Opinion
INDEX NO. 654136/2016
04-09-2021
LITTLE CHERRY, LLC and NEW YORK COMMUNITY BANK, Plaintiffs, v. CHERRY STREET OWNER LLC, JDS DEVELOPMENT LLC, and MICHAEL STERN, Defendants.
NYSCEF DOC. NO. 242 PRESENT: HON. ANDREA MASLEY Justice MOTION DATE __________ MOTION SEQ. NO. 004 005 DECISION + ORDER ON MOTION The following e-filed documents, listed by NYSCEF document number (Motion 004) 154, 155, 156, 157, 158, 159, 160, 161, 162, 163, 164, 165, 166, 167, 168, 169, 170, 171, 172, 173, 174, 175, 176, 177, 178, 179, 180, 181, 182, 190, 191, 192, 193, 194, 195, 196, 197, 198, 199, 200, 201, 202, 203, 204, 205, 206, 207, 208, 209, 232, 233, 234, 235, 236 were read on this motion to/for JUDGMENT - SUMMARY. The following e-filed documents, listed by NYSCEF document number (Motion 005) 183, 184, 185, 186, 187, 188, 189, 210, 211, 212, 213, 214, 215, 216, 217, 218, 219, 220, 221, 222, 223, 224, 225, 226, 228, 229, 230, 231 were read on this motion to/for SUMMARY JUDGMENT (AFTER JOINDER.
In motion sequence 004, plaintiff Little Cherry, LLC (Little Cherry) moves, pursuant to CPLR 3212, for summary judgment on (1) its first cause of action, declaring that defendants Cherry Street Owner LLC (CSO) and JDS Development (JDS) cannot proceed as a matter of law with their development project without Little Cherry's consent as a party-in-interest and (2) on its second cause of action enjoining the development project from proceeding without Little Cherry's consent.
In motion sequence 005, plaintiff-intervenor New York Community Bank (NYCB) moves, pursuant to CPLR 3212, for summary judgment on its claim for declaratory and injunctive relief, declaring that defendants cannot proceed with the development without NYCB's consent as a "party-in-interest," in its capacity as ground lease mortgagee and enjoining the defendants from (1) pursuing development without NYCB's consent and/or absent acknowledgement that the development cannot be implemented without NYCB's consent; (2) proceeding with construction relating to the development absent NYCB's consent; and (3) impairing or infringing NYCB's rights under the mortgage and ground lease.
Background
The underlying facts of this action are set forth, at length, in a prior decision of this court. (NYSCEF Doc. No. [NYSCEF] 123, Decision and Order [Mot. Seq. Nos. 002, 003].) Thus, the facts will not be repeated herein, except as necessary.
Little Cherry, LLC is the tenant of certain real property located at 235-247 Cherry Street, New York, Block 248, Lot 76 (the Premises). (NYSCEF 155, Joint Statement of Undisputed Facts [JSUF] ¶3.) NYCB is the holder of a leasehold mortgage encumbering Little Cherry's lease, with Little Cherry as borrower and mortgagor. (Id.) The Premises are owned by nonparty Two Bridgeset Housing Development Fund Company, Inc. (HDFC). (Id. ¶6.) HDFC's affiliate, nonparty Two Bridgeset Associates L.P. (TBA), is the owner of Lot 15. (Id.)
By a Zoning Lot Development Agreement (ZLDA), dated December 12, 2008, HDFC and TBA agreed to merge the two adjacent Tax Lots, 76 and 15 to facilitate Little Cherry's plan to construct a commercial development involving the two lots. (NYSCEF 156, ZLDA.) Recital provision C of the ZLDA provides that the two lots merging into a single zoning lot would be referred as the "Combined Zoning Lot". (Id. at 2.) Recital B provides that HDFC, as donee, is the owner of Lot 76, and "said land being herein referred to as 'Donee's Land', as same may be expanded or diminished by Donee ... ." (Id.)
As part of the process for the zoning lot merger, First American Title Insurance Company of New York, through Metropolitan Abstract Corporation, identified and recorded the parties-in-interest through a Certification. (NYSCEF 157, Certification.) The Certification identifies Little Cherry and NYCB as parties-in-interest. (Id.)
