34th Street Penn Association, LLC v. Payless Shoesource, Inc., New York County Landlord-Tenant Index No. 075998/2012
This commercial landlord-tenant case involved a straight-forward issue of contract interpretation. The tenant, a retailer, was, allegedly, concerned about leasing space in a building that had no tenants for its other retail space. Thus, the lease contained a clause providing that the tenant would receive a fifty percent reduction in Minimum Rent until “DSW and Walgreens” were “open and operating in the Building.” or a year had passed from the rent commencement date.
DSW opened in the building and Duane Reade/Walgreens thereafter sublet its space to Party City which opened in the building. (The Court does not address this issue, but the “Duane Reade/Walgreens” formulation likely arises from Walgreens acquisition of Duane Reade.)
It is well settled that a lease is a contract which is subject to the same rules of construction as any other agreement.
The court held for the tenant. First, it observed that “It is well settled that a lease is a contract which is subject to the same rules of construction as any other agreement.” It ruled that the language of the lease “was clear and unambiguous in providing that the responded need only pay 50 percent of the rent until both DSW and Walgreens opened.” Under these circumstances, the Court found “no need to resort to the parol or extrinsic evidence offered by the parties. . . . ” The court continued that parol and extrinsic evidence was particularly inappropriate where the lease was negotiated by sophisticated business people.
The lesson of 34th Street Penn Association is that when a court believes that a lease is clear, it will enforce the lease according to its terms and not consider parol or extrinsic evidence as to the lease’s meaning.