Opinion
No. LT-306705-21/BX
09-14-2022
1408 Blondell Inc., Petitioner, v. Edward Cardoso d/b/a BLONDELL COLLISION OF 1408; 1408 BLONDELL COLLISION CORP.; and EXOTIC AUTO TECH CORP., Respondents.
Unpublished Opinion
Jeffrey S. Zellan, J.
Petitioner landlord brings this action for monetary and possessory judgment for a commercial space rented by respondents for use as a car repair garage. Petitioner also seeks recovery for fines assessed by the City of New York and associated costs. Respondents oppose and seek abatement for a variety of reasons. After trial, the judgment of the Court is as follows: Judgment for petitioner for warrant of possession and $110,847.25
"It is uncontroverted that the parties entered into a written lease agreement" for the premises located at 1408 Blondell Avenue, Bronx, NY for the period beginning October 15, 2019 and ending December 31, 2024. Respondents' Summation, at 1. It is also uncontroverted that respondent has never paid any rent pursuant to the lease agreement. Notwithstanding the parties having executed a form Real Estate Board of New York Standard Form of Store Lease and rider (Petitioner's Ex. 2), the parties differ on whether that agreement represents their final understanding and agreement, or whether the parties waived and amended various portions of the lease agreement through performance. The parties' differences largely (though not exclusively) concern the manner and quality of repairs and improvements respondent made to the premises and whether respondent should be compensated for those repairs and improvements, essentially by way of a rent abatement.
At the outset, the Court notes the strong and longstanding presumption in New York that written leases are fully integrated agreements representing the parties' final binding agreement, as "[w]here landlord and tenant enter into a lease, it is reasonable to expect that it contain the engagements of the parties, and define the object and measure the extent of such engagement." Fogelson v. Rackfay Const. Co., 300 NY 334, 338 (1950), quoting Eighmie v. Taylor, 98 NY 288, 294-295 (1885). Although parties can waive their contractual rights through conduct, including in contracts with waiver restrictions, "waiver should not be lightly presumed and must be based on a clear manifestation of intent to relinquish a contractual protection." Fundamental Portfolio Advisors, Inc v. Toqueville Asset Mgt., L.P., 7 N.Y.3d 96, 104 (2006) (quotation and citation omitted). Otherwise, if written leases "could be varied by parol evidence, written leases would no longer be secure." Pelnorth Constr. Corp. v. Gordon, 6 Misc.2d 533, 536 (New Rochelle City Ct. 1957).
Unpaid Rent
Petitioner seeks unpaid rent and water/sewage fees pursuant to the parties' lease agreement. Petitioner's Ex. 2. The parties do not dispute that respondents never paid petitioner any rent, and do not dispute the base rent and water/sewage fees detailed in Petitioner's Exs. 2 and 4. Through June 2022, plaintiff alleges respondents accrued $103,647.25 in arrears, as well as $3,600/month for July and for August 2022 (a combined $7,200, totaling $110,847.25 with the prior unpaid rent). Petitioner's Exs. 2 and 4.
Respondents allege in their pleadings that petitioner agreed to accept the value of repairs to the premises in lieu of rent, specifically that respondent Cardoso "would first pay, supervise and perform all repairs, all at the expense of the landlord." Answer, at 2. Such an arrangement would have the effect of respondents not paying any rent at all during the period respondents were performing repairs rather than offsetting rent with the value of repairs, which is entirely incongruous with the terms of the parties' written lease, which specifies monthly rent payments by respondents and a concurrent program of repairs pursuant to a specified procedure in the rider. At trial, respondents appear to have refined their position, asking instead for a rent offset/abatement for the value of work performed. Respondents' Summation, at 2. Accordingly, the Court deems respondents' argument as an abatement defense, and addresses it later in this decision and order.
Respondents also assert that they should receive an abatement through December 2019 because the premises' prior occupant, Paul Smythe, still occupied the premises when the lease commenced and was not fully removed for nearly two months. Respondents' Summation, at 1-2. The merits of respondents' arguments aside, the rent ledger indicates that petitioner did not charge respondents rent between October 2019 through January 2020. As such, respondent's request for an abatement for that period is moot. Thus, for purposes of this decision, the Court finds that, prior to any abatements, the rent due and outstanding is $110,847.25.
