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Seepage, Smells Irk Tenant
by Ron Davis
A tenant of a New York shopping center had good cause to violate the terms of his lease by ceasing rental payments. So ruled a New York court in a lawsuit that focused on a supposedly iron-clad lease between the tenant and his landlord.
The shopping center, located in Hempstead, had rented space to the tenant for the operation of a bar and grill. The lease between the two parties contained terms that prevented the tenant from taking any legal action in case of any disputes.
Those terms were soon tested when the tenant complained of sewage and waste seeping into his premises. Such seepage, the tenant claimed, had occurred over several years and had resulted in a loss of business and good will of customers. The tenant eventually stopped paying his rent, and when the shopping center’s owner threatened to terminate the lease, the tenant asked the courts to intervene.
The shopping center’s owner responded by noting that the tenant had agreed in writing not to take any legal action against him. Furthermore, the center’s owner added, the tenants of the shopping center were responsible for maintaining and repairing the sewer lines.
Meanwhile, however, the center’s owner pleaded guilty in a Hempstead court to causing raw sewage to discharge onto the floors of stores in the center, thereby endangering the welfare of the occupants and customers.
A New York court ruled in favor of the tenant, finding that failure of the center’s owner to address the sewer problem was a “major health issue that affected the business of the tenants.”
The center’s owner accepted that decision but then terminated the lease of the tenant on grounds that the tenant violated the lease terms by taking legal action.
The tenant appealed, and a New York again court sided with the tenant, explaining, “Perhaps the most common mutual agreement, implied in all leases, is that of good faith and fair dealing. This agreement requires both parties to deal honestly and fairly with the other and encourages them to interpret and implement the lease in a manner that effects the agreement’s spirit and letter. The landowner in this case has violated the principles of good faith and fair dealing by allowing sewage and waste to be a major headache for this tenant. This type of behavior cannot be rewarded by enforcement of the lease. This court finds that it would be unconscionable to allow the tenant to be evicted under these circumstances.” (Malik v. Toss 29, Inc., Slip Copy 2007 WL 926297 [N.Y. Dist.Ct.).
Decision: March 2007
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