United States District Court, E.D. New York
HELENE K. TOBIN, Plaintiff,
IVAN GLUCK and PHYLLIS GLUCK, Defendants.
MEMORANDUM & ORDER
MARGO K. BRODIE, District Judge.
Plaintiff Helene K. Tobin commenced the above-captioned action against Defendants Ivan and Phyllis Gluck on April 18, 2007, pursuant to a guaranty from Defendants to Plaintiff in connection with the lease of a commercial property owned by Plaintiff ("Tobin I"). Plaintiff's Amended Complaint asserts claims of fraud, unjust enrichment and breach of a guaranty, and seeks damages and legal fees. On June 17, 2011, Defendants commenced an action in the Supreme Court of New York, County of Nassau to enforce a stipulation of settlement signed by the parties, resulting from a landlord and tenant proceeding. The County of Nassau action was removed to this Court on August 17, 2011 ("Tobin II"). Defendants moved for summary judgment on Tobin I, (Docket Entry No. 95), and Plaintiff cross-moved to further amend the Amended Complaint filed in Tobin I and to dismiss Tobin II, (Docket Entry No. 102). For the reasons discussed below, the Court grants Defendants' summary judgment motion and dismisses the claims in Tobin I, but grants Plaintiff leave to amend the Amended Complaint in Tobin I to add a claim for breach of contract. The Court denies Plaintiff's motion to dismiss Tobin II. The Court also consolidates the actions for all further proceedings.
Plaintiff Helene K. Tobin is the owner of 3480 Nostrand Avenue, Brooklyn, New York (the "Property"). (Def. 56.1 ¶ 1; Pl. 56.1 ¶ 1.) On July 1, 1997, Plaintiff leased the Property to tenant Clean-o-Rama, Inc., for a term of 15 years (the "Lease"). ( See Lease Assignment, annexed to the Declaration of David C. Segal ("Segal Decl.") as Ex. 4.) On April 10, 2002, Plaintiff agreed to an assignment of the lease ("Lease Assignment") from Clean-o-Rama, Inc., to Beaaro, Inc. ("Beaaro"). (Def. 56.1 ¶ 2; Pl. 56.1 ¶ 2.) Defendant Ivan Gluck is President of Beaaro. ( See Lease Assignment at 4.) In connection with the assignment of the lease to Beaaro, Inc., Defendants executed a guaranty, guaranteeing, among other things, the payment of rent (the "Guaranty"). (Def. 56.1 ¶ 3; Pl. 56.1 ¶ 3.) The Guaranty states in pertinent part:
Guarantor unconditionally guarantees the due and punctual payment of all installments of Base Rent, Tax Payments or other Additional Rent payable under the Lease through the date upon which the Tenant under the Lease and all subtenants and other occupants of the Demised Premises vacate, and give possession to Landlord of the Demised Premises.
(Def. 56.1 ¶ 4; Pl. 56.1 ¶ 4.) The Guaranty provides that it is to be interpreted under the laws of New York. (Def. 56.1 ¶ 5; Pl. 56.1 ¶ 5.)
Plaintiff commenced a holdover proceeding in New York Landlord/Tenant Court, Index No. L&T 06K070405 (the "L&T Action") alleging a default under the Lease. (Def. 56.1 ¶ 7; Pl. 56.1 ¶ 7.) The action was commenced against then tenant Beaaro, Inc., and several undertenants identified as John Does #1-5 and UVW and XYZ Corps (collectively "tenants"). ( See L&T Decision, annexed to Segal Decl. as Ex. 7.) Defendants were not named as parties in the L&T Action. In settlement of the L&T Action, on or about July 3, 2007, Plaintiff, Defendants, the tenants, and two other individuals associated with the tenants, all represented by counsel, entered into a stipulation "to resolve and settle their disputes amicably." (Def. 56.1 ¶ 8; Pl. 56.1 ¶ 8; Stipulation and Order (the "Stipulation") dated July 3, 2007, annexed to Segal Decl. as Ex. 5.) The Stipulation was "So Ordered" by Judge Loren Baily Schiffman on July 19, 2007. (Stipulation.) Paragraph 5 of the Stipulation states in pertinent part:
Not later than August 2, 2007 all respondents, and each of their principals, agents, officers, employees, shareholders and all persons claiming under them shall surrender possession of the captioned premises to the petitioner, empty, broom clean, in good order, condition and repair, except for ordinary wear and tear. Respondent shall deliver the keys to the undersigned attorney for the Tobins, which shall constitute surrender of the premises, but not acceptance of the surrender, unless and until the landlord, his agents or assignees inspect the premises for compliance with the terms of this paragraph, and determine that there has been full, due and timely compliance.
( Id. ¶ 5.) Paragraph 6 of the Stipulation states:
Not later than August 2, 2007 Beaaro shall pay to the petitioner, by certified funds or cashier's check, the sum of $250, 000 in full satisfaction of petitioner's claims against respondents under the lease and guaranty.
