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Lease Renewal Option Missing Essential Element Found Void and Unenforceable

Lease Renewal Option Missing Essential Element Found Void and Unenforceable

In Vizel v. Vitale, the plaintiff-tenant and defendant-landlord argued in cross-motions for summary judgment over whether a renewal option for the operative lease was valid or invalid as a matter of law.

The landlord argued that because the option-to-renew clause did not identify a rent amount or methodology to calculate rent during a renewal, it was therefore unenforceable. The tenant argued that the option was binding because the renewal rent would increase by three percent annually as the rental amounts increased throughout the lease term, and claimed he timely exercised his option and was not in default at the time he opted to renew.

The Court found in favor of the landlord, concluding that because the lease did not contain a methodology to determine missing rent for the renewal period, and the renewal clause was silent as to renewal rent, the lease option was missing an essential element and unenforceable and void as a matter of law. The Court declared the tenant a holdover tenant, and granted the landlord use and occupancy as he was entitled to holdover rent from expiration to the time the tenant vacates the premises, and issued a warrant of eviction.

In so concluding, the Court reasoned that the “doctrine of definiteness or certainty is well established in contract law.” A court cannot enforce a contract unless it is able to determine what in fact the parties have agreed to, and if an agreement is not “reasonably certain in its material terms,” there can be no legally enforceable contract. It noted that “a mere agreement to agree, in which a material term is left for future negotiations, is unenforceable.”

Using a well-defined test established by the State’s highest court, the Court stated there are two ways in which the requirement of definiteness could be satisfied in the absence of an explicit contract term: (1) an agreement could contain a methodology for determining the missing term within the four corners of the lease, for a term so arrived at would have been the end product of agreement between the parties themselves; or (2) an agreement could invite recourse to an objective extrinsic event, condition or standard on which the amount was made to depend.

The lease renewal option stated in relevant part:

At the option of the Tenant, the term of the Lease shall extend for an additional five (5) year period from July 1, 2015 to June 30, 2020 provided Tenant provides written notice to the Owner by certified mail, with return receipt to be received by the Landlord no later than April 1, 2015 provided the Tenant is not in default of any provisions of the Lease as amended and modified.

Clearly, the lease did not within its four corners contain a methodology to determine the missing rent for the renewal period, nor invited recourse to an objective extrinsic event, condition or standard on which the amount was made to depend. It was silent as to a renewal rent. For this reason, the Court determined that the lease option-to-renew “is missing an essential element and is therefore void and unenforceable.”

Fashion Magazine Interns Were Not Employees Under FLSA

Fashion Magazine Interns Were Not Employees Under FLSA

In Wang v. The Hearst Corporation, unpaid interns for various fashion magazines brought a putative class action against the corporation that owned the magazines, alleging they were “employees” entitled to minimum wage under, among other things, the Fair Labor Standards Act (FLSA). The United States District Court for the Southern District of New York denied the interns’ motion for partial summary judgment and class certification and the interns appealed. The Second Circuit Court of Appeals held that there was a connection between one intern’s formal education program and her internship, even though she did not receive academic credit for internship, and the totality of the circumstances supported a finding that the interns were not “employees” entitled to minimum wage under FLSA.

As the Court stated, the question before it was whether Hearst “furnishes bona fide for-credit internships or whether it exploits student-interns to avoid hiring and compensating entry-level employees.”

In determining the question, the Court noted that the U.S. “Supreme Court has long recognized that not every individual who performs a service for an employer qualifies as an ‘employee’ under the FLSA,” and applied the Court’s “primary beneficiary” test as the way to distinguish employees from bona fide interns. “To guide our ‘flexible’ analysis,” the Court wrote that it weighed and balanced the totality of the circumstances while looking to “seven non-exhaustive considerations specific to the context of unpaid internships:

  1. The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee—and vice versa;
  2. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions;
  3. The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit;
  4. The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar;
  5. The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning;
  6. The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern;
  7. The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.

The Court further noted that the “totality of the circumstances should be considered in view of the ‘purpose of a bona fide internship … to integrate classroom learning with practical skill development in a real-world setting.’”