On December 20, 2008, Little Cherry, as party-in-interest, executed a Waiver of Declaration of Zoning Lot Restrictions stating, in part,
"[Little Cherry] hereby agrees that [it], a 'party in interest' as defined in Section 12-10 - subdivision [d] of the Zoning Resolution, with respect to the lands known as Tax Lots 76 and 15 in Block 248 of the Tax Map of the City of New York, Borough of Manhattan, hereby acknowledges that the above described lands have been declared to be one zoning lot for the purpose of, and in accordance with, the provisions of the Zoning Resolution, and waives its rights to execute a Declaration of Zoning Lot Restrictions with respect to said Combined Zoning Lot in accordance with said subdivision [d])."(NYSCEF 159, Little Cherry Waiver of Declaration at 2.) Combined Zoning Lot is defined in the Waiver of Declaration as Lots 15 and 76 merged into a single zoning lot. (Id.) NYCB also executed a Waiver of Declaration of Zoning Lot Restrictions with language virtually identical to the one executed by Little Cherry. (NYSCEF 160, NYCB Waiver of Declaration at 2.)
Despite the merger, Little Cherry's development plans fell through, as HDFC terminated its sales contract with Little Cherry. (NYSCEF 163, Amended Complaint ¶ 74.) "In early 2016, CSO contracted with HDFC and its affiliate to acquire, inter alia, the Premises, the unused development rights appurtenant thereto, and the development rights above the adjacent Tax Lot 70." (NYSCEF 155, JSUF ¶11.) Little Cherry initiated this action.
In its prior Decision and Order, this court granted defendants' motion to dismiss "only to the extent that plaintiff's claim to enjoin defendants from impairing plaintiff's entitlement to quiet enjoyment of the Premises is dismissed." (NYSCEF 164, Decision and Order [Mot. Seq. No. 002, 003] at 8.) This court also granted NYCB's motion to intervene in this action as the holder of a leasehold mortgage encumbering the Lease for the Premises, with Little Cherry as borrower and mortgagor. (Id.) On July 10, 2019, the Appellate Division, First Department unanimously affirmed that decision. (NYSCEF 137, 174 AD3d 445 [1st Dept 2019] First Department Decision.) On October 22, 2019, the Appellate Division denied defendants' motion for reargument or leave to appeal. (NYSCEF 235, First Department Order.)
Little Cherry and NYCB now seek summary judgment declaring that the 2008 Waivers did not operate to waive the further merger of previously merged Tax Lots 15 and 76 with Tax Lot 70, especially since they did not execute the ZLDA.
Discussion
Summary judgment is a drastic remedy that will only be granted where the movant demonstrates that no genuine triable issue of material fact exists. (See Zuckerman v City of New York, 49 NY2d 557, 562 [1980]; CPLR 3212.) Initially, "the proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact." (Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986].) Once the movant has made such a showing, the burden shifts to the opposing party to demonstrate, with admissible evidence, facts sufficient to require a trial, or summary judgment will be granted. (Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985].) "[M]ere conclusions, expressions of hope or unsubstantiated allegations or assertions are insufficient" to raise a triable issue of fact. (Zuckerman v City of New York, 49 NY2d at 562.)
As stated, in this action, Little Cherry and NYCB seek a declaration as to their consent rights under §12-10 of the New York City Zoning Resolution. "Declaratory judgments are a means to establish the respective legal rights of the parties to a justiciable controversy. The general purpose of the declaratory judgment is to serve some practical end in quieting or stabilizing an uncertain or disputed jural relation either as to present or prospective obligations." (Thome v Alexander & Louisa Calder Found., 70 AD3d 88, 99 [1st Dept 2009] [citations omitted].)
Section 12-10 of the Zoning Resolution governs the transfer of development rights.
"New York City Zoning Resolution Section 12-10 restricts the buildable floor space of a structure and expresses this limitation in floor area ratios. Through a zoning lot merger and a transfer of airspace from one zoning lot to another, the floor area ratios of multiple zoning lots may be combined to overcome this restriction. The Zoning Resolution provides three basic mechanisms for the transfer of development rights in New York City: by zoning lot merger, by certification or special permit, or through the Inclusionary Housing Program. A 'zoning lot merger' is created when two or more existing zoning lots are joined together. Once the lots are merged, the development rights from all merging lots are combined, and may be used anywhere within the zoning lot, subject to 'split-lot' provisions where the merged lot is comprised of lots located within different zoning districts."(BACM 2006-4 Office 41-60, LLC v Flushing Landmark Realty L.L.C, 2014 WL 4054016, *8 [Sup Ct, Queens County 2014] [citation omitted].)
Pursuant to §12-10 of the New York City Zoning Resolution, all parties in interest must consent to the zoning lot merger through the execution of a Declaration of Zoning Lot Restrictions or through a Waiver of Declaration of Zoning Law Restrictions (Macmillan, Inc. v CF Lex Assoc., 56 NY2d 386, 390 [1982].) Specifically,
"[u]nder the New York City Zoning Resolution, as amended in 1977, before a tract of land may be treated as a single zoning lot, a written declaration consenting to the zoning lot merger must be executed by each party in interest, unless such a party has waived its right with respect thereto."(Id.).
