Greene v. Fast Eats Clifton Park, LLC
Decision Date | 28 May 2020 |
Docket Number | 529539 |
Citation | 124 N.Y.S.3d 487,183 A.D.3d 1215 |
Parties | Donald C. GREENE, Doing Business as DCG Development Co., Respondent, v. FAST EATS CLIFTON PARK, LLC, Formerly Known as Sonic of Clifton Park, LLC, Appellant. |
Court | New York Supreme Court — Appellate Division |
Monaco, Cooper & Carr, PLLC, Albany (Adam H. Cooper of counsel), for appellant.
Goldman Attorneys PLLC, Albany (Paul J. Goldman of counsel), for respondent.
Before: Lynch, J.P., Mulvey, Devine, Aarons and Colangelo, JJ.
In April 2018, defendant entered into a lease agreement with plaintiff allowing defendant to operate a Sonic drive-through restaurant in the endcap of Building 100 in a shopping center owned by defendant in the Town of Clifton Park, Saratoga County. The lease contemplated interior as well as exterior improvements to accommodate the design and model of defendant's restaurant, including installation of drive-through lanes in the parking lot and an outdoor covered parking area where customers would order food and have it delivered to their vehicles. There is no dispute that the existing stormwater detention basin on plaintiff's property was located at ground level. About two months after the lease was signed, plaintiff advised defendant that a new underground stormwater detention system was required to complete improvements to the property for defendant's business to operate, and that defendant was required to install and pay for the system under the terms of the lease. A dispute arose as to who was obligated to construct and pay for the new stormwater detention system. Plaintiff filed a notice of default by defendant under the lease in September 2018 and terminated the lease the next month.
Plaintiff then commenced this action seeking a declaratory judgment that it had properly terminated the lease, requesting damages. Defendant joined issue and asserted counterclaims contending that plaintiff was in breach of the lease, seeking specific performance of the lease. Plaintiff thereafter moved for summary judgment arguing that defendant had breached the lease by failing to produce plans for or construct the stormwater detention system, and requested a declaration that it had properly terminated the lease based upon defendant's breach and dismissal of defendant's counterclaims. Defendant opposed the motion, arguing, among other things, that construction of the underground stormwater detention system was not its responsibility under the lease, that the system is not mentioned in or covered by the lease and is excluded from the defined scope of the leased premises, and that extrinsic evidence establishes that plaintiff had agreed to pay for the system. Supreme Court granted plaintiff's motion for summary judgment and dismissed defendant's counterclaims. The court concluded that the terms of the lease required defendant, as the tenant, to design and construct the stormwater detention system, which it found was required for defendant to open and operate its restaurant in compliance with local building codes. Defendant appeals.
The key disputed issue is whether the lease unambiguously obligates either party to finance the stormwater detention system and, if not, whether the parties' extrinsic evidence is admissible and resolves the ambiguity.1 "In determining the obligations of parties to a contract, the threshold determination as to whether an ambiguity exists is a question of law to be resolved by the court" ( Agor v. Board of Educ., Northeastern Clinton Cent. Sch. Dist., 115 A.D.3d 1047, 1048, 981 N.Y.S.2d 485 [2014] [citations omitted]; see W.W.W. Assoc. v. Giancontieri, 77 N.Y.2d 157, 162, 565 N.Y.S.2d 440, 566 N.E.2d 639 [1990] ; Baff v. Board of Educ. of the Fonda–Fultonville Cent. Sch. Dist., 169 A.D.3d 1322, 1323, 95 N.Y.S.3d 397 [2019] ). If contractual language is unambiguous, it "must be enforced according to the plain meaning of its terms" ( Matter of Bainbridge Nursing Home v. Zucker, 170 A.D.3d 1367, 1369, 95 N.Y.S.3d 636 [2019] [internal quotation marks and citations omitted]; see Gaines Mar. & Servs., Inc. v. CMS Mar. Stor., LLC, 176 A.D.3d 1534, 1535, 111 N.Y.S.3d 462 [2019] ). However, "[a] contract is ambiguous if the language used lacks a definite and precise meaning, and there is a reasonable basis for a difference of opinion" ( Agor v. Board of Educ., Northeastern Clinton Cent. Sch. Dist., 115 A.D.3d at 1048, 981 N.Y.S.2d 485 [internal quotation marks and citation omitted] ), as "when the contract, read as a whole, fails to disclose its purpose and the parties' intent" ( Ellington v. EMI Music, Inc., 24 N.Y.3d 239, 244, 997 N.Y.S.2d 339, 21 N.E.3d 1000 [2014] ; see Tomhannock, LLC v. Roustabout Resources, LLC, 33 N.Y.3d 1080, 1082, 104 N.Y.S.3d 596, 128 N.E.3d 674 [2019] ; cf. Gaines Mar. & Servs., Inc. v. CMS Mar. Stor., LLC, 176 A.D.3d at 1535, 111 N.Y.S.3d 462 ). Resort to extrinsic evidence is appropriate to resolve an ambiguity in contractual language (see Baff v. Board of Educ. of the Fonda–Fultonville Cent. Sch. Dist., 169 A.D.3d at 1323, 95 N.Y.S.3d 397 ).
