Case Notes

In reversing, the Appellate Division noted that the lease included a nonwaiver provision stating that failure of landlord to insist upon strict performance of any of the lease's terms should not be deemed a waiver of any of landlord's rights and remedies, and should not be deemed a waiver of any subsequent breach or default. The court concluded that the nonwaiver clause raised a question of fact about whether landlord had waived its right to bring a breach of lease claim. As a result, summary judgment was not warranted.

No Breach of Quiet Enjoyment Covenant

In a New York tenant's action for breach of the commercial lease, tenant appealed from New York's Supreme Court's denial of its summary judgment motion and grant of landlords' cross-motion for summary judgment. The Appellate Division modified, holding that both summary judgment motions should have been denied because landlords' conclusory affidavits were insufficient to establish their entitlement to judgment as a matter of law. TDS Leasing, LLC v. Tradito, NYLJ 3/24/17, p. 27, col. 2 AppDiv, Second Dept.(memorandum opinion).

Landlords leased commercial space to tenant who, in turn, subleased the space to subtenant. Landlords subsequently evicted tenant pursuant to a default judgment that was later vacated for improper service. The default judgment was based on tenant's alleged failure to pay real estate taxes, as required by the lease. Tenant and subtenant then brought this action alleging that landlords had breached the covenant of quiet enjoyment. Tenant subsequently assigned its causes of action to subtenant. Supreme Court awarded summary judgment to landlords.

In modifying, the Appellate Division first upheld Supreme Court's denial of subtenant's summary judgment motion. The court held that in order to prevail on a claim for breach of the covenant of quiet enjoyment, a tenant must establish either that tenant has performed all conditions precedent for maintaining the action, or that landlord has waived those conditions. In this case, tenant failed to meet its prima facie burden of establishing performance or waiver. But the Appellate Division then held that Supreme Court should not have awarded summary judgment to landlords because they had failed to establish that tenants did not pay the real estate taxes required by the lease. The court held that landlord's conclusory affidavits were insufficient to warrant summary judgment.

Post-Eviction Rent

In an action by commercial landlord for post-eviction rent, corporate tenant appealed from the New York Supreme Court's award of rent, and principals of the corporate tenant appealed from the court's failure to dismiss the complaint against the principals as guarantors. The Appellate Division modified to dismiss the claim based on the guaranty, and otherwise affirmed, holding that the lease authorized the award of post-eviction rent. Post-Eviction Rent, Laquila Realty LLC v. Jalyng Food Corp., NYLJ 3/24/17, p. 32, col. 6, AppDiv, Second Dept. (memorandum opinion).

In April 2008, landlord and corporate tenant entered into a 15-year lease for store premises in Mount Vernon, NY. The lease provided that tenant would remain liable for rent after eviction, and also provided that if tenant breached, landlord was not precluded from any other remedy at law or in equity. The lease also included language incorporating a personal guaranty by the tenant's principals. At the end of the lease, the two principals signed as “Tenant.” They defaulted on payment of rent and landlord obtained a judgment of possession on Oct. 26, 2009. Tenant was evicted pursuant to that judgment. Landlord then brought the instant action against tenant for breach of the lease, and against tenant's principals on their purported guarantee. Tenant asserted a counterclaim for conversion of fixtures and equipment. After a nonjury trial, Supreme Court awarded landlord $1,183,698 against the corporate tenant and tenant's principals, and dismissed tenant's counterclaim.

In modifying, the Appellate Division held that when a lease provision so provides, tenant remains liable for monetary obligations of the lease even after eviction. As a result, the New York Supreme Court properly determined that landlord was entitled to post-eviction damages. The Appellate Division also upheld Supreme Court's dismissal of tenant's conversion counterclaim, citing tenant's failure to establish a superior right of possession, and failure to demand the equipment and fixtures before landlord brought this action. But the Appellate Division reversed Supreme Court's judgment against the tenant's principals, holding that because they signed the lease agreement only as “tenant,” and not individually or as guarantors, the language purporting to create a personal guarantee was ineffective to constitute an enforceable personal obligation.

Right of First Refusal

In a New York tenant's action for specific performance of a right of first refusal, landlord moved for summary judgment. The court granted the motion, holding that the right of first refusal expired with the end of the initial lease between the parties. Hendel v. Torah, NYLJ 3/15/17, p. 21, col. 1, Supreme Ct., Queens Cty (McDonald, J.).

The lease between the parties covered the period between Aug. 1, 2011 and Aug. 31, 2012. The lease included a right of first refusal. When the lease expired, tenant continued to occupy the premises pursuant to a month-to-month agreement. In April 2016, landlord served tenant with a 30-day notice of termination after entering into a contract to sell the property to a third party. Tenant refused to vacate, contending that it still had a right of first refusal. Tenant brought this action for specific performance, and landlord moved for summary judgment.

In granting landlord's motion, the court noted that tenant had never entered into a written extension of the existing lease, but instead entered into an oral agreement to remain in possession as a month-to-month tenant. The court acknowledged that when parties extend a lease into a month-to-month tenancy, the covenants of a lease are generally extended, but concluded that the right of first refusal is an exception to that rule. As a result, the right of first refusal had expired and tenant was not entitled to specific performance.

In NY: Commercial Tenant's Duty to Maintain Premises

In commercial landlord's action against tenant for breach of a lease, landlord appealed from the New York Supreme Court's award of summary judgment to tenant. The Appellate Division reversed and denied the motion, holding that questions of fact remained about whether landlord had waived its right to enforce tenant's duty to keep and maintain the premises in good repair. Sunoce Properties, Inc. v. Bally Total Fitness of Greater New York, Inc., NYLJ 3/3/17, p. 37, col. 2 AppDiv, Second Dept. (memorandum opinion).

