Sam & Mary Housing Corp. v. Jo/Sal Market Corp.
| Decision Date | 25 July 1983 |
| Citation | 121 Misc.2d 434,468 N.Y.S.2d 294 |
| Court | New York Supreme Court |
| Parties | SAM & MARY HOUSING CORP., Plaintiff, v. JO/SAL MARKET CORP., Defendant. |
Pearlman, Gottesman, Apat, Kupillas & Futterman, Kew Gardens, for defendant.
Sheldon Ostrow, New York City, for plaintiff.
"Oh, what a tangled web we weave, when first we practice to deceive," 1 appropriately describes the conduct of the plaintiff who seeks a declaratory judgment herein, pursuant to CPLR 3001, to declare a lease null and void, and to enjoin defendant from instituting any proceedings to recover possession of commercial premises. Defendant initially asserted three counterclaims: (1) treble damages under RPAPL for $1,500,000 for wrongful eviction; (2) extension of the lease for the period during which it remained dispossessed; and (3) restoration to the premises. (The second and third counterclaims have been discontinued.) The case appears to be one of first impression in the application of treble damages to an "unlawful lockout" from commercial premises. The testimony before this Court for five days furnished by 13 witnesses, participation by 6 attorneys, 46 exhibits and prior hearings before Mr. Justice Joseph Kunzeman on June 11, 1980 and June 17, 1980 and two Civil Court summary proceedings is summarized as follows:
Samuel Hassine, the principal stockholder and an officer of the plaintiff, Sam & Mary Housing Corp., is an experienced realtor and sophisticated businessman with substantial interests in three states. (The only other officer of the plaintiff corporation is Mary Ann Masone, a close friend of Mr. Hassine, who acts as secretary thereof.) In or about June, 1979, Hassine entered into contract negotiations for the purchase of a building at 105-34 Rockaway Boulevard, Queens, owned by Abraham Eagle. The premises contained a 2,000 sq. ft., street-floor food store and a 1,000 sq. ft. basement, (once also operated by Eagle who had previously sold the business and had given a low-rent lease as an inducement to buy to a prior store purchaser, Shoman Bros. Corp.). At the time of the building negotiations between Hassine and Eagle in June 1979, the food market was owned and operated by a successor purchaser, Giovanni Scalera, d/b/a 105-34 Rockaway Corp. which had assumed the lease from Shoman Bros.
Hassine testified that prior to going to contract on the building in July of 1979, he had tried to determine the nature of the store's occupancy by speaking with Scalera, who had allegedly advised him that the tenancy was month-to-month, that the store was unprofitable and he intended to vacate. Scalera denied any such conversation and asserted, to the contrary, that he had acquired, by assignment, a ten-year, low-rent lease from the prior store operator, Shoman Bros., which had until March 22, 1988 to run, and that said lease provided, in part:
"... This lease may be assigned without the landlord's consent provided the assignee and their successors in interest assume the terms and conditions thereof without releasing the tenant or its successors in interest from liability thereunder ..."
On July 3, 1979, Hassine and his attorney, Howard Stein, met with the owner of the building, Abraham Eagle, at the office of Jacob Lebwohl, Esq., attorney for Eagle. All attendees testified that lengthy discussions took place and it appears that 2 contract copies were concurrently processed by the two attorneys, Stein and Lebwohl, during the course of the negotiations that day. Par. 6d of the contract provided "Said premises are sold and are to be conveyed subject to: ... existing leases and tenancies ..." Par. 4 of the rider to the contract states in pertinent part: "4. Seller represents that the following are his tenants:
Hassine testified that he signed the contract, but does not recall reading 6d and that he did not see a lease at that time. Stein, Hassine's former lawyer and a real estate specialist, testified that Hassine did, in fact, see the lease at the July, 1979 contract signing; that he specifically took his former client to an adjoining room and advised him not to buy the building since the unfavorable lease terms made it a "lousy" deal; that Hassine decided to proceed notwithstanding his advice and said he would "handle the lease in his own way." The Lebwohl and Eagle testimony corroborated that discussions were held about lease provisions on that occasion, including the low rent, usage and payment of water charges, etc. On August 17, 1979, Hassine proceeded to close title to the building but documents of both parties were held in escrow by their respective attorneys, Lebwohl and Stein, to permit Hassine to complete certain physical inspections if he so desired. A closing statement was given Hassine, however, which gave him a credit of $1,000 for rent security on deposit for the store.
