Ahmed v C.D. Kobsons, Inc.

[*1] Ahmed v C.D. Kobsons, Inc. 2009 NY Slip Op 51307(U) [24 Misc 3d 1208(A)] Decided on May 1, 2009 Supreme Court, New York County Solomon, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on May 1, 2009
Supreme Court, New York County

Abdulla Ahmed, Plaintiff,

against

C.D. Kobsons, Inc., Defendant.



110049/2008



Plaintiff was represented by Steven Landy, Esq., 270 Madison Avenue, Suite 1400, New York, New York 10016

Defendant was represented by Barry S. Schwartz, Esq., 119 West 57th Street, New York, New York 10019

Jane S. Solomon, J.

In July 2008, by order to show cause, Plaintiff Abdulla Ahmed ("Ahmed"), a tenant, brought this action against defendant C.D. Kobsons, Inc. ("C.D."), his landlord, for a declaration that he properly exercised an option to renew in their lease. He sought a preliminary injunction to prevent the lease from expiring during the pendency of the action. The order to show cause granted a temporary restraining order tolling the expiration until the hearing.

When the motion finally was fully submitted, the termination date in the lease had passed. Accordingly, an injunction further tolling the expiration, pending this decision, was granted on a modest bond and a direction that Ahmed pay at the monthly rate set forth in the renewal schedule.

As explained below, the motion is denied and the stay is lifted.

FACTUAL BACKGROUND

The premises consist of a store and basement located at 311 Tenth Avenue, New York, New York, which were let pursuant to a lease that was made in May 2003 and was to expire on October 31, [*2]2008. Paragraph 40(b) sets forth the renewal option at issue here:

Provided that Tenant shall [not] be delinquent in the payment of rent, and further provided that Tenant shall not be in material default under any other provision of this lease, Tenant shall have the option to extend this lease for an additional period of five years from November 1, 2008 to October 31, 2013 at the monthly rents set forth in the following schedule.

(Rider to Lease, attached as Exh. B to Affidavit of Abdulla Ahmed.)

Ahmed attempted to exercise his renewal option by letter dated June 10, 2008, but C.D. rejected it, claiming that he was delinquent in the payment of rent and additional rent and that he had materially breached the lease. Ahmed then commenced this action for a declaration that he properly renewed the lease (first cause of action). He also asserts causes of action for malicious prosecution (second cause of action) and prima facie tort (third cause of action) based on C.D.'s commencement of previous landlord/tenant proceedings against him.

DISCUSSION

"A preliminary injunction may be granted . . . when the party seeking such relief demonstrates: (1) a likelihood of ultimate success on the merits; (2) the prospect of irreparable injury if the provisional relief is withheld; and (3) a balance of equities tipping in the moving party's favor." Doe v. Axelrod, 73 NY2d 748, 750 (1988). Here, Ahmed is not entitled to a preliminary injunction because he has not demonstrated a likelihood of success on the merits, and the equities are in C.D.'s favor.

C.D. gives three principal reasons why Ahmed is not entitled to renew his lease: (1) Ahmed has habitually paid his rent and water charges late; (2) Ahmed has incurred sanitation fines in the amount of $6,625 because of his failure to maintain the premises in a clean condition and has not reimbursed C.D. for them; and (3) Ahmed has failed to reimburse C.D. for sign permit fees in the amount of $1,020.53.

Late Rent

The lease requires payment on the first of the month, but copies of rental checks submitted by C.D. show that Ahmedwas late in paying his rent every month from January 2008 to July 2008. Further, the envelopes in which the checks were mailed show that some of them were postmarked even later. Copies of checks from 2003 to 2007 establish that Ahmed has a long history of late payments. Ahmed also delivered checks that could not be [*3]cashed because they were either misspelled or unsigned on several occasions; C.D. alleges that this was a delay tactic to avoid timely payment. Significantly, in a letter dated March 9, 2006, C.D. advised Ahmed that his late payment of rent would affect his ability to renew his lease. (Letter from C.D. to Ahmed, attached as Exh. E to Affidavit in Opposition of Doungrat Eamtrakul ("Eamtrakul Affidavit").)

