Tenant Evicted for Nonpayment Can't Blame Landlord for Wrecking His Business

March 28, 2019

What Happened: A tenant who hasn’t paid rent for two straight months is aggravation enough for any landlord. But when the tenant who skips rent has just borrowed $6 million from you to make improvements to its manufacturing facility, the stress level is that much worse.

What Happened: A tenant who hasn’t paid rent for two straight months is aggravation enough for any landlord. But when the tenant who skips rent has just borrowed $6 million from you to make improvements to its manufacturing facility, the stress level is that much worse. In this case, when the tenant failed to cure the default and come up with the money, the landlord decided to reenter the space and move the equipment and machinery (which were security for the loan) into storage, effectively putting the tenant out of business and forcing him to default on his loans. Outraged, the tenant not only fought the eviction but hit the landlord with a laundry list of counterclaims, including tortious interference with contract and failure to act in good faith.

Decision 1: The New York court dismissed the tortious interference with contract claim.

Reasoning: Tortious interference occurs when a person deliberately induces a third person to break a contract—for example, “I’ll give you $10,000 if you don’t show up for your gig at XYZ Casino tonight and perform at my place instead.” But that’s not what happened in this case. Although the landlord’s actions ultimately caused the tenant to default on his contracts, it didn’t do anything to induce any third parties to breach their contracts with him, the court explained.

Decision 2: The court also dismissed the tenant’s lack of good faith claim.

Reasoning: The tenant’s argument was that the landlord’s refusal to renegotiate the lease was a breach of its implied covenant of good faith and fair dealing. But the court wasn’t impressed. The lease didn’t say the landlord had to renegotiate the lease if the tenant was in default. What the lease did say was that if the tenant was in default, the landlord could terminate the lease, reenter the premises, and remove the tenant’s personal property and effects. And that’s precisely what the landlord did.

  • Canandaigua Natl. Bank & Trust Co. v. Acquest S. Park, LLC, March 2019

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