author: Read, J. Smith, J.

text:
    [4 NE3d 336, 981 NYS2d 326]
    Eujoy Realty Corp., Respondent, v Van Wagner Communications, LLC, Appellant.
    Argued October 8, 2013;
    decided November 26, 2013

      POINTS OF COUNSEL

      Scheichet & Davis, EC., New York City (Victor E Muskin and Rhine Z. Aung of counsel), for appellant.
    I. Respondent’s unpleaded claim for posttermination rent should be dismissed. (1251 Ams. Assoc. II, L.P. v Rock 49th Rest. Corp., 13 Misc 3d 142[A], 2006 NY Slip Op 52282[U]; Matter of Bombay Realty Corp. v Magna Carta, 100 NY2d 124; Ronnen v Ajax Elec. Motor Corp., 88 NY2d 582; Herter v Mullen, 159 NY 28; Matter of Ryan, 294 NY 85; In re Roth & Appel, 181 F 667; Cornwell v Sanford, 222 NY 248; Banque Worms v BankAmerica Intl., 77 NY2d 362; Bank of New York v Spiro, 267 AD2d 339; Werner v Padula, 49 App Div 135.) II. Respondent’s claim is barred by General Obligations Law § 7-103. (Matter of People v Booke, 58 AD2d 142; Matter of Perfection Tech. Servs. Press [Cherno-Dalecar Realty Corp.], 22 AD2d 352, 18 NY2d 644.) III. Respondent’s “due date” argument should not have been entertained. (Lumbermens Mut. Cas. Co. v Morse Shoe Co., 218 AD2d 624; Ritt v Lenox Hill Hosp., 182 AD2d 560.) IV The majority’s grant of summary judgment for respondent improperly adjudicated triable issues of fact under appellant’s alternative claims. (Rose v Spa Realty Assoc., 42 NY2d 338; Joseph P. Day Realty Corp. v Lawrence Assoc., 270 AD2d 140; Holt v Feigenbaum, 52 NY2d 291; Triple Cities Constr. Co. v Maryland

      Cas. Co., 4 NY2d 443; Stendig, Inc. v Thom Rock Realty Co., 163 AD2d 46; Riverside Research Inst. v KMGA, Inc., 108 AD2d 365; Esteve v Abad, 271 App Div 725; Sillman v Twentieth Century-Fox Film Corp., 3 NY2d 395.)

      Schnaufer & Metis, LLP, Hartsdale (John C. Schnaufer and Peter Metis of counsel), for respondent.
    I. No new theory of recovery was advanced by landlord before the motion court. (Lumbermens Mut. Cas. Co. v Morse Shoe Co., 218 AD2d 624.) II. Tenant is obligated to pay the annual basic rent for 2007, notwithstanding termination of the sign lease on January 8, 2007. (Madison Ave. Leasehold, LLC v Madison Bentley Assoc. LLC, 8 NY3d 59; 34 W. 34th St. Corp. v Nehama Realty Corp., 7 Misc 2d 532; Giles v Comstock, 4 NY 270; Matter of Ryan, 294 NY 85; Bottlers Seal Co. v Rainey, 225 NY 369; Werner v Padula, 49 App Div 135, 167 NY 611; Smathers v Standard Oil Co., 199 App Div 368, 233 NY 617; Goldsmith v Schroeder, 93 App Div 206; Sperry v Miller, 8 NY 336; 1251 Ams. Assoc. II, L.P. v Rock 49th Rest. Corp., 13 Misc 3d 142[A], 2006 NY Slip Op 52282[U].) III. Tenant was not entitled to a notice of default under article 43 of the lease before landlord could sue for the rent and the termination of the lease did not extinguish landlord’s right to sue for the 2007 rent. (219 Broadway Corp. v Alexander’s, Inc., 46 NY2d 506; Geraci v Jenrette, 41 NY2d 660; Sperry v Miller, 8 NY 336; Aronson v Markulin, 39 Misc 2d 273; Petrelli v Kagel, 37 Misc 2d 246; Hampton v Flesser, 133 Misc 705.) IV General Obligations Law § 7-103 does not apply to an annual installment of rent which the tenant is obligated to pay in advance on the first day of the year. (34 W. 34th St. Corp. v Nehama Realty Corp., 7 Misc 2d 532.) V Tenant’s position on the no waiver clause of the lease is incorrect. (Jefpaul Garage Corp. v Presbyterian Hosp. in City of N.Y., 61 NY2d 442; Excel Graphics Tech, v CFG/AGSCB 75 Ninth Ave., 1 AD3d 65; Monarch Info. Servs. v 161 William Assoc., 103 AD2d 703; Dennis & Jimmy’s Food Corp. v Milton Co., 99 AD2d 477, 62 NY2d 613; Renali Realty Group 3 v Robbins MBW Corp., 259 AD2d 682; Pollack v Green Constr. Corp., 40 AD2d 996, 32 NY2d 720.) VI. Tenant can neither factually nor as a matter of law establish an oral agreement which modifies or amends the lease or creates an estoppel. (Joseph P Day Realty Corp. v Lawrence Assoc., 270 AD2d 140; Rose v Spa Realty Assoc., 42 NY2d 338.)
   OPINION OF THE COURT

Read, J.

This appeal calls upon us to interpret a lease’s payment terms. We conclude that the pertinent lease obligated defendant tenant Van Wagner Communications, LLC (Van Wagner) to pay the full annual basic rent for calendar year 2007 to plaintiff landlord Eujoy Realty Corp. (Eujoy) on January 1, 2007. Although Van Wagner terminated the lease a week later, the parties did not agree in the lease to apportion rent posttermination except in specified circumstances not relevant here; and Van Wagner’s claim that the parties agreed orally to such apportionment is barred by the lease’s “no oral modification” clause.

