Opinion
L & T 50942/20
01-26-2021
98-48 QUEENS BLVD LLC as to an undivided 88% Interest and Elite Promotion Systems, Inc. as to an undivided 12% interest, as Tenants in Common and successor in interest to Admiral Realty Enterprises, L.P. formerly known as Andon Realty Enterprises, L.P., Owner, Petitioner, v. PARKSIDE MEMORIAL CHAPELS, INC., a New York corporation, as successor in interest to Mowry Buick, Inc. and Robert Mowry, the tenant, by Assignment of the Lease dated September 15, 1959 Affecting The Entire Building and Improvements consisting of approximately 2,500 square feet with 70 linear feet of frontage, together with all Rooms; and the Entire Concrete Slab consisting of Parking Area surrounding the Building; together consisting of the Entire Lot being the Premises known as and situated at 98-48 Queens Boulevard also known as 98-40/48 Queens Boulevard formerly known as 92-46/48 Queens Boulevard, in Rego Park, Queens County, New York 11374 and having a Tax map designation of Block 3086, Lot 29, Respondent-Tenant, Blinds to Go (U.S.) Inc., a Delaware corporation, doing business as Blinds to Go also known as Blinds to Go Inc., Store No.216; "John Doe" and "Jane Doe", Respondent(s)—Undertenant(s).
Michael H. Reich, Esq., Rashel M. Mehlman, Esq., SWEENEY, REICH & BOLZ, LLP, Attorney for Petitioner, 98-48 QUEENS BLVD LLC, et al., 1981 Marcus Ave, Suite 200 Lake Success, NY 11042, (718) 459-9000. Andrew Bittens, Esq., Kucker, marino, winlarsky & bittens, llp, Attorneys for Respondent-Tenant, PARKSIDE MEMORIAL CHAPELS, INC., et al., 747 Third Ave, New York, New York 10017, (212) 869-5030. John P. Sheridan, Esq., Herrick, Feinstein, LLP, Attorney for Respondent-Undertenant, BLINDS TO GO (U.S.), INC., 2 Park Ave, New York, New York 10016, (212) 592-1400.
Michael H. Reich, Esq., Rashel M. Mehlman, Esq., SWEENEY, REICH & BOLZ, LLP, Attorney for Petitioner, 98-48 QUEENS BLVD LLC, et al., 1981 Marcus Ave, Suite 200 Lake Success, NY 11042, (718) 459-9000.
Andrew Bittens, Esq., Kucker, marino, winlarsky & bittens, llp, Attorneys for Respondent-Tenant, PARKSIDE MEMORIAL CHAPELS, INC., et al., 747 Third Ave, New York, New York 10017, (212) 869-5030.
John P. Sheridan, Esq., Herrick, Feinstein, LLP, Attorney for Respondent-Undertenant, BLINDS TO GO (U.S.), INC., 2 Park Ave, New York, New York 10016, (212) 592-1400.
Sally E. Unger, J.
The decision/order dated January 22, 2021 is recalled and replaced as follows:
Factual and Procedural Background
Petitioner is the owner of the commercial premises located at 98-48 Queens Boulevard also known as 98-40/48 Queens Boulevard formerly known as 92-46/48 Queens Boulevard, in Rego Park, New York 11374 (hereinafter "subject premises"). Respondent Parkside Memorial Chapels, Inc., (hereinafter "Parkside" or "respondent") is a well-known local funeral home and the commercial tenant of the subject premises. Blinds To Go (U.S.) Inc., (hereinafter "Blinds To Go" or "sublessee") is the undertenant of Parkside.
The parties' predecessors-in-interest executed a lease dated September 15, 1959, which was assigned, amended and extended over time, such that the last lease term expired on December 31, 2019 with the petitioner as landlord and the respondent as tenant. Parkside came into possession of the subject premises through a lease assignment in 1971. The sublessee came into possession of a portion of the subject premises by its sublease with Parkside dated November 30, 1998. QBH Construction Corp. (hereinafter "QBH" or "additional occupant") is the owner and developer of adjoining Lot 7. QBH is not a named respondent in the instant proceeding.
On January 15, 2020, petitioner commenced this classic holdover summary eviction proceeding against the respondent and Blinds To Go (hereinafter collectively "respondents") seeking to recover possession of the subject premises, together with related relief. The petitioner seeks use and occupancy at the holdover rate and attorney's fees as well. Parkside interposed an answer on February 7, 2020, in which it raised numerous affirmative defenses. Blinds To Go failed to interpose an answer and was determined to be in default with a deemed denial of the allegations in the petition.
Settlement discussions proved unsuccessful and on February 24, 2020, the case was then set for trial which was to be conducted on April 1, 2020. By April 1st, the operations of the courts throughout New York State had already ceased due to the global pandemic of Covid-19. The petitioner's prior use and occupancy motion and Parkside's cross-motion to dismiss the petition resulted in this Court's decision and order entered August 24, 2020 (hereinafter "August Order").
