Opinion
XXXXX
03-14-2018
Ellen K. Carr, Plaintiff, v. Mark Torrey and A.C.T.I.O.N. PARTNERSHIP FOR YOUTH IN RURAL COMMUNITIES, INC., Defendants.
ELLEN K. CARR, pro se MARK TORREY, pro se A.C.T.I.O.N. PARTNERSHIP FOR YOUTH IN RURAL COMMUNITIES, INC., by Mark Torrey, Director
ELLEN K. CARR, pro se MARK TORREY, pro se A.C.T.I.O.N. PARTNERSHIP FOR YOUTH IN RURAL COMMUNITIES, INC., by Mark Torrey, Director Michael A. Sciortino, J.
The individual parties appeared and proceeded at this small claim pro se, without legal counsel, and A.C.T.I.O.N. Partnership For Youth in Rural Communities, Inc., appeared through Mark Torrey, its Director.
I. PROCEDURAL HISTORY
The plaintiff, ELLEN K. CARR, (hereinafter referred to as "plaintiff") commenced this small claim in the Justice Court for the Town of Parma, County of Monroe, in the amount of $3,000.00 for, according to the Small Claims Complaint Form, "Lease agreement — left 3 months before lease was up." Plaintiff filed the small claim against MARK TORREY, individually ("defendant Torrey"). The Court Clerk properly served the Notice of Small Claim by mailing it by certified mail and by first class mail. See, 22 N.Y.C.R.R. §214.10(e). The parties participated in a fair and impartial hearing of this small claim on February 13, 2018, and each witness was properly sworn under oath prior to providing any testimony to the Court. The Court confirmed that the defendants either reside within, are employed within, or have an office for the transaction of business within the municipality-the Town of Parma, giving rise to this Court's jurisdiction. See, Uniform Justice Court Act §213(a) (McKinney's 2018). At the hearing of the small claim, the parties presented evidence in their own behalf, including testimony of the plaintiff and the defendant. Plaintiff introduced and this Court received two (2) pieces of documentary evidence. Defendants introduced and this Court received three (3) pieces of documentary evidence.
Preliminarily, the Court amends the caption of the action pursuant to Uniform Justice Court Act §1814(c) to reflect the true parties. Following a reasonable inquiry by the Court it was determined that the proper party is A.C.T.I.O.N. Partnership For Youth in Rural Communities, Inc. ("defendant ACTION"), who appeared by Mark Torrey, its Director (defendant ACTION and defendant Torrey are collectively referred to as "defendants"). Defendant Torrey established that he had the requisite authority to bind the corporation in a settlement or at trial consistent with Uniform Justice Court Act §1809(2) and that the relevant Lease Agreement with the plaintiff was executed by defendant Torrey individually and in a capacity on behalf of defendant ACTION. It is well settled that a plaintiff may bring an action in small claims court against any business defendant "in any name used by it in conducting business." See, Uniform Justice Court Act § 1814 (McKinney's 2018). If the court determines defendant's true name at the hearing, the law permits the court to amend all papers to conform to such determination so as to assist a prevailing plaintiff in enforcing the judgment. Here, the evidence at the hearing established that plaintiff may properly bring this action against both the individual and the corporate defendant. See, Katz v. Rodolfo Valentin Salon, Spa & Hairpieces, 3 Misc 3d 126(A) (App Term 2d Dep't. 2004); Talley v. Peck, 48 Misc 3d 142(A) (App Term 2d Dep't. 2015); Bennett v. Class N' Style Travel & Limousine Ltd., 23 Misc 3d 8 (App Term 2d Dep't. 2009). The caption of this matter has been amended accordingly.
II. STATEMENT OF FACTS
The relevant facts in this matter demonstrate that the plaintiff and defendants executed a Lease Agreement for commercial property located at 5110 West Ridge Road, Spencerport, NY 14559, in the Town of Parma. See, Plaintiff's Exhibit 1. The tenancy commenced on July 1, 2016 for a term of one year through June 30, 2017 at an annual rent of $24,000.00, payable in equal monthly installments of $2,000.00 per month on the first day of each month. See id. The Lease Agreement provided the option for a one-year renewal, starting July 1, 2017 at an annual rent of $30,000.00, payable in equal monthly installments of $2,500.00 per month on the first day of each month. See id. The Lease Agreement provided for the premises to be used for "Action Partnership" and no other business purpose. See id. The Lease Agreement also contained a provision at Section 22 entitled the "Entire Agreement". Specifically, Section 22 states, "The foregoing constitutes the entire [sic] between the parties and may be modified only by a writing signed by both parties." See id.
