Landlord & Tenant

Court of Appeals

(Opinion by Read, J.)

In landlord's action for rent and reasonable attorneys' fees, tenant appealed from the Appellate Division's award of summary judgment to landlord. The Court of Appeals affirmed, holding that the lease obligated tenant to pay rent for an entire year even though tenant had terminated the lease within a few days of the beginning of the year.

Landlord leased billboard space to tenant for a 15-year period. The lease provided a specified rent for each lease year, and provided that should the lease be terminated before its expiration date, tenant would not be entitled to return of any basic rent paid in advance. If, however, the lease were terminated pursuant to three specified articles ' one covering fire or casualty, a second covering condemnation, and a third covering enactment of a law making billboard use illegal ' tenant would be liable only for rent until the termination date. The lease also permitted tenant to terminate if construction were to block the view of the billboard from the Long Island Expressway, but that provision did not give tenant the right to return of rent already paid if tenant exercised the termination right.

With a $96,243 check dated Jan. 2, 2007, tenant paid rent for calendar year 2007. Tenant quickly stopped payment on the check and, on Jan. 16, sent a letter to one of landlord's principals confirming an alleged conversation with another principal on Jan. 10, advising landlord that tenant was terminating because of impending construction. Tenant sent a substitute rent check for $2,109.43, covering the period before
termination. Landlord then brought this action to recover the balance of the rent due, together with costs and attorneys' fees incurred in conjunction with tenant's default. After Supreme Court entered judgment on a stipulation as to the amount of attorneys' fees, tenant appealed to the Court of Appeals as a matter of right based on the two-justice dissent at the Appellate Division.

In affirming, the Court of Appeals emphasized that the lease required tenant to pay the full annual rent for each year “in advance” on Jan. 1 of each year. The court held that even if tenant never actually paid the rent for 2007 because it stopped payment on the check, tenant remained liable for the full amount because the lease provided for apportionment of rent only in three enumerated circumstances, none of them applicable to this case. The court also rejected tenant's argument that the lease had been modified orally in 2006, relying on the lease's merger and no oral modification clause. The court found no basis for invoking partial performance or equitable estoppel to escape from the provisions of the “no oral modification” clause in the lease.

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No Class Action for Claim Against Landlord Based on GBL 349

Stratten v. 125 Court Street

NYLJ 12/10/13

Supreme Ct., Kings Cty.

(Graham, J.)

In an action by tenants seeking injunctive relief, money damages, and attorneys' fees under section 349 of the General Business Law, tenants sought certification of a class action and landlord sought dismissal of the complaint. The court denied certification because tenant had not waived its claims for punitive and minimum damages, while the court denied landlord's motion to dismiss, holding that section 349 applied to certain claims made by prospective and existing tenants.

Landlord owns a 321-unit rent-stabilized rental apartment building in Brooklyn. Tenants contend that landlord has been advertising apartments in the building by falsely representing an inflated maximum base rent far in excess of the actual maximum base rent, and then offering the apartments to tenants at a “preferred” rent far below the supposed base rent.

Although the named plaintiff tenants were apparently never charged more than the legal stabilized rent, the tenants alleged that, on information and belief, other tenants had been charged unlawful rent increases as a result of landlord's deceptive assertions about the maximum base rent. Tenants brought this action contending that landlord had engaged in deceptive acts or practices in the conduct of a business under General Business Law Section 349. Tenants also sought certification of a class. Landlord sought dismissal of the complaint on the ground that section 349 is inapplicable to landlord-tenant transactions.

In declining to dismiss the section 349 complaint, the court acknowledged that section 349 in that tenant's complaint alleged that landlord's conduct amounted to an extensive marketing scheme aimed at prospective, rather than existing tenants. In that context, the court held that tenants had adequately alleged a claim under section 349. The court then refused to certify a class on several grounds. First, the court found the request untimely. More critically, the court noted that plaintiff tenants had failed to waive their statutory right to treble damages under the Rent Stabilization Code and minimum damages under GBL section 349. As a result, the request for class certification was barred by CPLR 901(b), which bars class actions to recover penalties or minimum measures of recovery.