In the August Order, this Court determined it has subject matter jurisdiction over the proceeding pursuant to New York City Civil Court Act § 204. The petitioner's claim for holdover use and occupancy (150% of the last monthly rent reserved in the expired lease), as well as additional rent attributable to real estate taxes in the amount of $54,647.84 was preserved for trial. However, the Court determined that pendente lite use and occupancy was appropriate and awarded the petitioner interim use and occupancy against Parkside at the last lease rate of $28,688.08 per month prospectively, commencing September 1, 2020 and thereafter during the pendency of this proceeding, without prejudice to seeking the holdover rate at the conclusion of trial, if the petitioner prevails. The Court also determined that use and occupancy was only awardable as against Parkside. Parkside's cross-motion to dismiss was denied and a trial date was set.
The Stipulations
Initially, the parties agreed to conduct the trial of this case on the virtual Teams platform and executed a trial stipulation dated August 10, 2020, which was submitted to the court. In accordance with the trial stipulation, petitioner served its various trial exhibits on the respondents and filed the trial stipulation and their trial exhibits with the court. Thereafter, the parties decided they wished to forego a trial. Instead, they submitted two stipulations to facilitate that mutual decision. The parties executed a "pre-trial stipulation" dated September 8, 2020, which has various exhibits in the form of documents, surveys and photographs annexed. By their "trial waiver stipulation" submitted November 4, 2020, the parties waived their right to a trial and submitted the issues of law to be determined by this Court.
When the stipulations are read together, the parties: a) waived the right to trial; b) agreed the Court would determine whether petitioner is entitled to a final judgment of possession and the issuance of a warrant of eviction; c) agreed the keys to the subject premises were received by the petitioner from the respondents on July 10, 2020; d) agreed the Court should determine whether petitioner should be awarded holdover use and occupancy and the amount to be awarded, as well as attorney's fees, costs and disbursements.
The parties stipulated to the basic facts of the identity of the ownership and the parties, the definition of the subject premises, which includes both the building premises and exterior outlying realty. The parties also stipulated with respect to the existence and contents of the Amendment of Original Lease of August 1995, the recorded Memorandum of Lease, the Assignment of Lease, the Second Amendment to Lease, the Sublease, three letter agreements, the surveys of the subject premises and the Access Agreement, dated June 27, 2018 between the Respondents and QBH. The parties also stipulated that the subject premises were left in the condition depicted in the photographs submitted to the court.
Although the August Order required Parkside to pay pendente lite use and occupancy at the last lease rate of $28,688.08 per month, commencing September 1, 2020, the respondent admits it has failed to make any payment. Therefore, it is undisputed that Parkside is in violation of this Court's order. The August Order was clear as to the commencement date of the use and occupancy payments and that the order was without prejudice to the parties' rights which would be determined at trial. The fact that the parties decided to have paper submissions in lieu of a trial did not excuse the failure to comply with the August Order. The Court has not issued another order amending the August Order and the Court is not aware of any stipulation which held payments in abeyance or waived them.
Discussion
The key issues that remain in dispute are whether a) the respondents owe base rent or use and occupancy, and real estate taxes, commencing January 1, 2020; (while admitting that no use and occupancy has been paid since January 1, 2020* ); b) the delivery of the keys is an effective surrender of the subject premises and therefore also, whether the act of having the keys overnighted to the petitioner's attorneys has any relevance herein; c) the respondents surrendered possession in the condition required under the Lease, if a surrender was effectuated; and d) the respondents are responsible for use and occupancy at the holdover rate, if a surrender or relinquishment was not effectuated.
Through emails between the parties and the Court, the parties conveyed that the respondent tendered January 2020 use and occupancy to the petitioner. However, the payment was in the last lease amount and because the petitioner maintains the amount should have been 150% of the last lease rate, it did not deposit the check, but instead returned it to the respondent. Therefore, January 2020 use and occupancy remains due and owing.
The petitioner's position was and continues to be that the respondents did not vacate and surrender the subject premises. According to the petitioner, Parkside as well as Blinds To Go, are still in possession, because QBH has not vacated and surrendered the 800 square feet of space it occupies. Therefore, the petitioner asserts that the respondents are subject to a potential judgment of possession together with a warrant of eviction and remain obligated for use and occupancy to date. The petitioner maintains, under its interpretation of the amended lease, the surrender of legal possession requires the respondent and its sublessee to return possession by "removing all of their effects, as if the lease had not been made".
In furtherance of petitioner's claim, petitioner asserts that the respondent is responsible to obtain the recovery of possession from both of its sublessees, Blinds To Go and QBH, not the petitioner. The petitioner also insists that numerous effects of Blinds To Go remains in or on the subject premises. Additionally, petitioner claims that during respondent's tenancy, a fence was constructed by QBH, with the permission or condonation of the respondent, which encroaches approximately 8' into the subject premises and runs about 100', along the length of the western perimeter of the subject premises.
