The instant case is a commercial summary proceeding for non-payment of rent. In or about July 12, 2013, the Petitioner had served on the Respondent a 10-day rent demand. According to the Affidavit of Service, the 10-day rent demand was served on Andrew Moran, allegedly employed by General Plumbing Corporation, at the premises sought to be recovered. The 10-day rent demand stated that the Respondent was indebted to the Petitioner in the sum of $274,732.47 which represents [*2]all rent due through July 11, 2013 and demanded that the aforementioned sum be paid on or before July 26, 2013. Annexed to the rent demand was a chart stating the above name and address of the Respondent and is entitled, "Lease-Fixed Rent Escalation for CPI Increases Calculation worksheet to determine Monthly delinquency before interest charges from April 11, 2007 through July 11, 2013."

The demand states that the delinquent fixed rent due and owing is the sum of $239,959.81, 5% late charge in the sum of $11,997.99, interest at prime rate in the sum of $22,775.44 for a grand total of $274,732.47.

After the Respondent did not tender the aforementioned sum, the Petitioner proceeded with the service of the Notice of Petition and Petition seeking to recover possession for nonpayment of rent.

The Respondent appears by counsel, the Law Offices of Podvey, Meanor, Catenacci, Hildner, Cocoziello & Chattman, P.C., that interposed an answer which alleged various defenses and counterclaims. The answer specifically asserts that General Plumbing Corporation is the only party in possession, specifically that the trade names of that corporation are not independent entities but are trade names of the major corporation and thus, the pleadings should be amended to delete the unnecessary named parties. The Respondent disputes the allegations contained in the petition in regards to the amount due and owing.

In addition, the Respondent asserts that on July 25, 2013, the Respondent filed a declaratory judgment action in the Supreme Court of the State of New York in the County of Kings in the Commercial Division under Index Number 504231/2013 to determine, inter alia, the amount of rent owed on the subject premises. Until that determination is made, the Respondent allegedly deposited the sum of $92,457.22 into its attorney trust account and claims that this amount is owed in rent arrears.

Further, the answer contains other affirmative defenses, to wit: a declaratory judgment action is pending in Supreme Court which seeks a determination of the amount of rent owed and the subject proceeding should be removed and consolidated with that action; this proceeding should be dismissed based on the pending declaratory judgment action; the petition fails to state a cause of action upon which relief can be granted; this court lacks subject matter jurisdiction on the grounds that the Petitioner failed to serve a rent demand as prescribed by law; the rent demand is based on an improper and unclear rental amount; the court lacks personal jurisdiction since the notice of petition and petition were not served in accordance with the law; the petition fails to state a cause of action for rent and additional rent because the petition is unclear and the rental amount is improper; the Petitioner is not the person authorized pursuant to RPAPL §721 to commence this proceeding; the petition should be dismissed on the grounds that it was not issued by a proper party; the Petitioner failed to serve the proper predicate notice in accordance with the law; the landlord's claims are barred by the doctrine of laches, waiver and estoppel; and the petition should be dismissed for the failure to state a cause of action because it fails to allege sufficient facts concerning the alleged rental amount between the Petitioner and the Respondent.

The answer was filed with the court on August 13, 2013, and it appears that a court date was granted by the Clerk of the Court for August 15, 2013.

Subsequently, the Respondent submitted an Order to Show Cause on August 8, 2013 returnable on August 19, 2013 seeking a stay of the commercial non-payment proceeding, and for removal and consolidation of the commercial non-payment proceeding with the aforementioned declaratory judgment action.

It appears from the record that there was an ex-parte order to accelerate the Order to Show Cause from August 19, 2013 to August 15, 2013.

On August 9, 2013, upon the application of the Petitioner's attorney, the Respondent's motion was accelerated to August 15, 2013. The Petitioner was required to serve a copy of the order on the Respondent by August 9, 2013.

On August 15, 2013, after substantial conference with the Court, the parties entered into a two-attorney stipulation which adjourned the case for trial to September 15, 2013. The Respondent explicitly withdrew with prejudice the following defenses in the answer: third, fourth, fifth, sixth, ninth, tenth, eleventh and twelfth. Additionally, the Respondent represented that General Plumbing Inc. was the sole occupant in possession and the proceeding was discontinued against all undertenants and the pleadings were amended accordingly.

On August 19, 2013, the Petitioners' attorney served a Notice of Motion returnable on September 4, 2013 to admit Robert L. Povui, Esq., an attorney admitted before the courts of the State of New Jersey, pro hac vice as counsel on behalf of the Respondent-tenant, General Plumbing Inc. for this proceeding.

