Landlord & Tenant

AppDiv, Second Dept.

(memorandum opinion)

'

In landlord's action for breach of a commercial lease, landlord appealed from Supreme Court's grant of summary judgment dismissing the complaint to the extent it sought post-termination damages. The Appellate Division reversed and denied tenant's motion, holding that the lease did not preclude landlord from obtaining post-termination damages.

Landlord brought a summary eviction proceeding against tenant, and in that proceeding, was awarded rent up to the date of termination of the lease. Landlord then brought this action to recover damages resulting from tenant's breach. Supreme Court awarded summary judgment to tenant, holding that landlord may not obtain post-termination damages in the absence of a lease provision that specifically makes tenant responsible for payment of rent after the landlord-tenant relationship ends. Landlord appealed.

In reversing, the Appellate Division acknowledged that the parties could have included an explicit clause in the lease providing that the obligation to pay rent would survive termination of the tenancy, or another provision making tenant liable for post-termination damages. But the court held that the absence of such an explicit provision does not bar landlord from seeking, after mitigation, its actual contract damages resulting from the breach. The court also noted that the lease did explicitly provide that landlord's exercise of a remedy available under the lease's terms did not divest landlord of its right to exercise other rights or remedies pursuant to the lease. As a result, termination of the lease in the summary eviction proceeding did not bar landlord from seeking post-termination damages in this action.

COMMENT

When a commercial lease contains a survival of liability clause (hereinafter, “survival clause”), landlord may hold tenant liable for damages even after termination of the lease by acceptance of surrender or by eviction of the tenant. For example, Int'l Publications v. Matchabelli, 260 N.Y. 451, held that landlord was entitled to recover damages from an evicted tenant because the lease contained a survival clause, which stated that “[a]ny entry or re-entry by landlord' … shall not be deemed to have absolved or discharged the tenant from any liability hereunder.” Id. at 454. Because landlord had relet the premises for less rent than the rent reserved in tenant's original lease, the court held that landlord was entitled to recover the difference from the original tenant. See also Holy Properties Ltd., L.P. v. Kenneth Cole Prods., Inc., 87 N.Y.2d 130 (awarding landlord the rent due for the balance of the lease based on the survival clause in a commercial lease, and rejecting the argument that landlord's failure to mitigate damages should preclude recovery).

In Patchogue, the court held that “the absence of such a provision in the subject lease does not foreclose a landlord from seeking, after mitigation, its actual contract damages resulting from the breach” That conclusion might appear to be in tension with West Flatt Associates v. Maggiulli, 66 A.D.3d 1450, in which the court dismissed landlord's claim for rent accruing after landlord terminated the lease after providing tenant with a five-day notice of termination, noting that tenant may be held liable for rent only when the lease includes a survival clause, which the West Flatt lease did not. At the same time, however, the West Flatt court noted that in the absence of a survival clause, a claim for damages survives, even if a claim for rent does not. The Patchogue court seized upon that language to deny summary judgment to tenant on landlord's claim for post-termination damages, even though the language in West Flatt was dictum, and the case the West Flatt court cited is one in which the lease, unlike the leases in Patchogue and West Flatt, included a rent acceleration clause. (Benderson v. Poss, 142 A.D.2d 937).'

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Undocumented Alien Entitled to Succession Rights to Rent-Controlled Apartment

1504 Associates, L.P. v. Wescott

NYLJ 7/25/13, p. 23, col. 5

AppTerm, First Dept.

(memorandum opinion)

'

In landlord's holdover proceeding, occupant appealed from Civil Court's determination that she was not entitled to succession rights to a rent-controlled apartment. The Appellate Term reversed and remanded for a new trial, holding first that Civil Court made prejudicial evidentiary rulings, and second, that occupant's status as an undocumented alien did not preclude her from obtaining succession rights to the apartment.

Occupant's deceased husband was a rent-controlled tenant in the subject apartment. Occupant was concededly absent from the apartment for portions of the two years before her husband's death. When the husband died, landlord brought this proceeding to recover possession, and occupant asserted succession rights. At trial, Civil Court permitted occupant to testify, over landlord's objections, about conversations she had with her husband explaining her “temporary relocation” from the apartment. Then, after allowing the testimony at trial, Civil Court, in its post-trial decision, refused to consider the testimony as violative of the Dean Man's statute. The court awarded landlord a judgment of possession, and occupant appealed.

In reversing, the Appellate Term first held that the dead man's statute was inapplicable in a dispute between occupant and landlord, because landlord was a stranger to the tenant's estate. Moreover, the court noted that Civil Court's change of position was prejudicial to the occupant, who might have altered her trial strategy had she anticipated the possibility that the trial court would change its ruling after trial. The court then turned to, and rejected, landlord's other argument ' that because occupant is an undocumented alien, she is automatically disqualified from obtaining succession rights.

