HIDDEN PONDS OF ONTARIO INC v. ESTATE OF HRESENT (1997)

 Supreme Court properly rejected defendant's counterclaim for unpaid rent and counsel fees.   The court's determination that defendant breached the covenant of quiet enjoyment is supported by the record (see, Hidden Ponds of Ontario v. Hresent [appeal No. 2], 209 A.D.2d 1025, 622 N.Y.S.2d 168).   Because plaintiff was justified in abandoning the premises, defendant is not entitled to unpaid rent for the remainder of the lease term (see generally, 74 N.Y. Jur. 2d, Landlord and Tenant, § 369) or counsel fees.

 Further, the court properly determined that plaintiff was entitled only to nominal damages of $1 (see, Sears, Roebuck & Co. v. 9 Ave.-31 St. Corp., 274 N.Y. 388, 403, 9 N.E.2d 20, mot. to amend remittitur granted 274 N.Y. 636, 10 N.E.2d 589;  see generally, 74 N.Y. Jur. 2d, op. cit., § 270).   A tenant may recover special, or consequential, damages for breach of the covenant of quiet enjoyment “provided they are proximate in effect, and are not speculative or uncertain in character and were fairly within the contemplation of the parties when the lease was made, or might have been foreseen as a consequence of a breach of its covenants” (Friedland v. Myers, 139 N.Y. 432, 436, 34 N.E. 1055;  see generally, 74 N.Y. Jur. 2d, op. cit., § 271).   Thus, where a landlord breaches the covenant by failing to deliver possession, the tenant may recover the start-up costs for alteration or repair of the premises or for moving into the premises (Friedland v. Myers, supra;  see generally, 74 N.Y. Jur. 2d, op. cit., § 271).   Defendant delivered possession, and more than one year elapsed before plaintiff abandoned the premises because of the breach.   Under the circumstances, plaintiff did not sustain damages related to start-up costs, and, in any event, plaintiff failed to establish that it suffered damages for any expenditure it made for start-up costs.   Further, plaintiff failed to establish that it sustained damages proximately caused by the breach at the time it abandoned the premises.   It submitted no proof of the depreciated value of equipment or supplies removed from the premises at the time of abandonment and failed to establish that it suffered a loss of profit.

 The court erred, however, in awarding costs to plaintiff.   The action, but for the amount of damages claimed, could have been commenced in Wayne County Court.   Plaintiff did not recover damages in excess of $500 and, thus, CPLR 8102(2) precludes an award of costs.   Nevertheless, the court may award disbursements even though plaintiff is not entitled to costs (see, CPLR 8301[c] ).  Thus, we modify the judgment by vacating the award of costs in the sum of $700.

Judgment unanimously modified on the law and as modified affirmed without costs.

MEMORANDUM: