Opinion
Index No. 401074/2013 Index No. 401313/2013 Index No. 401438/2013
01-26-2016
ONE PLEASANTVILLE ROAD, LLC, Plaintiff, v. GETTY PROPERTIES CORP., Defendant. 1224 ROUTE 22 LLC, et al., Plaintiffs, v. GETTY PROPERTIES CORP., Defendant. 857 RT 6 MAHOPAC LLC, et al., Plaintiffs, v. GETTY PROPERTIES CORP., Defendant.
DECISION AND ORDER (Second Action) (Third Action) (Fourth Action) HON. ANIL C. SINGH, J.:
Defendant Getty Properties Corp., moves for an order pursuant to CPLR 3212, awarding summary judgment in favor of defendant and dismissing plaintiffs' actions, contending that the claims are precluded by the doctrines of collateral estoppel and/or res judicata. Plaintiffs oppose the motion and cross-move pursuant to CPLR 3025 to amend the complaint to add Montgomery Distributors, LLC as an additional party plaintiff.
I. The First Action
The defendants in the first action, who are all plaintiffs in the present actions, are limited liability corporations ("LLCs") that operated gasoline service stations under a master lease dated November 2, 2000, and sublease agreements with defendant Getty Properties Corp. ("landlord").
The sublease agreements provided in pertinent part as follows:
If upon termination of this sublease or abandonment of the premises by lessee, lessee abandons or leaves any personal property or equipment at the premises, such equipment or property shall be conclusively deemed abandoned and lessor shall have the right, without notice to lessee, to store or otherwise dispose of the property or equipment at lessee's sole cost, expense and risk, without being liable in any respect to lessee.(Sublease Agreement between Getty Petroleum Marketing Inc., and 2 Montauk Highway LLC, dated December 1, 2005, p. 7, paras. 15(a) and 17).
* * *
Lessee shall make no additions, changes, alterations or improvements to the premises without first submitting detailed plans and specifications and obtaining lessor's prior written consent which consent shall not be unreasonably withheld. Any alterations or additions to any buildings or permanent improvements authorized by lessor shall be made only after lessee has obtained all required permits and approved [sic] from all governing municipal authorities and shall be made in a good at lessee's cost and expense, workmanlike manner, in compliance with all applicable laws, rules and regulations and at lessor's option shall upon installation become the property of lessor and lessee shall have no right or interest therein except to continue to use same during the remainder of the term.
Robert Del Gadio, as principal, managed some of the LLCs, and Frank Mascolo, as principal, managed the rest. Del Gadio and Mascolo executed written personal guarantees for the sublease agreements.
On April 30, 2012, after the master lease and subleases were terminated, and after Getty Petroleum Marketing, Inc., filed for bankruptcy, the U.S. Bankruptcy Court issued an order directing the LLCs to vacate the demised premises.
In May 2012, landlord commenced an action against the LLCs, Del Gadio and Mascolo in this court under index number 651762/2012, alleging five causes of action (hereinafter the "first action"). The first cause of action was for ejectment. The second cause of action sought an award of use and occupancy for the fair rental value of the premises based on the LLCs' holdover. The third cause of action was for indemnification pursuant to paragraph 23 of each of the subleases, including an award of attorneys' fees. The fourth and fifth causes of action were against Del Gadio and Mascolo based on personal guarantees. The complaint sought monetary damages; a declaratory judgment; and warrants of eviction.
The verified answers and counterclaims of 31-05 Queens Blvd. LLC, and 857 Rt. 6 Mahopac LLC dated June 18, 2012, alleged that the LLCs spent over $1 million in renovating and refurbishing the stations, upgrading equipment, providing for new equipment, modern technologies, cash registers, lighting, landscaping, bathroom facilities, painting, physical improvements to stores and bays, and canopies. The LLCs asserted counterclaims for: 1) tortious interference with contract; and 2) unfair competition.
On March 18, 2013, the LLCs moved for summary judgment dismissing the complaint. Landlord cross-moved for summary judgment dismissing the LLCs' counterclaims.
Justice Schweitzer dismissed all of the counterclaims in a memorandum opinion dated June 13, 2013. Regarding the counterclaim alleging unfair competition, Justice Schweitzer wrote:
The second and last counterclaim pursuant to which several of the LLCs seek damages is based upon the claim of "unfair competition" because, inter alia, landlord "attempts to profit by the work and money expended" by the five LLCs "without justification or excuse."