The court emphasized that citizenship and immigration status are not among the criteria for family members listed in the applicable regulations (9 NYCRR section2204.6(d)), and held that such broad consideration should not be imported by implication into the regulatory scheme.

'

Four-Year Limitations Period for Overcharge

Matter of Campbell v. DHCR

NYLJ 7/24/13, p. 21, col. 3

Supreme Ct., Kings Cty.

(Ruchelsman, J.)

'

In an article 78 proceeding, tenant challenged DHCR's determination denying his overcharge claim. The court granted the petition, holding that because tenant's challenge alleged fraud by landlord, tenant, DHCR had an obligation to ascertain whether the rent on the base date was lawful, even if that date was more than four days before the date the challenge was filed.

Tenant's current rent ' $450 ' has not been increased since tenant took possession of the apartment. Tenant brought a rent overcharge complaint in January 2011, and DHCR found no evidence of any overcharge. DHCR also denied tenant's petition for administrative review, leading to this article 78 proceeding.

In granting the petition, the court relied on DHCR's determination in a case involving another tenant in the same building, finding that landlord had engaged in practices designed to evade rent regulation requirements. The court noted evidence that landlord had been restricting the rooms to transient tenants in order to increase the rent of the tenant preceding the current tenant from $280 to the current $450. Although this increase occurred before the four-year period, DHCR was obligated to examine the increase because of the possibility that landlord had engaged in a scheme to remove the apartment from rent stabilization. Accordingly, the court remanded to DHCR for further hearings.

'

No Nonpayment Proceeding

265 Realty, LLC v. Trec

NYLJ 7/15/13, p. 29, col. 4

AppTerm, 2nd and 11th Districts

(memorandum opinion)

'

In landlord's summary nonpayment proceeding, tenant appealed from Civil Court's award of possession and back rent to landlord. The Appellate Term reversed and dismissed the proceeding, holding that there was no rental agreement in effect at the time the proceeding was commenced.

Landlord had rented the rent-stabilized apartment to tenants Maria and Dorotea Trec. Maria died in 2008. The last renewal lease expired on Aug. 31, 2009. Dorotea Trec remained in possession after that date, but did not sign a lease agreement or pay any rent. Landlord then brought this proceeding, and Civil Court awarded judgment to landlord for $10,883.53 in back rent, along with possession of the apartment. Tenant appealed.

In reversing, the Appellate Term noted that when a rent-stabilized lease expires but tenant remains in possession, the landlord is not permitted to deem the lease renewed. As a result, no lease was in effect. Moreover, because there was no payment or acceptance of rent after that date, no month-to-month tenancy had been created. As a result, there was no rental agreement in effect, requiring dismissal of the nonpayment proceeding and reversal of the award to landlord of attorneys' fees.

'

Notice Need Not Include Proof of Agent's Authority

Matter of QPII-143-45 Sanford Avenue LLC v. Spinner

NYLJ 7/9/13, p. 24, col. 3

AppDiv, Second Dept.

(memorandum opinion)

'

In landlord's summary nonpayment proceeding, tenant appealed from the Appellate Term's affirmance of Civil Court's judgment for landlord in the amount of $11,678.52, and award of possession to landlord. The Appellate Division affirmed, holding that landlord's failure to provide tenant with proof of its agent's authority did not make landlord's five-day notice defective.

Tenant has occupied the subject rent-stabilized apartment for more than 35 years. On April 2, 2009, landlord served tenant with a five-day notice, asserting that tenant had failed to make timely rental payments totaling more than $9,000, and providing a detailed account of the arrears. The notice was signed by Cathy McGovern, who was identified as agent for the landlord. In seeking to invalidate the notice, tenant contended that it was defective because landlord provided no proof that McGovern had authority to act on landlord's behalf. Both Civil Court and the Appellate Term rejected the argument.

In affirming, the Appellate Division distinguished its prior decision in Siegel v. Kentucky Fried Chicken, 108 AD2d 218, affd 67 NY2d 792. The court noted that Siegel was limited to its factual peculiarities. In particular, in Siegel, the lease had designated certain rights that were to be exercised by landlord or landlord's agent, and had named a particular attorney as landlord's agent. When tenant received a notice from another attorney unknown to tenant, the court held that the notice was defective for failure to provide proof of the agent's authority. By contrast, the lease in this case did not obligate landlord to act only personally or through an identified agent. In these circumstances, failure to provide proof of the agent's authority did not make the notice ineffective.

'

'

Landlord Entitled to Post-Termination Damages Even Without Explicit Lease Provision

Patchogue Associates v. Sears, Roebuck & Co.

