Greenwich Village Associates v. Salle
| Decision Date | 05 September 1985 |
| Citation | 493 N.Y.S.2d 461,110 A.D.2d 111 |
| Parties | GREENWICH VILLAGE ASSOCIATES, Petitioner-Respondent, v. Jaques SALLE and Roxanne Salle, Respondents-Appellants. |
| Court | New York Supreme Court — Appellate Division |
G. Oliver Koppell, New York City, of counsel (Koppell & Deutsch, New York City, attorneys for respondents-appellants.
Howard Schechter, New York City, for petitioner-respondent.
Before SULLIVAN, J.P., and BLOOM, MILONAS and ELLERIN, JJ.
SULLIVAN, Justice Presiding.
Respondents Jaques and Roxanne Salle have occupied loft space on the second floor of 786-88 Greenwich Street in lower Manhattan since December 1972, pursuant to a sublease with D'Agostino Greenwich Village Corp., which had leased the entire building, and operated a D'Agostino supermarket on the first floor. The sublease was for an initial term of five years, and provided for three five-year renewal periods at respondents' option extending through 1992. After taking possession respondents made extensive renovations to the premises.
In January 1982, petitioner, a corporation closely related to D'Agostino Supermarkets and one of the principals of which is Nicholas D'Agostino, Jr., acquired fee title to the property from the then owner, Atloy Corporation, and simultaneously accepted a surrender of the prime lease from D'Agostino Greenwich Village Corp. Thereafter, on January 6, 1982, petitioner entered into a new lease with D'Agostino Supermarkets for operation of a D'Agostino supermarket on the first floor of the premises. When respondents refused to execute a new lease providing for an increased rental from $460 to $1,250 monthly 1, petitioner purported to avail itself of a provision in the sublease whereby termination of the sublease was effected by termination of the prime lease.
The only sublease provisions concerning termination are the following two rider paragraphs:
46. Termination of Underlying Lease.
If the term of the Underlying Lease shall for any reason except Landlord's default thereunder, be terminated prior to the expiration date of the Agreement, or in the event any action is commenced or threatened against the Landlord and/or Tenant by virtue of the existence of this Agreement, the Landlord shall have the right to terminate this Agreement and/or to take such other action as Landlord may consider to be necessary or desirable. In any such event, the Landlord shall not be liable to Subtenant by reason thereof. The Landlord covenants and agrees with the Tenant to perform all of the terms of the Underlying Lease so long as Tenant shall not be in default hereunder.
47. Termination.
Notwithstanding anything to the contrary herein contained, this Agreement shall terminate in the event that:
(a) the Underlying Lease shall be terminated for any reason; or
(b) the Tenant shall be in default of any of the provisions of this Agreement, including the Underlying Lease incorporated herein by reference.
Alleging expiration of the sublease, petitioner thereafter commenced this holdover proceeding. After joinder of issue 2 the parties cross-moved for summary judgment. The Civil Court denied petitioner's motion, granted respondents' cross-motion and dismissed the petition. Appellate Term modified the order to deny the cross-motion, and respondents appealed by permission of this court. We modify to grant the cross-motion and dismiss the petition.
As the Civil Court aptly noted, options to terminate tenures granted by the provisions of a contract or a lease should be strictly construed. (See Leighton's Inc. v. Century Circuit, Inc. 95 A.D.2d 681, 463 N.Y.S.2d 790; see, also, Rasch, N.Y. Landlord and Tenant, sec. 760.) Moreover, since the sublease, including its termination clauses, was drafted by D'Agostino Greenwich Village Corp., petitioner's alter ego, and through whose surrender of the underlying lease forfeiture was purportedly triggered, any ambiguity in the termination clauses should be construed against petitioner. (See 151 West Associates v. Printsiples Fabric Corp., 61 N.Y.2d 732, 472 N.Y.S.2d 909, 460 N.E.2d 1344.) With these principles in mind, analysis of the sublease's termination provisions discloses that they did not comprehend the sublessor's ability to effect a termination of the sublease by purchasing the fee and terminating its own prime lease.
The clear intendment of paragraph 46 was to permit the sublessor to avoid liability to the sublessee by permitting it to terminate the sublease if, for any reason "except [the sublessor's] default thereunder", the prime lease were terminated. Paragraph 47, on the other hand, provides for automatic termination of the sublease if the underlying lease is terminated for any reason and is, thus, in conflict with paragraph 46 which excludes termination of the prime lease by reason of the sublessor's default in performance of the underlying lease as a basis for termination of the sublease.
Petitioner argues that paragraph 47 controls, but that argument reads paragraph 46, which limits the sublessor's right to terminate, out of the sublease. Since the two provisions are in conflict and cannot be reconciled the ambiguity should be resolved in favor of respondents. (See 151 West Associates, supra, at 734, 472 N.Y.S.2d 909, 460 N.E.2d 1344.) For that reason, paragraph 47 cannot be read to negate the provisions of paragraph 46. Thus, any termination of the prime lease as a result of the sublessor's default thereunder is excluded as a basis for termination of the sublease. In the circumstances presented, where surrender of the prime lease is a mere subterfuge for invocation of the sublease's forfeiture provisions and part of a strategy to place petitioner in a position to exact a rent increase, default by the sublessor resulting in termination of the underlying lease, which is excluded as a basis for terminating the sublease, should be construed to include surrender of the underlying lease. It should be noted that in the very clause providing for termination, i.e. paragraph 46, the sublessor had covenanted to perform all of the terms of the underlying lease.
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