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Trifont Realty, LLC v. Billor Realty Corporation

December 20, 2012


Appeal from an order of the City Court of Yonkers, Westchester County (Arthur J. Doran, III, J.), entered May 18, 2011.

Trifont Realty, LLC v Billor Realty Corp.

Decided on December 20, 2012

Appellate Term, Second Department

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

This opinion is uncorrected and will not be published in the printed Official Reports.


The order granted occupant's motion to dismiss the petition and denied landlord's cross motion for partial summary judgment and a declaratory judgment, in a summary proceeding brought pursuant to RPAPL 713 (3).

ORDERED that the order is affirmed, without costs.

On December 8, 2010, landlord served Billor Realty Corporation (Billor II or occupant) with a 10-day notice to quit, alleging that Billor II is a squatter in the subject commercial premises owned by landlord (see RPAPL 713 [3]). In a notice of petition and petition subsequently served upon Billor II, landlord further alleged that occupant had defrauded landlord of the differential between the market value of rents occupant had collected from subtenants and the rent occupant had paid.

The parties do not dispute that, in 1961, the then-owner of the subject premises leased the premises for 99 years to Johnny-on-the-Spot Central, Inc. (Johnny-on-the-Spot); that the lease permitted the leaseholder to assign the lease without the owner's approval and provided for a 30-day notice in the event a party sought to terminate the lease; and that, in 1972, Johnny-on-the-Spot assigned its lease to Billor Realty Corporation (Billor I), which had been incorporated in 1940 and was dissolved in 1987. The parties also do not dispute that the identically named Billor Realty Corporation (Billor II) was incorporated in 1990 and that the premises was sold to landlord on August 3, 2005.

On papers dated February 11, 2011, after issue had been joined, occupant moved for summary judgment dismissing the petition, relying, in part, on an estoppel certificate alleged to have been executed by the former landlord in favor of the present landlord prior to the sale of the premises, which asserts, among other things, that the lease, assigned "to Billor, a purported division of C.R. Wallauer & Co., Inc. (Wallauer)" on May 22, 1972, "is in full force and effect." Occupant further asserted that landlord had accepted rent from Wallauer for the five years following landlord's purchase of the property. Landlord opposed the motion and cross-moved "for an order granting partial summary judgment on the petition and [a] declaratory judgment" that occupant "is not the tenant under the subject lease" because occupant had failed to produce the alleged written assignment of the lease purportedly executed by Billor I prior to its dissolution, and, if the assignment is alleged to be oral, the assignment was barred by the statute of frauds. Landlord also sought a hearing to determine the market value of the use and occupancy owed by occupant since August 3, 2005, less the sums actually paid.

By order entered May 18, 2011, the City Court granted occupant's motion for summary judgment dismissing the petition and denied landlord's cross motion. After making findings of fact based largely on matters not in dispute, the court concluded that landlord's cross-motion papers failed to contain sufficient proof, in admissible form, to support the relief sought; that occupant's proof established that Billor I had executed a written assignment to Wallauer; that the lease's 30-day notice requirement binds landlord, even if the claims alleged are in derogation of the lease; and that the estoppel certificate binds landlord to the statement therein to the effect that Billor II occupies the premises with Wallauer's permission. The City Court also concluded that the fraud claim is time barred because, with reasonable diligence, landlord could have discovered the public records pertaining to "respondent's dissolution and incorporation" at the time it had purchased the property, and had offered no reasonable basis for its failure to exercise due diligence to timely inspect those records, nor had landlord submitted an affidavit establishing its lack of knowledge of the estoppel certificate. For the reasons that follow, we affirm the order, albeit on grounds other than those relied upon by the City Court. As a general rule, a lease to a corporation is not terminated by a corporation's dissolution; thus, Billor I's rights and obligations pursuant to the 99-year lease were not extinguished, unless the lease so provided (Matter of Goldberg v Harwood, 216 AD2d 152, 153 [1995], affd 88 NY2d 911 [1996]), and there was no such lease provision. When Billor II was incorporated in 1990, it did not represent a reorganized Billor I, but was an entirely separate legal entity (see e.g. Mars Novelty Corp. v Sunrise Mall Assoc., 181 AD2d 661, 663 [1992]; 95 Lorimer, LLC v Insurance Co. of State of Pa., 6 Misc 3d 500 [Sup Ct, Kings County 2004]). A lease "is generally considered an asset to which the former shareholders succeed" (49 Am Jur 2d, Landlord and Tenant § 235). Because "a dissolved corporation remains in existence for the purpose of winding up its affairs" (Matter of Goldberg v Harwood, 216 AD2d at 153; see also Business Corporation Law §§ 1005 [a] [2]; 1006 [a]; Cava Constr. Co., Inc. v Gealtec Remodeling Corp., 58 AD3d 660, 661 [2009]), including the distribution of its assets (Business Corporation Law § 909), "[u]ntil that dissolution is complete, the corporation continues to hold title to the assets" (Wells v Ronning, 269 AD2d 690, 692 [2000]; see also Gran Sabana Corp. v Midtown Gourmet Food Mkt., 193 Misc 2d 788, 789 [App Term, 1st Dept 2002]). While there is a disputed claim that Billor I had assigned its leasehold rights prior to its dissolution, and that, pursuant to such assignment, Billor II had the right to possess the premises, we need not decide that issue nor need we determine who is the present leaseholder since, in any event, landlord has failed to even allege a termination of the 99-year lease and, thus, a possessory right to the premises superior to occupant's.

In light of the foregoing, we need not pass upon any issue relating to the validity and effect of the estoppel certificate. We further note that a summary proceeding is not the proper forum for the ...

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