INTERNATIONAL DEVELOPMENT INSTITUTE INC v. Greenpoint Mortgage Funding, Inc., et al., Defendants. (2021)

Order, Supreme Court, Bronx County (Norma Ruiz, J.), entered on or about May 17, 2019, which denied defendant Westchester Plaza, LLC's motion for partial summary judgment dismissing the first through fourth, seventh through eleventh, and fourteenth causes of action, unanimously reversed, on the law, without costs, and the motion granted.

This dispute arises from the lease of the second floor of defendant's building for the intended purpose of use by plaintiff as a school.  Plaintiff contends that defendant misrepresented that it would cooperate in obtaining the certificate of occupancy (CO), including by curing existing first-floor violations and carrying out the supporting work which defendant undertook to do (roof repair and electrical work).  This is merely a contention that defendant never intended to perform its obligations under the lease.  Plaintiff's claim for fraudulent misrepresentation must thus be dismissed as duplicative of its claims under the lease (see MMCT, LLC v. JTR Coll. Point, LLC, 122 A.D.3d 497, 499, 997 N.Y.S.2d 374 [1st Dept. 2014]).  The negligent misrepresentation claim fails for the same reason (see Greenman–Pedersen, Inc. v. Levine, 37 A.D.3d 250, 829 N.Y.S.2d 107 [1st Dept. 2007]).

In support of its claim for fraudulent concealment, plaintiff contends that defendant should have, but did not, disclose numerous existing first-floor violations, which made it impossible to use the premises as a school, as stated in the lease, or indeed to obtain a CO at all.  This contention is also unavailing.  Plaintiff's own submissions demonstrate that the first-floor violations were numerous, long-standing (many dating back to the 1990s), and matters of public record.  Plaintiff was a sophisticated party to an arm's-length contract and defendant expressly eschewed any warranties and presented the property for lease “as-is.”  It was incumbent on plaintiff to exercise full due diligence to ascertain all factors having a bearing on obtaining a CO. Plaintiff did not do so and thus cannot assert any claim for fraudulent concealment (see Jana L. v. West 129th St. Realty Corp., 22 A.D.3d 274, 278, 802 N.Y.S.2d 132 [1st Dept. 2005].).

Plaintiff's fraud claim underpins its claim for reformation of the lease.  Since plaintiff has no viable fraud claim, its claim for reformation also fails (see Resort Sports Network Inc. v. PH Ventures III, LLC, 67 A.D.3d 132, 136, 886 N.Y.S.2d 5 [1st Dept. 2009];  Kadish Pharm., Inc. v. Blue Cross & Blue Shield of Greater N.Y., Inc., 114 A.D.2d 439, 440, 494 N.Y.S.2d 354 [2d Dept. 1985], lv dismissed 68 N.Y.2d 641, 505 N.Y.S.2d 72, 496 N.E.2d 231 [1986]).

Plaintiff contends that defendant breached the lease's express covenant of quiet enjoyment.  Plaintiff remained in possession of the premises throughout the entire lease term, however.  Thus, “plaintiff's cause of action for breach of the warranty of quiet enjoyment is not viable as plaintiff has remained in full possession of the leased premises at all relevant times” (Rivera v. JRJ Land Prop. Corp., 27 A.D.3d 361, 364–365, 812 N.Y.S.2d 63 [1st Dept. 2006]).

Plaintiff's unjust enrichment cause of action is, again, premised on its allegations of fraud, which are unavailing.  Nor does plaintiff seek any specific damages in connection with the unjust enrichment claim, distinct from the contract claim.  In each case, plaintiff principally seeks to recoup the value of the improvements.  Nor does plaintiff argue that the lease is irredeemably void.  To the contrary, plaintiff continues to stand on its contract claims.  Accordingly, the unjust enrichment claims must be dismissed as duplicative of the contract claims (see Clark–Fitzpatrick, Inc. v. Long Is. R.R. Co., 70 N.Y.2d 382, 388–389, 521 N.Y.S.2d 653, 516 N.E.2d 190 [1987]).

Plaintiff's claim for tortious interference with business relations fails on multiple grounds.  In the first place, while plaintiff certainly planned to establish a school at the premises, the site was never approved for such use.  Plaintiff points to no evidence that it even had relations with any prospective students.  Nor did defendant interfere with any such unidentified relations (see Carvel Corp. v. Noonan, 3 N.Y.3d 182, 189, 785 N.Y.S.2d 359, 818 N.E.2d 1100 [2004]).  Moreover, as discussed, plaintiff has failed to establish any fraud claim.  As such, plaintiff has failed to establish that defendant used any wrongful means to interfere with any business relations (see Thome v. Alexander & Louisa Calder Found., 70 A.D.3d 88, 108, 890 N.Y.S.2d 16 [1st Dept. 2009], lv denied 15 N.Y.3d 703, 2010 WL 2572017 [2010]).

Plaintiff's claims for actual and constructive eviction fail, because it never surrendered possession of the premises (see Barash v. Pennsylvania Term. Real Estate Corp., 26 N.Y.2d 77, 82, 308 N.Y.S.2d 649, 256 N.E.2d 707 [1970];  Joon Song v. MHM Sponsors Co., 176 A.D.3d 572, 573, 111 N.Y.S.3d 581 [1st Dept. 2019];  127 Rest. Corp. v. Rose Realty Group, LLC, 19 A.D.3d 172, 173, 798 N.Y.S.2d 387 [1st Dept. 2005]).