Ultimately, a tenant is liable for use and occupancy for the entire holdover period, from the lease expiration through the date of vacatur of the subject premises. 501 East 87th St. Realty Co., LLC v. Ole Pa Enterprises Inc. , 304 AD2d 310, 757 NYS2d 31 (1st Dept 2003) ; Beacway Operating Corp. v. Concert Arts Socy , 123 Misc 2d 452, 474 NYS2d 227 (Civ. Ct NY 1984) ; 2641 Concourse Co. v. City University of New York , 137 Misc 2d 802, 522 NYS2d 775 (Ct of Claims 1987). It is undisputed that they are also obligated to remove their undertenant and that where an undertenant holds over, they are viewed the same as if a tenant had done so. Stahl Associates Co. v. Mapes , 111 AD2d 626, 490 NYS2d 12 (1st Dept 1985) and cases cited therein.
Similarly, just as a tenant is liable for the holding over of its sublessee for the entire time frame of the sublessee, once there is a vacatur, the tenant is required to turn over the entire premises, not a portion, not a majority, but the entire leased premises. Syracuse Associates v. Touchette Corp. , 73 AD2d 813, 424 NYS2d 72 (4th Dept. 1979) ; Loramine Drug Stores, Inc. v Kings Highway Sav. Bank , 190 Misc 50, 76 NYS2d 381 (AT2 1947).
The issue of "surrender" versus "relinquishment" of possession is one which is determined by the moment in time in which it occurs. When the voluntary vacatur occurs during the pendency of a lease, i.e. before its natural expiration, it is viewed under the law as a surrender. However, when a tenant voluntarily vacates at or after the lease expiration, there is no estate to be surrendered. Therefore, it can only be a relinquishment. Stahl Associates Co. v. Mapes, supra. See 2 NY Landlord & Tenant Incl. Summary Proc. § 26:15(5th ed.)
Parkside and Blinds To Go relinquished possession of a large portion of the subject premises on July 10, 2020, but not the entirety. Therefore, a judgment of possession and a warrant of eviction remain necessary for the petitioner to obtain possession of the whole subject premises. Contrary to respondents' position, it would not be superfluous for this Court to award a judgment and warrant, because for all intents and purposes, complete dominion and control is not in the hands of the petitioner.
Respondent's initial answer was devoid of any affirmative defense alluding to vacatur. The reason for this is that the vacatur occurred post-petition. In the case at bar, the alleged surrender occurred in July 2020, 6+ months after the lease expiration and 4+ months after commencement of the instant proceeding.
The parties chose to forego resolving the possessory issue at trial, and instead to have the Court determine the issue of possession based on their document submission. However, they all agreed as to the date the keys were relinquished, i.e. July 10, 2020. As previously determined in the August Order, the core issue of possession of the subject premises must be resolved as a precursor to determining use and occupancy. From respondents' perspective, as of July 10, 2020, complete dominion and control of the subject premises was ceded to the petitioner.
Parkside maintains that since there was no estate to surrender after the expiration of the lease, there similarly was no surrender to be accepted or rejected by the petitioner. Therefore, after the lease expiration, to a certain extent, the timing of the relinquishment is subject to the whims of the respondents. This presumes that complete dominion and control was ceded to the petitioner. In this situation, it was not. While it is all well and good that the respondents turned over the keys to the building premises, this does not equal 100% of the subject premises.
The lease expired on December 31, 2019. Respondents claim they relinquished possession 7 months thereafter. In making this assertion, Parkside is attempting to shift the burden of removing QBH from Parkside to the petitioner. Parkside is minimizing the extent of the intrusion upon petitioner's property that QBH caused with the involvement and impermissible authority granted by Parkside. Parkside suggests that petitioner should bring a suit directly against QBH based upon a claim of trespass. In making this suggestion, Parkside relies upon various cases in which the dispute was directly between adjoining landowners where one encroached upon the other's land. Those cases are readily distinguished from the case at bar and are inapposite. None of them were litigated in the context of a landlord tenant relationship in which a tenant impermissibly granted a license or a sublease to a third party to enter onto the owner's realty and engage in construction above and below ground.
Moreover, Parkside's perspective ignores the significance of its ongoing "Access Agreement" (hereinafter "Agreement") with QBH, which is not a minor technicality. As of July 10, 2020, only Blinds To Go relinquished its portion of the subject premises. QBH remains in possession. And while it would be much easier for Parkside to absolve itself of responsibility and shift the burden of removal to the petitioner, that would impose an inequitable burden upon the petitioner who had no involvement in creating the Agreement.
