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THE SIX-YEAR STATUTE OF LIMITATIONS BEGAN TO RUN WHEN THE LANDLORD COULD HAVE DEMANDED PAYMENT PURSUANT TO THE LEASE, NOT WHEN THE DEMAND WAS ACTUALLY MADE YEARS LATER (FIRST DEPT).

The First Department, reversing (modifying) Supreme Court, determined the six-year statute of limitations for breach of contract (here, a lease) started running when a demand for payment could have been made, not when the demand was actually made:

… [A]lthough the motion court awarded the entirety of the amounts of unpaid additional rent going back to 2006, the landlord’s inexplicable delay in asserting these counterclaims until September 13, 2019 rendered the amounts that accrued before September 13, 2013 time-barred (CPLR 213[2]). The law is well settled that the statute of limitations on breach of contract claims begin to run “when the party that was owed money had the right to demand payment, not when it actually made the demand” … . Because the limitations period cannot be extended “by simply failing to make a demand” … , the judgment must be reduced to include only those amounts that accrued on or after September 13, 2013, and we remand for the calculation of the proper award and commensurate reduction in statutory interest. Abarrotes Mixteca Corp., Inc. v Brisk, 2025 NY Slip Op 00034, First Dept 1-7-25

Practice Point: For a breach of contract, the statute of limitations begins to run when the party can demand payment pursuant to the contract, not when the demand is actually made. The statute of limitations cannot be extended by failing to make a demand.

 

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THE SO-CALLED “LUXURY DEREGULATION” PROVISION OF THE NYC RENT STABILIZATION LAW WAS REPEALED AS OF JUNE 14, 2019; APARTMENTS WITH LEASES IN EFFECT ON THE REPEAL DATE WHICH, PRIOR TO THE REPEAL, HAD BEEN ORDERED TO BECOME DEREGULATED, WERE NO LONGER ELIGIBLE FOR DEREGULATION AS OF JUNE 14, 2019 (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge Troutman, determined that the NYC Division of Housing and Community Renewal (DHCR) properly interpreted a provision of the Rent Stabilization Law which repealed the so-called “luxury deregulation” of rent stabilized residences. Prior to the operative date of the repeal, June 14, 2019, landlords could deregulate apartments if the tenant’s income exceeded the statutory threshold for two years:

Our primary task on this appeal is statutory interpretation. Specifically, we are asked to determine whether the Division of Housing and Community Renewal (DHCR) properly interpreted part D of the Housing Stability and Tenant Protection Act of 2019 (HSTPA)—repealing so-called “luxury deregulation” of rent stabilized residences—as applying to apartments that, prior to the repeal, were ordered to become deregulated upon expiration of the tenants’ leases, which would not expire until after the effective date of the repeal. We answer that question in the affirmative and hold that, contrary to petitioner’s contention, DHCR’s interpretation of part D as eliminating luxury deregulation for an apartment owned by petitioner was proper and did not constitute an impermissible retroactive application. Matter of 160 E. 84th St. Assoc. LLC v New York State Div. of Hous. & Community Renewal, 2024 NY Slip Op 06377, CtApp 12-19-24

 

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ALTHOUGH THE GUARANTEES REQUIRED THAT THE TENANT SURRENDER THE PREMISES IN THE CONDITION DESCRIBED BY THE LEASE, THE GUARANTEES DID NOT INCORPORATE THE LEASE OR EXPRESSLY REQUIRE COMPLIANCE WITH THE SURRENDER TERMS OF THE LEASE; THEREFORE THE TENANT’S FAILURE TO COMPLY WITH THE SURRENDER TERMS OF THE LEASE DID NOT TRIGGER THE GUARANTORS’ OBLIGATIONS (FIRST DEPT). ​

The First Department, reversing Supreme Court, determined the language of the guarantees controlled and the guarantors were relieved of responsibility for the tenant’s rent payments when the tenant surrendered the property in compliance with the terms of the guarantees. Although the guarantees referred to surrendering the premises in the condition required by the lease, the guarantees did not incorporate the lease or expressly require compliance with the surrender terms of the lease. Therefore the tenant’s failure to comply with the surrender terms of the lease did not trigger any obligation on the part of the guarantors:

… [T]he guarantees expressly limit defendants’ liability to the terms contained therein, which, as relevant here, only require that tenant surrender the premises in compliance with the surrender provisions set forth in the guarantees. While the guarantees mandated tenant surrender the premises in the condition required by the terms of the lease, they do not incorporate the terms of the underlying lease by reference … or expressly require that tenant’s surrender of the premises be performed pursuant to the terms of the lease … .

