HOME CONTRACTS, DOWN PAYMENTS IN ESCROW AND INDEMNIFICATION

Another dispute over a down payment.

Licht v. Rosenberg, Date filed: 2022-03-11, Court: Supreme Court, New York, Judge: Justice Louis Nock,  Case Number: 000624-20/HE:

"DECISION + ORDER ON MOTION Upon the foregoing documents, it is ordered that plaintiffs’ motion for summary judgment is determined as follows. BACKGROUND

Defendants DANIEL B. ROSENBERG and IRINA ROSENBERG a/k/a IRINA GABICHVADE (the “Sellers”), are the owners of 154 shares of 40 E. 9th St. Owners Corp. and the proprietary lease associated with Unit 5A (the “Unit”) of the property located at 40 East 9th Street, New York, New York 10003 (the “Premises”). On or about February 28, 2020, the Plaintiffs, LAURIE LICHT, MARK SMITH, and ANDREW SMITH (the “Purchasers”), and Sellers entered into a contract for the purchase and sale of the Unit of the Cooperative located at 40 East 96th Street, New York, New York 10003 (the “Contract” [NYSCEF Doc. No. 2]). Pursuant to the Contract, Purchasers delivered $175,000.00 as a contract deposit (the “Contract Deposit”), which was paid to Seller’s Attorney, as Escrowee, by wire transfer on February 28, 2020. Purchasers tendered $175,000.00 for the Contract Deposit, and Escrowee confirmed receipt of the Contract Deposit into Seller Attorney’s escrow account at Citibank, N.A., (the “Escrow Account”) (see, NYSCEF Doc. No. 3)

Paragraph 6.1 of the Contract of Sale provides that the “sale is subject to the unconditional consent of the Corporation.” Purchasers prepared and submitted a comprehensive board application (the “Board Application”) (NYSCEF Doc. No. 4) and, as requested, attended an interview before the Corporation’s Board of Directors, which was held on May 11, 2020, (the “Board Interview”). The Contract of Sale and Board Application are entirely consistent, with both naming all three Plaintiffs herein as the sole purchasers and applicants.

On May 20, 2020, the Corporation issued a decision on the Purchasers’ Board Application which was communicated to Purchasers’ real estate agent by e-mail from an employee at the managing agent’s office, Hoffman Management, named Gordon Noah (NYSCEF Doc. No. 5). The e-mail stated that “the Board will approve the application subject to the son [Andrew Smith] as the sole holder of shares with the parents [Laurie Licht and Mark Smith] as guarantors. Please let me know if they wish to move forward.” Upon receipt of the such conditional approval issued by the Corporation’s Board of Directors, the Purchasers elected to terminate the Contract in accordance with paragraph 6.3 of the Contract of Sale and requested the return of the Contract Deposit (see, NYSCEF Doc. No. 6). Per paragraph 6.3 of the Contract of Sale: “Either Party, after learning of the Corporation’s decision, shall promptly advise the other Party thereof…. If such consent is refused at any time, either Party may cancel this Contract by Notice. In the event of cancellation pursuant to this

6.3, the Escrowee shall refund the Contract Deposit to Purchaser.” Purchasers have demanded the return of their Contract Deposit, which Sellers and Escrowee have refused to do.

This action was commenced by summons and complaint filed June 25, 2020, asserting causes of action against Sellers for breach of the Contract of Sale and for related declaratory relief, and causes of action against Escrowee — defendant Law Offices of Nathaniel Muller, P.C. — for related declaratory relief. All causes of action are imbued with the purpose of obtaining a return of the Contract Deposit in accordance with the Contract of Sale on account of the absence of unconditional approval to the sale by the Cooperative Corporation’s Board.

An answer with counterclaims was filed by Sellers on August 4, 2020 (NYSCEF Doc. No. 11). The counterclaims seek, in effect, a declaration that they are entitled to receive and keep the Contract Deposit, and for $65,000 in attorneys’ fees, and for punitive damages in an amount of $50,000.

Escrowee filed an answer on August 4, 2020 (NYSCEF Doc. No. 16), which seeks an order allowing it to deposit the Contract Deposit with the County Clerk and asserting a counterclaim for legal fees.

Purchasers now move for summary judgment on the complaint. The motion is opposed by Sellers. Escrowee opposes the motion only to the extent that it seeks interest on the escrowed Contract Deposit.

DISCUSSION

“To obtain summary judgment it is necessary that the movant establish his cause or defense sufficiently to warrant the court as a matter of law in directing judgment; in is favor, and he must do so by tender of evidentiary proof in admissible form” (Zuckerman v. City of N.Y., 49 NY2d 557, 562 [1980]). To defeat summary judgment, “the opposing party must assemble and lay bare its affirmative proof to demonstrate that genuine triable issues of fact exist.” (Kornfeld v. NRX Technologies, Inc., 93 AD2d 772, 773 [1st Dept 1983], affd 62 NY2d 686 [1984]). “Similarly, the issues must be shown to be real, not feigned since a sham or frivolous issue will not preclude summary relief” (id.). Mere conclusions or unsubstantiated allegations will not defeat the moving party’s right to summary judgment (Zuckerman, supra).

Summary judgment is appropriate here because there is no credible dispute that the Corporation’s approval was expressly conditional upon the use of a guarantor. Paragraph 6.1 of the Contract clearly states that “[t]his sale is subject to the unconditional consent of the Corporation.” Paragraph 6.3 further provides that: “Either Party, after learning of the Corporation’s decision, shall promptly advise the other Party thereof. If the corporation has not made a decision on or before the Scheduled closing date, the Closing shall be adjourned for 30 business days for the purpose of obtaining such consent. If such consent is not given by such adjourned date, either Party may cancel this contract by Notice, provided that the Corporation’s consent is not issued before such Notice of cancellation is given. If such consent is refused at any time, either Party may cancel this contract by Notice. In the event of cancellations pursuant to this

6.3, the Escrowee shall refund the contract Deposit to Purchaser.” (Id.)