As to the Respondent's Order to Show Cause that seeks to stay the summary proceeding pending a final determination of the Supreme Court action, or for removal and for consolidation of the summary proceeding with the declaratory judgment action. The Respondent claims that the essential facts between the parties are not in dispute, however, the Respondent claims that the Petitioner's interpretation of the provision in the lease is incorrect. The Respondent states, in essence, that the above sum of $274,732.47 has been incorrectly calculated based upon the following rationale: the landlord wrongfully attempts to charge the Respondent late fees and interest for unpaid rent going back to August 2007 notwithstanding the fact that the rent demand for such rent was made in April 2013; the landlord failed to take into account the negative changes in the CPI Index as required by the lease; the Petitioner compounds the rent by calculating the fixed rent retroactively to a period of time prior to the date that the Petitioner would be entitled to collect any increase from the Respondent as of August 2007; and the Respondent's method of calculation more fully complies with the terms of the lease. The Respondent's calculation, pursuant to the Respondent's interpretation of the disputed lease, yields uncollected rent for the subject premises in the amount of $92,457.22 and said sum has been deposited in its attorney's trust account.

The Respondent further argues that the non-payment proceeding should be stayed pending a determination of the declaratory judgment action. According to the Respondent, the Respondent [*3]commenced the declaratory judgment action in or about July 25, 2013, and subsequently, on July 31, 2013, the landlord commenced the instant non-payment proceeding. The Respondent claims that both actions are pending for the same relief, and since the declaratory judgment was first in time, the summary proceedings should be stayed pending a determination of the declaratory judgment action. In the alternative, the Respondent claims that the non-payment proceeding should be stayed, removed and consolidated with the declaratory judgment action.

In the interim, the request for a stay in the Supreme Court of this summary proceeding was denied by the Hon. Carolyn E. Demarest, J.S.C., on August 15, 2013.

The Petitioner's motion to accelerate was granted as per order and the Order to Show Cause by Respondent was withdrawn, and the parties agreed that the undersigned would proceed with a trial on the merits. Additionally, the Respondent was directed to provide its calculations of the fixed rent, late fees and interest on or before August 6, 2013 by email. The case was adjourned for trial to September 25, 2013.

On September 25, 2013, this case was referred to the undersigned for trial. The parties admitted the following documents into evidence on consent and without reservation except as stated below:

After these admissions into evidence on consent, the Petitioners called Steven Bandini to testify in their case-in-chief. Mr. Bandini testified that he is a partner at the firm of Zapken & Loeb, LLP and has been a C.P.A. for nearly 25 years. He was acquainted with Jodi Brenner and not her father, and was hired by Jodi Brenner to perform calculations for the rental amounts due for the premises known as 436 Keap Street, Brooklyn, New York. He testified that he was retained to calculate the fixed rent and all increases, late charges and interest from August 2007 to the date.

The witness further testified that he performed the calculations that were admitted into evidence as Petitioner's Exhibit "6" (enclosed in the letter dated May 23, 2013). He was requested to perform the calculations from 2000 through 2013 but then was requested to revise the calculations from 2004 through May 2013. He further testified that he applied Table 24 to calculate the fixed rent and the subsequent increases because that table better represented the terms of the lease than the "Chained" CPI. Mr. Bandini testified that Petitioner's Exhibit "7", admitted into evidence on consent, were also his calculations. For a significant portion of his testimony, he explained the application of the CPI to the fixed rent and the compounding of the yearly rent increases for the purposes of calculating the fixed rent from 2004-2013. For example in the 2008, the fixed rent was calculated as follows:

For 2007, the witness testified that he was informed by Jodi Brenner that she could only collect from August 2007 through December 2007 and then from January 2008 to September 2013. The chart reflects the years of rent increase calculations that are not collectible and the years of rent increase calculations that are collectible. It was conceded by both parties that the Petitioners are precluded from collecting rent for the years 2005 through July 2007 based on the application of the six- year statute of limitation for breach of contract. Therefore, the Petitioner seeks to collect rent from August 2007 through and including September 2013.

The witness further described the calculation of the late fee. The late fee is calculated as follows:

Our multi-tier judicial system safeguards our rights to due process of law. As a multi-tier judicial system, great deference is given to the trial courts. It has been firmly established that "[t]he credibility of the witnesses, the reconciliation of conflicting statements, a determination of which evidence should be accepted and which should be rejected, the truthfulness and accuracy of the testimony, whether contradictory or not, are issues for the trier of fact.