To establish a claim for unfair competition, the LLCs must allege and demonstrate that landlord "misappropriated the ... labors, skills, expenditures, or good will [of the defendant] and displayed some element of bad faith in doing so." Abe's Rooms, Inc. v Space Hunters, Inc., 38 AD3d 690, 692 (2d Dept 2007) (emphasis supplied). See also Bongo Apparel, Inc. v Iconix Brand Group, Inc., 18 Misc 3d 1108(A), 2008 WL 41341 at * 13 (Sup. Ct. N.Y. Co.) ("under New York law, the essence of an unfair competition claim is that one may not act in bad faith to misappropriate the skill, expenditures, and labor of another").
This counterclaim fails because the LLCs have not alleged that landlord acted in bad faith. Rinos Foods, Inc. v Vintage Food Corp., 30 AD3d 332 (1st Dept 2006); Camelot Assocs. Corp. v Camelt Design & Dev. LLC, 298 AD2d 799 (3d Dept 2002).
Finally, the LLCs seek to reduce the amount of U&O damages for which they are liable pursuant to RPAPL section 601. That provision states as follows:
"In an action to recover the possession of real property, the plaintiff may recover damages for withholding the property, including the rents and
profits or the value of the use and occupation of the property for a term not exceeding six years; but the damages shall not include the value of the use of any improvements made by the defendant or those under whom he claims. Where permanent improvements have been made in good faith by the defendant or those under whom he claims, while holding, under color of title, adversely to the plaintiff, the value thereof must be allowed to the defendant in reduction of the damages of the plaintiff, but not beyond the amount of those damages."
The LLCs cannot reduce the amounts awarded in the U&O Order and judgment because the purported improvements (Tanks, Improvements and Property) have not "been made ... by defendant," but by non-parties - affiliates of Mr. Del Gadio's. As a result, this statute is inapplicable with respect to Tanks, Improvements and Property at all sites (except with respect to only some improvements allegedly made by defendant 49-25 Van Dam Street LLC).
The order dismissing the counterclaims was affirmed on appeal (Getty Props. Corp. v. Getty Petroleum Mktg. Inc., 115 A.D.3d 616 [1st Dept., 2014]).
II. The Second, Third and Fourth Actions
On June 6, 2012, One Pleasantville Road LLC commenced an action (the "second action") in Nassau County Supreme Court, seeking damages for breach of contract, conversion of property and unjust enrichment.
On June 13, 2012, six different LLCs commenced an action ('the "third action") in Nassau County Supreme Court, seeking money damages based upon the same three causes of action asserted in the second action, plus a cause of action for unfair competition.
On April 23, 2013, five LLCs commenced another action in Nassau County Supreme Court (the "fourth action"). The LLCs in that action asserted the same four causes of action that the LLCs asserted in the third action based on alleged misappropriation of improvements.
All three of the LLCs' action were transferred from Nassau County to New York County based upon forum selection clauses.
In an order dated June 18, 2014, Justice Schweitzer lifted the stay on the actions and consolidated them for purposes of discovery.
Defendants' motions for summary judgment are now pending before the Court.
III. Motion for Sumary Judgment
The standards for summary judgment are well settled. "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 eliminate any material issues of fact from the case" (Winegrad v. New York University Medical Center, 64 N.Y.2d 851, 853 [1985]). Despite the sufficiency of the opposing papers, the failure to make such a showing requires denial of the motion (id.) Summary judgment is a drastic remedy and should only be granted if the moving party has sufficiently established that it is warranted as a matter of law (see Alvarez v. Propect Hosp., 68 N.Y.2d 320, 324 [1986]). Moreover, summary judgment motions should be denied if the opposing party presents admissible evidence establishing that there is a genuine issue of fact remaining (Zuckerman v. City of New York, 49 N.Y.2d 557, 560 [1980]). "In determining whether summary judgment is appropriate, the motion court should draw all reasonable inferences in favor of the nonmoving party and should not pass on issues of credibility" (Garcia v. J.C. Duggan, Inc., 180 A.D.2d 579, 580 [1st Dept., 1992], citing Assaf v. Ropog Cab Corp., 153 A.D.2d 520, 521 [1st Dept., 1989]). The court's role is "issue-finding, rather than issue-determination" (Sillman v. Twentieth Century-Fox Film Corp., 3 N.Y.2d 395, 404 [1957] (internal quotations omitted)).
