Federal Realty Inv. Trust v Nick's Tailors & Cleaners, Inc.
Annotate this CaseDecided on April 5, 2005
District Court of Suffolk County, Fourth District
Federal Realty Investment Trust c/o LEVIN MANAGEMENT CORPORATION, Petitioner,
against
Nick's Tailors & Cleaners, Inc., Respondent.
SMLT 241-04
Patrick J. Barton, J.
Petitioner Federal Realty Investment Trust (hereinafter
Federal)commenced this nonpayment proceeding against respondent Nick's Tailors & Cleaners (hereinafter Nick's) to recover October 2004 minimum rent in the amount of $2136.39, as well as the following other items which it alleges constitutes additional rent under the lease: common area maintenance in the amount of $516.33; real estate taxes in the amount of $878.88; water/sewer in the amount of $8478.06; nsf service charge in the amount of $50.00 and legal fees in the amount of $1500.00.
In 1993, Net Realty Holding Trust, petitioner's predecessor-in-interest, entered into a 5 year lease commencing February 1, 1994, with respondent, for a part of the Hauppauge Shopping Center located at 387 Nesconset Highway, Smithtown, New York for the purpose of conducting the business of general dry cleaning. Thereafter, the lease was renewed for an additional five years.
By letter dated February 9, 2003, Federal informed Nick's that it was responsible for its proportionate share of the cost of maintaining cesspool system No.2 based upon its water consumption for the year 2002. The letter stated that the total cost of maintaining and servicing system #2 was $9059.75 and that out of the 8 tenants connected to the system, Nick's water [*2]consumption constituted 36% of the total water consumption. As a result petitioner claimed that Nick's was responsible for the sum of $3261.51 and requested payment within thirty (30) days. In a letter dated June 26, 2003, Federal acknowledged receipt of Nick's letter dated April 21, 2003 regarding the cesspool maintenance invoicing and informed Nick's that the charges were based solely on water consumption and discounted Nick's comments regarding water flow from another tenant and problems with the cesspool. The record is devoid of any further written communications between the parties, although Nick's by its president claimed he repeatedly advised petitioner that it had no right to charge for these expenses.
Notwithstanding the foregoing, on March 26, 2003 petitioner entered into a renewal lease with respondent for a 10 year term effective February 1, 2004. Said renewal lease was amended and supplemented by a lease modification agreement dated September 22, 2003.
It is undisputed that on the return date of the petition respondent paid October minimum rent as well as the other additional rent due and owing except for the items of additional rent allocated to water/sewer. The parties conceded in open court as well as in their respective papers that the sole issue for the Court to determine is whether the respondent is obligated to pay for the required maintenance and servicing of the cesspool system used by the respondent based upon its water consumption. It is respondent's position that the cesspool system has not been functioning properly for several years and that petitioner, rather than replace the existing system is attempting to pass on the cost to maintain the system onto the tenants connected to this system. Petitioner, by its property manager, refutes these contentions and claims that the problem is that the tenants' use exceeds the water consumption capacity of cesspool system #2. However, before reaching this issue, the Court must first address an additional issue raised by respondent in its motion.
Respondent claims that it was not yet in default in the payment of October 2004 minimum rent as section 16.01 of the lease provides for a five day curative period. With respect to the other charges, respondent claims that petitioner misapplied its payment of 1350.68 to the water/sewer charges that are in dispute and therefore no additional rent is due at all. However, in the absence
of a determination by the Court concerning the tenant's responsi- bility for the water/sewer charges based upon water consumption, petitioner is not precluded from seeking these charges in its petition notwithstanding the fact that respondent believes it is not responsible for the charges. In addition, respondent's reliance on section 16.01 of the lease is misplaced as that section applies only where the landlord has elected to terminate the lease pursuant to a conditional limitation (see, Broadway 54th Improvement Corp. v. Hit Factory Broadway, Inc.,NYLJ, at 29,col 4,1/20/98). However, since the petition was verified on October 1, 2004, and pursuant to section 5.02 of the lease minimum rent is due on the first day of each calendar month, respondent was not in default in the payment of October minimum rent as "a tenant has until midnight of the day on which rent is due ... to pay it" (1 Dolan, Rasch's Landlord and Tenant-Summary Proceedings § 12:20, at 557 [4th ed]). Therefore the petition is premature as to the October minimum rent (2 Dolan, Rasch's Landlord and Tenant-Summary Proceedings § 32:8, at 495 [4th ed]).