In September, 1979, one Salvatore Vinti contacted Hassine and advised him that he intended to purchase Scalera's food market and assume Scalera's lease but Vinti asked for a longer lease with a view towards renovating the store. When Hassine sought to cut off use of a part of the basement and effect other changes in the lease, the discussions became polarized and Hassine advised Vinti that he had no knowledge of Scalera's alleged lease and would not recognize the same. Scalera testified that he, too, exhibited the lease to Hassine during such discussions.
Subsequent to this encounter between Hassine and Vinti, Hassine directed his attorney, Stein, to obtain the closing documents which Lebwohl was still holding in escrow and to advise Scalera not to sell the store since he, Hassine, did not recognize the underlying lease. Stein complied with Hassine's request, but testified that he, thereafter, ceased representing Hassine because of their disagreement about the existence of the lease that he, Stein, knew to be valid.
In late 1979, Howard Stein was replaced by David Lee Foster, Esq., from Geneva, New York, a friend of Hassine's son, who wrote to Scalera's attorney, Diego Stincone, Esq. on November 16, 1979, that Hassine did not consider the lease binding as same was unrecorded. A copy of the Stein-Stincone letter was sent to Vincent Bucemi, Esq., attorney for the potential store purchaser, Vinti (and his corporation, Jo/Sal Market Corp., defendant herein). Foster also commenced nonpayment proceedings against Scalera which were settled, significantly, by Hassine accepting the $100 per month rent increase provided for and in accordance with the terms of the allegedly non-existent lease! 2 Foster then tried once more, unsuccessfully, to negotiate a new and more favorable lease for Hassine with Vinti. A barrage of letters were exchanged thereafter, all pertaining to Hassine's disavowal of the lease.
On April 17, 1980, defendant Jo/Sal Market Corp. (Vinti's corporation) assumed the lease from Scalera's corporation. On April 22, 1980, Hassine, on advice of his attorney, chained and padlocked the store. When Vinti allegedly broke the lock and entered, Hassine summoned the police and "chased" him out of the store. He and the defendant corporation have been out of possession since that time.
Shortly thereafter, Hassine rerented the store to one Harry McDonagh, with whom Hassine testified he had no connection except as a neighborhood bar owner at the adjacent 105-40 Rockaway Boulevard. The lease between them was duly recorded by Hassine, not the tenant. Several months later, McDonagh assigned this new lease to the current occupants, Gregory Masone and Thomas Barcia. (It is significant in the context of this case that Gregory Masone "a very close friend" of Hassine's, 3 is also the son of Mary Ann Masone, Hassine's associate and secretary of the plaintiff corporation.) The Court also takes judicial notice 4 of the case of Herald Midtown Vending Corp. v. H.J. McDonagh and Harry & Sam Inc., d/b/a Aqueduct Bar, Civil Court, Kings County, Index No. 67869/82, which had been, coincidentally, before me in February, 1983 on a motion in which it was stated that Harry McDonagh and Mary Ann Masone (a principal of the plaintiff herein) were partners in the aforesaid "neighborhood" bar and that Hassine's son, Eli Hassine, was their attorney--thereby belying Hassine's sworn testimony that his lease to McDonagh for the premises herein and subsequent assignment of same to Masone were "arms length transactions." (When this Court brought the existence of this contradiction to the attention of both sides in May, 1983 and suggested that an explanation of the discrepancy in Mr. Hassine's sworn testimony might be in order, none was forthcoming.)
Hassine contends that: (i) he is a bona fide purchaser for value under Real Property Law § 291 and the unrecorded lease is void as against him; (ii) defendant Jo/Sal has "unclean hands" and is estopped from asserting counterclaims because Vinti assumed Scalera's lease with full knowledge that by so doing he was "buying a lawsuit," as Hassine did not intend to honor the lease; (iii) defendant Jo/Sal has failed to prove actual damages with reasonable certainty; (iv) defendant has failed to establish treble damages under RPAPL § 853 as no force, or threat thereof, was used in executing the eviction.
Defendant contends that it has pleaded and proved its counterclaim for wrongful eviction and is entitled to treble damages computed on the basis of: $28,000 compensatory damages (purchase price $16,000, inventory $9,500 and legal services $2,500, expended when purchasing Scalera's grocery store), $89,640 representing present discounted value of the future loss of profits, $28,399 representing the present discounted value for future loss of the leasehold, $21,600 representing the prior...
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