Hylan Ross, LLC v. 2582 Hylan Boulevard Fitness Grp., LLC

206 A.D.3d 893

172 N.Y.S.3d 29

HYLAN ROSS, LLC, etc., appellant,

v.2582 HYLAN BOULEVARD FITNESS GROUP, LLC, etc., et al., respondents.

2019-14388

Index No. 151877/19

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

Argued—February 22, 2022

June 22, 2022

McLaughlin & Stern, LLP, New York, NY (Chester R. Ostrowski and Jason S. Giaimo of counsel), for appellant.

Olshan Frome Wolosky LLP, New York, NY (Thomas J. Fleming and Tara S. Richelo of counsel), for respondents.

ANGELA G. IANNACCI, J.P., SHERI S. ROMAN, LARA J. GENOVESI, WILLIAM G. FORD, JJ.

DECISION & ORDER

In an action, inter alia, to recover damages for breach of a lease agreement, the plaintiff appeals from an order of the Supreme Court, Richmond County (Orlando Marrazzo, Jr., J.), dated December 2, 2019. The order granted that branch of the defendants’ motion which was pursuant to CPLR 3211(a) to dismiss the complaint.

ORDERED that the order is affirmed, with costs.

The plaintiff is the successor in interest to BMN, LLC (hereinafter the landlord), which owned certain property on Staten Island. In March 2013, the landlord entered into a lease agreement with the defendant 2582 Hylan Boulevard Fitness Group, LLC, doing business as Planet Fitness (hereinafter the tenant), for the tenant to operate a health club and fitness facility on two floors of the property (hereinafter the premises). The landlord was to complete construction of the building prior to delivery of the premises. Section 7.01(b) of the lease (hereinafter the Approvals provision) provided, in pertinent part: "Landlord hereby agrees that Landlord, at Landlord's sole cost and expense, shall obtain any and all approvals, including any and all building permits, hereunder (collectively, the "Approvals ") and obtain a Certificate of Occupancy (temporary or permanent[)] for the Building. Landlord shall have a period of eighteen (18) months after the Effective Date (the "Approval Period ") to obtain the Approvals."

In the event the landlord was unable to timely obtain all approvals, the tenant had the right to terminate the lease. The defendant PFNY, LLC, guaranteed, inter alia, the payment of all base rent and common area costs for the first 10 years of the lease.

On or about March 6, 2015, the tenant sent the landlord a notice that it was terminating the lease due to the landlord's failure to obtain all approvals prior to the expiration of the Approval Period. The landlord rejected the notice, stating that it had timely obtained all approvals required to construct the building.

The plaintiff thereafter commenced this action alleging that the defendants breached the lease and the guaranty by purporting to terminate the lease when the landlord had timely obtained all "Approvals" contemplated by the Approval provision. The complaint alleged, among other things, that the parties specifically agreed that, in accordance with industry standards, it would be the tenant's responsibility to obtain certain permits, and other permits did not need to be obtained prior to substantial completion of construction.

The defendants moved, inter alia, pursuant to CPLR 3211(a)(1) and (7) to dismiss the complaint, arguing, among other things, that the lease unambiguously required the landlord to obtain all approvals, and that the plaintiff conceded that the approvals process was ongoing beyond the 18–month period set forth in the Approvals provision. In an order dated December 2, 2019, the Supreme Court granted that branch of the defendants’ motion which was to dismiss the complaint. The plaintiff appeals.

"[A] contract is to be construed in accordance with the parties’ intent, which is generally discerned from the four corners of the document itself. Consequently, ‘a written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms’ " ( MHR Capital Partners LP v. Presstek, Inc., 12 N.Y.3d 640, 645, 884 N.Y.S.2d 211, 912 N.E.2d 43, quoting Greenfield v. Philles Records, Inc. 98 N.Y.2d 562, 569, 750 N.Y.S.2d 565, 780 N.E.2d 166 ; see Ellington v. EMI Music, Inc., 24 N.Y.3d 239, 244, 997 N.Y.S.2d 339, 21 N.E.3d 1000 ). This rule has "special import in the context of real property transactions, where commercial certainty is a paramount concern, and where the instrument was negotiated between sophisticated, counseled business people negotiating at arm's length. In such circumstances, courts should be extremely reluctant to interpret an agreement as impliedly stating something which the parties have neglected to specifically include. Hence, courts may not by construction add or excise terms, nor distort the meaning of those used and thereby make a new contract for the parties under the guise of interpreting the writing" ( Vermont Teddy Bear Co. v. 538 Madison Realty Co., 1 N.Y.3d 470, 475, 775 N.Y.S.2d 765, 807 N.E.2d 876 [alterations, citations, and internal quotation marks omitted]).

Extrinsic evidence is generally inadmissible to add to or vary the writing, and may not create an ambiguity where one does not exist (see Donohue v. Cuomo, 38 N.Y.3d 1, 12–13, 164 N.Y.S.3d 39, 184 N.E.3d 860 ; Fini v. Marini, 164 A.D.3d 1218, 1221, 83 N.Y.S.3d 595 ). "Where a contract contains a merger clause, a court is obliged to require full application of the parol evidence rule in order to bar the introduction of extrinsic evidence to vary or contradict the terms of the writing" ( Vivir of L I. Inc. v. Ehrenkranz, 127 A.D.3d 962, 964, 7 N.Y.S.3d 411 ; see Schron v. Troutman Sanders LLP, 20 N.Y.3d 430, 436, 963 N.Y.S.2d 613, 986 N.E.2d 430 ). However, where contract language is "reasonably susceptible of more than one interpretation," and thus ambiguous, extrinsic or parol evidence is permitted to determine the parties’ intent as to the meaning of that language ( Chimart Assoc. v. Paul, 66 N.Y.2d 570, 573, 498 N.Y.S.2d 344, 489 N.E.2d 231 ; see Union Carbide Corp. v. Affiliated FM Ins. Co., 16 N.Y.3d 419, 425, 922 N.Y.S.2d 220, 947 N.E.2d 111 ; Yarom v. Poliform S.P.A., 153 A.D.3d 760, 761, 60 N.Y.S.3d 283 ). Whether a contract is ambiguous...