A contract is to be construed in accordance with the parties’ intent, which is generally discerned from the four comers of the document itself. Consequently, a written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms (Obstfeld v. Thermo Niton Analyzers, LLC, 112 AD3d 895, 897 [2d Dept 2013] [citing MHR Capital Partners LP v. Presstek Inc., 12 NY3d 640, 645 [2009]).

Binding First Department precedent instructs that a contract for the sale of a cooperative apartment may be terminated upon the co-op board’s conditional approval of the sale (see, e.g., Lovelace v. Krauss, 60 AD3d 579, 579-80 [1st Dept] [affirming motion court's declaration that contract of sale had been cancelled and directing escrowee to return plaintiff's deposit where only a conditional approval was granted to the purchaser of a co-op apartment], lv denied 12 NY3d 714 [2009]). The Appellate Division noted that “[c]o-op board approval was required as a condition precedent to defendants’ sale of these premises to plaintiff,” and “where there was still an area of disagreement to be resolved, there was no unconditional approval of the Board” (id.). As is the case here, “[t]he plain language of the contract permitted either party to cancel if unconditional approval was not obtained” (id.; see also, Albert & Kimmel v. Herman, 276 AD2d 413, 413-14 [1st Dept 2000] (affirming return of escrowed money to purchaser where buyer declined to meet conditions requested by co-op board]).

Here, the Board voted and granted conditional approval, requiring a personal guarantor of plaintiff Andrew Smith’s obligations (see, NYSCEF Doc. No. 5), and were clearly material. That condition to Board approval constituted a refusal to provide “unconditional consent” pursuant to section 6.1 of the Contract of Sale, giving rise to the plaintiffs’ unequivocal right to terminate the Contract of Sale “at any time” (id.). The plaintiffs promptly provided formal notice of cancellation to Sellers and Escrowee (NYSCEF Doc. No. 23). Consistent with the plain terms of the Contract of Sale, the plaintiffs properly exercised their right to terminate and are entitled to return of their Contract Deposit (see also, Moran v. Erk, 11 NY3d 452, 456 [2008] ["We do not ordinarily read implied limitations into unambiguously worded contractual provisions designed to protect contracting parties]).

Sellers, in opposition, point to the Board Application, which contains an answer by Purchasers to question 7 thereof, asking whether any part of the purchase price will be borrowed. Said plaintiff answered “Yes, a $300,000 mortgage will be taken by Andrew Smith. The remaining $1,450,000 will be paid in cash from Andrew Smith’s bank accounts.” (NYSCEF Doc. No. 21.) Sellers also point to a letter from Andrew Smith to the Board, dated April 5, 2020, stating that he would “be responsible for the mortgage and maintenance payments….” (NYSCEF Doc. No. 39.) However, the Contract of Sale does not contain any term of sale, or condition of sale, requiring a guaranty by any of the Purchasers. Nor is the Board Application or any other extrinsic document referenced in, or incorporated into, the Contract of Sale. Where the Contract of Sale found it useful or necessary to make extrinsic reference, or to incorporate a separate document, it was perfectly able to do so as it did concerning its Riders (contained in NYSCEF Doc. No. 2) which are “Attached to and Forming a Part of Contract of Sale” (the “Purchaser’s Rider”) and which make it clear that in the event of “any inconsistency or conflict between the terms of the printed portion of the Contract, Seller’s Rider, and this Rider (collectively referred to as this ‘Contract’), the terms and provisions of this Rider shall govern and be binding” (id.). Considering that all three plaintiffs are designated in the Contract of Sale, and in all other relevant documents (i.e., both Riders, and the Board Application), as the Purchaser, and, indisputably, all three plaintiffs would be the shareholders of the Cooperative shares underlying the Contract of Sale (see, Contract of Sale and Board Application), the unambiguous clause in the Contract of Sale making “[t]his sale subject to the unconditional consent of the Corporation” (Contract of Sale

6.1) applied equally to all three plaintiffs. The Corporation’s May 2020 insistence that the deal be different than that set forth in the February 2020 Contract of Sale (to wit: “the Board will approve the application subject to the son as the sole shareholder of shares with the parents as guarantors”) is, most decidedly, a condition which is inconsistent with the Contract of Sale. Purchasers had every right to cancel the Contract of Sale at that point and seek restitution of their Contract Deposit. Therefore, plaintiffs are entitled to summary judgment on their complaint, seeking restitution out of escrow of their Contract Deposit, to the extent set forth hereinbelow, and defendants’ counterclaims are dismissed.

As for plaintiff’s request for a sanction against defendants, it is denied. Although this court has recognized plaintiffs’ substantive position in this lawsuit to be imbued with merit, defendants’ point of view in opposition does not rise to the level of “frivolous conduct” (22 NYCRR §130-1.1). Escrowee’s opposition to the motion for summary judgment is limited to that part of the motion that seeks interest on the Contract Deposit. Escrowee has also asked for an order requiring plaintiffs to cover its legal costs in defending this matter. The Contract of Sale, at paragraph 1.24, specifically states that the parties agree that the contract deposit will be held in a non-interest bearing IOLA account. Therefore, no interest is due on the Contract Deposit.

