Opinion
324-06.
Decided August 17, 2006.
Jaspan Schlesinger Hoffman, LLP, Garden City, New York, Attorneys for Petitioner.
Jay Seltzer, Esq., Huntington, New York, Attorney for Respondents.
Via a non payment Notice of Petition dated July 12, 2006; K.B.K. Huntington Corp. (hereafter "landlord") seeks to recover a money judgment for $285,166.25 representing rent and additional rent, and a warrant of eviction against respondent's Country Cleaners, Inc. (hereafter "Country Cleaners") and Thomas Giordano (hereafter "Giordano"). The respondents have moved for dismissal of the petition via application dated July 28, 2006. Petitioner has interposed written opposition dated August 9, 2006, to which the respondent filed a reply dated August 15, 2006. The Court reserved decision upon the respondent's written application to dismiss together with several additional oral applications to dismiss which were interposed during the trial of the summary proceeding held August 17, 2006. To the extent that this decision fails to address any application presented at trial it is deemed denied.
Undisputed Facts
The parties orally stipulated at trial that the only factual issues to be resolved were whether Thomas Giordano at any time contracted individually with the landlord and whether either Country Cleaners or Giordano owe any rent or use and occupancy for occupying the real property commercial premises located at 410 West Main Street, Huntington, New York. All other factual issues joined for disposition were withdrawn or conceded as follows:
1) The landlord entered into a standard commercial lease (not in evidence) in 1986 for the subject dry cleaning premises with a non party individual, Domenick Pennestri, who continued operating an existing business known as "Pampers Dry Cleaners".
2) Mr. Pennestri sold his Pampers Dry Cleaners business to respondent Giordano in 1987 who operated it under the Pampers Dry Cleaning d/b/a for several years until being required to change the d/b/a to Main Street/Country Cleaners several years later for reasons having to do with a trade name encroachment claim.
3) Pampers/Main Street/Country Cleaners has continuously operated at 410 West Main Street, Huntington, New York through the date of this trial. No checks were introduced into evidence although it is undisputed that rent was habitually paid every five weeks and the parties had a harmonious relationship until October 2003. The landlord had knowledge of the assignment and never raised objection thereto. No new lease was executed at the 1996 expiration of the Pennestri lease.
4) The County Health Department discovered a chemical spill problem in October 2003 which required approximately $81,000 of remedial measures which was paid by Country Cleaners. Thereafter, Country Cleaners paid no rent except for a $7,166.92 payment on January 18, 2006 which is the same sum due under the 2006 Real Property tax bill.
5) The landlord served a three day notice dated June 29, 2006 demanding $270,728.30 of base and additional rent.
6) No written assignment of lease by Mr. Pennestri or written consent to assignment exists at this time.Disputed Factual Issues
A. What entity operates Country Cleaners at the subject premises and what is its relationship with the landlord?
B. What are the terms and conditions of Country Cleaners occupancy agreement with the landlord?
Legal Issues Presented
1) Does the non existence of a written assignment void the Pennestri lease as to respondent's pursuant to the Statute of Frauds, Gen. Oblig. Law 5-703?
2) Did the conduct of the parties in offering and accepting rent for 18 years create a landlord/tenant relationship?
Discussion
The respondents assert Gen. Oblig. Law Sec. 5-703 as a defense to this non payment proceeding contending that the Statute of Frauds voids any oral agreement it may have had with the landlord as no written assignment exists. The Second Department case of Dadich v. Ilana Knitting, Inc. 618 NYS2d 69 ( 208 AD2d 792) (2nd Dept. 1994) is offered in support of this contention. Said precedent found no liability under a Statute of Frauds theory for an oral assignor of a five year written lease which was surrendered and accepted by the landlord. While such an argument is colorable on its face, this situation is inapplicable to the case at bar wherein the assignee is admittedly in possession of the leasehold. The Court of Appeals long ago created an equitable exception to the Statute of Frauds concerning lease assignments when it held that:
Where a person other than the lessee is shown to be in possession of leasehold premises the law presumes that the lease has been assigned to him and that the assignment was sufficient to transfer the term and to satisfy the Statute of Frauds. So also payment of rent by the occupant to the plaintiff when the occupant has been let into possession by the original lessee is prima facie evidence of the assignment of the term, and a person in possession who holds himself out to the landlord as assignee is estopped from denying the assignment or objecting that the assignment was not in writing.
Mann v. Ferdinand Munch Brewery, 225 NY 189 (1919).
As there exists no dispute that Pampers/Country Cleaners occupied the premises and paid rent for the nine year balance of the lease term they are estopped from interposing the Statute of Frauds to vitiate its obvious oral agreement to take an assignment of the lease and be bound by it.
When the lease expired in 1996 the parties are presumed to have continued their business relationship under the same terms and conditions as contained in the expired lease on a month to month basis. See generally, Lakeside Plaza v. Impala Press, 237 AD2d 334, 654 NYS2d 811, (NY App. Div. 2nd Dept. 1997) . The record is devoid of any evidence to establish an oral modification of same. The respondents did not controvert the numbers provided in the landlord's three day notice (Exhibit 1) or assert that they were not the proper sums detailed in the Pennestri lease; except to assert they "hoped" they would receive a credit for th $81,000 of remedial EPA mitigation costs. Accordingly, the Court finds that Country Cleaners did agree to pay the sums detailed in Exhibit 1, inclusive of real estate taxes. The Court also notes that the respondents payment of the exact tax bill sum of $7,166.92 on January 18, 2006 belies its claims of no understanding to pay real state taxes. The Court also rejects the respondents assertion that it had an agreement that they would receive a rent abatement for the EPA clean up expenses. The payment of EPA remediation expenses in lieu of rent was clearly a unilateral tenant decision as was its admitted decision not to pay any subsequent rent as money "was not available".
Who is in Possession?
The thorniest issue presented for disposition is factual in nature and begs the question "who is in possession of the premises"? The respondents admit that Giordano purchased the Pennestri d/b/a/ business inclusive of the machinery and goodwill but claims it was exclusive of the lease. Such an assertion is not believable and is utterly rejected with this Court's finding that the purchase of the Pennestri "Pampers Cleaning" business was inclusive of the ten year lease.
However, other than the petitioner's self serving declarations that he would never have done business with anyone other than an individual; there exists not one scintilla of evidence in the record to suggest that Pampers/Country Cleaners was a d/b/a for Thomas Giordano individually. To the contrary; there seems little dispute that a corporation entitled Country Cleaners Inc. did exist and that the bulk of the rent payments were made from corporate accounts. Mr. Giordano testified under penalty of perjury that said corporation does in fact exist, pay current taxes, and operate out of the premises. Absent proof to the contrary; it is not logical or plausible to think that he would operate other than in a corporate capacity. The petitioner's argument that Giordano agreed to personally obligate himself in lieu of the petitioner's forbearance in bringing dispossess proceedings after the 2003 rent default is unpersuasive and would in fact be void under Sec. 5-701 ((a) (2) of the General Obligations Law, which voids all agreements or promises "to answer for the debt. . . . of another person".
Accordingly, the Court enters judgment for the petitioner as against only Country Cleaners, Inc. in the demanded sum of $277,895.27 plus August rent for a final sum of $285,166.75 plus costs and interest from August 1, 2006. A judgment of possession and warrant of eviction without stay, shall issue immediately against all respondents described in the petition.