This was originally posted on the SGR Blog.
Did Landlord Have/Fulfill Duty to Mitigate Damages by Reletting?
In 2019, the New York State Legislature amended the Real Property Law to mandate that landlords “shall, in good faith and according to the landlord’s resources and abilities, take reasonable and customary actions to rent the premises” vacated by a tenant during the term of a residential lease. Thus, landlords under residential leases now have the same obligations as commercial landlords to attempt to mitigate their damages when a tenant vacates the premises in violation of the lease. Needless to say, as a recent case illustrates, the Court may be called upon to determine if the actions taken by a landlord to re-let a vacated apartment were reasonable and customary.
The 14 East 4th Street Unit 509 LLC moved for partial summary judgment on its first and fourth causes of action, for breach of contract for unpaid rent and attorney’s fees, respectively, as well as to dismiss affirmative defenses and counterclaim of Michael Toporek—who opposed the motion and cross-moved for summary judgment on all East 4th’s causes of action and on his counterclaim.
In its complaint, East 4th alleged that it entered a lease with Toporek for Unit 509 located at 14 East 4th Street, New York, New York for two years commencing October 23, 2017 and ending on October 31, 2019. Pursuant to the lease, Toporek was obligated to pay base rent in the amount of $17,500.00 per month for the first year and $18,000 per month for the second year. In or about August 23, 2019, East 4th entered a renewal lease with Toporek for the unit for one year commencing November 1, 2019 and ending on October 31, 2020. Pursuant to the renewal lease, Toporek was obligated to pay base rent in the amount of $17,000.00 per month beginning on November 1, 2019.
In or about May 2020, Toporek informed East 4th that he could not pay the rent and he would be vacating the apartment and applying the security deposit toward the rent. In June 2020, Toporek vacated the apartment and surrendered possession of the premises. East 4th alleged that Toporek failed to cure his default under the lease and that $102,000 remained due and owing.
East 4th argued that it was entitled to summary judgment on its first cause of action, breach of contract, because the submission of the lease and proof of non-payment by Toporek established its entitlement to judgment. And, on its fourth cause of action, attorney’s fees. Finally, East 4th sought dismissal of Toporek’s 13 affirmative defenses and counterclaim.
Toporek opposed the motion and argued that East 4th failed to meet its burden of establishing compliance with RPAPL 227-e and that, if the court disagreed, he should be given the opportunity for discovery to support his affirmative defense of mitigation.
This was an action for breach of lease by Toporek. A lease is a contract. The four elements required of a cause of action for breach of contract are: formation of a contract between the parties; performance by plaintiff; defendant’s failure to perform; and resulting damage.
East 4th’s motion was supported by the affidavit of its owner and landlord, Erin Isakov, who had personal knowledge of the underlying facts, as well as copies of the lease and lease renewal, rental log and communications between the parties. It was undisputed that Toporek failed to make the full payment due under the lease from May through October 2020 at the monthly rent of $17,000.00.
Under RPL § 227-e, a landlord has a duty to mitigate its damages. Landlords “shall, in good faith and according to the landlord’s resources and abilities, take reasonable and customary actions” to re-rent a residential unit at fair market value or at the agreed rate during the remaining tenancy term, “whichever is lower”. Here, East 4th established through the affidavit of Isakov, with supporting documentation, that East 4th listed the apartment after Toporek vacated on multiple online rental websites such as StreetEasy, Zillow, Trulia and Naked Apartments; maintained a log of over 60 inquiries potential renters, virtual and in-person showings; and conducted nearly a dozen video walkthroughs and over three dozen live showings until the apartment was ultimately rented in February 2021 for a rental amount within the fair market value when compared to comparable listings.
Toporek vacated and surrendered possession of the premise in June 2020 and then unilaterally elected to have the security deposit applied to the monthly rent in contravention of the lease terms, which provides that “security deposit shall not be used by tenant towards any rent”.
East 4th established prima facie entitlement to summary judgment on its first cause of action, breach of the lease against Toporek in the sum of $102,000.00.
East 4th also moved to dismiss Toporek’s 13 affirmative defenses on the ground that the “defenses are not stated and lack merit” and to dismiss the counterclaim for attorney’s fees.
A party may move for judgment dismissing one or more defenses, on the ground that a defense is not stated or has no merit. In a pleading, statements, including those supporting an affirmative defense, must be “sufficiently particular to give the court and parties notice of the transactions, occurrences of series of transactions or occurrences intended to be proved and the material elements of each cause of action or defense”. An affirmative defense which set forth no factual basis supporting it, must be dismissed.
Toporek’s answer asserted general denials and thirteen affirmative defenses alleging that East 4th failed to mitigate its damages; the Covid-19 pandemic and its effect on the lease created a force majeure; frustration of purpose; breach of duty of good faith and fair dealing; doctrine of unclean hands; unjust enrichment, East 4th’s claims were barred, in whole or in part, because Toporek did not damage East 4th in the sum or manner alleged, or in any sum or manner at all; the claims were barred because Toporek’s actions or omissions were not the proximate cause of any alleged injury, loss and/or damages; and estoppel and waiver. In addition, Toporek asserted a counterclaim for attorney’s fees.
As to the first affirmative defense, mitigation of damages, East 4th properly mitigated its damages under RPL 227-e by taking actions to re-rent the apartment. The affidavit of Erin Isakov outlined her efforts to re-let the apartment and documentation to support that showing. In turn, other than Toporek’s conclusory statement, he failed to raise a triable issue of fact to preclude summary judgment.
The balance of the affirmative defenses contained in Toporek’s answer were not only conclusory, but also failed to include any supporting facts. None of the purported defenses put East 4th on notice as to what the actual defenses alleged. Accordingly, the affirmative defenses and counterclaim for attorney’s fees were dismissed.
Toporek’s cross-motion for summary judgment to dismiss the complaint also was denied. A defendant moving for summary judgment seeking an order dismissing the complaint has the initial burden of coming forward with admissible evidence, such as affidavits by persons having knowledge of the facts, reciting the material facts and showing that the cause of action has no merit. Toporek failed to provide any evidence to support his motion for summary judgement. Moreover, his application was only supported by an attorney affirmation which was insufficient under the CPLR.