LLC v. Simon Barkagan, M.D., Respondent (Tenant). (2026)

Procedural History

Petitioner S&L Star Realty, LLC ("S&L Star") commenced this commercial holdover summary proceeding via a notice of petition dated January 6, 2020 through which petitioner sought possession of the premises addressed at 2964 Brighton 6th Street, Unit M2, Brooklyn, NY 11235, rent arrears totaling $27,535.01, and use and occupancy in an amount to be determined by the Court. Proceedings commenced in Part 52. In March 2020, Respondent answered with a general denial and by asserting six affirmative defenses.

In 2021, the parties cross-moved for summary judgment. On November 10, 2021, Kings County Civil Court Judge Rupert V. Barry granted Respondent's motion based on the Court's finding that the Respondent had renewed the lease on equitable renewal grounds. At that time, the Court denied Petitioner's cross-motion for summary judgment.

In December 2022, the Appellate Term, Second Department modified that decision (Appellate Term Docket No. 2021-805 KC) because it found that there were "triable issues of fact with respect the applicability [of] each element of equitable renewal" that Judge Barry had found. With regard to the elements of equitable renewal, the Appellate Term stated as follows:

Equity will relieve a tenant from a failure to exercise an option to renew in the manner provided in the lease "where (1) the tenant's failure . . . resulted from an honest mistake or inadvertence, (2) the nonrenewal of the lease would result in a substantial forfeiture by the tenant, and (3) the landlord would not be prejudiced by the renewal" (Matter of 221-06 Merrick Blvd. Assoc., LLC v Crescent Elec. Acquisition Corp., 79 AD3d 896, 896-897 [2010]; see J. N. A. Realty Corp, v Cross Bay Chelsea, 42 NY2d 392, 399-400 [1977]).

After learning of the Appellate Term decision, Petitioner had the case restored in 2025 in Kings County Civil Court Part 52. Subsequently, the case was set for trial.

In May 2025, this matter was assigned to Part 67 for trial proceedings. The parties appeared before me on June 3, 2025, at which time Respondent indicated that it sought to stay these proceedings while seeking consolidation in Kings County Supreme Court with the Supreme Court action Simon Barkagan, M.D. v S&L Star Realty LLC, Case No. 519737/2017. However, Respondent's request for a stay was denied by this Court, and ultimately the Kings County Supreme Court denied Respondent's motion to consolidate and to stay this action. Trial proceedings were held before me on June 16, June 17, and August 7, 2025. Respondent informed the Court during the course of those proceedings that it sought to move for a directed verdict.

At the conclusion of trial on August 7, 2025, Respondent's counsel renewed its motion for a directed verdict. In its motion for a directed verdict, Repondent argued that Petitioner could not make its prima facie case because (1) it did not establish that the subject premises are located in a building that has multiple dwelling status, (2) Petitioner failed to provide sufficient evidence of the notice of termination, and (3) Petitioner had not shown that Respondent continued in possession without permission after January 1, 2020. After briefing, this Court issued a Decision and Order on February 4, 2026 granting Respondent's motion for a directed verdict in part, but only to the extent that Petitioner was seeking monetary relief for rent arrears and use and occupancy pursuant to its notice of petition. Respondent's motion for a directed verdict was otherwise denied.

Both sides also submitted post-trial memoranda in support of their respective cases.

Factual Background

Respondent entered into a lease for the subject premises that commenced January 2015. Respondent is a urologist who maintained a medical urology office at the subject premises since January 2015. The building owned by Petitioner that included the subject premises also includes around eight stories of residential units, other medical offices, and a parking lot.

The lease signed by both parties provides that it would have a "term of 5 years to commence on the first day of January 2015, and to end on the 1st day of January, 2020 both dates inclusive. . . ." In Provision 1A, the lease provides that "Tenant shall have the option to renew this Lease for additional three (3) five-year (5-year) Terms upon 90 day notice prior to expiration of Term . . . ." At the end of lease provision 28 "Bills and Notices," the lease specified that "Any notice by Tenant to Owner must be served by registered or certified mail addressed to Owner at the address first hereinabove given or at such other address as Owner shall designate by written notice."

Respondent testified that he timely mailed a renewal notice to Petitioner. Introduced into evidence on Respondent's office letterhead is a signed letter dated September 23, 2019, addressed to "S and L Star Realty LLC 2900 East 29th Street Apt. 106 Brooklyn, NY 11235." Respondent's trial counsel is included as a cc. The letter is addressed to Petitioner's two owners and states: "Please be advised that I, Simon Barkagan, MD am writing to advise you that I hereby exercise my option to renew my lease for 2964 Brighton 6th Street Unit M2 Brooklyn, NY 11235 pursuant to Lease paragraph 1A." Respondent testified that he mailed the letter at that time. Respondent testified that the letter was sent via first-class mail, but the letter does not indicate on its face how it was sent. Petitioner's owner Lyuvov Kotlovskaya testified that she did not receive the letter by either certified mail or email. Ms. Kotlovskaya also testified that she did not receive any telephone call from Dr. Barkagan indicating an intent to renew the lease.