( Id. ¶ 6; Def. 56.1 ¶ 9; Pl. 56.1 ¶ 9.) Paragraph 8 of the Stipulation provides for an alternative remedy in the event of noncompliance with paragraph 6, it states in pertinent part:
[F]or Beaaro's failure to timely and fully comply with paragraph 6, judgment in the amount of $350, 000, together with all reasonable attorneys' fees and costs incurred by petitioner to obtain and enforce such judgment less any payments made against the obligations of paragraph 6 by respondents.
(Stipulation ¶ 8(b).) Beaaro paid $250, 000 to Plaintiff on August 2, 2007. (Def. 56.1 ¶ 10; Pl. 56.1 ¶ 10.) According to Defendants, the keys to the Property were delivered to the attorney for Plaintiff on August 2, 2007 and the Property was vacant at that time. (Def. 56.1 ¶¶ 12, 14.) According to Plaintiff, one key to the Property was timely delivered but Plaintiff has no knowledge as to whether Defendants or the tenants of the Property have additional keys. (Pl. 56.1 ¶ 12.) On June 3, 2008, Defendants and the tenants moved in Civil Court, Kings County, to enforce the terms of the Stipulation. (Def. 56.1 ¶ 16; Pl. 56.1 ¶ 16.) Defendants and the tenants moved to (1) obtain the return of $17, 421.02 in security deposit from Plaintiff, (2) execute and tender stipulations of discontinuance for two separate actions then-proceeding between the parties in Kings County Supreme Court, (3) execute and tender a stipulation of discontinuance in Tobin I which was pending in this Court, (4) tender general releases in the form attached to the Stipulation, (5) obtain attorneys' fees in accordance with the Stipulation, and (6) such other relief as the Civil Court deemed proper. (L&T Decision at 1-2.) By decision dated January 23, 2009, the court granted the motion in its entirety. ( Id.; Def. 56.1 ¶ 17; Pl. 56.1 ¶ 9.) The L&T decision stated, "[u]pon reviewing said Stipulation, it is clear that respondent was in compliance with its terms and requirements." (L&T Decision at 3.) Defendants assert that the L&T Decision referred to the compliance of Defendants and the tenants. (Def. 56.1 ¶ 17.) Plaintiff contends that the L&T Decision only referred to the tenants and does not imply that Defendants were in compliance with the terms of the Stipulation. (Pl. 56.1 ¶ 17.)
By decision dated March 17, 2011, the Appellate Term reversed the L&T Decision on the grounds that the civil court lacked jurisdiction to grant the entirety of the relief requested. (Decision of the Appellate Term ("App. Term Decision"), dated March 17, 2011, annexed to Segal Decl. as Ex. 8; Def. 56.1 ¶ 18; Pl. 56.1 ¶ 18.)
II. Procedural History
The parties have generated a prodigious litigation history in what is essentially a landlord-tenant dispute. The Court attempts to summarize the major procedural events.
Plaintiff commenced an eviction action in the landlord-tenant division of the Civil Court of the City of New York, Kings County, alleging a default under the Lease. (Def. 56.1 ¶ 7; Pl. 56.1 ¶ 7.) At some point two other actions relating to these parties and the Lease and Guaranty were commenced in the Supreme Court of New York, Kings County (the "Kings County Actions"). ( See L&T Decision at 2.) On July 3, 2007, in settlement of the L&T Action and Plaintiff's claims against Defendants, Plaintiff, Defendants and the tenants entered into the Stipulation. (Def. 56.1 ¶ 8; Pl. 56.1 ¶ 8.) On April 18, 2007, Plaintiff commenced the instant action, Tobin I, in this Court. (Docket Entry No. 1.) Plaintiff asserted claims of unjust enrichment and breach of the Guaranty. ( Id. ) Plaintiff amended the Complaint on November 7, 2008, bringing claims of fraud, unjust enrichment and breach of the Guaranty. (Docket Entry No. 25.)
On June 3, 2008, Defendants and the tenants moved for enforcement of the terms of the Stipulation in the Civil Court of New York City, Kings County. (Def. 56.1 ¶ 16; Pl. 56.1 ¶ 16.) The court granted that motion on January 23, 2009. (Def. 56.1 ¶ 17; Pl. 56.1 ¶ 9.) On March 17, 2011, the Appellate Term reversed and vacated the L&T Decision on the grounds that the civil court lacked jurisdiction to grant the entirety of the relief requested. (Def. 56.1 ¶ 18; Pl. 56.1 ¶ 18.)
On June 17, 2011, Defendants commenced an action in the Supreme Court of New York, Nassau County. (Nassau Action Complaint, annexed to the declaration of John Harris ("Harris Decl.") as Ex. C.) Defendants sought specific performance of the Stipulation, attorneys' fees relating to the enforcement of the Stipulation and defense of the instant action before this Court, and return of their deposit in the sum of $17, 421.02 plus interest. ( Id. ) Plaintiff removed the Nassau action to this Court on August 17, 2011 bearing the case number 11-CV-3985, Tobin II. At some point, the Kings County Actions were terminated. ( See id. ¶ 3.) The Court has no specific information about the termination of these actions. On June 25, 2013, Plaintiff filed another action in this district ("Tobin III"), No. 13-CV-3592, against Defendants for fraud and breach of the Stipulation.
