Suffolk Sports Center, Inc. v. Belli Const. Corp.

• Decision Date: 26 June 1995
• Docket Number: No. 2,No. 1,1,2
• Parties: SUFFOLK SPORTS CENTER, INC., et al., etc., Respondents, v. BELLI CONSTRUCTION CORP., et al., Appellants (Action). ISLAND SPORTS CENTER, INC., Respondent, v. BELLI CONSTRUCTION CORP., Appellant, et al., Defendant (Action).
• Court: New York Supreme Court — Appellate Division

Page 952

628 N.Y.S.2d 952

212 A.D.2d 241

SUFFOLK SPORTS CENTER, INC., et al., etc., Respondents, v. BELLI CONSTRUCTION CORP., et al., Appellants (Action No. 1).

ISLAND SPORTS CENTER, INC., Respondent, v. BELLI CONSTRUCTION CORP., Appellant, et al., Defendant (Action No. 2).

Supreme Court, Appellate Division,

Second Department.

June 26, 1995.

Arthur E. Arnow, P.C., Plainview, for appellants.

Joseph D'Elia, Huntington (George W. Clarke, of counsel), for respondent Island Sports Center, Inc.

Before MILLER, J.P., and O'BRIEN, SANTUCCI and FLORIO, JJ.

SANTUCCI, Justice.

The question presented on this appeal is whether punitive damages should be awarded when a landlord intentionally prevents ingress and egress to a sports facility by blocking one entrance to the premises with "two [five-ton] cement blocks next to each other" and the other entrance with "a tremendous big red truck without the cab." Under the facts and circumstances of this case we conclude that such damages may be awarded.

Factual Background

At trial the following evidence was adduced. In November 1976 the plaintiff Island Sports Center, Inc. (hereinafter Island), leased a two-acre parcel in Huntington, Long Island from the defendant Belli Construction Corp. (hereinafter Belli), a company owned and operated by the four Belli brothers, who occupied the adjacent acreage, for a period of 10 years with an automatic 10-year renewal at the tenant's option. The property was operated by Island as a public sports amusement center equipped with a batting range, bumper boat rides, and a miniature golf course. On or about March 24, 1983, Island entered into an agreement with the plaintiff Suffolk Sports Center (hereinafter Suffolk), whereby Island sold the business and assigned the lease to Suffolk, a company owned and operated by three individuals. The purchase price for the business was $55,000. Suffolk was to pay $5,000 upon execution of the sales agreement and execute 48 promissory notes totaling $50,000 plus interest. Suffolk also accepted assignment of the lease for the remainder of the lease term, at a rental price of $1,333 per month, after receiving a written assurance from Belli that Island was "current with their rent payments and * * * not in default of any terms or conditions of the lease".

After investing several thousand dollars on some new equipment, effecting repairs and improvements to the premises, developing a "fitness-related baseball clinic" which included personalized instruction by a popular sports figure, and launching an extensive advertising campaign aimed predominantly at local little leagues, Suffolk conducted its grand opening season from March 27, 1983, to October 16, 1983. According to Suffolk, its first season was marked by successful patronage from the leagues, seven days a week, especially during their "prime time" in April, May, and part of June, and the baseball clinic maintained a steady enrollment of about forty participants. Throughout this first season Belli and Suffolk enjoyed friendly relations, and Belli often assisted Suffolk with the maintenance of the property.

In November 1983 the parties agreed that Suffolk could make the December 1983 and January 1984 rent payments when it paid its rent for February 1984. When Suffolk attempted to tender the December 1983 and the January and February 1984 payments Belli informed Suffolk that there was an offer for the property, that Belli recognized only Island as the tenant, that Island owed Belli back rent, and that Belli wanted "them out of there". Belli denied having made such statements. Nevertheless, despite Suffolk's repeated attempts to pay the rent from December 1983 through April 1984, Belli refused to accept the tendered payments. Belli stated that it did not accept rent throughout this period, because Suffolk had failed to provide proof that it had procured the insurance coverage required under the lease, and because Suffolk did not tender its share of property taxes. However, Belli admitted that it never even opened the three certified mailings from Suffolk wherein Suffolk had tendered the rent and had indicated its willingness to pay the property taxes upon its being furnished with a photocopy of the tax bill. Moreover, Belli stipulated during trial that at no time did it ever give Suffolk any written notice concerning any rent adjustment, tax apportionment, or Suffolk's failure to provide an insurance certificate.

On March 3, 1984, Suffolk, Belli, and Island met to "get everything straightened out". According to Suffolk, Belli wanted Suffolk to invest $20,000 in the property by May 1, 1984, toward its "upkeep" and "improve[ment]", or Belli was going to break the lease and issue a one-year lease that would be renewable at Belli's discretion. Belli contends that Suffolk had allowed the property to become "rundown" and that the offer of a one-year lease was for Suffolk's benefit in the event that it was unable to maintain the business and property.

On the morning of April 7, 1984, Suffolk was unable to enter its sports facility because the gate to the premises had been chained and locked. Suffolk immediately contacted Belli, who admitted to placing the chain and lock on the gate. Suffolk explained that it had been mailing Belli the rent payments, and emphasized the importance of opening the sports facility for the season. Belli agreed to remove the lock but, according to Suffolk, renewed its intention to interfere with Suffolk's operation unless Suffolk agreed to break the existing lease and execute a new one-year lease. Suffolk then prepared the facility for the 1984 season and opened on April 9, 1984.

According to Suffolk, Belli approached Suffolk on Friday, April 20, 1984, with a printed one-year lease and informed it that if the new lease was not signed by the next day, Belli would block Suffolk from entering the property and would prevent it from operating. Suffolk explained the effort that had been invested in opening the facility for the 1984 season, and Belli agreed to let Suffolk operate without interference on that weekend.

Beginning on the following Monday, April 23, 1984, and continuing through June 8, 1984, Belli intentionally prevented any "ingress and egress" to the sports facility, by blockading one entrance of the premises with "two [five-ton] cement blocks next to each other", and the other entrance with "a tremendous big red truck without the cab". As a result Suffolk was unable to conduct business. After several attempts, Suffolk finally managed to contact Belli on April 27, 1984, at which time Belli renewed its insistence upon a one-year lease and agreed to lift the barricades if Suffolk or Island agreed to break the lease and sign a one-year lease. During the blockade, Suffolk deposited its rent payments into the Suffolk County District Court, which ultimately directed that the payments be released to Belli and ordered the removal of the blockade on June 1, 1984.

Suffolk reopened the sports facility on June 9, 1984, but was unable to re-establish the customer loyalty and "good will" experienced during the previous season, or recapture its major patronage from the local little league teams due to the fact that the teams "went ahead and made arrangements with [Suffolk's] competitors" during the 37 days of the "blockade". Suffolk closed for the season on September 16, 1984, having yielded gross revenues substantially lower than the previous season, and requiring about $30,000 of additional capital from Suffolk's owners in order to meet the seasonal deficits. Shortly thereafter Suffolk decided to permanently discontinue the sports facility in light of the financial difficulties it experienced and Belli's "history of making good with [its] threats".

In 1986 Belli contracted to sell the property to Canyon Atlantic, another corporation in which the Belli brothers had an interest, for the purpose of constructing an office building complex. However, the complex was never built and in 1988 Belli removed Suffolk's equipment and "cleaned up the site".

In March 1993 Suffolk commenced this action to recover damages from Belli for breach of the covenant of quiet enjoyment, wrongful eviction, loss of business, and for causing Suffolk to default on its loan payments to Island. Island also commenced an action to recover damages from Belli, inter alia, for loss of its...