Landlord & Tenant

Court of Appeals

(Opinion by Graffeo, J.)

In an article 78 proceeding to annul New York City Local Law 38, which regulates lead-based paint in city apartments, petitioners appealed from the Appellate Division's dismissal of the petition. The Court of Appeals reversed, holding that enactment of the Local Law failed to comply with the State Environmental Quality Review Act (SEQRA).

In 1982, the City Council enacted Local Law 1, which required total abatement of lead-based paint in units inhabited by children aged 6 or younger. Three years later, non-profit organizations brought an action to compel the city to comply with its obligations under Local Law 1. The litigation extended over many years, resulting in a number of contempt orders and fines against the city for failure to enact regulations pursuant to the local law. In 1998, as the city proposed rules to implement Local Law 1, a City Council committee heard testimony that the lead-free approach, as interpreted by the courts, would exacerbate lead poisoning because of the risks that new hazards would be created by disturbance of intact paint. In addition, community groups expressed fears that landlords would abandon buildings because of abatement costs that could not be recouped from low-income tenants. As a result, the City Council began to develop new legislation, which ultimately resulted in Local Law 38 of 1999, which required abatement of peeling lead-based paint or lead-based paint on a deteriorating surface in a unit housing a child under the age of 6. Although a number of community groups expressed concern that the new legislation did not include lead dust within the definition of a hazard, the City Council issued a “negative declaration” for SEQRA purposes, obviating the need from preparation of an environmental impact statement accompanying the new local law. Petitioners, non-profit entities and several individual tenants brought this action to annul Local Law 38 on the ground that the negative declaration was invalid under SEQRA. Supreme Court granted the petition, but the Appellate Division reversed, dismissed the petition, and upheld Local Law 38.

In reversing the Court of Appeals concluded that the Council's two-paragraph summary of the law's interim controls and general descriptions of socioeconomic impacts did not constitute the “reasoned elaboration” required by SEQRA to support a negative declaration. In particular, the court noted that the Council had nowhere explained why lead dust had been omitted from the definition of lead-paint hazards, nor had the Council adequately explained why the new law had excluded 6-year-olds from protection. As a result, the court declared Local Law 38 invalid, and remitted to Supreme Court while expressing the expectation that the parties “would continue to work cooperatively to ensure that the resurrection of Local Law 1 does not further imperil New York City's children.”

Tenants May Not Assert Spiegel Law Defense Unless Public Officials Have Withheld Rent

Matter of Notre Dame Leasing, LLC v. Rosario

NYLJ 6/30/03, p. 18, col. 1

AppDiv, Second Dept

(3-2 decision; majority opinion by Krausman, J; dissenting opinion by Luciano, J.)

In landlord's summary nonpayment proceeding, tenant appealed from an Appellate Term order reversing Civil Court's grant of tenant's motion to dismiss until landlord submitted satisfactory proof that violations had been corrected. The Appellate Division affirmed, holding that tenants may not assert a defense based on the “Spiegel Law” unless public officials have exercised their right to withhold direct rent payments based upon landlord's code violations.

The Spiegel Law (Social Services Law, sec 143-b), enacted in 1962, authorized “every public welfare official” to withhold rent in cases where the official has knowledge of certain building violations, and the use dangerous and hazardous conditions as a defense to a nonpayment proceeding by landlord. At the time the Spiegel Law was enacted, it was common for all of the rent of tenants receiving public assistance to be paid directly from a public welfare official to landlord. Over time, however, the public assistance system has changed so that only a portion of rent is typically paid by public officials, and the remainder is paid directly by tenant. Also over time, public officials ceased using the Spiegel Law to enforce housing codes. In 1997, however, when the legislature amended RPAPL section 745 to require tenants seeking adjournment of eviction proceedings to deposit rent into court, the legislatures included an exemption for tenant who show that they have properly interposed a defense pursuant to the Spiegel Law. At that point, welfare recipients who were the respondents in summary possession proceedings began to assert the Spiegel Law as a defense. In this case, tenants receive public assistance, and the Human Resources Administration pays a portion of their rent directly to the landlord. Tenants are responsible for the balance. When landlord brought this summary nonpayment proceeding, tenants asserted the Speigel Law as a defense. Civil Court granted tenant's motion, noting that there had been building violations, and that landlord had not submitted proof that they had been corrected. The Appellate Term reversed, holding that the Spiegel Law was available only to public officials, not to individual tenants. Tenants appealed.

In affirming, the Appellate Division majority examined the language of the Spiegel Law, which, by its terms, gives powers only to public officials. The court then examined RPAPL section 745, which includes an exemption for Spiegel Law defenses, and held that the exemption applies only when public officials decide to withhold their portion of tenant's withheld. That is, according to the majority, if public officials withhold their portion, tenants may assert the Spiegel Law as a defense, but not otherwise.