The testimony of defendant Torrey established that defendant ACTION is a Not-For-Profit Corporation established under §501(c)(3) of the Internal Revenue Code, affording the corporation tax exempt status. See, Defendants' Exhibit A; see also, Defendants' Exhibit B. According to the evidence defendant Torrey submitted, defendant ACTION was established for the purpose "to train faithful people to lead others to a personal faith in Christ as Lord and Savior, help them acquire a Christian world view and teach people in other churches to do the same. Using Luke 10:27 as a basis, the Corporation will provide a spiritually nurturing environment to help those involved develop into morally wise and emotionally strong leaders and disciples of Jesus Christ. The Corporation will also provide opportunities for physical and intellectual growth. The corporation will strive to help develop leaders, possessing a servant heart, who desire to be involved in their community." See, Defendants' Exhibit A.
The evidence demonstrates that as early as January 31, 2017 and prior to the expiration of the first year of tenancy, defendant Torrey on behalf of defendant ACTION communicated with plaintiff that "Unfortunately, we do not find ourselves where we thought we would be by this point. With February rent paid, 4 months remain in our lease agreement. With each passing month, we are struggling to make this work financially." See, Plaintiff's Exhibit 2; see also, Defendants' Exhibit C. Once again, on March 4, 2017, defendant Torrey on behalf of defendant ACTION wrote to the plaintiff to enclose the March 2017 rent and also to advise that "Unfortunately, we do not find ourselves where we thought we would be by this point. With each passing month, we have struggled to make this work financially. My family has personally paid the rent for months now and cannot do so any longer. We intend to have our things removed from 5110 West Ridge Road by the end of the month. . . Again, this letter serves to inform you that we plan to vacate this rental property by the end of the month. . . Again, we are not in a position to continue to pay rent. We hope the search for a new tenant goes well." See id.
Thereafter on April 6, 2017, defendants once again communicated with plaintiff in writing "requesting that our lease at 5110 West Ridge Rd. be terminated effective March 31, 2017. We will forfeit the $2,000 security deposit. We will need to be released from all utilities responsibilities as well as any other responsibilities tied to rental of the facility." See, Defendants' Exhibit C. Thereafter, on June 27, 2017, the defendants then wrote to plaintiff indicating that "The end of our contract is now upon us. . . We have kept the utilities current and have now transferred them back to you. Thank you again for the opportunity to impact families through our Action Zone program. We are sorry that it didn't work out better for both of us. I am leaving the keys at the building for you on Thursday the 29th." See id.
Defendant Torrey also introduced correspondence dated July 18, 2017 that he drafted to "Mr. Enos," presumably counsel for the plaintiff who contacted the defendants about the late rental payments from April 1, 2017 through June 30, 2017. See id. In this correspondence of July 18, 2017, as well as at the small claims action, defendant Torrey argued that there was no "Personal Guarantee Clause" in the lease and that he entered the lease agreement as organization president and signed the lease for the organization. See id. The Preamble to the Lease Agreement clearly states that "This lease, entered as of the 1st day of July, 2016, is between Ellen Carr. . ., herein called "Lessor", and Mark Torrey, residing at . . . and "Action Partnership" of. . ., jointly and severally referred to as ("Lessees")." See, Plaintiff's Exhibit 1. The Lease Agreement is also signed by "Lessee: Mark Torrey" and also "Lessee: Action Partnership, by Mark Torrey".
Defendant Torrey also argued at the small claims action in sum and substance that there was an oral agreement between the defendants and the plaintiff covering the last three (3) months of rent that was due and owing. In his July 18, 2017 correspondence to Mr. Enos, defendant Torrey reference the oral agreement with plaintiff and that there was an "opportunity to get out of the last 2 months if the rental effort did not go well. We had hoped she would entertain ending the lease early at the February 5th meeting. She wanted to go the route of finding a renter. Based upon that oral arrangement, we proceeded to give notice at the beginning of March because all of our efforts to raise additional funding (since we are a non-profit organization) did not produce the desired results." See id. This alleged agreement was never subscribed or memorialized in writing, despite the provision in the Lease Agreement requiring any modification to be in writing at Section 22 — Entire Agreement, and despite the fact that the parties had a history of amending the Lease Agreement in writing by way of an Addendum to the Lease Agreement. See, Plaintiff's' Exhibit 1.
