230 Park Ave. Associates v. State, 84601

• Decision Date: 21 June 1995
• Docket Number: No. 84601,84601
• Citation: 630 N.Y.S.2d 855,165 Misc.2d 920
• Parties: 230 PARK AVENUE ASSOCIATES, Claimant, v. STATE of New York, Defendant. (Claim)
• Court: New York Court of Claims

Page 855

630 N.Y.S.2d 855

165 Misc.2d 920

230 PARK AVENUE ASSOCIATES, Claimant, v. STATE of New York, Defendant.

(Claim No. 84601.)

Court of Claims of New York.

June 21, 1995.

Carey & Ward (Geoffrey H. Ward, of counsel), for claimant.

Dennis C. Vacco, Attorney-General (Michael A. Rosas, of counsel), for defendant.

GERARD M. WEISBERG, Judge.

This is claimant's motion to dismiss the State's Fourth Affirmative Defense; or in the alternative, for permission to file a late claim pursuant to Court of Claims Act § 10(6), to deem the filed claim to have been filed nunc pro tunc within the statutory period, or to estop the State from asserting such defense. It is also defendant's cross motion for summary judgment dismissing the claim upon its Fourth and Eighth Affirmative Defenses. In reply, claimant seeks to strike the Eighth Affirmative Defense, or to estop the State from asserting it, and for summary judgment in its favor.

The facts are not in dispute. By a lease dated March 25, 1977, claimant rented office space in 230 Park Avenue, New York, New York, to the New York State Energy Research and Development Authority (NYSERDA) for a term of ten years, ending July 31, 1987. Pursuant to a sublease dated February 1, 1984, NYSERDA subleased a portion of the space to the New York State Department of Commerce. The sublease was filed and approved by the New York State Comptroller on August 30, 1984. Commencing on or about July 1, 1987, claimant and defendant entered into negotiations for a five-year lease for some or all of the formerly subleased premises. The offices were to be, and were in fact, used by the New York State Department of Commerce, the Office of the Inspector General of the State of New York, and as New York City chambers for Chief Judge Judith S. Kaye. Under a covering letter dated December 1, 1987, Robert J. Fleury, Assistant Chief of the Bureau of Leases, sent claimant a proposed five-year lease for the premises. It provided for rent at the rate of $76,890 per annum for the period August 1, 1987 to February 28, 1990, and $82,016 per annum for the period March 1, 1990 to July 31, 1992: all of the foregoing subject to adjustment for taxes and inflation. Claimant allegedly signed and returned this lease to the defendant. Be that as it may, paragraph 35 provides as follows: "This Lease shall not be binding and effective upon the State of New York unless and until the same shall have been approved by the State Attorney General and the State Comptroller, as signified by their signatures (or the signatures of their representatives) on Page No. 13 of this Lease." Neither of those signatures appears, and there does not appear to be any question that the lease was not filed and approved by the Comptroller.

In a series of letters dated March 22, 1988, May 3, 1989 and May 10, 1990, Timothy J. Leonard, Chief of the Bureau of Leases, confirmed that defendant would be occupying the subject premises while the formal lease was being finalized and that defendant would be paying rent at the rate of $6,407.50 per month from August 1, 1987 through January 31, 1990. This figure was obviously arrived at by dividing the yearly rent in the proposed lease by 12. ¹ Whether anything additional was to be owed for taxes and inflation is unclear.

The State remained in possession of the premises from August 1, 1987 until January 31, 1990. Although it repeatedly assured claimant that rent payments would be forthcoming and funds had been appropriated in prior budgets, no payments were made. By a letter dated August 29, 1991, defendant advised claimant in part as follows: "We have been notified by the Division of Budget that the Inspector General's Office does not have funds appropriated for the above subject proposed agreement in their current budget, nor do they have the authority to pay obligations from prior fiscal years." This claim ² was served on the defendant on December 16, 1991 and filed with the Clerk on the next day. It pleads two causes of action: breach of contract and unjust enrichment.

