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112 West 34th Street Associates, LLC, Plaintiff-Respondent v. 112-1400 Trade Properties LLC

May 8, 2012


112 W. 34th St. Assoc., LLC v 112-1400 Trade Props. LLC

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and subject to revision before publication in the Official Reports.

Decided on May 8, 2012

Tom, J.P., Andrias, Catterson, Moskowitz, Roman, JJ.

Judgment, Supreme Court, New York County (Jeffrey K. Oing, J.), entered November 7, 2011, inter alia, permanently enjoining defendant from terminating the lease or otherwise interfering with plaintiff's possession of the leased premises based on the December 2, 2008 notice to cure, and declaring that plaintiff is not in default under or in breach of the lease, unanimously affirmed, with costs. Appeal from order, same court and Justice, entered September 13, 2011, upon the parties' motions for summary judgment, unanimously dismissed, without costs, as subsumed in the appeal from the judgment.

Under a 114-year triple net ground lease, dated June 10, 1963 and set to expire on June 10, 2077, defendant leased to plaintiff the land and 26-story commercial building located at 112-120 and 122 West 34th Street in Manhattan. The building, which has approximately 780,000 square feet of rentable space, was built in the 1950s and its original construction featured an aluminum and glass curtain wall system on all but the eastern facade, which had a masonry veneer wall with punched windows.

In 2006, plaintiff's managing agent reviewed the condition of the building and concluded that certain components were failing and had outlived their useful lives, and required repair or replacement. In 2007, plaintiff undertook a capital improvement program, which included, among other things, placing a new curtain wall over the old one, at a cost of approximately $16.5 million, the installation of a new canopy, and masonry work.

By notice to cure dated December 2, 2008, defendant advised plaintiff that it was in default under the terms of the lease, in that: "[i]n violation of Sections 9.01(a) and 9.01(b) of the Lease, you have made structural changes or alterations to the Demised Premises involving in the aggregate an estimated cost of more than one hundred thousand dollars ($100,000) (the Structural Alterations') without having obtained Lessor's prior written consent to such Structural Alterations and without having provided Lessor with ten days' written notice prior to undertaking such Structural Alterations."

The notice identified eight work items, including masonry work (items [a][i] through [v]), the new canopy (item [a][vi]), adding a pre-fabricated shed on the roof of the building (item [a][vii]), and the new curtain wall (item [a][viii]). Defendant also alleged that plaintiff violated Sections 9.01(d) and (i) of the lease by making the structural alterations without either seeking or obtaining defendant's written approval of the project architects and/or engineers and cost estimates, and by failing to furnish a performance bond.

By summons and complaint dated January 22, 2009, plaintiff commenced this action, seeking a Yellowstone injunction (see First Natl. Stores v Yellowstone Shopping Ctr., 21 NY2d 630 [1968]), and a declaration that it was not in default under the lease. Plaintiff alleges that the challenged work is not structural and in any event falls within the ambit of Article 7 ("Repairs and Maintenance of Demised Premises") and Article 8 ("Compliance With Laws, Ordinances and Regulations"), neither of which requires the prior written consent of defendant. After granting a Yellowstone injunction, Supreme Court denied defendant's motion and granted plaintiff's cross motion for summary judgment. In so ruling, the court found that the interpretation of the term "structural change" presents a question of fact, and that the unrefuted affidavits of plaintiff's four experts established that the challenged work was not structural. We now affirm.

"The fundamental, neutral precept of contract interpretation is that agreements are construed in accord with the parties' intent" (Greenfield v Philles Records, 98 NY2d 562, 569 [2002]). "When the terms of a written contract are clear and unambiguous, the intent of the parties must be found within the four corners of the contract, giving practical interpretation to the language employed and the parties' reasonable expectations" (Franklin Apt. Assoc., Inc. v Westbrook Tenants Corp., 43 AD3d 860, 861 [2007]).

"A lease, like any other contract, is to be interpreted in light of the purposes sought to be attained by the parties" (Farrell Lines v City of New York, 30 NY2d 76, 82 [1972]). "Courts are obliged to interpret a [lease] so as to give meaning to all of its terms" (150 Broadway N.Y. Assoc., L.P. v Bodner, 14 AD3d 1, 5 [2004] [internal quotation marks omitted]). If inconsistent clauses exist, they will be reconciled if possible and the intent of the parties enforced as expressed in the lease (see National Conversion Corp. v Cedar Bldg. Corp., 23 NY2d 621, 625 [1969]). Further, "[i]t is well settled that no additional liability or requirement will be imposed upon a tenant by interpretation unless it is clearly within the provisions of the instrument under which it is claimed" (67 Wall St. Co. v Franklin Nat. Bank, 37 NY2d 245, 249 [1975]).

Here, the clear intention of the parties, evidenced by the language of Articles 7 and 8 of the commercial triple net lease, was to transfer to plaintiff net lessee all responsibility for inspection, maintenance and repair of the building.

Section 7.01 of the lease obligates plaintiff to perform "all necessary repairs [to the Demised Premises], interior and exterior, structural and non-structural, ordinary and extraordinary or radical, foreseen and unforeseen." Section 7.02 provides that the "necessity for and adequacy of repairs . . . shall be measured by the standard which is appropriate for buildings of similar construction and class, provided that Lessee shall in any event make all repairs necessary to avoid any structural damage or injury to the Building." Section 7.04 provides that defendant will not be required to make any repairs or alterations of any kind and that plaintiff "assumes the full and sole responsibility for the condition, operation, repair, replacement, ...

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