NYLJ 7/19/13, p. 25, col. 3

AppDiv, Second Dept.

(memorandum opinion)

'

In landlord's action for breach of a commercial lease, landlord appealed from Supreme Court's grant of summary judgment dismissing the complaint to the extent it sought post-termination damages. The Appellate Division reversed and denied tenant's motion, holding that the lease did not preclude landlord from obtaining post-termination damages.

Landlord brought a summary eviction proceeding against tenant, and in that proceeding, was awarded rent up to the date of termination of the lease. Landlord then brought this action to recover damages resulting from tenant's breach. Supreme Court awarded summary judgment to tenant, holding that landlord may not obtain post-termination damages in the absence of a lease provision that specifically makes tenant responsible for payment of rent after the landlord-tenant relationship ends. Landlord appealed.

In reversing, the Appellate Division acknowledged that the parties could have included an explicit clause in the lease providing that the obligation to pay rent would survive termination of the tenancy, or another provision making tenant liable for post-termination damages. But the court held that the absence of such an explicit provision does not bar landlord from seeking, after mitigation, its actual contract damages resulting from the breach. The court also noted that the lease did explicitly provide that landlord's exercise of a remedy available under the lease's terms did not divest landlord of its right to exercise other rights or remedies pursuant to the lease. As a result, termination of the lease in the summary eviction proceeding did not bar landlord from seeking post-termination damages in this action.

COMMENT

When a commercial lease contains a survival of liability clause (hereinafter, “survival clause”), landlord may hold tenant liable for damages even after termination of the lease by acceptance of surrender or by eviction of the tenant. For example, Int'l Publications v. Matchabelli, 260 N.Y. 451, held that landlord was entitled to recover damages from an evicted tenant because the lease contained a survival clause, which stated that “[a]ny entry or re-entry by landlord' … shall not be deemed to have absolved or discharged the tenant from any liability hereunder.” Id. at 454. Because landlord had relet the premises for less rent than the rent reserved in tenant's original lease, the court held that landlord was entitled to recover the difference from the original tenant. See also Holy Properties Ltd., L.P. v. Kenneth Cole Prods., Inc., 87 N.Y.2d 130 (awarding landlord the rent due for the balance of the lease based on the survival clause in a commercial lease, and rejecting the argument that landlord's failure to mitigate damages should preclude recovery).

In Patchogue, the court held that “the absence of such a provision in the subject lease does not foreclose a landlord from seeking, after mitigation, its actual contract damages resulting from the breach” That conclusion might appear to be in tension with West Flatt Associates v. Maggiulli, 66 A.D.3d 1450, in which the court dismissed landlord's claim for rent accruing after landlord terminated the lease after providing tenant with a five-day notice of termination, noting that tenant may be held liable for rent only when the lease includes a survival clause, which the West Flatt lease did not. At the same time, however, the West Flatt court noted that in the absence of a survival clause, a claim for damages survives, even if a claim for rent does not. The Patchogue court seized upon that language to deny summary judgment to tenant on landlord's claim for post-termination damages, even though the language in West Flatt was dictum, and the case the West Flatt court cited is one in which the lease, unlike the leases in Patchogue and West Flatt, i ncluded a rent acceleration clause. (Benderson v. Poss, 142 A.D.2d 937 ).'

'

Undocumented Alien Entitled to Succession Rights to Rent-Controlled Apartment

1504 Associates, L.P. v. Wescott

NYLJ 7/25/13, p. 23, col. 5

AppTerm, First Dept.

(memorandum opinion)

'

In landlord's holdover proceeding, occupant appealed from Civil Court's determination that she was not entitled to succession rights to a rent-controlled apartment. The Appellate Term reversed and remanded for a new trial, holding first that Civil Court made prejudicial evidentiary rulings, and second, that occupant's status as an undocumented alien did not preclude her from obtaining succession rights to the apartment.

Occupant's deceased husband was a rent-controlled tenant in the subject apartment. Occupant was concededly absent from the apartment for portions of the two years before her husband's death. When the husband died, landlord brought this proceeding to recover possession, and occupant asserted succession rights. At trial, Civil Court permitted occupant to testify, over landlord's objections, about conversations she had with her husband explaining her “temporary relocation” from the apartment. Then, after allowing the testimony at trial, Civil Court, in its post-trial decision, refused to consider the testimony as violative of the Dean Man's statute. The court awarded landlord a judgment of possession, and occupant appealed.