Therefore, while tenant was required to obtain written consent of the surrender from plaintiff under the lease, the motion court improperly determined that tenant’s failure to do so precluded the guarantors’ avoidance of liability for unpaid rent after tenant’s surrender … . ROC-Lafayette Assoc., LLC v Sturm, 2024 NY Slip Op 06016, Frist Dept 12-3-24

Practice Point: The language of a guarantee is strictly construed. Here the guarantees required surrender of the premises in the condition described by the lease but did not incorporate the lease or expressly require compliance with the surrender terms of the lease. Therefore the tenant’s failure to comply with the surrender terms of the lease did not trigger the guarantors’ responsibility for the tenant’s rent payments. The tenant had fully complied with the surrender terms in the guarantees.

 

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EVEN WHERE, AS HERE, THE REVIEWING COURT WOULD HAVE DECIDED THE MATTER DIFFERENTLY, THE COURT MUST AFFIRM AN ADMINISTRATIVE AGENCY’S RULING WHICH HAS A RATIONAL BASIS; THE TWO-JUSTICE DISSENT ARGUED THE PROOF PETITIONER RESIDED WITH HIS BROTHER IN THE MITCHELL-LAMA APARTMENT WAS SUFFICIENT AND PETITIONER WAS ENTITLED TO SUCCESSION RIGHTS (FIRST DEPT).

The First Department, reversing Supreme Court, over a two-justice dissent, determined Supreme Court should not have annulled the NYC Department of Housing Preservation and Development’s (HPD) denial of petitioner’s application seeking succession rights to his brother’s Mitchell-Lama apartment. Even where, as here, the court reviewing an administrative agency’s ruling would have decided the matter differently, the ruling must be upheld if there is a rational basis for it:

A careful review of the record shows that HPD had a rational basis to affirm the denial of petitioner’s succession rights. Petitioner failed to meet his burden to produce documents that would establish his primary residence was the New York apartment. He never provided any tax returns or proof that he was not required to file, which is a necessary component of any succession rights application … . Instead, he argued for the first time in his petition that he was not required to file tax returns due to his low income. Petitioner cannot fault HPD for failing to consider an argument that was not raised before it. Matter of Mantilla v New York City Dept. of Hous. Preserv. & Dev., 2024 NY Slip Op 04484, First Dept 9-19-24

Practice Point: An administrative agency’s ruling must be affirmed by the reviewing court if there is a rational basis for it, even when the reviewing court would have decided the matter differently. Here the dissent agreed with Supreme Court and argued petitioner presented sufficient proof that he resided with his brother in a Mitchell-Lama apartment and was therefore entitled to succession rights. The majority, however, upheld the city housing agency’s denial of the petition.

 

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DEFENDANTS OFFERED A REASONABLE EXCUSE FOR DEFAULT IN THIS EVICTION ACTION, INCLUDING THE COVID-19-RELATED DELAYS; THE COVID-19 EMERGENCY RENTAL ASSISTANCE PROGRAM (CERAP) APPLIES TO EVICTION PROCEEDINGS IN SUPREME COURT, AS WELL AS HOLDOVER PROCEEDINGS IN CIVIL COURT (SECOND DEPT). ​

The Second Department, reversing Supreme Court, determined defendants’ motion to vacate the default judgment in this eviction action should have been granted. In addition, the Second Department held the COVID-19 Emergency Rental Assistance Program (CERAP) applied to eviction actions in Supreme Court (not just to holdover proceedings in Civil Court) and remitted the matter for consideration of the merits of defendants’ motion for a stay pursuant to CERAP:

“A defendant seeking to vacate a default in answering a complaint and to compel the plaintiff to accept an untimely answer . . . must provide a reasonable excuse for the default and demonstrate a potentially meritorious defense” … . “Whether there is a reasonable excuse for a default is a discretionary, sui generis determination to be made by the court based on all relevant factors, including the extent of the delay, whether there has been prejudice to the opposing party, whether there has been willfulness, and the strong public policy in favor of resolving cases on the merits” … . Under the circumstances of this case, including the lack of prejudice to the plaintiff, the minor delay when accounting for the COVID-19-related stays, the plaintiff’s failure to disclose the related holdover proceeding, and the strong public policy of resolving cases on the merits, the defendants’ proffered excuse was reasonable … . In addition, the defendants demonstrated a potentially meritorious defense to the action. ZG Palmetto, LLC v Alongi, 2024 NY Slip Op 04419, Second Dept 9-11-24

Practice Point: In this eviction action, the COVID-19-related delays, the lack of prejudice to plaintiff, plaintiff’s failure to disclose the related holdover proceeding, and the potentially meritorious defense warranted vacation of the default judgment.

