Gateway I Group, Inc. v Collier, Halpern, Newberg, Nolletti & Bock, LLP

City Court of White Plains, Westchester County

Decided on August 3, 2021

Index No. 134/20

John P. Collins, Jr., J.

The following papers were considered in connection with this motion by Petitioner for partial summary judgment on Respondent's Third Affirmative Defense:^FN1

PAPERS

NOTICE OF MOTION/AFFIRMATION/AUSTIN AFFIDAVIT/EXHIBITS 1

NOTICE OF CROSS-MOTION/AFFIRMATIONS/NEWBERG AFFIDAVIT/ 2

MEMORANDUM IN SUPPORT

MEMORANDUM IN OPPOSITION & IN SUPPORT OF CROSS-MOTION/ 3

EXHIBITS

MEMORANDUM IN SUPPORT OF MOTION AND IN OPPOSITION TO 4

CROSS-MOTION

MEMORANDUM IN FURTHER SUPPORT OF CROSS-MOTION 5

This is a commercial eviction proceeding for non-payment. In its Third Affirmative Defense, Respondent alleges that it vacated and surrendered the Premises on or about February 29, 2020. In the instant motion, Petitioner moves for partial summary judgment and argues that Respondent did not properly surrender the Premises under either the terms of the lease or by operation of law.

I. Background

On our about February 24, 2020, Philip M. Halpern, Esq., a member of Collier Halpern & Newberg, LLP, wrote to Petitioner and informed Petitioner that he would "be starting [his] new post momentarily as the President has signed my formal commission to be a [United States District] Judge." As a result of his commission as a United States District Judge, the "law firm is now winding down its affairs and will not be able to pay any more rent commencing March 1, 2020, except that the law firm will continue to forward rent to you that it collects from subtenants." Mr. Halpern asked "if there is some modest proposal that [Petitioner] would propose to end our relationship on good terms," and requested "whether we can facilitate a friendly Termination and Surrender Agreement at your earliest convenience [because he] anticipate[d] starting [his] new job momentarily."

On March 12, 2020, David A. Newberg, Esq., sent a letter to Petitioner referencing the February 24, 2020 letter discussed above and enclosing a check "in the amount of $21,515.39 representing our subtenants' rent" for March 2020.

Thereafter, on April 8, 2020, Mr. Newberg sent a subsequent letter to Petitioner — this time in reference to a March 24, 2020 Landlord's Statement reflecting a balance due and owing. In this letter, Mr. Newberg referenced Mr. Halpern's prior letter stating that the law firm "was winding down its affairs and would not be paying any more rent [except for rent collected from the subtenants] . . . and in accordance with our prior oral and written notices, the firm vacated the leased premises and surrendered possession to the Landlord on February 29, 2020, except for the space occupied by subtenants."

Mr. Newberg stated: "Neither [Mr. Robert B. Austin], the Landlord or Cushman & Wakefield responded or in any way objected to any of the foregoing. Under these circumstances and in the absence of any objection, we deem your silence to be a consent to Tenant's surrender of the premises . . . and that Tenant would have no further liability under the Lease starting on March 1, 2020."^FN2

On May 14, 2020, Petitioner's counsel wrote to Respondent and informed Respondent, in sum and substance, that Petitioner rejected any tender of possession by Respondent and advised Respondent that Petitioner intended to enforce all the terms and conditions of the Lease. (Id. ("Your claim that the Landlord's alleged non-response to the tenant's communications does not, either factually or as a matter of law, constitute Landlord's consent to tenant's surrender of its household interest.").

II. Discussion

The threshold inquiry in a motion for summary judgment involving a contract dispute is whether the contract is free from ambiguity such that its provisions may be enforced without resort to extrinsic evidence. The interpretation of an unambiguous contract is a question of law for the court (Kass v. Kass, 91 NY2d 554, 566 [1998]).

