Opinion
No. 2022-22414 Index No. 656204/2020
09-28-2022
Sunanda Kakade, Plaintiff v. Evan Newman and ALEXANDRA RIVERA, Defendants
For Plaintiff Eva Marie Thomas Esq. A.Y. Strauss, LLC. For Defendants Brianna Nicole Neyland Esq. Steven B. Sperber Esq. SDK Heiberger LLP.
For Plaintiff Eva Marie Thomas Esq. A.Y. Strauss, LLC.
For Defendants Brianna Nicole Neyland Esq. Steven B. Sperber Esq. SDK Heiberger LLP.
LUCY BILLINGS, J.S.C.
Plaintiff moves for summary judgment on the liability of defendants, plaintiff's former tenants, on plaintiff's breach of contract and promissory estoppel claims. C.P.L.R. § 3212(b) and (e). Defendants' only defense to plaintiff's breach of contract claim is that plaintiff failed to show she mitigated her damages. NY Real Prop. Law (RPL) § 227-e. Defendants cross-move for summary judgment on that defense. C.P.L.R. § 3212(b) and (e).
Although plaintiff contends that defendants' cross-motion was untimely under C.P.L.R. § 2215, she does not claim that she lacked adequate time to oppose their cross-motion and concedes that defendants were entitled simply to move separately and timely for the same relief, as no note of issue has been filed. C.P.L.R. § 3212(a). Therefore the court disregards any untimeliness. C.P.L.R. § 2001.
I. UNDISPUTED FACTS
Plaintiff owns cooperative unit 7C at 242 East 25th Street, New York County. Plaintiff authorized her daughter, Angeli Kakade, to negotiate a sublease of the unit after a subtenant paying $3,300.00 per month was to move out at the end of March 2020. Plaintiff's daughter attests that on February 17, 2020, defendants returned to her their executed sublease that plaintiff previously had signed, setting the rent at $3,250.00 per month for the unit. The sublease required that defendants pay a security deposit to plaintiff and that defendants' failure to take possession of the unit after the sublease commenced would constitute a breach of the sublease. Defendants neither paid the security deposit nor took possession of the unit.
In reliance on the executed sublease, plaintiff's daughter further attests that she paid the $500.00 fee for defendants' application to the cooperative corporation's Board of Directors and made efforts to expedite consideration of the application, which the Board approved March 18, 2020. Plaintiff's daughter immediately notified defendants that they were approved to take possession of the sublet unit. On April 1, 2020, acknowledging the sublease was in effect, defendants notified plaintiff they did not intend to take possession.
Beginning April 9, 2020, through a broker, plaintiff listed the unit for rent at $3,300.00 per month, the rent that the subtenant preceding defendants had paid, but $50.00 per month more than plaintiff negotiated with defendants. Plaintiff's daughter attests that her broker advised that $3,300.00 per month was the fair market value, but this advice is inadmissible hearsay if offered for its truth. Patton v. Genito, 202 A.D.3d 631, 631 (1st Dep't 2022); Greca v. Choice Assoc. LLC, 200 A.D.3d 415, 416 (1st Dep't 2021); Poyodi v. Go NY Tours, Inc., 193 A.D.3d 518, 519 (1st Dep't 2021); Weisenfeld v. Iskander, 187 A.D.3d 533, 533 (1st Dep't 2020). Plaintiff's daughter admits that no one even inquired about the unit at that rent. Only after plaintiff, through the broker, dropped the listed price to $2,900.00 per month July 7, 2020, did plaintiff receive any applications to sublet the unit, and plaintiff finally entered a new sublease July 23, 2020, to rent the unit at $2,800.00 beginning August 15, 2020. Defendants do not dispute the rent they owed under their sublease, nor that plaintiff sublet the unit four months after defendants' breach of their sublease for $450.00 per month less than the monthly rent owed under defendants' sublease.
II. PLAINTIFF'S MITIGATION OF DAMAGES
New York Real Property Law (RPL) § 227-e requires that, upon the breach of a residential lease as plaintiff claims, plaintiff "landlord shall, in good faith and according to the landlord's resources and abilities, take reasonable and customary actions to rent the premises at fair market value or at the rate agreed to during the term of the tenancy, whichever is lower." Even if the court considers the advice the broker gave to plaintiff's daughter as evidence of the daughter's good faith in renting the premises at a fair market value of $3,300.00 per month, plaintiff does not dispute that this rate is still $50.00 higher than the rate agreed to during the term of the sublease defendants breached: $3,250.00 per month.
While RPL § 227-e requires only that the landlord "take reasonable and customary actions," "in good faith and according to the landlord's resources and abilities," to rent the premises, the statute unambiguously requires the listed rent to be the rate agreed to under the parties' sublease if that rate is lower than the fair market value. The "reasonable and customary actions," "in good faith and according to the landlord's resources and abilities," refer to how the landlord markets the premises: that it need not use brokerage services beyond its resources, for example, but, on the other hand, it must do more than advertise the unit on its building's bulletin board or to a few acquaintances.
Plaintiff insists that she agreed to rent the premises to defendants at $3,250.00 per month rather than the same rate as the prior subtenant paid, $3,300.00 per month, because plaintiff negotiated with defendants without a broker, saving brokers' fees. The onset of the coronavirus pandemic and plaintiff's inability to rent the premises or even generate an inquiry about the premises until plaintiff lowered the rate to under $3,000.00 per month, however, raise a question whether the fair market value was even lower than the rate agreed to during the term of the sublease defendants breached: $3,250.00 per month. Thus plaintiff has met her burden under RPL § 227-e to show that she mitigated her damages once she lowered the unit rent to $2,900.00 per month July 7, 2020, and immediately began receiving inquiries, but not before.
