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Contract Interpretation: Words Have Meaning

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  • Posted on: Jul 3 2024

By: Jeffrey M. Haber

As readers of this Blog know, we have frequently written about how courts enforce contracts that are clear and unambiguous. In fact, many of our articles on this subject reflect this fundamental principle of contract interpretation in their title: “The New York Court of Appeals Reminds Litigants That Words In Contracts Have Meaning”; “Contracts That Say What They Mean, Mean What They Say” and “Contracts That Say What They Mean, Mean What They Say Redux”. 

Today, we examine Stolzman v. 210 Riverside Tenants, Inc., 2024 N.Y. Slip Op. 03563(1st Dept. July 2, 2024) (here), a case involving the enforcement of a contract that was clear and unambiguous in its language.

The issue in Stolzman concerned the scope of a shareholder’s right under a lease to replace an air conditioning unit on the roof of the building in which he lived.

In 1991, defendant granted plaintiff’s predecessor a license to use a 20-square foot space on the roof of the building (the “Space”) “for the installation of an air conditioning unit … serving the Apartment, and for no other purpose.”  In 2002, the 1991 license agreement was amended to, among other things, remove the forgoing language and permit plaintiff’s predecessor, as lessee, “and [l]essee’s successors and assigns” to “use the Space for an air-conditioning unit (“Air Conditioning”) serving the Apartment, and for no other purpose.”  The license required the lessee to “maintain such Air Conditioning in accordance with all applicable legal requirements” and specified that the granted rights were “deemed appurtenant to ownership of the Proprietary Lease and cooperative shares allocated to the Apartment” and were irrevocable.  

In 2018, plaintiff listed the apartment for sale. Defendant refused to provide any assurances to any prospective buyers or plaintiff concerning the air conditioning unit and reserved the right to refuse consent to a replacement. 

Plaintiff moved for a declaratory judgment that the 2002 license agreement gave him and his successors and assigns the right to replace the air conditioning unit; for breach of the license agreement; for breach of the proprietary lease; for tortious interference with prospective business relations; and for a permanent injunction, enjoining the cooperative from continuing its alleged breaches and tortious conduct. Following defendant’s answer denying liability and asserting several affirmative defenses, plaintiff moved for summary judgment on his remaining claim for breach of the license agreement after the motion court dismissed all other causes of action. The motion court denied plaintiff’s motion for summary judgment finding that the 2002 license agreement was ambiguous as to whether it “permits [plaintiff] to replace the existing air-conditioning unit.” The motion court stated that “[i]n short, the text of the agreement may reasonably be read as permitting only use of the existing air-conditioning unit, and also as permitting both use of that unit and its replacement with a new unit.” 

On appeal, the Appellate Division, First Department held that the motion court improperly denied plaintiff’s motion for summary judgment. The Court found that the “license agreement, which was irrevocable, permitted plaintiff to maintain an air conditioner on the roof of the building, and was unambiguous in permitting plaintiff the ability to install a replacement air conditioner on the roof of the building.”1

The Court explained that “[u]nlike the 1991 agreement, the 2002 license,” which the Court held was the “controlling” agreement, “broadly permit[ed] the lessee and all successors to use the Space for ‘an air-conditioning unit.’”2 “There is no qualifying language limiting the use of the Space to the existing unit as defendant contends,” said the Court.3  

“Further,” noted the Court, “while the 1991 license was limited to a 10-year term and for so long as the original lessee held title to the proprietary lease, the rights set forth in the 2002 license apply to successor owners, are appurtenant to the cooperative shares and are irrevocable, supporting the practical and eventual need to replace the existing unit.”4 

The Court rejected defendants’ interpretation of the 2002 license agreement – i.e., that the agreement required the lessee to “maintain” the unit, without reference to its replacement.5 “This position,” said the Court, “ignores the rest of the explicit language of paragraph 2 [of the 2002 license agreement], which is not susceptible to more than one interpretation.…”6  

The Court also rejected “defendant’s reliance on extrinsic evidence, including the 1994 and 1995 negotiations between the parties, … because parol evidence is not admissible to create an ambiguity in a clear agreement.”7

Takeaway

“The best evidence of what the parties … intend is what they say in their writing.”8 Thus, when the contract is clear and unambiguous (i.e., it says what it means) and is susceptible to only one meaning, it should be enforced according to the plain meaning of those words.9 That was the situation in Stolzman.


Footnotes

  1. Slip Op. at *1.
  2. Id. at *2.
  3. Id.
  4. Id. (citing Ellington v. EMI Music, Inc., 24 N.Y.3d 239, 244 (2014) (“Where the terms of a contract are clear and unambiguous, the intent of the parties must be found within the four corners of the contract, giving a practical interpretation to the language employed and reading the contract as a whole”)).
  5. Id.
  6. Id. (citation omitted).
  7. Id. (citation omitted).
  8. Slamow v. Del Col, 79 N.Y.2d 1016, 1018 (1992).
  9. See, e.g., W.W.W. Assoc. v. Giancontieri, 77 N.Y.2d 157, 162 (1990).

Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP.

This article is for informational purposes and is not intended to be, and should not be taken as, legal advice.

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