Course of Performance and Pandemic Rent Reductions Can Create Triable Issues of Oral Modification and Promissory Estoppel Despite No‑Oral‑Modification Clauses

Introduction

In 2261 Realty, LLC v. Cai Ping Wang, the Appellate Division, Second Department, revisits the intersection of summary judgment standards, no‑oral‑modification clauses, and pandemic-era course-of-performance evidence in commercial leasing. The case arises from a five-year commercial lease (2017–2022) for a Brooklyn gift shop, in which the landlord sought unpaid rent and additional rent against the tenant and the tenant’s principal guarantor.

The key issues were whether the landlord was entitled to summary judgment for the claimed arrears and whether the tenant’s defenses—premised on promissory estoppel and alleged oral modifications to the lease (including a reduced monthly rent and a two-installment payment schedule)—should be dismissed at the summary judgment stage notwithstanding a lease clause requiring written modifications. The Second Department held that the landlord’s own motion papers created triable issues of fact on those defenses, precluding summary judgment.

Parties:

• Plaintiff/Respondent: 2261 Realty, LLC (landlord).
• Defendants/Appellants: NY PDK Trading, Inc. (tenant) and its principal, Cai Ping Wang (personal guarantor).

Summary of the Opinion

The Appellate Division dismissed the appeal from the interlocutory order as academic upon entry of judgment but reviewed the issues on appeal from the judgment. On the merits, it reversed the Supreme Court’s judgment granting summary judgment to the landlord for $105,365.55 and dismissing the tenant’s fourth, fifth, and sixth affirmative defenses. The appellate court held that the landlord failed to meet its prima facie burden on summary judgment. Specifically:

• The landlord’s own submissions, including an “Arrears Report” ledger, supported the defendants’ assertions that for approximately 3½ years rent was paid in two mid-month installments, and that after the COVID-19 shutdown the landlord consistently accepted a reduced rent from March 2020 through August 2022.
• The landlord did not submit the lease agreement with its motion and provided an affidavit that did not address the alleged COVID-related discussions or rent reduction, which left unresolved factual disputes material to the defenses.
• Because the landlord’s papers failed to eliminate triable issues of promissory estoppel and oral modification by unequivocally referable part performance, summary judgment was improperly granted.

Result: The judgment was reversed; the landlord’s summary judgment motion—and its request to dismiss the fourth, fifth, and sixth affirmative defenses—was denied. One bill of costs was awarded to the defendants.

Analysis

Procedural posture and framing

The landlord first pursued a nonpayment summary proceeding in 2021, which was resolved in August 2022 by stipulation granting a final judgment of possession and a warrant of eviction, stayed through the lease term’s end, while severing monetary claims for a plenary action. After the tenant vacated on October 1, 2022, the landlord sued for unpaid rent and additional rent. The trial court granted summary judgment for the landlord and dismissed several affirmative defenses. On appeal, the Appellate Division applied well-established summary judgment principles and reversed.

Precedents and Authorities Cited

• Matter of Aho, 39 NY2d 241, 248, and CPLR 5501(a)(1): Establish that a direct appeal from an order terminates upon entry of judgment, but the issues raised by the order are reviewable on appeal from the judgment. The court used this to dismiss the appeal from the order while reaching its substance via the judgment.
• Summary judgment standards:
  • Saunders v Nostrand 1543, LLC, 230 AD3d 1261, 1263; Stukas v Streiter, 83 AD3d 18, 22; Walker v Ryder Truck Rental & Leasing, 206 AD3d 1036, 1037–38; Spilman v Matyas, 212 AD3d 859, 860. These cases emphasize viewing the evidence in the light most favorable to the nonmovant, avoiding credibility determinations, and denying summary judgment when facts are in dispute or conflicting inferences exist.
• Promissory estoppel elements:
  • Delmaestro v Marlin, 168 AD3d 813, 816; Matter of Weaver v Town of N. Castle, 153 AD3d 531, 534; Rogers v Town of Islip, 230 AD2d 727. These establish the triad: clear and unambiguous promise; reasonable and foreseeable reliance; and injury from reliance.
• No‑oral‑modification clause and statute of frauds:
  • General Obligations Law § 15-301(1) and B. Reitman Blacktop, Inc. v Missirlian, 52 AD3d 752, 753: Written contracts that require written modifications cannot ordinarily be orally modified.
• Part performance and “unequivocally referable” conduct:
  • Parker v Navarra, 102 AD3d 935, 936; Pace v Robertson, 235 AD3d 989; Singh v Benzina, Inc., 189 AD3d 1494, 1496: An oral modification may be enforceable where there is part performance unequivocally referable to the modification.
  • Vogel v Vogel, 128 AD3d 681, 684; Kirk v Kirk, 207 AD3d 708, 712; Hannigan v Hannigan, 104 AD3d 732, 736: Define the “unequivocally referable” standard—conduct must be inconsistent with any other explanation.
• Proof on a contract claim:
  • VRA Family L.P. v Salon Mgt. USA, LLC, 183 AD3d 614, 615 (cf.): Highlights the importance of submitting the operative contract (here, the landlord did not submit the lease).
• Movant’s burden:
  • Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853: If the moving party fails to establish prima facie entitlement to judgment, the motion must be denied regardless of the sufficiency of the opposition.