Water Charges

The lease requires Ahmed to pay C.D. for his water usage as additional rent after presentation of a bill. (Lease, ¶ 28; Rider to Lease, ¶ 50(b)(ii).) C.D. has shown that Ahmed was significantly late in paying his water charges in 2005, 2006, and 2007. C.D. was forced to send numerous collection letters, a default notice, and a three-day demand to secure payment. In August 2007, Ahmed paid C.D. for overdue water charges for March through July of that year, but refused to pay a late fee imposed by the lease. (Letter from C.D. to Ahmed dated January 9, 2008, attached as Exh. E to Eamtrakul Affidavit; Rider to Lease, ¶ 65.)

C.D. notified Ahmed that his late payment of additional rent for water charges was adversely impacting his ability to renew his lease. In a letter demanding payment for overdue water charges, C.D. advised: "Please note that we are not considering renewal [of] your lease due to patterns of your late payments. (Letter from C.D. to Ahmed dated February 27, 2006, attached as Exh. E to Eamtrakul Affidavit.)

Sanitation Fines

The lease requires Ahmed to keep his store and the area in front of it in a clean condition at his sole cost and expense in compliance with governmental regulations. (Rider to Lease,

¶ 49(a) and (b).) The lease also states that it is an "essential inducement" to C.D. that Ahmed agrees that "no supplies or deliveries, nor any of [Ahmed's] refuse or rubbish, shall be kept, or permitted to be kept in any area outside of the [store]." (Rider to Lease, ¶ 49(c).) The lease defines "additional rent" as including all "sums which [Ahmed] is obligated to pay to [C.D.] or which [C.D.] shall expend on behalf of [Ahmed]." (Rider to Lease, ¶ 56.)

C.D.'s president, Doungrat Eamtrakul, states that twenty-three separate sanitation violations totaling $6,625 were issued because Ahmed "keeps the outside of the premises filthy" in violation of the lease. (Eamtrakul Affidavit, ¶ 8.) He attaches copies of the violations, which show that they were issued from November 2003 to October 2007 and were for, among other things, sidewalk trash and improper storage of garbage receptacles. In a letter dated March 18, 2008, C.D. requested that Ahmed reimburse it for the sanitation fines, and copies of the violation notices were attached to the letter. However, Ahmed has refused to [*4]reimburse C.D. for any of the fines, stating that additional back-up documentation is necessary.

Sign Permit Fees

The lease provides that Ahmed must pay for sign permit fees. (Rider to Lease, ¶ 62(e).) C.D. has shown that it paid sign permit fees in the aggregate amount of $1,020.53, but that Ahmed has refused to reimburse C.D. On March 18, 2008, C.D. wrote to Ahmed requesting payment, but Ahmed has not complied.

Ahmed Is Not Entitled to a Renewal

"The general rule is that if a tenant's right to renew is conditional . . . it cannot be exercised validly unless the tenant is in full compliance with the conditions." Jefpaul Garage Corp. v. Presbyterian Hosp. in City of New York, 61 NY2d 442, 448 (1984). Conditional renewal clauses do not guarantee a new term to a tenant; they are designed to ensure that a tenant only receives a renewal if the terms of the lease have been honored.

Here, the renewal clause provides that Ahmed can only renew the lease if he is not delinquent in the payment of rent and is not in material default of any other provision of the lease. However, when he attempted to exercise his renewal option, Ahmed was delinquent in the payment of $6,625 in additional rent for sanitation fines and $1,020.53 in additional rent for sign permit fees. He also materially breached the lease by abdicating his obligation to keep the premises in a clean condition and by repeatedly paying his rent and water charges late throughout his tenancy. Moreover, under the circumstances, Ahmed is not entitled to equitable relief. See TSS-Seedman's, Inc. v. Nicholas, 143 AD2d 223, 224 (2nd Dept. 1988); cf. Denice v. Lin-Ed Enterprise, Inc., 2003 NY Slip Op. 51487(U), 1 Misc 3d 903(A) (Civ. Ct., Richmond Co. 2003).

