437 Madison Ave. Associates v. A.T. Kearney, Inc.
| Decision Date | 01 September 1983 |
| Citation | 466 N.Y.S.2d 931,120 Misc.2d 944 |
| Court | New York City Court |
| Parties | 437 MADISON AVENUE ASSOCIATES, Petitioner, v. A.T. KEARNEY, INC., Individually and as successor by name to A.T. Kearney & Company, Inc., Respondent. |
Adam B. Gilbert, Shea & Gould, New York City, for petitioner.
Terri Weiss, Morgan, Lewis & Brockins, New York City, for respondent.
By reason of the present real estate market conditions prevalent in Manhattan's central business district, commercial tenants are increasingly holding over past the expiration dates of their leases as they attempt to find new locations that they can afford. This case arises out of such a situation in which the circumstances have been complicated by the landlord's claim that it suffered damage well beyond the normal increase in rent (use and occupation).
This matter was tried before the court without a jury and presents two issues for the courts consideration. They are: 1) must a landlord mitigate its damages if the damages it seeks are consequential in nature and 2) does the tenant's act of notifying the landlord of an intended holdover thereafter require the landlord to inform the tenant in a timely fashion of the consequences of its holdover, if those consequences would, in the ordinary course of affairs, be unforeseen.
The petitioner seeks to recover consequential damages in the amount of $30,782.80 caused by respondent's holding over for 20 days beyond the expiration of its tenancy as provided by a written lease.
On or about May 15, 1967 petitioner entered into a written lease with respondent which was due to expire on December 31, 1982. In a hand delivered letter dated September 21, 1982, the respondent informed the petitioner that it would not be able to vacate the premises until sometime beyond the expiration date. The petitioner did not answer respondent's letter of September 21, 1982 and there were no further communications between the parties until December 20, 1982. In a letter from its attorneys, petitioner finally acknowledged having received notification of respondent's intention to holdover (letter of 9/21/82) and informed respondent of the existence of a lease with a new tenant (First Manhattan Co.) encompassing not only the space occupied by respondent on the 31st floor but also the entire 30th floor. Petitioner's attorneys further informed respondent that pursuant to this lease First Manhattan Co. was not to commence paying rent until it had received occupancy of the entire space (the 30th floor plus the space occupied by respondent on the 31st floor). Thus, according to petitioner, in the event of a holdover by respondent, it would incur damages not only for the difference in rent between what respondent was paying and what First Manhattan Co. was to pay for the same space, but also for the loss of rent for the entire 30th floor for the period of respondent's holding over. It is this "lost rent" that petitioner now seeks, respondent having already paid $997 per day for use and occupancy of the space in which it held over for 20 days.
Petitioner takes the position that it was under no duty to advise the respondent of the consequential damages that it would incur in the event of a holdover by respondent. In so doing petitioner relies on several cases wherein it was held that the nature of the landlord-tenant relationship is contractual and thus it is not incumbent upon the landlord to give the tenant notice to quit. Adams v. City of Cohoes, 127 N.Y. 175, 28 N.E. 25; Vinson v. Greenburgh Housing Authority, 29 A.D.2d 338, 288 N.Y.S.2d 338; Cox v. Sammis, 57 A.D. 173, 174, 68 N.Y.S. 27. Though this may be the holdings of these cases it is not the issue in the case presently before this court. It is quite clear that the petitioner having been put on notice by the respondent of the likelihood of a holdover acted in an irresponsible manner in failing to communicate with its tenant. That petitioner was made aware of respondent's intention to holdover in the subject premises by respondent's letter of September 21, 1982 cannot be contested. It was after receiving notification of such that petitioner first entered into the lease agreement with First Manhattan Co. which provided that all the space be vacant or no rent would be paid on any portion of the space, and neglected to alert respondent, its tenant, of this pertinent development.
A landlord such as petitioner would certainly have reason to know that the usual measure of damages arising out of a holdover would be limited to the reasonable value of use and occupancy of the subject premises for the holdover period. Furthermore, petitioner should have realized that consequential damages, such as those claimed, would normally be unforeseen by a tenant. In light of the letter of 9/21/82 the petitioner should have notified respondent, as soon as possible, of the uncommon terms...
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...duty on the landlord to mitigate his loss in both residential and commercial leases); 437 Madison Ave. Assocs. v. A.T. Kearney, Inc., 120 Misc.2d 944, 466 N.Y.S.2d 931, 933 (Civ.Ct.N.Y.Co.1983) (extending duty to mitigate damages to commercial landlord-tenant relationship), aff'd, 127 Misc.......
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