Escrowee’s counterclaim seeks an award of the reasonable value of its efforts expended in defending plaintiffs’ claim against it for release from escrow, to plaintiffs, of the Contract Deposit. That counterclaim finds its grounding in a thoroughly unambiguous provision in the Contract of Sale stating:

Escrowee will serve without compensation. Escrowee is acting solely as a stakeholder at the Parties’ request and for their convenience. Escrowee shall not be liable to either Party for any act or omission unless it involves bad faith, willful disregard of this Contract or gross negligence. In the event of any dispute, Seller and Purchaser shall jointly and severally (with right of contribution) defend (by attorneys elected by Escrowee), indemnify and hold harmless Escrowee from and against any claim, judgment, loss, liability, cost and expenses incurred in connection with the performance of Escrowee’s acts or omissions not involving bad faith, willful disregard of this Contract or gross negligence. This indemnity includes, without limitation, reasonable attorneys’ fees either paid to retain attorneys or representing the fair value of legal services rendered by Escrowee to itself and disbursements, court costs and litigation expenses.

(NYSCEF Doc. No. 2

27.3 [emphasis added].)

The Appellate Division, First Department, in the highly instructive case of Breed, Abbott & Morgan v. Hulko (139 AD2d 71 [1st Dept 1988], affirmed 74 NY2d 686 [1989]), dealt with the question whether escrowee indemnification clauses in real estate sales contracts were exclusively limited to third party actions against the escrowee or, as in the present case, an action brought by one of the parties (in this case, the Purchasers). After noting an argument that such a clause only “relates to actions by third parties, and that somehow a different rule applies where the promise to indemnify is sought to be applied to recover legal expenses incurred in defending against an action brought by the promisor itself[,]” that court stated that “ [n]o plausible reason for such a distinction has been presented. Indeed, it is a curious notion that a broad indemnification clause will be interpreted to embrace counsel fees…where the action is brought by third parties, but will not be so interpreted where the action is brought by the promisor.” (Id., at 74-75.)

According to the foregoing appellate sentiment, Escrowee’s counterclaim herein, seeking an award from plaintiffs of the reasonable value of its efforts in defending this action, possesses theoretical merit. However, the analysis does not end there. The Appellate Division in that case made clear that the party which should bear the responsibility of such an indemnification clause must “sens[ibly be]” the unsuccessful party in the action (id., at 76).1 Naturally, in view of the within disposition granting Purchasers’ motion for summary judgment and dismissing Sellers’ counterclaims, Purchasers should not be the parties responsible for the escrow indemnification clause pertinent to this case. Therefore, Escrowee’s counterclaim seeking the reasonable value of its efforts herein from Purchasers is dismissed.2

Accordingly, it is

ORDERED and ADJUDGED that plaintiffs motion for summary judgment on their complaint is granted to the extent that defendant Office of Nathaniel Muller, P.C., shall release from escrow, to counsel for the plaintiffs, the sum of $175,000.00 escrowed in connection with the contract of sale that is the subject of this action, no later than ten business days from the date of filing hereof; and it is further

ORDERED that the part of plaintiffs’ motion seeking a sanction is denied; and it is further

ORDERED that the defendants’ counterclaims are dismissed.

This will constitute the decision and order of the court.

CHECK ONE: X     CASE DISPOSED NON-FINAL DISPOSITION GRANTED DENIED X           GRANTED IN PART OTHER

APPLICATION: SETTLE ORDER SUBMIT ORDER

CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT REFERENCE

Dated: April 12, 2022

Footnotes

1. The appellate articulation was: "We should have supposed that common sense and familiar, universally accepted indemnification principles would make it undisputably clear that as between the two parties to the transaction, the ultimate responsibility for indemnification of litigation expenses would rest on the party whose unjustified lawsuit gave rise to those expenses." (139 AD2d at 77.) As noted earlier in this decision, this court has not found defendants' unsuccessful position to rise to the level of "frivolous conduct" within the meaning of the sanction regulation (22 NYCRR §130-1.1). Thus, this court's application of the foregoing appellate articulation to the outcome of this matter, in which defendants did not ultimately succeed, should not be construed to imply anything beyond the ultimate finding herein that defendants' position was incorrect.

2. The court takes note of the fact that Escrowee has not asserted a cross-claim against Sellers --- its co-defendants --- in this action. Thus, nothing has been presented by Escrowee to this court which could possibly result in an order granting its requested fee relief as against Sellers."

EXEMPTING PARTY FOR HIS OWN NEGLIGENCE PROHIBITION HAS AN EXCEPTION

TITUMIR v. BARKER AVE. ESTATES LLC, 2022 NY Slip Op 50073 - Bronx Supreme Court 2022:

"In this action for, inter alia, breach of a non-delegable duty, defendants move seeking an order granting them summary judgment. Saliently, defendants aver that the lease between the parties precludes liability for the alleged water leak in the complaint, such that summary judgment is warranted. Plaintiff opposes the instant motion, procedurally asserting that discovery is not yet complete such that the instant motion is premature. Substantively, plaintiff contends that the portion of the lease upon which defendants rely does not bar liability against defendants, because to the extent it bars liability for defendants' negligence, General Obligations Law § 5-321 renders the relevant portion of the lease unenforceable.

For the reasons that follow hereinafter, defendants' motion is granted.