I

Eujoy owns a building in Maspeth, Queens, with a steel frame structure for advertisements atop the roof. Van Wagner is in the outdoor advertising business in the New York City region and other major metropolitan areas in the United States. On October 18, 2000, Van Wagner leased Eujoy’s billboard for a period of 15 years, commencing December 1, 2000 and ending September 30, 2015. Schedule A of the lease, which details the amount of “basic rent” for each year during the lease’s term, states as relevant to this appeal that

“[t]he basic rent . . . shall be in the following amounts and paid as follows:
“A. Basic Rent . . .
“Lease Year 7—The annual basic rent for the period January 1, 2007 through December 31, 2007 shall be $96,243.00 which [Van Wagner] shall pay in advance on January 1, 2007 . . .
“C. No Return of Basic Rent, . .
“Should this Lease be terminated for any reason prior to the date of its expiration, [Van Wagner] shall not be entitled to the return of. . . any basic rent paid in advance and covering a period beyond the date on which the Lease is terminated, provided, however, that . . . should this Lease be terminated pursuant to either Article 9 [fire or casualty], 10 [condemnation] or 50 [the enactment of any law making the billboard’s use illegal], the basic rent shall be paid through the date of termination and basic rent paid on account of any period subsequent to termination of the Lease shall be returned to [Van Wagner]” (emphasis added).

Van Wagner considered Eujoy’s billboard desirable for advertising because of its visibility to passing traffic on the nearby Long Island Expressway (LIE). The parties therefore executed article 53, a second rider to the agreement, to give Van Wagner the right to terminate the lease if this view was ever “substantially obstructed]” by “the erection of a new building or the increase in height of a building between the location of [the billboard] and the [LIE].”

In early January 2007, Van Wagner forwarded Eujoy a check for $96,243, the annual basic rent for the year; the check was dated January 2, 2007. Van Wagner quickly stopped payment, however, later claiming that “due to an internal oversight,” this check was “accidentally” and “erroneously” issued. Then on January 16, 2007, Van Wagner’s executive vice-president wrote a letter to Eujoy’s co-owner to confirm his conversation with her brother, another co-owner, of January 10, 2007 advising him that Van Wagner had terminated the lease, effective January 8, 2007, pursuant to article 53. A check for $2,109.43, representing rent for the period of January 1 through January 8, 2007, was enclosed with this letter.

By complaint dated October 17, 2007, Eujoy sought, in a first cause of action, the balance of the basic rent for 2007 ($96,243.00 - $2,109.43 = $94,133.57); and, in a second cause of action, asked for reasonable legal fees and costs incurred because of Van Wagner’s default on its alleged payment obligation under the lease. Eujoy asserted that schedule A required Van Wagner to pay the basic rent for 2007 in advance on January 1, 2007. In its answer dated November 16, 2007, Van Wagner advanced several affirmative defenses. These included assertions that the lease, and therefore Van Wagner’s obligation to pay rent, terminated as of January 8, 2007; and that it properly stopped payment, and the lease did not entitle Eujoy to rent not already received for a period after a valid termination.

On December 19, 2007, Eujoy moved for summary judgment for the balance of the basic rent for 2007, and a hearing to assess attorneys’ fees. Eujoy relied on the lease, arguing that “[t]he parties did not stipulate to apportion rent paid in advance and for the period following termination of [the lease] pursuant to Article 53”; and that article 19 of the lease entitled it to reimbursement of its reasonable attorneys’ fees and costs.

On January 31, 2008, Van Wagner cross-moved for summary judgment to dismiss the complaint “based on the lease,” or, alternatively, for permission to amend its answer to add an affirmative defense of estoppel. In support of the cross motion, Van Wagner’s executive vice-president submitted an affidavit in which he claimed that sometime in 2006 it became apparent that construction then underway would eventually block sight of the billboard from the LIE; and that he discussed this development several times by telephone with Eujoy’s co-owner late in the year, informing her that Van Wagner would “soon be compelled” to invoke article 53 to terminate the lease. Further, the view of the billboard from the LIE was substantially impaired long before 2007 and Van Wagner, which had already “prepared” an alternative location, might have terminated the lease much earlier than it eventually did. Van Wagner, however, “agreed [to] keep the advertisements posted . . . , and thus pay rent to [Eujoy], for as long as [Van Wagner] could collect revenues from [its] customer,” out of “consideration of the cordial relationship [Van Wagner] had maintained with [Eujoy] over the years, and in order to keep [Eujoy’s] stream of rent revenues flowing for as long as possible.” He added that because Eujoy “accepted the benefits of [Van Wagner’s] extended use of the [billboard] through January 8, 2007 and agreed that the Lease would terminate as of that date ... , it should not be entitled to collect rent for any subsequent period”; and if Van Wagner had “known that [Eujoy] would assert the claim it makes in this action, [Van Wagner] never would have extended [its] use of the [billboard] into 2007.”

In sum, Van Wagner suggested that Eujoy agreed to prorate rent in exchange for Van Wagner’s commitment not to invoke article 53 to terminate the lease in late 2006, as it was entitled to do. In response, Eujoy’s co-owner submitted an affidavit denying the conversations described by Van Wagner’s executive vice-president ever took place. She added that Van Wagner was not doing Eujoy any favors by refraining from terminating the lease in late 2006 since Van Wagner had already paid the annual basic rent for 2006 at the beginning of January of that year.

But Van Wagner’s motion papers focused on the stop payment order in relation to paragraph C of schedule A. That is, Van Wagner maintained that although this provision “means that rent paid in advance may not be recovered upon termination of the lease unless the termination is on a ground specified in that clause,” here no rent was, in fact, paid in advance because Van Wagner’s stop payment order prevented this from happening. Van Wagner also rejected what it characterized as Eujoy’s “due date theory,” a “fallback argument” that the stop payment order was “irrelevant” because “by virtue of [Van Wagner’s] continued occupancy on January 1, 2007, [Eujoy] became entitled to rent for the entire year.” According to Van Wagner, Eujoy’s reasoning was flawed since, in light of the stop payment order, Van Wagner did not pay any post-termination rent for Eujoy to retain and, in any event, the parties agreed to and acted upon the alternative payment arrangements described by Van Wagner’s executive vice-president.

