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This is a commercial holdover proceeding which seeks to bring to a close the long term tenancy that Apogee, a hair salon sued in this proceeding under its corporate name, Lin-Ed Enterprise, Inc. ("Apogee"), has had with its current landlord, Doreen Denice, and her predecessors. The relationship between the parties has had its ups and downs, which sparked two prior summary non-pay proceedings. The first, brought in October 2001, was withdrawn after an answer had been filed by the tenant. A month to the day after the first was withdrawn, on December 28, 2001, a second non-pay proceeding was started. The second proceeding was ultimately settled and, pursuant to a so ordered stipulation, was discontinued with prejudice and with the vacation of a warrant of eviction that had been issued pursuant to an earlier stipulation in that proceeding. The so ordered stipulation was signed on July 3, 2002. See Denice v Lin-Ed Enterprise, Inc., L/T No. 53625/2001 (Civ. Ct., Richmond County). A battle had ended that day, but the war was not over.

By its terms, the lease, which was received in evidence as Respondent's Exhibit C, was to expire on May 31, 2003. This holdover proceeding was commenced on July 21, 2003. A written answer with counterclaims was filed on August 20, 2003. Trial was held on September 25, 2003. Following the submission of post trial memoranda, the entire matter was submitted for final determination. [*2]

It is axiomatic that, if proper procedure is followed, a landlord can have successful resort to summary proceedings to oust a tenant which has overstayed its lease. The tenant here, however, takes issue with the landlord's assertion that the lease has come to an end. In an addendum to the lease, at the paragraph denominated "37th", the parties agreed as follows:

Tenant shall have an option to renew this Lease for a term of FIVE (5) YEARS, upon the same terms and conditions as are provided herein except that the rent during said renewal term shall [increase pursuant to the agreed scheduled].

Said option shall be exercised by a Tenant giving notice by certified mail to Landlord, return receipt requested, at least SIX MONTHS before the expiration of the existing term. It shall be a condition of the exercise of the foregoing option that at the time of the exercise of said option Tenant shall not be in default hereunder.

With little imagination required, Apogee claims it validly exercised its option to renew. The landlord strongly disagrees. The focus of the controversy is whether the tenant was in good standing under the lease when it exercised the option.

The landlord's petition scraped together a list of Apogee's alleged defaults in an attempt to establish that the tenant had not properly exercised its option under paragraph 37th. Her post trial memorandum of law, however, wisely limited her claim to the argument that the tenant was not in good standing when it gave notice of its exercise of the option to renew because it had not timely paid rent in the month that the option was exercised. The scant proof offered of other defaults, which was sharply contested by the tenant anyway, fell far short of the standard the landlord needed to reach in order to carry her burden of proof with respect to those claims.

In opposition to the default the landlord does press, Apogee points out that it paid its rent for the month during which the option was exercised, July 2002, and that the rent had been retained by the landlord. The notice of Apogee's exercise of its option, dated July 8, 2002, was timely mailed, certified mail return receipt requested, on July 10, 2002 to the address set forth in paragraph 37th. The envelope establishing the mailing, along with its contents, were received in evidence as Petitioner's Exhibit 4. The rent check was received in evidence as Respondent's Exhibit N. A check covering the payment of real estate taxes by Apogee, bearing the same date as the July 5, 2002 rent check, was received as Respondent's Exhibit M in evidence. The landlord did not deny receiving and cashing those checks.

On the other hand, Apogee does not dispute that rent under the lease was due the first of the month. Giving precise, full and wooden effect to the words of the lease, the tenant could not deny that its payment of the July 2002 rent was late. The tenant does claim, though, that rent payments were often a few days late and had been accepted by the landlord. The tenant argues that the practice of the parties under the lease and, more importantly, the agreement incorporated in the stipulation ending the non-pay proceeding that was so ordered on July 3, 2002 absolved the tenant of any technical rent based default under the lease. Free of default and in good standing, Apogee argues [*3]that it properly and effectively exercised its option and therefore, coupled with its tender of rent payments in accordance with the schedule set forth in the option provision of the lease addendum, that it has a complete defense to the claim of holdover.

The tenant's contention is amply and dispositively supported by case law. Assuming for the sake of argument that the landlord is correct and that Apogee was in default under the lease for failure to pay its July 2002 rent on time, forfeiture of its leasehold is not warranted. The general rule in New York is that a tenant

should not be denied equitable relief from the consequences of his own neglect or inadvertence if a forfeiture would result . . . . The rule applies even though the tenant . . ., by his inadvertence, has neglected to perform an affirmative duty and thus breached a covenant in the agreement. . . .

J.N.A. Realty Corp. v Cross Bay Chelsea, Inc., 42 N.Y.2d 392, 398-99, 397 N.Y.S.2d 958, 961-62 (1977). Under this rule, equitable considerations are properly invoked by courts to preserve valuable leasehold interests and to avoid their forfeiture. Rhinestone Ventures Associates, LP v Vatter, 2002 WL 1414093 (App. T., 2d Dep't 2002).