Legal Reasoning

The court’s reasoning proceeded in three steps:

1. Summary Judgment Framework: The court reiterated that on summary judgment the movant bears the initial burden of demonstrating entitlement as a matter of law. Evidence must be viewed in the nonmovant’s favor, and any conflicting inferences should favor the nonmovant. When a movant’s own submissions reveal factual disputes, the motion fails.
2. Application to Promissory Estoppel and Oral Modification:
   • Lease Clauses: The lease contained a no‑oral‑modification clause (section 71), a late fee provision (section 61), and an early termination clause permitting cancellation on six months’ prior written notice (section 75).
   • Defendants’ Defenses: The 4th, 5th, and 6th affirmative defenses alleged (a) an agreed two‑installment monthly payment schedule; (b) a COVID-era rent reduction agreed to by the landlord; and (c) reliance on those representations such that the tenant forewent exercising its early termination right.
   • Landlord’s Proof: The landlord submitted a stipulation from the nonpayment proceeding, an affidavit by a member (John Bennardo), and a rent ledger (the “Arrears Report”). Crucially, it did not submit the lease itself.
   • Course of Performance: The ledger, on its face, reflected that for ~3½ years rent was regularly paid in two mid‑month installments (around the 11th and the 21st), no rent was paid during the initial COVID closures, and for the period March 2020 to August 2022 the landlord consistently accepted a reduced rent each month.
   • Inferential Conflicts: That pattern of acceptance of reduced rent and altered payment timing is at least consistent with the tenants’ claims of an oral modification or clear promises supporting promissory estoppel. Because the plaintiff’s own submission supported the tenants’ narrative and the plaintiff’s affidavit did not rebut or explain these patterns—or address COVID-related discussions—the plaintiff failed to eliminate triable fact issues.
   • Statute of Frauds/No‑Oral‑Mod Clause: While GOL § 15‑301(1) would ordinarily bar an oral modification in a contract that requires written modifications, the doctrine of part performance can render an oral modification enforceable if the conduct is “unequivocally referable” to that modification. The multi-year acceptance of reduced rent and changed payment schedule could be found at trial (or on a fuller record) to be such conduct. At the very least, they raise questions for a factfinder.
3. Burden and Disposition: Because the landlord did not meet its prima facie burden—both by omitting the lease and by submitting a ledger that created factual disputes—the court applied Winegrad to deny summary judgment and reinstate the defenses irrespective of the tenant’s opposition papers.

How Each Cited Authority Influenced the Outcome

• Matter of Aho and CPLR 5501(a)(1): Dictated the appellate pathway—dismiss the appeal from the order, but review its issues on appeal from the judgment.
• Saunders, Stukas, Walker, Spilman: Set the standard that where conflicting inferences are possible (e.g., reduced rent could be either a temporary accommodation or an agreed modification), summary judgment is inappropriate.
• Delmaestro, Weaver, Rogers: Gave the framework for evaluating promissory estoppel; the landlord’s silence and ledger patterns prevented the court from concluding as a matter of law that no clear promise or reliance existed.
• GOL § 15‑301(1) and B. Reitman Blacktop: Recognized the no‑oral‑modification barrier, which would help the landlord—but only if no exception applied.
• Parker, Pace, Singh; Vogel, Kirk, Hannigan: Supplied the exception through “part performance” and the demanding “unequivocally referable” standard. The evidence of long‑term acceptance of reduced rent and changed payment timing could be viewed as conduct explicable only by the alleged modification, enough to create a triable issue.
• VRA Family (cf.): Underscored the evidentiary shortcoming of failing to attach the lease on a motion to enforce it.
• Winegrad: Controlled the disposition—movant’s failure ends the inquiry, requiring denial regardless of the nonmovant’s submissions.

Impact and Practical Implications

This decision has significant practical consequences in commercial landlord‑tenant litigation, especially for disputes arising from pandemic-era accommodations:

• Course of Performance Matters: A sustained pattern of accepting reduced rent and altered payment timing can create triable issues of oral modification or promissory estoppel despite a no‑oral‑modification clause. Summary enforcement of the original rent schedule and amounts may be unavailable where such patterns exist.
• COVID‑19 Context Is Legally Relevant: The court expressly noted the shop’s closure and the period of reduced rent acceptance, signaling that pandemic circumstances and parties’ responsive conduct can inform the equitable doctrines at play.
• Documentation Is Crucial for Landlords:
  • Always submit the operative lease when moving for summary judgment on lease obligations.
  • If accepting temporary concessions, memorialize them in writing with clear “no modification” and “reservation of rights” language, including express end dates and statements that accommodations are non‑precedential.
  • Consider timely invoicing of late fees or sending contemporaneous notices to avoid an inference that altered payment schedules were agreed modifications.
• Strategic Lessons for Tenants:
  • Maintain records of communications and a ledger of payments that show the landlord’s long‑term acceptance of altered terms.
  • Tie reliance to concrete actions (e.g., foregoing a contractual early termination right), which can satisfy the promissory estoppel injury prong.
• Litigation Posture: This ruling does not decide that an enforceable oral modification exists; it simply denies summary judgment. On remand, parties should expect focused discovery on the nature of any promises, negotiations during COVID, and the landlord’s intent in accepting reduced or split payments.

Complex Concepts Simplified

• Summary Judgment: A procedure to win a case without trial by showing there are no material facts in dispute and that the movant is entitled to judgment as a matter of law. If the movant’s own evidence shows disputes, the motion fails.
• No‑Oral‑Modification Clause: A contract provision stating that changes must be in writing to be effective. In New York, such clauses are generally enforceable (GOL § 15‑301(1)).
• Part Performance Exception: Even where a contract requires written modifications, an oral modification can be enforced if the parties’ conduct is “unequivocally referable” to the modification—meaning the conduct makes sense only if the modification existed.
• Promissory Estoppel: An equitable doctrine that enforces a promise when a clear promise is made, the other party reasonably relies on it, and suffers harm because of that reliance—even absent a formal contract change.
• “Unequivocally Referable” Conduct: Actions that cannot reasonably be explained by anything except the alleged agreement. Long‑term acceptance of reduced rent and changed payment schedules may qualify, depending on context.
• Final Judgment of Possession and Warrant of Eviction (Stipulation): In summary proceedings, parties may stipulate to possession/eviction issues while “severing” money claims for a separate lawsuit. Such severance preserves the right to litigate unpaid rent later.
• Prima Facie Burden: The moving party’s threshold obligation to present sufficient proof of entitlement to judgment. If it fails, the motion must be denied regardless of the opposition’s quality (Winegrad).

Key Facts Underpinning the Court’s Decision

• Lease Term: Nov. 1, 2017 to Oct. 31, 2022; monthly rent due on the 1st; late fee of 10% if paid more than five days late; modifications must be in writing; tenant could cancel with six months’ prior written notice.
• Pandemic Closure: Tenant’s shop closed for at least two months beginning March 2020; no rent paid during the closure months.
• Course of Performance:
  • For approximately 3½ years, rent payments were made in two installments around the 11th and 21st of each month.
  • From March 2020 to August 2022, the landlord consistently accepted reduced rent.
• Landlord’s Proof Gaps:
  • No copy of the lease submitted with the motion.
  • Affidavit from landlord’s member omitted discussion of COVID-related rent adjustments or efforts to avoid lease cancellation.
• Defenses at Issue:
  • Fourth: Promise to allow payment in two monthly installments.
  • Fifth: Promise to reduce rent due to COVID-19 impacts, with full payment of the reduced amount.
  • Sixth: Reliance on rent reduction promise led tenant not to exercise contractual early termination.

Conclusion

2261 Realty, LLC v. Cai Ping Wang reinforces several bedrock principles of New York practice while giving them contemporary texture in the pandemic context. First, a movant’s failure to meet its prima facie burden—especially by omitting the central contract and tendering evidence that itself creates factual disputes—compels denial of summary judgment. Second, even robust no‑oral‑modification clauses yield to the equitable exception of part performance where the parties’ conduct is “unequivocally referable” to the alleged modification. Third, promissory estoppel remains a viable defense where clear promises, reasonable reliance, and injury are in play.

Practically, the decision cautions landlords: sustained acceptance of reduced rent and altered payment schedules—particularly in response to extraordinary circumstances like COVID‑19—can preclude early judgment enforcement of the original lease terms. For tenants, carefully documented course-of-performance evidence can be enough to reach trial on estoppel and oral modification defenses. The Second Department’s reversal thus ensures that disputes over the meaning and legal effect of pandemic-era accommodations will be resolved on a full factual record rather than truncated at the summary judgment stage.