The instant action is for money damages arising from the failure to maintain a premises. The complaint alleges that the plaintiff and defendants' predecessor in both ownership and interest entered into a commercial lease for the premises located at Store No.7DE, 671 Allerton Avenue, Bronx NY 10467 (Store #7DE), whose term was from December 1, 2007 to November 30, 2022. Plaintiff was a merchant of discount hardware, discount housewares, a paint supplier and a seller of household goods, who would operate a store at Store #7DE. On July 24, 2017, water began to leak from apartments above Store #7DE, causing the store's ceiling to collapse and causing water to enter the store. The water flooded the store causing damage to plaintiff's goods, merchandise, the floor, the electrical wiring, the pipes and the light fixtures. As a result, plaintiff was forced to close the store, causing a loss of business. Plaintiff notified defendants, who after a protracted period of time attempted to fix the leak. Despite the repair, water nonetheless continued to leak into the store. Based on the foregoing plaintiff alleges that defendants failed to comply with their non-delegable duty to maintain and make repairs within Store #7DE (First Cause of Action). Plaintiff also alleges that based on the foregoing, despite having to close the store, he nevertheless continued to pay rent such that defendants breached the implied warranty of quiet enjoyment (Second Cause of Action). Lastly, plaintiff alleges that despite notifying defendants of the water condition within Store #7DE, defendants nonetheless failed to repair the same and then when they made repairs, they failed to ameliorate the condition. As such, plaintiff alleges that defendants were negligent (Third Cause of Action).

Standard of Review

The proponent of a motion for summary judgment carries the initial burden of tendering sufficient admissible evidence to demonstrate the absence of a material issue of fact as a matter of law (Alvarez v Prospect Hospital, 68 NY2d 320, 324 [1986]; Zuckerman v City of New York, 49 NY2d 557, 562 [1980]). Thus, a defendant seeking summary judgment must establish prima facie entitlement to such relief by affirmatively demonstrating, with evidence, the merits of the claim or defense, and not merely by pointing to gaps in plaintiff's proof (Mondello v DiStefano, 16 AD3d 637, 638 [2d Dept 2005]; Peskin v New York City Transit Authority, 304 AD2d 634, 634 [2d Dept 2003]). There is no requirement that the proof be submitted by affidavit, but rather that all evidence proffered be in admissible form (Muniz v Bacchus, 282 AD2d 387, 388 [1st Dept 2001], revd on other grounds Ortiz v City of New York, 67 AD3d 21, 25 [1st Dept 2009]). Notably, the court can consider otherwise inadmissible evidence, when the opponent fails to object to its admissibility and instead relies on the same (Niagara Frontier Tr. Metro Sys. v County of Erie, 212 AD2d 1027, 1028 [4th Dept 1995]).

Once movant meets his initial burden on summary judgment, the burden shifts to the opponent who must then produce sufficient evidence, generally also in admissible form, to establish the existence of a triable issue of fact (Zuckerman at 562). It is worth noting, however, that while the movant's burden to proffer evidence in admissible form is absolute, the opponent's burden is not. As noted by the Court of Appeals, [t]o obtain summary judgment it is necessary that the movant establish his cause of action or defense `sufficiently to warrant the court as a matter of law in directing summary judgment' in his favor, and he must do so by the tender of evidentiary proof in admissible form. On the other hand, to defeat a motion for summary judgment the opposing party must `show facts sufficient to require a trial of any issue of fact.' Normally if the opponent is to succeed in defeating a summary judgment motion, he too, must make his showing by producing evidentiary proof in admissible form. The rule with respect to defeating a motion for summary judgment, however, is more flexible, for the opposing party, as contrasted with the movant, may be permitted to demonstrate acceptable excuse for his failure to meet strict requirement of tender in admissible form. Whether the excuse offered will be acceptable must depend on the circumstances in the particular case (Friends of Animals v Associated Fur Manufacturers, Inc., 46 NY2d 1065, 1067-1068 [1979] [internal citations omitted]). Accordingly, generally, if the opponent of a motion for summary judgment seeks to have the court consider inadmissible evidence, he must proffer an excuse for failing to submit evidence in admissible form (Johnson v Phillips, 261 AD2d 269, 270 [1st Dept 1999]).

When deciding a summary judgment motion the role of the Court is to make determinations as to the existence of bonafide issues of fact and not to delve into or resolve issues of credibility. As the Court stated in Knepka v Talman (278 AD2d 811, 811 [4th Dept 2000]), [s]upreme Court erred in resolving issues of credibility in granting defendants' motion for summary judgment dismissing the complaint. Any inconsistencies between the deposition testimony of plaintiffs and their affidavits submitted in opposition to the motion present issues for trial(see also Yaziciyan v Blancato, 267 AD2d 152, 152 [1st Dept 1999]; Perez v Bronx Park Associates, 285 AD2d 402, 404 [1st Dept 2001]). Accordingly, the Court's function when determining a motion for summary judgment is issue finding, not issue determination (Sillman v Twentieth Century Fox Film Corp., 3 NY2d 395, 404 [1957]). Lastly, because summary judgment is such a drastic remedy, it should never be granted when there is any doubt as to the existence of a triable issue of fact (Rotuba Extruders v Ceppos, 46 NY2d 223, 231 [1978]). When the existence of an issue of fact is even debatable, summary judgment should be denied (Stone v Goodson, 8 NY2d 8, 12 [1960]).

