In Popyork, LLC v. 80 Court St. Corp., 23 AD3d 538, 806 N.Y.S.2d 606, 2005 N.Y. Slip Op. 08965, the Appellate Division, Second Department, found that the tenant, which operated a fast food restaurant, was entitled to relief from the consequences of its untimely renewal.
The tenant paid $550,000.00 to acquire the former tenant's rights over two years after the initial term of the lease had commenced as well as invested approximately $300,000.00 in improvement.
The court reasoned that the tenant stood to lose its goodwill that it shared with that local community as its customer base and the landlord offered no evidence that it was prejudiced by late notice of the lease renewal option which it received approximately four months before the fifth term of the lease was due to expire.
The Appellate Division, relying on the three-prong test established above, and on Street Beat Sportswear v. Waterfront Realty, 6 AD3d 693, 775 N.Y.S.2d 160; Comprehensive Health Solutions v. TrustCo Bank Nat'l Assn., 277 AD2d 861, 715 N.Y.S.2d 796; O'Malley v. Ruggiero, 245 AD2d 1129, 667 N.Y.S.2d 531; Dan's Supreme Supermarkets v. Redmont Realty Inc., 216 AD2d 512, 628 N.Y.S.2d 790, determined that although it was undisputed that the Plaintiff failed to timely exercise its option, equity should intervene to relieve the tenant of the consequences of an untimely renewal where the elements of the three-prong test are found.
The declaratory judgment action was remitted to the Supreme Court for an entry of a judgment declaring that the Plaintiff effectively exercised its option to renew the lease.