DECISION AND ORDER Upon review of the Respondent’s Motion to Dismiss, Petitioner’s Affirmation in Opposition and Respondent’s Reply Affirmation and following oral argument, the Decision and Order of the Court is as follows: Respondent’s Motion to Dismiss is granted in its entirety.On or about December 1, 2013 Petitioner and Respondent entered into a lease for the premises located at 815-817 39th Street, Brooklyn, NY 11232. The lease term extended from December 1, 2013 until November 30, 2018. Pursuant to the lease, the Respondents possessed the option to extend the lease for an additional five years, conditioned upon the Respondent providing the Petitioner 90 days’ notice of the intent to exercise this option. On August 17, 2018 the Petitioner landlord sent a Five-Day Notice to the respondent requesting payment of $43,306.91, for late charges from March 2014 through November 2015, January 2016 through July 2018 as well as additional fees for July 2018.Respondent sent a correspondence responding to the Rent Demand on August 22, 2018 indicating the Car-Tone Auto Collision, Inc./Car Tone Auto Enterprise Inc, Car did not owe any late charges to 815-817 39th Street, LLC. On August 28, 2018, Respondent sent correspondence to Petitioner indicating their intent to extend the lease term. On November 30, 2018, Petitioner filed a Non-Payment petition against Respondent alleging arrears in the amount of $45,833.15. Respondent filed an Answer on December 5, 2018 and the matter was calendared to the Commercial Housing Part 52 on December 12, 2018. On December 12, 2018, Petitioner and Respondent appeared with Counsel and entered a Stipulation outlining a motion schedule. The matter was adjourned to January 24, 2019. Respondent filed a Notice of Motion on January 16, 2019; Petitioner filed an Affirmation in Opposition on January 18, 2019 and Respondent filed a Reply Affirmation on January 24, 2019. Parties accepted service on all motion papers. Oral arguments on the motion were heard by this jurist on January 24, 2019.ANALYSIS & DISCUSSIONThe issues presented in this matter are waiver, breach of contract and the imposition of late fees as a penalty.Prior to addressing the main issues presented in this case, the court must first address the moving papers of the Petitioner landlord. The parol evidence rule “prohibits the introduction of evidence outside a written agreement for the purpose of varying or adding to such an agreement…” Katz v. Am. Tech. Indus., Inc., 96 A.D.2d 932, 932-33, 466 N.Y.S.2d 378, 380 (1983). It is well settled in this matter that the petitioner and respondent had a fully executed lease which proscribed their obligations as landlord and tenant. However, petitioner, through their moving papers attempted to introduce documents outlining the prior negotiations and lease drafts between the parties. The offered documents were not executed and appear to be the basis of the parties’ contract negotiations. The inclusion of these documents is a clear violation of the parol evidence rule by the Petitioner. This court would be remiss if it held every party to the terms offered, considered and debated during contract negotiations. Doing so would effectively deter opposing parties from negotiating and attempting to reach a settlement amongst themselves if they knew that the court would hold their negotiations against them. The court encourages parties to negotiate and discuss settlement on terms both parties can adhere to. That lease entered into between the parties on December 1, 2013 is the sole binding lease in this matter. The lease outlines the responsibilities and expectations of each party and dictates how breaches should be handled. Additionally, it affords each side a remedy to curing any breaches. It is improper for petitioner to attempt to sway this Court of the respondent’s intentions based upon prior documents that were not entered into as a final contract between the parties. Therefore, the prior contracts and negotiated but not executed leases and documents submitted by the Petitioner were not considered by the Court and bear no relevance to the matter before the Court.A waiver is defined as “the intentional relinquishment of a known right — it must be clear, unequivocal and deliberate.” Columbus Park Corp. v. Dep’t of Hous. Pres. & Dev. of City of New York, 170 A.D.2d 145, 149, 574 N.Y.S.2d 680, 683 (1991), rev’d, 80 N.Y.2d 19, 598 N.E.2d 702 (1992). Further, a waiver has been defined as “the voluntary and intentional relinquishment of a contract right, “‘should not be lightly presumed’ and must be based on ‘a clear manifestation of intent’ to relinquish a contractual protection” Stassa v. Stassa, 123 A.D.3d 804, 805, 999 N.Y.S.2d 116, 119 (2014).In the matter before the Court, both petitioner and respondent, through their respective papers indicate that respondent effectuated payment of the rent for the leased premises during the lease term from December 2013 through November 2018. Where the two sides differ is the essence of this case. Respondent indicates that all payments were made, though admittedly not always on time as prescribed by the lease. Respondent argues that they were never in breach of the contract as the Petitioner did not seek late fees, never added additional rent to their monthly payments and did not revoke their lease or initiate any legal action against them.1 In contrast, petitioner states that the respondents did not fulfill their obligation under the lease as the tenant did not remit payments on time as outlined by the lease. Additionally, the petitioner argues that since the lease is a two-attorney contract, it is outside the purview of the Court.It is well settled practice that the trial court has the jurisdiction and obligation to review all admissible evidence offered at the time of trial. Additionally, it is recognized that the trial court may review all testimony, documentary evidence, and is the sole judge of the witnesses’ presentation, truthfulness, reliability, motive and mental capacity at the time of trial. The issues contained in this case were brought before the Court upon the filing of a Non-Payment petition on November 30, 2018. Issue was joined on December 12, 2018 when both parties appeared with counsel in Part 52, the commercial housing part. Therefore, the Court determines that the lease in question is within the Court’s jurisdiction and may be reviewed by this Court in making its final determination.As to