Colonial Plaza Corp. v Steele

[*1] Colonial Plaza Corp. v Steele 2006 NY Slip Op 52065(U) [13 Misc 3d 1230(A)] Decided on October 6, 2006 Justice Court of Town of Hyde Park, Dutchess County Steinberg, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. As corrected in part through October 31, 2006; it will not be published in the printed Official Reports.

Decided on October 6, 2006
Justice Court of Town of Hyde Park, Dutchess County

Colonial Plaza Corp., Petitioner-Landlord,

against

Douglas Steele and Kristopher Pisano d/b/a/ Toucan Grill, Respondents-Tenants.



06-04-0164



To: Frank M. Mora, Esq.

Attorney for Petitioner

Colonial Plaza Corp.

John P. Stonner, Esq.

Attorney for Respondents

Douglas Steele and Kristopher Pisano

David L. Steinberg, J.

This is a summary proceeding to recover possession of real property for nonpayment pursuant to Real Property Actions and Proceedings Law, Article 7. By Notice of Petition and Petition, dated April 14, 2006, petitioner-landlord Colonial Plaza Corp. ("Petitioner") sought from Douglas Steele and Kristopher Pisano d/b/a Toucan Grill ("Respondents") a warrant of eviction and a judgment for $3771.66 constituting rent due, including late fees, as well as additional rent as may be due as of the date of the judgment, fair value of the use and occupancy, costs and disbursements and attorney's fees. On May 9, 2006, petitioner moved to amend the petition to seek additional rent from respondents in the nature of common area maintenance (CAM) charges and accelerated rent through the end of the term of the lease. The breakdown of the amount that petitioner seeks is as follows:

Prior excess payment($50.00) 3 Day Notice fee (Douglas)$23.18 3 Day Notice fee (Pisano)23.18 April, 2006 rent3725.30 April, 2006 late fee50.00 Common area maintenance charges (CAM)12,362.38 (October 1, 2005-March 31, 2006) May, 2006 rent$3725.30 May, 2006 late fee50.00 $19,909.34 Accelerated rent for June, 2006 through November, 2006) ($3725.30 x 6 months)22,351.80 $42,261.14

On May 9, 2006, the parties entered into a stipulation that the court had jurisdiction over [*2]the proceedings and the respondents. As stated, the petitioner moved to amend the petition to include a claim for the common area maintenance (CAM) charges of $12,362.38 and accelerated rent of $22,351.80 representing the six months rent due for the balance of the lease from June through November, 2006 due to Respondent's breach of the lease. The respondents consented to a Warrant of Eviction being issued. It was further agreed upon between the parties that the Warrant of Eviction would be signed and stayed until May 15, 2006 with the Court issuing a Judgment in an amount to be determined following written submissions by counsel as to the parties' respective legal positions regarding the amount due. Accordingly, no judgment was issued at the time. The respondents vacated the premises on or about May 15, 2006.

The Court has received letter briefs from John P. Stonner, Esq., attorney for respondents, dated May 23, 2006, and Frank M. Mora, Esq., attorney for petitioner, dated June 13, 2006.

Facts

On November 19, 2004, the parties entered into a written lease for commercial premises for a building known as Colonial Plaza, 3979 Albany Post Road, Hyde Park, New York for a restaurant with the right to obtain a license for the on-premises consumption of alcohol. The two year lease period commenced on December 1, 2004 and terminated on November 30, 2006. The annual rent in the first year from December 1, 2004 through November 30, 2005 was $42,574.80 in monthly installments of $3547.90. The annual rent in the second year from December 1, 2005 through November 30, 2006 was $44,703.60 in monthly installments of $3725.30. There is a $50.00 late charge if the rent is not paid by the 10th of the month. The lease further provides for respondents to pay a proportionate share of the real estate taxes and expressly denominates same as "additional rent" (¶49 in the Rider to Lease). The lease also provides for tenants' payment of Common Area Expenses (¶50 in the Rider to Lease) for the gross costs of the operation of the common areas of the shopping center including insurance, cleaning, snow removal, lighting, landscaping, paving, painting, repairs and maintenance. Lease, ¶50. These expenses are not expressly deemed to be additional rent.

On or about April 4, 2006, a Three Day Notice was served upon respondents seeking payment for all outstanding rent due in the amount of $3784.36 including late fees and Three Day Notice fees.

On or about April 14, 2006, petitioner commenced the instant summary proceeding seeking possession of the premises and a judgment for $3771.66 constituting rent due as of that date, such additional rent as may be due as of the date a judgment is rendered, together with attorney's fees.

On April 24, 2006, the petitioner submitted a statement of common area charges with copies of all pertinent bills for respondents' store at Colonial Plaza for the six month period of October 1, 2005 - March 31, 2006. (Petitioner's Exh. "2").

