Lease Bars Tenant's Claims for Lost Profits During Renovation Work

Section 7: [T]here shall be no allowance to Tenant for a diminution in rental value, and no liability on part of Landlord by reason of inconvenience, annoyance or injury to person(s), property or business arising from the making of any repairs, alterations, additions or improvements in or to any portion of the building or the premises or in or to the fixtures, appurtenances or equipment.

Rider: Landlord represents that any work performed by Landlord, as may be provided herein, shall be done in a reasonable and expeditious manner and that such work. . . and shall not interfere with the day-to-day operation of Tenant's business, nor obstruct any entry nor permanently take away any more than a minimal and necessary party of Tenant's space in the demised premises.

What Happened: A New York City restaurant sued its landlord for damages and business profits it claimed it lost while renovation and remodeling work was performed on the building. The landlord argued that Section 7 barred the tenant’s claims. The tenant replied that the Rider to Section 7 made an exception to the no-damages rule covering lost profits as a result of construction during the tenant’s business hours.

Decision: The New York court dismissed the tenant’s claims.

Reasoning: The language of Section 7 is unambiguous, the court reasoned: “there shall be no liability on part of Landlord by reason of. . . injury to. . . business arising from the making of any repairs, alterations, additions or improvements” (emphasis added by court). The Rider doesn’t contradict that essential point, the court concluded.  

• Abigael’s on Broadway Inc. v. Shorenstein Realty Servs., LP., 2019 N.Y. Misc. LEXIS 4321, 2019 NY Slip Op 32357(U)