New York Law Review

Tag: Partial Eviction

  • Eastside Exhibition Corp. v. 210 East 86th Street Corp., 18 N.Y.3d 617 (2012): De Minimis Exception to Actual Partial Eviction

    18 N.Y.3d 617 (2012)

    A minimal, inconsequential retaking of leased commercial space by a landlord does not constitute an actual partial eviction warranting total rent abatement if the interference is small and has no demonstrable effect on the tenant’s use and enjoyment of the space.

    Summary

    Eastside Exhibition Corp. leased space from 210 East 86th Street Corp. to operate a movie theater. Years into the lease, the landlord installed cross-bracing between support columns, taking up 12 square feet of a 15,000-19,000 square foot space, to prepare for adding floors to the building. Eastside stopped paying rent, claiming partial eviction, and sought an injunction and rent abatement. The trial court ruled the taking was de minimis and did not justify rent abatement. The Appellate Division found an actual partial eviction but ruled damages, not abatement, were the appropriate remedy, then found no damages. The Court of Appeals affirmed, holding that such a minor intrusion did not warrant the “draconian remedy” of total rent abatement.

    Facts

    Eastside Exhibition Corp. (tenant) leased two floors from 210 East 86th Street Corp. (landlord) for a movie theater. The lease ran from 1998 to 2016.
    In 2002, the landlord installed cross-bracing between existing support columns on both floors without notice to the tenant. The cross-bracing occupied approximately 12 square feet of a 15,000 to 19,000 square foot space. The tenant claimed this altered foot traffic on the first floor and slightly diminished the second-floor waiting area. The tenant ceased paying rent, claiming partial eviction.

    Procedural History

    The tenant sued for an injunction and rent abatement. The Supreme Court initially granted a temporary restraining order. After a nonjury trial, the Supreme Court dismissed the tenant’s claim, finding the taking de minimis and entering judgment for the landlord for unpaid rent.
    The Appellate Division modified, holding that any unauthorized taking constituted eviction but awarded damages instead of abatement and remanded for a damages hearing. On remand, the Supreme Court found no damages. The Appellate Division affirmed, citing law of the case. The Court of Appeals granted leave to appeal.

    Issue(s)

    Whether a minimal and inconsequential retaking of space that has been leased to a commercial tenant constitutes an actual partial eviction relieving the tenant from all obligation to pay rent.

    Holding

    No, because for an intrusion to be considered an actual partial eviction it must interfere in some, more than trivial, manner with the tenant’s use and enjoyment of the premises; a taking of less than one-tenth of one percent of the space, so located that its absence has no measurable effect on the tenant’s use, is de minimis.

    Court’s Reasoning

    The Court recognized the established rule that withholding rent is the proper remedy for partial eviction but distinguished cases where the intrusion is so minimal that total rent abatement is unjustified. It cited Lounsbery v. Snyder for the proposition that not every intrusion warrants full rent abatement, and damages are appropriate when there has been no substantial interference. “If it were necessary, [one] might properly invoke the application of the familiar maxim, `de minimis non curat lex’” (id. at 516). The Court reasoned that applying a full rent abatement rule to a trivial taking is inequitable, especially given modern commercial lease negotiation realities. The Court noted that the intrusion must interfere more than trivially with the tenant’s use. Because the tenant failed to demonstrate any actual damages or loss of enjoyment due to the cross-bracing, the intrusion was de minimis, and neither injunctive nor monetary relief was warranted. The court emphasized that “So far as we know, no cases actually granted a 100% rent abatement for a so called “eviction” as trivial as this one—a taking of less than one-tenth of one percent of the space, so located that its absence has no measurable effect on the tenant’s use.”

  • Barash v. Pennsylvania Terminal Real Estate Corp., 26 N.Y.2d 77 (1970): Measure of Damages for Partial Eviction

    Barash v. Pennsylvania Terminal Real Estate Corp., 26 N.Y.2d 77 (1970)

    In a partial actual eviction, the measure of damages is the difference between the actual rental value of the premises and the rent reserved under the lease, and the award should be reduced to its present value.

    Summary

    Barash, a commercial tenant, sued Pennsylvania Terminal after being forcibly evicted from a portion of its leased premises to accommodate elevator construction for a new tenant. The lower courts awarded treble damages based on the difference between the market rental value and the rent paid under the lease. The New York Court of Appeals reversed, holding that the correct measure of damages for a partial actual eviction is the difference between the market rental value and the rent reserved in the lease, discounted to its present value. Additionally, the court clarified the calculation of lost profits and distinguished between a “nominal” award in the legal sense versus a conservative estimate of damages.

    Facts

    Barash leased the entire eighth floor of a building for commercial art and subleasing purposes under a 10-year lease with escalating rent. Pennsylvania Terminal, the lessor, forcibly ejected Barash from 269 square feet of valuable office space to construct elevators for a new tenant leasing floors below. Barash paid $1.90 per square foot under the lease but the space had an actual value of $5 per square foot.

    Procedural History

    Barash sued Pennsylvania Terminal for forcible ejectment, seeking treble damages. The trial court awarded treble damages, calculating the loss based on the difference between the market rental value ($5/sq ft) and the lease rate ($1.90/sq ft). The Appellate Division modified the judgment by eliminating legal expenses but otherwise affirmed. Pennsylvania Terminal appealed to the New York Court of Appeals.

    Issue(s)

    1. Whether the proper measure of damages for a partial actual eviction is the difference between the market rental value and the rent reserved under the lease, and whether that award should be reduced to its present value.
    2. Whether the award for lost profits was speculative and conjectural.
    3. Whether the trial court’s designation of a $1,000 award as “nominal” was an error.

    Holding

    1. Yes, because the measure of damages is the difference between the actual rental value and the agreed-upon but unpaid rent, and the award should be reduced to its present value to avoid overcompensating the plaintiff.
    2. No, because there was sufficient evidence to support the award for lost profits based on the loss of the employee’s contribution to the company’s income.
    3. No, because the court used the term “nominal” to indicate a conservative estimate of damages, not in its strict legal sense.

    Court’s Reasoning

    The court held that the correct measure of damages for partial eviction is the difference between the market rental value of the space and the rent reserved under the lease. It cited numerous cases, including Peerless Candy Co. v. Halbreich, to support this rule. The court noted that the award should be reduced to its present value, stating, “We think that due regard for an award which neither overcompensates the plaintiff nor unduly penalizes the defendants warrants reduction of the award to its present value.”

    The court rejected the argument that the lost profit award was speculative, finding sufficient evidence to support the award based on the lost employee’s contribution. Citing Wakeman v. Wheeler & Wilson Mfg. Co., the court stated, “When it is certain that damages have been caused by a breach of contract, and the only uncertainty is as to their amount, there can rarely be good reason for refusing, on account of such uncertainty, any damages whatever for the breach.”

    Regarding the $1,000 “nominal” award, the court clarified that the term was used to indicate a conservative estimate of damages, not a nominal award in the strict legal sense (e.g., 6 cents or $1). The court agreed with the Appellate Division that there was sufficient evidence to predicate a finding of loss of profits in the sum of $1,000.

    The court emphasized the importance of correctly calculating damages to avoid unjust enrichment or undue penalty, specifying that “the rent which the tenant would have been liable to pay if he had enjoyed the possession is to be deducted from the value of the use and occupation during the period of the withholding of the possession.”