In an opinion dated July 31, 2008, Supreme Court denied Eu-joy’s motion and granted Van Wagner’s cross motion to dismiss the complaint. The court accepted Van Wagner’s interpretation of the lease in toto, concluding that although “[paragraph C of schedule A gave [Eujoy] the right to keep any basic rent that was paid in advance pursuant to paragraph A for the subject lease year 7,” Van Wagner “did not pay any such rent because [it] stopped payment on the rent check before [Eujoy] cashed it” (2008 NY Slip Op 33675[U], *1 [Sup Ct, NY County 2008] [emphasis added]). Eujoy appealed.

In May 2010, the Appellate Division, with two Justices dissenting, reversed Supreme Court’s order; granted Eujoy’s motion for summary judgment; denied Van Wagner’s cross motion in its entirety; and remanded the matter for determination of attorneys’ fees (73 AD3d 546 [1st Dept 2010]). The court read schedule A of the lease to require Van Wagner to pay Eujoy the basic rent for 2007 in advance, on January 1st of that year, and did not credit Van Wagner’s claim that this contractual obligation was altered by an oral agreement. In the latter regard, the court observed that

“the lease includes ‘no oral modification’ and ‘no waiver’ clauses, and the record contains no evidence of partial performance by [Van Wagner] that is ‘unequivocally referable to the alleged oral agreement’ (Teri-Nichols Inst. Food Merchants, LLC v Elk Horn Holding Corp., 64 AD3d 424, 425 [2009], Iv dismissed 13 NY3d 904 [2009]). Rather, [Van Wagner] continued to rent the structure as per the lease. [Van Wagner’s] unilateral act of terminating the lease . . . and then deeming its rent obligation to be limited to a pro rata amount does not establish a modification, ‘since, if such unilateral conduct were sufficient, the requirement that modifications be in a writing signed by the landlord would be rendered a nullity’ (Joseph P. Day Realty Corp. v Lawrence Assoc., 270 AD2d 140, 142 [2000])” (73 AD3d at 548).

Further, Van Wagner did “not demonstrate that principles of equitable estoppel are applicable . . . , since [Eujoy] engaged in no conduct that was ‘otherwise . . . [in]compatible with the agreement as written’ ” (id., quoting Rose v Spa Realty Assoc., 42 NY2d 338, 344 [1977]).

The dissenters took the position that Eujoy had only argued to the motion court that Van Wagner’s check for the basic rent for 2007 was “improperly stopped,” and did not rely “upon the terms of the lease itself’ (id. at 551 [Tom, J.E, and Freedman, J., dissenting]). Putting aside considerations of preservation, the dissenters concluded on the merits that General Obligations Law § 7-103, which prohibits the commingling by a landlord of funds deposited by a tenant as security or prepaid rent, would prevent Eujoy’s recovery, and that Eujoy violated the lease’s default provisions by failing to give Van Wagner notice that it was in breach.

On September 14, 2010, we dismissed Van Wagner’s motion for leave to appeal on the ground of nonfinality (see 15 NY3d 819 [2010]). Judgment was entered in Supreme Court on October 9, 2012 upon the parties’ stipulation to an award of attorneys’ fees. As a result, the appeal comes to us as of right because of the two-Justice dissent (see CPLR 5601 [a]), bringing the Appellate Division’s order up for our review. We now affirm.

II

Preservation

Van Wagner contends (and the dissenters in the Appellate Division agreed) that Eujoy’s

“complaint . . . alleged merely that [Van Wagner’s] delivery of a check for the full year’s rent, even if accidental, and even though stopped, amounted to payment of the rent that [Van Wagner] recovered by virtue of the stop [payment] order. The complaint alleged that the stop payment order thus amounted to recovery of advance rent in violation of the ‘no refund’ clause in [paragraph C of schedule A of] the lease.”

But Eujoy never relied exclusively on this theory of recovery. Notably, paragraph five of its complaint alleges as follows: “5. The annual basic rent under the Lease for the period January 1, 2007 through December 31, 2007 was $96,243.00 which [Van Wagner] was obligated to pay in advance on January 1, 2007” (emphases added). Eujoy fleshed out this allegation in its sole memorandum of law at Supreme Court, which both replied to Van Wagner’s opposition to its motion for summary judgment, and opposed Van Wagner’s cross motion for summary judgment. Indeed, Point II of Eujoy’s brief is captioned “The Lease Obligated [Van Wagner] to Pay the Annual Basic Rent for 2007 in Advance on January 1, 2007.” Van Wagner countered in a reply memorandum of law in further support of its cross motion.

In short, while Van Wagner insists that Eujoy’s “due date theory” of the lease was not pleaded, this is simply not the case. And even if Eujoy had, in fact, presented a new legal argument about the lease to Supreme Court in a reply brief, neither that court nor the Appellate Division would have been prohibited from considering it. In the cases relied upon by Van Wagner to say otherwise, the First Department, in effect, declined to endorse sloppy and potentially prejudicial motion practice by entertaining facts presented for the first time in a reply affidavit “to which the [nonmoving party] had no right to reply without court permission” (Lazar v Nico Indus., 128 AD2d 408, 410 [1st Dept 1987]; see also Ritt v Lenox Hill Hosp., 182 AD2d 560, 562 [1st Dept 1992] [it does not “avail (the moving party) to shift to (the nonmoving party), by way of reply affidavit, the burden to demonstrate a material issue of fact at a time when (the nonmoving party) has neither the obligation nor the opportunity to respond absent express leave of court”]; Dannasch v Bifulco, 184 AD2d 415 [1st Dept 1992] [same]; Lumbermens Mut. Cas. Co. v Morse Shoe Co., 218 AD2d 624 [1st Dept 1995] [same]; Azzopardi v American Blower Corp., 192 AD2d 453, 453-454 [1st Dept 1993] [the plaintiffs’ failure to present the facts adduced on the motion to renew “in connection with the original motion (for summary judgment) was clearly justified since they had not had an opportunity to respond to a claim raised for the first time in the reply papers”]).