With respect to Ahmed's long history of making late payments, it is well established that an "agreement to pay rent on a certain date is generally a material term of a lease." Madison Ave. Leasehold, LLC v. Madison Bentley Assocs. LLC, 8 NY3d 59, 65 (2006). It is an essential part of the deal because a landlord often " relies on timely payment of rent to meet its own outstanding obligations, such as a mortgage on the demised premises.'" Id. (quoting Fifty States Mgt. Corp. v. Pioneer Auto Parks, Inc., 46 NY2d 573, 578 (1979)). Here, Ahmed flouted the provision in the lease that required him to pay his rent on the first of the month and was seriously behind in his water charges.

Ahmed does not offer any explanation for his habitual lateness; nor does he submit any evidence to show that he does not owe C.D. for the sanitation fines or the sign permit fees.

His principal argument is that C.D. cannot reject his renewal notice without having previously sent a formal notice to cure [*5]detailing the grounds for the rejection.

In 42nd Street Dev. Corp. v. Actors & Directors Lab, Inc., the court held that the tenants were not entitled to exercise their renewal options because they were in default in the payment of rent and additional rent. NYLJ, May 9, 1989, at 21, col. 2 (App. Term, 1st Dept. 1989). The court further held: "The fact that landlord did not bring nonpayment proceedings or serve default notices (none were required for nonpayment of rent) during the term of the leases does not mean that landlord waived its right to reject [the] exercise of the options to renew upon the ground that the tenants were in arrears." Id.

In Jefpaul Garage Corp., the court held that a landlord who continues to accept rent with knowledge of lease violations is not necessarily precluded from declining to renew the lease, noting that a "landlord may desire that [a] tenant complete the term but not wish to extend it for a variety of reasons." 61 NY2d 442, 448. The court explained that the "refusal to extend results not in a forfeiture for the tenant but only in the loss of the privilege [of the extension] because the conditions precedent to enjoyment of the privilege have not been met." Id.

Here, C.D. is not forced to renew Ahmed's tenancy because it did not serve a notice to cure or press a landlord/tenant proceeding for the violations that support its

rejection of Ahmed's renewal notice. The renewal clause itself does not require C.D. to give notice of a rent delinquency or material default that would bar renewal.

The lease only requires a notice to cure when the landlord seeks to cancel the lease. (Lease, ¶ 17(1).) However, a notice to cure is not required when the tenant owes rent or additional rent. (Lease, ¶ 17(2).) Nor is a notice to cure necessarily required when a tenant is chronically late in the payment of rent and such notice would have been futile. See 326-330 East 35th Street Assoc. v. Sofizade, 191 Misc 2d 329, 330-31 (App. Term, 1st Dept. 2002) (applying Rent Stabilization Code § 2524.3 in the context of a residential lease); National Shoes, Inc. v. Annex Camera and Elecs., Inc., 114 Misc 2d 751 (Civ. Ct., NY Co. 1982) (commercial lease).

Here, Ahmed had notice that his late payment of rent and water charges was impacting his ability to renew the lease, and service of a formal notice to cure was not required in order to deny Ahmed an extension. Lastly, C.D.'s argument that Ahmed cannot be granted a preliminary injunction because he does not seek a permanent injunction in his complaint is rendered moot by the preceding analysis.

CONCLUSION

Accordingly, it hereby is

ORDERED that Ahmed's motion for a preliminary injunction is denied; and it further is

ORDERED that the Court's Interim Decision and Order dated September 15, 2008 is [*6]replaced with this Decision and Order and the injunction is vacated upon service of a copy hereof with notice of entry; and it further is

ORDERED that counsel shall appear in Part 55 for a Preliminary Conference on June 1, 2009 at noon to schedule the remaining proceedings herein.

Dated:May 1, 2009

ENTER:

/s

J.S.C.