§ 22.03 Theories of Liability

• Jurisdiction: United States
• Publication year: 2022

§ 22.03 Theories of Liability

The covenant of quiet enjoyment is considered breached when a tenant is evicted by either the landlord or its agent, the landlord's successor in interest, or one asserting a paramount title to the tenant.¹ The landlord or party disturbing the tenant is liable to the tenant for breaching the covenant of quiet enjoyment. The theories discussed in this section are the bases under which a tenant whose quiet possession rights have been disturbed can bring an action against the wrongdoer.

Several bases for a claim against a landlord for its disruption of a tenant's possessory rights are asserted in the implied covenant of quiet enjoyment context. These are: (1) actual eviction; (2) constructive eviction; (3) partial actual eviction; (4) eviction by title paramount; and (5) eviction by strangers. However, the two major types of wrongful eviction are actual and constructive.

[1]—Actual Eviction

[a]—Generally

An actual eviction occurs when a landlord or one with a superior title to the landlord deprives a tenant of the beneficial use, occupancy or enjoyment of its leased premises or a substantial part of the premises.² The tenant must continue to meet its obligations even when the landlord is in default. Only then will the tenant have a set off right.

In an actual eviction, the landlord ousts the tenant from physical possession of the leased premises. An actionable actual eviction is one in which the "landlord wrongfully ousts" the tenant from physical possession of the leased premises. It should be emphasized that to constitute an actual eviction, whether partial or total, there must be a physical expulsion or exclusion. For an actual eviction, the landlord must deprive the tenant of physical use, occupancy and possession of the premises. Without proof to that effect, a tenant cannot sustain its claim for actual eviction.³

Suppose a fire damages a building and a tenant is deprived of the use of its premises for a substantial period of time. Despite the duration or even permanency of this deprivation, a tenant cannot prevail on a claim that its landlord actually evicted it unless it is able to show that the landlord was in some way responsible for the tenant's displacement from the premises or that it undertook contractual obligations for such in the quiet enjoyment clause or elsewhere in the lease, such as in the fire and casualty section.

[b]—Partial Actual Eviction

A related theory of liability is the partial actual eviction, where a tenant is deprived of some portion of the premises. In a New York case, Eastside Exhibition Corp. v. 210 E. 86th Street Corp., a tenant brought an action based on partial actual eviction against his landlord claiming the "one-inch" rule should apply, which should entitle him to receive a 100% abatement in rent.⁴ New York is one of the few jurisdictions that recognize such a claim, but it requires the parties to show a substantial taking of the premises before allowing a rent abatement.⁵

On December 2002, the defendant landlord entered Eastside's space to construct steel crossbeams in that space as part of its preparatory work in adding two stories to the building. While the interference was relatively insignificant (the crossbeams took a total of only twelve square feet of space), Eastside went to court for an injunction and began withholding rent relying on the "one-inch" rule and the theory of partial actual eviction. Under the terms of the lease, which runs until December 16, 2016, for "15,000 to 19,000 square feet," the defendant landlord is allowed access to the premises at reasonable times to make repairs and improvements. The lease provides that the tenant will not receive a rent abatement either while the work is in progress for any diminishment of rental value arising from these repairs or improvements.

In allowing the a far-reaching remedy of the one-inch rule, the courts justified the discharge of a complete rental payment on the notion that "no man may be encouraged to injure or disturb his tenant in his possession, whom, by policy of the feudal law he ought to protect and defend."⁶ The New York Appellate Division took a swipe at the venerable but relatively obscure "one-inch" rule and some of the notable members of the national real estate bar are up in arms to modify the decision.⁷

In deciding for the landlord, the Appellate Division upheld the lower court's findings that while the lease allowed the landlord to enter the premises to make alterations in connection with the building addition, it did not authorize the landlord to permanently deprive the tenant of its use of any portion of the premises.⁸ While recognizing tenant's rights under a partial actual eviction, both the trial and appellate courts found the defendant's alterations to be so small a physical and operational intrusion to amount to a "de minimus" or "insubstantial" taking and thus an exception to the rule that partial actual eviction warrants a total rent abatement.