The principal issues of law decided by the Appellate Division (in addition to the question of preservation itself)—i.e., whether Van Wagner is indebted to Eujoy for the annual basic rent for 2007 under the terms of the lease and, relatedly, whether the lease’s payment terms were modified by an oral agreement—are preserved for appellate review. This is critical because, as we have elsewhere explained, when an issue is not preserved in Supreme Court, the Appellate Division’s consideration of it “must be deemed an exercise of its interest [ ] of justice jurisdiction,” and “[w]e have no power to review either the Appellate Division’s exercise of its discretion to reach [an unpreserved] issue, or the issue itself’ (Hecker v State of New York, 20 NY3d 1087, 1087 [2013]).

Rent Paid in Advance

Under the common law, rent is consideration for the right of use and possession of the leased property that a landlord does not earn until the end of the rental period (In re Roth & Appel, 181 F 667, 669 [2d Cir 1910]; 1 Friedman & Randolph, Friedman on Leases § 5:1.1 [5th ed 2013]). This presumption may be altered, however, by the express terms of the parties’ lease such that rent is to be paid at the beginning of the rental period rather than the end (see Giles v Comstock, 4 NY 270, 272 [1850]; Chemical Bank v Evans & Hughes Realty, 205 AD2d 573, 574 [2d Dept 1994]; 1 Robert F. Dolan, Rasch’s Landlord and Tenant—Summary Proceedings § 12:23 [4th ed 1998]; 1 Friedman & Randolph § 5:1.1). When a lease sets a due date for rent, that date is the date on which the tenant’s debt accrues (see 1 Friedman & Randolph § 5:1.1; see also Fifty States Mgt. Corp. v Pioneer Auto Parks, 46 NY2d 573, 578 [1979] [“A covenant to pay rent at a specified time ... is an essential part of the bargain”]). Rent paid “in advance” (i.e. at the beginning of the term) is unrecoverable if the lease is terminated before the completion of the term, unless the language of the lease directs otherwise (see 1251 Ams. Assoc. II, L.P v Rock 49th Rest. Corp., 13 Misc 3d 142[A], 2006 NY Slip Op 52282[U], *1 [App Term 2006]; Bernstein v Englander, 25 NYS2d 319, 319 [App Term 1941]; 1 Dolan § 12:23; 1 Friedman & Randolph § 5:1.1).

These rules reflect the strong preference for freedom of contract in the creation of leases, and although it may seem harsh for tenants, the courts assume that the parties have knowingly bargained for the provisions of their agreement. This is especially true in the case of arm’s length commercial contracts negotiated by sophisticated and counseled entities (see Oppenheimer & Co. v Oppenheim, Appel, Dixon & Co., 86 NY2d 685, 695 [1995]). Courts will give effect to the contract’s language and the parties must live with the consequences of their agreement. “If they are dissatisfied . . . , ‘the time to say so [is] at the bargaining table’ ” (id., quoting Maxton Bldrs. v Lo Galbo, 68 NY2d 373, 382 [1986]).

Here, the terms of schedule A of the lease spell out that the full annual rent for each rental period is to be paid “in advance” on January 1 of each of the 15 years of the lease’s term, excluding the first year. The rent is described as “annual basic rent,” which reinforces that the parties intended for rent to be paid in annual installments. The only other reference in the lease to the amount and periodicity of the rent appears in the preamble, which directs that “the annual rental rate” is “set forth in Schedule A” to the lease.

Next, paragraph C of schedule A explicitly states that Van Wagner is not entitled to “the return” of any basic rent “paid in advance,” even if the lease is terminated prior to expiration of a rental period. This language embodies the general rules discussed earlier. It is true that Van Wagner never fully paid the rent due on January 1 because it stopped payment of its first check. But that does not change the fact that the basic rent for 2007 became due on the date assigned in the lease, January 1st of that year. Paragraph C envisages apportionment of rent, but only where the lease is prematurely ended for specified reasons—i.e., pursuant to articles 9 (fire or casualty), 10 (condemnation) or 50 (the enactment of any law making the billboard’s use illegal). Here, though, Van Wagner invoked article 53 to terminate the lease. In sum, Van Wagner accrued a debt for the annual basic rent under the terms of the lease when it remained in possession of the billboard after January 1, 2007, and there is nothing in the law or the language of the agreement that relieves it of that debt.

Alleged Oral Modification of the Lease

Van Wagner urges in the alternative that, however the lease may be interpreted, the parties orally agreed in late 2006 to modify payment terms, as described by its executive vice-president. The lease includes a standard merger and “no oral modification” clause. The enforceability of such provisions is codified in General Obligations Law § 15-301 (1), which guarantees that any

“written agreement [that] include [s] a proscription against oral modification . . . ‘cannot be changed by an executory agreement unless such executory agreement is in writing and signed by the party against whom enforcement ... is sought.’ Put otherwise, if the only proof of an alleged agreement to deviate from a written contract is the oral exchanges between the parties, the writing controls. Thus, the authenticity of any amendment is ensured” (Rose, 42 NY2d at 343, quoting General Obligations Law § 15-301 [1]).

As we explained in Rose, a party can overcome such a clause and enforce an oral modification to a written agreement by demonstrating either that the oral modification “has in fact been acted upon to completion”; or, where there is only partial performance, that “the partial performance [is] unequivocally referable” to the alleged oral modification (42 NY2d at 343; see also Walter v Hoffman, 267 NY 365, 368 [1935]; 1 Robert F. Dolan, Rasch’s Landlord and Tenant—Summary Proceedings § 12:17 [4th ed 1998]). This analysis has also been applied to the statute of frauds and its codification at General Obligations Law § 5-703 (see Messner Vetere Berger McNamee Schmetterer Euro RSCG v Aegis Group, 93 NY2d 229, 235 [1999]).