Parkside would have this Court believe that it merely granted a license to QBH, rather than a possessory interest in their Agreement. While it may appear to be a license at first glance, because that is how it is referenced in the Agreement, in fact, the party being given a license is Parkside by QBH, which obtains a possessory interest. Parkside may only enter the area utilized by QBH with the express permission of QBH, not the reverse. The Agreement states,
During the course of the Construction, Developer [QBH] and/or Developer Parties will maintain and remove certain temporary protections on the Premises, which may include a fence, overhead protection, rooftop protection, establishing a controlled access zone of approximately eight (8) feet deep into the Premises along the entire property line (wherein Owner [Parkside] shall not enter, except when reasonably requested and accompanied by a member of the Developer Parties; the "CAZ"), window protection, scaffolding and/or netting as required by applicable law ("Temporary Protections").
While there is no termination date, the Agreement seems to be of finite duration, i.e., the period of construction. Yet, the end of the Agreement is undefined. Access by the Owner is permitted only upon consent of QBH, demonstrating complete dominion and control over the space by QBH. It is crucial to a license that it be terminable at will and that there be an absence of "exclusive dominion and control over a specifically identified portion of petitioner's premises," Federation of Organizations, Inc. v. Bauer, 6 Misc 3d 10, 12, 788 N.Y.S.2d 806 (AT2nd 2005), American Jewish Theatre, Inc., v. Roundabout Theatre Co., Inc. , 203 AD2d 155, 610 N.Y.S.2d 256 (1st Dept 1994).
The nature of the transfer of absolute control and possession is what differentiates a lease from a license or any other arrangement dealing with property rights Feder v. Caliguira, 8 NY2d 400, 404, 208 N.Y.S.2d 970 (1960). While a license customarily involves use or occupancy of the grantor's premises, in contrast, a lease grants exclusive possession of designated space to a tenant, subject to rights specifically reserved by the grantor. American Jewish Theatre v. Roundabout Theatre Co., 203 AD2d 155, 610 NYS2d 256 (1st Dept. 1994).
In a similar case before an appellate court, the plaintiff's recovery was upheld, upon the theory that the agreement between the parties was a lease, and not a mere license, Pocher v. Hall , 50 Misc. 639, 98 N.Y.S. 754 (AT1 1906). In that case, the agreement granted defendants use of the roof of the building for the limited purpose of advertising, but like here, involved the defendants' possession of and dominion over that area. Just as in the case at bar, the Pocher transaction comprised the construction and maintenance of the defendant's own structure, not merely placing of signs upon a wall or some other structure of the plaintiff's already in existence, Pocher v. Hall, supra . See also O. J. Gude Co. v. Farley , 28 Misc. 184, 58 NY Supp. 1036 (AT1,1899). Compare and contrast with Goldman v. NY Adv. Co. , 29 Misc. 133, 60 NY Supp. 275 [AT1, 1899] ; Reynolds v. Van Beuren , 155 NY 123, 49 N. E. 763, [1898] ). In both Goldman and Reynolds , the courts determined the agreement for placing or affixing advertising upon the side of a building or on a roof was no more than a license, in large part because the structure to which it was affixed was already in existence.
This Court finds that Blinds To Go relinquished possession of its portion of the subject premises on July 10, 2020, upon the petitioner's attorneys' receipt of the keys. The unnamed party, QBH, holds a sublease from Parkside. However, in this instance, whether a license or a sublease, seems to be a distinction without difference. Both would be a proper party to this proceeding. See 170 West 85th St. Tenants Assn. v. Cruz, infra. There has not been any demonstration of surrender or relinquishment or any other termination of the sublease between Parkside and QBH.
The tender and receipt of the keys were inconsequential with respect to Parkside and QBH. The survey of July 2, 2015 by Boro Land Surveying P.C. shows the subject premises without the obstruction of a construction fence. The Agreement between Parkside and QBH provides for the construction of such a fence. The July 28, 2020 survey by the same surveying firm demonstrates that the construction fence erected by QBH remains in place. Therefore, QBH remains in possession and consequently, so does Parkside.
At the commencement of this litigation, the petitioner did not know the identity of QBH as the additional occupant. Nonetheless, the petitioner properly named "John Doe" and "Jane Doe" as undertenants, a common practice when the names of individuals in possession are unknown. 1855 7th Ave. Coop HDFC v. Scott , 21 Misc 3d 131(A), 873 NYS2d 235 (AT1 2008). In or about early August, if not sooner, the name of the additional occupant became known to the petitioner. Therefore, the question becomes, whether QBH is a necessary party to this proceeding?
As stated in CPLR § 1001(a), in relevant part, necessary parties include those "who ought to be parties if complete relief is to be accorded between the persons who are parties to the action or who might be inequitably affected by a judgment in the action shall be made plaintiffs or defendants." The statute envisions joining parties as necessary to provide complete relief in the litigation.
In the case at bar, personal service was effectuated upon "John Doe" and "Jane Doe". No one responded on behalf of the fictitious parties by interposing an answer or by merely appearing. Therefore, they are in default.
