Opinion
LT-004722-11.
Decided October 21, 2011.
Hutchinson Hutchinson, P.C., Attorneys for Petitioner, New York; Mario Larrea, Respondent, Oyster Bay, New York, Kristen Crawford, Respondent, Oyster Bay, New York.
Decision Upon Court Hearing
Petitioner, Pamela Pfeiffer, has commenced this non-payment proceeding against Respondents Marie Larrea and Kristen Crawford for non-payment of rent concerning 14 Berry Hill Road, Oyster Bay Cove, New York. Petitioner seeks the sum of $93,600.00 which represents rent due for the period of July 15, 2011 through March 15, 2013. Respondents defaulted.
Petitioner submitted the Lease for 14 Berry Hill Road, Oyster Bay Cove, New York, which demonstrates that the monthly rent is $4,500.00. Petitioner invokes the following acceleration clause in Paragraph 3 of the Lease to recover $93,600.00, which reads as follows:
"The whole amount of rent is due and payable when this Lease is effective. Payment of rent in installments is for Tenant's convenience only. If Tenant defaults, Landlord may give notice to Tenant that Tenant may no longer pay rent in installments. The entire rent for the remaining part of the Term will then be due and payable."
The issue before the Court is whether the District Court has jurisdiction to grant a money judgment based upon an acceleration clause?
In Ross Realty v. V A Fabricators, Inc. ,42 AD3d 246, 836 NYS2d 242 (2nd Dept 2007), the Second Department was faced with a lease clause very similar to the one in the case at bar. Paragraph 40 of the lease in the Ross Realty case stated:
"There is a late charge for rent not paid by the 10th of the month. Minimum late charge is $50 or 6% of the total rent, whichever is greater, plus 1½% per month for any amount due after the 10th of the month. Furthermore, notwithstanding anything stated in this Lease to the contrary or any other remedies "at law," the total rent for the entire period covered by this Lease is payable at the time of signing of the Lease. The provisions contained for the payment of the rent in installments are for the convenience of Tenant only and in the event of default in performance or breach of any term or condition to be performed on Tenant's part, then the rent for the whole or any part of the period then remaining unpaid shall, at the option of the Landlord, at once become due and payable without any notice or demand. Monthly rent due without notice, demand, offset or deduction. Late charges shall become due and payable to the Landlord as additional rent. The 10-day default notice in Paragraph 17 of the lease does not include the violation of non-payment of rent. Non-payment of rent requires a three-day notice."
Both lease clauses provide that the rent for the entire period of the Lease is payable at the time of signing the Lease. However, both lease clauses permit the tenant to pay the rent in monthly installments, but allow the landlord to accelerate the entire rent owed upon a default in payment of rent.
The Second Department concluded in Ross Realty that the District Court does not have jurisdiction to render a money judgment for accelerated rent (in spite of the contractual clause to the contrary), because accelerated rent is not "rent due," but contractual damages which are not recoverable in the context of a summary proceeding. The Second Department stated in Ross Realty that:
"This court fully concurs with the reasoning and conclusions reached in Marketplace v. Smith, 181 Misc 2d 440, 694 NYS2d 893. In that case, in connection with a summary proceeding to regain possession of property for non-payment of rent, a commercial landlord asked the local court to award it accelerated "rent" exceeding one million dollars. In denying that claim, the court explained in relevant part that:
"The legislature devised the statutory scheme of summary proceedings to provide landlords with a simple expeditious and inexpensive means of regaining possession of premises . . . Allowing a landlord to circumvent the more rigid procedural requirements of a plenary action to collect on what is essentially a contractual claim undermines the legislative intent. Otherwise, a landlord would be able to collect damages having nothing to do with the tenancy, although contractually so defined, in the less intrusive summary proceeding forum" ( Marketplace, 181 Misc 2d at 442-443, 694 NYS2d 893).
Therefore, even assuming the second and third causes of action were subsumed within the claim for accelerated rent which the plaintiff made in the prior District Court proceeding, the District Court was without jurisdiction to entertain that claim since accelerated rent is not "rent due," but contractual damages not recoverable in a summary proceeding."
Based upon the foregoing, Petitioner is limited to recover rent as follows:
(a) $4,500.00 for July 15 to August 14, 2011
(b) $4,500.00 for August 15 through September 14, 2011
Petitioner is entitled to a judgment for rental arrears in the sum of $9,000.00, plus legal fees of $1,487.50 for a total of $10,487.50.
So Ordered: