Landlord Can't Seek Damages from Tenant That Ran Homeless Shelter

Landlord sued the City of New York, its Department of Homeless Services, and the Salvation Army, which had leased landlord's building. Tenant operated a homeless center there under an agreement with the city. Tenant terminated the lease after the city terminated the service contract. Landlord then sought damages from tenant, claiming that the building was returned in bad condition that would cost $200 million to repair. The court dismissed the case. Landlord appealed, and the case was reinstated. Tenant then appealed to New York's highest court. 

The court ruled for tenant. Landlord claimed that the lease termination was ineffective. The court disagreed. The lease didn't require landlord to accept the termination. Landlord could have insisted that the lease remain in effect and that tenant continue to pay rent until the building was repaired. But once landlord accepted the $10 million termination fee payment called for by the lease, it was precluded from claiming that the termination was ineffective based on tenant's failure to return the building in pre-lease condition.

JFK Holding Company LLC v. City of New York: 2013 NY Slip Op 07512, 2013 WL 6008902 (Ct. App. NY; 11/14/13; Smith, J, Lippman, CJ, Graffeo, Read, Pigott, Abdus-Salaam, JJ)