KEPT REALTY LLC v. MEIR MILLER LLC (2026)

DECISION & ORDER

In an action, inter alia, for declaratory and injunctive relief, the defendant appeals from an order of the Supreme Court, Kings County (Rupert V. Barry, J.), dated July 26, 2023.  The order, insofar as appealed from, denied those branches of the defendant's motion which were for summary judgment on its counterclaim for a judgment declaring, among other things, that the plaintiff did not validly exercise its option to extend the term of a certain commercial lease and dismissing the cause of action for declaratory relief and granted those branches of the plaintiff's cross-motion which were for summary judgment on the cause of action for declaratory relief and dismissing the defendant's affirmative defense and the defendant's counterclaim for declaratory relief.

ORDERED that the order is modified, on the law, by deleting the provision thereof granting those branches of the plaintiff's cross-motion which were for summary judgment on the cause of action for declaratory relief and dismissing the defendant's affirmative defense and the defendant's counterclaim for declaratory relief, and substituting therefor a provision denying those branches of the cross-motion;  as so modified, the order is affirmed insofar as appealed from, without costs or disbursements.

Pursuant to an October 1981 lease agreement, the plaintiff is a commercial tenant in a building owned by the defendant.  In January 2012, the lease was amended, inter alia, to extend the term of the lease to February 28, 2022, and to add an option for the plaintiff to renew the lease for an additional 10 years, conditioned upon the plaintiff not being “in default of any provision of th[e][l]ease beyond any applicable cure period” and upon the plaintiff providing timely written notice to the defendant of its intent to exercise the option.

In April 2020, the plaintiff failed to pay the rent due for that month and, in May 2020, remitted payment of 50% of the amount due, in both instances citing a downturn in business due to the COVID–19 pandemic.  In May 2020, the defendant rejected the plaintiff's offer of a partial rent payment and informed the plaintiff that the plaintiff would be 60 days in arrears as of June 1, 2020, but expressed a willingness either to negotiate a forbearance agreement with a payment schedule or to accept a voluntary early termination of the lease by the plaintiff.  Thereafter, the plaintiff made monthly rent payments in the amount of 50% of the rent due through September 2020, then resumed full rent payments.

The plaintiff alleged that on August 16, 2021, it notified the defendant by email of the plaintiff's election to renew the lease for another 10–year term.  The defendant denied receiving any such email.  On April 4, 2022, the defendant sent the plaintiff a notice to vacate along with a demand to pay outstanding rent in the amount of $22,458.32.

The plaintiff thereafter commenced this action, among other things, for declaratory and injunctive relief.  The plaintiff sought, inter alia, a judgment declaring that it validly exercised its option to renew the lease and that the lease term expires on February 28, 2032.  The defendant interposed an answer, in which it asserted an affirmative defense predicated upon allegations that the plaintiff did not validly renew the lease and that the term of the lease ended on February 28, 2022, and various counterclaims, including a counterclaim for a judgment declaring, among other things, that the plaintiff did not validly exercise its option to extend the term of the lease.  The plaintiff interposed a reply to the defendant's counterclaims.

The defendant moved, inter alia, for summary judgment on the counterclaim for a judgment declaring, among other things, that the plaintiff did not validly exercise its option to extend the term of the lease and dismissing the cause of action for declaratory relief.

The plaintiff opposed the defendant's motion and cross-moved, among other things, for summary judgment on the cause of action for a judgment declaring that the plaintiff validly exercised its option to renew the lease and that the lease term expires on February 28, 2032, and dismissing the defendant's affirmative defense and the defendant's counterclaim for declaratory relief.

In an order dated July 26, 2023, the Supreme Court, inter alia, denied those branches of the defendant's motion which were for summary judgment on the counterclaim for a judgment declaring, among other things, that the plaintiff did not validly exercise its option to extend the term that the term of the lease and dismissing the cause of action for declaratory relief and granted those branches of the plaintiff's cross-motion which were for summary judgment on the cause of action for a judgment declaring that the plaintiff properly exercised its option to extend the term of the lease and that the lease term expires on February 28, 2032, and dismissing the defendant's affirmative defense and the defendant's counterclaim for declaratory relief.  The defendant appeals.

“ ‘When the language of a contract is ambiguous, its construction presents a question of fact that may not be resolved by the court on a motion for summary judgment’ ” (New Plan of Hillside Vil., LLC v Surrette, 108 AD3d 512, 513, quoting Shadlich v Rongrant Assoc., LLC, 66 AD3d 759, 760;  see generally Vale v 221 Thompson, LLC, 82 AD3d 754;  County of Orange v Carrier Corp., 57 AD3d 601, 602).  “[C]ontract language is ambiguous when it is reasonably susceptible of more than one interpretation, and extrinsic or parol evidence may be then permitted to determine the parties' intent as to the meaning of that language” (RE/MAX of N.Y., Inc. v Energized Realty Group, LLC, 135 AD3d 924, 925 [internal quotation marks omitted] ).

In the case at bar, neither party demonstrated its prima facie entitlement to a declaration in its favor on the issue of whether the plaintiff validly exercised its option to renew the lease.  It is unclear from the provisions of the lease whether the plaintiff was “in default” beyond an “applicable cure period” such that it was barred from exercising its renewal option (see generally Cortes v 3A N. Park Ave. Rest Corp., 127 AD3d 909, 911;  New Plan of Hillside Vil., LLC v Surrette, 108 AD3d at 513).  “[T]he terms of the lease are reasonably susceptible of more than one interpretation, and, thus, ambiguous, requiring extrinsic evidence to resolve the ambiguity” (17 Lexington Ave., LLC v Alison Six Star, LLC, 229 AD3d 484, 487).  Moreover, even assuming, arguendo, that the plaintiff was not in default of its lease obligations and was therefore permitted to exercise the renewal option, the defendant's opposition raised a triable issue of fact as to whether the plaintiff provided the defendant with timely written notice of its exercise of the option as required by the lease.

Accordingly, the Supreme Court properly denied those branches of the defendant's motion which were for summary judgment on its counterclaim for a judgment declaring, among other things, that the plaintiff did not validly exercise its option to extend the term of the lease and dismissing the cause of action for declaratory relief but should have denied those branches of the plaintiff's cross-motion which were for summary judgment on the cause of action for declaratory relief and dismissing the defendant's affirmative defense and the defendant's counterclaim for declaratory relief (see New Plan of Hillside Vil., LLC v Surrette, 108 AD3d at 513).

CHAMBERS, J.P., WOOTEN, WAN and HOM, JJ., concur.