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Landlord & Tenant Law

By New York Real Estate Law Reporter Staff
September 01, 2024

Liquidated Damages Clause Might Constitute Unenforceable Penalty

Elk 33 East 33rd LLC v. Sticky's Corporate LLC 2024 WL 2925641 AppDiv, First Dept. (memorandum opinion)

In landlord's action to collect on the lease, the corporate guaranty, and the good guy guaranty, tenant appealed from Supreme Court's grant of summary judgment to landlord. The Appellate Division remanded for a determination whether the lease's liquidated damages provision constituted an unenforceable penalty, but otherwise affirmed.

The lease required landlord's written acceptance of tenant's surrender, and tenant never obtained that written acceptance. As a result, the guarantors remained liable for tenant's breach. The lease provided that upon breach by tenant, landlord could accelerate the rent through the expiration of the lease, discounted to present value, or landlord could collect rent when due through the end of the lease, provided that it gave tenant a credit if the premises were relet. Landlord elected to accelerate the rent, and Supreme Court awarded landlord $576,000, which included an award of attorneys fees. Tenant appealed.

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