The Law

Language given “fair and reasonable meaning” by Ron Davis A lengthy dispute over the rental amount that owners of a New York business must pay their shopping center landlord has concluded, though not exactly as the owners had hoped. The property, located in the northern area of New York State, is leased by Niagara Falls Mall, Inc. And the issue of rent arose when that longtime property lessee received notice of a rental payment increase. The center owner is Manufacturers and Traders Trust Company. And when the tenant’s top personnel received the notice of that increase, they argued that such a decision was uncalled for, if not illegal. But the lease agreement seemed to allow such a rental increase. The lease provides, for example, “adjustments of the rental amount during the 10th, 20th and 30th years, based on the appraised valuation of the property during the adjustment years.” The first 10-year rental adjustment, however, was based on a separate agreement between the parties rather than the formula set forth in the lease agreement. Moreover, the 20th year rental adjustment was not made because of the formula in the lease agreement between the two parties. So the tenant was obviously surprised to receive the notice of a future rent increase. The tenant resisted paying the additional rent, and the property owner sued. However, by that time the 30th year of tenancy passed without a rental adjustment. The two parties then agreed to have the value of the property determined by three appraisers. Still dissatisfied afterwards, however, the property owner sued. The Supreme Court, Appellate Division ruled that the property owner “met its burden of establishing that it met its obligation...in accordance with the lease agreement.” Moreover, the court, added, “The tenant failed to raise a triable issue of fact.” The judges explained, “We conclude that the court’s declaration that [the tenant] owes increased rent for that period is consistent with equitable principles. But,” added the judges, “the court erred in calculating the amount of the 20th and 30th year adjustments In construing the provision in the lease agreement at issue, our objective is to give the language used by the parties a ‘fair and reasonable meaning.’” Concluded the judges, “We therefore modify the amended order and judgment by reducing the annual amount of rental arrears for the period from December 15, 1989, through December 14, 1999 to $10,800, and the annual amount of rental arrears for the period from December 15, 1999 through December 14, 2007 to $39,096.” (Manufacturers and Traders Trust Company v. Niagara Falls Mall, Inc. (2015 WL 25336 [N.Y. A.D, 4 Dept.]) Decision: January 2015 Published: February 2015