Abatement for Respondents' Repair Costs
Respondents allege that they performed over $190,000 of repairs and improvements to the premises. Petitioner's Summation, at 2-3. The parties do not dispute that petitioner already reimbursed respondent, over the course of five checks, an amount totaling $59,723.56, for a portion of the work claimed. Id.; and Respondents' Summation, at 2. In this regard, Petitioner issued (and respondent Cardoso signed) receipts detailing the work that was being reimbursed. Respondents now seek additional reimbursement in the form of abatement for work allegedly performed but not reimbursed. Id. In seeking an abatement for that alleged work, respondents urge a broad waiver of the parties' written agreement governing reimbursement for repairs to the premises. Respondents' Summation, at 2-3. Respondents also allege that they are entitled to abatement through unjust enrichment and/or quantum meruit for work performed beyond the scope of the parties' agreement. Respondents' Summation, at 3-4. For the reasons set forth below, respondents' argument is unpersuasive.
Unlike the main body of the parties' lease, which was a commonly available pre-printed lease form, the rider governing the parties' reimbursement arrangement was generated by the parties themselves. The Court is accordingly mindful of the state's especially strong public policy to enforce agreement terms that were actively negotiated. See, e.g, Superior Tech. Resources, Inc. v. Lawson Software, Inc., 17 Misc.3d 1137 (A), *10-11 (Sup. Ct., Erie Co. 2007) (contrasting between clauses with "all the hallmarks of a pre-printed form," with "actively negotiated" clauses).
Despite those efforts to negotiate the lease, the parties acknowledge that they did not initially follow the terms of their agreement requiring respondents to seek pre-approval of repairs. Compare Petitioner's Ex. 2, Rider, ¶ 11 with Petitioner's Summation, at 2-3 and Respondent's Summation, at 2. While the Court finds that petitioner did waive strict compliance with the terms of the rider with regard to the reimbursements it provided respondents, the evidence before the Court does not support the wholesale waiver and abandonment of the written reimbursement arrangement respondents seek. The parties negotiated a specific list of issues/repair items to be addressed and reimbursed, and provided a means for addressing other issues as the parties acknowledged that "[t]he Premises require significant repairs." While the parties initially deviated from the procedure set forth in the rider to some degree, the planned scope of work and costs, at that point, was at least still memorialized in some measure in a written list of tasks and costs provided by respondent Cardoso to petitioner upon which petitioner paid reimbursements. Petitioner's Ex. 7. As costs escalated and circumstances changed, however, petitioner insisted upon compliance with the terms of the agreement. Cf., Fundamental Portfolio Advisors, at 107-108. There is no evidence of further waiver by the parties, and respondents have not established that they could "justifiably rely on [petitioner's] actions to reasonably conclude that the agreement would not be enforced" as to all repair work going forward. Rather, the Court presumes that the parties negotiated the terms of the lease in good faith and understood the terms of their agreement before executing their agreement. Fogelson, supra. Thus, absent compelling evidence to the contrary, which the Court does not find, the Court will not abate the rent to compensate for repairs that were not properly pre-approved through the procedures set forth in the negotiated lease, particularly those that were beyond the scope of the list of tasks detailed in the rider (Petitioner's Ex. 7). Fundamental Portfolio Advisors, at 108.
It is not disputed that respondents did not seek pre-approval for any of the repairs for which respondents now seek reimbursement from petitioner by way of a rent abatement. Further, with the exception of the alleged roof-related work, the Court finds that all of the work for which respondents seek reimbursement was beyond the scope of the lease and rider. As for the alleged roof-related work, the Court finds that there is insufficient evidence to demonstrate that such work had actually been performed, and to the extent any roof work had been performed, that there is sufficient credible evidence of the nature of such work and the costs thereof. In any event, even assuming such work had been performed (and performed in a code-compliant manner), respondents' abatement defense would still be precluded by the terms of the parties' agreement, as "[c]laims of unjust enrichment and quantum meruit are precluded if a valid and enforceable contract governs the improvements made to the building." White v Ivy, 63 A.D.3d 1235, 1238 (3d Dept. 2009), citing IDT Corp. v. Morgan Stanley Dean Witter & Co., 12 N.Y.3d 132 (2009), and Goldman v. Metropolitan Life Ins. Co., 5 N.Y.3d 561 (2005). This is particularly true where, as here, respondents entered into a triple net lease for the premises. Petitioner's Ex. 2, Rider, ¶ 1. See generally, Latham Land I, LLC v. TGI Friday's, Inc., 96 A.D.3d 1327, 1331-1332 (3d Dept. 2012) (discussing obligations in a triple net lease for a commercial space). Accordingly, the Court finds that respondents are not entitled to any rent abatement related to alleged repairs to the premises under the terms of the parties' contract, or under any equitable theory such as quasi-contract or quantum meruit.
