[*1]
116 Madison St., LLC v Seid
2009 NY Slip Op 51993(U) [25 Misc 3d 1207(A)]
Decided on September 29, 2009
Civil Court Of The City Of New York, New York County
Jaffe, J.
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and will not be published in the printed Official Reports.


Decided on September 29, 2009
Civil Court of the City of New York, New York County


116 Madison Street, LLC, Petitioner-Landlord,

against

Philip Seid and Henry Seid, d/b/a Chinatown Ice Cream Factory, Respondents-Tenants, Lychee Ice Cream Factory, Inc., Respondent-Undertenant.




L & T 74421/06



For petitioner:

Donald Eng, Esq.

217 Park Row Suite 9

New York, NY 10038

212-608-1939

For respondent:

Niles C. Welikson, Esq.

Horing Welikson & Rosen PC

11 Hillside Avenue

Williston Park, NY 11596

516-535-1700

Barbara Jaffe, J.



In modifying a decision granting petitioner summary judgment in this commercial holdover proceeding, the Appellate Term held that:

[t]he record raises material issues of fact, including whether petitioner landlord knew or should have known of the predecessor landlord's alleged acceptance of a new corporation as an additional tenant, and whether petitioner waived the alleged lease violation by its pre-petition retention of rent checks.
[*2]

(116 Madison Street, LLC v Philip Seid and Henry Seid d/b/a Chinatown Ice Cream Factory, and Lychee Ice Cream Factory, Inc., 21 Misc 3d 139[A], 2008 NY Slip Op 52336 [App Term, 1st Dept 2008]). A bench trial was then held before me on July 28 and August 3, 2009 on the instant petition to recover possession of premises located at 65 Bayard Street, New York, New York. Respondent-tenant Henry Seid (Henry) withdrew his answer to the petition and respondent-undertenant, Lychee Ice Cream Factory, Inc. (Lychee), did not answer.

Petitioner called as witnesses Nolan Cheng, respondent-tenant Philip Seid (Philip), who also testified on his own behalf, and Eugene Seid (Eugene), who appeared pursuant to a subpoena. Christina Seid (Christina) also testified for Philip. For the following reasons, the petition is dismissed.

I. FACTS

The premises in issue is located in the ground floor of a building owned since the 1950s by petitioner's predecessor, 65 Bayard Realty Corp. (65 Bayard), an entity wholly owned by the parents of respondents-tenants. Another of the Seid's sons, Eugene, became involved in the management of the building in the 1970s, and became the president of 65 Bayard in the late 1990s. In the late 1970s, Philip, Henry, and two of the other Seid sons, William and Otis, formed Lychee, which began operating on the premises as the Chinatown Ice Cream Factory, and has done so ever since.

Lychee has occupied the premises since its formation, pays rent for it, is licensed to operate there, pays its own employees, and is the named insured for the premises, although Philip owns the equipment inside the premises. Eugene has always accepted Lychee's rent checks, considers Philip and Henry as indistinguishable from Lychee, understands that the entity operating on the premises is Lychee Ice Cream Factory, d/b/a Chinatown Ice Cream Factory, and did not object to it.

Some time after 1979, Otis and Henry left Lychee, leaving William and Philip each with 50 percent of Lychee's shares. Upon William's death in 2003, Henry purchased William's 50 percent share in Lychee.

By lease dated December 16, 2004, Philip and Henry rented the premises in their individuals capacities from 65 Bayard for a term of 24 years and nine months at a monthly rate of $1,000, to commence January 1, 2005. (Pet. Exh. 5). In the prefatory portion of the lease, Philip and Henry are identified as tenants with "the right to assign said lease to a[n] LLC with a Personal Guarantee by the Tenant." Pursuant to paragraph four of the lease, however, the tenant, successors, and heirs, are prohibited from assigning or underletting the premises without 65 Bayard's written consent. (Id.). And, in paragraph 20, the parties agreed that 65 Bayard's failure to insist on strict performance of any of the terms of the lease "shall not be deemed a waiver of any rights or remedies that [65 Bayard] may have, and shall not be deemed a waiver of any subsequent breach or default in the terms, conditions and covenants herein contained." (Id.). The lease is signed by Eugene and Henry.

