Landlord & Tenant

AppTerm, 2nd, 11th and 13th Districts

(memorandum opinion)

In tenant's small claims action to recover his security deposit, landlord appealed from Civil Court's award of $1,170.35 to tenant. The Appellate Term modified to reduce the amount of the award to $1,116.45, but otherwise affirmed, holding that the security deposit remained the property of the tenant.

At the expiration of the parties' lease on June 30, 2012, the parties agreed that tenant could hold over for an additional one month. Tenant actually vacated on Aug. 1 ' one day past the end date of the lease extension. Landlord returned part of the security deposit, but not all of it, prompting this action by tenant. Civil Court awarded tenant a judgment for the amount of the security deposit, less the amount returned by landlord and less the value of damage to a door on the premises. Landlord appealed.

In modifying, the Appellate Term held that the security deposit was tenant's property and that landlord had to return it at the conclusion of the tenancy. But the court also held that landlord was entitled to use and occupancy for Aug. 1, 2012, computed as 1/31 of the rent under the expired lease. As a result, the court reduced tenant's award by $53.90.

'

Holdover Proceeding Alleging Month-to-Month Tenancy

Esposito v. Larig

NYLJ 7/29/16, p. 31, col. 2

AppTerm, 2nd, 11th, and 13th Districts

(memorandum opinion)

In tenant's holdover proceeding alleging that landlord had terminated a month-to-month tenancy, landlord appealed from Civil Court's dismissal of the petition and denial of landlord's motion to dismiss tenant's rent overcharge counterclaims. The Appellate Term modified to dismiss the counterclaims, but otherwise affirmed, holding that landlord had not established an entitlement to “first rent” for a newly created apartment.

Landlord rented the subject apartment to tenant at a monthly rent of $3,000. More than four years later, landlord brought this holdover proceeding to remove tenant, alleging that tenant was month-to-month. Tenant counterclaimed for rent overcharges, contending that the apartment was rent-stabilized. Landlord had initially alleged that the apartment had been entitled to charge $3,000 because the apartment had been deregulated as a result of high rent, but later abandoned that contention, arguing instead that the apartment had been deregulated because landlord had combined two apartments into a single new apartment. Civil Court dismissed landlord's petition, and denied landlord's motion to dismiss tenant's counterclaim for rent overcharges.

In modifying, the Appellate Term agreed that the petition should have been dismissed, emphasizing that landlord had failed to prove the extent of work done and the movement of perimeter walls. But the court also held that the expiration of four years since the first alleged overcharge barred tenant's overcharge complaint.

'

Tenant Brings Action for Specific Performance of an Option to Purchase Leased Premises

Cantalupo Construction Corp. v. 2319 Richmond Terrace Corp.

NYLJ 7/21/16, p. 22, col. 6

AppDiv, Second Dept.

(memorandum opinion)

In tenant's action for specific performance of an option to purchase the leased premises, tenant appealed from Supreme Court's judgment dismissing the complaint and awarding landlord $1,375,000 in use and occupancy. The Appellate Division affirmed, holding that tenant did not timely exercise its option.

In 2002, tenant leased the subject premises from landlord. The lease was accompanied by a contract giving tenant the option to purchase the property, for a three-year period, for $1,400,000. In December 2005, the parties agreed to extend the option to Nov. 1, 2006, on condition that tenant close on the property by the end of 2006. In February 2007, the parties entered into another extension agreement under which the tenant agreed to exercise the option within 30 days after reaching agreement with the state Department of Environmental Conservation (DEC) about environmental issues involving the property. The February 2007 extension also provided that the closing must occur no later than Aug. 1, 2007, and that if no agreement with DEC had been reached by that date, tenant would have the right to renegotiate the sale terms.

In November 2010, landlord brought a summary nonpayment proceeding against tenant, seeking eviction and unpaid rent and use and occupancy. Three months later, tenant brought this action for specific performance of the option to purchase. After the proceeding and action were consolidated, Supreme Court concluded that tenant was not entitled to specific performance, and that landlord was entitled to $1,375,000 in unpaid rent and use and occupancy. Tenant appealed.

In affirming, the Appellate Division emphasized that tenant had not exercised the option within the time limit specified in the February 2007 extension agreement, and had not renegotiated a further extension. The court also rejected tenant's argument that landlord, through its conduct, had waived its right to enforce compliance with the time limit. The court noted that the agreement included a clause precluding waiver except in writing.

'

Illegal Use Holdover Proceeding

WHGA Renaissance Apartments, L.P. v. Jackson

NYLJ 7/28/16, p. 22, col. 1

AppTerm, First Dept.

(memorandum opinion)

In landlord's illegal use holdover proceeding, tenant appealed from Civil Court's award of possession to landlord. The Appellate Term reversed and remanded for a new trial, holding that Civil Court had improperly struck expert testimony about tenant's psychiatric and mental infirmities.

