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On Appeal, Adam Leitman Bailey, P.C. Wins Tenant Right of First Refusal of Rent Stabilized Apartment


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Adam Leitman Bailey, P.C. won a four-year battle on behalf of a 63-year old rent-stabilized tenant against one of New York City’s most disreputable landlords at the First Department Appellate Division, where the Court unanimously reversed the lower Court’s decision, granting her summary judgment on all causes of action, including attorneys’ fees.

The landlord, who is currently under investigation by the Attorney General’s office for allegedly using ruthless tactics against rent-stabilized tenants, was under an undisputed contractual duty to provide the tenant with a right of first refusal to the apartment, and convert the apartment to various design specifications to accommodate her age.  However, when the apartment finally became available in 2011, instead of first offering the apartment to the tenant, he flagrantly breached his agreement by marketing and leasing the apartment under an eighteen month agreement while ignoring the tenant’s multiple inquiries to lease the apartment.

In 2012, the tenant engaged ALBPC to represent her.  ALBPC demanded that the landlord provide her with a right of first refusal to the apartment, which had become vacant.  Consistent with his prior illegal tactics, the landlord once again ignored any inquiries into the apartment.  Faced with no other alternative, ALBPC filed an emergency application in the Supreme Court, New York County on behalf of the tenant for a temporary restraining order preventing the landlord from reletting the apartment.  Plaintiff also filed a complaint against the landlord for breach of contract, injunctive relief mandating that the landlord perform renovations to the apartment, and reimbursement of attorneys’ fees.  ALBPC argued that the landlord would once again breach the agreement with the tenant if not enjoined from reletting the apartment.  Judge Cynthia Kern granted the TRO.

At the hearing on the permanent injunction regarding the reletting of the apartment, the landlord argued that the tenant was in breach of the agreement because she had annoyed other tenants.  Immediately recognizing this charade, ALBPC highlighted to the Court that even if the tenant had breached the agreement, which she clearly had not, the landlord had not provided the tenant with notice and an opportunity to cure as expressly provided for under the lease agreement.  ALBPC also argued that the landlord never denied that it had repeatedly breach the lease agreement with the tenant.  Judge Kern agreed with ALBPC arguments, and granted the preliminary injunction.

Given the undisputed fact that the landlord had materially breached the contract, and readily admitted to such breach, ALBPC moved for summary judgment on all causes of action against the landlord.  Within hours of filing the motion papers, the landlord resorted to another form of trickery by offering her a right of first refusal to the apartment if she would settle her claims against him.  ALBPC recognized that the tenant was under no legal obligation to settle her claims against the landlord given his admitted breach of the lease agreement.  ALBPC also had knew that the landlord would honor his obligations to renovate the apartment pursuant to the black letter of the contract.  Accordingly, ALBPC responded to the so-called offer by agreeing that she would accept the right of first refusal provided that the landlord would first agree to renovate the apartment, thereby cornering the landlord into a situation where he had to comply with the agreement.

It came as no surprise that the landlord’s so-called offer proved to be disingenuous.  Rather than responding to ALBPC, the landlord filed opposition papers to the motion for summary judgment, arguing that the tenant waived her right of first refusal by making a conditional acceptance to his so-called offer.

But, the landlord’s bad acts did not end there.  During the pendency of the Court’s decision regarding the motion, the Court encouraged the parties to enter settlement discussions.  In another rouse against the tenant, the landlord acted as if he was willing to engage in such discussions to resolve the matter.  However, each time the parties came to the bargaining table, the landlord would use some type of delay tactic to stall the discussions.  On multiple occasions, he refused to respond to his attorney regarding what terms and conditions he was willing to settle on.  When the Court had finally had enough of the stalling tactics, he switched attorneys.

Although the Court had granted the TRO and preliminary injunction in favor of the tenant, it mistakenly bought the landlord’s argument that the tenant had rejected his offer for the apartment

ALBPC immediately filed an appeal to the First Department that the tenant was entitled to summary judgment on all causes of action.  ALBPC highlighted to the Court the landlord’s admitted breach of the lease agreement, and flagrant acts to deprive her undisputable right to the apartment.  ALBPC also emphasized to the Appellate Division that the lower Court misconstrued the landlord’s so-called “offer.”  The First Department unanimously reversed Judge Kern’s denial, granting the tenant summary judgment, including attorneys’ fees:

[T]he motion granted, it is declared that plaintiff is the rightful tenant of the subject apartment, and the matter is remanded for further proceedings consistent herewith.  Plaintiff established her entitlement to judgment as a matter of law based on defendant’s breach of the surrender agreement which provided that she “shall have and retain a first right of refusal to lease” the subject apartment … when it became available for rent. When the apartment became available in 2011, defendant did not offer her the apartment but instead rented the apartment to a third party. . . .  Contrary to defendant’s argument, its offer to lease the apartment, subsequent to the breach, could not constitute a “first right of refusal” under the terms of the surrender agreement nor was it a “cure” of its breach. Thus, it is of no moment that plaintiff did not accept the purported offer within the time frame provided for in the surrender agreement. We note that defendant’s subsequent offer of the apartment to plaintiff does not render this action moot, since it did not settle the additional causes of action raised by plaintiff, including claims for attorneys’ fees, renovation of the apartment and moving expenses pursuant to the surrender agreement.

Adam Leitman Bailey, John M. Desiderio, and Joanna C. Peck represented the tenant before the Supreme Court.

Jeffrey R. Metz and Joanna C. Peck represented the tenant before the Appellate Division.

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Adam Leitman Bailey, P.C.

NEW YORK REAL ESTATE ATTORNEYS