Respondent testified that he had overlooked provision 28 in the lease that stated that the renewal notice had to be sent via registered or certified mail. Respondent acknowledged that he made "a mistake" under a strict reading of the lease provisions. In or around December 2019, Petitioner asked its counsel to send a termination notice to Respondent demanding that Respondent vacate the premises in accordance with the initial lease term.

During the time of the lease, Respondent renovated the subject premises, including by performing electrical work, plumbing work, installing air conditioning and a cooling system, and building a surgical center. Respondent testified that he spent significant amounts of money on custom furniture, anesthesia equipment, surgical equipment, and special flooring for the operating room suite. Respondent also testified that he had to hire a special consultant for purposes of renovations.

At trial, Respondent introduced a handwritten ledger identifying construction costs of approximately $270,000 and equipment costs of approximately $280,000 that were dated in 2015 and 2016. Respondent also introduced various invoices and receipts that evidenced some of the line items in the ledger from January 2015 through May 2015, corresponding with various types of construction costs. Respondent testified that he kept his records in this manner for the course of his business. Respondent further testified that he keeps records in the form of handwritten notes because he is "not good at typing." Respondent further testified that some of the original invoices and receipts had been lost, so he was introducing copies of the invoices and receipts into evidence. Respondent also introduced some photos of the renovation into evidence. Notably, the last entry in the ledger was dated December 27, 2016.

Petitioner disputed the admissibility of Respondent's evidence and noted that many of the invoices that were provided do not indicate that they were paid. Nonetheless, Petitioner prepared an analysis of Respondent's ledger and found that Respondent has supported with invoices and receipts $212,108.09 costs of renovation, including: (1) $121,024.10 of construction costs from January through June 2015; (2) $61,933.99 of electrical work, the vast majority of which occurred from January through July 2015; and (3) $29,150 of cabinets, carpentry, and flooring from January through May 2015. Respondent stipulated at trial that all of the invoices submitted into evidence do not date beyond July 2015. Respondent also testified that his recollection was that the renovation occurred over the span of four or five months.

With regard to equipment purchases in 2015 and 2016, Respondent was unable to locate invoices or receipts that indicated payments for equipment to support the ledger entries that identify a total equipment purchase of approximately $280,000. With regard to the equipment, Respondent testified that some of it would be movable to a new location, but some of it would not be movable. Respondent identified the anesthesia equipment and the scrub sink as not being movable. However, Respondent also testified that the anesthesia equipment, operating room tables, and cabinetry for the operating room were not reflected in his ledger and he did not provide any proof of payment or valuation of such equipment. Respondent said that those items were added after 2016 but did not provide any details, including dates of purchase or costs. Respondent conceded that other "big and bulky" equipment would still be movable. (See 6/17/26 Tr. 99:24-100:5 [Q: "Doctor, a few moments ago you said that some of the equipment is big and bulky, did I [ ] hear you correctly?" A: "Yes." Q: "It's still movable, correct?" A: "It's very expensive, but —" Q: "I'm sorry, I did not mean —" A: "Everything is movable."].)

The ledger lacks sufficient detail to determine what specific equipment was purchased on what date and by which vendor. Nor does it allow the Court to differentiate Respondent's expenses for movable equipment versus non-movable equipment. Accordingly, many key details concerning Respondent's outlay in medical equipment purchases are unknown beyond the $280,000 figure that Dr. Barkagan calculated and self-reported at the end of the ledger.

Standard of Review

Petitioner brings this summary holdover proceeding under RPAPL § 711(1) and RPAPL § 741. Under RPAPL § 741, a petitioner is required to allege and prove (1) "the interest of the petitioner in the premises from which removal is sought", (2) "the respondent's interest in the premises and his relationship to petitioner with regard thereto", (3) "the premises from which removal is sought", (4) "the facts upon which the special proceeding is based" and (5) "the relief sought." RPAPL § 741.