The memory, motive, mental capacity, accuracy of observation and statement, truthfulness and other tests of the reliability of witnesses can be passed upon with greater safety by a trial judge who sees and hears the witness than by appellate judges who simply read the "printed record" (Barnet v. Cannizzaro, 3 AD2d 745, 747, 160 N.Y.S.2d 329 [citation omitted]; see LeBron v. Brentwood Union Free School District, 212 AD2d 5112, 5113, 623 N.Y.S.2d 117; Segal v. MacDaniel Ford, 201 AD2d 717, 608 N.Y.S.2d 324). See also Healey v. Williams, 30 AD3d 466, 818 N.Y.S.2d 121 (App. Div., 2d Dept., 2006) in which the Appellate Division, Second Department held that the trial court's finding that the marital stipulation, which included a prescription against oral modification, was nonetheless orally modified and was supported by the evidence in the record. The trial court properly credited the testimony of the father in that proceeding upholding the above rule. In reviewing a determination made after a non-jury trial, "the power of the Appellate Division is as broad as that of the Trial Court and it may render the judgment as it finds warranted by the facts, taking into account that in a closed case the trial judge' had the advantage of seeing the witness' " (Northern Westchester Professional Park Assocs. v. Town of Bedford, 60 NY2d 492, 499, 470 N.Y.S.2d 350, 458 N.E.2d 809 [citation omitted], quoting York Mortgage Corp. v. Clotr Constr. Co., 254 NY 128, 133-134, 172 N.E. 265).

See also Lelekakis v. Kamamis, 41 AD3d 662, 839 N.Y.S.2d 773 (App. Div., 2d Dept., 2007) where the Appellate Division found that contrary to the Defendant's contentions, the Supreme Court finding that the signature of the Defendant, Stanley Kamamis, on the Option Agreement was not forged, was not against the weight of the evidence. "As this case was tried by the court, without a jury, this court's power to review the evidence is as broad as that of the trial court, with appropriate regard given to the discretion of the trial judge who was in the position to assess the credibility of the witnesses." (779 East NY Avenue Assoc., LLC v. Gurary, 31 AD3d 627, 628, 819 N.Y.S.2d 921; see Northern Westchester Professional Park Assocs. v. Town of Bedford, supra). In that case, the Court specifically found that the Trial Court was not required to credit the testimony of the Plaintiff's handwriting expert and apparently did not. "This case, in which there is no concrete evidence except the Option Agreement, was almost exclusively a matter of determining the relative credibility of the parties. On this record, there is no basis to disturb the Trial Court's determination that the signature was not forged".

Any determination in this proceeding must first be guided by principles of contract law. A fundamental tenant of contract law is that the agreements should be construed in accordance with the intent of the parties and the best evidence of the parties' intent is what they express in their written contract.

Legal research readily discloses that the first stage of such inquiry in any breach of contract claim is whether the underlying contract, albeit, in this case, a lease agreement, is uneqivocable and contains the necessary provisions to constitute a meeting of the minds between the parties. A determination of whether or not an agreement is ambiguous is a question of law to be decided by the courts and only after an analysis of the four corners of the instrument (see Kass v. Kass, 91 NY2d 554, 566, 673 N.Y.S.2d 350 [1998]; Todd v. Grandoe Corp., 302 AD2d 789, 790, 756 N.Y.S.2d 658 [2003]). [*13]Suffice to say, if any ambiguity exists in the instrument, then the courts will look to extrinsic evidence and may consider such facts in its analysis of the terms contained therein (see F & K Supply v. Willowbrook Dev. Co., 288 AD2d 713, 714, 732 N.Y.S.2d 734 [2001]; Ruthman, Mercadant & Hadjis v. Nardiello, 260 AD2d 904, 906, 688 N.Y.S.2d 823 [1999]). See also Goldman v. White Plains Center for Nursing Care, LLC, 11 NY3d 173, 176 (2008); MHR Capital Partners L.P. v. Presstek, 12 NY3d 640 (2009); Van Shift Holdings Ltd. v. Energy Improv Structure Acquisition Corp., 65 AD3d 405 (1st Dept., 2009).

In interpreting any contract, the courts will not look outside of the four corners of the instrument especially "where the instrument was negotiated between sophisticated, counseled people negotiating at arm's length [internal quotation marks and citations omitted]." Tag 380, LLC v. ComMet 380, Inc., 10 NY3d 507, 513 (2008); Logiudice v. Logiudice, 67 AD3d 544 (1st Dept., 2009).

In addition, "it is a recognized rule of construction that a court should not adopt an interpretation which will operate to leave a provision of a contract without force and effect. An interpretation that gives effect to all the terms of an agreement is preferable to one that ignores terms or accords them an unreasonable interpretation [internal quotation marks and certain citations omitted]." Ruttenberg v. David Data Systems Corp., 215 AD2d 191, 196 (1st Dept., 1995).

As a general rule, a landlord is not entitled to a possessory judgment in a summary eviction proceeding for a "stale" claim for rent—or where the landlord has failed to institute a summary proceeding for a substantial period of time to the detriment of the tenant. Rodriguez v. Torres, 1/22/2003 N.Y.L.J. 22, col. 1 (Civ. Ct. Kings Co.); McLaughlin v. Timms, 11/30/84 N.Y.L.J. 4, col. 3 (App. Term 1st Dept); Airco Alloys Division, Airco Inc. v. Niagara Mohawk Power Corp., 76 AD2d 68, 430 N.Y.S.2d 179 (4th Dep't 1980); 220-55 46th Ave Owners v. National Ventures, 3/11/92 N.Y.L.J. 25, col. 6 (Civ. Ct. Queens Co.); Gabmar Realty Corp v. Titronics, 8/14/96 N.Y.L.J. 27, col. 5 (City Ct. White Plains).

For all of the reasons stated above, the lease is not ambiguous, has been construed by its plain and ordinary terms and conditions, and is enforceable against the Respondent as stated below.

One of the critical components of the Respondent's claims involve the manner and method of the rent calculation by the Petitioner. The Respondent claims that the Petitioner is not entitled to increase the fixed rent for the commercial space and if allowed to collect the yearly increases by the Court, that the Court preclude the Petitioner from using any rental amount for any time period before the statute of limitation; in this case, prior to August 2007. The Respondent's arguments are fatally flawed and unsupported by any case authority. The identical claim was made by residential rent regulated tenants before the Court of Appeals years ago in opposition to the implementation by the former state DHCR to allow rent increases in the legal regulated rent based on major capital improvements. This position was unsustainable based on the realities of the residential real estate market and thus, even more applicable to commercial real estate.

In the well known case of Bryant Avenue Tenant's Assoc., et al v. Edward I. Koch, 84 NY2d 960, 644 N.E.2d 1381 (1994), the IAS court was reversed that held that the Rent Stabilization statute itself prohibited the merger of MCI rent increases with the legal regulated rent. The IAS court concluded that, even though DHCR limits MCI increases to 6% per year, the fact that such MCI increases become part of the legal regulated rent, which is then subjected to other annual rent increases, such as annual Rent Guidelines Board ("RGB") increases, has the effect of compounding the MCI increases (emphasis added). According to the IAS court, because of the compounding of the rent increases, the practical [*16]effect of merging an annual 6% MCI is to increase the MCI in excess of 6%. It was argued that to allow the MCI to become a permanent part of the base rent would be tantamount to forcing the tenants to pay for the increase forever. The High Court outright rejected this rationale and dismissed the Appellant's claims, similarly proffered by the General Plumbing in this case, that the resulting "compounding" is a windfall to the Petitioners that should be disallowed. The High Court stated that such an absurd result could not have been — and surely was not — intended by the Legislature.

The Court opined that the Legislature as well as the Judiciary have repeatedly concluded that the purpose of the rent regulatory laws and codes that allow MCIs to become part of the permanent base rent is to provide an incentive to owners of residential property to improve and upgrade their buildings. See, e.g., Assembly Debates, infra, at 293-94; Ansonia I, infra; Park Knoll Tenants' Ass'n v. DHCR, infra ("if landlords were limited to recoupment of actual costs, there would be no incentive for such improvements"). "Accordingly, the conclusion urged by the Appellants, and unanimously rejected by the First Department, that permanent increases in the base rent for MCIs violate the public policy underlying the RSL, rests on a fundamentally flawed, one-sided view of the RSL. The Rent Stabilization Law that Mayor Lindsay proposed was born of the need to balance the protection of tenants with the need to encourage private investment in residential housing. As Mayor Lindsay stated then: "[t]he City is faced then with an extraordinarily critical and delicate problem. We must prevent unfair and excessive rent increases, which landlords are in a position to impose because of the scarcity of housing; but we must not hastily impose rigid controls in the private sector, or no builder will ever construct private housing in New York City again. If that happened, new construction would be at a standstill, the construction trades would suffer, and the City would be faced with a permanent housing shortage". See Ansonia Residents' Ass'n v. DHCR, No. 17947/85 (Sup. Ct. NY Co. Jan. 18, 1987), aff'd, 144 AD2d 1040 (1st Dep't), aff'd, 75 NY2d 206 (1989) ("Ansonia I"); Ansonia Residents' Ass'n v. DHCR, 141 Misc 2d 224 (Sup. Ct. NY Co. 1988), rev'd sub nom. Ansonia Assocs. v. DHCR, 157 AD2d 583 (1st Dep't 1990) ("Ansonia II"); See RSL § 26-501; 8200 Realty Corp. v. Lindsay, 27 NY2d 124 (1970)." In conclusion, the High Court found that "the policies of DHCR both with respect to the merger of the increases into the stabilized rent, as well as allowing temporary retroactive rent increases to recover arrears, are fully supported by judicial precedent, the statute itself and the legislative history".