The small claims action was filed on January 22, 2018 for $3,000.00 for three (3) months of back rent that arguably totaled at least $6,000.00, in addition to other late fees that may have been assessed in a court of higher monetary jurisdiction. This Court confirmed with plaintiff at the outset of the hearing that a money action filed in a small claims part of a Town Court was limited by law to $3,000.00 consistent with the Uniform Justice Court Act §202. The plaintiff acknowledged that she understood this jurisdictional limitation and desired to proceed forward with the small claim hearing. It should also be noted that later on in plaintiff's testimony, she noted that the defendants "did leave the building in excellent shape." Regardless of this fact, the defendants did not interpose a counterclaim against the plaintiff for the return of the $2,000.00 security deposit that was being held by the plaintiff. From the testimony of the plaintiff and written correspondence of the defendants, it appears that the plaintiff maintained the $2,000.00 security deposit and the defendants consented to same to be applied to the back rent that was allegedly due and owing and that totaled more than $6,000.00.
III. LEGAL ANALYSIS and CONCLUSIONS OF LAW
The purpose of a small claims procedure is to do substantial justice between the parties according to the rules and principles of substantive law. See, Uniform Justice Court Act §1804 (McKinney's 2018); see, Hampton v. Annal Management Co., Ltd., 164 Misc 2d 287 (City Civ. Ct. 1994), appeal dismissed, 168 Misc 2d 138 (App. Term 1996). Small Claims Court is designed to provide litigants with a simple, informal and inexpensive procedure for the prompt determination of claims. See, Uniform Justice Court Act §1802 (McKinney's 2018). Although procedural rules may be relaxed, cases must be decided according to the rules and principles of substantive law. See, Uniform Justice Court Act §1804. This Court is bound by this standard; a standard which has been supported throughout many terms of this Court and others similarly situated throughout New York State. Accordingly, the goal of this Court throughout this entire proceeding is to ensure that substantial justice is done between the parties relying on the sound principles of statutory and case law; in doing so, this Court is required to deliberate upon the facts and apply the law to those facts.
In this particular case, plaintiff filed a small claim against defendant for $3,000.00 for back rent as a result of a commercial lease agreement for the months of April 2017, May 2017, and June 2017. This Court was clear in explaining to the plaintiff that the jurisdiction of the court was limited to $3,000.00 consistent with the law. Specifically, Uniform Justice Court Act §202 states that "Notwithstanding any other provision of law, the court shall have jurisdiction of actions and proceedings for the recovery of money or chattels where the amount sought to be recovered or the value of the property does not exceed $3000." Uniform Justice Court Act §202 (McKinney's 2018). Acknowledging this monetary limitation, plaintiff requested the Court to continue with the small claims hearing.
It is clear from the testimony provided by the parties that this landlord and tenant relationship started, and ended, professionally. But for the difficult financial climate and position that the defendants found themselves within, this claim likely would not have been filed. In fact, there was an open line of communication between the parties at all times. However, despite this open line of communication and professional relationship between the parties, there was also a binding Lease Agreement between the parties that called for monthly rental payments in the amount of $2,000.00. Defendants' inability to pay April 2017, May 2017, and June 2017, is a breach of the Lease Agreement and placed the defendants in default as established by the testimony and documentary evidence. While the plaintiff may be entitled to a judgment of a higher amount in another court with increased monetary jurisdiction such as Monroe County Supreme Court or the Monroe County Court, plaintiff elected to proceed forward in the small claims part of the Parma Town Court which is controlled by Uniform Justice Court Act §202.
