MORTON OF CHICAGO GREAT NECK LLC v. CRAB HOUSE INC

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Supreme Court, Appellate Division, Second Department, New York.

MORTON'S OF CHICAGO/GREAT NECK LLC, Respondent, v. CRAB HOUSE, INC., Appellant, et al., Defendant.

Decided: August 19, 2002

MYRIAM J. ALTMAN, J.P., ROBERT W. SCHMIDT, SANDRA L. TOWNES and BARRY A. COZIER, JJ. Willkie Farr & Gallagher, New York, N.Y. (Stephen Greiner, Monty Davis, and Jonathan C. Harris of counsel), for appellant. Certilman Balin Adler & Hyman, LLP, East Meadow, N.Y. (Patrick McCormick of counsel), for respondent.

In an action, inter alia, for a judgment declaring that the plaintiff landlord's acceptance of the defendant tenant's offer to terminate a lease was valid, holdover use and occupancy payments, and an attorney's fee, the defendant Crab House, Inc., appeals from (1) so much of an order of the Supreme Court, Nassau County (Adams, J.), entered August 15, 2000, as granted the plaintiff's motion for summary judgment, determined that the plaintiff landlord's acceptance of the defendant tenant's offer to terminate the lease was valid, set the matter down for an inquest to determine the amount of holdover use and occupancy payments and the attorney's fee, and denied its cross motion for partial summary judgment dismissing the plaintiff's second cause of action for holdover use and occupancy payments, (2) an order of the same court, entered March 23, 2001, which, after an inquest, awarded the plaintiff holdover use and occupancy payments of $347,229.09, and an attorney's fee, costs, and disbursements of $49,000, and (3) a judgment of the same court, dated March 26, 2001, which is in favor of the plaintiff and against it in the principal sum of $396,229.09.

ORDERED that the appeals from the orders entered August 15, 2000, and March 23, 2001, are dismissed;  and it is further,

ORDERED that the judgment is modified by adding a provision thereto declaring that the plaintiff landlord's acceptance of the defendant tenant's offer to terminate the lease was valid;  as so modified, the judgment is affirmed;  and it is further,

ORDERED that the plaintiff is awarded one bill of costs.

 The appeals from the intermediate orders must be dismissed because the right of direct appeal therefrom terminated with the entry of judgment in the action (see Matter of Aho, 39 N.Y.2d 241, 248, 383 N.Y.S.2d 285, 347 N.E.2d 647).   The issues raised on the appeals from the orders are brought up for review and have been considered on the appeal from the judgment (see CPLR 5501 [a][1] ).

In October 1994, the defendant Crab House, Inc., (hereinafter Crab House), as tenant, and Thomaston Northern Associates and Shore-Port Washington Development Corp., as landlords, entered into a lease of real property located on Northern Boulevard in Great Neck. The lease provided that, as a prerequisite to any assignment of the lease or sublease of the premises, the tenant was required to offer “to terminate this lease as of the last day of any calendar month during the term hereof and to vacate and surrender the Demised Premises to Landlord on the date fixed in the notice served by Tenant upon Landlord.”   The lease further provided that “[a]ny notice, demand, request or other document or instrument which may be or is required to be given under this lease, shall be in writing and shall be deemed delivered when received or first refused.”

By June 1998, Crab House had closed its restaurant at the premises and was seeking an assignee of the lease or subtenant for the property.   In December 1998, the plaintiff, Morton's of Chicago/Great Neck, LLC (hereinafter Morton's), acquired the premises and became the defendant's landlord.   In January 1999, Crab House located a potential sublessor.   By letter dated February 11, 1999, Crab House advised Morton's that it had found a suitable subtenant, and that, pursuant to the lease, it was seeking consent to its assignment of the lease and offering Morton's the option of terminating the lease.   On February 18, 1999, during a telephone conversation with Crab House's general counsel and vice-president, Morton's attorney orally accepted Crab House's offer to terminate the lease.   On the same day, Morton's mailed a certified letter confirming the acceptance.   Crab House subsequently attempted to revoke its offer to terminate the lease in a certified letter to Morton's dated February 18, 1999, and by facsimile transmission to Morton's dated February 19, 1999.   On February 22, 1999, Crab House received Morton's certified letter confirming its oral acceptance of Crab House's offer to terminate the lease.   On that same date, Morton's received Crab House's certified letter revoking the offer to terminate the lease.

 The Supreme Court properly determined that Morton's accepted Crab House's offer to terminate the lease and surrender the premises prior to its receipt of Crab House's attempted revocation of the offer, and that the lease terminated on February 28, 1999.   We agree with the Supreme Court's conclusion that, although the lease required that the tenant's offer to terminate the lease be in writing, it did not dictate the manner of acceptance of the offer.   Since a binding contract is formed by an oral acceptance of a written offer (see Tymon v. Linoki, 16 N.Y.2d 293, 298, 266 N.Y.S.2d 357, 213 N.E.2d 661), and it is undisputed that Morton's orally accepted Crab House's offer to terminate the lease prior to Crab House's attempt to revoke the offer, there was a binding agreement to terminate the lease.   Moreover, Morton's oral acceptance of the offer to terminate the lease was followed on the same day by the mailing of its written acceptance of the offer.   Morton's mailed its written acceptance of the offer on the day before Crab House faxed its notice of revocation of the offer.   Acceptance of an offer is effective upon dispatch, and “the contract springs into existence at the time of [the] mailing” (Wester v. Casein Co., 206 N.Y. 506, 513, 100 N.E. 488;  see Buchbinder Tunick & Co. v. Manhattan Natl. Life Ins. Co., 219 A.D.2d 463, 466, 631 N.Y.S.2d 148;  Restatement [Second] of Contracts § 63).

 We note that since this is in part a declaratory judgment action, the Supreme Court should have made a declaration in favor of the respondents (see Lanza v. Wagner, 11 N.Y.2d 317, 334, 229 N.Y.S.2d 380, 183 N.E.2d 670,appeal dismissed 371 U.S. 74, 83 S.Ct. 177, 9 L.Ed.2d 163, cert. denied 371 U.S. 901, 83 S.Ct. 205, 9 L.Ed.2d 164).

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