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Lobbying Activity Against Tenant

Splash v. Shullman Family

NYLJ 11/13/13, p. 21, col. 3

Supreme Ct., Westchester Cty.

(Connolly, J.)

In an action for tortious interference with business relations and breach of the implied covenant of good faith, tenant sought to restrain landlord from eviction from the leased premises during the pendency of the action, while landlord cross-moved to dismiss the complaint. The court denied both motions, holding that tenant had not demonstrated irreparable injury justifying a preliminary injunction, but that landlord's alleged lobbying activities could constitute tortious interference and bad faith.

Tenant operates a car wash on the subject premises. Three years before expiration of its lease, tenant entered into a new lease for premises at a nearby location with the intention of moving the car wash business. The lease was contingent on obtaining the necessary variances and approvals from the town zoning board of appeals. Tenant did not receive those approvals by the end of the lease term, allegedly because landlord had secretly retained a land use lawyer and experts to oppose tenant's applications, and induced the lawyer to represent that the lawyer and the experts had been hired by neighbors rather than by the landlord. At the expiration of tenant's lease with landlord, landlord brought a holdover proceeding against tenant in Justice Court, and tenant responded with this proceeding, seeking to stay the holdover proceeding and to enjoin landlord from removing tenant from the premises. Tenant also sought damages for tortious interference and breach of the implied covenant of good faith.

In denying injunctive relief to the tenant, the court emphasized that tenant had an adequate remedy at law if it prevailed on its claims, and could show neither irreparable injury nor a strong probability of success on the merits. But the court also held that tenant's complaint stated a cause of action for tortious interference with prospective business relations, noting that funding frivolous opposition to land use approvals, informing customers and employees
that tenant would soon be out of business, and attempting to confuse customers would be enough, if proven, to establish that landlord had employed wrongful means to interfere with tenant's effort to open its new location and maintain its relations with existing customers. In addition, the court indicated that if landlord had attempted to hire away tenant's employees and spread disinformation to tenant's customers during the term of the lease, those actions would constitute a breach of the implied covenant of good faith.

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Tenant Obligated to Pay an Entire Year's Rent After Termination

Eujoy Realty Corp. v. Van Wagner Communications, LLC

NYLJ 11/27/13, p. 23, col. 1

Court of Appeals

(Opinion by Read, J.)

In landlord's action for rent and reasonable attorneys' fees, tenant appealed from the Appellate Division's award of summary judgment to landlord. The Court of Appeals affirmed, holding that the lease obligated tenant to pay rent for an entire year even though tenant had terminated the lease within a few days of the beginning of the year.

Landlord leased billboard space to tenant for a 15-year period. The lease provided a specified rent for each lease year, and provided that should the lease be terminated before its expiration date, tenant would not be entitled to return of any basic rent paid in advance. If, however, the lease were terminated pursuant to three specified articles ' one covering fire or casualty, a second covering condemnation, and a third covering enactment of a law making billboard use illegal ' tenant would be liable only for rent until the termination date. The lease also permitted tenant to terminate if construction were to block the view of the billboard from the Long Island Expressway, but that provision did not give tenant the right to return of rent already paid if tenant exercised the termination right.

With a $96,243 check dated Jan. 2, 2007, tenant paid rent for calendar year 2007. Tenant quickly stopped payment on the check and, on Jan. 16, sent a letter to one of landlord's principals confirming an alleged conversation with another principal on Jan. 10, advising landlord that tenant was terminating because of impending construction. Tenant sent a substitute rent check for $2,109.43, covering the period before
termination. Landlord then brought this action to recover the balance of the rent due, together with costs and attorneys' fees incurred in conjunction with tenant's default. After Supreme Court entered judgment on a stipulation as to the amount of attorneys' fees, tenant appealed to the Court of Appeals as a matter of right based on the two-justice dissent at the Appellate Division.

In affirming, the Court of Appeals emphasized that the lease required tenant to pay the full annual rent for each year “in advance” on Jan. 1 of each year. The court held that even if tenant never actually paid the rent for 2007 because it stopped payment on the check, tenant remained liable for the full amount because the lease provided for apportionment of rent only in three enumerated circumstances, none of them applicable to this case. The court also rejected tenant's argument that the lease had been modified orally in 2006, relying on the lease's merger and no oral modification clause. The court found no basis for invoking partial performance or equitable estoppel to escape from the provisions of the “no oral modification” clause in the lease.