The First Department has summarized the doctrine of res judicata, or claim preclusion, as follows:
Strong policy considerations favor finality in the resolution of disputes to assure that parties are not vexed by repetitious litigation. These policy considerations are implemented in part through the doctrine of res judicata extending the bar of a former judgment not only to matters actually litigated but also to matters that might have been litigated but were not. The estoppel of a former judgment extends to all matters comprehended and involved in the thing expressly stated and decided, whether they were or were not actually litigated or considered.... It is not necessary to the conclusiveness of a former judgment that issue should have been taken on the precise point controverted in the second action. Whatever is necessarily implied in the former decision, is for the purpose of the estoppel deemed to have been actually decided.... Thus, the inquiry on [a] motion for summary judgment on the ground of res judicata [is] whether the issue raised in [the second action] was necessarily involved and determined in [a prior action].(Walentas v. Johnes, 126 A.D.2d 417, 420-421 [1st Dept., 1987] (internal citations and quotation marks omitted)).
"Under the transactional analysis test adopted by the Court of Appeals, subsequent claims are barred if they are coterminous with the transaction or series of transactions from which the earlier claims arose, meaning that if the facts upon which claims are based are related in time, space, origin, or motivation ... they form a convenient trial unit, and ... their treatment as a unit conforms to the parties' expectations" (Couri v. Westchester Country Club, Inc., 186 A.D.2d 715, 716 [2nd Dept., 1992] (internal quotation marks omitted)). "Under this analysis, a variation in the facts alleged, legal theories asserted, or relief sought in the new pleadings generally will not affect the result, because separately stated causes of action may nevertheless be grounded on the same gravamen of the wrong upon which the action is brought" (id.) (internal quotation marks omitted).
"The doctrine of res judicata may be invoked in instances of claim splitting to prohibit a plaintiff from bringing an action for only part of his claim; the judgment obtained in that action would preclude him from bringing a second action for the residue of the claim" (Sannon-Stamm Associates, Inc. v. Keefe, Bruyette & Woods, 68 A.D.3d 678, 678 [1st Dept., 2009]). It is well settled that once a claim is brought to a final conclusion, all other claims arising out of the same transaction or series of transactions are barred, even if based upon different theories or if seeking different remedies (Stanley v. Smith, 183 A.D.2d 675, 675 [1st Dept., 1992]: see also Jumax Associates v. 350 Cabrini Owners Corp., 110 A.D.3d 622, 623 [1st Dept., 2013]). "Under this analysis, a variation in the facts alleged, legal theories asserted, or relief sought in the new pleadings generally will not affect the result, because separately stated causes of action may nevertheless be grounded on the same gravamen of the wrong upon which the action is brought" (id.) (internal quotation marks omitted).
In the context of a landlord-tenant dispute, where a plaintiff asserts new allegations of defendant's breach of different provisions of a lease during the same time period encompassed by its previous actions against defendants, such allegations are precluded by the doctrine of res judicata as such claims could have been raised in the prior litigation (see, for example, Why Gerard, LLC v. Gramro Entertainment Corp., 94 A.D.3d 1205 [3rd Dept., 2012]).
The verified complaint of 857 Rt. 6 Mahopac LLC ("Mahopac") dated April 23, 2013, in the fourth action illustrates the facts alleged and causes of actions pled by the plaintiff LLCs in the second, third and fourth actions.
Mahopac's verified complaint begins with the introduction, "This is an action to recover money damages representing the fair value of personal property, trade equipment, business inventory and improvements seized and taken over by defendant, which the plaintiffs made to real property leased by the plaintiffs for which the defendant agreed to pay" (NYSCEF Doc. No. 18 under Index No. 401438/2013, p.1, para. 1).
The verified complaint of Mahopac alleges that the LLCs leased the premises from Getty Petroleum Marketing Inc. ("GPMI"), by written agreement dated July 11, 2005, and pursuant to a master lease dated November 2, 2000; GPMI filed for Chapter 11 bankruptcy; the master lease and subleases were terminated pursuant to an order of the Bankruptcy Court as of April 30, 2012; and the landlord requested the LLCs to surrender possession of the demised premises. According to the verified complaint, David Driscoll, the president of defendant, confirmed in writing the responsibility and liability of defendant to pay for inventory, equipment and personal property.
