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J.N.A. Realty Corp. v. Cross Bay Chelsea, Inc.

Court of Appeals of New York
366 N.E.2d 1313 (1977)


Facts

J.N.A. Realty Corp. (JNA) (defendant) leased commercial property to a restaurant for a 10-year term, with an option to renew for another 10-year term. The lease required the restaurant to inform JNA at least six months prior to the end of the lease term if it wished to exercise the option. Cross Bay Chelsea, Inc. (Chelsea) (plaintiff) offered to buy the lease, but under the condition that the option be modified to be a 24-year term. JNA agreed to modify the option as requested. All other terms of the lease remained unchanged. Chelsea purchased the lease, as well as some fixtures and chattels then existing on the property. Chelsea began to occupy the premises and made improvements upon the property while there. During Chelsea’s tenancy, JNA regularly reminded Chelsea in writing of its obligations under the lease. One such letter was sent two weeks prior to the time the option was set to expire, but made no mention of the option. JNA informed Chelsea approximately two weeks prior to the end of the lease term that the option had expired and Chelsea would need to vacate the premises at the end of the lease term. Chelsea shortly after provided notice of its intention to exercise the option, but JNA refused to honor the option. Chelsea brought suit. The trial court held that Chelsea was entitled to equitable relief. JNA appealed to the Appellate Term. The Appellate Term affirmed. JNA appealed to the Appellate Division. The Appellate Division reversed the trial court. Chelsea appealed to the Court of Appeals of New York.

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Dissent (Brettel, C.J.)

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