400 Madison Ave. v. Etno, Inc.

(Civ. Ct. N.Y. Cty. 3/28/94)

We represented: Respondent

Kibbie F. Payne, J.C.C.

This is a non-jury summary proceeding in which petitioner seeks a judgment of possession and a money judgment against respondent. In its defense, respondent raised several affirmative defenses and sought dismissal of the petition upon several grounds: failure to state a cause of action, defective notice of petition and petition, defective service of the three-day demand, improper verification of the petition, rent overcharge, breach of warranty of habitability and constructive eviction. It is petitioner's contention that respondent is in arrears of rent from August 1992 and that it is entitled to a judgment of possession and a monetary judgment. Respondent, however, strenuously maintains that petitioner has provided respondent with a five-month rent abatement, commencing September 1992, and that its obligation to pay rent under the lease did not commence until petitioner repaired the roof in accordance with paragraph 12 of the lease rider and that it is entitled to an abatement because it has been constructively evicted from using 60.1% of the subject premises. The facts are briefly set forth as follows:

The parties entered into a lease agreement, dated June 17, 1992, for the subject premises located on the 21st floor at 400 Madison Avenue in Manhattan. This lease agreement amended the parties' June 22, 1989 lease, of suite 807 located at the same premises, whereby respondent agreed to vacate and surrender suite 807 and thereafter agreed to lease the entire 21st floor with the connecting roof terrace at the rate of $4,625.00 per month from August 1, 1993 to July 31, 1994, $4,839.58 from August 1, 1994 through July 31, 1995 and $5,050.00 from August 1, 1995 through June 30, 1997. In connection with the lease amendment, the parties executed two documents entitled the "Tenant Improvement and Decorating Allowance" (hereinafter referred to as the "Allowance"), which provided that petitioner pay tenant an allowance of $24,189.58 in equal installments over four years and the "Special Tenant Improvement & Decorating Allowance" (hereinafter referred to as "Special Allowance") which provided that petitioner pay respondent/tenant $18,516.67 in four monthly installments. The parties dispute when tenant's obligation to pay rent arose. At trial respondent contended that its rental obligation commenced on February 1, 1993 because it was entitled to receive a five-month rent abatement from September 1992 to January 1993 as a result of its negotiations for entering into the new lease agreement. Petitioner, on the other hand, maintained that rental payments were due in a timely fashion from the commencement of the lease and that payment of each of the five installments due to respondent/tenant for its expenditures in decorating the subject premises pursuant the Allowance was conditioned on respondent's not being in default under the lease. Nevertheless, petitioner made no demands upon respondent for rent until February 1993. The subject premises was flooded due to an overflow of the water tanks on the roof in February 1993. The flood consisted of water from a pipe mixed with metallic substances which had the effect of turning the floodwater to a brownish red color. As a result, respondent's ceilings, walls, carpets and floors were severely damaged. Petitioner had the ceiling was repaired, the walls repainted and arranged for a contractor to clean the rug on at least five occasions. However, water stains remained on the carpet and the carpet retained an unpleasant odor. Additionally, water continues to leak into the largest office each time it rains. Due to these problems, respondent found the conference room and one of the offices were unsuitable to entertain clients. Respondent was, therefore, only able to use a portion (39.9%) of the leased premises for the conduction of its various businesses.

With respect to the first and third affirmative defenses interposed in respondent's answer, that the petition fails to state a cause of action and that "the notice of petition and petition are defective on their face," these defenses are conclusory and unsubstantiated. While claiming defects in the pleadings, respondent has failed to present any probative evidence specifying what, if any, aspect of the notice of petition and petition is defective. Respondent has failed to support its attack of the pleadings. Moreover, a reading of the notice of petition and petition clearly indicate that said pleadings provide more than adequate notice to respondent of petitioner's claims in these proceedings (see Goldstein v. Gold, NYLJ, May 30, 1990, p 28, col 1 [Civ Ct Kings Co]). This Court finds that the pleadings satisfy the requirements of RPAPL § 741. Furthermore, as a traverse hearing was conducted on the issue of the service of the three-day demand which is respondent's fourth affirmative defense and it was found that service was proper, that defense must also be dismissed.

