Opinion
60460/07.
Decided January 25, 2008.
Gutman, Mintz, Baker Sonnenfeldt, P.C., New Hyde Park, New York, For Petitioner.
Heller, Horowitz Feit, New York, For Respondents.
In this commercial holdover proceeding, respondent Metered Appliances, Inc. ("Metered") moves for summary judgment dismissing the complaint on the grounds that: (1) the lease at issue renewed for an additional ten year period; (2) petitioner did not adequately serve the petition or the 30-day notice to terminate; and (3) the petition does not adequately state the facts or adequately describe the premises.
Background
In an agreement dated July 1, 1993 (the "agreement"), Harlen Housing Associates, LP ("Harlen") "leased" to Metered, for an initial period of ten years, the "Laundry Room" located at 50 West 139th Street (the "Premises"). The agreement, which defines Metered as the tenant and Harlen as the landlord, begins: "Whereas the Landlord is desirous of leasing certain space contiguous to the plumbing and electrical and other fixtures of premises for the exclusive use of the Tenant to operate the business of coin metered laundry equipment. . . ."
Paragraph "3" of the agreement states: "This lease shall be in effect for the period of ten years from the date hereof . . . and automatically be renewed on the same terms and conditions as herein stated, unless canceled by written notice sent via registered mail by either party at least sixty (60) days prior to the expiration of each ten year period."
In paragraph "13" of the agreement, the parties agree that the "Landlord acknowledges that this agreement creates a Leasehold Estate in the Tenant for the term of ten years . . . Landlord further acknowledges that this agreement is not a license, is not revocable at will. . . .(emphasis supplied)."
Metered occupied the Premises during the initial ten-year term, and it is undisputed that neither party sent written notice cancelling the agreement at the end of the initial term. Metered then continued to occupy the Premises, after the initial term expired, for an additional two years.
In 2005, Metered commenced an action in Supreme Court, New York County, seeking a preliminary injunction enjoining Harlen from terminating the agreement and damages for a breach of the agreement. In a November 14, 2005 decision, Judge Richard Braun denied Metered's application for a preliminary injunction and Harlen's cross-motion for summary judgment. In the decision, Judge Braun wrote: "the subject document is a lease, in that it is denoted as such, demises the exclusive use of the specific premises, sets forth how to determine the `rent,' and denominates the parties as landlord and tenant [citations omitted]. . . . General Obligations Law § 5-903 does not apply here." After Judge Braun issued his decision, the parties apparently abandoned litigation of the Supreme Court action and it was dismissed.
Despite Judge Braun's decision, on December 29, 2006, Harlen served a thirty-day notice to terminate Metered's alleged monthly tenancy. Harlen then commenced this holdover proceeding in or about February 1, 2007.
In an October 10, 2007 Decision, Judge Manuel J. Mendez denied, without prejudice to renew on proper papers, Metered's motion to dismiss this proceeding. In that same decision, Judge Mendez granted Harlen's motion to amend the petition, changing the name of the respondent from "50 West 139th Street, Store No. 1" to "50 West 139th Street, Laundry Room."
Discussion
Metered moves for summary judgment dismissing the petition on the grounds that: (1) pursuant to its terms the lease renewed for an additional ten year period; (2) petitioner did not adequately serve the petition or the 30-day notice to terminate; and (3) the petition does not adequately state the facts or adequately describe the premises.
Metered argues that based upon the November 14, 2005 decision of Judge Braun and pursuant to the doctrine of collateral estoppel, the agreement between the parties is a lease and not a license and therefore General Obligations Law § 5-903 does not apply. As a result, because Harlen did not send a notice cancelling the lease, it renewed automatically for an additional ten-year period according to its terms.
Pursuant to General Obligations Law § 5-903, a contract for service, maintenance or repair which includes a provision for automatic renewal "for a specified additional period unless the person receiving the service . . . gives notice to the person furnishing such contract service . . .of his intention to terminate the contract at the expiration of such term" does not renew unless the service provider "at least fifteen days and not more than thirty days previous to the time specified for serving such notice upon him, shall give notice [of the existence of the provision in the contract] to the person receiving the service." This provision does not apply to a lease. See Coinmach Corp. v. Harton Assocs., 304 AD2d 705 (2d Dep't 2003).
In opposition, Harlen does not address Judge Braun's decision, and instead argues that the case law concerning this issue dictates a finding that this agreement is a license and not a lease. Harlen argues that because it retained possession of the keys to the space, and Metered was required to get those keys from Harlen every time it sought entry to the space, that Metered did not have exclusive control over the space.
Harlen further argues that the agreement is not a lease because the the paragraph requiring payment of "rent" is too vague to constitute an agreement concerning rent. The rent paragraph states: "The rent to be paid to the Landlord shall be the sum of 60% of the collections." Harlen argues that this language does not state whether the "rent" payments are calculated on a daily, weekly or monthly basis.