Justice Luciano dissented, concluding that subsection 5 of the Speigel Law does not expressly limit the defense to public welfare officials – even though every other section of the statute refers expressly to public welfare officials. As a result, he concluded that the statute should not be read in the limited fashion endorsed by the majority. He also referred to the legislative history accompanying the bill, in which opponents had warned of arbitrary action (withholding rent) by the “welfare official and the family involved.” In addition, he concluded that the majority's reading was inconsistent with the exemption included in RPAPL 745.

Failure to Give Notice of Restoration Precludes Contention That Restoration Was Completed on Time

The Vermont Teddy Bear Co., Inc. v. 538 Madison Realty Co.

NYLJ 6/9/03, p. 18, col. 1

AppDiv, First Dept

(4-1 decision; majority opinion by Saxe, J; dissenting opinion by Gonzalez, J.)

In an action by tenant for a declaratory judgment that the lease was properly terminated, and for return of a security deposit and rent overpayments, landlord appealed from Supreme Court's grant of summary judgment to tenant. The Appellate Division affirmed, holding that landlord's failure to give notice of restoration of the premises precluded landlord from contending that the premises had been restored within 1 year of a building collapse.

In 1996, landlord and tenant entered into a ten-year lease of first-floor retail space. On December 7, 1997, a portion of an adjacent building collapsed, rendering the leased premises unusable. Article 9 of the lease provided that if the premises were rendered wholly unusable, tenant's rent obligation would cease, and would not resume until 5 days after landlord provided written notice that the premises were ready for re-occupancy. A rider to the lease gave tenant the option to provide landlord with written notice that tenant had elected to terminate the lease if the premises were not restored within 1 year after receipt of tenant's notice. On December 17, 1997, tenant sent landlord the notice provided for in the rider. A year later, landlord had not sent tenant a notice indicated that the premises were ready for re-occupancy, although landlord contends that the premises had been restored by July 7, 1998. Tenant then brought this action for a declaration that the lease had been terminated, and for return of the security deposit and rent overpayments. Supreme Court granted summary judgment to tenant, and landlord appealed.

In affirming, the Appellate Division majority rejected landlord's argument that because the premises had been restored within one year, tenant's election to terminate had never taken effect. The majority concluded that article 9's provision that tenant's rent obligation would resume 5 days after landlord provided written notice effectively carried over to the rider, and required landlord to provide notice of restoration if landlord wanted to avoid tenant's election to terminate the lease. Because landlord had never provided the notice, the termination was effective.

Justice Gonzalez, dissenting, concluded that because the rider did not include a notice requirement of the sort expressly provided in article 9, landlord was not obligated to provide notice; restoration alone avoided termination of the lease.

Willingness to Reduce Size of Non-Conforming Billboards Entitles Tenant to Yellowstone Injunction

Marathon Outdoor, LLC v. Patent Construction Systems

NYLJ 6/9/03, p. 29, col. 5

AppDiv, Second Dept

(memorandum opinion)

In tenant's action to determine its rights under a lease, tenant appealed from Supreme Court's denial of its motion for a Yellowstone injunction, and from that court's grant of summary judgment to landlord. The Appellate Division reversed and granted the Yellowstone injunction, emphasizing tenant's willingness to cure any default in the lease.

In 1998, tenant leased space on which it intended to build two free-standing advertising billboards. The city issued building permits, but later revoked them because the new billboards would be too large and/or too close to the Long Island Expressway. Landlord and tenant agreed to suspend tenant's rental obligation until tenant resolved its dispute with the city, or until May 1, 2001 at the latest. On June 20, 2001, landlord sent tenant a letter declaring tenant to be in default and giving tenant 30 days to cure. Tenant then brought this action, and sought an injunction preventing cancellation of the lease prior to a judicial determination of breach. Tenant emphasized that in another action, a different plaintiff was challenging the constitutionality of the city's billboard regulations. Supreme Court denied the injunction, holding that a Yellowstone injunction was not available to stay action by a landlord pending resolution of another case.

In reversing, the Appellate Division agreed with Supreme Court that no injunction would be available pending resolution of the other case. But the Appellate Division noted that tenant had expressed a willingness to cure any default by decreasing billboard size or by otherwise conforming to the zoning ordinance. As a result, the court held that a Yellowstone injunction was available to prevent termination of the lease before any adjudication of tenant's alleged default.