While the decision seems to make sense, it woefully ignores the fact that the tenant's possessory interest in the lease should be supreme and that it was violated.⁹ What the court appears to be saying is that an owner may intrude upon a tenant's fee regardless of the permanence of the intrusion, so long as a court will be able to see such intrusions as "de minimus" or "insubstantial." While the facts in the Eastside case could easily lead to application of the "no harm no fault" rule, a far more reaching principle is being violated and ignored by failing to protect the tenant's possessory rights under the lease. If, by analogy, someone owned all except a small portion of property, which was located right in the middle of the plot and owned by the proverbial widow, there would be a public outcry if that landowner built his structure over the widow's parcel. The scenario in Eastside is quite similar. While the owner's rights to do alterations without tenant retribution were governed by the lease itself, even the appellate panel recognized that the owner's rights did not extent to improvements, which would deny the tenant's operational and possessory rights, no matter how small. Where the Eastside Court differed with its predecessors, however, was its fashioning of a "common sense" rule to leave the improvements in place instead of stopping the owner from making those improvements. The decision sanctifies the landlord's unauthorized actions, reducing the issue to one of mere compensation.

Perhaps, the "one-inch" rule is archaic in the twenty-first century world of real estate. But the repudiation of this rule in Eastside seems to send a signal that landlords can ignore a tenant's possessory rights, wrongfully intrude or build on the premises and be subject to only monetary damages. The primacy of possessory rights is completely ignored! Perhaps the early commentators had it right—the tenant's rights are supreme, even with respect to the owner. Tenants need to be protected from bullying owners who may believe that they have rights to use or modify a tenant's premises without notice, permission or a contractual right to do so under the lease. If the "one-inch" rule seems harsh in this regard, then let it stand until the courts and parties can better determine what intrusions are permitted, uphold the tenant's possessory rights, and make sure that the landlord's actions will not harm the tenant's use of the premises. It should be determined what intrusions violate any or all of these rights. Then, perhaps, a better rule can be adopted.

[2]—Constructive Eviction

Constructive eviction is a more subtle form of eviction. While not actually depriving the tenant of possession, the landlord's actions cause the premises to be untenantable. The landlord either obstructs the tenant's use or enjoyment of the premises, renders the premises unfit or unsuitable for occupancy for the purpose for which the tenant leased them or deprives the tenant of the value that the tenant has paid for the lease. If the tenant can prove that the landlord has conducted itself in such a manner, the tenant is allowed to abandon the premises and terminate the lease and all rent obligations under the lease.¹⁰

There is little difference in how the various jurisdictions define constructive eviction. Generally, it is found to have occurred when a landlord's actions deprive the tenant of the beneficial use of its premises in accordance with the lease terms.¹¹

When asserting a constructive eviction defense, the tenant must establish the following: (1) substantial interference by the landlord, its successor or one asserting paramount title; (2) abandonment of the premises by the tenant within a reasonable time after the landlord's transgressions; and (3) that the abandonment was directly related to the landlord's transgressions.¹²

[a]—Substantial Interference

The tenant's burden of showing that the landlord had "substantially interfered" with its occupancy is a major obstacle to establishing a constructive eviction claim. For example, if a landlord fails to make relatively minor repairs or improvements that do not materially interfere with the tenant's right or ability to use the premises, the courts will not sustain a constructive eviction claim.¹³

Roof leaks are often the basis of successful constructive eviction claims. The courts are inclined to find the existence of constructive eviction when there is a pattern of leaks into the premises resulting in flooded and unsafe areas as well as physical damage to the premises.¹⁴ Delays in repairing the premises, particularly during a tenant's seasonally active period, can be aggravating circumstances supporting a constructive eviction claim.

A landlord's interference with a tenant's receipt of basic services, such as water, heat and electricity,¹⁵ obstruction of access to the premises or building,¹⁶ or a landlord's harassing behavior¹⁷ have also been found to be the basis for constructive eviction claims.

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