Code Violation Fines and Associated Expeditor Costs
Petitioner alleges (and respondents do not contest) that petitioner received eight summonses from the New York City Department of Buildings during respondents' occupancy: Summons Nos. 035360083L; 03539986Y; 03539987X; 03539988H; 035460763N; 020520AEUHAZ100373; 020520AEUHAZ10034; and 020520AEUHAZ100375. Issuance of those summonses and their dispositions are also publicly-available through the New York City Department Buildings' Buildings Information System ("BIS"), of which the Court can and does take judicial notice. Petitioner seeks $18,400.00 as reimbursement for fines assessed by the City of New York for various violations of local building codes, and $2,800.00 in associated "expediting fees," allegedly paid by petitioner. Petitioner's Ex. 5. Petitioner seeks these reimbursements based upon the parties' lease agreement (Petitioner's Ex. 2), which states at Article 6, in relevant part, that "Tenant shall pay all costs, expenses, fines, penalties or damages, which may be imposed upon Owner by reason by reason of Tenant's failure to comply with" among other things, "all present and future laws, orders and regulations" of local government concerning the premises. Although respondents argue that there was no contractual provision agreeing to reimburse petitioner for fines assessed against petitioner due solely to respondents' failure to comply with applicable laws, the contract clearly does so at Article 6 of the lease agreement.
Notwithstanding the reimbursement provision in the lease, the Court finds that there is insufficient evidence to support recovery of these reimbursements. Specifically, petitioner did not meet its burden of proof on this claim that the fines at issue arose solely due to petitioner's actions or inactions. Rather, the evidence linking specific actions by respondent to specific violations and fines is nebulous at best. Indeed, there is evidence that at least some of these fines arose at a time that petitioner had not yet occupied the premises and/or commenced work that could have given rise to such liabilities. Additionally, it appears from BIS that Summons Nos. 020520AEUHAZ100373, 020520AEUHAZ100374, and 020520AEUHAZ100375 were dismissed. As a result, for these particular alleged violations, petitioner's remedy would have been to seek a refund from the City of New York, not from respondents. Moreover, to the extent that petitioner believed that respondents, rather than petitioner, were in fact responsible for the violations, petitioner's remedy under the terms of the lease was to demand that respondents substitute themselves for petitioner so that respondents might "resist or defend such action or proceeding." Petitioner's Ex. 2, Art. 8; and, e.g., People v. Erin Constr. Corp., 136 Misc.2d 807, 808 (Crim. Ct., New York Co. 1987) (discussing substitution of contractor for general partner of landlord originally named in summons); People v. Yeshivoth, Dkt No. 2016SK021019, 2017 NYLJ LEXIS 1115, *8-11 (Crim. Ct., Kings Co. Apr. 4, 2017) (discussing corporate standard for substitution generally); and N.Y.C. v. 187 Pinehurst Owners Corp., App. No. 1300221, *1 (N.Y.C. Envtl. Cntrl. Bd. Jul. 25, 2013) (discussing corporate substitution in City administrative proceeding). There is no indication in the hearing decisions (which petitioner provided as part of Petitioner's Ex. 6), or any evidence at trial, that indicates that petitioner made any effort to obtain such substitution. Compare Petitioner's Ex. 6 with, e.g., Yeshivoth, supra.
It is also not clear that the provision set forth in Article 6, which essentially seeks indemnity for civil fines, is enforceable as a matter of law. See, Elican Holdings, Inc. v. Hudson Oil Refining Oil Corp., 96 A.D.2d 792, 793 (1st Dept. 1983); and Arici v. Poma, 2019 NY Slip Op 31586(U), *6 (Sup. Ct., New York Co. 2019).
Conclusion
Upon the record before the Court, the Court finds that respondent has breached the terms of the parties' lease agreement regarding rent obligations and that petitioner is entitled to possessory and monetary relief for such unpaid rent. The Court also finds that respondent is not entitled to an abatement of this unpaid rent and that petitioner is not entitled to the additional monetary relief sought for alleged fines and expediting fees. Given the duration of the issues preceding the instant litigation and the instant litigation itself, respondent has not established a basis for a long stay of execution of a warrant of possession, and consequently the Court will order prompt execution to bring this matter to a close.
Accordingly, it is
ORDERED that the clerk enter judgment awarding possession of the premises to petitioner; and it is further
ORDERED that the clerk issue a warrant of possession in favor of petitioner and against respondents forthwith, the execution of which is stayed to the earliest date of execution of September 30, 2022; and it is further
ORDERED that the clerk enter judgment in favor of petitioner and against respondents in the amount of $110,847.25 together with costs and disbursements in this action, with interest from the date of judgment.
This constitutes the Decision and Order of the Court.