S. Nassau Med. Grp., P.C. v. 105 Rockaway Realty, LLC

208 A.D.3d 812

174 N.Y.S.3d 426

SOUTH NASSAU MEDICAL GROUP, P.C., et al., plaintiffs-respondents,

v.105 ROCKAWAY REALTY, LLC, defendant third-party plaintiff-appellant;

Mount Sinai Health System, Inc., third-party defendant-respondent.

2019–09963

Index No. 615625/18

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

Argued—April 5, 2022

August 24, 2022

Rivkin Radler, LLP, Uniondale, NY (Cheryl F. Korman, David M. Grill, and Henry Mascia of counsel), for defendant third-party plaintiff-appellant.

Abell Eskew Landau, LLP, New York, NY (Scott R. Landau and Kenneth M. Abell of counsel), for plaintiffs-respondents and third-party defendant-respondent.

COLLEEN D. DUFFY, J.P., SHERI S. ROMAN, JOSEPH J. MALTESE, WILLIAM G. FORD, JJ.

DECISION & ORDER

In an action, inter alia, for a judgment declaring that the plaintiffs have no obligations under a particular lease and guaranty, the defendant third-party plaintiff appeals from an order of the Supreme Court, Nassau County (Jerome C. Murphy, J.), entered July 25, 2019. The order granted the motion of the plaintiffs and the third-party defendant for summary judgment on the complaint and pursuant to CPLR 3211(a)(7) to dismiss the third-party complaint.

ORDERED that the order is affirmed, with costs, and the matter is remitted to the Supreme Court, Nassau County, for the entry of a judgment, inter alia, declaring that the plaintiffs have no obligations under the lease and guaranty.

South Nassau Medical Group, P.C., and South Nassau Communities Hospital (hereinafter together the plaintiffs) commenced this action, inter alia, for declaratory relief regarding a lease agreement between the defendant and South Nassau Medical Group, P.C., and a guaranty for that lease that South Nassau Communities Hospital had executed. The obligations owed by the plaintiffs under the lease were expressly conditioned upon the plaintiffs acquiring an ownership interest, on terms acceptable to the plaintiffs, in Rockaways ASC Development, LLC (hereinafter Rockaways ASC), a nonparty with which South Nassau Communities Hospital had previously executed a letter of intent. The plaintiffs alleged that, because they never acquired an ownership interest in Rockaways ASC, they had no continuing obligations to the defendant under the lease or the guaranty.

The defendant answered and commenced a third-party action against the third-party defendant, Mount Sinai Health System, Inc. The defendant alleged, inter alia, that the plaintiffs had breached the duty of good faith and fair dealing, and that the third-party defendant had tortiously interfered with the lease after entering into an affiliation agreement with the plaintiffs.

The plaintiffs and the third-party defendant moved, together, for summary judgment on the complaint and pursuant to CPLR 3211(a)(7) to dismiss the third-party complaint. In an order entered July 25, 2019, the Supreme Court granted the motion. The defendant appeals, and we affirm.

The plaintiffs met their burden of establishing, prima facie, that the condition precedent to their obligations under the lease had not been met. "A condition precedent is an act or event, other than a lapse of time, which, unless the condition is excused, must occur before a duty to perform a promise in the agreement arises" ( Argo Corp. v. Greater N.Y. Mut. Ins. Co., 4 N.Y.3d 332, 337 n. 2, 794 N.Y.S.2d 704, 827 N.E.2d 762 [internal quotation marks omitted]). "Express conditions precedent, which are those agreed to and imposed by the parties themselves, ‘must be literally performed’ " ( Preferred Mtge. Brokers, Inc. v. Byfield, 282 A.D.2d 589, 590, 723 N.Y.S.2d 230, quoting Oppenheimer & Co. v. Oppenheim, Appel, Dixon & Co., 86 N.Y.2d 685, 690, 636 N.Y.S.2d 734, 660 N.E.2d 415 ). Here, the plaintiffs presented evidence that they had not acquired an ownership interest in Rockaways ASC, which was undisputed by the defendant.

The proponent of a summary judgment motion must also demonstrate, prima facie, that the affirmative defenses raised by the opposing party are inapplicable (see Status Gen. Dev., Inc. v. 501 Broadway Partners, LLC, 163 A.D.3d 740, 742, 82 N.Y.S.3d 34 ). "Implicit in every contract is a covenant of good faith and fair dealing which encompasses any promise that a reasonable promisee would understand to be included" ( 25 Bay Terrace Assoc., L.P. v. Public Serv. Mut. Ins. Co., 144 A.D.3d 665, 667, 40 N.Y.S.3d 469 [internal quotation marks omitted]). " ‘The implied covenant of good faith and fair dealing is a pledge that neither party to the contract shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruit of the contract, even if the terms of the contract do not explicitly prohibit such conduct’ " ( id. at 667, 40 N.Y.S.3d 469, quoting Gutierrez v. Government Empls. Ins. Co., 136 A.D.3d 975, 976, 25 N.Y.S.3d 625 ). "Where the contract contemplates the exercise of discretion, this pledge includes a promise not to act arbitrarily or irrationally in...