III. Tobin I
In Tobin I, Defendants move for summary judgment and Plaintiff cross-move to amend the Amended Complaint.
a. Standard of Review
Summary judgment is proper only when, construing the evidence in the light most favorable to the non-movant, "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a); see also Bronzini v. Classic Sec., L.L.C., ___ F.Appx. ___, ___, 2014 WL 943933, at *1 (2d Cir. Mar. 12, 2014); Kwan v. Andalex Grp. LLC, 737 F.3d 834, 843 (2d Cir. 2013); Kwong v. Bloomberg, 723 F.3d 160, 164-65, 2013 WL 3388446, at *4 (2d Cir. 2013); Redd v. N.Y. Div. of Parole, 678 F.3d 166, 174 (2d Cir. 2012). The role of the court is not "to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Cioffi v. Averill Park Cent. Sch. Dist. Bd. of Educ., 444 F.3d 158, 162 (2d Cir. 2006) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986)). A genuine issue of fact exists when there is sufficient "evidence on which the jury could reasonably find for the plaintiff." Anderson, 477 U.S. at 252. The "mere existence of a scintilla of evidence" is not sufficient to defeat summary judgment; "there must be evidence on which the jury could reasonably find for the plaintiff." Id. The court's function is to decide "whether, after resolving all ambiguities and drawing all inferences in favor of the non-moving party, a rational juror could find in favor of that party." Pinto v. Allstate Ins. Co., 221 F.3d 394, 398 (2d Cir. 2000).
b. Guaranty cause of action
Defendants move for summary judgment on the basis that their payment of $250, 000 to Plaintiff released them from all liability under the Guaranty pursuant to paragraph 6 of the Stipulation and Plaintiff therefore cannot sustain her breach of Guaranty claim against Defendants. Plaintiff asserts that paragraph 6 released Defendants from liability as to only those claims then before the civil court in which the Stipulation was entered. The parties propose competing interpretations of paragraph 6 of the Stipulation that each believes comport with the clear and unambiguous language of that paragraph and the Stipulation as a whole.
"When interpreting a contract [under New York law], the intention of the parties should control, and the best evidence of intent is the contract itself.'" Gary Friedrich Enterprises, LLC v. Marvel Characters, Inc., 716 F.3d 302, 313 (2d Cir. 2013); see also Rothenberg v. Lincoln Farm Camp, Inc., 755 F.2d 1017, 1019 (2d Cir. 1985) ("As a general matter, the objective of contract interpretation is to give effect to the expressed intentions of the parties."). "At the outset, the court must determine whether the language the parties have chosen is ambiguous...." Id. (quoting Lockheed Martin Corp. v. Retail Holdings, N.V., 639 F.3d 63, 69 (2d Cir. 2011)); Greenfield v. Philles Records, Inc., 98 N.Y.2d 562, 569 (2002) ("The fundamental, neutral precept of contract interpretation is that agreements are construed in accord with the parties' intent." (citation omitted)). "If the contract is unambiguous, its meaning is... a question of law for the court to decide." JA Apparel Corp. v. Abboud, 568 F.3d 390, 397 (2d Cir. 2009). "In interpreting an unambiguous contract, the court is to consider its [p]articular words not in isolation but in the light of the obligation as a whole and the intention of the parties as manifested thereby... but the court is not to consider any extrinsic evidence as to the parties' intentions." Id. (citations and internal quotation marks omitted); see also In re AMR Corp., 730 F.3d 88, 98 (2d Cir. 2013) ("[C]ourts applying New York law construe a contract so as to give full meaning and effect to all of its provisions.'" (quoting PaineWebber Inc. v. Bybyk, 81 F.3d 1193, 1199 (2d Cir. 1996))).
If the contract is ambiguous, "extrinsic evidence as to the parties' intent may properly be considered." JA Apparel, 568 F.3d at 397. "Where there is such extrinsic evidence, the meaning of the ambiguous contract is a question of fact for the factfinder." Id. "Ambiguity here is defined in terms of whether a reasonably intelligent person viewing the contract objectively could interpret the language in more than one way." Topps Co., Inc. v. Cadbury Stani S.A.I.C., 526 F.3d 63, 69 (2d Cir. 2008). "To the extent the moving party's case hinges on ambiguous contract language, summary judgment may be granted only if the ambiguities may be resolved through extrinsic evidence that is itself capable of only one interpretation, or where there is no extrinsic evidence that would support a resolution of these ambiguities in favor of the nonmoving party's case." Id .; see also Rothenberg, 755 F.2d at 1019 ("[W]here contractual language is susceptible of at least two fairly reasonable interpretations, this presents a triable issue of fact, and summary judgment [is] ...