Contract Law and Leases

It has long been held that absent a violation of law or some transgression of public policy, people are free to enter into contracts, making whatever agreement they wish, no matter how unwise they may seem to others (Rowe v Great Atlantic & Pacific Tea Company, Inc., 46 NY2d 62, 67-68 [1978]). Consequently, when a contract dispute arises, it is the court's role to enforce the agreement rather than reform it (Grace v Nappa, 46 NY2d 560, 565 [1979]). In order to enforce the agreement, the court must construe it in accordance with the intent of the parties, the best evidence of which being the very contract itself and the terms contained therein (Greenfield v Philles Records, Inc., 98 NY2d 562, 569 [2002]). It is well settled that "when the parties set down their agreement in a clear, complete document, their writing should be enforced according to its terms" (Vermont Teddy Bear Co., Inc. v 583 Madison Realty Company, 1 NY3d 470, 475 [2004] [internal quotation marks omitted]). Moreover, "a written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms" (Greenfield at 569). Accordingly, courts should refrain from interpreting agreements in a manner which implies something not specifically included by the parties, and courts may not by construction add or excise terms, nor distort the meaning of those used and thereby make a new contract for the parties under the guise of interpreting the writing (Vermont Teddy Bear Co., Inc. at 475). This approach serves to preserve "stability to commercial transactions by safeguarding against fraudulent claims, perjury, death of witnesses [and] infirmity of memory" (Wallace v 600 Partners Co., 86 NY2d 543, 548 [1995] [internal quotation marks omitted]).

The proscription against judicial rewriting of contracts is particularly important in real property transactions, where commercial certainty is paramount, and where the agreement was negotiated at arm's length between sophisticated, counseled business people (Vermont Teddy Bear Co., Inc. at 475). Specifically, in real estate transactions, parties to the sale of real property, like signatories of any agreement, are free to tailor their contract to meet their particular needs and to include or exclude those provisions which they choose. Absent some indicia of fraud or other circumstances warranting equitable intervention, it is the duty of a court to enforce rather than reform the bargain struck (Grace v Nappa, 46 NY2d 560, 565 [1979]).

Leases are nothing more than contracts and are thus subject to the rules of contract interpretation, namely, that the intent of the parties is to be given paramount consideration, which intent is to be gleaned from the four corners of the agreement, and that of course, the court may not rewrite the contract for the parties under the guise of construction, nor may it construe the language in such a way as would distort the contract's apparent meaning (Tantleff v Truscelli, 110 AD2d 240, 244 [2d Dept 1985]).

In the absence of fraud or other wrongful act, a party who signs a written contract is presumed to know and have assented to the contents therein (Pimpinello v Swift & Co., 253 NY 159, 162 [1930]; Metzger v Aetna Ins. Co., 227 NY 411, 416 [1920]; Renee Knitwear Corp. v ADT Sec. Sys., 277 AD2d 215, 216 [2d Dept 2000]; Barclays Bank of New York, N.A. v Sokol, 128 AD2d 492, 493 [2d Dept 1987]; Slater v Fid. & Cas. Co. of NY, 277 AD 79, 81 [1st Dept 1950]). In discussing this long-standing rule the court in Metzger stated that [i]t has often been held that when a party to a written contract accepts it as a contract he is bound by the stipulations and conditions expressed in it whether he reads them or not. Ignorance through negligence or inexcusable trustfulness will not relieve a party from his contract obligations. He who signs or accepts a written contract, in the absence of fraud or other wrongful act on the part of another contracting party, is conclusively presumed to know its contents and to assent to them and there can be no evidence for the jury as to his understanding of its terms. This rule is as applicable to insurance contracts as to contracts of any kind. (Metzger at 416 [internal citations omitted]).

Generally, pursuant to GOL § 5-321, a provision in a lease seeking to exempt a party for his own negligence is void and unenforceable as against public policy (Great N. Ins. Co. v Interior Const. Corp., 18 AD3d 371, 372 [1st Dept 2005], affd, 7 NY3d 412 [2006]; Tormey v City of New York, 302 AD2d 277, 278 [1st Dept 2003]; Gibson v Bally Total Fitness Corporation, 1 AD3d 477, 479 [2d Dept 2003]; Radius, Ltd. v Newhouse, 213 AD2d 614, 615 [2d Dept 1995]). To be sure, GOL § 5-321 states that

[e]very covenant, agreement or understanding in or in connection with or collateral to any lease of real property exempting the lessor from liability for damages for injuries to person or property caused by or resulting from the negligence of the lessor, his agents, servants or employees, in the operation or maintenance of the demised premises or the real property containing the demised premises shall be deemed to be void as against public policy and wholly unenforceable.

However, case law has carved an exception to the prohibition described in the GOL §5-321. Specifically, it is well settled that an indemnification agreement in a lease shall be enforceable even if the lessor seeks to have the lessee indemnify him for his own negligence when the lease is the product of "sophisticated parties negotiating at arm's length," and "have agreed to allocate the risk of liability to third parties between themselves, essentially through the employment of insurance" (Great N. Ins. Co. at 372; see Hogeland v Sibley, Lindsay & Curr Co., 42 NY2d 153, 161 [1977]. In explaining why GOL §5-321 does not apply in the foregoing circumstances, the court in Hogeland stated that [t]he legislative history and the statute's express invalidation of any agreement `exempting the lessor from liability for damages for injuries resulting from the negligence of the lessor' strongly suggests that is was directed primarily to exculpatory clauses in leases whereby lessors are excused from direct liability for otherwise valid claims which might be brought against them by others. It and several parallel provisions prohibit agreements which free landlords (or others in comparable relationships) from all responsibility to a tenant (or others) for negligence; the former are thus compelled at their own peril to retain the incentive to act prudently. It is against this background of declared purpose that the indemnification clauses before us must be considered. So analyzed, Berenson is not exempting itself from liability to the victim for its own negligence. Rather, the parties are allocating the risk of liability to third parties between themselves, essentially through the employment of insurance. Courts do not, as a general matter, look unfavorably on agreements which, by requiring parties to carry insurance, afford protection to the public (internal citations omitted)(Hogeland at 160-161). Thus, in both Hogeland and Great N. Ins. Co., the lessees were obligated to indemnify the lessors, even though they had been found negligent Hogeland at 158; Great N. Ins. Co. at 372).

