Johnson v. Chemical Bank

147 Misc. 2d 390, 555 N.Y.S.2d 538, 1990 N.Y. Misc. LEXIS 203
CourtOrangetown Justice Court
DecidedMarch 20, 1990
StatusPublished
Cited by1 cases

This text of 147 Misc. 2d 390 (Johnson v. Chemical Bank) is published on Counsel Stack Legal Research, covering Orangetown Justice Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Johnson v. Chemical Bank, 147 Misc. 2d 390, 555 N.Y.S.2d 538, 1990 N.Y. Misc. LEXIS 203 (N.Y. Super. Ct. 1990).

Opinion

OPINION OF THE COURT

Paul B. Phinney, III, J.

Petitioners have brought on a summary proceeding alleging that the respondent tenants have failed to pay the rent as required in the lease in the sum of $2,333.33 and seek recovery of unpaid rent plus legal fees in the sum of $600 plus costs and disbursements. The respondent has appeared and denied the allegations and has set up an affirmative defense that the rent has been incorrectly calculated and, in fact, is a lower amount which Chemical Bank has forwarded to petitioner and which petitioner has rejected. Chemical Bank is also counterclaiming for one half the fee of the appraiser in the sum of $1,250. However, in later papers the attorneys for the respondent bank have admitted that the petitioner landlords have, in fact, paid one half the appraiser’s fee, albeit late, and accordingly the counterclaim is dismissed as moot.

Additionally, petitioner has brought on a cross motion to compel compliance with a subpoena duces tecum demanding that various documents be produced at a summary proceeding scheduled to be held before the court on March 20, 1990 at 3:30 p.m. wherein the petitioners have subpoenaed, inter alia, contracts of sale and closing statements for sale of all Chemical Bank branches to First National Bank of Highland from January 1, 1988 and all Federal and State tax returns from January 1, 1989. Respondents have moved to quash the subpoenas as to those above-listed items.

The factual setting of this matter is that the respondent chose to exercise its option to renew a lease originally entered into between the petitioners and respondent’s predecessor on May 1, 1964. It is undisputed that the respondent timely exercised its option to renew and set its valuation of the rental based on a formula set forth in the lease. Petitioners also, pursuant to the lease, timely objected to the lessee’s valuation and rental amount based thereon, and timely moved, pursuant to the lease, to have the appraisers for both the petitioner and respondent meet at the rented premises and select a third appraiser.

The portion of the lease relied on by both parties is found in section rv (a) on page four of the lease which provides that if [392]*392the lessee exercises its option to renew, then the annual rental for the extension period shall be an amount equal to 8% of the value of the land, buildings and improvements, but not less than the rental for the proceeding year. Specifically excluded from consideration (of the appraiser) shall be those buildings or improvements which were erected or installed at the sole expense of the lessee. It was further provided that the appraisal as determined by the third-party appraiser shall be binding on both the lessor and the lessee.

In this case the third-party appraiser was Thomas G. Martin who, pursuant to a letter dated July 4, 1989 accompanying his appraisal, appraised the fair market value in fee simple, as of April 15, 1989, at $350,000 (while not relevant to the decision, this court is amazed that Mr. Martin obtained the services of a secretary to type a letter on July 4, a national holiday!).

The gravamen of respondent’s defense is that the appraiser totally failed to take into account, and deduct from his valuation of the real property, the buildings or improvements that were erected by the lessee as was required pursuant to the terms of the lease. Respondent further argues, and has submitted affidavits from its real estate officer, Robert S. Wagner, that the value of the improvements made by the lessee are equal to or exceed $123,155.75, and thus a reduction of that amount from the appraised value leaves a value of the real property of $146,844.43, which when multiplied by 8% yields a figure less than the previous year’s rent and thus the previous year’s rent of $1,190.42 should apply. Respondent further calls upon the court to review the appraisal and hold the same was improperly done and, in effect, have a hearing to determine the correct valuation of the property.

Petitioner opposes on the ground that the relief that the respondent is asking is beyond the power of the Justice Court and that further, the respondent has missed his time deadlines for bringing this matter before a proper court. CPLR 7601 provides that a special proceeding may be commenced to specifically enforce an agreement that a question of valuation or appraisal be determined by a person named or to be selected and that the court may enforce such an agreement as if it were an arbitration agreement brought under CPLR article 75.

The first issue is whether or not this court has jurisdiction to resolve this issue. Petitioner cites UJCA 206, which pro[393]*393vided in subdivision (b) "CPLR article 75, relating to arbitrability and arbitration, shall not be applicable in the court. If it appears to the court that a genuine issue exists as to the arbitrability of the matter for which the action has been brought, the court shall stay the action until such issue has been resolved by a court of competent jurisdiction.” It is thus clear that if the relief respondents are seeking can only be provided pursuant to CPLR article 75, this court has no jurisdiction. CPLR 7601 provides that a party may commence a special proceéding to enforce an agreement providing for a valuation appraisal to be determined by a person named or to be selected and that the court should enforce such an agreement as if it were an arbitration agreement and the proceeding should be conducted as if brought under CPLR article 75. The question before this court is whether section 7601 only relates to proceedings to enforce an appraisal pursuant to an agreement or is broader than that and requires the court to apply article 75 to all questions concerning an appraisal. The Court of Appeals in Matter of Penn Cent. Corp. (Consolidated Rail Corp.) (56 NY2d 120 [1982]) ruled on a case which, in many ways is almost identical to the case at bar. In Matter of Penn Cent. Corp. (Consolidated Rail Corp.) (supra), Penn Central and Consolidated Rail Corporations had a dispute as to the valuation of their respective rights to a certain piece of property that was sold to the Triborough Bridge and Tunnel Authority. Conrail owned the surface rights and Penn Central owned the air rights. In order not to effect or hold up the sale, both parties agreed to the same and placed the proceeds in an escrow account and the valuation of their respective rights, pursuant to a letter agreement, was to be determined by three qualified disinterested appraisers. Certain written stipulations of fact were agreed to and given to the appraisers and the appraisers then rendered their decision holding that Penn Central was entitled to 65% of the proceeds and Conrail was entitled to 35% of the proceeds. Conrail refused to accept the appraisal and Penn Central commenced a proceeding under CPLR 7601 to enforce the appraisal. In rendering its decision, the Court of Appeals recognized that the courts have historically recognized the basic distinction between appraisals and arbitration, in that appraisals are much less formal and the courts historically have not simply rubber-stamped the results of appraisals. The court went on to hold that in the particular facts and circumstances of that case, where the appraiser’s valuation was the only issue in dispute, that the court could [394]*394confirm the appraisal report in a proceeding under CPLR 7601.

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Related

In re the Arbitration between Tamaron Investment, Inc. & Raia
167 Misc. 2d 125 (New York Supreme Court, 1996)

Cite This Page — Counsel Stack

Bluebook (online)
147 Misc. 2d 390, 555 N.Y.S.2d 538, 1990 N.Y. Misc. LEXIS 203, Counsel Stack Legal Research, https://law.counselstack.com/opinion/johnson-v-chemical-bank-nyjustctorange-1990.