East Side Car Wash, Inc. v. K.R.K. Capitol, Inc.

• Decision Date: 12 June 1984
• Citation: 476 N.Y.S.2d 837,102 A.D.2d 157
• Parties: EAST SIDE CAR WASH, INC., Plaintiff-Appellant, v. K.R.K. CAPITOL, INC., Defendant-Respondent, and Getty Refining and Marketing Company, Intervenor-Plaintiff-Respondent.
• Court: New York Supreme Court — Appellate Division

Page 837

476 N.Y.S.2d 837

102 A.D.2d 157

EAST SIDE CAR WASH, INC., Plaintiff-Appellant, v. K.R.K. CAPITOL, INC., Defendant-Respondent and Getty Refining and Marketing Company, Intervenor-Plaintiff-Respondent.

Supreme Court, Appellate Division First Department.

June 12, 1984.

Michael P. Zweig, New York City, of counsel (Jill E. Newfield, Flushing, with him on the brief; Hess, Segall, Guterman, Pelz, Steiner & Barovick, New York City, attorneys) for plaintiff-appellant.

Frederick S. Gold, New York City, of counsel (Marybeth C. Sullivan, New York City, with him on the brief; Schupak, Rosenfeld, Fischbein, Bernstein & Tannenhauser, New York City, attorneys) for defendant-respondent.

George A. Burrell, P.C., Brooklyn, for intervenor-plaintiff-respondent.

Before SANDLER, J.P., and ASCH, SILVERMAN, BLOOM and KASSAL, JJ.

ASCH, Justice.

Since May 1982, plaintiff East Side Car Wash, Inc. has operated a car-wash, parking lot and gasoline station at 1770 First Avenue in Manhattan, as the sublessee of said premises, with the sublease running into the year 2010. The sublease was assigned to plaintiff with the consent of sublessor defendant K.R.K. Capitol, Inc. K.R.K. Capitol, Inc. was not the original sublessor either, but rather obtained its lease before 1980 through assignment from Natelle Holding Corp. The owner of the premises is CW 62 Corp.

After obtaining assignment of the sublease, East Side Car Wash entered into a letter agreement with sublessor K.R.K. in January 1982, modifying the sublease. Among the terms of that modification were that "the service station premises shall at all times bear the brand and colors of a major brand of supplier; however, the brands may be changed by you from time to time" and that "a violation, breach and/or default by you of the terms and conditions of your dealer agreement ... including but not limited to co-mingling, non-payment, insolvency, and misconduct, shall terminate this agreement." East Side Car Wash did not obtain its predecessor's interest in the Getty dealer agreement but it did continue to display Getty signs and logos.

On September 7, 1983, Getty notified East Side Car Wash that it was terminating whatever relationship it had with the station, effective December 12, 1983. On September 30, 1983, sublessee-plaintiff East Side Car Wash received a mailgram from sublessor K.R.K. stating that it was in material breach of the lease on five grounds: failure to purchase or sell brand gasoline; violation of Getty trademark and dealer agreements by co-mingling and selling unbranded gasoline as Getty gasoline; unlawfully assigning and/or subletting the premises; making modifications to the premises without consent; and failure to obtain proper governmental permits; and that unless the defaults were cured within 10 days, the sublease would terminate at that time.

East Side Car Wash commenced this action against K.R.K. on October 7, 1983, seeking a declaratory judgment that it had not breached the sublease, as modified, and for an injunction against defendant K.R.K., barring it from instituting or prosecuting any action or proceeding or taking any steps to terminate the sublease or plaintiff's right of possession. In this complaint East Side Car Wash also alleged that the 10-day notice, unsubscribed and sent by neither registered nor certified mail, did not comply with New York Law; that the sublease provided for arbitration of all disputes thereunder; and that it had fully performed its obligations under the sublease. East Side Car Wash obtained an order to show cause, signed and filed October 7, 1983, which tolled the running of the 10-day period to cure, pursuant to First National Stores, Inc. v. Yellowstone Shopping Center, Inc., 21 N.Y.2d 630, 290 N.Y.S.2d 721, 237 N.E.2d 868.

Special Term (Gammerman, J.) granted a preliminary injunction tolling the running of the 10-day period to cure, in an order entered on November 21, 1983, but only on several conditions, including primarily one that unless East Side Car Wash reached an agreement with Getty within two weeks of the entry of the preliminary injunction order, East Side Car Wash "shall consent to permitting Getty to enter upon the leased premises and to remove its logo, signs and related equipment as to which it is determined that Getty is entitled." (emphasis added).

Getty and East Side then entered into negotiations as to the sale of certain equipment, such as lights, poles, compressors and pumps, but Getty refused to discuss a dealer relationship with East Side and insisted upon the return of its signs and logos and of 10 underground 550-gallon gasoline storage tanks, on the basis that they were old, posed an environmental danger and presented Getty with a potential source of liability, even if title were passed to East Side Car Wash.

East Side commenced a second declaratory judgment and injunction action as to the ownership of the underground tanks, by service of a summons upon Getty some time between December 21 and December 28, 1983. Also named as parties to that action were K.R.K. Capitol, Inc., as sublessor, and CW 62 Corp., as the owner. In the follow-up complaint, East Side Car Wash alleged that the underground tanks were fixtures and were part of the realty leased to it.

On December 23, 1983, Getty removed its signs and logos from the station and moved to intervene in the first declaratory judgment action between East Side and K.R.K. pertaining only to breach of the sublease, and for an order upon such intervention to authorize Getty to enter the premises and remove all of its equipment, including the 10 underground tanks.

Special Term granted Getty's motion to intervene in this action and upon such intervention granted Getty's motion for an order of seizure pursuant to CPLR 7102, directing that it be given possession of certain chattel property, including the 10 underground 550-gallon gasoline tanks. Such action was improvidently taken by Special Term.

Initially we note that intervention was erroneously granted. Although the sublease dispute between plaintiff and defendant does involve East Side's breach of its relationship (if any) with Getty, the issues of whether the underground tanks are fixtures or chattels and whether Getty owns said tanks even if they are chattels are neither relevant nor material to the resolution of the issues posed in the instant "sublease" action. A proposed intervenor is not permitted to raise...