Eastside Exhibition Corp. v 210 E. 86TH St.

• Decision Date: 15 September 2005
• Docket Number: 5454.
• Citation: 23 A.D.3d 100,801 N.Y.S.2d 568,2005 NY Slip Op 06735
• Parties: EASTSIDE EXHIBITION CORP., Respondent-Appellant, v. 210 East 86th Street Corp., Appellant-Respondent.
• Court: New York Supreme Court — Appellate Division

23 A.D.3d 100

801 N.Y.S.2d 568

2005 NY Slip Op 06735

EASTSIDE EXHIBITION CORP., Respondent-Appellant, v. 210 East 86th Street Corp., Appellant-Respondent.

5454.

Appellate Division of the Supreme Court of the State of New York, First Department.

September 15, 2005.

CROSS APPEALS from a judgment of the Supreme Court, New York County (Edward H. Lehner, J.), entered May 28, 2004. The judgment, after a nonjury trial, (1) dismissed defendant landlord's claims for ejectment and attorneys' fees, (2) awarded plaintiff tenant declaratory and injunctive relief preventing defendant from terminating plaintiff's lease, and (3) dismissed plaintiff's claims for a permanent injunction and abatement of rent.

Kaufman Friedman Plotnicki & Grun, LLP, New York City (Howard Grun of counsel), for appellant-respondent.

Slotnick, Shapiro & Crocker, LLP, New York City (Barry I. Slotnick, J. Lawrence Crocker and Elliot J. Blumenthal of counsel), and Marcus Rosenberg & Diamond LLP, New York City (David Rosenberg of counsel), for respondent-appellant.

OPINION OF THE COURT

ELLERIN, J.

The issue before us is whether a commercial tenant whose landlord takes possession of a minimal and nonessential portion of its demised premises is thereby entitled to an abatement of its entire rental obligation.

Plaintiff holds a lease commencing March 1, 1998 and expiring December 16, 2016 on a two-story space configured as a "quad" movie theater in a seven-story retail and office building owned by defendant at 210 East 86th Street in Manhattan. Article 13 of the lease permits defendant to have access to the demised premises at reasonable times to make repairs and improvements, and provides that there be no abatement of rent to plaintiff while such work is in progress or any damages by reason of loss or interruption of business or otherwise. Article 4 provides that there be no allowance to plaintiff for the diminution of rental value and no liability on defendant's part for inconvenience, annoyance or injury to business arising from the making of any repairs or improvements in or to any portion of the building or in or to the demised premises or the fixtures, appurtenances or equipment thereof.

On the street level of the demised premises are a ticket sales booth, a lobby, a concession stand, and two movie theaters. On the second floor are a lobby, an informal seating area, a concession stand, and two additional theaters. The street-level traffic pattern takes patrons from 86th Street down the long side of an L, which is 107 feet long and at some points only 12 feet wide, to the short side of the L, which is approximately 15 feet wide and forms the lobby for the two ground-floor theaters. All patrons enter this way and a majority also exit this way, which causes the space to be crowded at times.

In December 2002, without notice to or consent from plaintiff, defendant entered plaintiff's premises and installed steel floor-to-ceiling cross-bracing between two existing steel columns, in preparation for the construction of two additional stories to the building. On the ground floor, the columns are situated approximately midway between the concession stand and a staircase on one side of the 15-foot-wide lobby and the projection booth wall on the other. The cross-bracing thus occupies space between the two theaters and the concession stand, nearer the entrance to the easterly theater. On the second floor, the cross-bracing displaces a portion of an informal seating area for patrons waiting to enter the upstairs theaters.

In response to defendant's actions, plaintiff ceased paying rent, as a remedy for partial actual eviction (see Barash v Pennsylvania Term. Real Estate Corp., 26 NY2d 77, 83 [1970]), and commenced this action, seeking a permanent injunction barring defendant from doing any further work in the theater and directing defendant to remove what was already done, a full abatement of rent, compensatory damages exceeding $1 million and punitive damages of $3 million.

Defendant then served a notice to cure default for not installing a neutralization tank for spilled soda, for failing to provide books and records, for installing new doors on the upper theaters that violated the Building Code of New York City, and for other items that defendant did not pursue at trial. Plaintiff amended its complaint to include claims for permanent injunctive and declaratory relief preventing defendant from terminating the lease based on the default notice. Defendant then amended its answer to include a counterclaim for attorneys' fees and rent due from January 1, 2003 through September 2003 in the aggregate sum of $633,817, which encompassed the amount of rent arrears as stipulated to by the parties at trial and additional rent owed under the lease that had not been paid since commencement of this action. When the case was originally assigned to Justice Diane Lebedeff, defendant agreed to complete expeditiously the work already begun, and the court granted plaintiff a temporary restraining order as to other construction work. The court also permitted certain work to be completed upon defendant's undertaking that it would reduce the extent of the intrusion and improve safety and that it would remove the work if plaintiff prevailed.

Thereafter, a nonjury trial was held before Justice Edward Lehner, who identified the central issue as whether defendant's installation of the steel cross-bracing in plaintiff's premises, which deprived plaintiff of the use of approximately 12 square feet of space out of a stipulated total of between 15,000 and 19,000 square feet, constituted "such an actual partial eviction" as to deprive defendant of the right to collect any rent.

The court correctly found that, while the parties' lease permits defendant to enter plaintiff's premises at reasonable hours to make alterations in connection with the addition of two stories to the building, it does not authorize defendant to permanently deprive plaintiff of the use of any portion of the demised premises. Citing Barash (26 NY2d at 83), the court recognized that such a deprivation would constitute a partial actual eviction, which would suspend plaintiff's liability for all rent. However, the court found that defendant's alteration to plaintiff's premises is not in an area essential to the operation of plaintiff's business and occupies so small a percentage of the total area as to be de minimis, and concluded that "the taking of a non-essential minute area of space" constitutes an exception to the rule that a partial actual eviction warrants a total rent abatement. Accordingly, the court held that defendant may leave the subject alteration in the demised premises without forgoing the agreed rent.

In support of excepting a de minimis taking from the rule that any unauthorized taking deprives the landlord of the right to collect any rent, the court relied upon four decisions of this Court in which the words "de minimis" and "insubstantial" appear in connection with a taking (see Cut-Outs, Inc. v Man Yun Real Estate...