May 28, 2020 from the Times Union
Robert Gavin, Reporter
ALBANY – An appeals court determined that a state Supreme Court justice erred when he ruled last year that a business landlord properly terminated Sonic’s lease for a location in Clifton Park.
In a 5-0 ruling, the Appellate Division of state Supreme Court court’s Third Department reversed the decision of Justice Thomas Buchanan. The judge determined last June that the fast-food chain breached the lease it signed in April 2018 because it failed to build and pay for a storm-water drainage system.
Sonic, which has locations on Troy-Schenectady Road in Latham, Hudson River Commons on Hoosick Street in Troy and Southern Boulevard in Albany, was as recently as February still trying to open the location in Clifton Park.
Thursday’s ruling does not reinstate the lease Sonic signed and “whether a Sonic can and will open at this location is not resolved by this decision,” said Adam Cooper, the lawyer who argued on behalf of Sonic. “It allows us to continue our claims to seek that ultimate relief. ”
Sonic, listed as Fast Eats Clifton Park and formerly Sonic of Clifton Park, leased the would-be location in Town Plaza on Route 146. About two months later, the decision explained, Donald C. Greene, whose company DCG Development leased the space to Sonic, informed the chain that the drainage system was required for the business to operate and that it was the responsibility of the business. Sonic disagreed.
In September 2018, Greene filed a notice of default. He terminated the lease the next month. Greene took the matter to court seeking a judgment finding that he properly ended the lease — and he requested damages. Sonic counter-sued. The restaurant argued it was not its responsibility under the lease, that the drainage system was not mentioned in or covered by the lease and that it was Greene who agreed to pay for it.
Buchanan ruled that because the drainage system was not listed as landlord work and is required by local code, it was Sonic’s responsibility as the tenant under the lease.
On Thursday, in a decision authored by Justice Joseph Colangelo, the Third Department disagreed. The court will allow Sonic’s countersuit to go forward and overturned the judge’s upholding of the termination. Justices Michael Lynch, Eugene “Gus” Devine, Sharon Aarons and Robert Mulvey agreed.
“It is significant that the lease makes no mention of the current ground-level system and does not expressly contemplate construction of the new underground system,” Colangelo stated. He said while Buchanan’s interpretation was reasonable, “there are several difficulties with this conclusion, including that the lease itself does not establish that an underground storm-water detention system is required by the local code for the contemplated exterior improvements or that it is (Sonic) that necessitated this new system.”
Colangelo noted that Sonic disputes that an underground drainage system is needed to open and operate its business — or that, if it is needed, it is Sonic’s responsibility as opposed to all tenants.
Cooper told the Times Union he was pleased with the ruling and confident in its case going forward
“It is a big win for my client,” he said.
“We have always been confident in our case and believed that the law is on our side. Obviously the Appellate Division agreed … (it) recognizes the evidence that DCG agreed to do all of the necessary site work, including installation of the storm water management system. That issue is the crux of the entire dispute. This is vindication for my client. This project has been delayed for nearly two years as a result of DCG’s actions. We are confident in our case going forward in light of this well-reasoned decision from the Appellate Division. The court really examined all of the issues carefully, which is what he hoped for on this appeal.”
Paul J. Goldman, the lawyer for Greene, said he was disappointed with the ruling. He said the decision will lead to complete discovery — disclosure of evidence — in the case.