovember 22, 2011, as granted those branches of the motion of the defendant Hui Fat Companywhich were pursuant to CPLR 3211 (a) (1) to dismiss the first and second causes of actioninsofar as asserted against it.
Ordered that the order is modified, on the law, by deleting the provision thereof granting thatbranch of the motion of the defendant Hui Fat Company which was pursuant to CPLR 3211 (a)(1) to dismiss the second cause of action insofar as asserted against it and substituting therefor aprovision denying that branch of the motion; as so modified, the order is affirmed insofar asappealed from, without costs or disbursements, so much of the order as denied, as academic, thatbranch of the motion of the defendant Hui Fat Company which was pursuant to CPLR 3211 (a)(7) and 3016 (b) to dismiss the second cause of action insofar as asserted against it is vacated,and the matter is remitted to the Supreme Court, Queens County, for a determination on themerits of that branch of the motion of the defendant Hui Fat Company which was pursuant toCPLR 3211 (a) (7) and 3016 (b) to dismiss the second cause of action insofar as asserted againstit.
In October 2005, the plaintiff, Midorimatsu, Inc., as tenant, and the defendant Hui FatCompany (hereinafter HFC), as landlord, entered into a 10-year lease (hereinafter the lease) forthe premises at 111-14 and 111-16 Queens Boulevard, known as 111-06/20 Queens Boulevard(hereinafter the premises). According to the lease, the plaintiff was to use the premises as aJapanese/Chinese restaurant. The plaintiff intended to operate its restaurant at a capacity of about150 persons. The plaintiff opened its restaurant in January 2006, but, beginning in September2006, it was repeatedly cited for not having a "Public Assembly Permit," which is required for"Place[s] of Assembly" (Administrative Code of City of NY §§ 27-232, 27-525.1et seq.). Eventually, the plaintiff commenced this action against HFC alleging two causesof action. The first cause of action alleges "breach of implied covenant to engage in structuralrepairs and alteration in compliance with regulations." In substance, the plaintiff alleged that,under New York law, the owner of real property is required to bear the cost of structural changesto bring its property into compliance with legal [*2]requirements,unless the parties expressly agree that the tenant will bear those costs. The plaintiff contendedthat the lease did not expressly make it responsible for those costs. The second cause of actionalleged fraud. The plaintiff alleged that, despite knowing that the previous tenant had been citedfor not having a Place of Assembly permit, and knowing that the previous tenant had beenordered to reduce the capacity of its restaurant, HFC orally represented to the plaintiff before thelease was signed that the building was in compliance with regulations and that the plaintiff couldtherefore operate a restaurant at the desired capacity.
HFC filed a pre-answer motion to dismiss the complaint insofar as asserted against itpursuant to CPLR 3211 (a) (1) and (7) and 3016 (b). The Supreme Court granted that branch ofthe motion which was pursuant to CPLR 3211 (a) (1) and denied, as academic, the remainingbranches of the motion. The plaintiff appeals.
CPLR 3211 (a) (1) provides that a defendant may move to dismiss a cause of action on theground that "a defense is founded upon documentary evidence." A CPLR 3211 (a) (1) motionmay be granted "only where the documentary evidence utterly refutes plaintiff's factualallegations, conclusively establishing a defense as a matter of law" (Goshen v Mutual LifeIns. Co. of N.Y., 98 NY2d 314, 326 [2002]; see Leon v Martinez, 84 NY2d 83, 88[1994]; Cervini v Zanoni, 95 AD3d919, 920-921 [2012]; Fontanetta vJohn Doe 1, 73 AD3d 78, 83-84 [2010]; Lucia v Goldman, 68 AD3d 1064 [2009]; Elm Sea Realty Corp. v Chicoy, 68AD3d 1047 [2009]; SchwarzSupply Source v Redi Bag USA, LLC, 64 AD3d 696 [2009]). Materials that clearlyqualify as "documentary evidence" include "documents reflecting out-of-court transactions suchas mortgages, deeds, contracts, and any other papers, the contents of which are 'essentiallyundeniable' " (Fontanetta v John Doe 1, 73 AD3d at 84-85, quoting Siegel, PracticeCommentaries, McKinney's Cons Laws of NY, Book 7B, CPLR C3211:10).
Here, the lease expressly makes the plaintiff responsible for the cost of making structuralrepairs or alterations necessary to bring the building into compliance with, among other things,the Administrative Code of the City of New York, if those structural repairs or alterations ariseout of the plaintiff's "manner of use" of the premises. While, under the terms of the lease, theplaintiff's use of the premises as a restaurant does not, in itself, relate to the "manner of use" ofthe premises, the plaintiff's operation of the restaurant with a capacity of 75 persons or greaterrequires a Public Assembly Permit, which does relate to the "manner of use" of the premises.Consequently, under the express terms of the lease, the plaintiff is required to pay the cost of thestructural changes necessary in order to obtain a Public Assembly Permit. Thus, since the leaseconstitutes documentary evidence establishing a defense as a matter of law to the plaintiff's firstcause of action, the Supreme Court correctly granted that branch of HFC's motion which waspursuant to CPLR 3211 (a) (1) to dismiss that cause of action insofar as asserted against it.
The Supreme Court erred, however, in granting that branch of HFC's motion which waspursuant to CPLR 3211 (a) (1) to dismiss the second cause of action insofar as asserted against it.Consideration of parol evidence as to fraudulent misrepresentations is permissible despite thepresence of a merger clause in a contract (see Sabo v Delman, 3 NY2d 155, 161 [1957]).Notably, there is no express statement in the lease that the parties disclaim reliance on oralrepresentations (cf. Danann Realty Corp. v Harris, 5 NY2d 317, 320-321 [1959]; Yellow Book Sales & Distrib. Co., Inc. vHillside Van Lines, Inc., 98 AD3d 663 [2012]; Tarantul v Cherkassky, 84 AD3d 933, 934 [2011]; Laxer v Edelman, 75 AD3d 584,586 [2010]; Valassis Communications v Weimer, 304 AD2d 448, 448-449 [2003]).Consequently, the lease provisions are not a bar to consideration of the alleged oralmisrepresentations made by HFC.
In light of the above determination, that branch of HFC's motion which was pursuant toCPLR 3211 (a) (7) and 3016 (b) to dismiss the second cause of action insofar as asserted againstit is no longer academic, and thus, we remit the matter to the Supreme Court, Queens County, fora determination of that branch of the motion on the merits. Dillon, J.P., Balkin, Belen andChambers, JJ., concur. [Prior Case History: 2011 NY Slip Op 33274(U).]