The statement of common area charges and proportionate share of the charges were as follows:

Dutchess County Water and Wastewater Authority 4/01/05 - 7/31/05$146.00 8/01/05 - 11/30/05$650.95 $796.95100%$796.95 Central Hudson (parking area lights) 8/16/05 - 10/14/05$465.72 10/14/05 - 12/15/05$401.24 12/15/15 - 2/14/06$426.24 $1,293.2027.2%$351.75 Maintenance, mowing and plowing (10/1/05 Invoices) July, 2005 mow/trim$324.00 Sept. 8th debris removal$260.00 Sept. mow/trim$325.00 (11/1/05 Invoice) Oct., 2005 monthly maintenance$325.00 (12/1/05 Invoice) Nov. 2005 monthly maintenance$325.00 (1/19/06 Invoice) Dec., 2005 monthly maintenance $325.00 (2/1/06 Invoice) 1/5/06 extra clean-up of debris$65.00 (3/15/06 Invoice) Jan., Feb., March, 2006 monthly$390.00 clean up City of Poughkeepsie (3/15/06 - household debris)$8.25 Home Depot (10/18-19/05 Invoices)$41.40 Pioneering Blacktopping 10/26/05$736.10 Dave's Mowing Service (plowing and sanding) 12/27/05 Invoice$1526.33 1/31/06 Invoice$2273.25 3/4/06 Invoice$1169.10$4,968.68 Gloede Neon Signs 3/14/06 Invoice$86.50 Ulster Electric Supply Co. 9/27/05 Invoice$58.74 Veith Enterprises, Inc. 9/13/05 Invoice$239.97 River Management 10/18/05 - 3/15/06$650.00$9,128.6427.2%$2,483.00 Simplex Grinnell 1/24/06 Fire extinguisher inspection $813.1627.2%$221.18 Hyde Park School Taxes 7/1/05 - 6/30/06$19,897.5527.2%$5,412.13 Hyde Park Fire and Water 1/1/06 - 12/31/06$1412.8227.2%$384.29 County/Town Property Taxes 1/1/06 - 12/31/06$9974.5727.2%$2,713.08$12,362.38

The obligation for respondents to pay a proportionate share of the real estate taxes and common area expenses is set forth in the lease rider at ¶49 and ¶50.

The petitioner contends that provisions in the lease, at ¶ Sixth and ¶ Seventh render respondents liable for rent and common area maintenance charges until the lease term ends on November 30, 2006. These lease provisions state, in pertinent part:

In the event that the term of this lease shall expire as above

in this subdivision "Sixth" provided, or terminate by summary

proceedings or otherwise, and if the Landlord shall not re-let

the demised premises for the Landlord's own account, then

whether or not the premises be re-let, the tenant shall remain

liable for, and the Tenant hereby agrees to pay the Landlord,

until such time when this lease would have expired but for such

termination or expiration, the equivalent of the amount of all

of the rent and "additional rent" reserved herein..."

Lease, ¶ Sixth

"Any amount paid or expense incurred by the Landlord

as in this subdivision of this lease provided, and any [*3]

amount to which the Tenant shall at any time be in

default for or in respect to the use of water, electric

current or sprinkler supervisory services, and any

expense incurred or sum of money paid by the

Landlord by reason of the failure of the Tenant to

comply with any provision hereof, or in defending

any such action, shall be deemed to be "additional

rent" for the demised premises..."

Lease, ¶ Seventh

Relying on the above language, petitioner argues that all the sums listed above are due and payable in this summary proceeding for breach of the lease for nonpayment. He agrees that the above 2006 property and fire/water tax bills must be pro-rated, but contends it should be to the lease expiration of November 30, 2006.

Respondents oppose amendment of the petition. They argue that the Warrant of Eviction canceled the lease and annulled the landlord-tenant relationship. They refer the court to RPAPL §749(3) which states:

"The issuing of a warrant for the removal of a tenant

cancels the agreement under which the person removed

held the premises, and annuls the relation of landlord

and tenant, but nothing contained herein shall deprive

the court of the power to vacate such warrant for good

cause shown prior to the execution thereof. Petitioner

may recover by action any sum of money which was payable

at the time the special proceeding was commenced and

the reasonable value of the use and occupation to the time

the warrant was issued, for any period of time with respect

to which the agreement does not make any provision for

payment of rent."

Thus, respondents contend that the lease was terminated on April 14, 2006 when the notice of petition was issued and the petitioner may not recover subsequent "installments" for which the lease provides. Respondents maintain that no acceleration clause existed in the lease. Further, they contend that the breach of an agreement to pay money in installments is not a breach of an entire agreement, and will not permit a recovery of all the damages in advance. Respondents concede April and May, 2006 rent and late fees are due and owing to petitioner in the amount of $7496.96. However, they argue that the claims above and beyond these amounts, which are sought to be added to the petition by amendment, cannot be made a part of this proceeding as a matter of law.