Section 12-10(d) of the Zoning Resolution defines the term "zoning lot" to mean "a tract of land, either unsubdivided or consisting of two or more lots of record contiguous for a minimum of ten linear feet, located within a single block, which at the time of filing for a building permit (or if no building permit is required, at the time of filing for a certificate of occupancy) is declared to be a tract of land to be treated as one zoning lot for the purpose of the Resolution."
Section 12-10(d) further states,
"[s]uch declaration shall be made in one written Declaration of Restrictions covering all of such tract of land or in separate written Declarations of Resolutions covering parts of such tract of land and which in the aggregate cover the entire tract of land comprising the zoning lot ... . [E]ach Declaration shall be executed by a party in interest (as defined herein) in the portion of such tract of land covered by such Declaration (excepting any such party as shall have waived the right to execute such Declaration in a written instrument executed
by such party in recordable form and recorded at or prior to the recording of the Declaration."Thus, to accomplish a zoning lot merger, the Zoning Resolution required the written consent of all "parties-in-interest." (Macmillan, Inc. v CF Lex Assoc., supra.).
Section 12-10(f)(4) of the Zoning Resolution defines the term "party in interest" to mean a party possessing interest in the portion of the tract of land covered by the Declaration to include only:
"(W) the fee owners thereof; (X) the holder of any enforceable recorded interest in all or part thereof which would be superior to the Declaration and which would result in such holder obtaining possession of any portion of such tract of land; (Y) the holder of any enforceable recorded interest in all or part thereof which would be adversely affected by the Declaration; and (Z) the holder of any unrecorded interest in all or part thereof which superior to and adversely affected by the Declaration and which would be disclosed by a physical inspection of the portion of the tract of land covered by the Declaration."(Macmillan, Inc. v CF Lex Assoc., supra.) "[T]he phrase 'tract of land' refers only to the underlying surface land and does not embrace buildings on that land. (Id. at 391.)
This court previously determined that Little Cherry is a party-in-interest, as ground lessee of the Premises, and that NYCB, as the holder of the leasehold mortgage, may be adversely affected by a determination that Little Cherry waived its right to object to future zoning lot mergers. (NYSCEF 164, Decision and Order [Mot. Seq. No. 002, 003] at 14, 19.) This court also held that, while "it is clear that the Waiver applies to the 2008 merger of Lots 15 and 76 . . . what is not clear, at this stage, is whether the Waiver, which acknowledged the [ZLDA], waived any objections to future mergers or expansions of Lot 76." (Id. at 15.)
In seeking summary judgment, Little Cherry argues that it neither consented nor waived consent to the proposed merger of Tax Lot 70 to previously merged Tax Lots 15 and 76. Little Cherry asserts that the 2008 Declaration of Waiver of Consent of Zoning Lot Restrictions unambiguously refers only to the previously merged Tax Lots, Lots 15 and 76, and does not constitute a prospective waiver regarding the proposed merger of Tax Lot 70. NYCB essentially adopts the arguments advanced by Little Cherry and insists that it too only waived its right to object to the merger of Tax Lots 76 and 15.
"'A waiver is the intentional relinquishment of a known right with both knowledge of its existence and an intention to relinquish it.'" (City of New York v State of New York, 40 NY2d 659, 669 [2008], quoting Werking v Amity Estates, Inc., 2 NY2d 43, 52 [1956] [internal quotations omitted].) "Waiver requires a 'clear manifestation of an intent by [a party] to relinquish [a] known right.'" (DLJ Mtge Capital Corp. v Fairmont Funding, Ltd., 81 AD3d 563, 564 (1st Dept 2011], quoting Courtney-Clarke v Rizzoli Intl. Publs., 251 AD2d 13 [1st Dept 1998].) The intent to waive a right "must be unmistakably manifested and is not to be inferred from a doubtful or equivocal act" (Echostar Satellite L.L.C. v ESPN, Inc., 79 AD3d 614, 617 [1st Dept 2010] [internal quotation marks and citation omitted].) "[T]he waiver must be explicit, voluntary and made in good faith" (Silber v Silber, 99 NY2d 395, 404 [2003] [citation omitted]), and "should not be lightly presumed." (Echostar Satellite L.L.C. v ESPN, Inc., 79 AD3d at 617 [internal quotation marks and citation omitted].)