QBH is a "proper" party, i.e., a party whose absence will not preclude the entry of a binding judgment, but whose existence would make a judgment more comprehensive. Teachers College v. Wolterding, 77 Misc 2d 81, 351 N.Y.S.2d 587 (AT1 1974). Sublessees have an independent possessory interest derived from the primary tenant and are usually considered "proper", but not "necessary" parties. NY Prac., Landlord and Tenant Practice in New York § 15:228 ; Triborough Bridge and Tunnel Authority v. Wimpfheimer, 165 Misc 2d 584, 633 N.Y.S.2d 695 (AT1 1995) ; Crossroads Assoc., LLC v. Amenya, 47 Misc 3d 1216[A] 16 NYS3d 791(Peekskill, City Ct 2015). Consequently, their possessory rights are extinguished by a judgment of possession against the primary tenant. Nonetheless,
Due process requires only that, for the warrant to be effective against a subtenant, licensee or occupant, [they] be made a party to the proceeding, either by naming [them] in and serving [them] with the petition and notice of petition or by joining [them] as a party during the pendency of the proceeding.
170 West 85th St. Tenants Assn. v. Cruz , 173 AD2d 338, 339-40, 569 NYS2d 705 (1st Dept 1991).
While there have been some occasions in the past where the proceeding was dismissed for failure to name someone who was considered a necessary party ( 1515 Macombs Rd Corp. v. Austin , 149 Misc 2d 473, 567 NYS2d 199 [Bx Co 1990] ; Stanford Realty Assoc. v. Rollins , 161 Misc 2d 754, 615 NYS2d 229 [NY Co 1994] ), this is not the state of the law in this Department. (See Loira v. Anagnastopoulos, 204 AD2d 608, 612 NYS2d 189 [2nd Dept 1994] ; Crossroads Assoc., LLC v. Amenya, 47 Misc 3d 1216[A], 16 NYS3d 791, [Peekskill City Ct 2015] ; see also FS 45 Tiemann Place, LLC v. Gomez, 38 Misc 3d 135[A], 2013 NY Slip Op 50132[U] [App Term, 1st Dept 2013] ). Moreover, the Appellate Division of this Department, specifically disavowed the holding of Stanford Realty Assoc. v. Rollins, supra, i.e., that dismissal was necessary in such a circumstance and declined to follow it. Loira v. Anagnastopoulos, supra.
In short, dismissal is not required by the petitioner's failure to join QBH, since it is not a necessary party to the proceeding whose presence is indispensable to providing complete relief as between landlord and tenant (see Triborough Bridge & Tunnel Auth. v Wimpfheimer , supra ; FS 45 Tiemann Place, LLC v. Gomez, supra ).
However, once known, the name of the previously unknown party, should be added or substituted as a named party, for a warrant of eviction to be effective against them. 170 West 85th St. Tenants Assn. v. Cruz, supra. As of at least August 2020, petitioner became aware of the name of the additional occupant and has not made an application to amend the petition to substitute or otherwise include QBH as a specifically named party though that would have been appropriate.
The Court finds that in the interests of justice and judicial economy, amending the caption and the pleadings, to include QBH Construction Corp., as a proper party respondent undertenant is appropriate in place of "John Doe" and does so sua sponte. PRC Westchester Avenue LLC v. Doe , 64 Misc 3d 1216(A),117 NYS3d 458(Civ Bx 2019). Subsequently, all proceedings shall include its true name; all prior court filings and proceedings are deemed amended. CPLR § 1024.
Use and Occupancy
Having determined the issues of partial relinquishment of possession and amendment of the pleadings, the issue of post-petition use and occupancy is now ripe. The second amendment of the lease § 32, provided for what is commonly referred to as "holdover use and occupancy", although the document did not use the magic words "use and occupancy". The relevance of the date of July 10, 2020 as the date of relinquishment would only aid in determining the relevant time frame for which holdover use and occupancy may be awarded with respect to Blinds To Go in a litigation between Parkside and Blinds To Go. Parkside is wholly responsible for holdover use and occupancy being awarded in favor of the petitioner. Stahl Associates Co. v. Mapes, supra . The Court determines that use and occupancy is unquestionably due through the date of July 10, 2020. However, Parkside's liability for holdover use and occupancy does not end there, because Parkside has yet to relinquish or re-deliver complete possession to the petitioner.
Parkside suggests the Court should consider that the country was in the midst of a global pandemic during the time in which Blinds To Go failed to relinquish possession and therefore, the Court should reduce the monetary award with that consideration. Although Blinds To Go admitted it has no defense to the holdover proceeding, it together with Parkside are attempting to raise an affirmative defense of impossibility of performance. Blinds To Go would have this Court deny the application for use and occupancy entirely, based upon a theory of impossibility of performance. Neither of these respondents' contentions consider the law in effect in this State or the fact that Blinds To Go remained in possession for months after the expiration of the lease, before the pandemic hit New York.
