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J.C. Penney Corp., Inc. v. Carousel Center Co.

October 5, 2009

J.C. PENNEY CORPORATION, INC., PLAINTIFF,
v.
CAROUSEL CENTER COMPANY, L.P., DEFENDANT.



The opinion of the court was delivered by: Scullin, Senior Judge

MEMORANDUM-DECISION AND ORDER

I. INTRODUCTION

Currently before the Court is Defendant's motion for reconsideration, pursuant to Rule 59(e), of Judge Munson's January 24, 2008 Order which, among other things, denied Defendant's motion for summary judgment. Defendant contends that the Court should reconsider Judge Munson's denial of summary judgment because (1) there is new evidence and a change in circumstance which favor dismissal, and (2) the Court made clear error of law in its decision.

II. BACKGROUND*fn1

Carousel Center Company, L.P. ("Defendant") is a limited partnership; its limited partner is Pyramid Company of Onondaga ("Pyramid"), which owns 98% of Defendant. Defendant's general partner is Carousel General Company, L.L.C., which owns 2% of Defendant. At the center of this lawsuit is the Carousel Mall ("the Mall"), which Defendant operates under a 1995 assignment from Pyramid, the Mall's builder. Pyramid, either directly or through affiliates, owns or controls Defendant.

On January 10, 1990, Plaintiff entered into a lease agreement with Pyramid. This agreement went through amendments and/or supplements and evolved into a Second Amended Lease, dated August 30, 1995. Subsequently, Defendant became the successor-in-interest to the rights and obligations of Pyramid under the lease. This lease contained Consent Provisions whereby the Mall was not to be changed or altered without Plaintiff's consent.

In May 2000, Pyramid requested the Syracuse Industrial Development Agency's ("SIDA") assistance in constructing the DestiNY USA project ("DestiNY USA" or "the Project"). On April 30, 2002, SIDA adopted its Resolution pursuant to § 204 of the New York State Eminent Domain Procedure Law ("EDPL"), making the determinations and findings required to authorize the acquisition of certain interests in the Mall for the construction of the Project, including any provision of a tenant's lease which might restrict or impede the development of the Project. The provision states that the Company [Pyramid] has requested that the Agency [SIDA] acquire certain real property interests in or effecting Existing Center Land within the existing Carousel Center to the extent necessary or appropriate to construct the proposed modifications to Carousel Center necessary or appropriate to transform it into the DestiNY USA Project ('Carousel Center Interests').

Exhibit 1 to the Resolution defines "Carousel Center Interests" to include, among others, interests of some or all of the tenants in varying degrees created by leases or agreements that may establish restrictions on: the use of the lands surrounding the mall building; the use of space within the mall building that are inconsistent with DestiNY USA Project designs; the use of common interior areas within the mall building; visibility and/or signage; the name of the project; and any other applicable interests that may exist.

The Resolution further provides that the Company [Pyramid] agrees to indemnify, defend and hold harmless . . . the Agency [SIDA] . . . from any Claims (as defined in the Agency Agreement) imposed . . . or incurred . . . or asserted . . . by reason of or arising from the institution, prosecution or abandonment of any eminent domain proceedings . . . with respect to any of the Land or the Public Improvement Land (including the Existing Center Land). . . .

In May 2002, Plaintiff instituted an original proceeding in the New York State Supreme Court, Appellate Division, Fourth Department, under EDPL § 207, asking that the court reject SIDA's Resolution and Determinations and Findings.*fn2

At the hearing before the Appellate Division, Defendant maintained that the tenant's interests created by the lease (hereinafter referred to as the "Consent Provisions") were real property interests subject to the State's eminent domain power. In opposition, Plaintiff contended that the Consent Provisions of the Lease were not "real property" within the meaning of the EDPL. On November 15, 2002, the Appellate Division confirmed SIDA's Resolution and Determination and Findings, held that the Consent Provisions were interests in real property subject to condemnation by SIDA, and dismissed Plaintiff's petition. See Kaufmann's Carousel, Inc. v. City of Syracuse Indus. Dev. Agency, 301 A.D.2d 292, 299-300 (4th Dep't 2002). Plaintiff sought leave to appeal to the Court of Appeals, which that Court denied on February 25, 2003. See Kaufmann's Carousel, Inc. v. City of Syracuse Indus. Dev. Agency, 99 N.Y.2d 508 (2003).

Plaintiff filed the present action on October 24, 2002. See Dkt. No. 1. In its amended complaint, Plaintiff seeks (1) an injunction preventing Defendant from proceeding with the construction of the Project and from procuring and/or paying for the proposed condemnation by SIDA, and (2) damages for breach of the express and implied terms of the Contract. See Dkt. No. 13 at ¶¶ at 41-59.

On November 30, 2005, both Plaintiff and Defendant cross-moved for summary judgment. Defendant asserted that (1) it had not breached the express or implied terms of the lease because no construction had yet occurred; (2) Plaintiff cannot recover under the theory that Defendant induced SIDA to condemn the Consent Provisions; (3) Plaintiff seeks the wrong measure of money damages; and (4) Plaintiff is not entitled to injunctive relief. See Dkt. No. 213-3.

On December 29, 2005, SIDA commenced a proceeding to condemn the Consent Provisions and on March 29, 2006, the New York State Supreme Court, Onondaga County, granted the petition and authorized SIDA to procure these interests. See Affirmation of Timothy J. Lambrecht, dated February 4, 2008 ("Lambrecht Aff."), at ¶ 9 and Exhibit "A" annexed thereto. On September 29, 2006, the Appellate Division, Fourth Department, upheld the Order of Condemnation. See id. at ¶ 10 and Exhibit "B" annexed thereto. On October 24, 2006, the Court of Appeals denied leave to appeal. See id. and Exhibit "C" annexed thereto.

On January 24, 2008, Judge Munson denied all motions then pending before the Court, including the parties' cross-motions for summary judgment. See Dkt. No. 246. In denying the cross-motions for summary judgment, the Court stated that, because the parties' versions of events differed substantially, there were material issues of fact which made summary judgment inappropriate. The Court did not provide any further discussion of the merits of either party's legal arguments.

On February 4, 2008, Defendant filed a motion for reconsideration pursuant to Federal Rule of Civil Procedure 59(e) and Local Rule 7.1(g) on the grounds that (1) there is new evidence which was not previously available to the Court which mooted Plaintiff's claim for injunctive relief, and (2) the Court's ...


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