In reversing, the Appellate Term first held that the dead man's statute was inapplicable in a dispute between occupant and landlord, because landlord was a stranger to the tenant's estate. Moreover, the court noted that Civil Court's change of position was prejudicial to the occupant, who might have altered her trial strategy had she anticipated the possibility that the trial court would change its ruling after trial. The court then turned to, and rejected, landlord's other argument ' that because occupant is an undocumented alien, she is automatically disqualified from obtaining succession rights.

The court emphasized that citizenship and immigration status are not among the criteria for family members listed in the applicable regulations (9 NYCRR section2204.6(d)), and held that such broad consideration should not be imported by implication into the regulatory scheme.

'

Four-Year Limitations Period for Overcharge

Matter of Campbell v. DHCR

NYLJ 7/24/13, p. 21, col. 3

Supreme Ct., Kings Cty.

(Ruchelsman, J.)

'

In an article 78 proceeding, tenant challenged DHCR's determination denying his overcharge claim. The court granted the petition, holding that because tenant's challenge alleged fraud by landlord, tenant, DHCR had an obligation to ascertain whether the rent on the base date was lawful, even if that date was more than four days before the date the challenge was filed.

Tenant's current rent ' $450 ' has not been increased since tenant took possession of the apartment. Tenant brought a rent overcharge complaint in January 2011, and DHCR found no evidence of any overcharge. DHCR also denied tenant's petition for administrative review, leading to this article 78 proceeding.

In granting the petition, the court relied on DHCR's determination in a case involving another tenant in the same building, finding that landlord had engaged in practices designed to evade rent regulation requirements. The court noted evidence that landlord had been restricting the rooms to transient tenants in order to increase the rent of the tenant preceding the current tenant from $280 to the current $450. Although this increase occurred before the four-year period, DHCR was obligated to examine the increase because of the possibility that landlord had engaged in a scheme to remove the apartment from rent stabilization. Accordingly, the court remanded to DHCR for further hearings.

'

No Nonpayment Proceeding

265 Realty, LLC v. Trec

NYLJ 7/15/13, p. 29, col. 4

AppTerm, 2nd and 11th Districts

(memorandum opinion)

'

In landlord's summary nonpayment proceeding, tenant appealed from Civil Court's award of possession and back rent to landlord. The Appellate Term reversed and dismissed the proceeding, holding that there was no rental agreement in effect at the time the proceeding was commenced.

Landlord had rented the rent-stabilized apartment to tenants Maria and Dorotea Trec. Maria died in 2008. The last renewal lease expired on Aug. 31, 2009. Dorotea Trec remained in possession after that date, but did not sign a lease agreement or pay any rent. Landlord then brought this proceeding, and Civil Court awarded judgment to landlord for $10,883.53 in back rent, along with possession of the apartment. Tenant appealed.

In reversing, the Appellate Term noted that when a rent-stabilized lease expires but tenant remains in possession, the landlord is not permitted to deem the lease renewed. As a result, no lease was in effect. Moreover, because there was no payment or acceptance of rent after that date, no month-to-month tenancy had been created. As a result, there was no rental agreement in effect, requiring dismissal of the nonpayment proceeding and reversal of the award to landlord of attorneys' fees.

'

Notice Need Not Include Proof of Agent's Authority

Matter of QPII-143-45 Sanford Avenue LLC v. Spinner

NYLJ 7/9/13, p. 24, col. 3

AppDiv, Second Dept.

(memorandum opinion)

'

In landlord's summary nonpayment proceeding, tenant appealed from the Appellate Term's affirmance of Civil Court's judgment for landlord in the amount of $11,678.52, and award of possession to landlord. The Appellate Division affirmed, holding that landlord's failure to provide tenant with proof of its agent's authority did not make landlord's five-day notice defective.

Tenant has occupied the subject rent-stabilized apartment for more than 35 years. On April 2, 2009, landlord served tenant with a five-day notice, asserting that tenant had failed to make timely rental payments totaling more than $9,000, and providing a detailed account of the arrears. The notice was signed by Cathy McGovern, who was identified as agent for the landlord. In seeking to invalidate the notice, tenant contended that it was defective because landlord provided no proof that McGovern had authority to act on landlord's behalf. Both Civil Court and the Appellate Term rejected the argument.

In affirming, the Appellate Division distinguished its prior decision in Siegel v. Kentucky Fried Chicken , 108 AD2d 218, affd 67 NY2d 792. The court noted that Siegel was limited to its factual peculiarities. In particular, in Siegel, the lease had designated certain rights that were to be exercised by landlord or landlord's agent, and had named a particular attorney as landlord's agent. When tenant received a notice from another attorney unknown to tenant, the court held that the notice was defective for failure to provide proof of the agent's authority. By contrast, the lease in this case did not obligate landlord to act only personally or through an identified agent. In these circumstances, failure to provide proof of the agent's authority did not make the notice ineffective.

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