Landlord & Tenant

AppDiv, First Dept

(memorandum opinion)

In an action by landlord for rent, landlord appealed from Supreme Court's grant of summary judgment to tenant. The Appellate Division reversed and awarded judgment to landlord on it claim against tenant for rent under the holdover provisions of the lease, holding that landlord's practice of billing tenant at a lower rate did not constitute a waiver of its rights under the lease.

Landlord leased a retail booth to tenant for $6500 a month for a 1-year period to expire on April 30, 2003. The lease gave tenant a right to renew for an additional 2-year term, at a rental increase of 5%, upon timely written notice to landlord. The lease also provided that if tenant remained in possession as a holdover without execution of a new lease, tenant, at landlord's option, would be deemed to be occupying the premises as a month-to-month tenant at a rent equal to 1.5 times the monthly rent payable during the last lease. The lease also provided that acceptance of rent by landlord with knowledge of tenant's breach would not constitute waiver of that reach, and provided that landlord could not waive a provision of the lease except in writing. Finally, the lease included a guarantee by tenant's principal of the obligations of the corporate tenant.

The parties never executed a renewal lease. Instead, tenant remained in possession at the expiration of the initial term, and landlord billed tenant at 5% more than the original monthly rent. Then, in March, 2004, tenant notified landlord of its intent to vacate by April 30, 2004. Landlord then advised tenant that by staying on and paying the increased rent, tenant had agreed to the 2-year lease extension. Landlord brought this action seeking an additional 12 months' rent, or, in the alternative, holdover rent at 150% for the 11 months during which tenant had occupied the premises as a holdover. Supreme Court awarded summary judgment to tenant.

In reversing, the Appellate Division first agreed with Supreme Court that tenant was a month-to-month tenant and could not be held liable under the unexecuted lease. But the Appellate Division also concluded that Supreme Court had erred in holding that landlord had waived its right to collect 150% of the initial rent for the holdover period. The court relied on the no waiver clause of the lease, and found no evidence that landlord had unmistakably manifested an intention to surrender its right to holdover payments. Hence, landlord was entitled to recover those payments ' but only against the corporate tenant. The court emphasized that the guaranty clause created an obligation for the guarantor to guarantee any 'renewal, change or extension of the lease.' In this case, upon expiration of the lease, the guaranty lapsed, and did not apply to tenant's obligations as a month-to-month tenant.

Tenant Entitled to Present Retaliatory Eviction Defense

Prochner v. Pancerz

NYLJ 7/19/06, p. 29, col. 3

AppTerm, 2^nd and 11^th Districts

(memorandum opinion)

In landlord's holdover proceeding seeking possession of a rent-stabilized apartment for personal use, tenant appealed from Civil Court's award of possession to landlord. The Appellate Term reversed and remanded, holding that Civil Court had improperly hampered tenant in her effort to establish retaliatory eviction.

Tenant had filed several complaints about landlord to the Division of Housing and Community Renewal (DHCR) in 1999. Landlord then issued a lease to tenant under court compulsion. In August 2003, after expiration of that lease, landlord brought the instant holdover proceeding seeking to recover possession of the premises for his personal use. At a non-jury trial, landlord testified that he had problems with his knees that made it difficult to live in an apartment other than one on the first floor. Tenant submitted evidence that another first-floor apartment had become available in February 2003, but the trial court concluded that the availability of another apartment did not establish landlord's lack of good faith. Tenant tried to establish that landlord's action was retaliatory, but the trial court set a 1-year limit on testimony about retaliatory eviction. After trial, the court awarded possession to landlord.

In reversing, the Appellate Term agreed with the trial court that availability of another apartment did not establish a lack of good faith. But the Appellate Term concluded that the trial court had erred in precluding testimony about landlord's retaliatory motives. The court conceded that no presumption of retaliation was applicable because the tenant's allegations related to events in 1999, but nevertheless held that tenant was entitled to present evidence about complaints filed in 1999. As a result, the court remanded for a new trial.

Landlord Not Entitled to Invoke Lease Provision

New Henry & John Corp. v. Rainbow Restaurant Inc.

NYLJ 7/26/06, p. 24, col. 3

Supreme Ct., Queens Cty

(Lane, J.)

In landlord's commercial holdover proceeding, tenant contended that landlord could not invoke the lease provision providing that landlord could declare the lease expired if the building was 'totally damaged or rendered wholly untenantable.' After trial, the court agreed with tenant's position, and dismissed the proceeding.

Landlord leased restaurant space to tenant for a 5-year term. On Dec. 27, 2005, a fire in the restaurant's kitchen area, caused by over-accumulation of grease and oil in an exhaust duct, burned the wooden ceiling and roof beams beyond repair. The kitchen walls and floor remained intact, and the dining, bar and bathroom areas were not visibly damaged. In January 2006, landlord demanded that tenant vacate the premises and surrender the lease. Tenant resisted, contending that the lease obligated landlord to repair the fire damage at landlord's cost, even if the fire was the result of tenant's fault.

The lease provides that in the event of partial damage by fire without fault or neglect by tenant, landlord shall be obligated to repair the premises at its own expense, and that rent shall abate until repairs shall be made. The lease also provides that in the event of partial damage by fire due to tenant's fault or neglect, landlord shall be obligated to repair at its own expense, but rent shall not abate. Finally, the lease provides that in the event that the building shall be so damaged that landlord decides to demolish or rebuild it, landlord may give tenant a notice in writing that terminates the lease.

After trial, the court concluded that the damage in this case was not so total as to permit landlord to terminate the lease. In the absence of structural damage to the premises, landlord could not invoke the clause permitting lease termination. As a result, the court dismissed the proceeding.

Underbilling Practice Did Not Waive Landlord Rights

Elite Gold, Inc. v. TT Jewelry Outlet Corp.