'

No Class Action for Claim Against Landlord Based on GBL 349

Stratten v. 125 Court Street

NYLJ 12/10/13

Supreme Ct., Kings Cty.

(Graham, J.)

In an action by tenants seeking injunctive relief, money damages, and attorneys' fees under section 349 of the General Business Law, tenants sought certification of a class action and landlord sought dismissal of the complaint. The court denied certification because tenant had not waived its claims for punitive and minimum damages, while the court denied landlord's motion to dismiss, holding that section 349 applied to certain claims made by prospective and existing tenants.

Landlord owns a 321-unit rent-stabilized rental apartment building in Brooklyn. Tenants contend that landlord has been advertising apartments in the building by falsely representing an inflated maximum base rent far in excess of the actual maximum base rent, and then offering the apartments to tenants at a “preferred” rent far below the supposed base rent.

Although the named plaintiff tenants were apparently never charged more than the legal stabilized rent, the tenants alleged that, on information and belief, other tenants had been charged unlawful rent increases as a result of landlord's deceptive assertions about the maximum base rent. Tenants brought this action contending that landlord had engaged in deceptive acts or practices in the conduct of a business under General Business Law Section 349. Tenants also sought certification of a class. Landlord sought dismissal of the complaint on the ground that section 349 is inapplicable to landlord-tenant transactions.

In declining to dismiss the section 349 complaint, the court acknowledged that section 349 in that tenant's complaint alleged that landlord's conduct amounted to an extensive marketing scheme aimed at prospective, rather than existing tenants. In that context, the court held that tenants had adequately alleged a claim under section 349. The court then refused to certify a class on several grounds. First, the court found the request untimely. More critically, the court noted that plaintiff tenants had failed to waive their statutory right to treble damages under the Rent Stabilization Code and minimum damages under GBL section 349. As a result, the request for class certification was barred by CPLR 901(b), which bars class actions to recover penalties or minimum measures of recovery.

'

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Lobbying Activity Against Tenant

Splash v. Shullman Family

NYLJ 11/13/13, p. 21, col. 3

Supreme Ct., Westchester Cty.

(Connolly, J.)

In an action for tortious interference with business relations and breach of the implied covenant of good faith, tenant sought to restrain landlord from eviction from the leased premises during the pendency of the action, while landlord cross-moved to dismiss the complaint. The court denied both motions, holding that tenant had not demonstrated irreparable injury justifying a preliminary injunction, but that landlord's alleged lobbying activities could constitute tortious interference and bad faith.

Tenant operates a car wash on the subject premises. Three years before expiration of its lease, tenant entered into a new lease for premises at a nearby location with the intention of moving the car wash business. The lease was contingent on obtaining the necessary variances and approvals from the town zoning board of appeals. Tenant did not receive those approvals by the end of the lease term, allegedly because landlord had secretly retained a land use lawyer and experts to oppose tenant's applications, and induced the lawyer to represent that the lawyer and the experts had been hired by neighbors rather than by the landlord. At the expiration of tenant's lease with landlord, landlord brought a holdover proceeding against tenant in Justice Court, and tenant responded with this proceeding, seeking to stay the holdover proceeding and to enjoin landlord from removing tenant from the premises. Tenant also sought damages for tortious interference and breach of the implied covenant of good faith.

In denying injunctive relief to the tenant, the court emphasized that tenant had an adequate remedy at law if it prevailed on its claims, and could show neither irreparable injury nor a strong probability of success on the merits. But the court also held that tenant's complaint stated a cause of action for tortious interference with prospective business relations, noting that funding frivolous opposition to land use approvals, informing customers and employees
that tenant would soon be out of business, and attempting to confuse customers would be enough, if proven, to establish that landlord had employed wrongful means to interfere with tenant's effort to open its new location and maintain its relations with existing customers. In addition, the court indicated that if landlord had attempted to hire away tenant's employees and spread disinformation to tenant's customers during the term of the lease, those actions would constitute a breach of the implied covenant of good faith.

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