Strict Adherence to Lease Cure Provisions and Limited Scope of Counterclaim Waivers in Commercial Ejectment Proceedings

1. Introduction

Stamp Rite Tool & Die Corp. v. Branded Leather, Inc. (2025 NYSlipOp 01832) arises from a dispute over a ten-year commercial lease in Queens County, New York. Stamp Rite (landlord) entered into a written lease with Branded Leather, Inc. (tenant) in 2014, allocating responsibility for structural and non-structural repairs, prohibiting hazardous uses, and expressly reserving cure and termination procedures. In 2017, Branded sublet the premises to Dedi Corp., which operated a kitchen. In early 2021, landlord’s counsel issued violation letters citing propane tanks, sewage backups, and non-office use, then served a lease cancellation. Landlord sued for ejectment and unpaid charges; tenant and subtenant counterclaimed for landlord’s breach, repair obligations, rent abatement, and declaratory relief. Before discovery concluded, landlord moved for summary judgment on ejectment and to dismiss counterclaims. The Supreme Court denied both requests; the Appellate Division affirmed on appeal.

2. Summary of the Judgment

The Appellate Division, Second Department, unanimously held:

Landlord failed to establish prima facie entitlement to summary ejectment because triable issues existed regarding (a) whether landlord waived its right to terminate by acquiescing in subtenant’s kitchen use for years, and (b) whether the tenant defaults could have been cured within the 15-day cure period or, if not, whether the tenant diligently commenced cure.
Lease provisions limiting counterclaims and set-offs did not, as a matter of law, bar tenant counterclaims for breach and declaratory relief. Such counterclaims were “inextricably intertwined” with landlord’s demand for unpaid charges and governed by statute (Real Property Law §235-h).
Accordingly, landlord’s motion pursuant to CPLR 3212 (summary judgment) and CPLR 3211(a)(1) (documentary-evidence dismissal) was properly denied.

3. Analysis

3.1 Precedents Cited

Blake Rising, LLC v. Atlantic Collision, Inc. (186 AD3d 551): Standard for summary ejectment requires proof of landlord’s ownership, right to immediate possession, and tenant’s present occupation.
City of New York v. Anton (169 AD3d 999): Reinforces three-part ejectment test.
150/160 Assoc. v. Mojo-Stumer Architects (174 AD2d 658): Lease terms bind landlord and tenant rights/duties.
Simon & Son Upholstery v. 601 W. Assoc., LLC (268 AD2d 359): Conduct of the parties can modify original lease expectations and effect waiver.
Jannace v. Nelson, L.P. (256 AD2d 385): Landlord must strictly comply with cure and termination provisions to effect a valid lease termination.
Sunset Café, Inc. v. Mett’s Surf & Sports Corp. (103 AD3d 707): Documentary-evidence dismissal under CPLR 3211(a)(1) only where papers utterly refute allegations.
All 4 Sports & Fitness, Inc. v. Hamilton, Kane, Martin Enters., Inc. (22 AD3d 512): Counterclaims “inextricably intertwined” with landlord’s claim warrant refusal to enforce waiver clauses.
Real Property Law §235-h: Tenant’s statutory right to declaratory and injunctive relief in summary proceedings cannot be waived by lease.

3.2 Legal Reasoning

(a) Lease Termination and Cure Requirements: Article 17(1) of the lease distinguished between rent defaults (no grace period) and non-rent defaults (15-day cure period, followed by five-day cancellation notice if uncured). Landlord’s motion did not conclusively show that the alleged defaults (barbecue propane storage, kitchen use, sewage backup) were incurable within 15 days or that tenant did not promptly begin cure within that period. Moreover, landlord’s years-long tolerance of kitchen operations raised a factual question about waiver of its right to enforce office-only use.

(b) Non-Waiver Clause versus Waiver by Conduct: Although the lease contained a non-waiver clause (Article 25), equitable principles and Simon & Son Upholstery require examination of subsequent conduct. A landlord can, by words or actions, effectively waive strict rights—even in the presence of a non-waiver provision—if the parties’ reasonable expectations evolve.

(c) Counterclaim Waiver Provisions: Articles 4 and 26, and the rider’s Paragraph 10 purported to bar all counterclaims or set-offs. The Appellate Division emphasized that (i) waivers cannot override Real Property Law §235-h, which protects tenants’ rights to declaratory and injunctive relief in summary proceedings; and (ii) where tenant’s counterclaims for breach and declaratory relief are inextricably tied to landlord’s money judgment for unpaid rent and charges, enforcement of waiver clauses would yield an inequitable result. Under Sunset Café, the lease did not “utterly refute” the factual bases of the counterclaims.

3.3 Impact

This decision underscores two critical principles for commercial landlords and tenants in New York:

Strict compliance with lease-specified cure and termination procedures is essential. A landlord cannot shortcut statutory and contractual notice and cure requirements and still obtain summary ejectment.
Lease clauses purporting to waive counterclaims and set-offs will be narrowly construed. Tenants retain statutory rights to declaratory and injunctive relief, and intertwined breach claims cannot be barred by boilerplate waiver language.

Future litigants will need to (1) document cure opportunities and tenant responses carefully, and (2) draft waiver provisions with precise carve-outs consistent with Real Property Law §235-h and with awareness that “inextricably intertwined” counterclaims may survive.

4. Complex Concepts Simplified

Summary Ejectment: A fast-track legal remedy for landlords to remove holdover tenants. It requires proof of ownership, tenant’s possession, and landlord’s immediate right to possession.
Cure Period: A specified timeframe in the lease during which a tenant can remedy a non-payment or non-monetary default before the landlord may terminate.
Non-Waiver Clause: A contract provision stating that failure to enforce a right on one occasion does not waive that right in the future. Despite its presence, conduct can still give rise to waiver.
CPLR 3212 (Summary Judgment): A motion seeking judgment as a matter of law where no material facts are in dispute.
CPLR 3211(a)(1): A motion to dismiss based on documentary evidence, granted only if the documents conclusively negate the opponent’s claims.
Real Property Law §235-h: Protects tenants’ rights to assert statutory counterclaims (e.g., repair or habitability disputes) in summary proceedings, which cannot be waived in a lease.

5. Conclusion

Stamp Rite Tool & Die Corp. v. Branded Leather, Inc. establishes that a landlord’s right to ejectment hinges on strict adherence to contractually and statutorily mandated notice and cure procedures, and that express non-waiver or no-counterclaim provisions in a commercial lease will not bar a tenant’s declaratory relief or intertwined breach claims. The ruling reaffirms equitable limits on contractual waivers and underscores the continuing vitality of Real Property Law §235-h. Landlords must therefore proceed with precision in enforcing defaults, and tenants remain protected against overly broad waiver clauses in commercial leases.