Court Opinion

ID: 5854866
Source: CourtListenerOpinion
Date Created: 2022-01-13 00:59:17.968207+00
Date Added: 2024-06-11T08:44:13.990003
License: Public Domain

Milonas, J.,
dissents in a memorandum as follows: I would reverse and remand for further proceedings. This is an appeal from an order of the Supreme Court, Appellate Term, entered May 21, 1981, reversing an order of the Civil Court, New York County (Ribaudo, J.), dated January 12, 1981, which granted the landlord summary judgment on its holdover proceedings and denied appellant Modell’s cross motion for summary judgment. For approximately 40 years, appellant Henry Modell & Company, Inc. (“Modell”) had been the tenant of a portion of the space in premises located at 198 Broadway. In January of 1959, one of the owners of the property sold his fee interest to the other owners and received a master lease subject to existing tenancies, including Modell’s. Modell, in turn, agreed to exchange its direct lease for a sublease and to pay a greatly increased rent (from $9,600 to $25,000 per year). As part of the new agreement, Modell was given an option for an additional term of 21 years, ending January 15, 1980, and two further 21-year renewal terms, provisions which coincided with those contained within the master lease. However, in December of 1965, 198 Broadway, Inc., a wholly owned subsidiary of petitioner-respondent, Reformed Protestant Dutch Church (“Church”), acquired the master lease. Shortly thereafter, the Church purchased the building. When Modell, in November of 1978, attempted to exercise the first of its renewal options, it was informed that it could not do so. Since 198 Broadway had not invoked its own option to renew, and Modell’s renewal rights being subject to that of the master lease, the sublease would, according to the Church, terminate at the expiration date of the master lease. Petitioner thus commenced a holdover proceeding. The trial court, finding material issues of fact and meritorious defenses, declined to grant summary judgment and directed that discovery take place and that the matter be set for trial. The *513Appellate Term reversed and ordered summary judgment in favor of the Church on the ground that Modell’s right to renew was conditioned on renewal by 198 Broadway of its master lease. In my opinion, this was error in that there-exist questions of fact which render summary judgment inappropriate. In J.N.A. Realty Corp. v Cross Bay Chelsea (42 NY2d 392), the Court of Appeals held that while the loss of an option to renew does not ordinarily result in the forfeiture of any vested rights, there are circumstances where a tenant might indeed suffer forfeiture. In such situations, equity will intervene to relieve against the forfeiture. It is insufficient simply to declare that Modell’s rights were entirely dependent on the actions of 198 Broadway and that no forfeiture was involved where, as is the case here, respondent has made allegations which, if true, may justify that equity be applied. Modell states that the reason it was willing to relinquish its direct lease in the first place and become a sublessor, and in the process pay a significantly higher rental, was in order to obtain the renewal options. Respondent further claims that the fee owner wrongfully directed its wholly owned subsidiary to breach its sublease by not renewing the master lease and that this was done despite the economic detriment to 198 Broadway. Modell also contends that, in reality, 198 Broadway was not a separate, corporate entity as evidenced by the fact that the Church and 198 Broadway, for example, interchangeably billed Modell for rent and interchangeably deposited Modell’s checks, and that the master lease merged with the fee and Modell thereby became the direct tenant (see Curtis v Moore, 152 NY 159). Although the Appellate Term considered this argument only to reject it, respondent was never provided with the opportunity to prove the validity of its contentions. Certainly Modell has raised sufficient issues of fact to require further proceedings.