Landlord & Tenant

Court of Appeals

(6-1 decision; Opinion by Pigott, J; dissenting opinion by Fahey, J.)

In an action by tenant's granddaughter for cognitive injuries suffered from lead paint in tenant's apartment, the granddaughter appealed from the Appellate Division's affirmance of Supreme Court's grant of summary judgment to the landlord. The Court of Appeals affirmed, holding that the granddaughter did not “reside” in tenant's apartment within the meaning of the applicable local law.

The granddaughter was born in January 1997 and lived in a Bronx apartment with her father and mother in 2002. When she was three months old, her paternal grandmother began caring for her during daytime hours, from 9:30 a.m. to 6:30 or 7:00 p.m. in her nearby first-floor apartment in a building owned by landlord.

In January 1998, the granddaughter was found to have an elevated blood lead level, and the New York City Department of Health identified lead paint hazards at the grandmother-tenant's apartment as the cause. The city issued an order to abate to landlord. Eight years later, the granddaughter's mother brought this action against landlord on the granddaughter's behalf, contending that landlord had owed the granddaughter a duty to abate hazardous lead conditions in grandmother's apartment, and alleging that failure to abate those hazards caused granddaughter's cognitive impairment. Supreme Court dismissed the complaint and the Appellate Division affirmed. The Court of Appeals granted leave to appeal.

In affirming, the Court of Appeals focused on then-applicable section 27-2014(h) of the New York City Administrative Code, which imposed on landlord the duty to remove paint with specified lead levels from the walls “in any dwelling unit in which a child or children six (6) years of age and under reside.” The court's majority held that the granddaughter did not reside in the grandmother's apartment, and, as a result, the code provision did not impose a duty on landlord to remove the lead-based paint. Judge Fahey, dissenting, argued that a child may have more than one place of residence, and focused on the intent of the law, which was to protect young children.

COMMENT

At common law, a tenant may recover from landlord for injuries suffered by a child exposed to hazardous levels of lead even without proving that landlord had actual knowledge of the lead condition. In Chapman v. Silber, 97 N.Y.2d 9, the Court of Appeals started by reiterating the rule that a landlord is generally liable for failure to repair a dangerous condition only when the landlord has notice of the condition, but then held that a jury can infer notice of a lead hazard if plaintiff establishes that landlord has notice that: 1) the apartment was constructed before lead-based paint was banned; 2) paint was peeling in the apartment; 3) lead-based paint poses a danger to young children; and 4) a young child lived in the apartment. In Chapman, the court reversed the lower court's affirmance of summary judgment dismissing the tenant's claim despite the lack of any evidence regarding the landlord's notice of the amount of lead in the paint. The lower court had granted the landlord's motion to dismiss because, while the landlord was generally aware of the dangers of lead-based paint, the tenant had not alleged that the landlord had notice that the paint in this apartment had hazardous levels of lead. In reversing, the Court of Appeals held that summary judgment was inappropriate because a reasonable jury could infer from the facts alleged that the landlord had actual or constructive notice of a hazardous lead-based paint condition in the apartment .

In New York City, New York City Administrative Code ' 27-2056.5 (Local Law 1, 2004) creates a rebuttable presumption that any landlord who has notice that a child younger than 7 years old resides in an apartment, has notice of a lead-based paint hazard. In Woolfalk v. New York City Hous. Auth., 263 A.D.2d 355, the First Department held that when causation is established, a tenant was entitled to judgment as a matter of law where the landlord had notice that a child younger than 7 years old was residing in the apartment, and that “whether the landlord had actual notice of peeling paint or other indications of a hazard [was] immaterial.”