Notwithstanding the Courts' rules of enforcement, "implicit in all contracts is a covenant of good faith and fair dealing in the course of contract performance . This embraces a firm pledge that neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract Where the contract contemplates the exercise of discretion, this pledge includes a promise not to act arbitrarily or irrationally in exercising that discretion" (Dalton v. Education Testing Serv., 87 NY2d 384, 389, 639 N.Y.S.2d 977, 663 N.E.2d 289 [internal quotation marks and citation omitted]); Gallagher v. Lambert, 74 NY2d 562, 549 N.Y.S.2d 945, 549 N.E.2d 136, rearg. denied 75 NY2d 866, 552 N.Y.S.2d 931, 552 N.E.2d 179; Black v. MTV Networks, 172 AD2d 8, 576 N.Y.S.2d 846, appeal dismissed 79 NY2d 915, 581 N.Y.S.2d 667, 590 N.E.2d 252).

As stated in NY Practice Series-Landlord and Tenant Practice in New York, §10:11, it is well the implied covenant of good faith and fair dealings applies to leases. See also, Robert f. Dolan, Rasch's Landlord & Tenan-Summary Proceedings, §6:13 entitled "Unconscionable Lease or Clause" wherein the doctrine is discussed. Notwithstanding this implied covenant, our Courts have assumed the role of policing disputed agreements.

Turning to the UCC, Article 2 that governs the statutory remedies for breach of contract in a commercial transaction for the sale of goods. In the early case of Equitable Lumber Corp. v. IPA Land Dev. Corp., 38 NY2d 516, 344 N.E2d 391, 381 N.Y.S.2d 459, 1976), our highest court, in a case of first impression, was called on to determine the enforceability of a provision in a commercial sales contract which 1) stipulated that the seller may recover the reasonable value of attorney's fees incurred as a result of the buyer's breach and 2) attempted to liquate such sum at 30% of the amount recoverable by the plaintiff in the event that the buyer failed to make payments due under the contract which required the services of an attorney for collection.

The Court ruled that attorney's fees were not recoverable as damages in an action for breach of contract under the UCC or otherwise at law, unless expressly agreed to by the parties. The Court, in its analysis of the UCC, called to attention of all parties that the code itself allows the parties broad discretion to fashion their own remedies for breach of contract but continue to contain express limitations on the ability of the parties to alter the damages rules.

In Wirth & Hamid Fair Booking (supra, 265 NY p. 223, 192 N.E. p. 301), the High Court noted that "(l)iquidated damages constitute the compensation which the parties have agreed must be paid in satisfaction of the loss or injury which will follow (sic) from a breach of contract. They must bear reasonable proportion to the actual loss. Otherwise, an agreement to pay a fixed sum, upon a breach of contract, is an agreement to pay a penalty, though the parties have chosen to call it liquidated damages,' and is unenforceable". UCC §2—302 of the code which articulates the principle of unconscionability provides in pertinent part: "If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made, the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause so as to avoid any unconscionable result." The principle underlying this section is the prevention of oppression and unfair surprise and not of disturbance of allocation of risk (Official Comment, McKinney's Cons. Laws of NY, Book 62 1/2 , part I, Uniform Commercial Code, s 2—302, p. 193). It should be emphasized that in contrast to subdivision (1) of §2—718 of the code discussed above, § 2—302 is limited to and focuses only on the time of contracting as the vantage point for the determination of unconscionability.

After a review of the evidence, the High Court concluded that "under the circumstances of this case, the provision for payment of attorney's fees does not fail on the ground of unconscionability, although in a case involving disparity of bargaining power or oppressive practices, this principle may be the basis for invalidating such a contractual term". Without sufficient evidence to make such a determination, the court remanded for those factual deficiencies.