Additionally, respondent's application for dismissal based upon the grounds of improper verification must also be denied. RPAPL § 741 expressly provides that a legal representative may verify a petition. Although CPLR 3021 requires a person other that a party to state the reason why verification is not made by the party, in this case respondent has not demonstrated that it had timely objected to the attorney's verification and notified counsel that it had intended to treat the pleadings as nullity in accordance with CPLR 3022 (also see, Matter of Lentile v. Egan, 94 AD2d 839, 840, aff'd 61 NY2d 874; Fort Holding v. Otero, 157 Misc2d 834). Accordingly, respondent waived any objection with respect to the verification. Moreover, defects with respect to pleading verifications may be capable of correction by amendment (see Hablin Realty Corp. vs. McCain, 123 Misc2d 777 [App Term, 1st Dept]; Nassau Lease Corp. v. The Nissan Bros., NYLJ, Jan. 13, 1984, p 6, col 3 [App Term, 1st Dept]; 150 West 26th St. Corp. v. Hall, NYLJ, Jan. 12, 1982, p 11, col 1 [App Term, 1st Dept]).

The defense of breach of warranty of habitability as contained in RPL § 235‑b is applicable only to residential property and has not been extended to commercial property (see Bomze v. Jaybee Photo Suppliers, Inc., 117 Misc2d 957; also Park Lane Assoc. v. MacNow, NYLJ, November 2, 1983, p 13, col 6 [App Term 2 & 11 Dept]). The failure of a landlord to provide essential services to a commercial tenant in possession does not suspend that tenant's obligation to pay rent (Towers Organization, Inc. v. Glockhurst Corp., N.V., 160 AD2d 597, 599; Earbert Restaurant, Inc. v. Little Luxuries, Inc., 99 AD2d 734). Accordingly, respondent's eighth affirmative defense is dismissed.

This Court finds that respondent is entitled to the five-month rent abatement for the period of September 1992 through January 1993. The evidence presented at trial clearly indicates it to be the intention of the parties that the Special Allowance provision would not be enforced. Respondent's president Izak Sendahar and Uri Mermelstein testified that the parties had negotiated the lease rider with Scott Bloom and it was agreed that respondent would be given such an abatement. Petitioner made no demands for rent from September 1992 through January 1993, despite its claim that rent was due from September 1992. Parole evidence is admissible in this case to show that the Special Allowance fails to express the true agreement of the parties by reason of the fact that said provisions fails to correctly express the true agreement of the parties (Susquehanna S.S. Co. v. AD Anderson & Co., 239 NY 285; Booth v. Powers, 56 NY 22). The evidence in this case indicates that the parties had agreed that respondent was to be given five months free rent. Accordingly, the seventh affirmative is valid to the extent that there was a rental overcharge and respondent is entitled to a five-month abatement in the amount of $23,125.00.

The court finds that respondent's twofold defense for its non-payment of rent - failure of petitioner to comply with lease agreement and constructive eviction - is without merit. Paragraph 12 of the lease in pertinent part provides that " . . . expeditiously after the execution of this lease amendment by landlord, landlord shall repair the flooring of the terraces on the 21st floor of the building so as to eliminate the water leakage in the 20th floor of the building." Counsel argues, in support of its position, that the failure to commence said repairs on the terrace has prevented respondent from using the subject premises for "its intended purpose" and maintains that a constructive eviction has occurred which had forced respondent to abandon a portion of the premises due to the wrongdoings of the landlord. In support of this position counsel relies upon Minjak Co. v. Randolph (140 AD2d 245) and Manhattan Mansions v. Moe's Pizzeria (149 Misc2d 43). Counsel's reliance, however, is misplaced. In Minjak, the appellate court found that the "40 separate water leaks" and "huge clouds of dust" caused by the fifth floor tenant was substantial and materially deprived respondent-tenant of the use of his music studio and compelled him to abandon that portion of the premises. In this case, however, there is nothing in the record to support respondent's claims of a substantial deprivation of the use of the terrace and of any resulting abandonment. Respondent in this case had little use of the terrace from the time it took possession. Constructive eviction occurs when the "landlord commits wrongful acts which substantially and materially deprive the tenant of the beneficial use and enjoyment of his possession", resulting in the tenant's abandonment of the leased premises (2 Rasch, Landlord and Tenant, 28:21). It has been held that no constructive eviction can be found if the tenant does not abandon the whole premises (Barash v. Pennsylvania Term. Real Estate Corp., 26 NY2d 77; Edgerton v. Page, 20 NY 281). It is also the rule of law that the commercial tenant's independent obligation to pay rent continues so long as it remains in possession and is not suspended because of the landlord's alleged failure to make certain repairs on the premises (see 335 Broadway/93 Worth Co. v. Heller, NYLJ, March 21, 1994 p 30 col 1 [App Term 1st Dept]). Although respondent may have been unable to renovate the terrace as it would have liked, petitioner's non-compliance with its obligation to repair in no way deprived respondent of the use and enjoyment of the terrace because the terrace was in the same unusable condition of disrepair that it was when respondent took possession of the subject premises.