The affirmative defense of impossibility of performance is one which is utilized to excuse a party from performing under a lease. Although this defense was recognized in the common law, it has been applied narrowly, largely because the very basis of contract law is allocating risks that might affect performance and only in extreme circumstances should performance be excused. The impossibility defense excuses a party's performance only when the destruction of the subject matter of the contract or the means of performance makes performance objectively impossible. Additionally, the impossibility must be brought on by an unanticipated event that could not have been foreseen or guarded against in the contract. Kel Kim Corp. v. Cent. Markets, Inc. , 70 NY2d 900, 902-03 524 NYS2d 384 (1987). This presumes that a lease is actually in effect. In the case at bar, and as Parkside has emphasized with respect to the concepts of surrender v. relinquishment, the lease already expired.
Respondents also cannot find support in its force majeure lease clause, even if the lease term had not expired. Under a lease in New York, only where the force majeure clause "specifically includes the event that actually prevents a party's performance will that party be excused." Kel Kim Corp. v. Cent. Markets, Inc., supra. Triggering force majeure as a defense requires that: a) the intervening event must be specifically stated in the provision; b) it must have been an unforeseeable event; c) the defaulting party must show it made reasonable efforts to comply with its obligations; and d) performance must be impossible, not simply difficult or financially impracticable. See Kel Kim Corp. v. Cent. Markets, Inc. , supra ; Reade v. Stoneybrook Realty , 63 AD3d 433, 434 882 NYS2d 8 (1st Dept 2009).
The parties' lease amendment dated August 1995, contains a force majeure clause, which states:
If either party shall be delayed or prevented from the performance of any act required by this Lease by reason of acts of God, strikes, lockouts, labor troubles, inability to secure materials, restrictive governmental laws, or regulations or other cause, without fault and beyond the reasonable control of the party obligated (financial inability excepted) performance of such act shall be excused for the period of the delay: and the period for the performance of any such act shall be extended for a period equivalent to the period of such delay, provided, however, that nothing in this section shall excuse Tenant from the prompt payment of any rental or other charge required of tenant except as may be expressly provided elsewhere in this Lease. (Emphasis supplied)
Applying the criteria stated in the relevant caselaw, Parkside is not excused from the payment of rent/use and occupancy. Quite the contrary. The force majeure clause specifically excepts nonpayment of rent, as an excusable act. For purposes of this provision, the Court equates "rental or other charge" with use and occupancy.
Moreover, in proffering this application, respondents did not furnish any documentation to even suggest a reduction in income during the subject period. Parkside fails to recognize several things: possession could have been, but was not, relinquished at least 2½ months prior to the shut-down of nonessential services, such as merchants of blinds; Parkside, a funeral home, was an essential service, not subject to the shut down; Blinds to Go is a well-known international merchant with online business. Neither Parkside nor Blinds To Go also has failed to produce anything to demonstrate any attempts were made to vacate in a timely fashion.
Parkside also maintains that petitioner is not entitled to holdover "rent" because rent is not the term utilized in a summary eviction holdover proceeding for a respondent's use and occupancy of a premises. Parkside takes it a step further by arguing that by utilizing the term "rent" in the lease, the petitioner is relegated to a plenary action, because what was contemplated by the lease was moneys sought for withholding rent in a summary eviction nonpayment proceeding. Respondent seems to ignore that the very term "holdover rent" is an oxymoron. Clearly, what was contemplated by the parties at the execution of the second amended lease was the amount to be paid by the tenant if the tenant held over after the expiration of the lease term.
Moreover, the section of the Lease, i.e. ¶32 of the Amendment dated August 1995, makes it abundantly clear that the charge of 150% of the last monthly rent is the rate for which Parkside is liable under the situation at bar. In the section titled "Holdover", the Lease provides, "If the TENANT retains possession of the premises or any part thereof after the termination of the term by lapse of time or otherwise, without prior written approval by the LANDLORD, the TENANT shall pay the LANDLORD rent at 150% of the monthly rental rate" (Emphasis added). This is a lease term the parties negotiated. It is not the role of the court to re-write their arms length agreement to cause a result that is contrary to its express provisions, no matter how much their predicament may stir the sympathy of the court. Bayside Federal Savings and Loan Association v. Cord Meyer Development Company, 28 AD2d 866, 281 N.Y.S.2d 893 (2nd Dept 1967).
The petitioner conversely is now seeking to charge the respondents with ongoing use and occupancy until such time as the petitioner has possession of the subject premises. In this instance, the subject premises include both an interior and exterior area. Unfortunately, Parkside permitted QBH to construct a wall which encroaches approximately 8 feet into the subject premises and runs about 100 feet, along the length of the western perimeter of the subject premises, which was not removed at any time prior to vacatur.
The petition seeks use and occupancy through the date possession is awarded to petitioner. Before the issue of possession was submitted to the Court for determination, the respondents relinquished most, but not complete dominion and control over the subject premises to the petitioner. For relinquishment to be complete and the accrual of use and occupancy to end, there must be a complete turn-over of the entire subject premises, which has not occurred. Stahl Associates Co. v. Mapes, supra .