Interestingly, the defendants did not counterclaim for the return of their security deposit despite the fact that defendants left the building in "excellent shape". However, under New York law, a security deposit remains the property of the tenant and must be returned upon the conclusion of the tenancy. See, General Obligations Law §7-103 (McKinney's 2018). However, upon a default by the tenant, the deposit may be used by the landlord as an offset against amounts owed to the landlord. See, Rivertower Assoc. v. Chalfen, 153 AD2d 196 (1st Dep't. 1990); see also, Hoffman v. Farucci, 31 Misc 3d 127 (App Term, 2d Dep't. 2011). In this case, the defendants defaulted in the payment of three months' rent and the plaintiff used the security deposit as an offset against the full amount owed to the landlord. However, this Court only has jurisdiction of up to $3,000.00, for which the plaintiff has used the $2,000.00 security deposit as an offset to the total amount that is due and owing. See, Hoffman, supra at p. 127.
Lastly, defendant Torrey provided this Court with various case names with regard to oral agreements in other landlord tenant matters, as well as a reference to the Statute of Frauds. This Court was unable to obtain any case citation from only the limited case names provided by defendants. However, with regard to the reference to the Statute of Frauds, it is noted that certain oral agreements are limited by the Statute of Frauds. In particular, section 5-701 of the New York General Obligations Law requires certain contracts to be in writing to be enforceable. See, General Obligations Law § 5-701 (McKinney's 2018). The purpose of the Statute of Frauds is to prevent fraud in the proving of certain legal transactions particularly susceptible to deception, mistake, and perjury. See, Sheehy v. Clifford Chance Rogers & Wells, LLP, 3 NY3d 554 (2004). Here, defendant Torrey stated that he and defendant ACTION entered into an oral agreement with plaintiff whereby the defendants would be permitted to vacate the premises and not be further responsible for the rent that was due and owing for the remainder of the lease term. There was no such admission by the plaintiff that an oral agreement was made to be sufficient evidence to satisfy the Statute of Frauds. See, General Obligations Law § 5-701(3)(c) (McKinney's 2018). Absent such an admission, this Court cannot conclude that the parties satisfied the Statute of Frauds or their legal obligations under the Lease Agreement which required any modification of the terms of the "Entire Agreement" to "be modified only by a writing signed by both parties." See, Plaintiff's Exhibit 1.
Based upon the credible testimony of the plaintiff and defendants, and the documentary evidence introduced, this Court concludes that the principles and rules of substantive law along with the purpose of substantial justice compel a determination that plaintiff has a cause of action in this Court that would entitle plaintiff to damages on this small claim against the defendant. However, and consistent with the standard of substantial justice between the parties, the plaintiff has retained $2,000.00 of the defendants' security deposit as an offset for the amount that the defendants allegedly owe for rent. Permitting the plaintiff to receive a judgment in the amount of $3,000.00 and also keep the $2,000.00 security deposit would be a total recovery of $5,000.00 which exceeds this Court's monetary jurisdiction permissible by law. See, Uniform Justice Court Act §202. Accordingly, the plaintiff should only be permitted to recover $1,000.00 which is the balance of the small claim award minus the security deposit being maintained as an offset. See, Rivertower, supra at 196; see also, Hoffman, supra at 127.
Accordingly,
IT IS HEREBY ORDERED THAT Plaintiff's small claim against Defendants is granted for the total of $1,000.00; and,
IT IS HEREBY FURTHER ORDERED THAT Defendants to hereby make payment of the small claim amount of $1,000.00 to the plaintiff within thirty (30) days of the receipt of this Decision, Order, and Final Judgment.
For the benefit of the parties to this small claim, review of this Court's Decision, Order, and Final Judgment may be taken consistent with Uniform Justice Court Act §1807. See, Uniform Justice Court Act §1807 (McKinney's 2018). Moreover, pursuant to Uniform Justice Court Act §1703(b), "An appeal as of right from a judgment entered in a small claim or a commercial claim must be taken within thirty days of the following, whichever first occurs:
1. service by the court of a copy of the judgment appealed from upon the appellant.
2. service by a party of a copy of the judgment appealed from upon the appellant.
3. service by the appellant of a copy of the judgment appealed from upon a party.
Where service as provided in paragraphs one through three of this subdivision is by mail, five days shall be added to the thirty day period prescribed in this section. See, Uniform Justice Court Act §1703(b) (McKinney's 2018).
This constitutes the Decision, Order, and Final Judgment of the Justice Court in the Town of Parma, County of Monroe, State of New York. DATED: March 14, 2018 Hilton, New York ________________________________ HON. MICHAEL A. SCIORTINO Town Justice, Town of Parma