Lead Paint Law Failed to Comply with SEQRA

Matter of New York City Coalition to End Lead Poisoning, Inc. v. Vallone

NYLJ 7/2/03, p. 19, col. 2

Court of Appeals

(Opinion by Graffeo, J.)

In an article 78 proceeding to annul New York City Local Law 38, which regulates lead-based paint in city apartments, petitioners appealed from the Appellate Division's dismissal of the petition. The Court of Appeals reversed, holding that enactment of the Local Law failed to comply with the State Environmental Quality Review Act (SEQRA).

In 1982, the City Council enacted Local Law 1, which required total abatement of lead-based paint in units inhabited by children aged 6 or younger. Three years later, non-profit organizations brought an action to compel the city to comply with its obligations under Local Law 1. The litigation extended over many years, resulting in a number of contempt orders and fines against the city for failure to enact regulations pursuant to the local law. In 1998, as the city proposed rules to implement Local Law 1, a City Council committee heard testimony that the lead-free approach, as interpreted by the courts, would exacerbate lead poisoning because of the risks that new hazards would be created by disturbance of intact paint. In addition, community groups expressed fears that landlords would abandon buildings because of abatement costs that could not be recouped from low-income tenants. As a result, the City Council began to develop new legislation, which ultimately resulted in Local Law 38 of 1999, which required abatement of peeling lead-based paint or lead-based paint on a deteriorating surface in a unit housing a child under the age of 6. Although a number of community groups expressed concern that the new legislation did not include lead dust within the definition of a hazard, the City Council issued a “negative declaration” for SEQRA purposes, obviating the need from preparation of an environmental impact statement accompanying the new local law. Petitioners, non-profit entities and several individual tenants brought this action to annul Local Law 38 on the ground that the negative declaration was invalid under SEQRA. Supreme Court granted the petition, but the Appellate Division reversed, dismissed the petition, and upheld Local Law 38.

In reversing the Court of Appeals concluded that the Council's two-paragraph summary of the law's interim controls and general descriptions of socioeconomic impacts did not constitute the “reasoned elaboration” required by SEQRA to support a negative declaration. In particular, the court noted that the Council had nowhere explained why lead dust had been omitted from the definition of lead-paint hazards, nor had the Council adequately explained why the new law had excluded 6-year-olds from protection. As a result, the court declared Local Law 38 invalid, and remitted to Supreme Court while expressing the expectation that the parties “would continue to work cooperatively to ensure that the resurrection of Local Law 1 does not further imperil New York City's children.”

Tenants May Not Assert Spiegel Law Defense Unless Public Officials Have Withheld Rent

Matter of Notre Dame Leasing, LLC v. Rosario

NYLJ 6/30/03, p. 18, col. 1

AppDiv, Second Dept

(3-2 decision; majority opinion by Krausman, J; dissenting opinion by Luciano, J.)

In landlord's summary nonpayment proceeding, tenant appealed from an Appellate Term order reversing Civil Court's grant of tenant's motion to dismiss until landlord submitted satisfactory proof that violations had been corrected. The Appellate Division affirmed, holding that tenants may not assert a defense based on the “Spiegel Law” unless public officials have exercised their right to withhold direct rent payments based upon landlord's code violations.

The Spiegel Law (Social Services Law, sec 143-b), enacted in 1962, authorized “every public welfare official” to withhold rent in cases where the official has knowledge of certain building violations, and the use dangerous and hazardous conditions as a defense to a nonpayment proceeding by landlord. At the time the Spiegel Law was enacted, it was common for all of the rent of tenants receiving public assistance to be paid directly from a public welfare official to landlord. Over time, however, the public assistance system has changed so that only a portion of rent is typically paid by public officials, and the remainder is paid directly by tenant. Also over time, public officials ceased using the Spiegel Law to enforce housing codes. In 1997, however, when the legislature amended RPAPL section 745 to require tenants seeking adjournment of eviction proceedings to deposit rent into court, the legislatures included an exemption for tenant who show that they have properly interposed a defense pursuant to the Spiegel Law. At that point, welfare recipients who were the respondents in summary possession proceedings began to assert the Spiegel Law as a defense. In this case, tenants receive public assistance, and the Human Resources Administration pays a portion of their rent directly to the landlord. Tenants are responsible for the balance. When landlord brought this summary nonpayment proceeding, tenants asserted the Speigel Law as a defense. Civil Court granted tenant's motion, noting that there had been building violations, and that landlord had not submitted proof that they had been corrected. The Appellate Term reversed, holding that the Spiegel Law was available only to public officials, not to individual tenants. Tenants appealed.

