Cobalt Blue Corp. v. 184 W. 10th Street Corp.

Order, Supreme Court, New York County (Elliott Wilk, J.), entered March 18, 1991, which, inter alia, granted plaintiff’s motion for summary judgment, reversed to the extent appealed from, on the law, and the motion denied, without costs or disbursements. Under the terms of a lease entered into by plaintiff’s assignor with defendant landlord, the tenant of the premises could renew for two successive five year terms after the expiration of the initial term of the lease on August 31, 1991. Pursuant to paragraph 60 (c), the options were required to be "exercised” at least 12 months prior to the expiration of the then existing term. However, paragraph 60 (d) provided that the tenant’s renewal options "shall be of no force and effect” in the event the landlord received a "bona fide” offer from a third-party to lease the premises at a higher rental for the period of the renewal term. The tenant had the right, within 30 days of being sent copies of the proposed third-party lease, to accept the terms by executing and returning these copies. If the tenant did not accept within this period, the landlord would be free to enter into the proposed lease with the third-party. Plaintiff, which was assigned the lease in 1984, purported to exercise the option to renew, for both five year renewal periods, in a letter dated August 3, 1989 over two years before [455] the expiration date. The defendant landlord would not agree to the further term, and on July 23, 1990, sent the plaintiff copies of a proposed offer by a third-party to rent the premises for the period at a rental three times greater than that set forth in the lease. Plaintiff refused to match such offer and brought this action for declaratory and injunctive relief. The IAS court granted plaintiff summary judgment on its first cause of action finding that the landlord was precluded from invoking the provisions of paragraph 60 (d) after the plaintiff had already exercised the renewal option. While pursuant to the terms of paragraph 60 (c), "[e]ach of said options shall be exercised by Tenant giving notice by certified mail to Landlord * * * at least twelve (12) months before the expiration of the then existing term”, the terms of paragraph 60 (d) can reasonably be interpreted to contemplate countervailing offers received by landlord from bona fide third-parties, even after the tenant exercised the option to renew. Thus, that paragraph provides that if the landlord receives a third-party offer "at any time prior to the expiration of the then existing term” (emphasis added), the renewal options "shall be of no force and effect”. In view of the ambiguity raised by these sections of the lease, the IAS court improvidently granted plaintiff summary judgment. Further, while plaintiff asserts that defendant made a counter offer for a ten year renewal which was not on the same terms and conditions as the existing lease, the plaintiff purported to exercise both the five year renewal options of the lease in 1989. This, and other minor changes, simply raise other issues of fact as to whether the variance in the terms was substantial or de minimis. Although the plaintiff does not attack the counter offer as not bona fide, this also remains as an issue of fact which cannot be determined on the papers before us. Concur—Rosenberger, Kupferman, Ross and Asch, JJ.