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Under the Terms of the Lease and the Related Guaranty of Payment, the Guarantor Was Required to Pay Liquidated Damages in an Amount Equal to the Rent for the Unfinished Term of the Lease Even After the Tenant Was Evicted and the Landlord Had Regained Possession of the Property

The Second Department, over a dissent, determined that the terms of appellant’s guaranty of payment of amounts owed under a lease obligated the appellant even after the tenant had left the premises and the landlord took possession. Although the tenant’s obligation to pay rent had ended when the plaintiff-landlord took possession, the terms of the lease allowed the plaintiff to seek the amount of the rent for the remaining term of the lease as liquidated damages and did not require the plaintiff to mitigate those damages by renting to another:

“Although an eviction terminates the landlord-tenant relationship, the parties to a lease are not foreclosed from contracting as they please” … . Where a lease provides that a landlord is under no duty to mitigate damages after its reentry by virtue of its successful prosecution of a summary proceeding, and that the tenant remains liable for damages, “[the tenant] remain[s] liable for all monetary obligations arising under the lease” … .

Here, the lease did not obligate the plaintiff to mitigate damages after reentry by virtue of its successful prosecution of a summary proceeding, and specifically provided that in the event of such reentry, “tenant shall also pay owner as liquidated damages . . . any deficiency between the rent hereby received and or covenanted to be paid and the net amount, if any, of the rent collected on account of the subsequent lease or leases of the demised premises for each month of the period which would otherwise have constituted the balance of the term of this lease.” Thus, although the tenant no longer remained liable for rent after it vacated the premises, it was liable for liquidated damages, which could be as much as the balance of rent due under the original term of the lease, since the plaintiff was under no obligation to rent to a new tenant for the balance of the term. Moreover, the guaranty specifically stated that the appellant guaranteed “the full and prompt payment by Tenant of all amounts due under [the] lease.” Accordingly, the plaintiff was entitled to seek from the appellant the liquidated damages for which the tenant was liable under the lease even after the termination of the landlord-tenant relationship… . H.L. Realty, LLC v Edwards, 2015 NY Slip Op 06572, 2nd Dept 8-19-15

 

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