Present: HON. UTE WOLFF LALLY, Justice TRIAL/IAS, PART 17 NASSAU COUNTY HERCULES CORP., Plaintiff(s), Defendant(s).

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1 L SHORT FORM ORDER SUPREME COURT - STATE OF NEW YORK Present: HON. UTE WOLFF LALLY, Justice TRIAL/IAS, PART 17 NASSAU COUNTY HERCULES CORP., -against- BEACH VIEW APT. CORP., Plaintiff(s), Defendant(s). MOTION DATE: 5/29/01 INDEX No.:19499/00 MOTION SEQUENCE NO:1,2 xxx The following papers read on this motion: Notice of Motion/ Order to Show Cause... l-3 Answering Affidavits... 4,5 Replying Affidavits... 6,7 Notice of Motion Answering Affidavits Replying Affidavits... 15,16 Briefs: ,18 Upon the foregoing papers, it is ordered that this motion by plaintiff for an order preliminarily enjoining defendant from interfering with plaintiff's exclusive right of use and occupancy of the laundry room located at the building known as 129 Beach Street, Far Rockaway, New York (the "premises") and from interfering with plaintiff's exclusive right to install, operate and maintain coin metered laundry equipment at the premises and from commencing any procedure to dispossess or evict plaintiff from. the premises to CPLR 3212 is granted. On June is denied. Motion by defendant for an order pursuant granting it summary judgment dismissing the complaint 17, 1993, plaintiff entered into a five-year agreement

2 Hercules v Beach View -2 - Index, with defendant wherein plaintiff was granted, inter alia, the "sole and exclusive use and occupancy" of the laundry room located at the a premises "for the purpose of installing and operating coin-metered laundry equipment" in exchange for "$ per month." This agreement which was to expire on July 31, 1998, also contained provisions for automatic renewal and right of first refusal. Paragraph 7 of the agreement provides for automatic renewal unless either party gives notice of its intent not to renew "by certified mail, return receipt requested, received by lessee no less than ninety (90) days and no more than one hundred and twenty (120) days prior to the expiration of the original term or any successive term thereafter." Paragraph 11(c) of the agreement provides that [alt the expiration of the lease or any renewal, Lessee shall have the right of first refusal to meet any bona fide bid to lease the laundry room(s) and/or provide coin metered laundry equipment services to the premises." In the fall of 2000 plaintiff and defendant entered into negotiations concerning the condition of the laundry facility and the renewal of their agreement. At such time, defendant advised plaintiff that the tenants in the building were dissatisfied with the service provided and the condition of the washing machines. Since the parties were unable to reach an agreement, defendant entered into a new lease with another Laundromat company ("Sebco"). (See Lease dated October 26, 2000, annexed as Exhibit A to plaintiff's Affirmation in Opposition.) _

3 Hercules v Beach View -3- Index, By letter dated November 6, 2000, defendant notified plaintiff of its intention not to renew the lease; that it signed a lease with Sebco effective December 6, 2000, and that plaintiff should remove its equipment by December 5, By letter dated November 14, 2000, plaintiff advised defendant that it had no intention of removing its equipment. It was the plaintiff's contention that the automatic renewal provision took effect and, therefore, the lease automatically renewed itself from year to year making the new expiration date October 31, Plaintiff further claimed that pursuant to paragraph 11(c) of the agreement, it had the right of first refusal to meet any bona fide competitive bid. Plaintiff then commenced an action for an injunction and obtained a temporary restraining order on December 12, Subsequently, defendant advised plaintiff that although it believed the agreement expired on July 31, 1998, it would give plaintiff an opportunity to match Sebco's offer (see letter dated December 12, 2000). By letter dated December 29, 2000, plaintiff notified defendant that it would match Sebco's offer, including the installation of new machines, and provided defendant with three partially executed agreements. Defendant, however, was not prepared to accept plaintiff's offer as it had already entered into a new agreement with Sebco. As a concession, defendant agreed to allow plaintiff to remain in possession until July 31, Plaintiff moves for a preliminary injunction and defendant

4 Hercules v Beach View -4 - Index L moves for summary judgment dismissing the complaint. Plaintiff argues that the agreement at issue is a lease, not governed by the statutory notice requirements on automatic renewals as set forth in General Obligations Law Plaintiff further argues that defendant violated the agreement by not allowing plaintiff to exercise its right of first refusal. Defendant, on the other hand contends that the automatic renewal provision is unenforceable as the agreement was a contract for services as contemplated by General Obligations Law and the requisite notice was not given. Plaintiff's application for a preliminary injunction is denied. To obtain a preliminary injunction, the movant must establish a likelihood of success on the merits, irreparable injury in the absence of an injunction, and a balancing of equities in the movant's favor. (Aetna Insurance Company v Capasso, 75 NY2d 860; Doe v Axelrod, 73 NY2d 748; Grant Co. v Srogi, 52 NY2d 496.) The propriety of granting or referring to grant a preliminary injunction lies in the court's discretion which is exercised on the basis of the factual proof submitted. (See Nelson, L.P. v Jannace, 248 AD2d 448.) The determination of such relief depends not only on the right of the party seeking it but also on the appropriateness of its issuance in the circumstances in which it is sought. (Matter of Gerges v Koch, 62 NY2d 84, ) The movant * bears the burden of establishing the right to such relief. (See Carman v Congregation DeMita of New York, Inc., 269 AD2d 416;

