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Eastside Exhibition Corp v. 210 East 86th Street Corp

February 21, 2012

EASTSIDE EXHIBITION CORP., APPELLANT,
v.
210 EAST 86TH STREET CORP., RESPONDENT.



The opinion of the court was delivered by: Ciparick, J.

This opinion is uncorrected and subject to revision before publication in the New York Reports.

In this appeal, we are asked to consider whether a minimal and inconsequential retaking of space that has been leased to a commercial tenant constitutes an actual partial eviction relieving the tenant from all obligation to pay rent. We conclude, under the circumstances of this case, where such interference by a landlord is small and has no demonstrable effect on the tenant's use and enjoyment of the space, total rent abatement is not warranted.

I.

In February 1998, plaintiff Eastside Exhibition Corp. entered into a lease with defendant 210 East 86th Street Corp. to occupy two floors in defendant's seven story retail and office building to operate a multiplex movie theater with 1,150 seats and four screens. The lease ran from March 1, 1998 to December 16, 2016. Article 13 of the lease permits the landlord to enter the demised premises to make repairs and improvements and provides that there be no abatement of rent during the time such work is in progress. Article 4 of the lease provides that there be no allowance to the tenant for the diminution of rental value arising from the making of any repairs or improvements.

More than nine years ago, in December 2002, defendant landlord, without giving notice to or receiving permission from plaintiff, entered the demised premises and installed cross-bracing between two existing steel support columns on both of plaintiff's leased floors causing a change in the flow of patron foot traffic on the first floor and a slight diminution of the second floor waiting area. The concededly unaesthetic cross-bracing was placed in preparation for the addition of two additional floors to the building. Plaintiff ceased paying rent as a remedy for the alleged actual partial eviction and commenced this action, seeking a permanent injunction barring defendant from doing any further work in the premises and directing defendant to remove the cross-bracing. Plaintiff also sought an abatement of its rent obligation.*fn1 Supreme Court granted plaintiff a temporary restraining order on any further work by defendant and also ordered defendant to expeditiously complete the current work. Subsequently, a non-jury trial was held to determine whether the cross-bracing constituted an actual partial eviction so as to allow for the complete abatement of rent. At trial, the parties stipulated that the total area of the premises was between 15,000 and 19,000 square feet and that the cross-bracing occupied approximately 12 square feet.

Supreme Court, as relevant here, dismissed plaintiff's claim and entered judgment for defendant for unpaid rent. In its decision, the court stated that although the lease did not grant the landlord the right to permanently deprive the tenant of any portion of the demised premises and that such a deprivation will normally result in "liability for all rent [being] suspended although the tenant remains in possession of the portion of the premises from which he was not evicted" (quoting Barash v Pennsylvania Term. Real Estate Corp., 26 NY2d 77, 83 [1970]), here, the taking of 12 square feet of non-essential space in plaintiff's lobby constituted a de minimis taking not justifying a full rent abatement.*fn2

The Appellate Division modified on the law, holding that there is no de minimis exception to the rule that any unauthorized taking of the demised premises by the landlord constitutes an actual eviction (see Eastside Exhibition Corp. v 210 E. 86th St. Corp., 23 AD3d 100, 104-105 [1st Dept 2005]). However, the court declined to award plaintiff a full rent abatement, stating that "current landlord/tenant realities [make it] particularly untoward automatically to apply harsh and oppressive strictures derived from feudal law that mirror the policies and concerns of that earlier society" and that in light of that, the remedy is to compensate plaintiff for its actual damages (id. at 105). The Appellate Division remanded the matter to Supreme Court for a hearing to determine actual damages (see id.).

The hearing on damages was held three years later. Plaintiff proffered two witnesses, who were unable or unwilling to estimate actual damages, essentially testifying that damages were impossible to determine given the significant number of variables in the motion picture theater industry. After the hearing, Supreme Court found that plaintiff failed to establish any damages and made no award to plaintiff. The Appellate Division affirmed, declining to revisit legal issues as it felt bound by the law of the case as earlier expressed in the first Appellate Division order (see Eastside Exhibition Corp. v 210 E. 86th St. Corp., 79 AD3d 417, 418 [1st Dept 2010]). We granted plaintiff leave to appeal (16 NY3d 708 [2011]) and now affirm on different grounds.

II.