New York City Administrative Code ' 27-2056.4 imposes an obligation on the landlord to investigate whether a child under 7 years old resides in an apartment via questions on the lease and annual questionnaires for the tenant to fill out. Furthermore, even where the tenant of record indicates on the questionnaire that no young child resides in the apartment, if the landlord has “actual knowledge” that a child is in fact residing in the apartment, the presumption still applies. Id. At least in cases where the City of New York is the landlord, courts have held that actual knowledge by the building's super should be imputed to the landlord. In Moya ex rel. Moya v. City of New York, 9 Misc. 3d 332, the court granted a child's motion for summary judgment even though the tenant of record, the building's super, had stated on the annual questionnaire that no young children resided in the apartment. The court held that because the super knew that a young child was residing in the apartment, his knowledge was imputed to his employer, the city. Because the city did not reasonably attempt to abate the harm, the city, as landlord, was liable for any harm caused thereby to the child. See also Peri v. City of New York, 44 A.D.3d 526, aff ' d, 11 N.Y.3d 756 (Imputing to landlord-city, without discussion, super's knowledge).

'

Claim Against Breaching Landlord's Successor-in-Interest Restored

'PK Restaurant, LLC v. Lifshutz

NYLJ 4/6/16, p. 29, col. 1

AppDiv, First Dept.

(memorandum opinion)

In an action by commercial tenants for breach of a lease, tenants appealed from Supreme Court's dismissal of its breach of contract claim against original landlord's successors-in-interest, and successor-in-interest cross-appealed from denial of its motion to dismiss tenant's claims for tortious interference with contract and specific performance. The Appellate Division modified to restore the breach of contract claim and dismiss the tortious interference claim.

Associates, the original landlord, leased the building to Corporation, which subleased the cellar, basement and first floor to tenant's predecessor for use as a restaurant. The lease, which became effective on Dec. 28, 1998, was to run through September 2019. Tenant's predecessor, and then tenant, ran a successful restaurant until a fire devastated the premises on Feb. 8, 2010. Corporation did not restore the premises, and informed tenant that it had ended its tenancy with Associates. After Associates locked tenant out of the premises, tenant brought an earlier action against Associates and Corporation, which resulted in a judgment ordering Associates to restore tenant to the premises on condition that tenant post an undertaking and pay rent. Tenant did not meet the conditions, and returned the keys to Associates on July 5, 2012. Associates then terminated tenant's lease.

On Sept. 13, 2012, Associates contracted to sell the building to Lifshutz, who assigned his contract rights to Realty. The latter purchased the property on Dec. 21, 2012, and subsequently relet the premises.

On Dec. 4, 2013, tenant brought this action, alleging various causes of action against Associates (most of which were time-barred), and also alleging breach of the lease and sublease agreement against Lifshutz and Realty, tortious interference against Realty, and seeking specific performance against Realty. Tenant also filed a notice of pendency. Supreme Court dismissed the breach claims against both Lifshutz and Realty, but did not dismiss the tortious interference or specific performance claims.

In modifying, the Appellate Division held that the breach of lease claim was properly dismissed against Lifshutz because he was not a party to the lease and sublease, and because he never acquired title to the property. But the Appellate Division reinstated the claim against Realty. First, the court emphasized that the contract Lifshutz had signed (and later assigned to Realty) provided that purchaser agreed to assume at closing all liabilities with respect to tenant arising prior to or subsequent to the date of the contract. The court concluded that the record was not sufficiently developed to determine whether tenant was an intended beneficiary of that provision. Second, the court indicated that even if tenant was not an intended beneficiary, Real Property Law section 223 would nevertheless make Realty, as a successor landlord, liable for any breach committed by its predecessors. Although Realty contended that the lease had been terminated, thus extinguishing any liability under the lease, the court concluded that the effectiveness of the termination was a disputed question of fact.

The court then held that Supreme Court should have dismissed the tortious interference claim against Realty, noting that Associates had attempted to terminate the sublease before Realty had any involvement. Finally, the court held that Supreme Court had properly let the specific performance claim stand, concluding that Realty's leasing of the premises to another tenant did not absolutely bar a specific performance claim, but instead concluded that the record was not yet sufficiently developed to determine the hardship specific performance would create for the new tenant.