Petitioner counters that respondents are trying to rewrite the May 9th Stipulation in that the parties in no way sought by the Stipulation and the consequent Warrant of Eviction to cancel what is owed to petitioner. The Warrant was a "back-up" in case respondents did not vacate. Since they did vacate, it was not executed. In essence, petitioner cries, "foul" regarding [*4]respondent's argument as to the effect of what transpired on May 9th and urges the court to enforce the lease provisions of additional rent due.

Determination

This summary proceeding raises issues relating to whether common area maintenance (CAM) charges and accelerated rent upon a breach of the lease may be included in a judgment as unpaid rent. For the reasons that follow, the real estate taxes may be included, but the other CAM charges and the accelerated rent may not be included in the judgment.

Common Area Maintenance (CAM) Charges

A justice court is of limited jurisdiction whose powers are prescribed by the New York State Legislature through Article VI, Section 17 of the New York State Constitution. With respect to summary proceedings, the Legislature has prescribed that justice courts shall have jurisdiction over "Proceedings to recover possession of real property located in whole or in part within the municipality, to remove tenants therefrom, and to render judgment for rent due without regard to amount." UJCA §204. RPAPL §701 (1) provides that "a special proceeding to recover real property may be maintained in a county court, the court of a police justice of the village, a justice court, a court of civil jurisdiction in a city, or a district court."

¶49 of the Rider to the Lease provides that the "[t]enant will pay to the Landlord, for each calendar year, as additional rent, its share of real estate taxes....". This is clear and unambiguous language regarding the proportionate payment of real estate taxes being considered additional rent.

¶50 of the Rider to the Lease provides that "[tenant] will reimburse the Landlord for its share of the Landlord's gross costs of the operation of the common areas of the shopping center..." It does not expressly refer to such costs as additional rent. Rather, petitioner relies on the lease provision at ¶Seventh to categorize the obligations set forth in ¶50 as additional rent. The 326 words contained in the four run-on sentences of ¶Seventh of the Lease refer to circumstances when the Landlord may take action in the event of a default by the tenant in the performance of any contractual obligation. In such case, the Landlord may perform such obligations or pay any judgment, lien or expense upon which the Tenant is in default and claim such amount due him as "additional rent."

¶Seventh is not easily aligned with ¶50. The respondents were not in default in their common area maintenance charges. In fact, the charges in question for the six month period of October 1, 2005 - March 31, 2006 were sent to respondents with a cover letter of April 24, 2006, ten days after the instant proceeding was commenced. (Petitioner's Exh. "2") It has never been alleged by petitioner in this proceeding that demand was previously made for these charges, or that respondents were in default, or had failed to comply with the payment of the common area maintenance charges.

The common area maintenance charges under ¶50 were not designated "additional rent" expressly within that paragraph. The court concludes that the language in ¶Seventh that "Any amount paid or expense incurred by the Landlord as in this subdivision of this lease provided, and any amount as to which the Tenant shall at any time be in default......and any expense incurred or sum of money paid by the Landlord by reason of the failure of the Tenant to comply with the provision hereof, or in defending any such action,...." (emphasis added) do not apply to the Tenant's obligation set forth in ¶50. [*5]

The primary purpose of a summary nonpayment proceeding pursuant to RPAPL §711 is to provide a landlord with an inexpensive, expeditious and simple means to obtain possession of the leased premises for nonpayment of rent. Under this notion, courts have held that claims arising from a lease which are unrelated to rent or additional rent cannot be maintained in a summary proceeding. In Rector of Trinity Church v. Chung King House of Metal, Inc., 193 Misc 2d 44, 49-50 (Civil Ct., NY Co., 2002), the court held that in a commercial nonpayment summary proceeding, it lacked subject matter jurisdiction to award the landlord monetary damages on its separate ancillary claim for electricity charges. The parties' commercial lease defined "additional rent" as expenses incurred by the landlord as a result of "instituting, prosecuting or defending any action or proceeding" by reason of the tenants' default. The electricity charges sought by the landlord did not fall within that definition of "additional rent." see also, Matter of Binghamton Housing Auth. v. Douglas, 217 AD2d 897 (3rd Dept., 1995) (landlord my seek judgment for money owed for rent in summary proceedings, but "not other charges."); Matter of Petrakakis v. Crown Hotels, 3 AD2d 635 (3rd Dept., 1956); Atkinson v. Surinder K. Trehan, 70 Misc 2d 614 (1972) (failure to pay taxes cannot support summary proceeding where lease did not identify taxes to be rent); compare, Roosevelt Island Assoc. v. Donald, 4 Misc 3d 21 (App. Term, 1st Dept., 2004) (since utility charges were designated as "additional rent" under the lease, they are properly recoverable in a nonpayment summary proceeding).