The same principles of unconscionability as described in the UCC have been codified in New York. In New York, "[f]ortunately, the Legislature has provided a remedy in its enactment of RPL § 235—c whose purpose is to engraft the spirit of the Uniform Commercial Code into landlord and tenant relationships and to mandate a judicial policing against unconscionable results without strained construction of legal principles.". See NY Real Prop. Law § 235—c; Pine Top Associates v. Hirsch & Sons Deli World, Inc., 92 Misc. 29 470, 400 N.Y.S.2d 665 (1977).

In the seminal case of Truck Rent-a-Center, Inc., v. Puritan Farms 2nd, Inc., et al, 41 NY2d 420, 361 N.E.2d 1015, 393 N.Y.S.2d 365 (1977), a milk delivery truck-lessor sued to enforce a liquidated damages provision in a lease. The Supreme Court, Queens County, rendered judgment for the plaintiff. The Supreme Court, Appellate Division, Second Judicial Department, at 51 AD2d 786, 380 N.Y.S.2d 37, affirmed by a divided court, and the defendant appealed. The Court of Appeals held that the lease provision requiring the lessee on breach of contract to pay one-half of all rentals that would have been due had the agreement be fully complied with bore a reasonable relation to amount of probable actual harm and was not a penalty. "Although lessee might have exercised purchase option for amount less than liquidated damages and although clause appeared on preprinted foreign portion of agreement, there being no indication of [any] disparity of bargaining power or of unconscionability".

The primary issue before the court was whether the liquidated damages' provision was enforceable. "Liquidated damages constitute the compensation which, the parties have agreed, should be paid in order to satisfy any loss or injury flowing from a breach of their contract. (Wirth & Hamid Fair Booking v. Wirth, 265 NY 214, 223, 192 N.E. 297, 301.) In effect, a liquidated damage provision is an estimate, made by the parties at the time they enter into their agreement, of the extent of the injury that would be sustained as a result of breach of the agreement. (5 Williston, Contracts (3d ed.), §776, [*19]p. 668.) Parties to a contract have the right to agree to such clauses, provided that the clause is neither unconscionable nor contrary to public policy. (Mosler Safe Co. v. Maiden Lane Safe Deposit Co., 199 NY 479, 485, 93 N.E. 81, 83.) Provisions for liquidated damage have value in those situations where it would be difficult, if not actually impossible, to calculate the amount of actual damage. In such cases, the contracting parties may agree between themselves as to the amount of damages to be paid upon breach rather than leaving that amount to the calculation of a court or jury. (14 NY Jur., Damages, s 155, pp. 4—5.)"

As was stated eloquently long ago, to permit parties, in their unbridled discretion, to utilize penalties as damages, "would lead to the most terrible oppression in pecuniary dealing"'. (Hoag v. McGinnis, 22 Wend. 163, 166; see also 425 Matter of Associated Gen. Contrs., NY State Ch. (Savin Bros.), 36 NY2d 957, 961—962, 373 N.Y.S.2d 555, 558—559, 335 N.E.2d 859, 861—862, (dissenting opn.).)"

In interpreting a provision fixing damages, it is not material whether the parties themselves have chosen to call the provision one for liquidated damages', or have styled it as a penalty. (Wirth & Hamid Fair Booking v. Wirth, 265 NY 214, 225, 192 N.E. 297, 302, 1019, supra; Ward v. Hudson Riv. Bldg. Co., 125 NY 230, 234, 26 N.E. 256, supra.) Such an approach would put too much faith in form and too little in substance; and should be interpreted as of the date of its making and not as of the date of its breach. (e.g., Seidlitz v. Auerbach, 230 NY 167, 172, 129 N.E. 461, 462, supra.)"

In enforcing the liquidated damages clause, the Court found "no significance to the fact that the liquidated damages clause appears on the preprinted form portion of the agreement. The agreement was fully negotiated and the provisions of the form, in many other respects, were amended. There is no indication of any disparity of bargaining power or of unconscionability. The provision for liquidated damages related reasonably to potential harm that was difficult to estimate and did not constitute a disguised penalty". Id at 427.