The surveys and the Agreement reveal that the fence constructed by QBH, its unfettered access and use of a portion of the subject premises were never terminated or demolished, respectively. Moreover, the Agreement contains a representation by Parkside that it is not required to obtain permission of anyone before entering into the agreement. However, pursuant to ¶14 of the Lease Amendment of 1995, which re-stated a portion of the original lease of September 15, 1959, Parkside is only given conditional permission to enter into sublet. Specifically, the provision states, "Lessee in possession may sub-let all or any part of the demised premises provided that the sub-lease is made subject to the terms and conditions of this lease." (Emphasis added). This provision was essentially reiterated later in ¶14b) of the 1995 Lease Amendment.
Nothing in the Agreement states that it is subject to the Lease. Therefore, Parkside was unable to enter into the Agreement with impunity. The Second Amendment dated May 2011 did not alter or otherwise affect the conditional right to sublet. The parties have not submitted anything to demonstrate QBH has vacated the subject premises and as already determined, Parkside is obligated to return the subject premises free of its sublessees. Stahl Associates Co. v. Mapes, supra. Having failed that, the holdover use and occupancy continues until such time as complete dominion and control of the subject premises is returned to the petitioner.
Use and occupancy was tendered at the lease rate in January 2020, but rejected by petitioner, because it was lower than the holdover rate defined in the lease. As stated above, the Court is measuring the length of time for which petitioner is entitled to use and occupancy against Parkside as commencing January 1, 2020 and continuing thereafter until such time as complete dominion and control is relinquished or otherwise returned to petitioner. This has yet to occur.
The amount of holdover use and occupancy as agreed upon by the petitioner and Parkside in the Second Amendment § 32, is 150% of the last monthly rent. Parkside now challenges that amount as excessive. The Court notes that this 150% rate as holdover is quite common and a rate as high as 200% is not uncommon. See White Plains Plaza Realty, LLC v. Town Sports Intl., LLC , 79 AD3d 1025, 914 NYS2d 222 (2nd Dept 2010) ; See also "COVID-19 and the Commercial Landlord" NYLJ December 23, 2020.
The last lease rate of rent was $28,688.08, in accordance with the lease amendment of May 2011. Rent was due and payable on the first of the month. Therefore, the amount of monthly use and occupancy is $43,032.12. The amount of use and occupancy awarded to petitioner and against Parkside for the period of January 2020 through January 2021 is $559,417.56.
The parties stipulated that respondents have not paid the real estate taxes on the subject premises for the second half of the 2019/2020 year, for the period of January 1, 2020 through June 30, 2020 and for the first half of the 2020/2021 year, for the period of July 1, 2020 through December 31, 2020 due July 1, 2020. The petitioner is awarded as additional use and occupancy against Parkside, the amount payable for the second half of 2019/2020 $54,647.84.
Petitioner is also entitled to the payment of real estate taxes for the first half of the 2020/2021 year, because Parkside has remained in possession for that tax period. The amount to be awarded shall be determined at the attorney's fee hearing.
In its petition, petitioner also seeks interest on its use and occupancy. There is no provision for the payment of interest chargeable to the respondent for its default in the payment of use and occupancy in the parties' Lease. While interest is chargeable for late payment of taxes and insurance, the Lease is devoid of any provision for interest or late charges on the default of rent or use and occupancy payments. Therefore, none is awarded.
Pursuant to the terms of the lease, real estate taxes represent additional use and occupancy. As stated above respondent did not pay real estate taxes for the second half of the 2019/2020 year, for the period of January 1, 2020 through June 30, 2020 and for the first half of the 2020/2021 year, for the period of July 1, 2020 through December 31, 2020 due July 1, 2020. Due to the default, under the terms of the lease, respondent is responsible for 8¾% interest payable to petitioner from the time of petitioner's payment of the taxes. In this instance, petitioner paid $54,647.84 on December 18, 2019. The interest chargeable is therefore $4,782.00 per annum and $13.29 per diem. Therefore, as of January 15, 2021, respondent is responsible for interest in the amount of $5,167.41 allocable to its default in the payment of taxes for the second half of the 2019/2020 tax year.
The parties stipulated the subject premises were left in the condition depicted in the pictures taken by the petitioner and submitted to the Court. These photographs demonstrate the subject premises were delivered with loads of furniture, blinds, shelving and hanging advertisements, aside from what appears to be built in ladders, etc. Suffice it to say, the subject premises require a great deal of clearing out for future use. The extent of damages has yet to be proven and is more appropriately an issue to be developed through discovery, which is generally not an aspect of summary eviction proceedings. Any claims petitioner may have for damages are preserved for a plenary action.
There remains an issue of the space taken by the Construction Fence granted by Parkside under the sublease. This sublease was signed without authority by Parkside's President granting the developing adjoining owner possession of a portion of the subject premises described as up to 8 feet deep and the length of the 100' westerly boundary-perimeter line. The party who was granted access was made a party to this proceeding in the instant order. Therefore, due to their default, the petitioner must prevail at an inquest to be held before a judgment of possession and warrant of eviction can be awarded by the court.
