The long standing “one inch” rule in New York, in connection with actual partial evictions, as explained by Judge Cardozo1 has been that an actual eviction by a landlord, even if partial, and no matter how trivial, will suspend the entire rent owed by the tenant. The reason for such rule, as explained by the Court of Appeals2 is “that the tenant has been deprived of the enjoyment of the demised premises by the wrongful act of the landlord; and thus the consideration of his agreement to pay rent has failed.”
As a result of such rule, practitioners in Landlord/Tenant courts are (or were) well aware that a full 100% rent abatement would result, even if a tenant remained in possession of the premises,3 if a landlord physically expelled or excluded a tenant from any part of the leased premises.
The Court of Appeals in Eastside Exhibition Corp. v. 210 East 86th Street Corp.,4 while claiming it was not overruling this longstanding rule, appears to have done just that.
The facts in Eastside are straightforward: Eastside, as tenant, entered into an 18 year lease with 210 86th Street Corp., as landlord, to operate a multiplex movie theater. The lease allowed landlord to make repairs and improvements without an abatement of rent during the period the work was in progress and also provided that the tenant would not receive an allowance for any diminution in value resulting from the repairs or improvements. Approximately 4 years after commencement of the term, without notice, landlord entered the premises and “installed cross-bracing between two existing steel support columns on both of plaintiff’s leased floors causing a change in the flow of patron traffic on the first floor and a slight diminution of the second floor waiting area.” Plaintiff ceased paying rent alleging an actual partial eviction. At trial, the parties stipulated that the total area of the demised premises was between 15,000 and 19,000 square feet and that the cross-bracing installed by landlord occupied approximately 12 square feet. The Supreme Court dismissed plaintiff’s claim and entered judgment for defendant holding that “the taking of 12 square feet of non-essential space in plaintiff’s lobby constituted a de minimis taking not justifying a full rent abatement.” The Appellate Division, First Department modified, “holding that there is no de minimis exception to the rule that any unauthorized taking of the demised premises by the landlord constitutes an actual eviction” but held that the remedy was not a full rent abatement but compensation to plaintiff for its actual damages. During an inquest, the plaintiff’s witnesses were not able to estimate actual damages testifying that given the variables in the motion picture industry, damages were impossible to determine. The Supreme Court made no damage award to plaintiff and the Appellate Division affirmed.
On these facts, and acknowledging the existence of the long standing rule, the Court of Appeals held “Given the inherent inequity of a full rent abatement under the circumstances presented here and modern realities that a commercial lessee is free to negotiate appropriate lease terms, we see no need to apply a rule, derived from feudal concepts, that any intrusion-no matter how small-on the demised premises must result in a full rent abatement. Rather, we recognize that there can be an intrusion so minimal that it does not prescribe such a harsh remedy.” The Court then enunciated what appears to be a new rule: “For an intrusion to be considered an actual partial eviction it must interfere in some, more than trivial, manner with the tenant’s use and enjoyment of the premises.”
This new pronouncement now opens the door to an analysis, on a case by case basis, as to whether a particular intrusion or taking by a landlord, given the particular facts at issue, is severe enough to warrant any relief at all and, if so, the extent of such relief.
The dissent by Judge Read is well written and worth reading for its analysis as to why the “trivial” taking may not be so trivial on the facts presented and for its historical analysis of the law as it relates to actual partial evictions. The most compelling objection raised by Judge Read is succinctly stated as follows: “The majority has overruled an easy to understand, easy to apply bright-line rule in favor of a new de minimis rule that affords no predictability of outcome. Under Kernochan, it was very risky for a landlord to intrude on leased space in disregard of the tenant’s right to the whole of the property because the tenant might withhold rent. Now it is very risky for a tenant to withhold rent where the landlord wrongfully appropriates any portion of the leased premises because it is left up to the courts to determine whether the ouster is merely trifling in amount and trivial in effect. This determination will inevitably require expensive, protracted litigation with an uncertain resolution (citation omitted).”
It was the predictability of outcome that previously guided both landlords and tenants and helped guide their decision making process. Now, without such predictability, will landlords be more willing to take space from tenants? Will tenants continue to pay rent even if landlords trespass and take back portions of the demised premises instead of availing themselves of the costly and often times lengthy, and now unpredictable, judicial process? Only time will tell what the fallout from this decision may be.