Statute of Frauds Bars Claim Based on Alleged 99-Year Lease

On August 21, 2019, Justice Ash of the Kings County Commercial Division issued a decision in Roman Catholic Church of the Epiphany v. City of New York, 2019 NY Slip Op. 32783(U), holding that the Statute of Frauds barred a claim based on an alleged 99-year lease, explaining:

The City brings the instant cross motion to dismiss on the essential ground that the Statute of Frauds (General Obligations Law [GOL] § 5-703) bars enforcement of the unsigned purported lease. . . .

GOL § 5-703 (2) provides:

A contract for the leasing for a longer period than one year, or for the sale, of any real property, or an interest therein, is void unless the contract or some note or memorandum thereof, expressing the consideration, is in writing, subscribed by the party to be charged, or by his lawful agent thereunto authorized by writing.

Thus, regardless of what negotiations may have taken place between plaintiff and the City and/or its agencies and regardless of plaintiffs intention to execute a lease to the subject parcel, because the purported lease submitted by plaintiff is unsigned, plaintiff may not claim a valid leasehold interest thereunder. In her affidavit submitted in support of the cross motion to dismiss, Arielle Goldberg, Director of Land Use and Policy, Division of Planning and Pre-Development at HPD' s Office of Neighborhood Strategies, avers that she reviewed HPD's files and has been unable to locate any document, whether signed or unsigned, listing the City (by HPD or any other agency) and plaintiff as parties, including but not limited to any document titled a "Lease" or "License Agreement" or any document(s) referring to any such agreement between the City and plaintiff. In a separate affidavit, Vivian Louie, Assistant Commissioner for the Division of Property Management and Client Services in HPD's Office of Asset and Property Management, likewise asserts that she searched HPD's files and was unable to retrieve any lease or license documents between plaintiff and the City/HPD.

Of course, GOL § 5-703(4) provides that nothing contained in this section abridges the powers of courts of equity to compel the specific performance of agreements in cases of part performance. However, in order to enforce the unsigned lease based upon the equitable doctrine of part performance, plaintiff must demonstrate that it engaged in conduct which was unequivocally referable to the purported 99-year lease. Unequivocally referable conduct is conduct which is inconsistent with any other explanation. It is not sufficient that the unsigned agreement gives significance to plaintiffs actions. Rather, the actions alone must be unintelligible or at least extraordinary, explainable only with reference to the unsigned agreement.

In this matter, plaintiff has not alleged that it engaged in conduct properly considered unequivocally referable to the purported lease, either based on its own maintenance of the subject parcel or by Arriba's maintenance of Epiphany Park. As argued by the City, plaintiff could have performed maintenance and repair work in and around the subject parcel out of a genuine and laudable concern for the safety of the individuals parking their cars on or otherwise using the property, and a reasonable self-interest in avoiding the liability that could result to plaintiff for injuries. Also, plaintiffs upkeep of the subject parcel is at least as consistent with its use of the property under a terminable license as it would be under a leasehold tenancy.

To the extent plaintiff argues that its repair and maintenance of Epiphany Park constitutes part performance, such is likewise not unequivocally referable to the unsigned lease. The lease document submitted by plaintiff makes only a passing reference to the Maintenance Agreement. There is no provision within the purported lease that Arriba's performance under the Maintenance Agreement constitutes the consideration for plaintiff's alleged leasehold. Nor does the Maintenance Agreement indicate that Arriba's performance thereunder is linked with the creation of any leasehold. The only possible reference to consideration in the Maintenance Agreement is contained in the following "Whereas" clause:

WHEREAS, if sufficient funds for construction of capital improvements are made available to HPD, then the City, acting by and through HPD, intends to construct such site improvements in exchange for, and as induced by, Arriba's agreement to maintain the Site under the terms and conditions set forth in this Agreement.

From the foregoing clause it appears that the City is promising to construct improvements to Epiphany Park in exchange for Arriba's maintenance work, rather than granting any leasehold interest to plaintiff. Arriba's agreement to maintain and repair Epiphany Park could also be explained by a charitable motivation to assure a safe and well-maintained park and playground for neighborhood children and/or to improve the quality of the area surrounding plaintiffs house of worship.

While plaintiff argues that the subject parcel was separated from Epiphany Park and the street by a fence and gate, there is no allegation that plaintiff installed the fence and gate following the commencement of the alleged lease term. Insofar as the City may have installed the fence and gate, such would be consistent with the City's claim of ownership of the subject parcel and a desire to keep the property separate and secure for future use as a hockey skate area, as it was officially designated, or for parking and/or storage of its own vehicles.

In short, the Statute of Frauds precludes plaintiff from asserting a 99-year leasehold interest in the subject parcel based on the purported lease document, which is unsigned, and plaintiff has not alleged any conduct which may be properly considered unequivocally referable to the purported 99-year lease to establish an enforceable interest under the part performance exception of GOL 5-703(4).

(Internal quotations and citations omitted).

New York contract law--usually straightforward--has traps for the unwary, like the requirement that some contracts be in writing (the statute of frauds). And as this decision shows, there are ways to escape from those traps, but the exceptions are narrow and difficult to meet. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client face a situation where you are unsure how to enforce rights you believe you have under a contract.