| ICSC Legal Database - Cases | Monday, February 22, 1999 05:04 PM |
| Citation: |
| Arnot Realty Corp. v. New York Tel. Co., 665 N.Y.S.2d 478 (App. Div. 1997). |
| Issue: |
| (1) Whether a Plaintiff–Landlord may recover damages for breach of an agreement by a Defendant–Tenant to |
| remove fixtures and alterations to the premises upon the request of the Plaintiff, even if such request is made |
| after Defendant has vacated the premises? |
| (2) Whether a tenant can be held liable for asbestos removal on the basis of a lease covenant to tender the |
| premises to landlord at the conclusion of the lease in “broom clean” condition? |
| (3) Whether a landlord may recover holdover damages from a tenant who has vacated the premises, but who |
| has breached covenants to repair? |
| (4) Whether a tenant responsible for “all necessary structural and roof repairs and replacements” is obligated |
| to undertake necessary asbestos removal? |
| Facts: |
| In 1970, Plaintiff–Realty Corporation agreed to construct a building for |
| Defendant–Telephone Company, with plans and specifications to be approved by Defendant, as well as to lease |
| such building to Defendant for a 15-year term with options to extend. One year later, the parties executed an |
| amendment to the lease, shifting responsibility from Plaintiff to Defendant for “all necessary structural and roof |
| repairs and replacements” in exchange for a 7.15% annual reduction in rent. Defendant occupied the premises |
| from 1971 until 1993, at which time Plaintiff had the premises inspected. The inspection revealed asbestos in |
| the first and second floor ceilings, the result of fireproofing done during the building’s construction. Plaintiff |
| called on Defendant to make the necessary repairs to the ceilings, citing Defendant’s obligation to maintain the |
| building in good condition and Defendant’s assumption of responsibility for structural repairs. Defendant refused |
| Plaintiff’s demand, contending that asbestos removal was not within the scope of the required structural repairs |
| and that Defendant’s only obligation was to return the premises in the same condition as upon delivery, less |
| reasonable wear and tear. |
| Plaintiff brought suit in the New York Supreme Court, alleging four causes of action. After discovery, Defendant |
| moved for summary judgment dismissing all causes of action. The Supreme Court granted Defendant’s motion |
| as to the third cause of action. In addition, the Court also granted summary judgment to Plaintiff on the first, |
| second, and fourth causes of action upon its own review of the record. Both parties appealed. |
| Holding: |
| (1) Summary judgment for Plaintiff on the first cause of action is affirmed. Defendant is liable since the relevant |
| lease provision explicitly provided that it survived the termination of the lease. |
| (2) Summary judgment for Plaintiff on the second cause of action was reversed. Issues of fact still remain as |
| to whether the loosening of asbestos was “normal wear and tear.” If the problems from asbestos arose from |
| ordinary events (e.g., vibrations from nearby trains), then Defendant is not liable; if loosening of asbestos |
| occurred from Defendant’s use, then Defendant would be liable. Only a finder of fact can make this |
| (3) Summary judgment for Defendant on the third cause of action was affirmed. New York case law has |
| repeatedly upheld the proposition that a tenant who has vacated premises but breached covenants to repair |
| cannot be held liable for holdover rent while the repairs are made and the premises unleased. |
| (4) Summary judgment for Plaintiff on the fourth cause of action was reversed, and summary judgment was |
| granted in favor of the defendant. Asbestos removal did not fall under the scope of “structural repairs,” for it was |
| a government mandate that the parties did not contemplate at the time of the lease. That the government would |
| mandate such remedial measures 20 years later could not have been foreseen at the time. Defendant |
| assumed responsibility for structural repairs. |
| Classification 1: |
| Landlord and Tenant |
| Classification 2: |
| Covenants/Clauses |
| 01483 - Journal - Fall 1998 |
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