Siegmund Strauss, Inc. v. E. 149th Realty Corp.

• Decision Date: 05 March 2013
• Citation: 960 N.Y.S.2d 404,104 A.D.3d 401,2013 N.Y. Slip Op. 01343
• Parties: SIEGMUND STRAUSS, INC., Plaintiff–Respondent, v. EAST 149TH REALTY CORP., Defendant, Windsor Brands, Ltd., et al., Defendants–Appellants.
• Court: New York Supreme Court — Appellate Division

104 A.D.3d 401

960 N.Y.S.2d 404

2013 N.Y. Slip Op. 01343

SIEGMUND STRAUSS, INC., Plaintiff–Respondent,

v. EAST 149TH REALTY CORP., Defendant,Windsor Brands, Ltd., et al., Defendants–Appellants.

Supreme Court, Appellate Division, First Department, New York.

March 5, 2013.

Mischel & Horn, P.C., New York (Scott T. Horn of counsel), for appellants.

Epstein Becker & Green, P.C., New York (Ralph Berman of counsel), for respondent.

GONZALEZ, P.J., SAXE, MOSKOWITZ, DeGRASSE JJ.

Upon remittitur from the Court of Appeals (20 N.Y.3d 37, 956 N.Y.S.2d 435, 980 N.E.2d 483 [2012] ), judgment, Supreme Court, New York County (Bernard J. Fried, J), entered April 7, 2009, declaring plaintiff Siegmund Strauss to be the lawful tenant of the subject premises, and bringing up for review an order (same court and Justice), entered August 6, 2007, which granted plaintiff's motion to dismiss the amended answer of defendants Windsor Brands, Ltd., Twinkle Import Co., Inc., Teresa Rodriguez and Robert Rodriguez (defendants) which asserted counterclaims and a third-party complaint, unanimously modified, on the law, to the extent of denying plaintiff's CPLR 3211 motion, finding viable claims for breach of contract, and otherwise affirmed, without costs.

The parties to this appeal negotiated to merge their corporations and operate out of a building at 520 Exterior Street in the Bronx. At the time, the building was leased by defendant Windsor. Plaintiff and the individual defendants—who owned and operated defendant corporations—drafted, but did not execute a written merger agreement. It is undisputed that all of the parties began to perform under that agreement, which included a provision that contemplated Windsor helping Strauss to negotiate a new lease for the premises with 149th Street Realty, the landlord. However, after plaintiff moved into the subject premises, the parties' relationship quickly soured, and plaintiff Strauss sought to buy out the appealing defendants. The offer was rejected, and plaintiff removed the individual defendants from the merged corporation's payroll and changed the locks on the premises.

Plaintiff commenced this action seeking, among other things, a declaratory judgment that it was the tenant entitled to possession of the property. In their answer, defendants asserted counterclaims and a third party complaint against the Strauss principals, alleging fraud, conversion, and tortious interference with a contractual relationship. The amended answer did not assert a claim for breach of contract.

Strauss and its principals moved, pursuant to CPLR 3211(a)(7), to dismiss the counterclaims and third-party complaint. By order entered August 7, 2007, the court granted the motion, finding that the factual allegations underlying the counterclaims and third-party complaint supported claims for breach of contract, but not the alleged torts. Defendants moved for clarification/modification and reargument, requesting permission to amend their counterclaims to assert a cause of action for breach of contract. By order entered December 10, 2007, the court denied the motion.

Defendants subsequently moved to amend their complaint to assert a claim for breach of contract. This motion was denied by order entered February 25, 2008. ¹ A bench trial ensued, and the court declared plaintiff the lawful tenant of the premises. Defendants appealed from the final judgment, seeking review of the August 2007 and February 2008 interlocutory orders pursuant to CPLR 5501(a)(1).

We affirmed, holding that the appeal did not bring up for review either of the interlocutory orders because neither “necessarily affected” the final judgment awarding plaintiff possession of the property ( Strauss v. East 149th Realty Corp., 81 A.D.3d 260, 919 N.Y.S.2d 1 [1st Dept. 2010] ). We concluded that the judgment declaring that Strauss was entitled to possession would still stand regardless of whether defendants were permitted to pursue a claim for breach of contract ( id. at 265, 919 N.Y.S.2d 1).

The Court of Appeals granted leave,² modified, and remitted for our review of the motion court's determination in its August 2007 order, which the Court of Appeals found “necessarily affected” the final judgment (20 N.Y.3d at 43, 956 N.Y.S.2d 435, 980 N.E.2d 483 [2012] ).

Given that the remand order permits review of the motion court's 2007 order, we find error in the grant of plaintiff's CPLR 3211 motion to dismiss the...