COMMENT

Real Property Law ' 223 provides that a lessee has the same remedy for breach of an agreement contained in the lease against the lessor's grantee and the lessor's assignee as the lessee would have against the original lessor. However, despite the language of Real Property Law ' 223, in at least one case a court has held that a provision in a negotiated commercial lease that explicitly limits the successor landlord's liability can eliminate the rights that a tenant has against the successor landlord for an initial landlord's breach. In Croxton Collaborative Architects v. T-C 475 Fifth Ave, 1 13 A.D.3d 479, the court dismissed tenant's claim of damages against a successor landlord where the lease extension agreement between initial landlord and tenant stated that a successor landlord could not be held liable for any act, omission or default by the initial landlord under any circumstance. Specifically, the court indicated that because the claim was against the successor landlord for various breaches by the initial landlord, all of which predated successor landlord's ownership, the terms of the initial lease acted as documentary evidence precluding any claim against the successor landlord.

When a tenant claims wrongful eviction and seeks specific performance as a remedy, courts will not require the removal of a new tenant in possession of the subject property unless the new tenant has been made a party to the proceedings. In Oppenheim v. Spike, 107 Misc.2d 55, the court held that tenant was limited to an action for damages for wrongful eviction where a new tenant entered into occupation of the premises and had not been made party to the proceedings. See also Kentpark Realty Corp. v. Lasertone Corp., 3 Misc.3d 28; Chester Mamaroneck Gardens LLC v. Riggsbee, 189 Misc.2d 439; Eight Associates v. Hynes, 102 A.D.2d 746. When the new tenant is made a party to the litigation, the court will balance the equities of case-specific factors, including a consideration of the hardship to be imposed, to determine whether the wrongfully evicted tenant or the new tenant is entitled to the premises. For instance, in S.W.S Realty Co. v. Geandomenico, 484 N.Y.S.2d 402 (N.Y. City Civ. Ct. 1984), the court held that the wrongfully evicted residential tenant was entitled to restoration, despite the fact that a new commercial tenant was in possession of the subject premises, because the wrongfully evicted tenant would likely have greater difficulty finding a suitable replacement to the property and had lived there for years, while the new commercial tenant had only occupied the space for a few months.

'

Landlord Entitled to Rent, Not Use and Occupancy, for Holdover Period

40 Rector Owner LLC v. The City of New York

NYLJ 4/1/16, p. 28, col. 2

AppDiv, First Dept.

(memorandum opinion)

In landlord's action against tenant for use and occupancy for a period after expiration of a multi-year lease, landlord appealed from Supreme Court's grant of tenant's summary judgment motion dismissing most of landlord's causes of action. The Appellate Division modified to restore landlord's claims for periods during which tenant had held over, concluding that even if landlord was not entitled to use and occupancy, landlord was entitled to rent.

Landlord leased premises to tenant for a period to expire on July 23, 2010. The lease required tenant to pay rent and additional rent. At the expiration of the lease term, tenant held over as a month-to-month tenant with landlord's consent. Tenant vacated one floor on Oct. 1, 2010, and another two floors by May 1, 2011. On April 11, 2011, landlord sent tenant a notice indicating that it was terminating the month-to-month tenancy effective May 31, 2011. Tenant failed to vacate all of the remaining space by the deadline, remaining in possession of all but three floors. Landlord brought a holdover proceeding in June 2011, and sought use and occupancy for all of the original leased space for the periods before and after May 31, 2011.

With respect to the period before May 31, 2011, the Appellate Division held that questions of fact remained about tenant's liability. The court observed that the record did not make it clear whether the lease for multiple floors was divisible. If the lease was divisible, tenant would only be obligated for the floors tenant actually occupied, but if the lease was not divisible, tenant would be liable for all of the floors. The court observed that for the period during which landlord consented to the holdover, tenant's liability was for rent and additional rent, not for use and occupancy. With respect to the period after May 31, 2011, the court held that tenant was liable for use and occupancy, but only for those floors tenant actually occupied. Once tenant vacated a floor, tenant could no longer be held liable for use and occupancy for that floor.