Initially, with respect to any water/sewer charges sought by petitioner that accrued prior to [*3]February 1, 2004, the Court notes that the parties have overlooked the fact that the lease then in effect governs with respect to those charges. Although denominated as a renewal lease, the lease now in effect is not a continuation of the prior lease and is entirely different from the prior lease. Consequently, petitioner cannot base a summary proceeding on an expired lease to collect these allegedly outstanding charges when there is now a new lease in effect. Rather, petitioner, is relegated to a plenary action. Even assuming petitioner can seek these charges in the instant proceeding, there would still be no basis to impose any liability upon Nick's for these charges as paragraph 22 of the expired lease states in pertinent part: 22. COMMON AREA MAINTENANCE PAYMENT: Lessee, as additional rent, agrees to pay to Lessor, without offset or deduction, in equal monthly installments on the first day of each and every calendar month during the term hereof (pro-rata for that portion of the calendar month in which the term hereof shall commence, if such portion is shorter than a full month) as its share of the cost to Lessor of keeping and maintaining the parking areas and other common facilities, as set forth in Article 21, the annual amount equal to the greater of (a) Lessee's pro-rata share as [which pursuant to paragraph 20 of the lease is 1.39%, i.e., respondents leased the floor area of the shopping center] hereinafter of all costs and expenses of every kind and nature as may be paid, incurred or amortized by Lessor ... ; or (b) $1,965.00 ... limited to:... costs and expenses of planting, replanting and replacing flowers and landscaping; water and sewerage charges [emphasis added].
Since petitioner concedes that the cesspool system is an instrument of sewerage (see, Kopp v. Barnes, 10 AD2d 532; ECL 390103[2]), under the terms of the expired lease, respondent would only have been responsible for its pro rata share of the charges attributable to sewerage in addition to any other common area maintenance charges or $1965.00, which ever was greater. To the extent petitioner may seek to impose liability under paragraph 19 which relates to utility charges, reliance on that section is wholly inappropriate since it specifically relates to charges for services supplied by a utility company and the subject leased premises is not connected to a public sewer.
Moreover, although not raised by respondent, the Court finds that petitioner waived the right to collect these sewerage charges. Since petitioner not only renewed the lease with respondent despite the fact respondent did not comply with its prior demand for these charges, it is undisputed that petitioner continued to accept the minimum rent from February 9, 2003 up to and including the
commencement of the renewal lease without ever attempting to enforce its rights under the expired lease to collect these charges. Although paragraph 38 of the lease contains a "no waiver clause", the Court finds that petitioner waived its right to seek these charges as the existence of a nonwaiver clause does not in itself preclude waiver of a contract clause (Dice v. Inwood Hills Condominium, 237 AD2d 403, 404). It is well established that the acceptance of rent with knowledge of particular conduct which is claimed to be a default constitutes a waiver by the landlord of the default (see, Jefpaul Garage Corp. v. Presbyterian Hosp., 61 NY2d 442, 448, 474 N.Y.S.2d 458, 462 N.E.2d 1176; Lee v. Wright,108 AD2d 678,680). Petitioner, by renewing the lease and having continued to accept the minimum rent without making any effort to enforce its rights under the expired lease for the collection of the sewerage charges allegedly due as additional rent, has acted in a manner wholly [*4]inconsistent with enforcement of the no waiver clause (see, Simon & Son Upholstery v. 601 West Associates, LLC, 268 AD2d 359).