It is well settled that the withholding of the entire amount of rent is the proper remedy when there has been a partial eviction by a landlord (see Fifth Ave. Bldg. Co. v Kernochan, 221 NY 370, 372-373 [1917] ["Eviction . . . suspends the obligation of payment . . . because it involves a failure of the consideration for which rent is paid . . . If such an eviction, though partial only, is the act of the landlord, it suspends the entire rent because the landlord is not permitted to apportion his own wrong"]). "The reason of the rule is, that the tenant has been deprived of the enjoyment of the demised premises by the wrongful act of the landlord; and thus the consideration of his agreement to pay rent has failed" (Edgerton v Page, 20 NY 281, 284 [1859]). This is true even if a tenant remains in possession of the premises (see Barash, 23 NY2d at 83). This remedy of total abatement of rent for an actual partial eviction is one of very long standing in New York (see Dyett v Pendelton, 8 Cow 727 [Sup Ct of New York 1826]) and we do not, herein, jettison or overrule it as stated by the dissent (see dissenting op at 12).

The question we now address is whether there can be an intrusion on the demised premises that is of such trifling amount that imposition of the draconian remedy of total rent abatement is unjustified. We made it clear in Lounsbery v Snyder (31 NY 514, 516-517 [1865]) that not every intrusion amounts to an eviction which warrants a full rent abatement and damages are an appropriate remedy when there has been no substantial interference with the use of the premises. We further stated "[i]f it were necessary, [one] might properly invoke the application of the familiar maxim, 'de minimis non curat lex'" (the law does not concern itself with trifles) (id. at 516).

Plaintiff would like us to adopt an all or nothing rule that would allow for full rent abatement. However, applying the principle that a "landlord is not permitted to apportion his own wrong" (Fifth Ave. Bldg Co., 221 NY at 373) and a rule that any minimal intrusion warrants a total abatement to a case such as this, involving only a trivial taking, "has little but age and inertia to recommend it" (Friedman on Leases § 29:2.4 at 29-15 [5th ed]). Scholars have criticized an all or nothing rule noting that it is "more talismanic than rational" (Stoebuck and Whitman, Property § 6.32, at 284 [4th ed]). Additionally, courts in other jurisdictions have rejected such a harsh rule (see Talbot v Citizens Natl. Bank of Evansville, 389 F2d 207, 211 [7th Cir 1968] [holding that under Indiana law an encroachment on 5.45 feet of leased space does not rise to the level of an eviction because there was no "showing that the part of the demised premises from which [the tenant] was evicted was a material part or that the eviction was a material breach of the covenant of quiet enjoyment"]; Dussin Inv. Co. v Bloxham, 96 Cal App 3d 308, 317 [Court of Appeal, 4th Dist Div 2 1979] ["a tenant is not relieved entirely of the obligation to pay rent by an actual, partial eviction unless the eviction is from a substantial portion of the premises and that in determining the question of substantiality, the court may and should consider the extent of the interference with the tenant's use and enjoyment of the property"]).

Given the inherent inequity of a full rent abatement under the circumstances presented here and modern realities that a commercial lessee is free to negotiate appropriate lease terms, we see no need to apply a rule, derived from feudal concepts, that any intrusion -- no matter how small -- on the demised premises must result in full rent abatement. Rather, we recognize that there can be an intrusion so minimal that it does not prescribe such a harsh remedy. For an intrusion to be considered an actual partial eviction it must interfere in some, more than trivial, manner with the tenant's use and enjoyment of the premises. That a partial eviction must intrude on the enjoyment of the demised premises was implicated early on in Dyett where the court noted that the tenant, having retained some portion of the premises, nonetheless was not required to pay for the part of the premises retained because there existed "such a disturbance, such an injury to its beneficial enjoyment, such a diminution of the consideration upon which the contract is founded, that the law refuses its aid to coerce the payment of any rent" (8 Cow at 731). Similarly, in Edgerton, we stated that "there must be an entry and expulsion of the tenant by the landlord, or some deliberate disturbance of the possession depriving the tenant of the beneficial enjoyment of the demised premises, to operate a suspension or extinguishment of the rent" (20 NY at 285).

While the dissent seems to view our holding as revolutionary and "schizophrenic" (dissenting op at 2 n 1), we regard it as nothing more than an application of the familiar de minimis principle which we have never held or suggested to be inapplicable to actual partial eviction cases. So far as we know, no cases actually granted a 100% rent abatement for a so called "eviction" as trivial as this one -- a taking of less than ...


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