Equitable renewal of a lease may be established "where (1) the tenant's failure . . . resulted from an honest mistake or inadvertence, (2) the nonrenewal of the lease would result in a substantial forfeiture by the tenant, and (3) the landlord would not be prejudiced by the renewal." (Matter of 221-06 Merrick Blvd. Assoc., LLC v Crescent Elec. Acquisition Corp., 79 AD3d 896, 896-897 [2d Dept 2010].) To be entitled to equitable renewal, a tenant is "obligated to demonstrate (1) that its default was excusable, (2) that its default will cause it to suffer a substantial forfeiture, and (3) that [landlord] was not prejudiced by the delay." (Temple Emanu-El v AG, 240 AD2d 752, 752 [2d Dept 1997].) "The Second Department has explicitly placed the burden on the party seeking relief to show that it has met all three [ ] prongs." (25-35 Bridge St. LLC v Excel Auto. Tech Ctr., 63 Misc 3d 269, 289, 2018 NY Slip Op 28339 [Sup Ct, Kings County 2018], citing 221-06 Merrick, 79 AD3d at 897, 913 and Temple Emanu-El, 240 AD2d at 752.) "Equitable relief . . . should be granted only where the tenant's failure was slight, and the loss suffered by the landlord was small when compared to the hardship that would result to the tenant." (Id. [citations omitted].)

Discussion

Petitioner has established its prima facie case via the deed that it entered into evidence and Petitioner's owner's supporting testimony. Respondent did not rebut Petitioner's showing that it is owner of the subject property. Petitioner also introduced the subject lease, which Respondent acknowledged he agreed to and had signed. Petitioner also presented evidence that Respondent did not renew the lease in accordance with strict compliance of the terms in the agreed-upon lease.

In any event, the appellate term decision sending this matter to trial indicated that the issue of fact to be resolved at trial would be whether Respondent could establish his entitlement to equitable renewal of the lease.

With regard to the first equitable relief prong, which requires that the tenant show an honest mistake or inadvertence, the Court finds that Respondent has established an honest mistake. The testimony and facts as presented show that Dr. Barkagan intended to renew the lease under its terms and was unaware of the lease requirement that any such renewal communication must be done by registered or certified mail. (See Laundry Mgt. - N. 3rd St., Inc. v BFN Realty Assoc., LLC, 179 AD3d 776, 779 [2d Dept 2020] [tenant sending renewal letter via regular mail even though the lease required registered/certified mail or personal delivery was found by Second Department to be "the result of inadvertence, negligence or honest mistake"]; Grunberg v George Associates, 104 AD2d 745, 745-746 [1st Dept 1984] [where tenant provided timely written notice to landlord, but not via certified mail as was required under the lease, a failure "to timely exercise the option in accordance with the precise terms of the lease . . . is not necessarily fatal to their request for relief"]; Studio Brooklyn, LLC v 90 S 8th LLC, 2025 NY Slip Op 34299[U] [Sup Ct, Kings County Nov. 12, 2025] [finding where tenants mistakenly sent their renewal in a form that was not via registered or certified mail as required in the lease, that "Tenants have demonstrated that their failure to exercise the Option to renew the Lease in strict compliance with the Lease was the result of an excusable default based on their honest mistake.")

The second prong of equitable relief concerns whether the tenant will suffer a substantial forfeiture. Here, the Court sides with Petitioner.

"[E]quity allows a court to intervene to protect a tenant from his failure to strictly comply with a relatively inconsequential requirement of an option clause because he might suffer a forfeiture if he has made valuable improvements on the property." (25-35 Bridge St., 63 Misc 3d at 289 [internal quotation omitted].) However, "[e]ven where the tenant made substantial improvements, equitable relief will not be granted unless the tenant can show that such improvements were made with the specific intention of exercising an option." (Id. at 295 [emphasis added], citing Trieste Group, LLC v Ark Fifth Ave. Corp., 13 AD3d 207, 207 [1st Dept 2004] [finding that $67,000 of improvements made three to five years before the lease term expired were "insufficient to constitute the kind of forfeiture that would justify granting defendant equitable relief from its default"]; see also 221-06 Merrick Blvd. Assoc. v Crescent Elec. Acquisition Corp., 24 Misc 3d 138(A), 2009 NY Slip Op 51586(U) [App Term, 2d Dept 2009] [reversing trial court which had found equitable renewal after trial because "tenant failed to offer sufficient proof that it made improvements in reliance upon renewal"]; Soho Dev. Corp. v Dean & De Luca, Inc., 131 AD2d 385, 386 [1st Dept 1987] ["The record demonstrates that the major costs of improvements made by the tenant were incurred during the first two years of the lease. Presumably, all of these improvements have been effectively amortized and depreciated over the life of the lease."]) "Furthermore, expenditures for nonpermanent fixtures do not count towards a forfeiture as they can be removed and do not indicate a tenant's intent to exercise a renewal or purchase option." (25-35 Bridge St., 63 Misc 3d at 296, citing J.N.A. Realty Corp. v Cross Bay Chelsea, Inc., 42 NY2d 392, 402-403 [NY 1977]; see also Laundry Mgt., 179 AD3d at 779 [disagreeing with a lower court finding that there were "substantial improvements to the premises sufficient to constitute a forfeiture justifying equitable relief"]; Soho Dev. Corp., 131 AD2d at 387.)