The plaintiffs conceded that as to factors one and seven (expectation of payment and entitlement to a job, respectively), they had none. As for the second factor (training), the Court concluded that this “clearly contemplates that training opportunities offered to the intern include ‘product[s] of experiences on the job.’” The Court also found that “the internships did provide beneficial training” and for this reason the plaintiffs had “also misread the closely related” fifth factor (valuable duration) in “arguing that the interns were not receiving ‘beneficial learning’ when they performed repetitive or similar tasks they had already ‘learned,’” noting that as “exemplified by the meeting minutes and photoshoots, practical skill may entail practice, and an intern gains familiarity with an industry by day to day professional experience.” As for factors three and four, the Court said that these “relate to the integration of the internship to the student-intern’s academic program and academic calendar, respectively,” and that in general “the internships were arranged to fit the academic calendar and required academic credit as a prerequisite.” For factor three (academic integration) all interns, except one that had interned between the completion of her undergraduate degree in fashion and the start of her graduate degree, also in fashion. But for her, the Court concluded that she “intentionally deferred her start date for graduate school and took a full time internship at a Hearst magazine to gain professional experience” and concluded that a jury is “not necessary to infer from these undisputed facts” that her internship was “tied to” her formal education. The “program required a student to earn approval from an accredited university for the ‘receipt of academic credit’ generally is more telling than whether credit was actually awarded in that individual’s case.” As for the sixth factor (displacement) the Court examined the “extent to which an intern’s work complements the work of paid employees or displaces it, and although the district court found that the sixth factor favored the interns because the interns completed some work regularly performed by paid employees, the Court concluded that this factor “alone is not dispositive. An intern may perform complementary tasks and in doing so confer tangible benefits on supervisors.”

Thus, the Court affirmed the district court’s conclusion that the interns were not “employees” for the purposes of the FLSA.

“Life Partner” Was Not Child’s Parent

“Life Partner” Was Not Child’s Parent

In Garnys v. Westergaard, a life partner of a child’s deceased mother filed a visitation petition. The Family Court dismissed petition and the life partner appealed. The Appellate Court held that the life partner was not the child’s “parent,” and thus she did not have standing to seek visitation with the child, even if the life partner played a role in the daily upbringing of the child from his birth until his mother became ill.

According to the decision of the Appellate Division, Second Department, in May 2015, the child’s biological mother died of cancer. The mother was not married when the child was born in 2005, and a second parent is not listed on the child’s birth certificate. Prior to her death, the mother executed a will providing that Kermit Stang Westergaard and Azadeh Houshyar Westgaard, the child’s maternal uncle and aunt, be appointed the child’s guardians. In January 2016, the uncle and aunt filed a petition pursuant to Family Court Act Article 6 to be appointed the guardians of the child. In June 2016, while the guardianship proceeding was pending, the petitioner commenced this proceeding pursuant to Family Court Act Article 6 against the uncle and aunt, seeking visitation with the child. The uncle and aunt moved to dismiss the visitation petition, arguing that the petitioner lacked standing to seek visitation under Domestic Relations Law § 70, and the Family Court granted the motion and dismissed the visitation petition. The petitioner appealed.

The Appellate Court found that the “Legislature has clearly limited the right to seek visitation to noncustodial parents, grandparents, and siblings.” Here, the petitioner argued that she should be considered a “parent” under the law because “she moved in with the mother shortly before the child’s birth, she played a role in the daily upbringing of the child from his birth until the mother became ill, and she and the mother considered each other ‘life partners,’ even though they never married or registered as domestic partners.” Noting that a recent decision from the State’s highest court expanded the definition of parent “beyond biological and adoptive parents to include a person who establishes, by clear and convincing evidence, that he or she agreed with the biological parent of the child to conceive and raise the child as co-parents, the Court concluded that petitioner “failed to sustain her burden of establishing standing to seek visitation. The petitioner failed to demonstrate that the mother consented to anything more than the petitioner assisting her with child-rearing responsibilities. For example, the petitioner does not contend that the child referred to her as his mother, and the petitioner was not listed as a parent on school records or legal documents. Most importantly, after the mother was diagnosed with terminal cancer, she executed a will providing that the respondents be appointed the child’s guardians.”

“Under the particular circumstances of this case,” the Court agreed with the Family Court that the respondent lacked standing to seek visitation.

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