By contract dated April 2005, 65 Bayard agreed to sell the premises to one Dean Ross. (Pet. Exh. 3). Attached to the contract is a list of building tenants, including Philip and Henry. In an agreement signed on April 29, 2005, Ross assigned the contract to Cheng for the benefit of a limited company to be formed. In paragraph seven of the agreement, Cheng agreed to keep the agreement confidential and not communicate with 65 Bayard or its attorney. In the same [*3]paragraph, Ross's attorney is given the obligation of keeping Cheng's counsel "fully informed of all relevant matters relating to the Contract." (Id.). Due to the confidentiality agreement, Cheng did not enter the premises before the closing of the contract of sale. Rather, he inspected the exterior and saw on it a sign bearing the name "Chinatown Ice Cream Factory."

In May 2005, Henry sold his 50 percent share in Lychee to Philip's daughter, Christina, and stopped working at the store. (Pet. Exh. 18). By corporate banking resolution dated July 19, 2005, Christina opened a bank account in the name of "Lychee Ice Cream Factory." (Pet. Exh. 16). The bank omitted the "Inc."

The sale of the building closed on August 19, 2005. Cheng was present in his capacity as petitioner's managing partner. Although Eugene was surprised to learn that petitioner and not Ross was to purchase the building, he did not object. At the closing, Cheng received a copy of the lease naming Philip and Henry as tenants (Pet. Exh. 5) and an estoppel certificate reflecting, inter alia, Henry and Philip's tenancy (Pet. Exh. 4). The certificate was prepared by petitioner and signed by Eugene, who relied on the lease in signing it.

Cheng then became the managing agent of the building. He went to the building in August or September, and then again in November or December. The Chinatown Ice Cream Factory sign was still there; he saw no indicia of Lychee's, or any other corporate, presence.

On or about August 23, 2005, Cheng received a check for September's rent from Christina. The payor of the check is Lychee and it is signed by Christina. (Pet. Exh. 6). Cheng did not deposit the check as it reflected a name other than those of respondents-tenants'. The rent check for October, dated September 20, 2005, also reflected Lychee as payor. (Pet. Exh. 8). Cheng held that check as well.

Soon thereafter, Christina called Cheng and asked why he had not deposited the checks. According to Cheng, he explained to Christina that he had to look into the matter and he asked her for copies of Lychee's tax identification number and license to do business. According to Christina, Cheng explained that he had had no time to cash the checks.

By letter dated October 16, 2005, Christina memorialized her recollection of her conversation with Cheng and she provided Lychee's tax identification number and business identification number. (Pet. Exh. 9). By letter to Cheng dated October 21, 2005, Christina observed that petitioner had not yet cashed the two checks and a new check for November's rent, and she repeated the assertion she set forth in the October 16 letter. (Pet. Exh. 10).

Then, by letter dated November 2, 2005, Cheng returned all three checks to Christina and explained, in pertinent part, that petitioner could not deposit them as the tenants named in the lease were not the payors of the checks, and that the lease had not been signed by both Philip and Henry. He thus asked "who is occupying" the premises and requested a copy of the tax identification card and business license. (Pet. Exh. 7). In response, by letter dated November 9, Philip advised Cheng that he had been informed by his attorney that the checks were valid, as was the lease, and that he added his signature to the three checks "if that is what you wanted." (Pet. Exhs. 6, 8, 11). In explaining why he did not return the checks, Cheng testified that he believed Philip would have sent them back again to him. Cheng's testimony concerning Philip's out-of-court assertive conduct is admissible solely as evidence of Cheng's own state of mind in retaining the checks. (Cf Prince, Richardson on Evidence § 8-106 [Farrell 11th ed], citing People v Reynoso,73 NY2d 816 [1988] [under state of mind exception to hearsay rule, out-of-court [*4]statement admissible where its mere utterance without regard to its truth may indicate circumstantially hearer's state of mind]). It does not constitute evidence as to Philip's future conduct.

