Women's Interart Center, Inc. v. New York City Economic Development Corp.

97 A.D.3d 17, 944 N.Y.2d 137

This text of 97 A.D.3d 17 (Women's Interart Center, Inc. v. New York City Economic Development Corp.) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Women's Interart Center, Inc. v. New York City Economic Development Corp., 97 A.D.3d 17, 944 N.Y.2d 137 (N.Y. Ct. App. 2012).

Opinion

OPINION OF THE COURT

Renwick, J.

The Women’s Interart Center (WIC), a not-for-profit cultural organization in Manhattan’s Hell’s Kitchen, commenced two separate actions with regard to properties it leases from the City of New York (the City) and which it intends to purchase and develop into rehearsal studios and a cultural center. The two actions have been consolidated for a joint trial. In the first action, WIC challenges the City’s termination of a contract to sell the subject properties to WIC. In the second action, WIC [19]*19challenges Clinton Housing Development Fund Corp.’s (CHDFC) attempt to evict WIC from the same properties after the former acquired a putative “net lease” of the same property from the City. This appeal involves a ruling in WIC’s favor in the second action, declaring that CHDFC lacks standing to commence eviction proceedings against WIC.

WIC has been involved since 1971 with theatrical productions and the support of visual artists, writers, and smaller theatrical companies, as well as others. In July 1971, WIC began to lease space at 549 West 52nd Street from the City. The lease is month to month. In the past, WIC has used its space at 549 West 52nd Street as a theater and art gallery, and for workshops, among other things. Due to the terrible condition of the building, however, WIC ceased presenting public programming there. On January 25, 1996, WIC leased part of the second floor at 500 West 52nd Street from the City to be used as a theater. It is WIC’s sole venue for public programming.

Beginning in the 1990s, WIC sought to purchase the building at 549 West 52nd Street, and an adjacent City-owned property consisting of vacant garages, for a nominal sum to create a cultural facility. The building’s owner, the Department of Housing Preservation and Development (HPD), was to transfer ownership to defendant New York City Economic Development Corp. (EDC) which would then sell it and the adjacent property to WIC for two dollars. In August 2001, EDC and WIC executed a contract, which included a development plan, for the sale of the two City-owned parcels, each for one dollar. Reportedly, when all the conditions had not been met, EDC terminated the contract and the project in December 2002.

In April 2003, WIC commenced a federal action, raising both federal and state claims against the City and others. The two federal claims were a First Amendment retaliation claim and an equal protection claim. After completion of discovery, in an order dated May 23, 2005, the district court granted the defendants summary judgment dismissing WIC’s federal claims. The district court declined to exercise supplemental jurisdiction over the state constitutional and common-law claims and thus dismissed those claims for lack of subject matter jurisdiction, but without prejudice (2005 WL 1241919, 2005 US Dist LEXIS 10027 [SD NY 2005]). WIC then commenced the first action (index No. 109017-07) against EDC, for breach of contract, and the City, for tortious interference with WIC’s contract with EDC.

[20]*20Meanwhile, on or about April 15, 1999, CHDFC and the City entered into an agreement that they called a “net lease,” which was extended on October 11, 2007. The agreements cover multiple buildings, including 500 West 52nd Street and 543-549 West 52nd Street. The term of each contract is month-to-month. The rent paid by CHDFC for the entire term is one dollar and “such other amounts as shall be due and payable to [the City] hereunder.” Each agreement states, “The sole and exclusive relationship of [the City] and [CHDFC] hereunder shall be that of landlord and tenant. [CHDFC] is not and shall not be deemed to be an agent ... of [the City] by virtue of this Net Lease.” Each contract says that CHDFC shall operate and manage the premises.

On March 31, 2006, the City sent WIC a letter regarding 500 West 52nd Street, stating, “effective May 1, 2006, [CHDFC] will assume management of the property that you currently lease from the Department of Housing Preservation and Development” and instructing WIC to send rent payments to CHDFC. On March 29, 2007, the City sent WIC a similar letter regarding 549 West 52nd Street for the period April 1, 2007 onward.

In August and September 2007, CHDFC informed WIC that it was terminating the latter’s tenancies at 500 and 549 West 52nd Street. On March 24, 2008, CHDFC commenced holdover proceedings against WIC in Civil Court with respect to both buildings. On the same day, WIC commenced the second action in Supreme Court, seeking a declaratory judgment and a permanent injunction.