The parties entered into a lease in 1975, and extended the lease seven times. The lease required tenant to keep and maintain the premises in good order, condition and repair. When landlord brought this action alleging that tenant had breached the lease, tenant contended that landlord had waived its right because landlord had been alerted to ongoing water damage at the property beginning in 1977 and had continued to accept rent and extend the lease with full knowledge of the water damage. Supreme Court agreed with tenant and awarded summary judgment dismissing the claim. Landlord appealed.

In reversing, the Appellate Division noted that the lease included a nonwaiver provision stating that failure of landlord to insist upon strict performance of any of the lease's terms should not be deemed a waiver of any of landlord's rights and remedies, and should not be deemed a waiver of any subsequent breach or default. The court concluded that the nonwaiver clause raised a question of fact about whether landlord had waived its right to bring a breach of lease claim. As a result, summary judgment was not warranted.

No Breach of Quiet Enjoyment Covenant

In a New York tenant's action for breach of the commercial lease, tenant appealed from New York's Supreme Court's denial of its summary judgment motion and grant of landlords' cross-motion for summary judgment. The Appellate Division modified, holding that both summary judgment motions should have been denied because landlords' conclusory affidavits were insufficient to establish their entitlement to judgment as a matter of law. TDS Leasing, LLC v. Tradito, NYLJ 3/24/17, p. 27, col. 2 AppDiv, Second Dept.(memorandum opinion).

Landlords leased commercial space to tenant who, in turn, subleased the space to subtenant. Landlords subsequently evicted tenant pursuant to a default judgment that was later vacated for improper service. The default judgment was based on tenant's alleged failure to pay real estate taxes, as required by the lease. Tenant and subtenant then brought this action alleging that landlords had breached the covenant of quiet enjoyment. Tenant subsequently assigned its causes of action to subtenant. Supreme Court awarded summary judgment to landlords.

In modifying, the Appellate Division first upheld Supreme Court's denial of subtenant's summary judgment motion. The court held that in order to prevail on a claim for breach of the covenant of quiet enjoyment, a tenant must establish either that tenant has performed all conditions precedent for maintaining the action, or that landlord has waived those conditions. In this case, tenant failed to meet its prima facie burden of establishing performance or waiver. But the Appellate Division then held that Supreme Court should not have awarded summary judgment to landlords because they had failed to establish that tenants did not pay the real estate taxes required by the lease. The court held that landlord's conclusory affidavits were insufficient to warrant summary judgment.

Post-Eviction Rent

In an action by commercial landlord for post-eviction rent, corporate tenant appealed from the New York Supreme Court's award of rent, and principals of the corporate tenant appealed from the court's failure to dismiss the complaint against the principals as guarantors. The Appellate Division modified to dismiss the claim based on the guaranty, and otherwise affirmed, holding that the lease authorized the award of post-eviction rent. Post-Eviction Rent, Laquila Realty LLC v. Jalyng Food Corp., NYLJ 3/24/17, p. 32, col. 6, AppDiv, Second Dept. (memorandum opinion).

In April 2008, landlord and corporate tenant entered into a 15-year lease for store premises in Mount Vernon, NY. The lease provided that tenant would remain liable for rent after eviction, and also provided that if tenant breached, landlord was not precluded from any other remedy at law or in equity. The lease also included language incorporating a personal guaranty by the tenant's principals. At the end of the lease, the two principals signed as “Tenant.” They defaulted on payment of rent and landlord obtained a judgment of possession on Oct. 26, 2009. Tenant was evicted pursuant to that judgment. Landlord then brought the instant action against tenant for breach of the lease, and against tenant's principals on their purported guarantee. Tenant asserted a counterclaim for conversion of fixtures and equipment. After a nonjury trial, Supreme Court awarded landlord $1,183,698 against the corporate tenant and tenant's principals, and dismissed tenant's counterclaim.

In modifying, the Appellate Division held that when a lease provision so provides, tenant remains liable for monetary obligations of the lease even after eviction. As a result, the New York Supreme Court properly determined that landlord was entitled to post-eviction damages. The Appellate Division also upheld Supreme Court's dismissal of tenant's conversion counterclaim, citing tenant's failure to establish a superior right of possession, and failure to demand the equipment and fixtures before landlord brought this action. But the Appellate Division reversed Supreme Court's judgment against the tenant's principals, holding that because they signed the lease agreement only as “tenant,” and not individually or as guarantors, the language purporting to create a personal guarantee was ineffective to constitute an enforceable personal obligation.

Right of First Refusal

In a New York tenant's action for specific performance of a right of first refusal, landlord moved for summary judgment. The court granted the motion, holding that the right of first refusal expired with the end of the initial lease between the parties. Hendel v. Torah, NYLJ 3/15/17, p. 21, col. 1, Supreme Ct., Queens Cty (McDonald, J.).

The lease between the parties covered the period between Aug. 1, 2011 and Aug. 31, 2012. The lease included a right of first refusal. When the lease expired, tenant continued to occupy the premises pursuant to a month-to-month agreement. In April 2016, landlord served tenant with a 30-day notice of termination after entering into a contract to sell the property to a third party. Tenant refused to vacate, contending that it still had a right of first refusal. Tenant brought this action for specific performance, and landlord moved for summary judgment.

In granting landlord's motion, the court noted that tenant had never entered into a written extension of the existing lease, but instead entered into an oral agreement to remain in possession as a month-to-month tenant. The court acknowledged that when parties extend a lease into a month-to-month tenancy, the covenants of a lease are generally extended, but concluded that the right of first refusal is an exception to that rule. As a result, the right of first refusal had expired and tenant was not entitled to specific performance.