Additionally, there is “another qualification to the mandátes of section 15-301 [which is] [analytically distinct from the doctrine of partial performance”; namely,

“the principle of equitable estoppel. Once a party to a written agreement has induced another’s significant and substantial reliance upon an oral modification, the first party may be estopped from invoking the statute to bar proof of that oral modification. Comparable to the requirement that partial performance be unequivocally referable to the oral modification, so, too, conduct relied upon to establish estoppel must not otherwise be compatible with the agreement as written” (Rose, 42 NY2d at 344 [citations omitted]).

When the parties dispute whether an oral agreement has been formed, it is the conduct of the party advocating for the oral agreement that is “determinative,” although the conduct of both parties may be relevant (see Messner, 93 NY2d at 237-238; see also Imperator Realty Co. v Tull, 228 NY 447, 456-457 [1920, Cardozo, J., concurring]). This is because the equity doctrine is designed to prevent a party from inducing full or partial performance from another and then claiming the sanctuary of the statute of frauds or section 15-301 when suit is brought (see Messner, 93 NY2d at 237-238).

In this case, Van Wagner depicts the facts as consistent with its claim of a fully performed oral modification because “no sensible businessperson” would have terminated the lease on January 8, 2007 “if liable for a full year’s rent as a result of a week’s occupancy,” and Eujoy “accepted” the termination along with a check for the prorated rent. As for Eujoy’s conduct, article 53 of the lease clearly gave Van Wagner the right to terminate the lease in the event new construction substantially obstructed the view of the billboard from the LIE. Eujoy’s acquiescence to termination on this ground was, therefore, compatible with the lease. So, too, Eujoy’s acceptance of Van Wagner’s check for $2,109.43 since the lease includes a standard “no waiver” provision. As for Van Wagner’s conduct, it might also be said that “no sensible businessperson” would neglect to reduce a lease modification to writing. Regardless, Van Wagner’s payment of prorated rent in lieu of the annual basic rent was just as demonstrative of breach of contract as of completion of the purported oral modification. General Obligations Law § 15-301 becomes meaningless if a tenant’s nonpayment of the rent required by a lease is sufficient to prove an oral modification of payment terms, or estop the landlord from recovering the shortfall (see Joseph P. Day Realty Corp. v Lawrence Assoc., 270 AD2d at 142). And Van Wagner does not escape section 15-301 or the “no oral modification” provision of the lease by simply saying it fully rather than partially performed an oral modification when making the prorated payment.

We have examined Van Wagner’s other arguments and consider them, to the extent preserved, to be unavailing. Accordingly, the judgment appealed from and the order of the Appellate Division brought up for review should be affirmed, with costs.

Smith, J.

(concurring). I join the majority opinion except for its unnecessary restatement of an erroneous preservation rule.

The majority says that if Eujoy’s argument were, as Van Wagner argues, unpreserved, that might benefit not Van Wagner but Eujoy (majority op at 423 n 4). This oddity would result from following a very odd rule—one that, as I have explained elsewhere, is without justification (see Hecker v State of New York, 20 NY3d 1087, 1088-1089 [2013, Smith, J., concurring]). I continue to hope that the day will come when the rule is abandoned.

Chief Judge Lippman and Judges Graffeo, Smith, Pigott and Rivera concur with Judge Read; Judge Smith in a separate opinion in which Judge Pigott concurs; Judge Abdus-Salaam taking no part.

Judgment appealed from and order of the Appellate Division brought up for review affirmed, with costs.

      . The parties created their agreement by customizing the standard form lease copyrighted by the Real Estate Board of New York, Inc.

      . Article 19, part of the form lease, states that
      “[i]f Owner, ... in connection with any default by Tenant in the covenant to pay rent hereunder, makes any expenditures or incurs any obligations for the payment of money, including but not limited to attorney’s fees, in instituting, prosecuting or defending any action or proceedings, then Tenant will reimburse Owner for such sums so paid or obligations incurred with interest and costs ... If Tenant’s lease term shall have expired at the time of making of such expenditures or incurring such obligations, such sums shall be recoverable by Owner as damages.”

      . Van Wagner did not raise General Obligations Law § 7-103 or the lease’s default provisions at Supreme Court.

      . Although Van Wagner clearly assumes that it would prevail if the “due date theory” were, in fact, unpreserved, this is not necessarily (or perhaps even likely) the case. If we agreed with Van Wagner on this score, we would remit the matter to the Appellate Division (see Matter of New York State Off. of Victim Servs. v Raucci, 20 NY3d 1049 [2013]). That Court could then elect to exercise its interest of justice jurisdiction to reach the unpreserved issue and again decide against Van Wagner on the merits. As noted earlier, we would have no power to review these decisions (see Hecker).

      . Article 21, part of the form lease, states that
      “[a]ll understandings and agreements heretofore made between the parties hereto are merged in this contract, which alone fully and completely expresses the agreement between Owner and Tenant and any executory agreement hereafter made shall be ineffective to change, modify, discharge or affect an abandonment of it in whole or in part, unless such executory agreement is in writing and signed by the party against whom enforcement of the change, modification, discharge or abandonment is sought.”