Discussion

Defendants' motion seeking summary judgment is granted. Significantly, on this record, defendants establish that the lease and rider which bind the parties contains a provision which exempt defendants from any liability arising from the water leak alleged in the complaint. The record also establishes that insofar as this is a commercial tenancy, the lease falls within the ambit of the exception to the rule prescribed by GOL § 5-321, which renders unenforceable a lease provision such as the one in the lease and rider between the parties, which exempts defendants from all liability, which necessarily includes their negligent acts.

In support of the instant motion, defendants submit an affidavit by Arie Weissman (Weissman), defendants' Managing Agent, who states that the lease and rider appended to defendants' motion are true and accurate.

Defendants provide the lease and rider between the parties^[1]. The lease is dated November 29, 2007, is between plaintiff and Solomon Management Co., LLC., and is for Store #7DE^[2]. Paragraph two of the lease makes plaintiff responsible for the maintenance of the "premises, fixtures, and appurtenances," requiring that plaintiff "make all repairs in and about the same necessary to preserve them in good order and condition." Paragraph thirteen of the lease states that

[t]he Landlord shall not be liable for any failure of water supply or electrical current, sprinkler damage, or failure of a sprinkler service, nor for injury or damage to a person or property caused by the elements or by other tenants or persons in said building, or resulting from steam, gas, electricity, water, rain or snow, which may leak or flow form any part of said building, or from pipes, appliances or plumbing works of the same, or from the street or sub-surface, or from any other place nor for interference with light or other incorporeal hereditaments by anybody other than the Landlord, or caused by operations by or for a government authority in construction of any public or quasi-public work, neither shall the Landlord be liable for any latent defect in the building.

The rider is also dated November 29, 2007. Paragraph 13 of the rider reiterates paragraph two of the lease and paragraph 10 of the rider reiterates paragraph thirteen of the lease. Significantly, paragraph 2 of the rider states that

[t]he Tenant shall, at-his own cost and expense, during the whole term of this Lease and of any renewal agreements, have ready before the commencement of this Lease his own fire and liability insurance including the Broad Form Comprehensive Liability endorsement covering the demised premises; general public liability insurance with limits of not less than $750,000 with respect to death or personal injury to any one person and any one occurrence; for bodily injury and property damage, in the amounts not less than $350,000; and shall maintain the same in full force and effect throughout the entire term of this Lease and of any renewal thereof.

Based on the foregoing, defendants establish prima facie entitlement to summary judgment.

Preliminarily, contrary to plaintiff's assertion, he fails to establish that the instant motion is procedurally premature pursuant to CPLR § 3212(f) on grounds that discovery has not yet been completed.

Pursuant to CPLR § 3212(f), a motion for summary judgment will be denied if it appears that facts necessary to oppose the motion exist but are unavailable to the opposing party. Denial is particularly warranted when the facts necessary to oppose the motion are within the exclusive knowledge of the moving party (Franklin National Bank of Long Island v De Giacomo, 20 AD2d 797, 797 [2d Dept 1964]; De France v Oestrike, 8 AD2d 735, 735-736 [2d Dept 1959]; Blue Bird Coach Lines, Inc. v 107 Delaware Avenue, N.V., Inc., 125 AD2d 971, 971 [4th Dept 1986]). However, when the information necessary to oppose the motion is wholly within the control of the party opposing summary judgment and could be produced via sworn affidavits, denial of a motion for summary judgment pursuant to CPLR § 3212(f) will be denied (Johnson v Phillips, 261 AD2d 269, 270 [1st Dept 1999]).

A party claiming ignorance of the facts critical to defeat a motion for summary judgment is only entitled to further discovery and denial of a motion for summary judgment if he or she demonstrates that reasonable attempts were made to discover facts which, as the opposing party claims, would give rise to a triable issue of fact (Sasson v Setina Manufacturing Company, Inc., 26 AD3d 487, 488 [2d Dept 2006]; Cruz v Otis Elevator Company, 238 AD2d 540, 540 [2d Dept 1997]). Implicit in this rationale is that the proponent of further discovery must identify facts, which would give rise to triable issues of fact. This is because a court cannot condone fishing expeditions and as such, "[m]ere hope and speculation that additional discovery might uncover evidence sufficient to raise a triable issue of fact is not sufficient" (Sasson at 501). Thus, additional discovery should not be ordered where the proponent of the additional discovery has failed to demonstrate that the discovery sought would produce relevant evidence (Frith v Affordable Homes of America, Inc., 253 AD2d 536, 537 [2d Dept 1998]).Notwithstanding the foregoing, CPLR § 3212(f) mandates denial of a motion for summary judgment when a motion for summary judgment is patently premature, meaning when it is made prior to the preliminary conference, if no discovery has been exchanged (Gao v City of New York, 29 AD3d 449, 449 [1st Dept 2006]; Bradley v Ibex Construction, LLC, 22 AD3d 380, 380-381 [1st Dept 2005]; McGlynn v Palace Co., 262 AD2d 116, 117 [1st Dept 1999]). Under these circumstances, the proponent seeking denial of a motion as premature need not demonstrate what discovery is sought, that the same will lead to discovery of triable issues of fact or the efforts to obtain the same have been undertaken (id.). In Bradley, the court denied plaintiff's motion for summary judgment as premature, when the same was made prior to the preliminary conference (Bradley at 380). In McGlynn, the court denied plaintiff's motion seeking summary judgment, when the same was made after the preliminary conference but before defendant had obtained any discovery whatsoever (McGlynn at 117).

