CARRANO v. COLON (2025)

ORDERED that the order, insofar as appealed from, is affirmed, without costs.

In settlement of a prior holdover proceeding involving the apartment that is the subject of the instant licensee proceeding (see RPAPL 713 [7]), the parties to the holdover proceeding entered into a so-ordered stipulation (hereinafter the 1992 stipulation) pursuant to which the respondents (the Castros) were granted a rent-stabilized lease and “deemed rent stabilized tenants, entitled to all rights of the Rent Stabilization Law including renewal leases.” The petitioner in the holdover proceeding subsequently sold the premises to the petitioner in the instant proceeding (landlord), and landlord began a second holdover proceeding against the Castros in 2004, arguing, among other things, that he was not bound by the lease renewal provision of the 1992 stipulation. The matter was appealed to the Appellate Division, Second Department, which held, in Matter of Carrano v. Castro, 44 A.D.3d 1038, 1040, 844 N.Y.S.2d 435 (2007), that landlord was bound by that provision, reasoning that “[t]he terms of the stipulation evidenced the intent of the parties to the agreement that the lease renewal provision run with the land, and the agreement touched and concerned the premises.” The Castros have since passed away and, in the instant proceeding, landlord seeks to recover the apartment from their daughter (occupant) and other individuals.

In her answer to the petition, occupant asserted failure to state a cause of action as her first affirmative defense and succession rights as her second affirmative defense. By notice of motion dated July 20, 2023, landlord moved, insofar as is relevant to this appeal, for summary judgment on the petition and dismissal of both of occupant's affirmative defenses. In support of the motion, landlord argued, among other things, that the 1992 stipulation does not include succession rights; that, if the stipulation does include succession rights, it is void under the rule against perpetuities (RAP); and that occupant's first affirmative defense should be dismissed because the petition satisfies the requirements of RPAPL 741. In opposition, occupant asserted that the phrase “all rights of the Rent Stabilization Law” includes the right to have qualified family members succeed to the tenancy and that the succession provision of the 1992 stipulation does not violate the RAP. By order dated November 13, 2023, the Civil Court, insofar as is relevant to this appeal, denied the aforementioned branches of landlord's motion.

“ ‘The fundamental, neutral precept of contract interpretation is that agreements are construed in accord with the parties’ intent’ and ‘[t]he best evidence of what parties to a written agreement intend is what they say in their writing’ ” (Donohue v. Cuomo, 38 N.Y.3d 1, 12, 164 N.Y.S.3d 39, 184 N.E.3d 860 [2022], quoting Greenfield v. Philles Records, 98 N.Y.2d 562, 569, 750 N.Y.S.2d 565, 780 N.E.2d 166 [2002]). “[A] written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms” (Kolbe v. Tibbetts, 22 N.Y.3d 344, 353, 980 N.Y.S.2d 903, 3 N.E.3d 1151 [2013] [internal quotation marks omitted]). “A contract is unambiguous if the language it uses has ‘a definite and precise meaning, unattended by danger of misconception in the purport of the [agreement] itself, and concerning which there is no reasonable basis for a difference of opinion’ ” (Greenfield v. Philles Records, 98 N.Y.2d at 569, 750 N.Y.S.2d 565, 780 N.E.2d 166, quoting Breed v. Insurance Co. of N. Am., 46 N.Y.2d 351, 355, 413 N.Y.S.2d 352, 385 N.E.2d 1280 [1978]). “Ambiguity exists if the agreement, read as a whole, fails to disclose its purpose and the parties’ intent, or when specific language is susceptible of two reasonable interpretations” (Mulacek v. ExxonMobil Corp., 42 N.Y.3d 931, 933, 217 N.Y.S.3d 25, 241 N.E.3d 794 [2024] [internal quotation marks and alterations omitted]; see Ellington v. EMI Music, Inc., 24 N.Y.3d 239, 244, 997 N.Y.S.2d 339, 21 N.E.3d 1000 [2014]). “[P]arties cannot create ambiguity from whole cloth where none exists, because provisions ‘are not ambiguous merely because the parties interpret them differently’ ” (Baron v. New York Mut. Underwriters, 181 A.D.3d 638, 640, 121 N.Y.S.3d 120 [2020], quoting Mount Vernon Fire Ins. Co. v. Creative Hous., 88 N.Y.2d 347, 352, 645 N.Y.S.2d 433, 668 N.E.2d 404 [1996]).