CHDFC then answered and asserted affirmative defenses. Supreme Court removed CHDFC’s landlord-tenant petitions from Civil Court and consolidated them into the second action. After discovery, CHDFC moved for summary judgment dismissing the complaint and remanding the landlord-tenant cases to Civil Court. On August 19, 2010, the court denied CHDFC’s motion for summary judgment in the second action. Instead, the court declared that WIC was entitled to a declaratory judgment that CHDFC lacked authority to terminate or otherwise encumber the WIC tenancies at issue here because the “Net Lease,” the April 15, 1999 agreement between the City, acting through HPD, and CHDFC, constituted merely a “management agreement” respecting the subject WIC premises (2010 NY Slip Op 32242ÍUJ, *7, *10 [2010]). This appeal followed.

CHDFC argues that Supreme Court erred when it declared that it lacked standing to institute an eviction proceeding [21]*21against WIC. CHDFC contends that the agreement between it and the City is by its terms a net lease and not a contract for management services. WIC, however, argues that the agreement, although designated as a “net lease,” is by its terms a contract for management services. If the proof supports WIC’s position, CHDFC’s action against WIC would be illegal because as an agent of the landlord, it would not have standing to maintain an eviction proceeding (see RPAPL 721; see also Key Bank of N.Y. v Becker, 88 NY2d 899 [1996]).

To determine whether the underlying agreement is a net lease or a contract for management services, its contents must be examined in order to see what interest the parties intended to pass (Statement, Inc. v Pilgrim’s Landing, 49 AD2d 28, 33 [1975]). The mere fact that the agreement is referred to as a “net lease” does not transform it into one (Feder v Caliguira, 8 NY2d 400, 404 [1960]; Matter of Davis v Dinkins, 206 AD2d 365, 366 [1994], lv denied 85 NY2d 804 [1995]; American Jewish Theatre v Roundabout Theatre Co., 203 AD2d 155, 156 [1994]; 74 NY Jur 2d, Landlord and Tenant § 2). Rather, the court must look to the rights and obligations that the agreement confers to determine its true nature (American Jewish Theatre, 203 AD2d at 156; Feder, 8 NY2d at 404).

The critical question in determining the existence of a lease establishing a landlord-tenant relationship is whether exclusive control of the premises has passed to the tenant (see Feder, 8 NY2d at 404; Matter of Davis, 206 AD2d at 366; American Jewish Theatre, 203 AD2d at 156; Ferrer v Dinkins, 218 AD2d 89, 93 [1996], lv denied 88 NY2d 801 [1996]; Slutzky v Cuomo, 114 AD2d 116, 118 [1986], appeal dismissed 68 NY2d 663 [1986]). If this control has passed, even though the use is restricted by limitations or reservations, a landlord-tenant relationship is established (see Feder, 8 NY2d at 404; Layton v A. I. Namm & Sons, Inc.,

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Related

Layton v. A. I. Namm & Sons, Inc.
98 N.E.2d 590 (New York Court of Appeals, 1951)
Feder v. Caliguira
171 N.E.2d 316 (New York Court of Appeals, 1960)
Miller v. City of New York
203 N.E.2d 478 (New York Court of Appeals, 1964)
Key Bank v. Becker
669 N.E.2d 814 (New York Court of Appeals, 1996)
Statement, Inc. v. Pilgrim's Landing, Inc.
49 A.D.2d 28 (Appellate Division of the Supreme Court of New York, 1975)
Slutzky v. Cuomo
114 A.D.2d 116 (Appellate Division of the Supreme Court of New York, 1986)
Schlesinger v. Rockefeller Center, Inc.
119 A.D.2d 462 (Appellate Division of the Supreme Court of New York, 1986)
First Federal Savings v. Minkoff
176 A.D.2d 1049 (Appellate Division of the Supreme Court of New York, 1991)
American Jewish Theatre, Inc. v. Roundabout Theatre Co.
203 A.D.2d 155 (Appellate Division of the Supreme Court of New York, 1994)
Davis v. Dinkins
206 A.D.2d 365 (Appellate Division of the Supreme Court of New York, 1994)
Ferrer v. Dinkins
218 A.D.2d 89 (Appellate Division of the Supreme Court of New York, 1996)
Nextel of New York, Inc. v. Time Management Corp.
297 A.D.2d 282 (Appellate Division of the Supreme Court of New York, 2002)
Harris v. Adams & Co. Real Estate, Inc.
62 Misc. 2d 749 (Civil Court of the City of New York, 1970)

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Bluebook (online)
97 A.D.3d 17, 944 N.Y.2d 137, Counsel Stack Legal Research, https://law.counselstack.com/opinion/womens-interart-center-inc-v-new-york-city-economic-development-corp-nyappdiv-2012.