In the commercial context, in Pryamid Centres and Co., v. Kenny Shoe Corp., 244 AD2d 625, 663 N.Y.S.2d 711 (AD3d Dept., 1997) it was held that a commercial lease that provides that the [*20]landlord is entitled to double the fixed rent or the average annual percentage rent, whichever is greater, was unenforceable. According to the court, the provision was intended to coerce defendant's performance rather than compensate plaintiff's for breach of contract. As such, "we agree with Supreme Court that the liquidated damages provisions of paragraph 6.02 is an unreasonable penalty that was disproportionate to any subsequent loss suffered by the plaintiffs." See also an interesting case, namely, Babylon Village Equities v. Mitchell, 11 Misc 3d 84, 816 N.Y.S.2d 279 (AT, 2d & 11th Jud. Dist., 2006) in which the court determined that a final judgment of possession for the landlord should be vacated. "The award of legal fees was based on a lease clause which purported to entitle landlord to $250.00 if landlord commenced a summary proceeding predicate, inter alia, on tenant's nonpayment of rent and a total of $500.00 if the proceeding was brought to judgment. "However, notwithstanding any provision in the lease to the contrary, only a prevailing party is entitled to recover attorney's fees [ see Nestor v. McDowell, 81 NY2d 410, 415-416, 599 N.Y.S.2d 507, 615 N.E.2d 991[1993]; Village of Hempstead v. Taliercio, 8 AD3d 476, 778 N.Y.S.2d 519 [2004]". In that case, the landlord did not prevail on the merits was respect to the central relief sought because there was no possessory judgment for any rent arrears.

In addition to the above, Courts struck some of the above types of lease provisions using the doctrine of contracts of adhesion'. After all, as Robert F. Dolan, Rasch's Landlord & Tenan-Summary Proceedings, §2:8 at 112 [4th ed.], provides "all leases are subject to judicial scrutiny under the concept of unconscionability and if the lease is or any provision thereof is found to be unconscionable when made, the court may refuse to enforce the lease or to strike that unconscionable provision".

A good analysis by Judge David A. Sears, in VP Village Park, LLC v. Victor, 40 Misc 3d 1233 (A), 2013 WL 4565918 (NY Just. Ct)) depicts a dispute involving the validity of a late charge provision in a lease. He said that "[a] contract of adhesion is a contract formed as a product of gross inequality of bargaining power between the parties. Such a contract will be deemed unconscionable when it inflicts substantive unfairness on the weaker party. Such a contract often arises when a standardized form is presented to a party whose choice is either to accept or reject a contract without an opportunity to negotiate its terms. An adhesion contract tainted by unconscionability is unenforceable. A contract of adhesion will be set aside upon a showing of unfairness, undue oppression or unconscionability. Standardized contracts are not unenforceable merely because of an inequality of bargaining power of the parties without additional proof of unconscionablity or violation of public policy. In considering the doctrine of contracts of adhesion, a court must look for the elements of such a contract which are (1) a necessity of life; (2) a contract for the excessive benefit of the offeror; (3) an economic or other advantage of the offeror; and (4) the offer of a proposed contract on a take it or leave it basis. Spring Valley Garden Associates v. Earle, 112 Misc 2d 786 (Special Term Rockland County, 1982).

In Grand Baldwin Assos. v. Birnak, ABC Corp., 21 Misc 3d 1129 (A), 2008 WL 4891113 (NY Dist. Ct) Justice Fairgreive, similarly, after a detailed analysis supported by well settled landlord and tenant rules of law and reliance on many of the above cases including but not limited to Truck Rent-A-Center, Inc. v. Purtan Farmres 2nd Inc., supra; Wirth & Hamid Fair Booking v. Wirth, supra; and Equitable Lbr. Co. v. IPA Land Dev. Corp., supra, found the liquidated damages provision a penalty and not enforceable by law. His analysis involved a comparison of the recent case of Thirty-Third Equities Company LLC v. Americo Group, Inc. (294 AD2d 222, 743 N.Y.S.2d 10 [1st Dept., 2002]), where the Court held that a liquidated damages clause calling for a 250% increase in rent was enforceable where the landlord had already found a new tenant to rent the premises at a 250% increase from the rent that the original tenant was paying for the space. Additionally, in Chatham Green Mgt. Corp. v. AAFE Mgt. Co., 2003 WL 22299083, 2003 NY Slip Op. 51298 (U) (NY City Civ. Ct), a case involving a short term commercial lease agreement with a option to renew for five consecutive years, the Civil Court held that the lease provision awarded the landlord 3 times the base rent was unenforceable. The court reasoned that such an amount was not reasonably proportionate to the injury the landlord sustained as a result of the tenant's failure to vacate the premises.