5 Hercules v Beach View -5- Index Shannon Stables Holding Company, Ltd. v Bacon, 135 AD2d 804, 805.) Further, preliminary injunctive relief is a drastic remedy which will not be granted unless a clear right thereto is established (William M. Blake Agency, Inc. v Leon, _ AD2d 723 N.Y.S.2d 871; Peterson v Corbin, 275 AD2d 35, 36.) -I Applying these principles to the instant case, this Court finds that plaintiff has not established a clear right to injunctive relief based upon the undisputed facts. Plaintiff has not demonstrated a likelihood of success on the merits. (See Sebco Corp. v Shore View Corp., NYLJ, 5/25/95, p. 33, col. 5 - Supreme Court, Kings County.) Nor has plaintiff demonstrated that imminent and irreparable harm will result absent the granting of the injunction. (See: Betesh v J-1, 209 AD2d 568.) Based upon the particular facts of this case, this Court finds that the agreement involved is not a lease but a license. The distinction between a lease and a license is fairly simple to state: if the instrument grants exclusive possession, control and dominion over a certain defined space it is a lease; if the instrument grants only use and occupancy without exclusive control and possession it is a license. (See Dime Laundry v 230 Apts, 120 Misc2d 399.) It is the transfer of absolute control and possession of property at an agreed rental which differentiates lease from other arrangements dealing with property rights." a (Feder v Caliguira, 8 NY2d 400, 404.) Further, in interpreting an instrument, the Court examines the

6 Hercules v Beach View - 6- Index c rights it confers and the obligations it imposes to determine its true nature. (Matter of N.Y. World-Telegram Corp. v McGoldrick, 298 N.Y. 11, 18.) It is the intention of the parties, rather than their characterization of the agreement which determines whether an agreement constitutes a lease or a license. (Equitable Life Assur. Sot. v Winter L. Corp., 265 N.Y. 338, 401; Dime Laundry v 230 Apts, supra.) In general, an agreement for the installation and maintenance of laundry facilities for the use of tenants of an apartment building creates only a license to service the tenants as granted. (Todd v Krolick, 96 AD2d 695, affd 62 NY2d 836; Wash-0-Matic Laundry Co. v 621 Lefferts Ave. Corp., 191 Misc. 884.) As a license, it is personal, revocable and in no manner binding on defendant. (Dime Laundry v 230 Apts, supra; 1 Rasch, NY Landlord & Tenant, Summary Proceedings, 71, p. 95.) Although the agreement at bar is characterized as a "lease" and uses such language as "exclusive use and occupancy" and rent", there is no evidence that plaintiff had exclusive dominion and control over the area where the machines were located (see Sebco Laundry Systems, Inc. v Oakwood Terrace Housing Corp., 277 AD2d 303; Linro Equipment Corporation v Westgate Tower Associates, 233 AD2d 824). Hence, this agreement created only a license to service tenants in the building. Notwithstanding the foregoing analysis, the characterization of the agreement as a license or lease is irrelevant here because

7 Hercules v Beach View -7 - Index. plaintiff does not deny that it failed to provide the statutory notice requirement set forth in General Obligations Law 5-903(2). General Obligations Law requires that providers of services to real or personal property give notice of their intention to rely on automatic renewal provisions in the contracts whereby the service are rendered. The courts have interpreted this statute broadly (see Telephone Secretarial Service v Sherman, 28 AD2d 1010, 1011) as it was designed to aid small businessmen who have been compelled to continue doing business with a company for an extended period of time despite dissatisfaction with the cost or service. (NY Legis Ann, 1961, p. 52.) Inasmuch as the requisite notice was not given, the automatic renewal provision is unenforceable. The agreement, therefore, expired at the end of its original term (October 31, 1998) and is no longer in effect. (Dime Laundry v 230 Apts, supra.) In light of this court's determination that the agreement expired on October 31, 1998, plaintiff should have exercised its right of first refusal at said time. Plaintiff, however, did not attempt to exercise such right until November 2000, after plaintiff's application for injunctive relief. Since plaintiff did not exercise its right of first refusal in accordance with paragraph 11(c) of the agreement, defendant had no obligation to accept such untimely offer as the agreement was no longer binding on it. As a final note, this court rejects plaintiff's contention

8 Hercules v Beach View -8- Index L that it should be treated as a holdover tenant, and as such, it had the right to exercise its right of first refusal on the same terms as those contained in the original instrument. (See: City of New York v Pennsylvania R. R, Co., 37 NY2d 298, 300.) Plaintiff was not a holdover tenant as the agreement involved was not a lease and plaintiff no longer had any rights under expired on October 31, such agreement once it In view of the foregoing, plaintiff's application for injunctive relief is denied and the temporary restraining order heretofore granted is vacated. Defendant's motion for summary judgment dismissing the complaint is granted. - ( J.S.C. ENTE R he rcu l es