By letter dated January 30, 2006, petitioner sought from respondents a certificate of liability insurance naming petitioner as an additional insured. (Pet. Exh. 12). In response, by letter dated February 13, 2006, Philip complied with Cheng's request and furnished the certificate which reflects Lychee as primary insured and petitioner as additional insured. (Pet. Exh. 13).

It is undisputed that for nine months, Cheng received and retained, but did not cash or deposit, Lychee's monthly rent checks. (Resp. Exhs. B[1-9]). Christina further testified that she sent each check before the first of the month in which it was due but was unable to produce a certificate of mailing for the rent check for May 2006, having given it to prior counsel who had lost it. As the copy of the certificate contained in the record on appeal from the decision modified by the Appellate Term constitutes the best evidence of the certificate, it is admissible, although it does not prove the date of mailing or receipt.

By five-day notice of termination dated May 12, 2006 and served the same day, petitioner notified respondents-tenants that on May 22, 2006, their lease would expire due to their violation of paragraph four of their lease by assigning and/or subletting the premises to Lychee. By notice of petition and petition dated May 31, 2006 and filed June 1, 2006, petitioner notified respondents that a hearing would be held on June 12, 2006 on its petition for a final judgment of eviction based on the ground set forth in the notice of termination.

In his answer, Philip denies having assigned or sublet the lease and alleges, in pertinent part, that petitioner waived the alleged default and vitiated the notice of termination by accepting rent from Lychee after the termination date set forth therein.

By letter dated July 24, 2006, counsel for petitioner returned all of the checks to respondents' counsel. (Pet. Exh. 14). By letter dated July 26, 2006, respondents' counsel sent them back. (Pet. Exh. 15).

Petitioner contends that the lease had been assigned to Lychee without its consent, in violation of the lease. Philip denies having either assigned the lease or sublet the premises to Lychee, and Eugene denies having permitted an assignment of the lease. On rebuttal, Cheng denied having seen any of the rent checks paid by Lychee to 65 Bayard.

The parties have submitted post-trial memoranda and post-trial reply memoranda.

II. ANALYSIS


A. Did respondent violate the lease by assigning it to Lychee?


To establish a breach of a covenant in a lease not to assign, the lessor must show that the transaction constitutes an assignment in law, and that the lessee transferred his or her entire interest in the demised premises, or a part thereof, for the unexpired term of the original lease, parting with all reversionary interest with respect the premises affected.

(74A NY Jur 2d, Landlord and Tenant § 758 [2d ed]; City of NY v Pennsylvania RR Co., 37 NY2d 298, 300 [1975]; Mann Theatres Corp. of California v Mid-Island Shopping Plaza Co., 94 AD2d 466, 471 [2d Dept 1983], affd 62 NY2d 930 [1984]).

After petitioner rested, I denied respondent's motion for an order dismissing the petition, [*5]holding that petitioner had established, prima facie, that Philip's and Henry's lease had been assigned to Lychee. (Mann v Ferdinand Munch Brewery, 225 NY 189, 194 [1919] [payment of rent by tenant in possession constitutes prima facie proof of assignment sufficient to satisfy Statute of Frauds]; Bedford v Terhune, 30 NY 453, 459 [1864] [same]; Gateway I Group, Inc. v Park Ave. Physicians, PC, 62 AD3d 141, 147 [2d Dept 2009] [same]). In so holding, I relied on the evidence of Lychee's apparently exclusive occupancy of the premises, 65 Bayard's acceptance of Lychee's rent checks, and the certificate of insurance for the premises naming Lychee as the primary insured. As petitioner has set forth a sufficient case, the burden of proof shifts to Philip.

The presumption of an assignment may be rebutted by proof that a different relationship exists between the alleged assignor and assignee. (Quackenboss v Clarke, 12 Wend 555 [1834]; Bedford, 30 NY 453, 459; Day v Greenebaum, 82 Hun 533 [App Term, 1st Dept 1894]). Here, Philip not only denies having assigned the lease, but asserts that Lychee was merely present at the premises or operated there as a licensee.