To support their positions, Little Cherry and NYCB rely on the language of the 2008 Waivers. They assert that the waivers only apply to and address the merger of Tax Lots 76 and 15. Thus, The Waivers do not apply to any proposed merger of the new single zoning lot with Tax Lot 70 or any other future mergers. Little Cherry also relies on a report from its expert, Howard Goldman, opining, in part,
"[t]hrough the Waiver of Declaration, Little Cherry waived its right to execute the Declaration as to the Merged Zoning Lot —i.e., the specific combination of Lots 15 and 76 in 2008. However, it is absolutely clear — based on a review of the express terms of the governing documents (and consistent with industry standards for such documents) —that Little Cherry did not waive its rights with respect to any future enlargement of the Merged Zoning Lot."(NYSCEF 222, Goldman Report at 2.)
Defendants contend that the ZLDA and 2008 Waivers constitute a binding waiver of objections to future expansions and mergers. Defendants assert that the 2008 Waiver expressly refers to the ZLDA, and the ZLDA unambiguously provides that Tax Lot 76 "may be expanded." Defendants do not dispute that the ZLDA language addressing expansion of Tax Lot 76 is contained in ZLDA's Recital clause but maintain that the Recital clause contains other material terms that are integral to the ZLDA.
Defendants also offer the report of their expert, Ron Mandel, stating, in part,
"[a]s Little Cherry has already waived its rights to execute a Declaration and consented to being a part of a [Merged Zoning Lot], and as the Declaration applied to future enlargements of the [Merged Zoning Lot], Little Cherry's further consent is not necessary to effect that enlargement and Little Cherry need not sign an additional Waiver to effectuate the proposed enlargement of the zoning lot to be comprised of
Tax Lots 15, 70, and 76."(NYSCEF 218, Mandel Report at 4.)
As a matter of law, the Declarations of Waiver signed by Little Cherry and NYCB did not waive their right to object to future mergers with other lots. The Declarations of Waiver are unambiguous and only apply to the merger of Lots 15 and 76. They do not waive Little Cherry and NYCB's right to object to the merger of Lots 15 and 76 with Lot 70. Defendants' reliance on Recital B to create an expansion of the Waivers is misplaced. The Recitals are descriptive and nonbinding. (Hampton Hall Pty Ltd. v Global Funding Servs., Ltd., 82 AD3d 523, 524 [1st Dept 2011] [citation omitted] [holding that whereas clauses are "descriptive and did not bind"]; Grand Manor Health Related Facility, Inc. v Hamilton Equities, Inc., 65 AD3d 445, 447 [1st Dept 2009] [stating that "the recital regarding plaintiff's tenancy is set forth only in the "whereas" clause of the stipulation. Although a statement in a 'whereas' clause may be useful in interpreting an ambiguous operative clause in a contract, it cannot create any right beyond those arising from the operative terms of the document"].)
Accordingly, it is unnecessary for the court to reach the expert reports. Moreover, defendants' expert is not opining on matters beyond the "ken" of the factfinder, but on the ultimate issue of law before the court. (Good Hill Master Fund L.P. v Deutsche Bank AG, 146 AD3d 632 [1st Dept 2017][no expert necessary for determination of whether a credit default swap agreement was breached.) While expert opinions are often helpful on zoning issues, the particular issue here is a matter of contract interpretation for which no expert opinion is needed.
Accordingly, it is
ORDERED that the Little Cherry's motion for summary judgment is granted; and it is further
ADJUDGED and DECLARED that declaring that defendants cannot proceed with the Stern Development, as defined in the Amended Complaint, without the express consent of Little Cherry as a party-in-interest, in its capacity as ground lessee under the Ground Lease; and it is further
ORDERED that defendants are enjoined from (1) pursuing the Stern Development absent Little Cherry's consent and/or absent acknowledgement that the Stern Development cannot be implemented without Little Cherry's consent; (2) proceeding with construction relating in any way to the Stern Development absent Little Cherry's consent; and (3) impairing, in any way, Little Cherry's right to use and occupy the Premises; and it is further
ORDERED that plaintiff New York Community Bank's motion for summary judgment is granted; and it is further
ADJUDGED and DECLARED that defendants cannot proceed with the Stern Development as a matter of law without the express consent of NYCB as a party-in-interest, in its capacity as ground lease mortgagee under the Ground Lease Mortgage; and it is further
ORDERED that defendants are enjoined from (1) pursuing development without New York Community Bank's consent and/or absent acknowledgement that the development cannot be implemented without New York Community Bank's consent; (2) proceeding with construction relating to the development absent New York Community Bank's consent; and (3) impairing or infringing New York Community Bank's rights under the mortgage and ground lease. 4/9/2021
DATE
/s/ _________
ANDREA MASLEY, J.S.C.