Tenant's adult son had been using the subject apartment for illegal drug activities. The police had recovered 240 ziplock bags of crack cocaine and heroin in the apartment, and had also recovered a scale. At trial in the holdover proceeding, the officer who arrested the son during a search of the apartment testified that one of the bedrooms in the apartment was used as a working room in which drugs were cut and packaged. She also testified that anyone looking into that bedroom would see the drugs from the outside. A glass pipe containing cocaine residue was found in tenant's own bedroom. The son ultimately pleaded guilty to criminal possession in the third degree, a felony. Tenant in this proceeding did not challenge the evidence that the apartment was used for illegal drug activity. Instead, her defense was that she was unaware of the activity. To support that defense, she introduced expert medical testimony that would establish that she lacked capacity to comprehend the illegal drug activity in the apartment. Civil Court struck all of the expert testimony and entered judgment for landlord.

In reversing, the Appellate Term noted that landlord had been aware that a guardian had been appointed for tenant based on her prior diagnosis of paranoid schizophrenia. The court held that tenant should have been able to introduce some evidence tending to disprove her knowledge of and acquiescence to drug activity, especially because that was the heart of her defense. As a result, the court remanded for a new trial.

'

Action for Breach of Contract for a Proposed McDonald's Restaurant

R&D Hotel, LLC v. McDonald's USA, LLC

NYLJ 7/18/16, p. 17, col. 3

U.S. Dist. Ct., SDNY

(Kaplan, J.)

In landlord's action for breach of contract, tenant moved to dismiss. The court granted tenant's motion, holding that landlord had not obtained the approvals required by the lease agreement.

The parties entered into a lease for a proposed McDonald's restaurant. The lease required landlord to obtain the approval “of all public and governmental authorities as to matters relating to zoning ' or similar requirements for use of the Premises as a McDonald's restaurant.” If landlord did not obtain these “Landlord Approvals” within 270 days after the lease commencement date, tenant had the option to terminate the lease or to obtain the approvals at landlord expense. The lease defined the “Approval Date” as “[t]he date Landlord obtains all final, non-appealable approvals described in this Article'” Landlord obtained zoning approvals within the 270 day deadline, but, on the deadline date, a third party was appealing some of the approvals. Several months after the 270 day deadline, the parties executed an amendment to the lease extending the deadline from 270 to 450 days after the Lease commencement date. The approvals were still under appeal at 450 days, and McDonald's notified landlord of its intent to terminate the lease. Landlord brought this breach of contract action, and McDonald's moved to dismiss.

In granting McDonald's motion, the court focused on the primary issue: Did the approval requirement require landlord to obtain initial approvals within 270 days, or “final, non-appealable” approvals? The court started by noting the lease amendment that extended the deadline, and noted that if the original lease contemplated only initial approvals, the extension amendment would have been unnecessary because landlord had already obtained the initial approvals within 270 days. The court was unwilling to adopt an interpretation that would render contract terms meaningless or superfluous. In addition, the court noted that the original lease appeared to use “Landlord Approvals” and “final, non-appealable Landlord Approvals” interchangeably, suggesting that all references to landlord approvals were meant to require final, non-appealable approvals.

'

Nonprimary Residence Holdover Proceeding

1472 Properties, LLC v. Solanski

NYLJ 8/8/16, p. 17, col. 3

AppTerm, 2nd, 11th, and 13th Districts

( Per Curiam Opinion)

In a nonprimary residence holdover proceeding, landlord appealed from Civil Court's entry of a money judgment in favor of tenant. The Appellate Term reversed and denied tenant's motion for entry of the money judgment, holding that Civil Court lacked subject matter jurisdiction to enter the judgment.

Landlord and tenant entered into a stipulation of settlement of the holdover proceeding. The stipulation provided for entry of a final judgment in favor of landlord, with execution of the warrant stayed through Oct. 31, 2013, in return for which tenant was to receive a $20,000 buyout and a waiver of arrears. Tenant failed to vacate by Oct. 31, and was evicted on Nov. 25, 2013. Tenant subsequently moved to enforce landlord's obligation to pay $20,000. Although landlord contested the court's summary judgment, Civil Court awarded tenant judgment for $19,777, and later reduced the award to reflect an $8,000 payment landlord had made at the time the stipulation was executed. Landlord appealed.

In reversing, the Appellate Term did not decide whether housing part, prior to termination of a proceeding, would have jurisdiction to enforce a stipulation requiring landlord to make a monetary payment. But the court held that in this case, once the proceeding terminated following tenant's eviction, housing part had no jurisdiction to entertain tenant's motion for entry of a money judgment, even though the stipulation had attempted to reserve tenant's right to make the motion. The court therefore vacated Civil Court's judgment and denied tenant's motion without prejudice to tenant's right to renew the motion in another forum.