Practice Point: The COVID-19 Emergency Rental Assistance Program (CERAP) applies to eviction actions in Supreme Court, not just to holdover proceedings in Civil Court.

 

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DEFENDANT, AS AN OUT-OF-POSSESSION LANDLORD, WAS NOT LIABLE FOR AN ALLEGED DANGEROUS CONDITION ON THE PROPERTY; PLAINTIFF’S REFERENCES TO UNPLEADED CAUSES OF ACTION (LABOR LAW 240(1) AND LABOR LAW 241(6)) IN THE BILL OF PARTICULARS WERE UNSUPPORTED; THE COMPLAINT SHOULD HAVE BEEN DISMISSED (SECOND DEPT). ​

The Second Department, reversing Supreme Court and dismissing plaintiff’s complaint, determined defendant was an out-of-possession landlord who was not responsible for the alleged dangerous condition on the property and the Labor Law 240(1) and 241(6) causes of action, although mentioned in the bill of particulars, were not pleaded. Plaintiff was doing work on cabinets when she was struck by a piece of wood that flew off a table saw operated by another worker. She sued under a negligence theory (dangerous condition) and under Labor Law section 200 (which codifies common law negligence):

“[A] landowner who has transferred possession and control is generally not liable for injuries caused by dangerous conditions on the property” … . “‘An out-of-possession landlord can be held liable for injuries that occur on its premises only if the landlord has retained control over the premises and if the landlord is contractually or statutorily obligated to repair or maintain the premises or has assumed a duty to repair or maintain the premises by virtue of a course of conduct'” … .

… [T]he evidence … , including … the written lease … and transcripts of the deposition testimony … established … that the defendant was an out-of-possession landlord that had relinquished control of the subject property to Tobin and had not assumed a duty to maintain the property in a reasonably safe condition by a course of conduct … . Although the defendant reserved a right of entry under the lease, this did not provide a sufficient basis on which to impose liability upon the defendant for injuries caused by a dangerous condition, as the condition did not violate a specific statute, nor was it a significant structural or design defect … .

Modern practice permits a plaintiff, in some circumstances, to successfully oppose a motion for summary judgment by relying on an unpleaded cause of action that is supported by the plaintiff’s submissions, where the plaintiff has not engaged in unexcused protracted delay in presenting the new theory of liability… . … Here … the plaintiff’s unpleaded causes of action alleging violations of Labor Law §§ 240(1) and 241(6) are not supported by the plaintiff’s submissions, as the record demonstrates that the plaintiff’s work at the time of her injury did not involve “construction, excavation or demolition work” within the meaning of Labor Law § 241(6), or “erection, demolition, repairing, altering, painting, cleaning or pointing of a building or structure” within the meaning of Labor Law § 240(1) … . Miranda v 1320 Entertainment, Inc., 2024 NY Slip Op 04313, Second Dept 8-28-24

Practice Point: Here the defendant demonstrated out-of-possession landlord status and was therefore not liable for an alleged dangerous condition on the property.​

Practice Point: Although unpleaded causes of action mentioned for the first time in the bill of particulars can be considered in opposition to a summary judgment motion, here the unpleaded Labor Law 240(1) and 241(6) causes of action were unsupported by the plaintiff’s submissions. The complaint should have been dismissed.

 

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THE LEASE FOR THE LAND WHERE PLAINTIFF PLANTED CROPS HAD A MUTUAL 90-DAY TERMINATION PROVISION WHICH DEFENDANTS EXERCISED; DEFENDANTS THEN DESTROYED THE CROPS MONTHS BEFORE THEY COULD BE HARVESTED; PLAINTIFFS’ COMPLAINT STATED CAUSES OF ACTION FOR BREACH OF CONTRACT AND CONVERSION BASED UPON THE IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING AND THE THEORY OF EMBLEMENTS (THIRD DEPT).