COMMENT

Real Property Law ' 232-c provides that when a landlord continues to accept rent from a holdover tenant, a month-to-month tenancy is created “unless an agreement either express or implied is made providing otherwise,” and tenant is liable to landlord for rent payments beginning on the first day after its lease term expires. In Bonner v. Nash, after landlord brought a holdover proceeding against tenant for immediate possession of the premises, the Appellate Term required tenant to pay rent to landlord in the amount fixed in its lease for the period of time tenant remained on the premises after the expiration of its lease up until it vacated the property. 70 Misc.2d 752, 753 (1972). Since landlord continued to accept rent payments from tenant subsequent to the expiration of its lease term, the court cited RPL ' 232-c in finding tenant liable to landlord for rent, as opposed to use and occupancy. Id.

From the time a tenant begins holding over without landlord's consent, it becomes liable for the reasonable value of use and occupancy of the premises, measured as the fair market value of the property after the expiration of the lease. Courts will not, however, uncritically accept landlord's evidence of fair market value, especially when landlord contends that the fair market value is far higher than the rent tenant was paying under the lease. For example, in Mushlam, Inc. v. Nazor, the First Department reversed Supreme Court's determination that landlord was entitled to use and occupancy in an amount four times the previous rent, and remanded instead for a hearing to determine the fair market value of the leasehold. 80 A.D.3d 471, 473 (2011). In attempting to meet the landlord's burden of proving the reasonable value of use and occupancy, landlord relied on an affidavit from a real estate broker who opined on comparable rentals in the area, and an unsigned draft lease for the commercial penthouse in the subject building. Id. at 472. The Appellate Division noted that the rent reserved under the lease constituted probative, but not conclusive, evidence of market value, and found that a hearing was warranted because the unsigned penthouse lease was not comparable, and leases for other units in the building provided for much lower rents. Id. at 473 .

When a lease provides for liquidated damages in the event tenant holds over with respect to all or part of the premises, a tenant that holds over with respect to part of the premises is liable for the liquidated damages. For example, in PHH Mortgage Corp. v. Ferro, Kuba, Mangano, Sklyar, Gacovino & Lake, P.C., 113 A.D.3d 831, the Second Department in holding sub-subtenant to the liquidated damages provision of the main lease, explained that a lessor is under no obligation to rearrange its leasing of space to mitigate damages caused by a subtenant who holds over. Id.

'

Nonprimary Residence Proceeding Succeeds

Matter of Giddings v. New York City Department of Housing Preservation and Development (HPD)

NYLJ 4/13/16, p. 25, col. 2

AppDiv, First Dept.

(memorandum opinion)

In an article 78 proceeding, tenant challenged HPD's determination, after a hearing, to issue a certificate of eviction requested by landlord. The Appellate Division confirmed HPD's determination, concluding that the evidence established that tenant did not maintain the apartment as her primary residence.

Since 2002, tenant has been a professor and department head at Smith College in Massachusetts. She maintained a Massachusetts address, had a Massachusetts driver's license, registered a car in Massachusetts and, for the years 2009-2011, her tax returns listed her only address in Massachusetts. She has maintained a fully furnished house in Massachusetts. Based on this evidence, the court concluded that DHCR had properly decided that the tenant had spent fewer than 183 days in the New York apartment in the calendar year preceding commencement of the eviction proceeding in 2012. As a result, the apartment was not her primary residence

'

Landlord Not Bound By Terms in Sublease Agreement

SI Hylan Care, LLC v. 2454-2464 Hylan Boulevard, LLC

NYLJ 4/14/16, p. 20, col. 1

AppDiv, Second Dept.

(memorandum opinion)

In an action by subtenant against landlord for breach of contract and for a declaration that it has a right to purchase the leased property, landlord appealed from Supreme Court's denial of its motion to dismiss. The Appellate Division reversed and dismissed the complaint, holding that landlord was not a party to the sublease conferring rights on the subtenant, and was therefore not bound by its terms.

In 1973, prior owners entered into a long-term lease of the subject Richmond County property to prior tenant. In 1994, prior tenant assigned its lease to current tenant. In 2008, current landlord acquired title to the property. In 2013, tenant entered into a sublease with subtenant that gave subtenant the right to purchase the property from landlord at fair market value. The prime lease included no provision giving tenant a right to purchase. When subtenant sought to exercise the purchase option included in the sublease, landlord refused to sell, advising subtenant it had no right to purchase. Subtenant then brought this action in Nassau County Supreme Court. Landlord moved for a change in venue to Richmond County, and for dismissal of the complaint. Supreme Court denied both motions, and landlord appealed.