Paragraph 25 of the verified complaint states:
Each of the plaintiffs have surrendered their respective premises to Getty reserving the right to remove trade fixtures, equipment, including the underground storage tanks at several locations, identification signs, price signs, gasoline dispensers, electronic equipment operating its gasoline storage and dispensing system cash registers and inventory, all of which the defendant has refused to allow plaintiffs to remove or pay plaintiffs the fair value thereof.(Verified Complaint, p. 5, para. 25).
The verified complaint asserts four causes of action: 1) breach of contract; 2) conversion; 3) unjust enrichment; and 4) unfair competition. Regarding the fourth cause of action, the verified complaint specifically states, "As a result of the misappropriation by the defendant of the plaintiffs' property for the defendants' commercial advantage, such action constitutes unfair competition for which plaintiff has been damaged" (Complaint, p. 7, par. 36).
A careful comparison of the first, second, third and fourth actions reveals that the gravamen of the wrong is the same in all four actions. All of the actions arise from a landlord-tenant relationship based on the same master lease and sublease agreements. In all four actions, the LLCs sought damages from the landlord based on the allegation that the landlord misappropriated the LLCs' improvements, fixtures, inventory and/or personal property. The LLCs sought a setoff for some of the fixtures in the first action. Subsequently, the LLCs sought damages for fixtures and other improvements in the second, third and fourth actions. In short, the LLCs should have raised all misappropriation claims in the first action.
The LLCs clearly had a full and fair opportunity to litigate any potential claims in the first action. The docket on NYSCEF reflects that more that 1,000 documents were filed in the first action. Hearings were held before a Special Referee regarding the amount of use and occupancy and the amount of attorneys' fees. The parties are identical, and the first action ended with a final judgment on the merits that was affirmed on appeal. Accordingly, this Court finds that plaintiffs' claims are precluded by the doctrine of res judicata.
IV. Cross-Motion to Amend the Complaint
The LLCs cross-move to amend the complaints to add Montgomery Distributors LLC as an additional party plaintiff.
In the first action, Justice Schweitzer issued an order dated October 9, 2014, stating in its entirety as follows:
By letter dated August 28, 2014, defense counsel requested permission to file a new action by an entity named Montgomery Distributors, LLC (Montgomery) for damages arising from the alleged misappropriation of Montgomery's property. The court asked defense counsel to answer certain questions, which he did in a September 18, 2014 letter. Counsel identified the locations of Montgomery's property, identified the proposed defendants as the "owners/operators" of the (the gas stations at) these locations, and explained that: Mr. Del Gadio is the President of an "S Corporation" named Dorchester Properties Ltd., the sole member of Montgomery; and that the locations in the pending Nassau actions are included in the list of locations in the proposed Montgomery action. Plaintiffs' counsel submitted responding letters, and defense counsel submitted a final letter dated October 2nd in response.
After taking these letters into account, the court denies defense counsel's request. A new action by Montgomery will not change the result of plaintiffs' motion for summary judgment. In granting the motion, the court determined that Mr. Del Gadio was not entitled to compensation because the defendant limited liability companies, with the exception of 49-25 Van Dam LLC, did not own the property. The decision was affirmed on appeal.(NYSCEF Doc. No. 881 under index number 651762/2012).
Litigation and claims pressed by Mr. Del Gadio on behalf of purported owners of improvements and related equipment have been rejected by State and Federal courts. At no time was Montgomery referenced as the true owner. Nor was it brought into any of these actions. At this point, considering the lengthy delay, the opportunities (and obligations) to assert a claim on Montgomery's behalf, and final decisions rejecting the LLCs' claims of ownership, principles of laches, waiver, collateral estoppel, undue prejudice, and preservation of judicial resources compel this court to deny defense counsel's request.
Based on Justice Schweitzer's unambiguous order, this Court finds that the motion to add Montgomery Distributors, LLC, as a party defendant is without merit.
Accordingly, it is
ORDERED that defendant's motions for summary judgment are granted, and the complaints are dismissed with cost and disbursements to defendant as taxed by the Clerk; and it is further
ORDERED that the Clerk is directed to enter judgment accordingly.
The foregoing constitutes the decision and order of the court. Date: January 26, 2016
New York, New York
/s/_________
Anil C. Singh