Here, as the Appellate Division, Second Department, held, “when read as a whole, the stipulation ․ sought to confer upon [the Castros], by way of an express contract referring to the rent stabilization law, the same rights as those afforded tenants protected by the rent stabilization law” (Matter of Carrano v. Castro, 44 A.D.3d at 1040, 844 N.Y.S.2d 435). One of the rights afforded tenants protected by the Rent Stabilization Law is “succession rights for qualified family members” (Matter of Santiago-Monteverde, 24 N.Y.3d 283, 290, 998 N.Y.S.2d 144, 22 N.E.3d 1012 [2014]; see Rent Stabilization Code [9 NYCRR] [RSC] § 2523.5 [b] [1]; Matter of Jourdain v. New York State Div. of Hous. & Community Renewal, 159 A.D.3d 41, 45, 70 N.Y.S.3d 239 [2018]; Waterside Plaza Ground Lessee, LLC v. Rwambuya, 131 A.D.3d 867, 868, 17 N.Y.S.3d 387 [2015]; Langdale Owners Corp. v. Lane, 166 Misc.2d 439, 443-444, 636 N.Y.S.2d 577 [App. Term, 2d Dept., 2d & 11th Jud. Dists. 1995]). There is no basis in the text of the 1992 stipulation to conclude that the parties intended to exclude succession rights. As occupant and the Civil Court noted, the stipulation specifically excludes one “right[ ] of the Rent Stabilization Law”—the prior landlords’ right to recover possession of the premises for their own or for their immediate family's use and occupancy (see RSC § 2524.4 [a])—and the exclusion of this one right supports the conclusion that the parties did not intend to exclude any other rights (see Quadrant Structured Prods. Co., Ltd. v. Vertin, 23 N.Y.3d 549, 560, 992 N.Y.S.2d 687, 16 N.E.3d 1165 [2014]; see generally Glen Banks, New York Contract Law § 10.16 [West's NY Prac Series 2023]).

The New York RAP, codified at EPTL 9-1.1, “provides that (1) any present or future estate is void if it suspends the absolute power of alienation for a period beyond lives in being at the creation of the estate plus 21 years (EPTL 9-1.1 [a] [2]), and (2) any estate in property is invalid unless it must vest, if at all, within the same period (EPTL 9-1.1 [b])” (Wildenstein & Co. v. Wallis, 79 N.Y.2d 641, 647, 584 N.Y.S.2d 753, 595 N.E.2d 828 [1992]; see Metropolitan Transp. Auth. v. Bruken Realty Corp., 67 N.Y.2d 156, 161, 501 N.Y.S.2d 306, 492 N.E.2d 379 [1986]). “Underlying both early and modern rules restricting future dispositions of property is the principle that it is socially undesirable for property to be inalienable for an unreasonable period of time” (Symphony Space v. Pergola Props., 88 N.Y.2d 466, 475, 646 N.Y.S.2d 641, 669 N.E.2d 799 [1996]). “The underlying objective of the [RAP] remains: to protect the alienability of property” (Bleecker St. Tenants Corp. v. Bleeker Jones LLC, 16 N.Y.3d 272, 276, 920 N.Y.S.2d 291, 945 N.E.2d 484 [2011]).

In Bleecker St. Tenants Corp., the Court of Appeals held that “the [RAP] does not apply to options to renew leases” (id. at 274, 920 N.Y.S.2d 291, 945 N.E.2d 484), reasoning that the RAP codifies the American common law, and “[u]nder the common law, it was well settled that perpetual options to renew leases have always been held valid” (id. at 277, 920 N.Y.S.2d 291, 945 N.E.2d 484 [internal quotation marks and alterations omitted]). In response to the dissent's contention that excluding renewal options from the RAP's coverage would undermine the purposes of the RAP, and could potentially result in a former tenant retaking possession of the property after its lease has expired, the majority explained that “our holding does not leave open this possibility, for an option exercisable by a former tenant no longer in possession is not a renewal option: it is an option to enter into a new lease” (id. at 278, 920 N.Y.S.2d 291, 945 N.E.2d 484). Inasmuch as the lease that occupant would receive should she prove her entitlement to succession rights is a renewal lease, not a new lease (see RSC § 2523.5 [b] [1] [“any member of (a rent-stabilized) tenant's family ․ who has resided with the tenant in the housing accommodation as a primary residence for a period of no less than two years ․ immediately prior to the permanent vacating of the housing accommodation by the tenant ․ shall be entitled to be named as a tenant on the renewal lease” (emphasis added)]), the Bleecker St. Tenants Corp. Court's holding that “the [RAP] does not apply to options to renew leases” (16 N.Y.3d at 274, 920 N.Y.S.2d 291, 945 N.E.2d 484) compels the conclusion that the succession provision of the 1992 stipulation is outside the scope of the RAP.

We have not considered landlord's contention that the succession provision of the 1992 stipulation violates the common-law rule against unreasonable restraints on alienation, as it was improperly raised for the first time before the Civil Court in landlord's reply papers (see Valente v. Dave & Buster's of NY, Inc., 132 A.D.3d 973, 974-975, 19 N.Y.S.3d 533 [2015]; Medugno v. City of Glen Cove, 279 A.D.2d 510, 511-512, 718 N.Y.S.2d 881 [2001]).

With respect to occupant's first affirmative defense, asserting failure to state a cause of action, “no motion ․ lies under CPLR 3211 (b) to strike th[is] defense, as this amounts to an endeavor by [landlord] to test the sufficiency of his ․ own claim” (Butler v. Catinella, 58 A.D.3d 145, 150, 868 N.Y.S.2d 101 [2008] [internal quotation marks omitted]; see Jacob Marion, LLC v. Jones, 168 A.D.3d 1043, 1044, 93 N.Y.S.3d 120 [2019]; Mazzei v. Kyriacou, 98 A.D.3d 1088, 1089, 951 N.Y.S.2d 557 [2012]).

Accordingly, the order, insofar as appealed from, is affirmed.

TOUSSAINT, P.J., MUNDY and QUIÑONES, JJ., concur.