There have been numerous recent decisions by appellate and trial courts involving landlord/tenant disputes covering a wide variety of issues. A few of those decisions are discussed in this article.
In a decision dated October 5, 2012, the Appellate Term, First Department in C&A 483 Broadway, LLC v. KLMNI, Inc.,1 discussed Yellowstone injunctions. In a short decision that did not discuss many facts, the Appellate Term reversed the lower court’s order granting summary judgment to the tenant dismissing the petition, and held a “May 2008 Yellowstone injunction issued by Supreme Court, which restrained landlord from terminating the governing commercial lease agreement based on tenant’s conduct in ‘affixing a flag or banner’ to a flagpole attached to the building’s facade, did not bar landlord from terminating the tenancy and maintaining this August 2010 holdover proceeding based on the conditional limitation provision in the lease triggered by the tenant’s late payment of rent.” This brief decision reminds us that a Yellowstone injunction serves to toll a cure period related to a specific alleged default claimed by a landlord. Where a landlord serves successive default notices each alleging a new default, tenant will need to seek and obtain a new Yellowstone injunction to toll the cure period related to each claimed default.
In 455 Second Avenue LLC v. NY School of Dog Grooming, Inc.,2 the commercial tenant, relying on Multiple Dwelling Law §302, moved to dismiss the nonpayment petition claiming no rent was due because a proper Certificate of Occupancy had not been obtained for the premises. The tenant, operating a dog grooming business, and landlord entered into a commercial lease with a termination date of August 31, 2018. In 2008, the tenant sought to renew its dog grooming educational license which could not be renewed without a proper C of O for the premises. The existing C of O was for a multiple dwelling, with a basement (the premises at issue) used as a restaurant. The tenant stopped paying rent, the landlord commenced the nonpayment proceeding and tenant moved to dismiss alleging that MDL §302(1) relieved tenant of the obligation to pay rent because a proper C of O did not exist for the premises. The New York City Civil Court denied the motion, citing to well settled appellate precedent, holding that MDL §302, by its terms, which the Court held were required to be strictly construed, did not apply to commercial premises/tenancies. In reaching its determination, the Court referenced a recent Court of Appeals decision in Chazon, LLC v. Maugenest, 19 N.Y.3d 410 (2012).
In Chazon, the plaintiff/landlord owned a loft building in Brooklyn. The defendant/tenant occupied an apartment in the building but had not paid rent for 9 years. Landlord commenced an ejectment action based on the nonpayment of rent. Supreme Court granted summary judgment in favor of landlord awarding landlord possession of the apartment. The Appellate Division affirmed and permission to appeal was granted by the Court of Appeals. The Court of Appeals reversed based on MDL §302 and MDL art. 7-C (the Loft Law). Briefly, the Loft Law permitted residential occupancy of lofts (apartments in buildings formerly used for commercial purposes) but set deadlines for owners of the buildings to alter the building to conform to certain safety and fire protection standards. The Loft Law allowed for extensions of the deadlines in certain circumstances. Until the standards are met and a proper certificate of occupancy is obtained, tenants are protected by the MDL from eviction. In rejecting opinions from various appellate courts, the Court of Appeals strictly construed what it termed “the law’s command” that “No rent shall be recovered by the owner of such premises . . . and no action or special proceeding shall be maintained therefore, or for possession of said premises for nonpayment of such rent.” The Court, in reversing the Appellate Division, recognized that “the statutes leave these parties in their present stalemate until compliance has been achieved.”
In Disunno v. WRH Properties, LLC3 the Appellate Division addressed a well settled principle involving the covenant of quiet enjoyment in commercial leases. Because the issue is raised from time to time, a review of this recent decision is helpful. The tenant commenced an action seeking damages from the landlord for an alleged breach of the commercial lease at issue. The landlord moved under CPLR 3211(a)(7) to dismiss the third cause of action which alleged landlord breached an implied warranty of fitness for a commercial purpose. The lower court denied the motion. In reversing that portion of the lower court’s determination, the Appellate Division reaffirmed that “[i]n the absence of fraud or of a covenant, a lessor does not represent that the premises are tenantable and may be used for the purpose for which they are apparently intended [citations omitted]. The implied warranty of habitability applies only to residential lease space [citations omitted].” This case reminds counsel of the importance of careful lease drafting and the need, from the tenant’s perspective, to obtain from the landlord proper representations in the lease that the premises can in fact be used for the purpose intended by the tenant.