A license is a "privilege . . . to do one or more acts upon land without possessing any interest therein." (Greenwood Lake & Port Jervis RR Co. v New York & Greenwood Lake RR Co., 134 NY 435, 440 [1892]; Kohman v Rochambeau Realty and Dev. Corp., 17 AD3d 151 [1st Dept 2005] [citing Greenwood]; Millbrook Hunt, Inc. v Smith, 249 AD2d 281 [2d Dept 1998]). It does not convey exclusive possession and control of premises, and it may be cancelled at will and without cause. (Finkelstein and Ferrara, Landlord and Tenant Practice in New York § 3:23 [West's NY Prac Series, vol F, 2008]; Am. Jewish Theatre, Inc. v Roundabout Theatre Co., Inc., 203 AD2d 155, 156 [1st Dept 1994]).

While the evidence demonstrates that Lychee alone operates on the premises and has done so for decades, it does not demonstrate that Lychee possesses and controls the premises to the exclusion of respondents-tenants, or that Lychee cannot be ousted at will or without cause, and there is no written agreement between 65 Bayard and respondents-tenants other than the December 2004 lease naming them as tenants. There is also no independent evidence that an assignment was even proposed to 65 Bayard or to petitioner, or of any attempt to conceal an assignment while 65 Bayard was landlord. Rather, Cheng's ignorance of Lychee's presence was the product of his confidentiality agreement with Ross; respondents-tenants had nothing to do with it.

Most significantly, there was no evidence that respondents-tenants forfeited their tenancy rights beyond having granted Lychee permission to operate on the premises. (See CC Ming [USA] Ltd. Partnership v Champagne Video Inc., 232 AD2d 202 [1st Dept 1996] [landlord's failure to prove that tenant did not retain reversionary interest in leased premises warranted finding that there was no "de facto" assignment]). That the license had continued for decades does not prove that it is irrevocable.

By contrast, in Mann Theatres, 94 AD2d at 470-471, the alleged assignor had been unable to obtain the plaintiff-landlord's consent to assign its sublease. It thus executed a written "operating agreement" whereby the alleged assignee was granted the "irrevocable right to operate" on the premises on the assignor's behalf for the remaining term of the assignor's sublease including extensions. The alleged assignee agreed to assume all of the alleged assignor's obligations under the sublease and was entitled to retain all business profits, whereas the alleged assignor agreed to pay the rent received from the assignee to the plaintiff-landlord. [*6]The court held that the operating agreement constituted an assignment of the sublease as it "yielded the exclusive possession and control of the premises" to the proposed assignee, and contained no reversionary provision. (Id.). The court also concluded from the evidence that the landlord had previously withheld consent to the assignment that there had been a "thinly veiled attempt to conceal [a] deliberate evasion of [the] covenant not to [assign]." (Id., 94 AD2d 466, 473).

As Lychee's continuous and exclusive presence over the years is as indicative of a license as it is of an assignment, petitioner has failed to sustain its ultimate burden of proving that the lease had been assigned to Lychee, a conclusion suggested by the Appellate Term's reference in its decision to an "additional tenant," as opposed to an alleged assignee. (116 Madison Street, LLC v Philip Seid and Henry Seid d/b/a Chinatown Ice Cream Factory, and Lychee Ice Cream Factory, Inc., 21 Misc 3d 139[A], 2008 NY Slip Op 52336 [App Term, 1st Dept 2008]).

B. Did respondent violate the lease by subletting the premises to Lychee?


A sublease is a "transfer by a tenant of only part of his estate or interest in the whole, or in a part, of the leased premises, with the reservation unto himself of a reversionary interest in the leasehold estate." (1 Dolan, Rasch's Landlord and Tenant - Summary Proceedings § 9:2 [4th ed]). The hallmark of a sublease is the retention by the sublessor of a reversionary interest. (Id.). Moreover, as there is no privity of contract between a lessor and sublessee, the sublessee pays rent to the sublessor, who remains liable for paying the rent to the lessor. (1 Dolan, Rasch's Landlord and Tenant - Summary Proceedings § 9:53). A landlord-tenant, or sublandlord-subtenant relationship, may not be inferred merely by the tenant or subtenant's occupancy or possession of the premises. (Finkelstein and Ferrara, Landlord and Tenant Practice in New York § 14:353 [West's NY Prac series, vol G, 2008]; see also 74A NY Jur 2d, Landlord and Tenant § 733 [2009] [relationship created by sublease is ordinary relation of landlord and tenant]).

