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Modell's N. Y., Inc. v. Noodle Kidoodle, Inc.
Citations: 242 A.D.2d 248; 662 N.Y.S.2d 24; 1997 N.Y. App. Div. LEXIS 8477
Court: Appellate Division of the Supreme Court of the State of New York; August 28, 1997; New York; State Appellate Court
The Supreme Court of New York County, under Justice Emily Jane Goodman, modified an order from January 7, 1997, granting the defendants' motion for summary judgment regarding the plaintiffs' second and third causes of action while affirming the denial of the motion in other respects, without costs. The case involves a licensing agreement from May 1, 1989, in which defendant Greenman Bros. Inc., now merged with Noodle Kidoodle, Inc., leased premises from the plaintiff to operate a store. The lease commenced on June 1, 1989, or when the defendants opened for business, and lasted until January 31, 1999, with provisions for early termination. Key points of contention include Paragraphs 45 and 46 of the Agreement. Paragraph 45 details a Mutual Right of Cancellation, allowing either party to terminate the lease if gross receipts were below $1,000,000 after February 1, 1991, with specific notice requirements and conditions for liability. Paragraph 46 outlines the requirement for the Tenant to maintain efficient operations and adhere to operational hours set by the Landlord. The plaintiff filed suit after receiving a termination notice from Noodle on February 14, 1996, indicating that their gross sales were $654,856.59 for the previous lease year. The plaintiff's complaint alleged breach of contract, fraud, and sought a declaration that the cancellation notice was void. The defendants moved for dismissal and/or summary judgment, while the plaintiff cross-moved for partial summary judgment regarding the cancellation notice. The court ultimately determined that the fraud claim, based on allegations of misinterpretation and suppression of sales by the defendants, should have been dismissed, as it did not constitute an actionable claim separate from breach of contract. Additionally, it noted the necessity for detailed allegations in fraud claims per CPLR 3016(b). Plaintiff's fraud claim is dismissed due to insufficient specificity under CPLR 3016, lacking any allegation of reliance or supporting evidence. The claim of intentional misrepresentation does not substantiate the fraud allegation and merely raises questions related to the breach of contract. The court finds no ambiguity in the licensing agreement concerning the termination option, affirming that the option commenced on February 1, 1991, without limitations to that lease year. The trial court erred in considering extrinsic evidence to interpret the unambiguous contract language of Paragraph 45, which clearly outlines the parties' intentions. Regarding Paragraph 46, the defendants' request for summary judgment on their operational compliance is denied, as plaintiff presented evidence of operational flaws, creating triable issues of fact on breach of contract. The court rejects the defendants' argument that Paragraph 46 was limited to the landlord's right to additional rent, as no such limitation is specified in the agreement. The inclusion of Paragraph 46 is interpreted as a safeguard against potential mismanagement by the defendants.