Landlord & Tenant

AppDiv, Second Dept. (memorandum opinion)

In commercial tenant's action for a declaration that landlord is obligated to repair the roof of the premises, landlord appealed from Supreme Court's grant of summary judgment to tenant. The Appellate Division modified to deny the summary judgment motion, holding that the lease was ambiguous and that the extrinsic evidence was not conclusive as a matter of law

In 1996, landlord leased a substantial portion of its building to tenant for operation of a car wash, automobile detailing shop and accessory showroom. The building had one other tenant. The lease provided that tenant “shall, at the Tenant's own cost and expense make all repairs.” The lease also provided that “[l]andlord need only repair the damaged structural parts of the [p]remises.” In 2012, tenant brought this action for a declaration that landlord was obligated to repair the roof. Both parties sought summary judgment, and Supreme Court granted tenant's motion.

In modifying, the Appellate Division emphasized that the lease provisions were inconsistent, especially because the lease never specified what repairs should be deemed structural. The court also discounted the deposition testimony of one of tenant's principals indicating that landlord had drafted the lease, noting that landlord's principal had died before commencement of the action. The court held, therefore, that the Dead Man's Statute (CPLR 4519) precluded the court from relying on tenant's testimony about communications between tenant's principal and landlord's principal. The court also noted that both parties had made repairs to the roof during the term of the lease, so that intent could not be inferred conclusively from the parties' conduct. Accordingly, neither party was entitled to summary judgment.

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Tenant Excused from Performing Lease When Owner Leased Without Required Permit

Ader v. Guzman

NYLJ 1/15/16, p. 26, col. 4

AppDiv, Second Dept.

(memorandum opinion)

In an action to rescind a lease, landlord appealed from Supreme Court's order granting tenant's summary judgment motion. The Appellate Division affirmed, holding that leasing without a required town permit excused tenant from performance under the lease.

Landlord leased residential property to tenant for the period from May 21, 2013 through Sept. 5, 2015 for the sum of $180,000. On June 5, 2013, after tenant learned that the premises lacked the rental permit required by section 270-3 of the Southampton Town Code, tenant notified landlord that the lease was illegal and demanded the return of all sums already paid, which included an $18,000 security deposit and an $18,000 utility deposit. Landlord rejected the demand, contending that tenant had executed the lease after having ample opportunity to investigate whether the premises had a valid permit. Tenant then brought this action seeking return of $216,000, the total amount tenant had paid under the lease, arguing that the lease was illegal without a valid rental permit. Both parties sought summary judgment, and Supreme Court granted tenant's motion. Landlord appealed.

In affirming, the Appellate Division emphasized that the Town Code provision requiring rental permits was not simply a revenue raising device, but was also designed to address overcrowded and dangerous conditions in non-owner occupied dwelling units. Because the code provision was designed to protect health and safety of tenants, the court held that the code affords tenants an implied private right of action , because a private right of action is consistent with the legislative scheme. The court held that to permit landlord to violate the code provision and profit from his wrongdoing would violate public policy. The court noted that landlord had not furnished evidence demonstrating that tenants were raising the illegality of the rental for personal gain, particularly in light of tenant's showing that it had vacated the premises shortly after the lease commenced.

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Tenant Entitled to Set Off Security Deposit Against Rent Due

23 East 39th Street Management Corp. v. 23 East 39th Street Developer, LLC

NYLJ 12/30/16, p. 25, col. 2

AppDiv, First Dept.

(memorandum opinion)

In an action by tenant to recover the balance of a security deposit that landlord had failed to maintain in a segregated account, both parties appealed from a Supreme Court order awarding landlord rent for months after tenant attempted to terminate the lease, and denying tenant's request to set off its security deposit against unpaid rent. The Appellate Division reversed and remanded, holding that tenant was not entitled to terminate the lease when it did, but that tenant was entitled to set off the security deposit against rent due.

In August 2007, the parties entered into a lease to begin in October of that year. By the terms of the lease, each party had the right to terminate on 90 days' written notice “subsequent to the first consecutive 12-month anniversary of the rent.” Tenant paid landlord a $400,000 security deposit to be held in a segregated account. On May 15, 2008, tenant informed landlord of its intent to vacate the premises. Tenant vacated on Oct. 8, 2008, one year after the lease became effective. Tenant had not paid rent from May 2008 to September 2008, so after vacating, tenant brought this action to recover $115,944.19, the difference between the $400,000 security deposit and the rent due for May through September. Landlord counterclaimed for $246,212.12, the amount due for three months following tenant's departure.

Supreme Court granted tenant's summary judgment motion on its claim for the security deposit, noting that landlord had improperly failed to segregate the deposit. The court granted landlord's summary judgment motion on its counterclaim, holding that tenant was not entitled to vacate until three months after the one-year anniversary of the lease. Supreme Court referred the matter to a special referee only to determine the amount of rent tenant owed for the period between November 2008 and January 2009. The special referee then denied landlord rent for the period between November 2008 and January 2009, and determined that tenant could not obtain an offset of the security deposit against the amount of rent due. Supreme Court then confirmed the referee's order, and both parties appealed.

In reversing, the Appellate Division held that the referee had exceeded the scope of his reference by denying landlord recovery for rents for the period between November 2008 and January 2009. The court emphasized that Supreme Court had referred the matter only to determine the rents owed for that period, not to determine whether tenant was liable for rent. The court then held that the special referee exceeded the scope of his reference in refusing to reduce the amounts tenant owed the landlord by a setoff representing the amount of the security deposit to which tenant was entitled.

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Civil Court Properly Exercised Discretion In Vacating Warrant of Eviction

Matter of Lafayette Boynton HSG Corp. v. Pickett

NYLJ 1/19/16, p. 18, col. 6

AppDiv, First Dept.

(memorandum opinion; concurring opinion by Saxe, J.)

In landlord's summary nonpayment proceeding, landlord appealed from the Appellate Term's affirmance of Civil Court's order granting tenant's motion to vacate an already-executed warrant of eviction. The Appellate Division affirmed, holding that tenant's showing of good cause sufficed to support Civil Court's exercise of discretion in vacating the warrant of eviction.

Disabled tenant had occupied the subject apartment for more than 30 years. Landlord brought this nonpayment proceeding in 2011. Tenant entered into a stipulation of settlement agreeing to issuance of a warrant of eviction, to be stayed for a period of time to allow him to pay the rent arrears Tenant then obtained seven extensions and stays of eviction on condition that he pay arrears by a new date. Ultimately, the warrant of eviction was executed, and tenant was removed from the premises. Later, tenant moved to be restored to the premises on payment of $14,030.59 in back rent, and Civil Court granted the motion. The Appellate Term affirmed, and landlord appealed.

In affirming, the Appellate Division held that because tenant had engaged in good faith efforts to secure emergency rental assistance to cover the arrears, and since tenant ultimately paid the arrears, Civil Court had properly exercised its discretion to restore tenant to possession. Justice Saxe concurred in result, agreeing that the majority's opinion was consistent with existing authority, but arguing that tenant should have to show more than good cause to vacate a warrant of eviction that has already been executed. He noted that RPAPL 749(3), the applicable statute, explicitly provides for vacating a warrant of eviction for good cause when the warrant has not yet been executed, but that the state makes no provision for vacating a warrant that has already been executed. Justice Saxe argued that something more than good cause should be required to vacate an already-executed warrant, and he suggested that a tenant should have to establish an error in the allegations surrounding issuance of the warrant might be necessary.

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