Additionally, respondent continued to conduct its business on the premises and failed to abandon same despite the conditions caused by the flood and the state of the terrace's disrepair. The conditions in this case do not satisfy the elements of a constructive eviction. If respondent's claims that it was induced to renting the 21st floor solely because of the terrace and the terrace was unusable for its intended purpose, then respondent's recourse was to abandon the entire premises. In that event it would have had the option to interpose the defense of constructive eviction. Respondent's continued use and possession of the premises for its business dealings belie the reasons for its failure to pay rent. This factor is also applicable to respondent's claim of a partial constructive eviction defense as a result of the February flooding of its premises. Petitioner, as the landlord, had the obligation to correct the conditions which deprived its tenant of the beneficial use and enjoyment of the premises within a reasonable time. Failure to correct such conditions within a reasonable time results in a constructive eviction (Merlar Realty Corp. v. Richard Feigen Graphics, Inc., 83 Misc2d 684). Respondent has once again through its conduct waived its defense of constructive eviction by continuing to conduct its business and remaining upon the premises.

During this trial, respondent sought dismissal of these proceedings on the grounds that petitioner, a foreign partnership, has failed to establish that it is authorized to do business in the State of New York. In opposition to respondent's application, petitioner presented a photocopy of a December 24, 1987 certification from the Secretary of State document certifying that petitioner was licensed to do business in the State of New York. At that time this Court denied respondent's motion to dismiss and permitted petitioner to proceed on its case. After reviewing Article 8-A of the Partnership Law dealing with Foreign Limited Partnerships which was revised in 1991 repealing §§ 120 to 120-1, I must change my ruling. Section 121-907(a) of the Partnership Law, in pertinent part, provides that a foreign partnership " . . . doing business in this state without having received a certificate of authority to do business in this state may not maintain any action, suit or special proceeding in any court of this state unless and until such partnership shall have received a certificate of authority in this state." Consequently, this Court will permit petitioner, pursuant to CPLR 2001, to submit proof of compliance with Partnership Law § 121-907. Accordingly, petitioner is given twenty (20) days from notice of entry of this order to present a certificate of authority to do business in this state. In the event that petitioner fails to comply with this directive respondent may settle a judgment dismissing the petition on the grounds that petitioner failed to demonstrate that it has authority to do business in this state. However, should petitioner submit a certificate of authority to do business, then petitioner is entitled to a judgment in its favor and may settle its judgment in accordance with this decision.

The question remains, however, whether or not respondent is entitled to some abatement for the damage to the premises as a result of the flood. The evidence presented to this court fails to demonstrate that petitioner had any prior knowledge, either actual or latent, that such a condition was likely to occur on the premises. As result, it cannot be held liable for the damage to respondent's property resulting from the flood because it was not a foreseeable event. However, respondent is entitled to an abatement for the failure to repair the roof because it was obligated to make such repairs pursuant to the lease agreement. This Court does not accept respondent's contention that since the roof constitutes 41.5% of the subject premises that respondent is entitled to a like percentage rental abatement. The testimony clearly indicated that the terrace was to be used for an ambiance for the entertainment of it clients. An abatement of five percent is therefore given to respondent from the March 1993 to the present.

For the above reasons, petitioner is entitled to a judgment of possession and a money judgment in the amount of $ 47,868.75, which represents rent for February 1993 and rent abatements for the periods March 1993 to the present. The foregoing constitutes the decision and order of this court.