South Road Associates, LLC v. International Business Machines Corporation

• Decision Date: 29 December 2003
• Docket Number: 2002-09203.
• Citation: 770 N.Y.S.2d 126,2 A.D.3d 829,2003 NY Slip Op 19986
• Parties: SOUTH ROAD ASSOCIATES, LLC, Respondent, v. INTERNATIONAL BUSINESS MACHINES CORPORATION, Appellant.
• Court: New York Supreme Court — Appellate Division

2 A.D.3d 829

770 N.Y.S.2d 126

2003 NY Slip Op 19986

SOUTH ROAD ASSOCIATES, LLC, Respondent, v. INTERNATIONAL BUSINESS MACHINES CORPORATION, Appellant.

2002-09203.

Appellate Division of the Supreme Court of the State of New York, Second Department.

December 29, 2003.

In an action, inter alia, to recover damages for breach of contract, the defendant appeals from an order of the Supreme Court, Dutchess County (Dillon, J.), dated September 17, 2002, which denied its motion for summary judgment dismissing the complaint and granted the plaintiff's cross motion for partial summary judgment on the issue of liability on the cause of action to recover damages for breach of contract.

Ordered that the order is reversed, on the law, with costs, the motion is granted, the cross motion is denied, and the complaint is dismissed.

The plaintiff, South Road Associates, LLC (hereinafter SRA), leased certain property referred to collectively in the lease as "buildings 952 and 982" in Poughkeepsie to the defendant International Business Machines Corporation (hereinafter IBM). The lease which is the subject of this appeal was entered into in 1981, although IBM previously had leased the property from SRA and a prior owner for decades. Later in 1981, IBM discovered that an underground storage tank was leaking chemical contaminants into the groundwater and soil, and it subsequently embarked on a remediation program overseen by the New York State Department of Environmental Conservation (hereinafter the DEC).

In 1984 SRA and IBM entered into a written agreement in which IBM acknowledged its responsibility for the contamination and for its remediation. The agreement essentially provided that IBM would abate any pollution to the satisfaction of the requisite governmental agencies and that its obligations under the agreement would survive termination of the lease. Over the next several years, IBM installed groundwater monitoring wells and removed contaminated soil.

In 1993 IBM petitioned the DEC to reclassify the site to a Class 4 ("site properly closed-required continued management"), based on its removal of the contaminated soil and the results of groundwater samples. The DEC granted the petition after requiring IBM to install and operate "a pump and treat" system on the property due to residual chlorobenzene in the groundwater. The DEC notified SRA that the reclassification petition had been granted because the source of the contamination and the grossly contaminated soils had been removed and the remaining groundwater contamination was confined to a small area where a pump and treat system was operating. In 1995 the United States Environmental Protection Agency indicated that no further remedial action was planned with respect to the property.

SRA commenced this action against IBM in 2000 alleging inter alia, that the contamination remained and had caused a diminution in the value of the property. IBM successfully moved to dismiss certain causes of action, which are not at issue on appeal, so that only the cause of action to recover damages for breach of contract based on breach of the lease remained. The Supreme Court denied IBM's motion for summary judgment dismissing the complaint and granted SRA's cross motion for partial summary judgment on the issue of liability. We conclude that the Supreme Court erred, and the cause of action based on breach of the lease should be dismissed.

The complaint alleged that due to the contamination, IBM failed to return the property in "good order and condition" as contemplated by the lease. SRA relied on paragraph 7 of the lease, which provided, in relevant part, that IBM "will remove its goods and effects ... and will (a) peaceably yield up to [SRA] the premises in good order and condition ... and (b) repair all damage to the premises and the fixtures, appurtenances and equipment of [SRA] therein, and to the building, caused by [IBM's] removal of its furniture, fixtures, equipment, machinery and the like and the removal of any improvements or alterations."

Contrary to SRA's contention, the lease is clear and unambiguous that the term "premises" as used in paragraph 7 and in the lease as a whole was intended to refer to the interior of the leased buildings, and not to the land and groundwater. Where the language of a contract is clear and unambiguous, it is to be interpreted by its own language (see R/S Assoc. v New York Job Dev. Auth., 98 NY2d 29, 32 [2002]). Extrinsic evidence may not be used to create an ambiguity in an agreement which is clear and unambiguous on its face. "Evidence outside the four corners of the document as to what was really intended but unstated or misstated is generally inadmissible to add to or vary the writing ... Whether or not a writing is ambiguous is a question of law to be resolved by the courts" (W.W.W. Assoc. v Giancontieri, 77 NY2d 157, 162 [1990]).

The lease defined "premises" as "the space being more particularly shown on the attached floor plan" consisting of a certain number of gross square feet in buildings situated on "land" (...