Court Opinion

ID: 6210606
Source: CourtListenerOpinion
Date Created: 2022-02-05 21:04:33.277479+00
Date Added: 2024-06-11T08:56:48.769644
License: Public Domain

Parness, J. P.
(dissenting). I respectfully dissent and would reverse the judgment to the extent appealed from, awarding petitioner landlord the additional rent due under the lease’s tax escalation clause.
In Wendel Found. v Moredall Realty Corp. (282 NY 239), by virtue of the landlord’s tax-exempt status, no real estate tax was paid by the landlord or any other entity. Fairfax Co. v Whelan Drug Co. (105 AD2d 647) and S.B.S. Assocs. v Weissman-Heller, Inc. (190 AD2d 529) stand only for the proposition that if the landlord seeks additional rent under a tax escalation clause such as is found here, the amount of the additional rent is limited, proportionately, by the amount of the increased tax actually paid, as opposed to an increase in the tax assessment over the base year. The proposition espoused in the foregoing cases, with which I have no quarrel, is simply that the landlord may not seek as additional rent amounts unrelated to the additional tax actually paid. Nowhere in the authorities relied on by the majority is there expressed a requirement that the landlord be the entity making the increased payment.
The landlord here was liable for the increased tax, and the tax was actually paid, albeit by a third party, the net lessee. *587Certainly, the landlord, in granting nonparty HBO a net lease, accepted a reduced rent in contemplation of the fact that HBO would pay the real estate taxes, along with any increase in those taxes. It can hardly be said that, under these circumstances, the landlord will enjoy a windfall if the respondent tenant pays his share of the increased taxes; rather it is the tenant who will enjoy a profit to which it is not entitled. This court should not lightly set aside contracts forged by sophisticated business persons who are aware of the complexities of modern financial transactions. To impose, as the majority would, an obligation that the landlord personally pay the increased tax, is to rewrite the lease under the guise of construction.
McCooe and Glen, JJ., concur; Parness, J. P., dissents in a separate memorandum.