With respect to the sewerage charges that accrued after the
effective date of the renewal lease, i.e., February 1, 2004, the Court finds petitioner's reliance on Article 7 of the lease for the reason previously given, i.e.,that the provision specifically relates to charges for services supplied by a utility company and the subject leased premises is not connected to a public sewer. In fact, since the term utility is defined as a "business enterprise that performs essential public service and that is subject to governmental regulation"(Black's Law Dictionary [8th ed 2004]), the term utility charges certainly connotes charges for necessary services rendered by a public utility which is defined as "business entity providing necessary services to the public ..." (Black's Law Dictionary [8th ed 2004], supra).
Likewise, liability cannot be imposed under lease section 10.02 which governs repairs and maintenance by the tenant since that provision only applies to items which "exclusively serve the Leased Premises" and cesspool system #2 does not exclusively serve the leased premises. Rather, pursuant to lease section 10.01, it is the landlord who is responsible for the maintenance and repairs to the common areas of the shopping center and the cesspool, which constitutes an appurtenance common to the eight tenants connected to the cesspool (see, Finkelstein v. Huner,77 App Div 424, affd 179 NY 548), fails within the ambit of this section as the pumping of a cesspool constitutes an ordinary repair (Parmele v. Pulvola Chemical Co., 31 Misc. 818).
It is respondent's contention that the tenant's contention that the provision governing the tenant's responsibility for sewer charges are found in section 6.03 of the lease which pertains to the tenant's share of operating costs for common areas. Pursuant to section 6.03, the tenant's share of operating costs is arrived at by multiplying the total amount of operating costs by the Tenant's Proportionate Share which under lease section 1.02(K)is the floor area of the leased premises divided by the floor area of the shopping center which in respondent's case is 1.39%.
Pursuant to section 6.03(B), operating costs are defined as "all costs and expenses associated with the operation, equipping, painting, maintenance and repair of the Shopping Center including the costs and expenses of: ... (ii) operating,equipping, maintaining, repairing and replacing ... sanitary drainage systems . . ." Inasmuch as the cesspool is the receptacle that ultimately receives the discharge of sewage from the sanitary drainage system, it is an integral part of said system and the Court agrees with respondent that this section is applicable and respondent, under the present lease, is only responsible for 1.39% of the sewage charges accruing on or after February 1, 2004. In this regard, the Court notes that despite the fact that petitioner was aware of Nick's large water consumption prior to the execution of the present lease, it failed to include any provision in the lease imposing liability for sewage charges based upon water consumption rather than the tenant's proportionate share of such charges. In the absence of such a specific provision, no additional liability may be imposed upon the tenant (see, Allstate Mgt. Corp. v. Grand Union Co., 142 AD2d 344). [*5]
To the extent respondent seeks an order directing that the sum of $1350.68 applied to sewage charges be credited against future rent, that application must be denied as such a request is in the nature of injunctive relief which is beyond the jurisdiction of this Court (UDCA § 209[a]; Arbern Realty Co. v. Clay Craft Planters Co., Inc., 188 Misc 2d 314 [App. Term, 9th & 10th Jud. Dists.]).
Finally, with respect to attorney's fees, the Court concludes that the tenant was clearly the prevailing party herein since it was successful with respect to the central relief sought (see, Nestor v. McDowell, 81 NY2d 410, 415; 25 E. 83 Corp. V. 83rd Street Assocs., 213 AD2d 269). Consequently, pursuant to section 17.04 of the lease, respondent is entitled to reasonable attorneys' fees to be determined at a hearing before this Court.
Accordingly, respondent's motion is granted solely to the
extent of dismissing the petition and awarding respondent
reasonable attorneys' fees. That branch of the motion seeking an order directing petitioner credit respondent the payment of
$1350.68 towards future rent is denied. The Clerk of the Court is directed to place the matter on the landlord and tenant calendar for a hearing on attorneys' fees.
New Court Date:
Dated:
J.D.C.
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