Peach Parking Corp. v. 346 West 40th Street

Full title: PEACH PARKING CORP., Plaintiff, v. 346 WEST 40TH STREET, LLC, KINNEY…

Court: Supreme Court of the State of New York, New York County

Date published: Sep 27, 2005

2005 N.Y. Slip Op. 30056 (N.Y. Sup. Ct. 2005)

Opinion

0103096/2004.

September 27, 2005.

[EDITOR'S NOTE: This case is unpublished as indicated by the issuing court.] WALTER B. TOLUB, J.Page 2

Defendant The Hertz Corporation ("Hertz") moves'to amend its answer to assert counterclaims for partial constructive eviction and fraud in the inducement of its sublease.

The parties to this action dispute the responsibility under various leases to make repairs to the subject premises. Defendant 346 W. 40^th Street LLC leases the premises to Kinney System, Inc. ("Kinney") under a prime lease. Kinney subleases the premises to Peach Parking Corp. Peach subleases the premises to Hertz. Hertz operates the parking garage at the premises.

"It is well settled that leave to amend a pleading shall be freely granted absent prejudice or surprise resulting from the delay" ( Ancrum v. St. Barnabas Hosp., 301 A.D.2d 474, at 475 [1^st Dept. 2003]). However, leave to amend the pleading will be denied where an examination of the proposed pleading establishes that the pleading is palpably insufficient as a matter of law (id.). The amendment must be permitted unless its "lack of merit is clear and free from doubt" {Hawkins v. Genesee Pi. Corp., 139 AD2d 433, 434 [1^st Dept. 1988]).

A motion to amend must be supported by an affidavit of merit and proof that could be considered on a motion for summary judgment (Zaid Theatre Corp. v. Sona Realty Co., 18 AD3d 352, 355 [1^st Dept. 2005]). While Hertz's initial motion did not contain an affidavit of merit, Hertz submitted an affidavit from a party with knowledge of the underlying transaction in reply to the opposition. The court will deem this affidavit proof in admissible form of the content of the proposed amended answer. Thus the court will only address the sufficiency of the proposed amended answer.

Hertz's motion for leave to amend the complaint to assert a cause of action for partial constructive eviction is denied. Partial constructive eviction may be asserted by a tenant as a defense in an action for nonpayment of rent where the tenant abandons only a portion of the demised premises where the acts of the landlord make that portion unusable ( Minjak Co. v. Randolph, 140 AD2d 245 [1^st Dept. 1988]). The claim may only be asserted defensively Elkman v. Southgate Owners Corp., 233 AD2d 104, 105 [1^st Dept. 1996]). Because Hertz does not assert partial constructive eviction as a defense, but rather seeks affirmative relief, the amendment is palpably improper and must be denied.

Hertz's motion for leave to amend the answer to include fraud in the inducement is granted. Hertz alleges that Peach Parking, Kinney and 346 West 40th Street, LLC represented in writing that there were no defaults under the prime lease and first sublease prior to its entering into its sublease. Hertz alleges that these parties knew that their were defaults at the time Hertz entered into the sublease and that therefore it was fraudulently induced to enter into the sublease.

"A fraud claim that merely restates a breach of contract claim may not be maintained" ( Orix Credit Alliance, Inc. v. R.E. Hable Co., 256 AD2d 114, 115 [1^st Dept. 1998]). To establish a claim for fraud separate from an agreement, a party must allege misrepresentations of a present fact that was collateral to the agreement and that induced the defrauded party to enter into the agreement (id.).

Plaintiff and co-defendants represented to Hertz in writing that there were no known defaults under the prior agreements relating to the subject premises. This constitutes a representation of a present fact collateral to Hertz's sublease. Hertz further alleges, and it is not without logic, that it relied on the representation that there were no defaults on the underlying leases when it agreed to its sublease. The parties in opposition to the motion have not established that this counterclaim is patently without merit. Therefore Hertz's motion to amend its answer to assert a counterclaim for fraud in the inducement must be granted. Accordingly, it is

ORDERED that The Hertz Corporation `s motion to amend its answer to assert a counterclaim for partial constructive eviction is denied; and it is further

ORDERED that The Hertz Corporation `s motion to amend its answer to assert a counterclaim for fraud in the inducement is granted; and it is further

ORDERED that The Hertz Corporation shall serve an amended answer in compliance with this decision and order within 30 days of entry of this order.

This memorandum opinion constitutes the decision and order of the Court.