The Court of Appeals has emphasized that "when parties set down their agreement in a clear, complete document, their writing should . . . be enforced according to its terms." (Vermont Teddy Bear Co. v. 538 Madison Realty Co., 1 NY3d 470, 475 [2004]. This rule has special import "in the context of real property transactions, where commercial certainty is of paramount concern, and where . . . the instrument was negotiated between sophisticated, counseled business people at arm's length." (Id. (citation and quotation marks omitted)). "In such circumstances, courts should be extremely reluctant to interpret an agreement as impliedly stating something which the parties have neglected to specifically include." (Id. (citation and quotation marks omitted)).

A "lease is subject to the rules of construction applicable to any other agreement" [*2](George Backer Mgt. Corp. v. Acme Quilting Co., 46 NY2d 211, 217 [1978]). "[T]he aim is a practical interpretation of the expressions of the parties to the end that there be a realization of [their] reasonable expectations." (Brown Bros. Elec. Contr., Inc. v. Beam Constr. Corp., 41 NY2d 397, 400 [1977]; see also South Road Assoc., LLC v. International Business Machines Corp., 2 AD3d 829, 833 [2d Dep't 2003] ("[t]he language of a contract must be interpreted to reach a practical interpretation of the expressions of the parties so that their reasonable expectations will be realized.")).

Thus, "[t]he rules of construction of contracts require [the court] to adopt an interpretation which gives meaning to every provision of a contract or, in the negative, no provision of a contract should be left without force and effect" (Muzak Corp. v. Hotel Taft Corp., 1 NY2d 42, 46 [1956]; see also Singh v. Atakhanian, 31 AD3d 425, 427 [2d Dept 2006] ("A contract should not be interpreted in such a way as would leave one of its provisions substantially without force or effect.")).

Here, the record is clear that despite Respondent's adamant desire to tender the Premises to Petitioner, there was not a valid surrender pursuant to Article 22 of the Lease. Respondent's strategy evolved from the potential facilitation of a "friendly" Termination and Surrender Agreement based upon a name partner's immediate investiture as a federal judge (2/24/20 Halpern Letter) to a silence as acceptance stratagem (4/8/20 Newberg Letter).

In any event, neither of the two methods satisfies Article 22 of the Lease. That provision of the Lease is clear that nothing short of "an agreement in writing signed by the Lessor" is a valid surrender including the "acceptance of the keys or any other act."

Further, Respondent's argument that Respondent surrendered possession of the Premises because Petitioner allegedly accepted rent from the subtenants in unavailing. To the extent that Petitioner accepted payment from the subtenants, the record is clear that the payment was made indirectly though Respondent. Even assuming arguendo that the subtenant made the payments directly to Petitioner, Respondent's argument would not be persuasive.

Again, the contract between the parties, i.e. Article 27.02 of the Lease, is clear the acceptance of such rent does not substitute the subtenant as the tenant or release Respondent from the Lease. (Id. ("Lessor may, after default by Lessee and expiration of Lessee's time to cure such default, if any, collect rent from the sublessee or occupant.")); see Goldcrest Transp. v. Accross Am. Leasing Corp., 298 AD2d 494, 496 (2d Dep't 2002) ("Goldcrest's direct payment of rent to the landlord in July 1995 did not affect its status because the paramount lease provided that the landlord's acceptance of rent from a subtenant would not constitute an acceptance of the subtenant as tenant, and the landlord accepted this payment without prejudice to its right to seek eviction if negotiations to lease the entire premises to Goldcrest proved unsuccessful."))

Finally, any argument that Petitioner could have surrendered the Premises with the subtenants still in possession is meritless. (Id. at 495 (subtenant was not entitled to continued possession in absence of the landlord's consent due to the breach of the lease by prime tenant)). In the absence of a written agreement accepting Respondent's voluntary surrender, Respondent [*3]could not have surrendered possession of the Premises with a subtenant remaining in possession.

Based upon the foregoing, it is hereby

ORDERED that plaintiff's motion for partial summary judgment on Respondent's Third Affirmative Defense is GRANTED .

The foregoing constitutes the Opinion, Decision, and Order of the Court.

Dated: August 3, 2021

White Plains, New York

HON. JOHN P. COLLINS, JR., J.C.C.