Landlord's Damages Limited in Breach Case

In Weaver Street Properties, LLC v. Cold Stone Creamery, Inc., 2011 NY Slip Op 05803 (2d Dept.), a landlord and a tenant entered into a lease whereby the tenant rented store space in a shopping center owned by the landlord.  The tenant then entered into a sublease with a company owned by two parties, which ran an ice cream store as a franchise of the tenant.  The franchisee defaulted in the payment of rent, and thereafter closed the store about 18 months into the lease term.  The landlord then sued the tenant to recover damages for breach of contract, alleging, among other things, that it was entitled to damages in the amount of the rent due for the remainder of the lease term (which exceeded a 12 month period).

The Appellate Division, Second Department, disagreed with the landlord.  The lease stated that “notwithstanding anything contained herein or elsewhere in the lease to the contrary, landlord and tenant agree that tenant’s liability upon any breach of default hereunder for non-payment of rent shall not exceed an aggregate amount equal to twelve (12) months base rent or the remainder of the rent due pursuant to this lease, whichever is less.”  Therefore, in light of this language in the lease, the Court limited the landlord's damages (for a period not to exceed 12 months), stating the following: “where, as here, a real property transaction contract was negotiated at arm’s length between sophisticated, counseled parties, special import must be given to the rule that a written agreement that is complete, clear, and unambiguous on its face must be enforced according to the plain meaning of its terms.”

Salvatore R. Marino, Esq.

Lender Denied Foreclosure

A recent court decision highlights the federal Home Affordable Modification Program (also known as “HAMP”).  HAMP was established to assist eligible home owners with loan modifications on their home mortgage debt, and it is part of the Making Home Affordable Program which was created by the Financial Stability Act of 2009.

In Aames Funding Corporation v. Houston, 2011 NY Slip Op 5642 (2d Dept.), a judgment of foreclosure sale was entered against the homeowner, and a year later the Supreme Court granted the lender’s motion to extend a notice of pendency for an additional three years. Several years after the notice of pendency was granted, the homeowner was notified by America’s Servicing Company (also known as ASC, which is the homeowner’s loan servicer) that the homeowner might be eligible for federal HAMP assistance.  As a result, the homeowner submitted an application to ACS.  When the application when pending, however, the lender published a notice of foreclosure sale.  

In response to the notice, the homeowner moved for an emergency stay (postponement) of the foreclosure sale pending a determination on his HAMP application.  The Appellate Division, Second Department held for the homeowner and ordered the stay, citing Version 2.0 of the “Making Home Affordable Program Handbook,” which states the following: “a servicer may not refer any loan to foreclosure or conduct a scheduled foreclosure sale unless and until the borrower is evaluated for HAMP and is determined to be eligible for the program.”

Salvatore R. Marino, Esq.

"Open and Obvious" Defense Fails

            In Demuth v. Best Buy Stores, L.P., 2011 NY Slip Op 5014 (2d Dept.), the plaintiff allegedly was injured when she tripped and fell over a cluster of concrete protruding from the ground in an area adjacent to a Best Buy store.  Best Buy sought to dismiss her case, alleging that the cause of the plaintiff’s accident was “open and obvious” and “not inherently dangerous.”

The Court disagreed with Best Buy and held for the plaintiff in this case, stating the following: “while a landowner has a duty to maintain its premises in a reasonably safe manner, it does not have a duty to protect against an open and obvious condition which, as a matter of law, is not inherently dangerous.  [In this case, however, due to insufficient evidence submitted by Best Buy], Best Buy failed to demonstrate that the cluster of concrete on which the plaintiff tripped was a naturally occurring topographic condition or some other condition that a landowner could not reasonably be expected to remedy, and thus failed to show that it was not inherently dangerous.”

Salvatore R. Marino, Esq.