Fourth Department – Reformation of lease: Laun v. Stewart

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New York State Supreme Court, Appellate Division, Fourth Judicial Department

Breach of good faith and fair dealing

Reformation of lease

Laun v. Stewart

CA 25-00732

Appealed from Supreme Court, Seneca County

Background: The plaintiff commenced an action asserting numerous causes of action arising from a joint venture with one of the defendants that involved house flipping. Another defendant owned a marina that was in a deteriorated condition and the parties agreed to lease the marina for five years with an option to purchase. There was a falling out between the parties and their joint venture ended. Both parties of the joint venture sought to purchase the marina. The purchase option was not exercised before the end of the five-year lease and the first defendant purchased the property from the second defendant.

Ruling: The Appellate Division held that the defendants’ motions seeking to reform the lease ought to have been granted. On its face, the lease indicated a total of six years but, through deposition testimony, it was the understanding of the parties that the term would be five years before the option to purchase expired. Additionally, the defendants did not breach the covenant of good faith and fair dealing as testimony demonstrated that the first defendant said that his interest in purchasing the property depended upon whether the terms of sale were similar to those set forth in the lease. This did not show that an agreement had been made prior to the lease period and option expiring.

Gregory L. Silverman for the plaintiff-appellant-respondent; Christopher A. Schiano, of Schiano Law Office, and Fernando Santiago, of Santiago Burger, for the defendants-respondents.

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