      . Article 25, part of the form lease, states that
      “[n]o payment by Tenant or receipt by Owner of a lesser amount than the monthly rent herein stipulated shall be deemed to be other than on account of the earliest stipulated rent, nor shall any endorsement or statement of any check or any letter accompanying any check or payment as rent be deemed an accord and satisfaction, and Owner may accept such check or payment without prejudice to Owner’s right to recover the balance of such rent or pursue any other remedy in this lease provided.”
      Van Wagner makes much of the fact that this provision says “monthly” rent. But the preamble defines rent for purposes of the lease only in terms of the categories of rent set out in schedule A; i.e., annual basic rent and “additional rent” totaling $200,000, to be paid to Eujoy in equal installments of $100,000 upon execution of the lease and on October 1, 2001.


source: Caselaw Access Project

author:
Read, J.
      Chief Judge Lippman

license: Public Domain

text:
    [5 NE3d 5, 982 NYS2d 34]
    The People of the State of New York, Respondent, v Andre Collier, Appellant.
    Argued November 13, 2013;
    decided December 12, 2013

      POINTS OF COUNSEL

      Claude Castro & Associates PLLC, New York City (Claude Castro and D. Paul Martin of counsel), for appellant.
    I. The trial court and the Third Department erred by denying appellant’s request to withdraw his plea and then imposing a greater sentence than appellant had agreed to in his plea bargain. (People v Taveras, 10 NY3d 227; People v Martin, 278 AD2d 743; People v Hill, 9 NY3d 189; People v Van Deusen, 7 NY3d 744; People v Rivera, 51 AD3d 1267; People v Donnelly, 80 AD3d 797; People v Armstead, 52 AD3d 966; People v Bruning, 45 AD3d 1179; People v Kinch, 15 AD3d 780; People v Cameron, 83 NY2d 838.) II. The trial court and the Third Department erred by rendering appellant’s plea bargain involuntary and unconstitutional. (People v Hill, 9 NY3d 189; People v Van Deusen, 7 NY3d 744; People v Rowland, 8 NY3d 342.)

      P. David Soares, District Attorney, Albany (Steven M. Sharp of counsel), for respondent.
    Since defendant received the full benefit of his bargain, his guilty plea should not be disturbed. (People v Prescott, 66 NY2d 216; People v Taylor, 65 NY2d 1; People v Frederick, 45 NY2d 520; People v Miller, 42 NY2d 946; People v Fiumefreddo, 82 NY2d 536; People v Cornell, 16 NY3d 801; People v Seaberg, 74 NY2d 1; People v Francabandera, 33 NY2d 429; People v Lopez, 28 NY2d 148; People v Cameron, 83 NY2d 838.)
   OPINION OF THE COURT

Read, J.

By indictment dated February 8, 2005, the grand jury accused defendant Andre Collier of five first-degree robberies (Penal Law § 160.15 [3]). Each count of the indictment related to a holdup at a different store in the Albany area during a two-month period in the fall of 2004. Defendant was alleged to have displayed and threatened the immediate use of a knife to force employees of these stores to turn over monies in the cash register.

At a hearing on April 22, 2005, defendant was offered a plea bargain requiring him to plead guilty to two counts of robbery in the first degree (the first and fifth counts of the indictment) in satisfaction of the full indictment and several unindicted robberies. Under the terms of the proposed plea agreement, as described by County Court, defendant would be sentenced to a determinate term of 25 years in prison on the first count of the indictment, and five years on the fifth count, each to be followed by five years of postrelease supervision. Further, the judge retained discretion to direct these sentences to run either concurrently or consecutively, based upon his evaluation of the information in the yet-to-be-prepared presentence report. Defendant agreed to these terms and conditions and pleaded guilty.

On June 17, 2005, defendant appeared for sentencing, and County Court declared him to be a second felony offender. Based on his review of the presentence report, the judge imposed the agreed-upon 25-year and five-year determinate sentences consecutively rather than concurrently. Defendant appealed, arguing that his sentence was excessive. On June 26, 2008, the Appellate Division affirmed the judgment, holding that defendant was “precluded from challenging the sentence imposed as harsh and excessive” because he had knowingly, intelligently and voluntarily waived his right to appeal (52 AD3d 1121, 1122 [3d Dept 2008], Iv denied 11 NY3d 786 [2008]).

Defendant then moved pro se pursuant to CPL article 440 to vacate the judgment of conviction and set aside his sentence on the ground the five-year sentence he received to satisfy count five of the indictment was illegal. In support of his motion, defendant enclosed a letter from a prison official indicating that, as a second felony offender, his minimum legal sentence for first-degree robbery was 10 years. In a decision and order dated August 10, 2009, County Court denied the motion without a hearing. The judge noted that defendant had not suffered any prejudice by virtue of the alleged error, which, in fact, benefit-ted him. He additionally concluded that defendant had waived this issue by not raising it on direct appeal. Defendant appealed the judge’s order.

On December 2, 2010, the Appellate Division agreed that defendant’s five-year sentence on count five of the indictment was illegal, and held that he was not barred from raising this issue in a CPL article 440 motion even though it could have been raised on direct appeal (79 AD3d 1162 [3d Dept 2010]). The court vacated defendant’s sentence and remitted the matter to County Court for the judge to “resentence defendant in a manner that ensures that he receives the benefit of his sentencing bargain or permit both parties the opportunity to withdraw from the plea agreement” (id. at 1163).

At the resentencing hearing on January 13, 2011, defendant asked to withdraw his plea; the People, however, requested that County Court resentence defendant. By this time, six years had elapsed since the robberies charged in the indictment. Voicing his intention to “impose a sentence that clearly ensures that [defendant] receives the benefit of the sentencing bargain,” the judge sentenced him to concurrent determinate prison terms of 25 years on the first count of the indictment and 10 years on the fifth count, each to be followed by five years of postrelease supervision.

On appeal, defendant argued that County Court could not legally resentence him to 10 years in prison on the fifth count of the indictment because he originally pleaded guilty to this crime in exchange for a five-year incarceratory term. The Appellate Division disagreed, observing that

“defendant actually received a lesser sentence under the resentence than the one he agreed to under the plea agreement because County Court directed that the sentences run concurrently, instead of consecutively, thereby reducing his aggregate prison exposure from 30 to 25 years. Thus, defendant received a sentence that was better than ‘the benefit of his bargain’ upon resentencing, and County Court was not required to allow him to withdraw his plea” (91 AD3d 987, 988 [3d Dept 2012]).

