49 A.D.3d 411
N.Y. App. Div.
2008

LAURA CORIO, M.D., PLLC, et al., Appellants, v R. LEWIN INTERIOR DESIGN, INC., et al., Defendants, and HAROUT NALBANDIAN, M.D., Respondent.

Supreme Court, Appellate Division, First Department, New York

[854 NYS2d 55]

Plaintiffs leased the ground floor of a building owned by Nalbandian for a medical office. A rider to the lease gave plaintiffs an option to renew at a rent to be determined if plaintiffs were not in default. The rider also provided that plaintiffs were required to obtain all necessary permits in connection with any construction or renovations they performed.

Plaintiffs contracted with defendants R. Lewin Interior Design, Inc. and JMK Construction Group, Ltd. to design and perform renovations at the premises and obtain the necessary permits in connection with the construction. The plans for the project were not approved and a building permit was not issued, but plaintiffs proceeded with the renovations nonetheless. Plaintiffs allege that when the lease came up for renewal, the owner refused to discuss the annual rent for the renewal term.

In this action against Lewin, JMK and related entities as well as the owner, plaintiffs’ causes of action against the owner allege fraud, fraudulent inducement and conspiracy. These claims are essentially based on the owner’s alleged refusal to negotiate the rent for the renewal term. The owner asserts that plaintiffs were in violation of the lease for failure to obtain the necessary permits and were therefore not entitled to a renewal.

The fraud claim, which alleges that the owner (as well as the