Eastside Exhibition Corp.v.210 E. 86th St. Corp.

In February 1998, plaintiff Eastside Exhibition Corp. entered into a lease with defendant 210 East 86th Street Corp. to occupy two floors in defendant's seven-story retail and office building to operate a multiplex movie theater with 1,150 seats and four screens.¹ The lease ran from March 1, 1998 to December 16, 2016.² Article 13 of the lease permits the landlord to enter the demised premises to make repairs and improvements and provides that there be no abatement of rent during the time such work is in progress. Article 4 of the lease provides that there be no allowance to the tenant for the diminution of rental value arising from the making of any repairs or improvements.³

More than nine years ago, in December 2002, defendant landlord, without giving notice to or receiving permission from plaintiff, entered the demised premises and installed cross-bracing between two existing steel support columns on both of plaintiff's leased floors.⁴ This caused a change in the flow of patron foot traffic on the first floor and a slight diminution of the second-floor waiting area.⁵ The concededly unaesthetic cross-bracing was placed in preparation for the addition of two additional floors to the building.⁶ Plaintiff ceased paying rent as a remedy for the alleged actual partial eviction.⁷ Plaintiff commenced this action, seeking a permanent injunction barring defendant from doing any further work in the premises and directing defendant to remove the cross-bracing.⁸ Plaintiff also sought an abatement of its rent obligation.⁹ Supreme Court granted plaintiff a temporary restraining order on any further work by defendant and also ordered defendant to expeditiously complete the current work.¹⁰ Subsequently, a nonjury trial was held to determine whether the cross-bracing constituted an actual partial eviction so as to allow for the complete abatement of rent.¹¹ At trial, the parties stipulated that the total area of the premises was between 15,000 and 19,000 square feet and that the cross-bracing occupied approximately 12 square feet.¹²

Supreme Court, as relevant here, dismissed plaintiff's claim and entered judgment for defendant for unpaid rent.¹³ In its decision, the court acknowledged that the lease did not grant the landlord the right to permanently deprive the tenant of any portion of the demised premises.¹⁴ The court noted that such a deprivation will normally result in liability for all rent being suspended although the tenant remains in possession of the portion of the premises from which he was not evicted.¹⁵ Here, the taking of 12 square feet of non-essential space in plaintiff's lobby constituted a de minimis taking not justifying a full rent abatement.¹⁶ The Appellate Division modified on the law, holding that there is no de minimis exception to the rule that any unauthorized taking of the demised premises by the landlord constitutes an actual eviction.¹⁷ However, the court declined to award plaintiff a full rent abatement, stating that current landlord/tenant realities make it particularly untoward automatically to apply harsh and oppressive strictures derived from feudal law that mirror the policies and concerns of that earlier society and that in light of that, the remedy is to compensate plaintiff for its actual damages.¹⁸ The Appellate Division remanded the matter to Supreme Court for a hearing to determine actual damages.¹⁹

The hearing on damages was held three years later.²⁰ Plaintiff proffered two witnesses, who were unable or unwilling to estimate actual damages, essentially testifying that damages were impossible to determine given the significant number of variables in the motion picture theater industry.²¹ After the hearing, Supreme Court found that plaintiff failed to establish any damages and made no award to plaintiff.²² The Appellate Division affirmed, declining to revisit legal issues as it felt bound by the law of the case as earlier expressed in the first Appellate Division order.²³ The Court of Appeals granted plaintiff leave to appeal and affirmed on different grounds.²⁴