A Judge of this Court granted defendant leave to appeal (19 NY3d 1024 [2012]), and we now affirm.

“[A] guilty plea induced by an unfulfilled promise either must be vacated or the promise honored” (People v Selikoff, 35 NY2d 227, 241 [1974], cert denied 419 US 1122 [1975], citing Santobello v New York, 404 US 257, 260 [1971]; accord People v Esposito, 32 NY2d 921, 923 [1973]). “The choice rests in the discretion of the sentencing court” and “there is no indicated preference for one course over the other” (Selikoff, 35 NY2d at 239; see also Santobello, 404 US at 263 [“The ultimate relief to which petitioner is entitled we leave to the discretion of the state court, which is in a better position to decide whether the circumstances of this case require only that there be specific performance of the agreement on the plea, ... or whether, in the view of the state court, the circumstances require granting the relief sought by petitioner, i.e., the opportunity to withdraw his plea of guilty”]).

The sentencing court may have good reason to reject a defendant’s request to withdraw his plea. Where, as here, years have gone by since the original plea, it may be difficult for the People to locate witnesses, obtain their renewed cooperation and proceed to trial on the “then stale indictment[ ]” (Selikoff, 35 NY2d at 240 [discussing Esposito, supra]). Under these circumstances, allowing a defendant to withdraw his plea would give him “more than he was entitled” to under the bargain he struck (id.). Thus, the People “can hold a defendant to an agreed sentence rather than allow vacation of the plea when it would otherwise be prejudiced” (People v McConnell, 49 NY2d 340, 349 [1980]).

Moreover, specific performance of a plea bargain does not foreclose “technical divergence from the precise terms of the plea agreement” so long as the defendant’s reasonable expectations are met (Paradiso v United States, 689 F2d 28, 31 [2d Cir 1982]). And a defendant’s subjective view of the plea bargain is not controlling: “Compliance with a plea bargain is to be tested against an objective reading of the bargain, and not against a defendant’s subjective interpretation thereof’ (People v Cataldo, 39 NY2d 578, 580 [1976] [emphasis added]; see also Paradiso, 689 F2d at 31 [“In determining what is reasonably due a defendant (t)he dispositive question ... is what the parties to (the) plea agreement reasonably understood to be the terms of the agreement” (emphasis added and internal quotation marks omitted)]).

Thus, if the originally promised sentence cannot be imposed in strict compliance with the plea agreement, the sentencing court may impose another lawful sentence that comports with the defendant’s legitimate expectations. Again, “the reasonable understanding and expectations of the parties, rather than technical distinctions in semantics, control the question of whether a particular sentence imposed violates a plea agreement” (Gammarano v United States, 732 F2d 273, 276 [2d Cir 1984]; see also Paradiso, 689 F2d at 31 [where the “sentence actually received” was “less severe than the maximum bargained for, (the defendant was) in no position to complain that his expectations were frustrated”]; People v Williams, 87 NY2d 1014 [1996] [upholding a sentence modification that corrected an illegal sentence by increasing the indeterminate incarceratory term of 3V2 to 7 years to 31/2 to IOV2 years because the judge advised the defendant during the plea proceedings that he could receive up to 15 years in prison]).

In light of these principles, we conclude that the judge’s modification of defendant’s sentence was proper. Simply put, the resentencing comported with defendant’s reasonable expectation that he would receive a minimum determinate prison term of 25 years and a maximum determinate prison term of 30 years in exchange for his plea. County Court did not resentence defendant in conformity with the technical terms of the plea agreement with respect to the fifth count of the indictment. But defendant, in fact, achieved the best outcome allowed by his plea since County Court, upon resentencing, reduced his maximum incarceratory term from 30 to 25 years in order to cure the illegality in the sentence originally imposed to resolve the fifth count. Thus, defendant clearly received the benefit of his bargain.

Defendant insists otherwise. He takes the position that his “aggregate prison exposure” is “irrelevant” even if more favorable than what he originally agreed to and received because his “two sentences [were] separate and distinct and operate[d] independently] [of] each other.” And since the original “plea bargain [could not] be legally fulfilled” with respect to the five-year sentence on the fifth count of the indictment, “both sentences must be vacated and [defendant] must [be] given the opportunity to withdraw his plea in its entirety.” The dissent likewise contends that defendant’s plea must be vacated because he “pleaded guilty without knowledge that his bargained-for five-year sentence was half the minimum prescribed by law” (dissenting op at 437). But as already discussed, once a defendant has pleaded guilty a reviewing court must make an objective determination of whether the ultimate sentence fulfilled the sentencing promise—here, a minimum determinate prison term of 25 years and a maximum determinate prison term of 30 years. The defendant’s subjective interpretation of the agreement does not control (see Cataldo, 39 NY2d at 580; Paradiso, 689 F2d at 31).

Defendant also claims that People v Catu (4 NY3d 242 [2005]) and its progeny prescribe plea vacatur because his due process rights were violated, and the dissent agrees (see dissenting op at 436). In Catu, the trial court did not advise the defendant during the plea colloquy that he was subject to a mandatory period of supervision after his release from prison, a direct consequence of his plea. Because a defendant pleading guilty must be aware of the direct consequences of a plea in order to knowingly, voluntarily and intelligently choose among alternative courses of action, the Catu court’s failure to apprise the defendant of post-release supervision required reversal of the conviction and vacatur of the plea.