Pursuant to ¶11 of the August 1995 Amendment to the lease, between petitioner's predecessor-in-interest and Parkside, the respondent is responsible for the payment of petitioner's legal fees in the event that a summary eviction proceeding was necessitated by the respondent. Since the responsibility of obtaining vacancy of the sublessee and the additional occupant was Parkside's and the sublessee did not vacate until long after the commencement of the instant proceeding, with the additional occupant remaining in possession today, the petitioner is awarded attorney's fees. The full amount of the attorneys' fees cannot be determined in a hearing until such time as the petitioner has full dominion and control of the subject premises. A conference shall be held on February 25, 2021 at 10am on the Teams virtual platform. The attorneys shall contact the court clerk to be sent a link to enable them to log onto Teams.
Aside from the holdover use and occupancy and attorneys' fees, and other fees, as provided in the lease, petitioner has a claim for damages caused as a result of respondents' acts of commission and/or omission at the time of their vacatur. There may be additional damages incurred for the removal of the QBH fence as well, once that occurs. Therefore, the parties must litigate the various issues surrounding this transaction in a separate action in Supreme Court.
Conclusion
The petitioner is awarded a judgment of possession together with a warrant of eviction against Parkside and Blinds To Go, to issue forthwith. Execution may proceed forthwith, subject to any relevant Executive Orders of the Governor of New York which may require a stay.
The petitioner is directed to serve a copy of this Order by overnight courier upon QBH within 10 days. An inquest shall be conducted as to QBH on February 25, 2021, immediately following the conference.
The amount of holdover use and occupancy awarded to petitioner and against Parkside is $559,417.56. Additionally, Parkside is liable for the real estate taxes for the amount payable for the second half of 2019/2020 $54,647.84. Petitioner is further awarded $5,167.41 in interest on the defaulted payment of real estate taxes. At the present time, petitioner is awarded a money judgment in the amount of $619,232.81, based on these various allocations.
Use and occupancy shall continue pendente lite at the holdover rate in the monthly sum of $43,032.12, together with real estate taxes at the rate provided in the lease until such time as the petitioner obtains complete dominion and control over the entire subject premises.
The amount to be awarded for the first half of the 2020/2021 tax year shall be determined at the attorney's fee hearing.
Petitioner has established its entitlement to an award of attorney's fees, the amount of which shall be determined once petitioner has fully recovered the subject premises. Petitioner has leave to make a motion to award attorney's fees once possession is recovered in full.
The petitioner's claim for damages resulting from the respondents' vacatur can only be fully ascertained once the petitioner has complete possession of the subject premises and therefore, is preserved for a plenary action in which the defendants may include, but are not limited to Parkside, Blinds To Go and QBH Construction Corp.
Considering the size of the award to the petitioner, the Court declines to hold Parkside in contempt of the August Order, although there has been a total disregard of its requirement for Parkside to pay pendente lite use and occupancy and there is no contrition shown or legitimate excuse for the respondent's failure to comply with this Court's Order.
Based upon the amendment to the caption, all future papers filed with and generated by the court shall bear the following caption:
CIVIL COURT OF THE CITY OF NEW YORK
COUNTY OF QUEENS: NONHOUSING PART 52
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98-48 QUEENS BLVD LLC as to an undivided 88% Interest and ELITE PROMOTION SYSTEMS, INC. As to an undivided 12% interest, as TENANTS IN COMMON and successor in interest to ADMIRAL REALTY ENTERPRISES, L.P. formerly known as ANDON REALTY ENTERPRISES, L.P., Owner, Petitioner,
against-
PARKSIDE MEMORIAL CHAPELS, INC., a New York corporation, as successor in interest to Mowry Buick, Inc. and Robert Mowry, the tenant, by Assignment of the Lease dated September 15, 1959 Affecting The ENTIRE BUILDING and Improvements consisting of approximately 2,500 square feet with 70 linear feet of frontage, together with all Rooms; and the ENTIRE CONCRETE SLAB consisting of Parking Area surrounding the Building; together consisting of the ENTIRE LOT being the Premises known as and situated at 98-48 QUEENS BOULEVARD also known as 98-40/48 QUEENS BOULEVARD formerly known as 92-46/48 Queens Boulevard, in REGO PARK, QUEENS COUNTY, NEW YORK 11374 and having a Tax map designation of Block 3086, Lot 29, Respondent-Tenant,
BLINDS TO GO (U.S.) INC., a Delaware corporation, doing business as BLINDS TO GO also known as BLINDS TO GO INC., Store #216; QBH Construction Corp. and "Jane Doe"*, Respondent(s)—Undertenant(s).
*Names of Respondents being fictitious and unknown to Petitioner; persons intended being in possession of the premises herein described.
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This constitutes the decision and order of this Court.