Based upon the foregoing, the common area maintenance charges, other than the real estate taxes, are not properly recoverable in this proceeding. The real estate taxes are recoverable until May 15, 2006 when the respondents vacated the premises.

Accelerated rent

Although this court has jurisdiction to render a judgment for unpaid rent [RPAPL §711 (2)]; Matter of Bedford Gardens Co. v. Silberstein, et al., 269 AD2d 445 (2nd Dept., 2000), the issue remains whether the accelerated rent under an accelerated rent clause included in a lease falls into the same class as unpaid rent due and owing and thereby eligible to be reduced to judgment by a Justice Court. A landlord and tenant may contract for accelerated rents due upon termination of the landlord-tenant relationship. Olim Realty Corp. v. Big John's Moving, 250 AD2d 744 (2nd Dept., 1998). The Court of Appeals has held that a landlord attempting to collect accelerated rents has no duty to mitigate his damages. Holy Props. v. Cole Prods., 87 NY2d 130 (1995). The landlord in Holy Props. pursued an action for accelerated rents in the Supreme Court after obtaining a judgment and a warrant of eviction in a separate summary proceeding. As a result, the Court did not have to deal with the issue of subject matter jurisdiction. The Court of Appeals differentiated between leases and contracts and held that a party may be liable for accelerated rent only if it agreed to such an obligation in writing. This conclusion implies that an accelerated rent provision is not a creature of statute that would embody its collection in the realm of a summary proceeding, but rather a creature of contract which would require a separate plenary action.

In Marketplace v. David Smith, DBA The Hippo Cafe, et al., 181 Misc 2d 440 (Henrietta Town Court, Monroe Co., 1999), the landlord commenced a nonpayment summary proceeding to recover possession of the premises. The landlord sought a judgment consisting of unpaid rent as of the date of the petition and a sum for accelerated rent for the remaining period of the lease, In deciding that the court lacked subject matter jurisdiction to award a judgment for accelerated [*6]rent, the court first determined whether the accelerated rent fell within the "same class as unpaid rent" (181 Misc 2d at 441) for which the court acknowledged it had jurisdiction. The court held that the accelerated rent clause was a "creature of contract" as opposed to a "creature of statute" governing summary proceedings. Id. at 441. Concluding that a determination of such contractual claim would undermine the legislative intent of summary proceedings, the court denied the landlord's motion for summary judgment and granted judgment for the unpaid rent and eviction. Accord, Neighbors of Watertown, Inc v. Pearson, 10 Misc 3d 954 (Watertown City Ct., 2005); 207-211 West 144th Street Tenant Association v. Cosgrove, 2003 NY Slip Opn. 51381U, 2003 NY Misc. LEXIS 1375 (Civil Ct., NY Co., 2003); see also, 210 West 29th Street Corp. v. Chohan, 13 AD3d 613 (2nd Dept., 2004) (citing Marketplace, supra with approval in rejecting the defendant tenant's claim that a prior judgment obtained by he plaintiff in a summary holdover proceeding for past rent due barred the instant action in Supreme Court for damages in the form of rental payments for the period after the tenant vacated the premises and before the premises were re-let).

Therefore, petitioner may not recover the accelerated rent of $22,351.80 in the instant summary proceeding.

Petitioner is entitled to attorneys' fees in this proceeding pursuant to ¶Twentieth in the lease which shall be granted in the sum of $1500.00.

In view of the foregoing, petitioner is entitled to the following award of damages and attorneys' fees:

Prior Excess payment($50.00) 3 Day Notice fee (Douglas)$23.18 3 Day Notice fee (Pisano)23.18 April, 2006 rent3725.30 April, 2006 late fee50.00 May, 2006 rent3725.30 May, 2006 late fee50.00 Hyde Park School Taxes 7/1/05 - 5/15/06 (318 days @ $14.83)4715.23 Hyde Park Fire and Water 1/1/06 - 5/15/06) (135 days @ $1.05)142.13 County/Town Property Taxes 1/1/06 - 5/15/06) (135 days @$7.43)1003.47 Attorneys' Fees1500.00$14,907.79

Accordingly, petitioner shall be granted a judgment for $14, 907.79 plus costs. Submit judgment plus a bill of costs. .

E N T E R, [*7]

________________________________

David L. Steinberg

Town Justice

Dated Hyde Park, New York

October 6, 2006

Entered this day of October, 2006

________________________________

Clerk

An appeal from this judgment must be taken no later than the earliest of the following dates: (I) thirty days after receipt of a copy of the judgment by the appealing party, (ii) thirty days after personal delivery of a copy of the judgment by another party to the action to the appealing party (or by the appealing party to another party), or (iii) thirty-five days after the mailing of a copy of the judgment to the appealing party by the clerk of the court or by another party to the action.