As indicated above, claimant first moves to dismiss defendant's Fourth Affirmative Defense. It provides: "The Court lacks jurisdiction over the claim due to claimant's failure to serve and file any notice of intention or the claim within the time constraints of the Court of Claims Act." However, paragraph 6 of the claim states: "Claimant alleges that the claim herein accrued on or about August 29, 1991 and, therefore, this claim is filed within the time constraints set forth in Section 10 of the Court of Claims Act." In its answer, in response to this paragraph, the State said that it: "Leaves to the Court's determination the legal conclusions contained in paragraph 6 of [the] Notice of Claim * * * * ". CPLR 3018 provides that all statements in a complaint not denied are deemed admitted. There is no category of response denominated "leaving it to the Court's determination." Inasmuch as defendant has failed to deny the statements and allegations of timeliness in paragraph 6 of the claim, they are deemed admitted. Alternatively, should I reach the issue, I would find the claim timely as to the cause of action for unjust enrichment. ³ As stated above, the claim pleads two causes of action: breach of contract and unjust enrichment. Pursuant to Court of Claims Act § 10(4), it had to be served and filed within six months of accrual. Defendant appears to argue that both causes of action accrued when it vacated the premises on January 31, 1990. Claimant's cause of action for unjust enrichment did not accrue, however, until the purported lease under which defendant was in possession, and which was subject to ratification (see, Deverho Constr. Co. v. State of New York, 94 Misc.2d 1053, 407 N.Y.S.2d 399), was disaffirmed on August 29, 1991. A cause of action for use and occupation could not accrue until the lease was disaffirmed. (See, Rosefsky v. State of New York, 205 A.D.2d 120, 617 N.Y.S.2d 969.)

Claimant's motion to strike the Fourth Affirmative Defense is therefore granted. Its motion for permission to file a late claim or to estop the State from relying on Court of Claims Act § 10 is denied as moot. Its motion to deem the claim to have been timely filed nunc pro tunc is denied as both moot and lacking authority. (See, Spinella v. State of New York, NYLJ, Apr. 20, 1988, at 13, col. 1, supra.)

With respect to the cross motions, defendant first moves to dismiss the claim as untimely. For the reasons stated above, that motion is denied. The State next moves to dismiss the breach of contract cause of action as violating section 112(2) of the State Finance Law. Prior to 1992, that statute provided in pertinent part: "Before any contract made for or by any state department, board, officer, commission, or institution, shall be executed or become effective, whenever such contract exceeds 5,000 dollars in amount, it shall first be approved by the comptroller and filed in his office." ⁴ The purpose of this statute is twofold: to prevent State employees from making improvident or extravagant contracts and from creating liabilities for which there has been no appropriation. (Deverho Constr. Co. v. State of New York, 94 Misc.2d 1053, 407 N.Y.S.2d 399, supra.) Nor does the State's acceptance of benefits under an unapproved contract estop it from denying liability under such contract (Parsa v. State of New York, 64 N.Y.2d 143, 485 N.Y.S.2d 27, 474 N.E.2d 235 [emphasis supplied].)

Claimant first objected to our granting summary judgment to the State with respect to this defense because the cross motion did not contain the affidavit of someone with personal knowledge of the facts. It is my understanding that claimant concedes that the three temporary leases had not been filed nor approved by the Comptroller. The claimant's ability to maintain a breach of contract action in the face of that omission is a question of law that requires no supporting affidavits. Be that as it may, the State has now submitted the affidavit of Theodore F. Winnie, Chief Auditor of State Expenditures, Office of the New York State Comptroller, in which he states that there is no record in that office of the temporary leases having ever been filed or approved by the Comptroller. If that is not correct, the burden was on claimant to come forward with evidence to the contrary. (Zuckerman v. City of New York, 49 N.Y.2d 557, 427 N.Y.S.2d 595, 404 N.E.2d 718.)

Claimant also asserts that section 112(2) does not apply to the three temporary leases. It concludes this based on two arguments: (i) that while the five-year sublease was conditioned on the Comptroller's approval, the temporary leases were not; and (ii) that the temporary leases were just extensions of the already approved sublease. Neither argument is persuasive. State officers cannot waive the provisions of section 112(2). (Matter of Konski Engrs. v. Levitt, 69 A.D.2d 940, 415 N.Y.S.2d 509, affd. on opn. below 49 N.Y.2d 850, 427 N.Y.S.2d 796, 404 N.E.2d 1337, cert. denied 449 U.S. 840, 101 S.Ct. 118, 66 L.Ed.2d 47.) As to extensions or renewals of approved contracts, unless the renewal is pursuant to, and in accordance with, an option provision contained in the approved contract, the extension or renewal must be independently approved by the Comptroller. (Westgate North, Inc. v. State Univ. of N.Y., 77 Misc.2d 611, 354 N.Y.S.2d 281, affd. without opn. 47 A.D.2d 1004, 368 N.Y.S.2d 1020, lv. denied 36 N.Y.2d 647, 372 N.Y.S.2d 1026, 334 N.E.2d 603.)

Lastly, claimant relies on Rosefsky v. State of New York, 205 A.D.2d 120, 617 N.Y.S.2d 969 supra, for the proposition that a holdover under an approved lease does not have to satisfy section 112(2). In Rosefsky, claimant leased the first floor of its premises to the State at $9 per square foot. The lease expired on May 31, 1986. The State desired to remain and to expand the leasehold to include the second floor. As negotiations proceeded along those lines, the State...