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135 East 57th Street LLC v. Daffy’s Inc.

Appellate Division of the Supreme Court of New York
934 N.Y.S.2d 112 (2011)


Daffy’s Inc. (Daffy’s) (defendant) was a popular discount clothing retail chain in New York City. One of Daffy’s locations was on 57th Street, where it leased space from 135 East 57th Street LLC (135 East) (plaintiff). Daffy’s executed a lease with 135 East in 1994. Under the terms of the lease, Daffy’s had an option of two five-year renewal terms. The first of these options had to be exercised by January 31, 2010, in writing. Although Daffy’s intended to exercise its option to renew the lease, Daffy’s corporate controller accidentally missed the option date. Daffy’s verbally notified 135 East of its intent to renew on February 4, 2010, then notified Daffy’s in writing on February 9, 2010. 135 East sought a declaratory judgment that Daffy’s had failed to timely renew its lease. At trial, Daffy’s late renewal was found to be a mistake made in good faith, and Daffy’s delay was found to have not prejudiced 135 East. Daffy’s presented evidence that it painted the retail space when it first entered into the lease with 135 East. The trial court issued a declaratory judgment that Daffy’s was entitled to equitable relief because Daffy’s had made improvements to the property that would cause Daffy’s to suffer a forfeiture if the lease were terminated. Consequently, the trial court excused Daffy’s late renewal. 135 East appealed.

Rule of Law


Holding and Reasoning (Saxe, J.)

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