Here again, there is no proof that respondents-tenants transferred any part of their interest in the premises, there is no agreement memorializing a transfer, and Lychee always paid its rent directly to 65 Bayard, not to respondents-tenants. I thus find that petitioner failed to meet its burden of showing that respondents-tenants sublet the premises to Lychee. (See Gordian v Donovan, 6 Misc 3d 1028[A], 2004 NY Slip Op 51832[U] [Civ Ct, New York County 2004] [no proof of rental agreement between parties as respondent did not pay rent to petitioner and his continued possession alone was insufficient to create landlord-tenant relationship]; Barbizon Owners Corp. v Chudick, 159 Misc 2d 1023 [Civ Ct, Queens County 1994] [no landlord-tenant relationship established between respondent and his brother, who also resided in apartment, absent proof of any rental agreement between them and as brother pays no rent to respondent]; Hispano Am. Advertising, Inc. v Dryer, 112 Misc 2d 936 [Civ Ct, New York 1982] [finding that sharing of office space between two entities did not make one entity a sub-tenant of other entity; continued possession or occupancy alone is insufficient to create landlord-tenant relationship]).

C. Is petitioner bound by 65 Bayard's alleged waiver of its right to object to the alleged


assignment or sublet?

Philip also argues that even if respondents-tenants had assigned the lease or sublet the premises to Lychee, petitioner waived its objection to it by virtue of 65 Bayard's waiver of any objection to it. Petitioner denies that it is bound by 65 Bayard's waiver as it had no knowledge of [*7]it or of Lychee's occupancy or payment of the rent.

When a landlord's reversion is transferred subject to a lease, the transferee "takes the premises under the conditions as to the tenancy that his predecessor in title has established." (1 Dolan, Rasch's Landlord and Tenant - Summary Proceedings § 5:19. In 52 Riverside Realty Co. v Ebenhart, the First Department held that the conditions as to a tenancy include any waiver of rights that the predecessor landlord has established if the transferee has notice of the existence of the leasehold, and that the "possession of premises constitutes constructive notice to a purchaser of the rights of the possessor." (119 AD2d 452, 453 [1st Dept 1986]). The court relied on Phelan v Brady, 74 Sickels 587 (1890).

In Phelan, the predecessor landlord had permitted the defendant to occupy rooms in the premises and to lease other rooms to various tenants and collect their rent. The plaintiff was not informed of the defendant's presence and thus had no actual notice or knowledge of her presence. The Court held that it did not matter whether the plaintiff "was in fact ignorant of any right or claim" of the defendant to the premises, as "it is enough that she was in possession . . . as that fact operated in law as notice to the plaintiff of all her rights." The Court explained:

It may be true, as has been argued by the plaintiff's counsel, that when a party takes a conveyance of property situated as this was, occupied by numerous tenants, it would be inconvenient and difficult for him to ascertain the rights or interests that are claimed by all or any of them. But this circumstance cannot change the rule. Actual possession of real estate is sufficient notice to a person . . . and to all the world of the existence of any right which the person in possession is able to establish.


(Id., at 591-592). The Court also observed that the plaintiff had been on the premises before the transfer and could have inquired into the defendant's rights, and that while his failure to do so would not have changed the result in the action, "it shows that the plaintiff's loss is to be attributed to his confidence in [the transferor], who probably deceived him, and to his failure to take notice of [the defendant's] possession." (Id.).

Here, as in Phelan, petitioner had notice of respondents-tenants' possession of the premises and is thus deemed to have had notice of their right to permit Lychee to operate on the premises. (See also Radcliffe Assocs. v Greenstein, 274 AD 277 [1st Dept 1948], lv denied 274 AD 984 [where lease restricted use of premises to butcher shop but tenant sold groceries with prior landlord's knowledge and lack of objection, new landlord could not evict based on violation of lease as it "took the premises under the conditions as to tenancy that its predecessor had established."]; Carrano v Castro, 12 Misc 3d 5 [App Term, 2d Dept 2006], affd 44 AD3d 1038 [2d Dept 2007] [landlord charged with notice of stipulation entered into between tenant and prior landlord]).

