Metered Appliances, Inc. v. Lafayette Court Apartment Corp.
| Decision Date | 11 June 2012 |
| Docket Number | No. 18794/11.,18794/11. |
| Citation | 2012 N.Y. Slip Op. 51038,954 N.Y.S.2d 760,35 Misc.3d 1238 |
| Parties | METERED APPLIANCES, INC., Plaintiff, v. LAFAYETTE COURT APARTMENT CORP. and Service Directions, Inc.,, Defendants. |
| Court | New York Supreme Court |
OPINION TEXT STARTS HERE
Evan R. Shusterman, Esq., Heller, Horowitz & Feit, P.C., New York, for Plaintiff.
Marcia E. Fokas, Esq., Paul G. Burns, Esq., Levin & Glasser, P.C., New York, for Defendant.
Defendants Lafayette Court Apartment Corp. (“Lafayette”) and Service Directions, Inc. (“SDI”) move for summary judgment dismissing the second and fourth causes of action in plaintiff Metered Appliances, Inc.'s (“Metered”) complaint, seeking, respectively, specific performance of a lease purportedly accepted pursuant to plaintiff's right of first refusal and damages for SDI's allegedly tortious interference with plaintiff's lease agreement and prospective economic relations with Lafayette. Notwithstanding plaintiff's insistence that defendants negotiated in bad faith in order to deprive plaintiff of its contractual right, defendants contend that plaintiffs declined to match a bona fide offer for a new lease. Defendants also argue that plaintiff's right of first refusal is an unreasonable restraint on the alienation of Lafayette's property and is thus unenforceable. Defendants further argue that, because there was no breach of contract, and because plaintiff provides no evidence that SDI engaged in any wrongful conduct, SDI is not liable for tortious interference. Moreover, while plaintiff contends that discovery is necessary to determine the intentions of defendants in negotiating the new lease, defendants counter that plaintiff has not made an evidentiary showing that discovery would yield evidence sufficient to delay summary judgment.
On December 24, 2002, Lafayette entered into a lease agreement with H2O Laundry Services, Inc., a corporation for which plaintiff is successor-in-interest (the “Original Lease”), for the laundry room at 141–145 Lafayette Avenue, Brooklyn, New York (the “Premises”). Under the Original Lease, plaintiff provided and serviced coin-operated laundry machines for residents of Lafayette's condominium complex and paid a fixed monthly rent of $80. The Original Lease had a term of seven years and provided that the lease “shall continue from year to year after its expiration unless either party shall give notice of its intention not to renew by certified mail, return receipt requested, not less than sixty (60) days prior to the expiration date.” The Original Lease further provided that “[a]t the expiration of this lease or any renewal, [Metered] shall have the right of first refusal to meet any bonafide [ sic ] bid to lease the laundry room(s) and/or provide coin-metered laundry equipment services to the premises.”
After the expiration of the initial term, Metered and Lafayette continued the Original Lease for two years, until, on October 6, 2010, Lafayette's Board President informed Metered, by certified mail, return receipt requested, of its intention to end the lease as of December 24, 2010. In late September of 2010, Lafayette had begun negotiations for a new lease agreement with SDI, which provides “smart card” laundry systems, whereby residents can operate the machines with pre-paid cards and receive instant refunds in the event of malfunction, and 24–hour, seven day per week service, which, SDI states, many laundry equipment companies do not offer. While a draft written agreement, dated November 9, 2010 (the “November 9 Lease”), was prepared, such agreement was never executed. On or about December 7, 2010, “in accordance with [its] rights under the [Original] Lease,” Lafayette presented to plaintiff the unexecuted November 9 Lease, which plaintiff rejected because “it was not bona fide and not a legitimate offer.” 1 Although Lafayette had terminated the Original Lease, effective December 24, 2010, under the terms of that lease, plaintiff remained in possession of the Premises after the expiration of its second renewal.