Here, the parties attended a preliminary conference on January 25, 2021, which resulted in an order prescribing discovery that very day. Thus, the instant motion is not premature on grounds that no discovery conferences have yet been held. Moreover, to the extent that plaintiff's sole assertion on this issue is merely that "[d]iscovery has not been completed," he fails to establish, as required, what attempts were made to discover the facts he needs, which are critical to defeat this motion, and which are in defendants' possession (Sasson at 488; Cruz at 540).

Substantively, defendants establish that the commercial lease between the parties bars any liability as against defendants for the water leak alleged in the complaint. As noted above, leases are nothing more than contracts and are thus subject to the rules of contract interpretation, namely, that the intent of the parties is to be given paramount consideration, which intent is to be gleaned from the four corners of the agreement, and that of course, the court may not rewrite the contract for the parties under the guise of construction, nor may it construe the language in such a way as would distort the contract's apparent meaning (Tantleff at 244).

Here, paragraph two of the lease and 13 of the rider establish that plaintiff agreed to completely maintain Store #7DE. More significantly, paragraph 13 of the lease and 10 of the rider establishes that with regard to water leaks emanating from pipes within Store #7DE, and causing damage, as alleged in the complaint, defendants would bear no liability whatsoever. Thus, per the clear and unambiguous language of the lease and rider, the instant action is barred.

While it is true that pursuant to GOL § 5-321, a provision in a lease seeking to exempt a party for his own negligence is void and unenforceable as against public policy (Great N. Ins. Co. at 372; Tormey at 278; Gibson at 479; Radius, Ltd. at 615), it is equally true that an indemnification agreement in a lease shall be enforceable even if the lessor seeks to have the lessee indemnify him for his own negligence when the lease is the product of "sophisticated parties negotiating at arm's length," and "have agreed to allocate the risk of liability to third parties between themselves, essentially through the employment of insurance" (Great N. Ins. Co. at 372; see Hogeland at 161).

Here, while a fair reading of paragraph thirteen of the lease and 10 of the rider clearly insulates defendants from all liability from the conditions alleged therein, such that liability is barred for their own negligent conduct, paragraph 2 of the rider brings paragraph thirteen of the lease and 10 of the rider within the ambit of the exception to GOL § 5-321. To be sure, insofar as paragraph 2 of the rider mandates that plaintiff purchase insurance insuring it for property damage, it is clear that the parties to this commercial lease sought to allocate plaintiff's risk, the very same for which he sues, to a third-party, namely the insurance company.

Accordingly, defendants establish that even if they were negligent in the maintenance of the Store #7DE, the lease between the parties bars this action (Great N. Ins. Co. at 372; see Hogeland at 161). By operation of law, this is necessarily true for the second cause of action for breach of the implied warranty of quiet enjoyment, since to hold otherwise, would render paragraph 13 of the lease and 10 of the rider meaningless. Indeed, a violation of the implied warranty of quiet enjoyment would impose the very liability upon defendants that they sought, through negotiation, to avoid.

The Court also holds, as urged by defendants, that the first cause of action, premised on an alleged non-delegable duty requiring defendants to maintain Store #7DE, fails as a matter of law. As noted by the lease and rider, the tenancy at issue is commercial and not residential. As such, the non-delegable duty pleaded by plaintiff and the legal authority for which he never identifies, does not exist. To be sure, while Multiple Dwelling Law § 78(1) states that "[e]very multiple dwelling, including its roof or roofs, and every part thereof and the lot upon which it is situated, shall be kept in good repair. .. [and that] [t]he owner shall be responsible for compliance with the provisions of this section," Multiple Dwelling Law § 4(4) defines a "dwelling" as "any building or structure or portion thereof which is occupied in whole or in part as the home, residence or sleeping place of one or more human beings." Thus, while it is true that the duty imposed by MDL § 78 (1) is non-delegable (Mas v Two Bridges Assoc. by Nat. Kinney Corp., 75 NY2d 680, 687 [1990]), by the express language of the statute, it does not apply to commercial tenancies(Ortiz v CEMD El. Corp., 123 AD3d 463, 464 [1st Dept 2014] ["Multiple Dwelling Law § 78 is inapplicable because the building at issue is not a multiple dwelling but a commercial building."]).

For the same reasons, the New York City Administrative Code does not impose a duty upon defendants to keep a commercial premises such as Store #7DE in good repair. While pursuant to the New York City Administrative Code, "[t]he owner of a multiple dwelling shall keep the premises in good repair" (New York City, NY, Code § 27-2005[a]), NY, Code § 27-2004[a][3] defines a dwelling as "any building or structure or portion thereof which is occupied in whole or in part as the home, residence or sleeping place of one or more human beings."

Nothing submitted by plaintiff in opposition raises an issue of fact sufficient to preclude summary judgment. It is hereby

ORDERED that the complaint be dismissed with prejudice. It is further

ORDERED that defendants serve a copy of this Order with Notice of Entry upon plaintiff within thirty days (30) hereof.

This constitutes this Court's decision and Order.

