Opinion
2011-11-15
The NATIONAL BLACK THEATRE WORKSHOP INCORPORATED, Plaintiff–Respondent,v.NUBIAN PROPERTIES LLC, et al., Defendants–Respondents–Appellants,Harlem Apple, LLC, Defendant–Appellant–Respondent.
Olshan Grundman Frome Rosenzweig & Wolosky LLP, New York (Mason A. Barney of counsel), for appellant-respondent.Reitler Kailas & Rosenblatt LLC, New York (Craig J. Albert of counsel), for respondents-appellants.Herrick, Feinstein LLP, New York (Raymond N. Hannigan of counsel), for respondent.
Olshan Grundman Frome Rosenzweig & Wolosky LLP, New York (Mason A. Barney of counsel), for appellant-respondent.Reitler Kailas & Rosenblatt LLC, New York (Craig J. Albert of counsel), for respondents-appellants.Herrick, Feinstein LLP, New York (Raymond N. Hannigan of counsel), for respondent.
Judgment, Supreme Court, New York County (Walter B. Tolub, J.), entered August 31, 2009, declaring the sublease between defendants Nubian Properties LLC and Harlem Apple, LLC void, and bringing up for review an order, same court and Justice, entered July 20, 2009, which
granted plaintiff's motion for summary judgment declaring the sublease void, and so declared, implicitly denied so much of Harlem Apple's motion for summary judgment as sought a declaration that the sublease is valid and enforceable and denied so much of Harlem Apple's motion as sought summary judgment on its cross claims for breach of the sublease and indemnification against Nubian Properties and Nubian Realty LLC, unanimously reversed, on the law, without costs, the judgment vacated, Nubian Realty added as a defendant pursuant to CPLR 305, 1003, and 3019(b) and (d), plaintiff's motion denied, Harlem Apple's motion granted, and it is declared that the sublease is valid and enforceable. Appeal from the aforesaid order unanimously dismissed, without costs, as subsumed in the appeal from the judgment.
The motion court correctly found that section 8.8.2 of the operating agreement between plaintiff and Nubian Properties prohibited the latter from subletting to Harlem Apple the portion of the premises it had leased from Nubian Realty, LLC, the company created by the operating agreement for the sole purposes of acquiring, leasing, managing and selling real property (the Company). Nevertheless, plaintiff may not void the sublease, because Nubian Properties, assuming it had no actual authority, had apparent authority to enter into the sublease, and Harlem Apple's reliance on that authority was reasonable ( see Hallock v. State of New York, 64 N.Y.2d 224, 231–232, 485 N.Y.S.2d 510, 474 N.E.2d 1178 [1984]; Goldston v. Bandwidth Tech. Corp., 52 A.D.3d 360, 362–363, 859 N.Y.S.2d 651 [2008], lv. denied 14 N.Y.3d 703, 2010 WL 547639 [2010]; 1230 Park Assoc., LLC v. Northern Source, LLC, 48 A.D.3d 355, 852 N.Y.S.2d 92 [2008]; Limited Liability Company Law § 412[b][2] ).
Before entering into the sublease, Harlem Apple learned the uncontested facts that Nubian Properties was the general manager of the Company and that the Company was the owner of the subject premises. Harlem Apple also reviewed the overlease between the Company and Nubian Properties, which permitted Nubian Properties to sublease the premises, and received warranties from Nubian Properties, on its own behalf and as general manager of the Company, that either no consents were needed to sublease the premises or that all such consents had been obtained. That Nubian Properties executed the overlease both as lessor, on behalf of the Company, and as lessee, on its own behalf, is not dispositive. It is uncontested that Nubian Properties was the general manager of the Company, with the sole authority to enter into leases on behalf of the Company. Thus, it was the only entity with the authority to execute the overlease as both lessor and lessee. Nor, contrary to plaintiff's contention, should the overlease have put Harlem Apple on notice that further inquiry was required. Nubian Properties appeared to be carrying on the normal business of the Company, as its general manager, with respect to the leasing of property, and had warranted on behalf of itself and the Company that it had the authority to sublease these premises. Harlem Apple was not required to review the operating agreement before it could reasonably rely on Nubian Properties' authority ( see Federal Ins. Co. v. Diamond Kamvakis & Co., 144 A.D.2d 42, 46–47, 536 N.Y.S.2d 760 [1989], lv. denied 74 N.Y.2d 604, 543 N.Y.S.2d 397, 541 N.E.2d 426 [1989] ).
Moreover, in the time preceding the execution of the sublease, Nubian Properties communicated to plaintiff its intention to sublease the premises to Harlem Apple, including by providing plaintiff with a copy of a draft of the sublease. Yet plaintiff
made no effort to disabuse Harlem Apple of its understanding that Nubian Properties had the authority to enter into the sublease ( see Coopers & Lybrand v. Arol Dev. Corp., 210 A.D.2d 181, 182, 621 N.Y.S.2d 24 [1994], lv. denied 85 N.Y.2d 804, 626 N.Y.S.2d 756, 650 N.E.2d 415 [1995]; Merrell–Benco Agency, LLC v. HSBC Bank USA, 20 A.D.3d 605, 608, 799 N.Y.S.2d 590 [2005], lv. dismissed in part, denied in part 6 N.Y.3d 742, 810 N.Y.S.2d 411, 843 N.E.2d 1152 [2005] ).
In view of the foregoing, Harlem Apple is entitled to summary judgment on its cross claims for breach of contract and indemnification under the sublease. It is uncontested that, before terminating the lease, and although there was no temporary restraining order in effect, Nubian Properties and the Company continued to deny Harlem Apple access to the premises, despite Harlem Apple's satisfaction of all conditions precedent, which Nubian Properties conceded.
The parties appear to concede that the court improperly dismissed the Company as a defendant. In any event, the record supports the conclusion, and no party argues to the contrary, that Harlem Apple satisfied the provisions of CPLR 305, 1003 and 3019(b) and (d), entitling it to bring the Company into the action as a defendant for the purpose of asserting its cross claims against the Company.