Therefore, Harlen argues, the agreement is no more than a license and General Obligations Law § 5-903 applies. Accordingly, because Metered did not provide written notice to Harlen concerning the existence of the renewal clause in the contract, pursuant to General Obligations Law § 5-903, the license is revocable by Harlen and Harlen rightfully revoked it.
It is settled law that a determination on a preliminary injunction, a provisional remedy designed for the narrow purpose of maintaining the status quo, is not an adjudication on the merits and lacks preclusive effect. See BFP 245 Park Co., LLC v. GMAC Commercial Mortgage Corp., 12 AD3d 330, 332 (1st Dep't 2004); Coinmach Corp. v. Fordham Hill Owners Corp., 3 AD3d 312, 314 (1st Dep't 2004).
Here, in his November 14, 2005 decision, Justice Braun denied Metered's motion for a preliminary injunction on the ground that Metered was unable to establish irreparable harm. Separately, the court denied without prejudice portions of Harlen's cross-motion on the ground that Harlen did not submit all of the pleadings and granted a portion of the motion to the extent of dismissing "the part of the third cause of action requesting a preliminary injunction." In his decision, Judge Braun only determined Metered's application for a preliminary injunction and his finding that the agreement is a lease has no preclusive effect.
This Court now addresses whether the agreement is a lease and consequently whether the automatic renewal clause is enforceable. Whether the agreement constitutes a lease and created a landlord-tenant relationship depends on the intent of the parties and not on their characterization of the agreement. Dime Laundry Service, Inc. v. 230 Apartments Corp., 120 Misc 2d 399 (Sup.Ct., New York County 1983).
The agreement is a lease where it contains a description of the specific premises to be occupied exclusively by the party providing the services, specifies the amount of rent to be paid, provides for the respondent's exclusive use and occupancy for a definite term. See Coinmach Corp. v. Harton Assoc., 304 AD2d 705 (2d Dep't 2003); Hi-Rise Laundary Equipment Corp. v. Matrix Properties, Inc., 96 AD2d 930 (2d Dep't 1983). "Essential to a lease is a conveyance of exclusive possession of definite space to the lessee." Dime Laundry Service, Inc. v. 230 Apartments Corp., 120 Misc 2d 399 (Sup.Ct., New York County 1983). "Indicia of exclusivity, such as control over the patrons of the laundry services, control of the keys, or exclusion of other vending machines or services are lacking here." Dime Laundry Service, Inc., 120 Misc 2d at 401. The Court in Dime found that those factors were missing, which supported its finding that the parties did not intend for the respondent to have exclusive control over the premises.
Here, the Court finds that the agreement is a lease. First and foremost, in paragraph "13" of the lease the parties expressly reflect their objective intent to define Metered as a tenant with a lease and not as a licensee. Paragraph "13" states: "Landlord acknowledges that this agreement creates a Leasehold Estate in the Tenant for the term of ten years. . . . Landlord further acknowledges that this agreement is not a license, is not revocable at will and agrees it will recognize this conveyance as a Lease affording Tenant all the rights permitted a Tenant under the Law of this state." Clearly, with this language, the parties meant to avoid any confusion in the future as to the nature of their landlord tenant relationship.
Moreover, the agreement contains all of the essential terms of a lease. The parties entered into the agreement for the stated purpose of leasing space for Metered's exclusive use. The agreement contains a description of the specific premises to be occupied exclusively by Metered, specifies the amount of rent to be paid, and provides for the respondent's exclusive use and occupancy for a definite term.
That the rent is determined by a formula, rather than a specific dollar amount does not render the rental payment "vague." Leases often contain rent and additional rent payments that are calculated pursuant to a formula (e.g. tax escalation formulas) rather than a specific dollar amount.
The lease also expressly states that Metered has exclusive dominion and control over the use of the premises. Harlen's employees are directed to provide access to Metered's employees at the time and hours exclusively regulated by Metered. The fact that Harlen retained the keys to the premises does not undermine Metered's control inasmuch as Metered was granted exclusive and unfettered access.
As the parties expressed their intent that their agreement be adjudged a lease, and the agreement contains the essential elements of a lease, Harlen's argument that the agreement is merely a license has no merit.
Moreover, because neither party sent written notice cancelling the lease prior to the end of the initial ten-year term, the lease, pursuant to its terms, automatically renewed. For this reason, Harlen may not now terminate the lease by service of a 30-day notice cancelling Metered's monthly tenancy. Metered's tenancy is not a monthly tenancy, nor is Metered a licensee. The Court therefore dismisses the petition and need not address the remaining grounds in Metered's motion.
In accordance with the foregoing, it is
ORDERED that Metered Appliances, Inc.'s motion for summary judgment is granted, the petition is dismissed, and the Clerk of the Court is directed to enter judgment accordingly.
This constitutes the decision and order of the Court.