Landlord & Tenant

AppDiv, First Dept.

(memorandum opinion)

In tenant's action for wrongful eviction, both parties appealed from Supreme Court's judgment awarding tenant damages and attorneys' fees, but denying tenant supplementary attorneys' fees and treble damages. The Appellate Division modified to award supplementary attorneys' fees and treble damages, but otherwise affirmed.

After signing a lease extension agreement, tenant found landlord changing the dead bolt lock on the front door, and tenant alleged that landlord had removed all personal effects from the apartment, and refused to return them for at least a month. When tenant brought this wrongful eviction action, landlord failed to contest the merits of tenant's claims, including tenant's request for attorneys' fees. Supreme Court awarded tenant damages of $6,700, plus interest, and attorneys' fees of $44,714 for the period up to Dec. 10, 2014, when proceedings before a Judicial Hearing Officer were completed. Supreme Court denied tenant's request for supplementary fees, and for treble damages.

In modifying, the Appellate Division first rejected landlord's argument that tenant was not entitled to reciprocal attorneys' fees under Real Property Law section 234 because landlord had never signed the lease entitling landlord to attorneys' fees. The court emphasized that tenant had signed the lease and landlord had ratified it by providing tenant with keys to the premises. As a result, landlord was bound by the lease, and subject to the statutory obligation to pay attorneys' fees to a prevailing tenant. Because fees incurred after Dec. 10, 2014 were necessary to provide tenant with complete relief, tenant was entitled to those fees. The court then held that tenant was entitled to treble damages on the award of $6,700 because the record was sufficiently developed to determine treble damages. The court declined to decide whether treble damages were mandatory or discretionary, concluding on the facts of this case, tenant should prevail in either case.

COMMENT

RPAPL 853 states that a person is “entitled to recover treble damages” if he is evicted “in a forcible or unlawful manner, or ' held and kept out by force or by putting him in fear of personal violence or by unlawful means.” N.Y. Real Prop. Acts. Law ' 853 (McKinney). Before a 1981 amendment, the statute required a showing of violent or forceful acts for the recovery of treble damages. Applying the earlier statute, the Fourth Department, in Statement, Inc. v. Pilgrim's Landing, Inc., 49 A.D.2d 28, did not award the tenant treble damages despite the proven wrongful eviction, because the tenant, rather than alleging violent or forceful acts, merely alleged that landlord had wrongfully failed to deliver proper statutory notice of eviction. Id. at 34. In response, in 1981, the legislature amended RPAPL 853 to broaden the entitlement to treble damages to all instances of unlawful evictions. As stated in a memorandum by Assemblyman Richard N. Gottfried, the purpose of the amendment was to “correct the unduly narrow scope of the remedy to cover the full wrong” of wrongful evictions. 1981 N.Y. Legis. Ann., at 256. Unlike the previous statute, this amendment would “provide procedural remedies for tenants unlawfully evicted from their homes.” Id.

Arguments have been made that this amendment has worsened the ambiguity of the already unclear statute. The use of the word “entitled,” rather than “may” or “shall” in both the original and amended statutes has left courts uncertainty about when treble damages should and can be awarded. Further, some have argued that the addition of the word “unlawful” opens the door to too much availability for treble damages. In response, courts have interpreted this broadened “entitlement” to be permissive, not mandatory. In Mannion v. Bayfield Development Co., 134 Misc.2d 1060, the court found the tenant's claim for treble damages to be unwarranted, despite the tenant's successful claim that his eviction was unlawful because landlord's nonpayment proceeding was jurisdictionally defective. Id. at 1064. The tenant claimed that because of the 1981 amendment's addition of the word “unlawful,” treble damages should have been extended to the tenant, because the tenant had proven unlawful eviction. Id. at 1062. However, the court rejected this argument, noting that in most instances when the legislature mandates treble damages it uses peremptory words like “shall.” In the absence of the that language, the court held that any award of treble damages under RPAPL 853 is subject to the court's discretion. Id. at 1063. In Mannion, the court used this discretion to determine that because there was no evidence of harassment, violence, force, or intention for the landlord to economically benefit from the eviction, treble damages would be unwarranted. Id. at 1064 .

Appellate courts in New York have endorsed the result in Mannion. Thus, in Lee v. Park, 16 A.D.3d 986, the Third Department denied treble damages for a wrongful eviction, explaining that such a grant is permissive rather than mandatory, and that the landlord acted with good faith when chaining the renters out of their convenience store business to keep unauthorized people from entering the premises. Id. at 989 .

In other appellate cases, as in Hood, courts have exercised discretion to award treble damages without showings of violence. In Lyke v. Anderson, 1 47 A.D.2d 18, the Second Department awarded the tenant treble damages for an unlawful (but not violent or forceful) wrongful eviction. Id. at 29. The court found that the behavior of the trailer park manager was “illustrative of the precise evil that RPAPL 853, as amended, was designed to prevent”: he deliberately avoided the required eviction proceedings, smashed the tenants' sundeck, and physically discarded the tenants' mobile home into a damaging, swampy area. Id. at 29.

'

Obligation to Pay Brokerage Commission

Gronich & Co., Inc. v. Longstreet Associates L.P.

NYLJ 6/24/16, p. 26, col. 3

AppDiv, First Dept.

(memorandum opinion)

In an action for a brokerage commission, former landlord appealed from Supreme Court's grant of summary judgment to broker. The Appellate Division affirmed, holding that a subsequent landlord's assumption of obligations under a lease did not suffice to release the original landlord from its obligation to pay the brokerage commission.

