Calendar Date: May 3, 2017
Barclay Damon, LLP, Albany (Linda J. Clark of counsel), for
Schoeneck & King, PLLC, Rochester (Curtis A. Johnson of
counsel), for respondent.
Before: Garry, J.P., Lynch, Rose, Mulvey and Aarons, JJ.
MEMORANDUM AND ORDER
from that part of an order of the Supreme Court (Lebous, J.),
entered July 21, 2016 in Tompkins County, which partially
denied defendant's motion for summary judgment dismissing
the complaint and partially granted plaintiff's cross
motion for summary judgment.
parties' predecessors entered into a 20-year lease in
1985 for property located in the City of Ithaca, Tompkins
County. Plaintiff acquired the property in 1997. In 2005,
plaintiff and Bank of America, N.A. entered into a second
amendment extending the lease for 10 years until December 31,
2015, with the tenant retaining "the right to extend the
term of this [l]ease for a single additional period of 
years from January 1, 2016 through December 31, 2025."
To exercise this right, the tenant was required to send
written notice to plaintiff no later than December 31, 2013.
Bank of America assigned the lease to defendant in November
2013. At issue on this appeal is whether defendant's
ensuing letter of December 19, 2013 served to exercise the
renewal option. That letter, addressed to plaintiff and
referenced as a "Lease Renewal Notice, " stated as
follows: "Please allow this letter [to] serve as formal
notification that [defendant] wishes to exercise its right to
extend the term of the lease referenced above for an
additional period of 10 years, to begin January 1, 2016 and
continue until December 31, 2025. Said option to extend
provided in amendment to lease dated July 14, 2005.
Specific terms and details of this extension to be
determined prior to December 31, 2015. Although we
regard our option to renew as exercised, we request that you
also please acknowledge receipt of this notice by signing
below and returning a copy" (emphasis added). The letter
was hand delivered and its receipt was acknowledged by
plaintiff that same day.
March 2016, plaintiff commenced this action alleging that
defendant had exercised the renewal option but had defaulted
under the lease, as amended, by failing to pay the rent due
since January 2016. Plaintiff sought a declaratory judgment
that the lease had been extended through December 31, 2025,
and damages for defendant's anticipatory breach.
Defendant moved to dismiss the complaint, asserting that the
December 19, 2013 letter was simply an agreement to agree, or
a counteroffer, and that the lease had not been renewed.
Supreme Court granted plaintiff's motion to convert
defendant's motion to dismiss into a motion for summary
judgment and to treat plaintiff's responding papers as a
cross motion for summary judgment. Defendant, in turn,
further responded in opposition and in support of its own
motion for summary judgment. Supreme Court partially granted
plaintiff's cross motion, finding that the lease had been
extended and that defendant breached the lease by its
nonpayment of rent. The court also determined that defendant
anticipatorily breached the lease, and that an inquest on
damages would be scheduled at a later date. Defendant now
affirm. It has long been established that "a
tenant's election to renew a lease must be timely,
definite, unequivocal and strictly in compliance with the
terms of the lease" (Matter of Joyous Holdings v
Volkswagen of Oneonta, 128 A.D.2d 1002, 1004 ;
see Orr v Doubleday, Page & Co., 223 NY 334, 339
). In our view, the December 19, 2013 letter meets this
standard - it is captioned as a "Lease Renewal" and
described as a "formal notification" to extend the
term in accord with the second lease amendment. We are not
persuaded by defendant's assertion that the underscored
last sentence of the first paragraph - "Specific terms
and details of this extension to be determined prior to
December 31, 2015" - makes this a qualified, conditional
offer to extend the term. Significantly, the very next
sentence includes the affirmative statement that "we
regard our option to renew as exercised." While it is
undisputed that defendant engaged in ongoing discussions with
plaintiff over the next two years to explore changes to and
reductions in the leased space, that effort does not change
the unequivocal, definitive declaration that "we regard
our option to renew as exercised" (compare Matter of
Joyous Holdings v Volkswagen of Oneonta, 128 A.D.2d at
1003 [election to renew expressly contingent upon structural
repairs being made]; King v King, 208 A.D.2d 1143,
1144  [changes requested in proposed separation
further reject defendant's contention that the renewal
was indefinite and unenforceable because the essential term
of rent was not defined. Where, as here, the parties did not
leave the rental amount for the renewal period open to
negotiation, we look to the terms of the original lease, as
amended (see Subcarrier Communications, Inc. v Satra
Realty, LLC, 11 A.D.3d 829, 831 ). The premise for
doing so is that "[o]nce the option is exercised, the
original lease is deemed a unitary one for the extended
term" (Dime Sav. Bank of N.Y. v Montague St. Realty
Assoc., 90 N.Y.2d 539, 543 ). Notably, the second
lease amendment included a rent formula covering the
five-year period up to December 31, 2015. Under the
principles stated, this formula defines the rent due during
the extension period.
inasmuch as defendant acknowledged that it "peacefully
quit the premises on or before May 31, 2016 and turned the
keys over to" plaintiff's agent, Supreme Court did
not err in finding an anticipatory breach (see Norcon
Power Partners v Niagara Mohawk Power Corp., 92 N.Y.2d
458, 463 ).
J.P., Rose, Mulvey and Aarons, JJ., concur.
that the order is ...