In April of 2011, Lafayette once again opened negotiations with SDI. Lafayette states that, by this time, it “was very dissatisfied with the services provided by Metered,” and made clear that it wanted a lease that would not renew automatically and could be terminated prior to its expiration. On May 9, 2011, Lafayette and SDI finalized the terms of a lease agreement (the “May 9 Lease”), which provides, at the last sentence of Paragraph 12, that “[e]ither party may cancel this agreement at anytime [ sic ] and the Lessor shall reimburse the Lessee for the cost of the removal of all laundry equipment and any improvements” made to the Premises (the “Termination Clause”).2
The May 9 Lease has a one-year initial term, which will not automatically renew, but which may be extended, by written agreement of both parties, for a period of seven years. By letter dated June 28, 2011, after both defendants had executed the lease agreement, Lafayette presented plaintiff with the May 9 Lease and asked whether it would match the terms of the offer pursuant to its preemptive right. Plaintiff claims that, upon reading the Termination Clause, it “immediately recognized that [the May 9 Lease] was concocted to usurp [its] bargained-for right of first refusal.” In its response letter, dated July 25, 2011, plaintiff informed Lafayette that the Termination Clause renders the May 9 Lease illusory, as it would allow Lafayette to end its relationship with plaintiff immediately after signing the agreement, but that it assented to the terms of the May 9 Lease if the Termination Clause was omitted. On or about August 2, 2011, Lafayette sent a letter to plaintiff stating that, because plaintiff would not comply with all the terms of the May 9 Lease, it was moving forward on its lease agreement with SDI.
Plaintiff asserts that, notwithstanding the unconditional language of the Termination Clause, Lafayette made a tacit agreement with SDI, under which each party would only terminate the lease for good cause within the first year, so that defendants could circumvent plaintiff's right of first refusal under the Original Lease. Although it provides no direct evidence to support this conclusion, plaintiff argues that, because “virtually all leases call for the installation of new machines,” a lease that could be terminated immediately without reasonable actual cause would not make “business sense” for a laundry services company, as it would render the used machines useless upon termination. From this premise, plaintiff reasons that discovery would yield documentary evidence demonstrating that defendants colluded with each other with the express intent to deprive Metered of its right of first refusal under the Original Lease. Plaintiff insists that, because the Termination Clause is not a legitimate, bona fide lease provision, its acceptance of the terms of the May 9 Lease without that provision constituted an effective exercise of its right of first refusal, thereby creating a “new lease” between itself and Lafayette. In opposition to plaintiff's assertions, SDI states that it agreed to the May 9 Lease because it believed that Lafayette would be satisfied with its superior service. SDI also provided copies of lease agreements that it has with other lessors that have a similar provision allowing either party to terminate the lease prior to its expiration.3
On August 16, 2011, plaintiff initiated this action, alleging that Lafayette, at the persuasion of SDI, had breached the Original Lease and then engaged in self help to evict plaintiff from the Premises. The first cause of action seeks damages for breach of the May 9 Lease, which plaintiff claims it accepted pursuant to its right of first refusal. The second cause of action demands specific performance of the May 9 Lease in favor of plaintiff, with the exception of the Termination Clause. The third cause of action alleges that Lafayette illegally entered and locked plaintiff out of the Premises in violation of RPAPL 853. The fourth cause of action alleges that SDI tortiously interfered with plaintiff's contractual and economic relationship with Lafayette.
On September 7, 2011 plaintiff moved, by order to show cause, for an order preliminarily enjoining Lafayette from “[n]ot recognizing the lease matched by Metered on July 26, 2011,” terminating such lease with plaintiff, evicting plaintiff, removing plaintiff's machines, permitting a competitor to enter the Premises to operate laundry equipment, or preventing plaintiff from operating its laundry equipment at the Premises. The Court granted plaintiff a temporary restraining order pending determination of the motion but, on October 5, 2011, denied plaintiff's motion for injunctive relief upon a finding that the Termination Clause “has been demonstrated to be a legitimate, negotiated term of that lease to which plaintiff will not...
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