[1] In light of Weissman's affidavit, which establishes the authenticity of the lease and rider, they are before the Court in admissible form. To be sure, leases are nothing more than contracts (Tantleff at 244). A contract "has independent legal significance and need only be authenticated to be admissible" (Brand Med. Supply, Inc. v Infinity Ins. Co., 51 Misc 3d 145(A) [App Term 2016]; All Borough Group Med. Supply, Inc. v GEICO Ins. Co., 43 Misc 3d 27, 28 [App Term 2013]; see, Fairlane Fin. Corp. v Greater Metro Agency, Inc., 109 AD3d 868, 870 [2d Dept 2013] ["A private document offered to prove the existence of a valid contract cannot be admitted into evidence unless its authenticity and genuineness are first properly established."]; NYCTL 1998-2 Tr. v Santiago, 30 AD3d 572, 573 [2d Dept 2006]).

[2] The complaint concedes that the lease and rider in question binds defendants insofar as the instant premises changed ownership after the foregoing documents were executed."

TOO MANY CONTRACTS CAN SPOIL THE BROTH

Here there were so many contracts between the parties that had inconsistent language: another type of battle of the forms

County of Nassau v Technology Ins. Co., Inc., 2019 NY Slip Op 05954, Decided on July 31, 2019, Appellate Division, Second Department"

"The plaintiffs, County of Nassau and Nassau County Department of Public Works, commenced this action against Technology Insurance Co., Inc. (hereinafter TIC), and Looks Great Services, Inc. (hereinafter LGS). The plaintiffs alleged that LGS performed work for the plaintiffs and was required to maintain general liability insurance naming the plaintiffs as additional insureds. LGS's work for the plaintiffs included performing emergency debris removal services following a hurricane. The plaintiffs further alleged that LGS, through its agents, employees, subcontractors, or sub-subcontractors, was involved in a motor vehicle collision while operating a tractor trailer on an expressway. Allegedly, the plaintiffs had received multiple claims and had been named in two underlying actions related to the collision. LGS produced evidence that it was insured under a certain general liability insurance policy issued by TIC. According to that insurance policy, the plaintiffs were additional insureds as "required by written contract." TIC, however, had refused to defend or indemnify the plaintiffs in the claims related to the collision. The plaintiffs sought a judgment declaring that TIC is obligated to defend and indemnify the plaintiffs under the TIC policy. The plaintiffs also sought, inter alia, to recover damages from TIC for breach of the insurance policy and from LGS for breach of contract.

The plaintiffs moved for summary judgment declaring that TIC is obligated to defend [*2]and indemnify the plaintiffs, and on the issue of liability on the second and third causes of action, which alleged breach of contract against TIC and LGS, respectively. In an order entered October 28, 2016, the Supreme Court, inter alia, denied the plaintiffs' motion. The plaintiffs appeal.

"When determining whether a third party is an additional insured under an insurance policy, a court must ascertain the intention of the parties to the policy, as determined from within the four corners of the policy itself" (Superior Ice Rink, Inc. v Nescon Contr. Corp., 52 AD3d 688, 691). Here, the subject insurance policy provides that the plaintiffs were additional insureds as "required by written contract." Consequently, the plaintiffs' entitlement to defense and indemnification under the insurance policy depends on whether LGS was contractually required to maintain general liability insurance naming the plaintiffs as insureds.

The question of whether LGS was contractually required to maintain general liability insurance naming the plaintiffs as insureds cannot be resolved on the record before us. "The fundamental, neutral precept of contract interpretation is that agreements are construed in accord with the parties' intent. The best evidence of what parties to a written agreement intend is what they say in their writing. Thus, a written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms" (Greenfield v Philles Records, 98 NY2d 562, 569 [citations and internal quotation marks omitted]). "While the meaning of a contract is ordinarily a question of law, when a term or clause is ambiguous and the determination of the parties' intent depends upon the credibility of extrinsic evidence or a choice among inferences to be drawn from extrinsic evidence, then the issue is one of fact" (Amusement Bus. Underwriters v American Intl. Group, 66 NY2d 878, 880).

The record includes multiple agreements between the plaintiffs and LGS. A "Blanket Purchase Order" (hereinafter BPO), awarded under a formal sealed bid proposal and relating to tree pruning and stump removal, included provisions requiring LGS to procure liability insurance naming the plaintiffs as insureds and to defend and indemnify the plaintiffs. A "Debris Management Agreement" (hereinafter DMA), relating to "such professional services as may be required to effect disaster response and recovery," did not include these provisions. Four "Supplemental Agreement[s]" each provide, in part, that "[t]his Supplemental Agreement is entered into pursuant to the provisions of the original [DMA] . . . entered into in 2011 under the existing [BPO]." Under these circumstances, triable issues of fact exist regarding whether the occurrences were covered by the DMA or the BPO, and thus the plaintiffs were not entitled to summary judgment on the cause of action seeking a declaration that TIC was obligated to defend and indemnify the plaintiffs.

Similarly, the plaintiffs failed to demonstrate their prima facie entitlement to judgment as a matter of law on the second and third causes of action, alleging breach of contract. Given the triable issue of fact as to whether the plaintiffs are covered under the insurance policy, the plaintiffs have not shown, prima facie, that TIC breached the insurance policy by, inter alia, failing to defend or indemnify the plaintiffs. Additionally, the plaintiffs failed to establish, prima facie, that a binding indemnification agreement between LGS and the plaintiffs was in effect at time of the collision, and, moreover, failed to eliminate all triable issues of fact as to whether the plaintiffs were free from negligence in connection with the collision (see Poalacin v Mall Props., Inc., 155 AD3d 900, 910).

Since the plaintiffs did not demonstrate their prima facie entitlement to summary judgment declaring that TIC is obligated to defend and indemnify the plaintiffs, and on the issue of liability on the second and third causes of action, alleging breach of contract, we agree with the Supreme Court's denial of their motion, without regard to the sufficiency of the defendants' opposing papers (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853).