Eighty Eight Bleecker Co., LLC v. 88 Bleecker Street Owners, Inc.

• Decision Date: 09 November 2006
• Docket Number: 7236A.,7236.
• Parties: EIGHTY EIGHT BLEECKER CO., LLC, Respondent, v. 88 BLEECKER STREET OWNERS, INC., Appellant.
• Court: New York Supreme Court — Appellate Division

34 A.D.3d 244

824 N.Y.S.2d 237

2006 NY Slip Op 08048

EIGHTY EIGHT BLEECKER CO., LLC, Respondent, v. 88 BLEECKER STREET OWNERS, INC., Appellant.

7236.

7236A.

Appellate Division of the Supreme Court of the State of New York, First Department.

Decided November 9, 2006.

Judgment, Supreme Court, New York County (Debra A. James, J.), entered April 27, 2005, awarding plaintiff the principal sum of $36,415.42, unanimously reversed, on the law, without costs, and the judgment vacated. Order, same court and Justice, entered October 14, 2004, which granted plaintiff's motion for summary judgment on the first two causes of action in the complaint and denied defendant's cross motion for summary judgment dismissing the second cause of action, unanimously reversed, on the law, without costs, plaintiff's motion denied, defendant's cross motion granted and the first two causes of action dismissed.

By agreement dated January 11, 1982, defendant landlord entered into a lease with plaintiff's predecessor partnership for commercial space in a residential, cooperative building. This partnership was converted into a limited liability company in July 1995 and is the plaintiff herein. The agreement was an overlease, with nine tenants in occupancy at the time of the agreement.

The lease was for a 20-year term, with two 15-year renewal options. The annual rent was set at $43,000, with no increases other than tax escalations. The 15-year renewals were to be on the same terms, with no rent increase. The tax escalation, payable as additional rent, was defined in the lease as "a sum equal to ten per cent of any increase in the amount of real estate taxes over and above those payable for the fiscal year 1981/1982 which may be imposed upon the property of which the Demised Premises form a part ... Tax bills shall be sufficient evidence of the amount of such taxes and shall be used for the calculation of the amounts to be paid by Tenant." The principal places of business of both defendant landlord and plaintiff tenant were set forth in the lease as c/o Leonard Krim, Esq., at 10 East 40th Street, New York, New York. The law firm of Krim and Krim, P.C., of which Leonard Krim, Esq., is a member, represents plaintiff. Mr. Krim is also plaintiff's managing partner.

By letter dated January 3, 2000, plaintiff exercised its option to renew the lease for the first 15-year renewal period. Thereafter, in December 2002, plaintiff commenced the underlying action by serving a summons and complaint upon defendant alleging three causes of action. The first cause of action claimed defendant overcharged plaintiff rent in the amount of $225.20 per month from December 1, 1996 through July 31, 2002. The second cause of action claimed defendant overcharged plaintiff additional rent pursuant to the tax escalation clause in the lease from fiscal year 1997-1998 through fiscal year 2001-2002. The third cause of action alleged that defendant had not paid over to plaintiff real estate tax refunds it had received. Defendant's answer denied the allegations and raised affirmative defenses of, inter alia, statute of limitations, unclean hands, waiver, estoppel, ratification and laches.

Plaintiff moved for summary judgment on the first two causes of action in May 2004. The affidavit of Leonard Krim in support of the motion claimed that when exercising its renewal option in January 2000, plaintiff first noticed it had been overpaying the rent. Krim wrote to the then managing agent of defendant and demanded an explanation. His affidavit further stated that in November 2002, he discovered the tax escalation overcharges for the period set forth in the complaint and again wrote to defendant's managing agent demanding reimbursement. With respect to the tax overpayment claim, plaintiff contended that rather than calculating tax escalations upon the actual real estate taxes imposed on the property, defendant had calculated them based on the gross real estate...