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Separate Leases, Separate Terms
by Ron Davis
Plans to oust an unwanted tenant from a New York shopping center have not worked out as the centerís owner obviously hoped.
The shopping center is William Floyd Plaza on Long Island, and the tenantóGenovese Drug Stores, Inc.óhad leased space there since 1975. That location seemed suitable for the tenantís business goals. So much so, in fact, that the tenant in 2000 leased an additional 3,000 square feet of space at William Floyd Plaza.
But the following year, the two parties agreed to terminate the lease for the additional space. That termination agreement specifically provided that it applied only to that additional space. So the tenantís right to continue the occupancy of the original premises was not affected.
Despite that right, however, the centerís owner in 2006 attempted to terminate the lease of the entire space the tenant occupied. The centerís owner explained that the termination language of the lease of additional space allowed such action.
The tenant responded to that attempt by suing the centerís owner, arguing that the termination of the lease of additional space had no bearing on the original lease. The tenant also wanted the courts to ďpermanentlyĒ prevent the centerís owner from interfering with the tenantís possession of the original leased premises.
Nevertheless, the centerís owner initiated legal action to evict the tenant.
A New York court ruled in favor of the tenant, thereby allowing the tenant to continue to operate its business at the shopping center and to permanently prevent the centerís owner from attempting to terminate the tenantís lease.
The centerís owner appealed.
A New York appellate court agreed with the lower court, explaining, ďThe plain language of the agreement by which the tenant leased the additional premises provided that the terms of the agreement, which included the right to terminate upon which the [centerís owner] relies, applied only to the lease of the additional premises and not to the lease of the original premises. The tenant thus established that the [centerís owner] had no authority to terminate the lease of the original premises.Ē
The court did, however, overrule the lower courtís decision to permanently prevent the centerís owner from terminating the tenantís lease at its expiration. (Genovese Drug Stores, Inc. v. William Floyd Plaza , LLC, 2009 WL 1886122 [N.Y. A.D. 2 Dept.])
Decision: June 2009
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