In 1996, Longstreet, then the owner of the GM Building, entered into a 15-year lease with FAO Schwarz. The lease included a five-year option to renew. Longstreet agreed to pay Gronich a brokerage commission equal to 2% of the rent under the lease. The brokerage commission agreement provided that Longstreet would be relieved of liability for the commission if Longstreet delivered an agreement by a purchaser or grantee of the building which assumed payment of the brokerage commission amounts due. Longstreet subsequently sold the building. As part of the deal, the purchaser agreed to a lease assumption providing that purchaser “accepts the written assignment and agrees ' to perform and comply with and to be bound by all the terms, covenants, agreements, provisions, and conditions of the Leases on the part of the landlord.”

Longstreet also delivered the brokerage agreement to purchaser. In 2011, long after the sale of the building, successor-in-interest to FAO Schwarz exercised its lease renewal option. When no one paid the 2% commission for the renewal term, Gronich brought this action against Longstreet, and Supreme Court granted Gronich's summary judgment motion.

In affirming, the Appellate Division held that a covenant in a lease to pay a broker's commission upon renewal of the lease is not a covenant that runs with the land. As a result, a grantee would be liable for the covenant only if the grantee affirmatively assumed the lease covenant. In this case, the court concluded that the lease assumption did not constitute an affirmative assumption of the covenant to pay the brokerage commission. Longstreet was not, therefore, relieved of its obligation to pay the brokerage commission.

COMMENT

All four Appellate Divisions have held that agreements to pay brokerage commissions are not covenants that run with the land, and that absent and affirmative assumption of a covenant, a grantee cannot be liable for breaches of the covenant. For instance, in Wharton Associates, Inc. v. Continental Indus. Capital LLC, 137 A.D.3d 1753, the original landlord and plaintiff broker entered into a brokerage agreement, providing that the original landlord pay the plaintiff broker a commission for leasing the property to the tenant. Id. at 1754. The broker sued the successor landlord for the commission, but the Fourth Department held that brokerage agreements do not run with the land, and because the successor landlord did not expressly assume the commission agreement, the landlord was not liable for payment of the brokerage agreement. Id. at 1754. See also Cushman and Wakefield, Inc. v. Progress Corp. N.V., 172 A.D. 191; Gurney, Becker & Bourne, Inc. v. Bradley, 101 A.D.2d 1012.

Generally, when a court concludes that a covenant does not run with the land, the court states that it is not enforceable against the successor party, but does not address the original landlord's liability. In Longley-Jones Assoc. v. Icron Realty Co., 67 N.Y.2d 346, the Court of Appeals held that a successor landlord was not liable to pay brokerage commissions owed to the broker by the original landlord through a brokerage agreement, because the covenant did not run with the land. Id. at 348. In Longley-Jones, the court did not address the original landlord in its decision at all. However, because courts conceptualize covenants that do not run with the land as personal, contractual promises ( see Eagle Enterprises v. Gross, 39 N.Y.2d 505 at 510), it would appear that the original landlord remains liable even after transfer of its interest in the premises. In some circumstances, however, this may prove problematic because after conveying the property, the original landlord no longer have control over how much rent the successor landlord seeks or collects.

More generally, courts find that successor landlords are liable for covenants when the successor landlord has affirmatively assumed the obligation of the covenant. For instance, in Bank of New York, Albany v. Hirschfeld, 37 N.Y.2d 501, the Court of Appeals held a successor landlord liable for a covenant requiring the landlord to provide the lessee bank 10 free parking spaces in a garage adjoining the landlord's premises, because the successor landlord affirmatively assumed the contractual liability of the original landlord to carry out the covenants from the lease. Id. at 506. In the opinion's dictum, the court then suggested that without such assumption, the covenant would not have been enforceable. Id. at 506.

'

Right to Object to Occupancy By Non-Family Members

Adam Clayton Powell LLC v. Penant

NYLJ 6/21/16

AppTerm, First Dept.

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

In landlord's holdover proceeding, tenant appealed from Civil Court's award of possession to landlord. The Appellate Term affirmed, holding that landlord had not waived its right to object to occupancy by parties other than tenant and tenant's family.

The lease limited occupancy of the apartment to tenant, tenant's immediate family, and occupants defined in Real Property Law section 235-f. The lease also provided that only a written waiver could waive violations of the lease, and provided that landlord's acceptance of rent without taking action against a violation by tenant did not prevent landlord from taking action at a later date if tenant again violated the lease. Tenant, a jazz musician, had two or more unrelated roommates residing with him in the four-bedroom apartment. Landlord brought this holdover proceeding based on tenant's violation of the occupancy restriction in the lease, and Civil Court awarded possession to landlord. Tenant appealed, contending that landlord had waived the violation by accepting rent with knowledge of the violation.

In affirming, the Appellate Term majority relied on the lease's no waiver clause and on the provision that acceptance of rent with knowledge of a violation did not preclude landlord from later taking action on the violation. Justice Ling-Cohan, dissenting, noted that before landlord brought this proceeding, tenant and three unrelated individuals residing with tenant had commenced a Housing Part proceeding against landlord, naming themselves as “petitioner-tenants.” These persons and the landlord all signed a consent order in that proceeding. In her view, landlord's act of signing that document constituted an affirmative act of waiver, precluding landlord from obtaining a judgment of possession.

'