The Third Department, reversing Supreme Court, in a full-fledged opinion by Justice Pritzker, over a partial dissent, determined the complaint stated causes of action for breach of contract and conversion. Plaintiffs leased land from defendants to grow crops. There was a provision in the lease allowing termination upon 90 days notice. Plaintiffs alleged they planted crops in the fall of 2019 which could not be harvested until the fall of 2020. Defendants elected to terminate the contract effective May 2020. In May 2020 defendants entered the land and destroyed the crops with herbicide: The Third Department found that the implied covenant of good faith and fair dealing and the theory of emblements should be harmonized with the termination provision:

… [T]he purpose of the lease agreement was clear and, since both parties were aware that the land was to be used to seed, maintain and harvest the crops[*3], defendants were under a contractual duty to allow plaintiffs to fulfill this purpose under the implied covenant of good faith and fair dealing … . Against this backdrop, both parties had the express right to terminate the lease agreement with 90 days’ notice. Therefore, plaintiffs’ right of possession would extinguish upon rightful termination and, as such, without an express or implied obligation, plaintiffs would be unable to recover on a breach of contract theory … . However, given the nature of the agricultural lease agreement, the implied covenant of good faith and fair dealing and the theory of emblements must be harmonized with the mutual termination provision. * * *

… [G]iven the purpose of the lease agreement as well as the early termination provision, the doctrine of emblements created an implied contractual term granting plaintiffs a right of reentry to harvest their crops in the event that defendants exercised the early termination provision. * * *

… [P]laintiffs have adequately alleged a possessory interest in the … crops because, under the doctrine of emblements, they retained a right to harvest and take away those crops after defendants terminated their tenancy early … . Together with plaintiffs’ allegation that defendants destroyed the cereal crops, plaintiffs’ conversion cause of action was improperly dismissed … . Van Amburgh v Boadle, 2024 NY Slip Op 04168, Third Dept 8-8-24

Practice Point: Here, although the land-lease for crop-growing included a mutual 90-day termination provision, the exercise of the termination provision must be harmonized with the implied covenant of good faith and fair dealing and the theory of emblements. Because defendants terminated the lease before plaintiffs could harvest the crops, the complaint stated causes of action for breach of contract and conversion.​

 

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QUESTIONS OF FACT WHETHER DEFENDANT WAS AN OUT-OF-POSSESSION LANDLORD PRECLUDED SUMMARY JUDGMENT IN FAVOR OF THE LANDLORD IN THIS SLIP AND FALL CASE (SECOND DEPT). ​

The Second Department, reversing Supreme Court in this slip and fall case, determined there were questions of fact whether the landlord was an out-of-possession landlord:

“A property owner has a duty to maintain its premises in a reasonably safe condition” … . “That duty is premised on the landowner’s exercise of control over the property, as the person in possession and control of property is best able to identify and prevent any harm to others” … . “It has been held uniformly that control is the test which measures generally the responsibility in tort of the owner of real property” … . “Thus, a landowner who has transferred possession and control is generally not liable for injuries caused by dangerous conditions on the property” … .

… [D]efendants failed to establish their prima facie entitlement to judgment as a matter of law dismissing the complaint insofar as asserted against them on the ground that they were out-of-possession landlords. Although the defendants submitted a lease establishing that a tenant leased the entire office building and was responsible for the maintenance of vestibules and entrances, the defendants’ submissions also demonstrated that they maintained an office in the building and that, each work day, the defendants’ employee used the building entrance where the plaintiff’s slip and fall occurred. The defendants’ submissions further demonstrated that this employee would report any defects in the building to the building’s security, and the tenant would then remedy those defects. Under these circumstances, triable issues of fact exist as to the defendants’ control of the subject property and whether they were out-of-possession landlords … . Grullon v 57-115 Assoc., L.P., 2024 NY Slip Op 03811, Second Dept 7-17-24

Practice Point: Here, even though the lease made the tenant responsible for maintenance, the fact that the landlord had an office in the building raised a question of fact whether the landlord could escape liability for a slip and fall as an out-of-possession landlord.​

 

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THE DEFENSE EXPERT SHOULD NOT HAVE BEEN PRECLUDED FROM TESTIFYING IN THIS CEILING-COLLAPSE CASE; THE MOTION TO SET ASIDE THE VERDICT SHOULD HAVE BEEN GRANTED; NEW TRIAL ORDERED (SECOND DEPT). ​

