WEST BROADWAY GLASS COMPANY, Petitioner/Landlord-Appellant, v. I.T.M. BAR INC., etc., Respondent/Tenant-Respondent.
Order of the Appellate Term of the Supreme Court, First Department, entered on or about December 20, 1996, affirming a judgment of the Civil Court, New York County (Eileen Bransten, J.), entered August 21, 1995, which dismissed the petition in this commercial rent nonpayment proceeding, unanimously modified, on the law, to the extent of remanding to the trial court for an assessment of damages resulting from the landlord's breach of lease, and otherwise affirmed, without costs.
Severe water/sewer problems existed from the commencement of the lease in October 1993, inhibiting the tenant's renovation of the premises and delaying its opening of a bar and restaurant. Full rent abatements were negotiated through October 1994, but the problem persisted. This summary nonpayment proceeding seeks recovery of rent ($18,675) for the period since the last stipulated abatement. The case went to trial on the tenant's affirmative defenses of constructive eviction and breach of lease.
There was no constructive eviction here because the tenant never did abandon the premises (see, Barash v. Pennsylvania Term. Real Estate Corp., 26 N.Y.2d 77, 308 N.Y.S.2d 649, 256 N.E.2d 707), instead continuing its renovation on assurances from the landlord that the problem would be remedied. Nonetheless, as the trial court noted, there was a breach of the lease due to the landlord's renting of premises it knew to be untenantable. However, this does not automatically trigger a 100% rent abatement, because a tenant in possession still remains obligated to pay rent. Rather, the tenant's loss should be the difference between the value of the leased premises as they were intended and the value as a result of the breach (City of New York v. Pike Realty Corp., 247 N.Y. 245, 160 N.E. 359). The measure of such damages remains to be determined. (See, e.g., Greenblott v. Catskill Off-Track Betting Corp., 215 A.D.2d 627, 628 N.Y.S.2d 312; Ciraolo v. Miller, 138 A.D.2d 443, 525 N.Y.S.2d 861.)