the issue of waiver and breach of contract, the evidence submitted by counsel, including the affidavits of Harvey Pincus as Managing Member of 815-817 39th Street, LLC and Anthony Cotona as President of Car-Tone Auto Collision, Inc. and Car Tone Auto Enterprise Inc. reflects that the Petitioner Landlord knew of the alleged breach, continued accepting rent from the respondents, did not take any affirmative action to have defendant’s cure the alleged breach via any of the remedies contained within the lease and failed to commence a cause of action prior to the respondent’s notification of intent to exercise its option to renew.Many commercial leases contain clauses for late fees, legal fees, damages and other remedies put in place to ensure compliance to the contract, timely payment of rent and to give advance notice of available options to settle any foreseeable breach of the contract. As these rules are not codified in statute but through the lease itself, it routinely falls to the court to interpret the clauses to deem which clauses are viable and enforceable. Here, the lease covers a term of five years from December 2013 through November 2018. The submitted affidavits of each party state that the first alleged late payment was in March 2014, wherein late fees were waived by the petitioner and the late payment was accepted. Further the affidavits, ledgers and testimony received indicate that during the five year lease term, the respondent’s remitted other late payments without penalty. The petitioner did not proactively seek any remedy. For example, the petitioner did not add late fees to any invoice following late payment from the prior month; the petitioner did not send correspondence to the respondent indicating accumulated arrears and over the course of the five year lease term never commenced an action for non-payment until November 30, 2018. Under the definition of “waiver”, this course of action by the petitioner seems voluntary, deliberate, knowing and intentional as to continuing the lease with knowledge of the breach.The court in Gordon v. Eshaaghoff, 60 AD3d 807, 876 N.Y.S.2d 433 (A.D., 2D Dept., 2009) held that void evidence submitted at trial to demonstrate the plaintiff ever imposed a fee, seeking late fees at such a late date is tantamount to a penalty to coerce respondent as opposed to an avenue of compensation for the alleged breach by respondent. See also Brenner v. Gen. Plumbing Corp., 46 Misc. 3d 1215(A), 13 N.Y.S.3d 849 (N.Y. Civ. Ct. 2015). The court further elaborated this point in Pyramid Centres & Co. v. Kinney Shoe Corp., 244 A.D.2d 625, 626, 663 N.Y.S.2d 711 (1997) where the Supreme Court found “that the damages sought by plaintiffs were so disproportionate to the actual loss suffered that the practical result of such a provision could be generally construed as designed to compel and coerce the continued performance of a party.”. In the case at hand, plaintiffs seek damages/late fees in the amount of $45, 833.15 for the periods of March 2014 through November 2015 and January 2016 through July 2018. Of note, is that there is a gap from November 2015 to January 2016 (December 2015 is omitted), which leads this Court to believe that respondent paid on time in December 2015, which, if true would mean that any arrears would either have been resolved or the petitioner waived the previous late fees. Petitioner alleges that the amount of arrears accumulated due to the respondent tenants not remitting timely rent. However, based upon a review of the papers submitted, the Petitioner does not proffer any contemporaneous monthly invoices or requests made to respondent seeking payment of late fees either as a separate invoice or as added rent. Furthermore, petitioner did not commence any other non-payment petitions when the alleged arrears became due previously. Rather, the petitioner allowed the arrears to accumulate to a significant amount and then commenced a holdover petition upon the respondent attempting to exercise their option to renew.Aside from the previous model, there are other ways that a waiver may occur. Previous courts have held that, “acceptance of rent by a landlord from a tenant with knowledge of the tenant’s violation of the terms of the lease normally results in a waiver of the violation.” Jefpaul Garage Corp. v. Presbyterian Hosp. in City of New York, 61 N.Y.2d 442, 447, 462 N.E.2d 1176 (1984). The court in Jefpaul states that the burden and option rests with the landlord to acknowledge the breach and take steps to terminate the lease or cure the default. Id. at 448. In the matter before the court, the respondent acknowledges late payment of rent, however, the respondent points out that the petitioner landlord continuously accepted the late rent. The petitioner landlord did not offer any contradictory information that would rebut the respondent’s claims. Petitioner indicated that they did accept late payment of the rent, therefore continuing the landlord — tenant relationship for the full five-year lease term. Ignoring the breach and accepting the rent constitutes a waiver of the breach and further indicates that the petitioner landlord was willing to continue the lease with the respondent tenant. Id. at 448.In Brenner, the court opined that an imposition of late fees so far into the lease and after the alleged breach took place were unenforceable as a matter of fact and law as the petitioner had not sought late fees prior to the commencement of the action. Id. at 23. In this case, the petitioners did not seek any late fees during 2014 to 2018, rather they only sought late fees on the eve of the lease expiring in November 2018 and four years after the alleged breach commenced. The petitioner landlord knowingly waived the breach of contract.Therefore, this court finds the late fees sought to be an imposition of a penalty and a tactic to prevent the respondent from exercising their lease option.CONCLUSIONFollowing a complete review of the motion papers, considering all admissible evidence and information and after hearing oral arguments on the motion, this court finds that the Petitioner landlord waived the alleged breach of contract by the Respondent tenant. The court also finds that the relief requested is a penalty being levied by the Petitioner against the Respondent. Respondent’s Motion to Dismiss is hereby granted in its entirety.This constitutes the Decision and Order of the Court.Dated: May 16, 2019Brooklyn, New York