The Second Department, reversing Supreme Court, determined defendants landlord and property manager were entitled to have the liability verdict set aside in the interest of justice because the judge should not have precluded testimony by defendants’ expert. Plaintiff-tenants were injured when their apartment ceiling collapsed. The defendant expert would have testified there would have been no visible signs that the ceiling was about to collapse. The court noted that plaintiffs’ request for a Frye hearing was properly denied because the expert would have testified based upon his personal training and experience:

“[E]xpert opinion is proper when it would help to clarify an issue calling for professional or technical knowledge, possessed by the expert and beyond the ken of the typical juror” … . The expert must possess “the requisite skill, training, education, knowledge or experience from which it can be assumed that the information imparted or the opinion rendered is reliable” … . “The expert’s opinion, taken as a whole, must also reflect an acceptable level of certainty in order to be admissible” … .

Here, the defendants’ CPLR 3101(d) disclosure indicated that Yarmus [the defense expert], a professional engineer with experience in construction management and building and safety code compliance, would testify, inter alia, as to the materials and manner of construction of the ceiling at issue, as well as the manner in which ceilings so constructed may detach and collapse, allegedly, without a defect that is detectable so as to give notice of a dangerous condition. Contrary to the plaintiffs’ contention, Yarmus’s proposed testimony was neither so conclusory or speculative, nor without basis in the record, as to render it inadmissible … .

… “[T]he long-recognized rule of Frye . . . is that expert testimony based on scientific principles or procedures is admissible but only after a principle or procedure has ‘gained general acceptance’ in its specified field … . An expert opinion based on personal training and experience is not subject to a Frye analysis … . Ghazala v Shore Haven Apt. Del, LLC, 2024 NY Slip Op 03681, Second Dept 7-3-24

Practice Point; If a judge makes a mistake by precluding admissible testimony, here testimony by the defense expert, the judge has the power to set aside the verdict in the interest of justice. The Appellate Division reversed the denial of the motion to set aside the verdict.

 

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HERE A STIPULATION BETWEEN LANDLORD AND TENANT SETTING THE RENT FOR A RENT STABILIZED LEASE VIOLATED THE RENT STABILIZATION LAW (RSL) RENDERING THE STIPULATION VOID (CT APP).

The Court of Appeals, reversing the Appellate Division, in a full-fledged opinion by Judge Halligan, determined “an agreement waiving a benefit of the Rent Stabilization Laws is void as against public policy. This rule is not altered by the tenant’s status. Accordingly, the stipulation at issue here, which required the tenant to waive his right to file a Fair Market Rent Appeal (FMRA), is void and did not provide a path to deregulation of the subject apartment:”

The Stipulation between McKinney [the tenant] and the landlord provided that McKinney “agrees to accept and the landlord agrees to offer a rent stabilized lease” in McKinney’s name at a rate of “$650 per month.” It also stated that “$1,650 per month is a fair rent for [the] apartment being removed from Rent Control,” a proviso apparently intended to set the initial legal regulated rent under the Rent Stabilization Laws (RSL). The Stipulation further provided that “[f]or as long as Ed McKinney is the tenant, his rent shall be $650 per month plus allowable rental increases.” The effect of that provision, which neither party disputes, was to ensure that McKinney would pay a preferential rate of $650, with subsequent increases tied to this number for the duration of his tenancy. McKinney also agreed “not to challenge the rent,” thereby waiving his right to challenge the amount of the initial rent through a Fair Market Rent Appeal (FMRA) proceeding. * * *

By securing McKinney’s explicit agreement “not to challenge the rent,” the Stipulation waived his right to file an FMRA. That bargain circumvented the statutory process, and consequently the Stipulation is void in its entirety as a matter of law … . Because the Stipulation is void, [the landlord’s] registration statement based on the Stipulation is as well, and therefore “neither party is entitled to rely on it” … and it cannot serve as the basis for deregulation. It remains to be determined whether the apartment was properly deregulated on some other ground. Liggett v Lew Realty LLC, 2024 NY Slip Op 03378, CtApp 6-30-24

Practice Point: Re: rent stabilized leases, a stipulation which sets the rent but provides that the tenant will not challenge the rent violates the Rent Stabilization Law rendering the stipulation void.

 

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