Defendants cross-move for summary judgment that plaintiff never mitigated her damages. C.P.L.R. § 3212(b) and (e); RPL § 227-e. Plaintiff admits she did not list her unit for rent at the rate agreed to during the sublease defendants breached, which was lower than plaintiff's claimed market value, and does not explain why she could not have negotiated without a broker, saving brokers' fees, as she did with defendants. Therefore the court grants defendants summary judgment on plaintiff's failure to mitigate her damages between April 3, 2020, when defendants' first rental payment was due, and July 7, 2020, when plaintiff lowered the rent to $2,900.00 per month. While plaintiff might have claimed that hiring a broker and listing the unit at $50.00 per month more was a reasonable course of action more likely to produce a new subtenant than proceeding without a broker at a lower listed rent, she does not make, let alone support, such a claim. Her admitted experience listing the unit at $3,300.00 per month through a broker and receiving not a single inquiry belies such a claim.
Plaintiff relies on 14 E. 4th St, Unit 509 LLC v. Toporek, 203 A.D.3d 17, 23-24 (1st Dep't 2022), which dismissed the tenant's affirmative defense of failure to mitigate damages, even though the landlord had listed the rental apartment at a rent higher than under the tenant's lease. There, however, the landlord presented comparable listings during the same period, also during the height of the pandemic, and detailed the landlord's offers of rent concessions that reduced the rent lower than the tenant's obligation under the lease, which generated 60 inquiries and approximately 50 showings of the apartment. Id. at 21. Plaintiff offers no such evidence.
Defendants, on the other hand, do not demonstrate that plaintiff failed to mitigate her damages after she lowered the rent to $2,900.00 per month July 7, 2020. Defendants present the affidavit of Samantha Behringer, a real estate broker with 20 years experience specializing in residential leases, who is familiar with the rental market in the area of 242 East 25th Street, New York County. She attests that in March 2020, at the the onset of the coronavirus pandemic, rental rates for apartments in the area dropped by approximately 30%. If the fair market value immediately before March 2020 was $3,300.00 per month, as plaintiff and her prior subtenant's rent indicate, this decline would reduce the fair market value to $2,310.00, even lower than the $2,900.00 per month rent at which plaintiff listed the unit July 7, 2020, or the $2,800.00 per month rent at which she sublet the unit July 23, 2020.
Behringer, however, provides no details whether this 30% decline applied to all apartments, regardless of size, features, or the building's common elements. She does not explain why plaintiff's unit, which she does not indicate she ever observed, and which she does not describe, necessarily would suffer the same decline as other apartments. The very fact that plaintiff did sublet her unit at $2,800.00 per month within 16 days after she lowered the rent to $2,900.00 per month strongly suggests that the actual rate under the new sublease was the fair market value.
Consequently, the court denies defendants summary judgment on plaintiff's failure to mitigate her damages after July 7, 2020, when plaintiff lowered the rent to $2,900.00 per month. C.P.L.R. § 3212(b). Although Behringer's affidavit raises a factual question whether plaintiff mitigated her damages after that date, the issue is of minimal significance, as RPL § 227-e provides that, once the unit was relet, the new subtenant's sublease terminated defendants' sublease and mitigated the damages otherwise recoverable from defendants. 14 E. 4th St, Unit 509 LLC v. Toporek, 203 A.D.3d at 24.
III. PROMISSORY ESTOPPEL
Where, as here, the dispute arises from a written agreement between plaintiff and defendants, plaintiff concedes that she may not maintain her promissory estoppel claim. As set forth above, there was an enforceable sublease between the parties, which defendants do not dispute. Plaintiff's promissory estoppel claim does not allege a duty independent of the sublease. ID Beauty S.A.S. v. Coty Inc. Headquarters, 164 A.D.3d 1186, 1186 (1st Dep't 2018); Zakrzewski v. Luxoft USA, Inc., 151 A.D.3d 573, 574 (1st Dep't 2017); Susman v. Commerzbank Capital Mkts. Corp., 95 A.D.3d 589, 590 (1st Dep't 2012); CARI, LLC v. 415 Greenwich Fee Owner, LLC, 91 A.D.3d 583, 583 (1st Dep't 2012). Therefore the court grants summary judgment in favor of defendants, the non-moving parties, dismissing plaintiff's promissory estoppel claim on which plaintiff moved for summary judgment. C.P.L.R. § 3212(b); Otto v. Otto, 192 A.D.3d 517, 518 (1st Dep't 2021). See Dunham v. Hilco Constr. Co., 89 N.Y.2d 425, 429-30 (1996).
IV. CONCLUSION
Based on the undisputed facts, the court grants plaintiff's motion for summary judgment on defendants' liability for the breach of the parties' sublease by refusing to pay the security deposit or rent due under the sublease beginning April 3, 2020, or to take possession of the sublet unit. C.P.L.R. § 3212(b) and (e). The court grants defendants' cross-motion for summary judgment to the extent of determining that plaintiff failed to mitigate her damages until at least July 7, 2020; otherwise denies defendants' cross-motion, id.; and grants defendants summary judgment dismissing plaintiff's promissory estoppel claim. C.P.L.R. § 3212(b).