West Coast Company v. SGHC Food Corp.

19 H.C.R. 115A (Civ. Ct. N.Y. Cty. 1989)

We represented: Petitioner

Robert D. Lippman, J.

DECISION and ORDER Petitioner instituted this non‑payment proceeding to recover rent from December 1988 in the amount of $9,316.54 plus cost disbursements and attorneys' fees. Respondent moves to dismiss on the grounds the notices relating to an increase of real estate taxes and a consumer price index escalation were defective. Hearing was held on March 8, 1989.

The parties entered into a written agreement on May 13, 1983 by which terms landlord West Coast Company lased to SGHC Food Corp. a portion of the ground floor known as store #3-4 located in the building known as 804‑6 Washington Street, 95 Horatio Street and West Coast apartments.

Article 27 of the lease provides as follows:

BILLS AND NOTICES:

Except as otherwise expressly provided in this Lease, any bills, statements, notices, demands, requests or other communications given or required to be given under this Lease shall be deemed sufficiently given or rendered if in writing, sent by registered or certified mail (return receipt requested) addressed (a) to Tenant (i) at Tenant's address set forth in this Lease if mailed prior to Tenant's taking possession of the Premises, or (ii) at the Building if mailed subsequent to Tenant's taking possession of the Premises, or (iii) at any place where Tenant or any agent or employee of Tenant may be found if mailed subsequent to Tenant's vacating, deserting, abandoning or surrendering the Premises, or (b) to Landlord at Landlord's address set forth in this Lease, or (c) to such other address as either Landlord or Tenant may designate as its new address for such purpose by notice given to the other in accordance with the provisions of this Article 27. Any such bill, statement, demand, request or other communication shall be deemed to have been rendered or given on the date when it shall have been mailed as provided in this Article 27.

In accordance with Article 27, James Suchman, Assistant Director of Commercial Real Estate, employed by Rockrose Development Corp, agent for petitioner, mailed to respondent on November 18, 1988 notices of real estate tax and consumer price index increases. There were four notices in all, two identical notices relating to increased real estate taxes and two identical notices relating to consumer price index increases. One C.P.I. letter and one real estate tax letter were sent by certified mail to SGHC Food Corp. addressed to 804‑6 Washington Street; the other two were sent by certified mail to SGHC Food Corp. addressed to 66 Gansevoort Street, the business address of tenant's office. Registered return receipts for all four notices were submitted in evidence at the hearing.

The CPI letter in pertinent part reads as follows:

"Dear Tenant: in accordance with the terms of your lease, your monthly rent is being increased . . . "

The real estate tax letter in pertinent part reads as follows:

"Dear Tenant: As per the terms of your lease, the landlord is entitled to a proportion of the Real Estate Tax increase over the base year as stated in your lease."

Tenant argues the notices were defective because 1) they did not emanate from the landlord but from Rockrose and the landlord's name is nowhere identified; 2) the address of the property in question is not stated in the notice; and 3) the lease referred to is not specified or identified.

As to the first argument, it is repudiated by the lease itself. The lease was executed on behalf of tenant by Sam Grafi, president of SGHC Food Corp. and H. Henry Elghanayan, president of Rockrose Development Corporation, denominated as Agent for West Coast Co., Landlord. Thus, it is evident that from the inception of the lease, tenant conducted business with the landlord through its agent Rockrose whose authority was clear from the lease itself. Under the circumstances tenant was fully aware that a notice from landlord's known agent constituted proper notice from the landlord without specific reference to the landlord.

The second and third arguments, like the first, have no merit. Landlord transferred to tenant possession of only one property. Although the property bears two postal addresses, the use of either address or both addresses can only refer to one property. Possession of that property was transferred under only one lease. It is undisputed that there exists only one lease agreement between the parties. Accordingly a notice sent by landlord's authorized agent to tenant referring to "your lease" is capable of designating only the one agreement existing between them. Thus tenant cannot plausibly argue that the notices were equivocal or ambiguous because the landlord or the property or the lease was not identified with specificity.

Article 27A (11) requires the notices to be sent at the building if mailed subsequent to Tenant's taking possession of the Premises. Rockrose mailed the notices to 804-806 Washington Street. There was no need to send copies to the Horatio Street address. As for the copies mailed to Gansevoort Street, these, in fact, exceeded the requirements of the lease, but acted as precautions in that they assured receipt at respondent's business office.

Article 28E (2) (a) of the lease provides as follows:

(2) (a) Any Landlord's Statement or comparative statement sent to Tenant shall be conclusively binding upon Tenant unless, within thirty (30) days after such statement is sent, Tenant shall send a written notice to landlord objecting to such statement and specifying the respects in which such statement is claimed to be incorrect. If such notice is sent, the parties agree that, due to the unavailability of Landlord's books and records because of their confidential nature, either party may refer the decision of the issues raised to a reputable independent firm of certified public accountants selected by Landlord, and the decision of such accountants shall be conclusively binding upon the parties. The fees and expenses involved in such decision shall be borne by the unsuccessful party (and if both parties are partially unsuccessful, the accountants shall apportion the fees and expenses between the parties based on the degree of success of each party).

It is tenant's contention that since the notices were defective, the provisions of Article 28E (2) (a) did not come into play. The court, however, finds the notices were in conformity with Article 27 of the lease and were otherwise adequate to alert tenant of C.P.I. and tax increases. Therefore, under Article 28E (2) (a) tenant had 30 days from the date the notices were sent to challenge in writing the substance of the notices. Having failed to object within the required 30-day period, tenant, by virtue of the contractual provision to which it agreed, is now foreclosed from challenging the real estate tax and C.P.I. increases.

In accordance with the reasons above stated, tenant's motion to dismiss is denied.

Final judgment in favor of petitioner is rendered as follows:

•Based rent from January 1, 1989 to March 1, 1989 at the rate of $1,878.50 per month, for a total of $5,635.50.

•Additional rent for December 1, 1988 through March 31, 1988, for a total of $400.00.

•Real Estate Tax from July 1, 1988 through March 31, 1989 at the rate of $799.50 per month, for a total of $7,195.50.

•Consumer Price Index increase at the rate of $211.14 from May 1, 1988 through March 31, 1989 (11 months) for a total of $2,322.54.

This comes to a total of $15,553.54.

Tenant is to pay landlord $15,553.54 by April 24, 1989. Issuance of the warrant stayed to and including April 24, 1989.

Pursuant to Article 29 of the lease, landlord is entitled to be reimbursed by tenant for reasonable attorneys' fees and disbursement.

The parties are to appear in Room 581 on April 18, 1989 at 2:30 PM for a hearing to determine reasonable attorneys' fees.