It is significant that the lease makes no mention of the current ground-level system and does not expressly contemplate construction of the new underground system. The parties rely on several provisions in this 40–page, small print lease to support their claim that the other is responsible to construct and finance the underground stormwater detention system. In finding that defendant, as the tenant, was responsible, Supreme Court relied upon a provision in section 1.AC of the lease, entitled "Tenant's Improvements,"2 which is defined as "[a]ny improvements, ... trade fixtures, ... signs and personal property installed and paid for by the [t]enant as set forth in Exhibit ‘D.’ " The court relied on the catchall phrase in that section, that, "[i]n addition, [t]enant's [i]mprovements shall include any and all work required for [t]enant to open and operate its business at the [d]emised [p]remises and which is not included in [l]andlord's [w]ork," which "shall be performed at [t]enant's sole cost and expense" (emphasis added). Plaintiff's principal argument is that the underground system is not listed as landlord work and, thus, it is the tenant's responsibility under this section. Notably, however, Exhibit D, also entitled "Tenant's Improvements," requires the landlord's prior approval before tenant improvements are made, but then refers specifically only to work on the building itself, not to the exterior. Moreover, when the work contemplated by "Tenant's Improvements" is spelled out in more detail in section 9.A of the lease, it is defined as "the right to make such alterations and improvements in the [d]emised [p]remises as may be necessary and proper for the conduct of its business ..., excepting (a) structural alternations or improvements, (b) alterations to the heating, cooling, plumbing, or electrical systems, and (c) alterations, additions, or improvements to the exterior or storefront of the [d]emised [p]remises " (emphases added). This appears to exclude exterior work from the tenant's responsibility.
The landlord's work is spelled out in Exhibit C to the lease, which requires that it complete a list of 11 specified items of work on the building related to electricity, lights, heat and the like, although no exterior work is specified. At the end of the list, there is a provision requiring that all construction work comply with local codes and then a catchall phrase that "[t]enant, at tenant's sole cost, shall be responsible for any additional improvements required in connection with tenant's specified use of the leased premises that are imposed by local code." Plaintiff argued, and Supreme Court found, that, inasmuch as the underground stormwater detention system is not listed as landlord work and is required by local code, it was defendant's responsibility as the tenant under the foregoing lease provisions.
Although that is one reasonable interpretation of these provisions, there are several difficulties with this conclusion, including that the lease itself does not establish that an underground stormwater detention system is required by the local code for the contemplated exterior improvements or that it is defendant's business that necessitated this new system. Indeed, defendant disputes that an underground stormwater detention system is needed to open and operate its business or that, if it is needed, it is attributable to this business rather than to all of the tenants in common. Defendant does not contest that the applicable codes are incorporated into the lease, but it cannot be determined from the four corners of the lease, among other things, whether such underground system is required as a result of defendant's business (see Century Sur. Co. v. All In One Roofing, LLC, 154 A.D.3d 803, 808, 63 N.Y.S.3d 406 [2017], lv denied 31 N.Y.3d 909, 2018 WL 2916022 [2018] ). Also, although "[l]andlord [w]ork" appears to be limited to improvements on the building, the "[t]enant's [i]mprovements" provision appears to exclude exterior alterations and improvements. Moreover, several other lease provisions call into question the foregoing interpretation espoused by plaintiff and adopted by Supreme Court.
Significantly, sections 1.F and 2 of the lease define the "Demised Premises," or leased premises, as a 3,200 square-foot portion of the building within the shopping center, "together with improvements and fixtures included in [l]andlord's [w]ork." Section 2 specifically provides that it "does not include the land beneath the improvements ... or the parking lots " (emphases added). Section 2 gives the tenant "the non-exclusive right to use a portion of such space," presumably the parking lots, for its equipment serving the leased premises, including the drive-through and ordering stalls as shown on the attached site plan, which depicts only the leased building. Importantly, that...
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Parol evidence
...843 (2d Dept. 2020). Extrinsic evidence was admissible to resolve ambiguity in HOA’s bylaws. Greene v. Fast Eats Clifton Park, LLC , 183 A.D.3d 1215, 124 N.Y.S.3d 487 (3d Dept. 2020). Parol evidence was admissible where the lease was ambiguous as to which party was responsible for upgrading......
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Parol evidence
...843 (2d Dept. 2020). Extrinsic evidence was admissible to resolve ambiguity in HOA’s bylaws. Greene v. Fast Eats Clifton Park, LLC , 183 A.D.3d 1215, 124 N.Y.S.3d 487 (3d Dept. 2020). Parol evidence was admissible where the lease was ambiguous as to which party was responsible for upgrading......