As one can conclude from the history of commercial transactions with this property, all of [*22]the commercial lease agreements were not only recorded but also "run with the land". So the initial lease and option to purchase did not contain the typical late fee provision as opposed to that of the disputed lease, but did contain a penalty for nonpayment of "additional rent" as follows: "in default of the payment of any taxes or other charges herein set forth, .after ten day notice to tenant, the landlord may pay the same and the amount so paid with interest thereon at twelve (12) percent may be added as additional rent to the next installment of rent becoming due..".

In this disputed lease, the pivotal language of the late fee provision is that all late payments of the fixed rent or other payments be "delinquent" for a period in excess of ten (10) days, shall be "subject" to a late charge of "5% of the amount of the delinquent payment". Webster defines delinquent, inter alia, as ignoring a duty, commitment or responsibility, or as unpaid finance and overdue payment.

Under the particular facts in this case as established above, the Court does not find that the Respondent corporation was delinquent' in the payment of the monthly rent. The alleged breach of this rental agreement is more akin to a procedural' breach rather than a substantive breach. Until May 23, 2013, the fixed rent, without any CPI increase as prescribed in the lease, was tendered and accepted without reservation by the Petitioners. As compelling, there was no evidence that late fees were ever billed to the Respondent corporation or collected by Fred Brenner as the owner or paid by Fred Brenner as the tenant or his son, Irwin Brenner as the current president of the Respondent corporation (Gordon v. Eshaaghoff, 60 AD3d 807, 876 N.Y.S.2d 433 (A.D., 2d Dept., 2009).

Notwithstanding Petitioner's claim that the Respondent is contractually obligated to pay the late fees, and the lease states that such sums are due, "without notice or demand and without abatement, deduction or set-off", this Court, pursuant to the above case authority and RPAPL 235-c, finds that the late fee claims, under these particular facts, are unreasonable, are intended as a penalty and therefore, unenforceable. Moreover, the Petitioner's assessment of late fees with interest are "unreasonable and confiscatory in nature" (943 Lexington Avenue, Inc. v. Niarchos, 83 Misc 2d 803, 373 N.Y.S.2d 787 (App Term, 1st Dept 1975); Raanana Realty Corp. v. Louis J. Rotondi Restaurant Corp., 1/9/91 NY Law Journal 23, col 3 (1st Judicial Dept, NY Co); Parkchester Apartments Co v. Lewis, 4/22/98 NY Law Journal (1st Judicial Dept, Bronx Co); Rock v. Kleeper, 23 Misc 3d 1103 (A), 2009 WL 865514 (NY City Ct.); Sandra's Jewel Box Inc. v. 401 Hotel, L.P., 273 AD2d 1, 708 N.Y.S.2d 113 (1st Dep't 2000); North Clinton Associates v. Rehman, ISLT 179-11, NYLJ 1202482550604 at 1 Dist., SUF, decided February 14, 2011; Ultrashmere House, Ltd. v. 38 Town Associates, 123 Misc 2d 102, 473 N.Y.S.2d 120).

Moreover, the method used by the CPA to calculate the late fees and interest is flawed and extract a penalty, are unjust and inequitable. Although the Court has determined that the calculations of the C.P.A. are arithmetically accurate, the application of the late fee provision to the difference between the amount of rent paid by the Respondent ($18,750.00) and the fixed rent with the CPI increase for six years would actually award the Petitioners a true windfall. The Petitioners would unfairly recover monetary penalties against the Respondent for rent increases that the Petitioners did not impose or collect in any manner whatsoever.

Second, while the lease states that late payment shall be "subject to a late charge", there was no evidence submitted at trial to demonstrate that the plaintiff ever imposed the fee." Gordon v. Eshaaghoff, 60 AD3d 807, 876 N.Y.S.2d 433 (A.D., 2d Dept., 2009). This provision, in the opinion of this Court, is not absolutely mandatory; it gives the Petitioners discretion to impose the fee. If the imposition of late payment was mandatory, the Petitioner's would have imposed the late fee each month of delinquency prior to this law suit. Here, the late fees and interest are being used to coerce Respondent's performance rather than to compensate the Petitioner's for any breach of contract (Pryamid Centres and Co., v. Kenny Shoe Corp., 244 AD2d 625, 663 N.Y.S.2d 711 (AD3d Dept., 1997). Since the Petitioner's did not impose any late fees prior to May 23, 2013, this Court shall not permit the Petitioner to impose those fees and find the late fees and interest sought to be imposed here unenforceable as a matter of fact and law.

Hon. Harriet L. Thompson Judge of the Civil Court