NYLJ 7/31/06, p. 34, col. 1

AppDiv, First Dept

(memorandum opinion)

In an action by landlord for rent, landlord appealed from Supreme Court's grant of summary judgment to tenant. The Appellate Division reversed and awarded judgment to landlord on it claim against tenant for rent under the holdover provisions of the lease, holding that landlord's practice of billing tenant at a lower rate did not constitute a waiver of its rights under the lease.

Landlord leased a retail booth to tenant for $6500 a month for a 1-year period to expire on April 30, 2003. The lease gave tenant a right to renew for an additional 2-year term, at a rental increase of 5%, upon timely written notice to landlord. The lease also provided that if tenant remained in possession as a holdover without execution of a new lease, tenant, at landlord's option, would be deemed to be occupying the premises as a month-to-month tenant at a rent equal to 1.5 times the monthly rent payable during the last lease. The lease also provided that acceptance of rent by landlord with knowledge of tenant's breach would not constitute waiver of that reach, and provided that landlord could not waive a provision of the lease except in writing. Finally, the lease included a guarantee by tenant's principal of the obligations of the corporate tenant.

The parties never executed a renewal lease. Instead, tenant remained in possession at the expiration of the initial term, and landlord billed tenant at 5% more than the original monthly rent. Then, in March, 2004, tenant notified landlord of its intent to vacate by April 30, 2004. Landlord then advised tenant that by staying on and paying the increased rent, tenant had agreed to the 2-year lease extension. Landlord brought this action seeking an additional 12 months' rent, or, in the alternative, holdover rent at 150% for the 11 months during which tenant had occupied the premises as a holdover. Supreme Court awarded summary judgment to tenant.

In reversing, the Appellate Division first agreed with Supreme Court that tenant was a month-to-month tenant and could not be held liable under the unexecuted lease. But the Appellate Division also concluded that Supreme Court had erred in holding that landlord had waived its right to collect 150% of the initial rent for the holdover period. The court relied on the no waiver clause of the lease, and found no evidence that landlord had unmistakably manifested an intention to surrender its right to holdover payments. Hence, landlord was entitled to recover those payments ' but only against the corporate tenant. The court emphasized that the guaranty clause created an obligation for the guarantor to guarantee any 'renewal, change or extension of the lease.' In this case, upon expiration of the lease, the guaranty lapsed, and did not apply to tenant's obligations as a month-to-month tenant.

Tenant Entitled to Present Retaliatory Eviction Defense

Prochner v. Pancerz

NYLJ 7/19/06, p. 29, col. 3

AppTerm, 2^nd and 11^th Districts

(memorandum opinion)

In landlord's holdover proceeding seeking possession of a rent-stabilized apartment for personal use, tenant appealed from Civil Court's award of possession to landlord. The Appellate Term reversed and remanded, holding that Civil Court had improperly hampered tenant in her effort to establish retaliatory eviction.

Tenant had filed several complaints about landlord to the Division of Housing and Community Renewal (DHCR) in 1999. Landlord then issued a lease to tenant under court compulsion. In August 2003, after expiration of that lease, landlord brought the instant holdover proceeding seeking to recover possession of the premises for his personal use. At a non-jury trial, landlord testified that he had problems with his knees that made it difficult to live in an apartment other than one on the first floor. Tenant submitted evidence that another first-floor apartment had become available in February 2003, but the trial court concluded that the availability of another apartment did not establish landlord's lack of good faith. Tenant tried to establish that landlord's action was retaliatory, but the trial court set a 1-year limit on testimony about retaliatory eviction. After trial, the court awarded possession to landlord.

In reversing, the Appellate Term agreed with the trial court that availability of another apartment did not establish a lack of good faith. But the Appellate Term concluded that the trial court had erred in precluding testimony about landlord's retaliatory motives. The court conceded that no presumption of retaliation was applicable because the tenant's allegations related to events in 1999, but nevertheless held that tenant was entitled to present evidence about complaints filed in 1999. As a result, the court remanded for a new trial.

Landlord Not Entitled to Invoke Lease Provision

New Henry & John Corp. v. Rainbow Restaurant Inc.

NYLJ 7/26/06, p. 24, col. 3

Supreme Ct., Queens Cty

(Lane, J.)

In landlord's commercial holdover proceeding, tenant contended that landlord could not invoke the lease provision providing that landlord could declare the lease expired if the building was 'totally damaged or rendered wholly untenantable.' After trial, the court agreed with tenant's position, and dismissed the proceeding.

Landlord leased restaurant space to tenant for a 5-year term. On Dec. 27, 2005, a fire in the restaurant's kitchen area, caused by over-accumulation of grease and oil in an exhaust duct, burned the wooden ceiling and roof beams beyond repair. The kitchen walls and floor remained intact, and the dining, bar and bathroom areas were not visibly damaged. In January 2006, landlord demanded that tenant vacate the premises and surrender the lease. Tenant resisted, contending that the lease obligated landlord to repair the fire damage at landlord's cost, even if the fire was the result of tenant's fault.

The lease provides that in the event of partial damage by fire without fault or neglect by tenant, landlord shall be obligated to repair the premises at its own expense, and that rent shall abate until repairs shall be made. The lease also provides that in the event of partial damage by fire due to tenant's fault or neglect, landlord shall be obligated to repair at its own expense, but rent shall not abate. Finally, the lease provides that in the event that the building shall be so damaged that landlord decides to demolish or rebuild it, landlord may give tenant a notice in writing that terminates the lease.

After trial, the court concluded that the damage in this case was not so total as to permit landlord to terminate the lease. In the absence of structural damage to the premises, landlord could not invoke the clause permitting lease termination. As a result, the court dismissed the proceeding.