Moreover, petitioner's professed ignorance of Lychee's occupancy is the product of its decision to enter into and abide by its confidentiality agreement with Ross, not from any action by respondents-tenants or Lychee. If any misrepresentation was made to petitioner concerning the tenancy, respondents-tenants were not shown to have been part of it. Petitioner's ignorance resulted from Cheng's willingness to purchase the building in sole reliance on Ross. And even if petitioner had relied to its detriment on the estoppel certificate, the certificate estops only 65 Bayard, not Philip, who was not party to it. (See JRK Franklin, LLC v 164 East 87th St. LLC, 27 [*8]AD3d 392 [1st Dept 2006], lv denied 7 NY3d 705 [party to estoppel certificate had duty and ability to investigate before voluntarily certifying absence of tenant lease defaults]; NHS Ntl. Health Svces., Inc. v Kaufman, 250 AD2d 528 [1st Dept 1998] [where tenant executed estoppel certificate certifying that lease had not been amended even though it had been amended, landlord, who knew of amendment, could not use certificate to bar tenant from recovery based on amended lease]; Padell Nadell Fine Weinberger & Co. v Midtown Realty Co., 245 AD2d 188 [1st Dept 1997] [tenant executed estoppel certificate in connection with landlord's loan application and thus, as certificates were executed in favor of lender, they could not be used to estop tenant from asserting its rights against landlord]).

To the extent that the Appellate Term, Second Department, has held otherwise (Clearview Apt. Assocs., LP v Ocasio, 17 Misc 3d 23 [App Term, 2d & 11th Jud Dists 2007] [transferee not bound unless she has notice of facts underlying waiver]), it does not bind me. Rather, I am bound by 52 Riverside in which the First Department held that a transferee need not be aware of anything beyond the possession of the premises in order to be bound by the waiver of its predecessor. Moreover, the court in Clearview was primarily concerned with whether the plaintiff was equitably estopped, not whether the plaintiff was bound by its predecessor's waiver.

For these reasons, even if there had been an assignment or sublease, petitioner is bound by 65 Bayard's waiver of any objection it may have had to the transfer.

D. Did petitioner waive its objection to an assignment or sublet?

Acceptance of rent with knowledge of the conduct that is alleged to constitute a default under the terms of the lease constitutes a waiver of the default, as "[t]he acceptance of the rent is in effect an election by the landlord to continue the relationship of landlord and tenant." (Atkins Waste Materials, Inc. v May, 34 NY2d 422, 427 [1974]). In Jefpaul Garage Corp. v Presbyterian Hospital in City of New York, 61 NY2d 442, 460-461(1984), the Court of Appeals observed that:

[a]lthough the intent to waive is usually a question of fact, knowing acceptance of rent without any effort to terminate justifies an inference that the landlord has elected to hold the tenant to the lease. The primary reason for the rule is the inconsistency of the landlord's positions. As one old English case put it, the landlord should not be permitted "to treat a man as a tenant, and then treat him as a trespasser." Undoubtedly, however, the courts have applied the rule also to prevent a forfeiture of the tenant's estate.

Even if a tenant's checks are not cashed, the landlord may be deemed to have accepted them by retaining them. (See Scherer, Residential Landlord-Tenant Law in New York § 11:6 [2008] [retention of tenant's check, even if not cashed, may constitute acceptance and result in waiver of right to proceed with holdover action]; Intl. Bus. Machines Corp. v Joseph Stevens & Co., L.P., 300 AD2d 222 [1st Dept 2002] [landlord's receipt and retention of rent check constituted "acceptance" of rent]; Roxborough Apt. Corp. v Becker, 176 Misc 2d 503 [Civ Ct, New York County 1998] [landlord's retention of three rent checks for months preceding commencement of action without returning them or claiming that retention was inadvertent constitutes acceptance of rent]; Dulac v Moy, NYLJ, Nov. 4, 1992, at 28, col 1 [Civ Ct, New York County] [landlord waived right to evict by retaining 10 monthly rent checks, even though she did not cash them]). [*9]

Petitioner maintains that its return of the checks in November preserved its right to object to the alleged assignment or sublet. Philip argues otherwise.