In affirming, the Appellate Division majority examined the language of the Spiegel Law, which, by its terms, gives powers only to public officials. The court then examined RPAPL section 745, which includes an exemption for Spiegel Law defenses, and held that the exemption applies only when public officials decide to withhold their portion of tenant's withheld. That is, according to the majority, if public officials withhold their portion, tenants may assert the Spiegel Law as a defense, but not otherwise.

Justice Luciano dissented, concluding that subsection 5 of the Speigel Law does not expressly limit the defense to public welfare officials – even though every other section of the statute refers expressly to public welfare officials. As a result, he concluded that the statute should not be read in the limited fashion endorsed by the majority. He also referred to the legislative history accompanying the bill, in which opponents had warned of arbitrary action (withholding rent) by the “welfare official and the family involved.” In addition, he concluded that the majority's reading was inconsistent with the exemption included in RPAPL 745.

Failure to Give Notice of Restoration Precludes Contention That Restoration Was Completed on Time

The Vermont Teddy Bear Co., Inc. v. 538 Madison Realty Co.

NYLJ 6/9/03, p. 18, col. 1

AppDiv, First Dept

(4-1 decision; majority opinion by Saxe, J; dissenting opinion by Gonzalez, J.)

In an action by tenant for a declaratory judgment that the lease was properly terminated, and for return of a security deposit and rent overpayments, landlord appealed from Supreme Court's grant of summary judgment to tenant. The Appellate Division affirmed, holding that landlord's failure to give notice of restoration of the premises precluded landlord from contending that the premises had been restored within 1 year of a building collapse.

In 1996, landlord and tenant entered into a ten-year lease of first-floor retail space. On December 7, 1997, a portion of an adjacent building collapsed, rendering the leased premises unusable. Article 9 of the lease provided that if the premises were rendered wholly unusable, tenant's rent obligation would cease, and would not resume until 5 days after landlord provided written notice that the premises were ready for re-occupancy. A rider to the lease gave tenant the option to provide landlord with written notice that tenant had elected to terminate the lease if the premises were not restored within 1 year after receipt of tenant's notice. On December 17, 1997, tenant sent landlord the notice provided for in the rider. A year later, landlord had not sent tenant a notice indicated that the premises were ready for re-occupancy, although landlord contends that the premises had been restored by July 7, 1998. Tenant then brought this action for a declaration that the lease had been terminated, and for return of the security deposit and rent overpayments. Supreme Court granted summary judgment to tenant, and landlord appealed.

In affirming, the Appellate Division majority rejected landlord's argument that because the premises had been restored within one year, tenant's election to terminate had never taken effect. The majority concluded that article 9's provision that tenant's rent obligation would resume 5 days after landlord provided written notice effectively carried over to the rider, and required landlord to provide notice of restoration if landlord wanted to avoid tenant's election to terminate the lease. Because landlord had never provided the notice, the termination was effective.

Justice Gonzalez, dissenting, concluded that because the rider did not include a notice requirement of the sort expressly provided in article 9, landlord was not obligated to provide notice; restoration alone avoided termination of the lease.

Willingness to Reduce Size of Non-Conforming Billboards Entitles Tenant to Yellowstone Injunction

Marathon Outdoor, LLC v. Patent Construction Systems

NYLJ 6/9/03, p. 29, col. 5

AppDiv, Second Dept

(memorandum opinion)

In tenant's action to determine its rights under a lease, tenant appealed from Supreme Court's denial of its motion for a Yellowstone injunction, and from that court's grant of summary judgment to landlord. The Appellate Division reversed and granted the Yellowstone injunction, emphasizing tenant's willingness to cure any default in the lease.

In 1998, tenant leased space on which it intended to build two free-standing advertising billboards. The city issued building permits, but later revoked them because the new billboards would be too large and/or too close to the Long Island Expressway. Landlord and tenant agreed to suspend tenant's rental obligation until tenant resolved its dispute with the city, or until May 1, 2001 at the latest. On June 20, 2001, landlord sent tenant a letter declaring tenant to be in default and giving tenant 30 days to cure. Tenant then brought this action, and sought an injunction preventing cancellation of the lease prior to a judicial determination of breach. Tenant emphasized that in another action, a different plaintiff was challenging the constitutionality of the city's billboard regulations. Supreme Court denied the injunction, holding that a Yellowstone injunction was not available to stay action by a landlord pending resolution of another case.

In reversing, the Appellate Division agreed with Supreme Court that no injunction would be available pending resolution of the other case. But the Appellate Division noted that tenant had expressed a willingness to cure any default by decreasing billboard size or by otherwise conforming to the zoning ordinance. As a result, the court held that a Yellowstone injunction was available to prevent termination of the lease before any adjudication of tenant's alleged default.