1357 Tarrytown Rd. Auto, LLC v. Granite Props., LLC

• Decision Date: 14 September 2016
• Citation: 1357 Tarrytown Rd. Auto, LLC v. Granite Props., LLC, 2016 NY Slip Op 5981, 142 A.D.3d 976, 37 N.Y.S.3d 341 (N.Y. App. Div. 2016)
• Parties: 1357 TARRYTOWN ROAD AUTO, LLC, et al., respondents-appellants, v. GRANITE PROPERTIES, LLC, et al., appellants-respondents.
• Court: New York Supreme Court — Appellate Division

142 A.D.3d 976

37 N.Y.S.3d 341

2016 N.Y. Slip Op. 05981

1357 TARRYTOWN ROAD AUTO, LLC, et al., respondents-appellants,

v.GRANITE PROPERTIES, LLC, et al., appellants-respondents.

Supreme Court, Appellate Division, Second Department, New York.

Sept. 14, 2016.

DelBello Donnellan Weingarten Wise & Wiederkehr, LLP, White Plains, N.Y. (Nelida Lara and Lee S. Wiederkehr of counsel), for appellants-respondents.

Arent Fox LLP, New York, N.Y. (Russell P. McRory, Jeff Leung, and Michael McMahan of counsel), for respondents-appellants.

RUTH C. BALKIN, J.P., L. PRISCILLA HALL, ROBERT J. MILLER, and HECTOR D. LaSALLE, JJ.

In an action, inter alia, to recover damages for fraudulent inducement, the defendants appeal from so much of an order of the Supreme Court, Westchester County (Jamieson, J.), dated April 22, 2014, as denied those branches of their motion which were pursuant to CPLR 3211(a) to dismiss the causes of action alleging breach of the implied covenant of good faith and fair dealing and for rescission, and the plaintiffs cross-appeal from so much of the same order as granted that branch of the defendants' motion which was pursuant to CPLR 3211(a) to dismiss the cause of action alleging fraudulent inducement.

ORDERED that the cross appeal is dismissed as abandoned; and it is further,

ORDERED that the order is reversed insofar as appealed from, on the law, and those branches of the defendants' motion which were pursuant to CPLR 3211(a) to dismiss the causes of action alleging breach of the implied covenant of good faith and fair dealing and for rescission are granted; and it is further,

ORDERED that one bill of costs is awarded to the defendants.

The defendant Granite Properties, LLC (hereinafter the landlord), owns certain real property in the Town of Greenburgh. The plaintiffs sought to purchase an existing automobile dealership and take over its lease to a portion of that property. Accordingly, in June 2013, the plaintiffs entered into an “Assignment and First Amendment to Lease,” and then, in July 2013, a “Second Amendment to Lease” (hereinafter, collectively with the lease, the lease agreements), whereby the plaintiffs would rent the portion of the property occupied by the dealership as well as the remainder of the property. In September 2013, the plaintiffs discovered through performing a title search that a local law prohibited parking vehicles without license plates on the premises, a practice the plaintiffs contend is essential to the business of selling automobiles. When the landlord refused to release them from the lease agreements, the plaintiffs commenced this action against the landlord and the individual defendant, who is the managing member of the landlord, alleging fraudulent inducement and breach of the implied covenant of good faith and fair dealing, and seeking rescission. The Supreme Court granted the defendants' motion pursuant to CPLR 3211(a) to dismiss the complaint only as to the cause of action alleging fraudulent inducement. The defendants appeal from so much of the order as denied those branches of their motion which were to dismiss the causes of action alleging breach of the implied covenant of good faith and fair dealing, and for rescission.

The Supreme Court erred in denying the subject branches of the defendants' motion pursuant to CPLR 3211(a)(1). The implied covenant of good faith and fair dealing is breached when a party acts in a manner that would deprive the other party of the right to receive the benefits of their agreement (see Frankini v. Landmark Constr. of Yonkers, Inc., 91 A.D.3d 593, 595, 937 N.Y.S.2d 80 ; P.T. & L. Contr. Corp. v. Trataros Constr., Inc., 29 A.D.3d 763, 764, 816 N.Y.S.2d 508 ). The implied covenant includes any promises which a reasonable promisee would be justified in understanding were included (see Dalton v. Educational Testing Serv., 87 N.Y.2d 384, 389, 639 N.Y.S.2d 977, 663 N.E.2d 289 ). However, no obligation may be implied that would be inconsistent with other terms...