The evidence established that Philip provided petitioner with the information it requested concerning Lychee, and that after Philip signed the September, October, and November checks and returned them to Cheng asking "if that is what [he] wanted," Cheng sought no further information and expressed nothing other than a request for the insurance certificate reflecting that it was covered as an additional insured under the policy. Philip thus had reason to believe that there were no other issues with the checks and could only surmise as to petitioner's continued retention of the checks. Finally, petitioner did not return the checks to Philip until long after the pleadings were fully served. In these circumstances, Cheng's belief that Philip would not return the checks to him, even if reasonable, does not explain petitioner's delay in attempting to terminate the tenancy while holding the checks for some eight months. That delay sufficiently connotes an intent to waive an objection to the alleged assignment or sublet.

Petitioner also relies on the no-waiver clause of the lease. A no-waiver clause in a parties' lease may itself be waived. (Kenyon & Kenyon v Logany, LLC, 33 AD3d 538 [1st Dept 2006]; 61 E. 72nd St. Corp. v Zimberg, 161 AD2d 542 [1st Dept 1990]; Lee v Wright, 108 AD2d 678 [1st Dept 1985]; P & D Cards and Gifts, Inc. v Matejka, 150 AD2d 660 [2d Dept 1989]. Waivers have been found where a landlord has accepted rent in circumstances inconsistent with the clause. (Ginsberg v Lo Bright Mfg. Co., Inc., 2001 WL 1221652, 2001 NY Slip Op 40147[U] [Sup Ct, Nassau County]).

In Jefpaul, the no-waiver clause specifically provided that acceptance of rent would not constitute a waiver. (61 NY2d 442). In P & D Cards and Gifts, Inc., 150 AD2d 660, by contrast, the clause did not refer to acceptance of rent. Thus, the landlord's acceptance of rent for many months was deemed a waiver notwithstanding the no-waiver clause. (Compare Madison Ave. Leasehold, LLC v Madison Bentley Assocs., LLC, 30 AD3d 1 [1st Dept 2006], affd and rearg denied 8 NY3d 59 [no-waiver clause waived by acceptance of rent], with Excel Graphic Technologies, Inc. v CFG/AGSCB 75 Ninth Ave., LLC, 1 AD3d 65 [1st Dept 2003], lv denied 2 NY3d 794 [2004] [landlord's acceptance of rent with knowledge of tenant's subletting without consent did not constitute waiver of breach as lease also contained no-waiver provision specific to alleged breach]; Monarch Info. Svces., Inc. v 161 William Assocs., 103 AD2d 703 [1st Dept 1984] [acceptance of rent did not establish that landlord waived prohibition against assignments given specific no-waiver clause]).

Here, absent a specific provision precluding a waiver of the right to object to the assignment of the lease or subletting of the premises without the landlord's written consent, and in light of petitioner's conduct in retaining respondents'-tenants' checks for such a long period of time and given Philip's reason to believe that it was waiving its objection, petitioner may not rely on the no-waiver clause.

III. CONCLUSION

For all of these reasons, petitioner has failed to sustain its ultimate burden of proving that the lease had been assigned to Lychee, that the premises had been sublet to Lychee, or that it has [*10]not waived its objection thereto. I thus need not address the other issues raised by the parties [FN1] or suggested by certain of the facts set forth above. Accordingly, the petition is dismissed as to respondent Philip Seid only.

This constitutes the decision and order of the court.

_______________________________

Barbara Jaffe, JCC

DATED:September 29, 2009

New York, New York

Footnotes


Footnote 1:The absence of Philip's signature from the lease is not in issue as petitioner brought the petition against him based on his tenancy pursuant to the lease. And, even if Philip is not a tenant, Henry's tenancy has not been abridged. That Henry sold his shares in Lychee to Christina does not disprove his tenancy absent sufficient proof of the alleged assignment.