As Kings County Supreme Court Justice Katherine Levine previously found under a similar set of facts:

The most significant factor in determining a tenant's intent to exercise an option is when during the leasehold the improvements were made. Where improvements made by the tenant are towards the beginning of the lease term, and are necessary for the utilization of the premises, the courts will typically find that the tenant has not evinced an intent to exercise a renewal or purchase option. . . . In such cases, the improvements are deemed to have been amortized and/or depreciated by the time of the exercise of the renewal, so that the tenant has "reaped the benefits of any initial expenditure." [135 East 57th St. LLC v Daffy's Inc., 91 AD3d 1, 5 (1st Dept 2011)], citing to [Wayside Homes, Inc. v Purcelli, 104 AD2d 650, 651 (2d Dept 1984)]. . . On the other hand, substantial improvements made close to or after the expiration of a renewal or purchase option indicate a tenant's intent to exercise it. J.N.A., supra, 42 NY2d at 396. See also, e.g., Bench 'N' Gavel Rest., Ltd. v. Time Equities, Inc., 169 AD2d 755, 565 N.Y.S.2d 121 (2nd Dept. 1991) (commercial tenant took over lease with fewer than two years remaining until the option's expiration and expended more than $200,000 on improvements during that time); [537 Greenwich LLC v Chista Inc., 2008 NY Slip Op 50989[U], 19 Misc 3d 1133(A) at *9] (tenant made significant renovations to property within months of the lease's expiration).

(25-35 Bridge St., 63 Misc 3d at 296 [emphasis added].)

Here, the evidence that Respondent has put forward indicates that the expenditures that have been itemized and presented to the Court were made within the first two years of the lease. The expenditures that were evidenced via invoices and receipts are all within the first six months of the lease. Under the framework that Second Department courts have developed, it is insufficient for a tenant to establish a forfeiture via expenditures that occurred three-to-four years prior to the lease renewal period.

Additionally, Respondent admits that at least some of the equipment that he purchased and had installed in the subject property can be relocated elsewhere. There is insufficient evidence in the record for the Court to attempt a valuation of Respondent's potential forfeiture based on unmovable equipment. In any event, for the more than $200,000 identified in construction costs, all of those costs were incurred at the outset of the initial lease term and the Court has not been provided with evidence that those costs were incurred with the intent of renewing the lease more than four years later.

Many of these facts are similar to those in the matter before Justice Levine in 25-35 Bridge Street, which found that the second equitable renewal prong was not established. (See 25-35 Bridge St., 63 Misc 3d at 297-298.) In that case, all receipts were dated within the first two years of lease, "[m]any of the expense-related documents put in evidence . . . , including receipts and invoices, are handwritten, . . . and do not specify the nature of the expenditures beyond general or vague descriptions," and "many of the expenditures . . . were for removable trade fixtures that did not affect the value of the premises, and thus, would not count towards a forfeiture." (Id.) Accordingly, the Court is inclined to reach the same conclusion here.

There is additional case law that provides that a forfeiture may be found even in cases even where no substantial expenditures were made if the tenant shows that the business location itself is a "valuable asset" and that the tenant stands to lose customer goodwill associated with that location. (See J.N.A., 42 NY2d at 398.) However, here, Respondent has not offered evidence in support of a loss of goodwill associated with the subject premises.

Based on the above, the Court finds that Respondent failed to satisfy the second prong for equitable renewal. Accordingly, the Court need not reach the third prong of equitable renewal and determine whether or not there was prejudice to Petitioner here. (See 25-35 Bridge St., 63 Misc 3d at 299.)

Conclusion

The Court therefore finds in favor of Petitioner after trial as Petitioner has established its prima facie case and Respondent has not satisfied its burden of establishing equitable renewal.

Accordingly, it is hereby,

Ordered, that a final judgment of possession and warrant of eviction shall issue in favor of Petitioner, and it is further,

Ordered, that execution of the warrant of eviction is stayed until June 18, 2026. The earliest execution date is June 19, 2026.

Ordered that Petitioner is to forthwith file and serve a copy of this decision after trial and order with Notice of Entry on Respondent.

This constitutes the Decision and Order of the Court. Copies of this decision will be uploaded to NYSCEF and mailed by regular mail to both parties.

Date: June 4, 2026

Brooklyn, NY

Hon. Javier Ortiz, JCC

Javier Ortiz, J.