Summary
This Appellate Division, First Department decision addresses a landlord's appeal from an order denying summary judgment against a commercial tenant and dismissing claims against a guarantor. The court modified the order to grant summary judgment against the tenant, holding that its failure to pay rent precluded it from asserting breach of the covenant of quiet enjoyment or constructive eviction. The court also reinstated the complaint against the guarantor due to unresolved constitutional questions regarding New York City's guaranty law and directed the landlord to serve notice on the City of New York.
Topics
Practice areas
Questions Presented
- Whether a tenant who has defaulted on rent and vacated the premises may assert a breach of the covenant of quiet enjoyment.
- Whether the tenant's constructive eviction claim is waived by the lease provision waiving Real Property Law §227.
- Whether the landlord is entitled to attorneys' fees under article 19 of the lease.
- Whether the trial court erred in dismissing the action against the guarantor given the pending constitutional challenge to the guaranty law.
Holdings
- A tenant who is in default of rent and has vacated the premises is precluded from asserting a claim for breach of the covenant of quiet enjoyment because performance of rent is a condition precedent to that right.
- The tenant's constructive eviction claim is waived because the lease expressly waives the rights protected by Real Property Law §227.
- The landlord is entitled to attorneys' fees because it prevailed on the central claims advanced in the action.
- The dismissal of the action against the guarantor was improper; the matter is remanded for the trial court to address the constitutionality of the guaranty law.
Key quotations
“The tenant is precluded from asserting a claim for breach of the covenant of quiet enjoyment because it was already in default of its obligation to pay rent at the time it vacated the leased premises.” (at 525)
“When a tenant vacates the premises after defaulting on its obligation to pay rent, it is deprived of its right to insist upon the performance of the covenant of quiet enjoyment.” (at 525)
Factual background
The lease gave the tenant the right to quiet enjoyment conditioned on timely rent payment. The premises were closed in March 2020 due to COVID‑19, and the tenant stopped paying rent. A lease amendment in October 2020 extended the term and waived April 2020 rent but the tenant ceased rent payments after January 2021. The tenant remained in possession until May 2021, then vacated without permission. The tenant also waived Real Property Law §227 in the lease.
Procedural history
The landlord sued the tenant and guarantor for unpaid rent and breach of lease. The trial court denied the landlord's summary‑judgment motion, dismissed the claim against the guarantor, and later granted summary judgment against the tenant while reinstating the claim against the guarantor. The landlord appealed the order.
Remand instructions
Serve notice on the City of New York in accordance with CPLR 1012(b)(2) and file proof of service; the matter is remanded to the Supreme Court, New York County to address the constitutionality of Administrative Code §22-1005.