To be saved from the literal language of a lease option renewal provision by equity's intervention, there must be some showing that non-renewal of the lease would cause great harm to the tenant and, conversely, that renewal would cause little prejudice to the landlord. See Souslian Wholesale Beer & Soda, Inc. v 380-4 Union Ave. Realty Corp., 166 App. Div. 2d 435, 437, 560 N.Y.S.2d 491, 493 (2d Dep't 1990), app. den., 78 N.Y.2d 858, 575 N.Y.S.2d 454 (1991). Clearly, equity will save a long term tenant from a de minimis breach of the lease where there is no discernible prejudice to the landlord, 40 Plus 53 61st Street Realty Corp. v. Dalton, 2003 WL 21911088 (App. T., 2d Dep't 2003), including where rent payments are fully tendered by the tenant though not always precisely on time. 41st Avenue Realty Associates L.L.C. v Choices Women's Medical Center, Inc., 188 Misc. 2d 274, 276, 728 N.Y.S.2d 859, 861 (App. T., 2d Dep't 2001).

There is no question here that Apogee has made a substantial investment in the leasehold, which is a touchstone for the invocation of equity. Apogee has operated its hair salon in the subject premises for over seven years.

Since [such] a long-standing location for a retail business is an important part of the good will of that enterprise, the tenant stands to lose a substantial and valuable asset [justifying application of the equitable rule against forfeiture].

Sy Jack Realty Co. v Pergament Syosset Corp., 27 N.Y.2d 449, 453, 318 N.Y.S.2d 720, 722 (1971).

The second touchstone has also been met. There has been absolutely no credible showing of any prejudice to the landlord should equity save the tenant from forfeiture of the lease. Indeed, the landlord did not reject the notice of option renewal when given by the tenant in July 2002 nor did she reject subsequent rent payments during the period when the tenant still could have timely [*4]exercised its option. Therefore, even if the landlord could prove that the defendant was in default for failure to pay the July 2002 exactly on the first of the month, such default is de minimis. Since there has not been a hint of prejudice to the landlord demonstrated and that forfeiture of the lease would result in substantial harm to a long term tenant, the exercise of the option by Apogee must be given effect even though it is not in strict compliance with the literal language of the option provision of the lease addendum.^[FN1] See Ingrassia v. Frappiano, L/T No. 50843/01 (Civ. Ct., Richmond County, June 27, 2001).

In any event, notwithstanding the available resort to equity, the tenant would win the day under the lease itself without resort to equity because of an oddity in the litigation history of the parties in the second commercial non-pay proceeding. That proceeding ended in the so ordered stipulation, Respondent's Exhibit B, that was entered on July 3, 2002. It is the landlord's claim now that, at the time the stipulation was reached and entered on the record, the tenant was already in default of its July 2002 rent obligation. That a landlord would agree to a stipulation discontinuing her non-pay proceeding with prejudice while the tenant was then in default of its current rent payment defies logic. The only reasonable explanation for the conduct of the parties is the one given by Linda Norton, Apogee's vice president, who testified at trial that the attorneys for the parties agreed that July's rent would be handled by Apogee's payment of the July 2002 rent along with its payment of past due real estate taxes which had been the subject of stipulations ending the non-pay proceeding. Two consecutively numbered checks drawn on the same Apogee checking account and dated July 5, 2002 were sent to and were cashed by the landlord, (Respondent's Exhibits M and N), reflecting those payments. The long and the short of it is that, if Apogee's rent payment of July 2002 was late under the lease, Apogee still was not in default of that payment because the lateness had been waived by the agreement which resulted in the instructions to Apogee by the attorneys for both parties as to how the rent payment for that month should be made. Thus, there being no default of the rent payment, Apogee was in good standing when it exercised its option under paragraph 37th of the addendum to the lease to renew its tenancy and lease for another five years.

For all the foregoing reasons, the Court finds and determines that Apogee is occupying the subject premises pursuant to a valid lease. The landlord's holdover petition sets forth no legally sufficient ground warranting summary dispossession. Landlord and tenant remain fully obligated, including for the rent as scheduled in the addendum, under the lease. Finally, no credible evidence sufficient to support the claims made by the tenant in its counterclaims has been presented. Accordingly, the petition and the counterclaims are dismissed in their entirety. [*5]

This constitutes the Decision and Order of the Court.

Exhibits, if any, will be available at the office of the Clerk of the Court 30 days after receipt of a copy of this decision.

Court attorney to notify all sides of this Decision and Order.

DATED: Staten Island, New York November 21, 2003ERIC N. VITALIANO

Judge of the Civil Court

ASN by on

Decision Date: November 21, 2003