In reversing, the Appellate Division emphasized that a sublease can confer no more rights than those granted the tenant in the main lease. Here, because the main lease included no purchase option, the sublease could not confer a purchase option on subtenant. The court also noted that subtenant had no privity of contract with the landlord. As a result, landlord was entitled to dismissal of the complaint. The court dismissed as academic landlord's appeal from Supreme Court's denial of its motion for a change in venue, but noted that Supreme Court had erred in denying the motion because CPLR 507 make the proper venue the county in which the property is located. Supreme Court had improperly relied on a forum selection clause in the sublease even though the landlord was not a party to the sublease.

'

Subtenant's Failure To Vacate

7001 East 71st Street, LLC v. Millennium Health Services

NYLJ 4/22/16, p. 23, col. 4

AppDiv, First Dept.

(memorandum opinion)

In landlord's action against subtenant for damages to the premises, landlord appealed from Supreme Court's denial of its motion to dismiss subtenant's counterclaim for constructive eviction. The Appellate Division reversed and dismissed the counterclaim, holding that subtenant's failure to vacate the premises precluded the constructive eviction counterclaim.

Landlord leased the subject premises to Maimonides Medical Center, and Maimonides, in turn, subleased the premises to subtenant, a medical practice. When Superstorm Sandy damaged the premises, landlord terminated the main lease because the damage could not be repaired within 120 days. Landlord's complaint in this action alleged that subtenant remained in the premises after the lease termination, causing further damage to the premises. Subtenant counterclaimed for constructive eviction, and landlord moved to dismiss the counterclaim. Supreme Court denied landlord's motion to dismiss the counterclaim, and landlord appealed.

In reversing, the Appellate Division first held that subtenant's failure to vacate the premises barred its constructive eviction claim. The court went on to hold that subtenant was precluded from bringing a constructive eviction claim because there was no landlord-tenant relationship between landlord and subtenant.

'

Excusable Absence By Tenant Precludes Nonprimary Residence Claim

'Second 82 Corp. v. Veiders

NYLJ 4/28/16, p.22, col. 2

AppTerm, First Dept.

(2-1 decision; memorandum opinion; dissenting memorandum by Shulman, J.)

In landlord's nonprimary residence proceeding, landlord appealed from Civil Court's dismissal of the petition. A divided Appellate Term reversed, holding that the record contained sufficient support for Civil Court's finding that tenant's absence was temporary and excusable.

In March 2007, landlord brought a nonprimary residence proceeding against tenant, alleging that tenant's primary residence was at a family-owned home in Erie County. Although the Appellate Term reversed Civil Court's dismissal of that petition, landlord learned that tenant was caring for his ill mother in Erie County, and in August 2007, landlord discontinued that proceeding pursuant to a stipulation of settlement. The stipulation provided that landlord would renew the lease for two years and tenant would resume staying in the Manhattan apartment when care for his mother was no longer necessary. One month later, in September 2007, tenant's mother died. Tenant nevertheless spent most of the next two years in Erie County running a family business and winding up the estates of his mother and aunt. He was absent from the Manhattan apartment for more than 183 days each year, and electricity usage in the apartment was negligible. In July 2009, landlord brought the current nonprimary residence proceeding, and Civil Court dismissed the petition, concluding that tenant's absence was temporary and excusable. Landlord appealed.

In affirming, the Appellate Term majority concluded that the Rent Stabilization Code is not so inflexible as to penalize a tenant who must temporarily relocate when compelling family obligations arise. The majority concluded that it was appropriate to defer to the trial court's conclusion, which rested on the credibility of witnesses. Justice Shulman, dissenting, emphasized tenant's violation of the terms of the stipulation of settlement, in addition to the facts that tenant had used the Erie County address on his mother's probate petition, on his drivers license, and his credit card. He contended that the majority's opinion amounted to an exception that allows a rent-stabilized tenant to maintain an apartment despite an absence for “business pursuits.”

'