As we subsequently made clear in People v Hill (9 NY3d 189 [2007]), though, there is a difference between due process rights and sentencing expectations. When, as here, the defendant possesses sufficient information about his promised sentence to make an informed choice at the time of the plea allocution, “the defendant’s guilty plea is voluntary [and] so either the plea’s vacatur or specific performance of the promise is appropriate. A Catu error, by contrast, affects the voluntariness of [a] defendant’s guilty plea, and thus makes vacatur the appropriate remedy” (id. at 191 n 1 [distinguishing Selikoffi).

Accordingly, the orders of the Appellate Division should be affirmed.

Chief Judge Lippman

(dissenting). Because defendant’s guilty plea was obtained in violation of his due process rights, vacatur of the plea is the proper remedy for the constitutional deprivation. Accordingly, I dissent.

For a guilty plea to comport with due process, defendant must “possess! ] the requisite information to make an informed choice” (People v Hill, 9 NY3d 189, 191 n 1 [2007]). Acknowledging this bedrock principle of our criminal justice system, the majority nonetheless determines that the illegal sentence here violated defendant’s “sentencing expectations,” rather than his due process rights (majority op at 435), drawing the inexplicable conclusion that defendant’s choice to waive his fundamental rights was knowing and voluntary, despite his ignorance that the imposition of the promised five-year sentence was a legal impossibility.

Contrary to the majority’s contention, this case raises the same constitutional concerns addressed in our jurisprudence involving plea allocutions where courts failed to inform defendant of a mandatory term of postrelease supervision (PRS). The constitutional principle underlying our PRS cases is that, without knowledge of a direct consequence of her criminal conviction, a defendant’s “plea cannot be deemed knowing, voluntary and intelligent” (Hill, 9 NY3d at 191; see also People v Catu, 4 NY3d 242, 245 [2005]). The appropriate remedy for a constitutionally defective plea is automatic vacatur (Hill, 9 NY3d at 191 n 1; People v Louree, 8 NY3d 541, 545 [2007]; People v Van Deusen, 7 NY3d 744, 746 [2006]; Catu, 4 NY3d at 245; McCarthy v United States, 394 US 459, 466 [1969] [“if a defendant’s guilty plea is not equally voluntary and knowing, it has been obtained in violation of due process and is therefore void”]). This is true despite the theoretical feasibility under the law of resentencing defendant to a combined period of incarceration and PRS equal to or less than the maximum potential term to which defendant agreed (see Louree, 8 NY3d at 545; Van Deusen, 7 NY3d at 746; see also People v Rowland, 8 NY3d 342, 345 [2007]; People v Pichardo, 1 NY3d 126, 130 [2003]). Harmless error analysis, including the majority’s assessment of whether specific performance effectively “cured” the defect, has no place in this context because when a plea is obtained in violation of defendant’s due process rights, “no later events [can] rescue it” (People v Boyd, 12 NY3d 390, 396 [2009, Pigott, J., dissenting]; see also Hill, 9 NY3d at 192; People v Coles, 62 NY2d 908, 910 [1984]).

We are equally bound to apply this constitutional principle in circumstances where a plea bargain includes an illegal sentence. Only recently this Court reiterated that “the imposition of a mandatory term of imprisonment” is a direct consequence of an unconditional guilty plea (People v Peque, 22 NY3d 168, 184 [2013], citing Boykin v Alabama, 395 US 238, 244 n 7 [1969], Jamison v Klem, 544 F3d 266, 277 [3d Cir 2008], and People v Harnett, 16 NY3d 200, 205 [2011]). Similarly, in Harnett we recognized that “[t]he direct consequences of a plea—those whose omission from a plea colloquy makes the plea per se invalid—are essentially the core components of a defendant’s sentence: a term of probation or imprisonment, a term of post-release supervision, a fine” (16 NY3d at 205 [emphasis added]). Defendant here pleaded guilty without knowledge that his bargained-for five-year sentence was half the minimum prescribed by law, rendering his defective plea indistinguishable from that of a defendant unaware of a term of mandatory PRS. Both scenarios involve an accused who is uninformed of a direct consequence of her plea, and in both cases vacatur of the guilty plea is mandatory (see People v Cameron, 83 NY2d 838, 840 [1994] [when the “sentence pursuant to the plea agreement . . . was (not) authorized by law . . . the sentence must be reversed and the case remitted for resentencing with the opportunity for both parties to withdraw from the plea agreement” (citation omitted)]).

In holding otherwise, the majority effectively sanctions the coexistence of two incompatible rules: where the plea is to a single count, conditioned on an illegal sentence, vacatur is required; where, on the other hand, the plea is to multiple counts, only one of which held out the promise of an illegal sentence, a court-imposed increase of that sentence will be allowed so long as defendant’s aggregate exposure to incarceration is not increased. Deciding which rule applies depends on the constitutionally irrelevant question of whether a defendant’s plea bargain includes an illegal sentence in isolation or as part of a package deal. While perhaps attractively pragmatic, the second rule blatantly ignores that “the constitutional defect lies in the plea itself and not in the resulting sentence” (Hill, 9 NY3d at 191). By denying the constitutional dimensions of the injury, the majority blurs a distinction we have taken care to delineate in the past between a constitutionally defective plea and a plea induced by a promise that goes unfulfilled. In the latter case, the sentencing court surely has the discretion to vacate the plea or to give defendant specific performance of the plea bargain (People v Selikoff, 35 NY2d 227, 241 [1974], cert denied 419 US 1122 [1975]). But where a plea is unknowing and thus involuntary due to an illegal sentence, only vacatur will remedy the violation of defendant’s due process rights. Because here defendant’s plea bargain included the promise of an illegal sentence, it was necessarily unknowing, and the majority effects a significant and troubling departure from precedent by failing to vacate his plea.

Judges Graffeo, Smith, Pigott and Abdus-Salaam concur with Judge Read; Chief Judge Lippman dissents in an opinion in which Judge Rivera concurs.

Orders affirmed.

       As we discussed in People v Pignataro (22 NY3d 318 [2013]), the legislature eventually enacted Penal Law § 70.85 to allow a sentencing court to honor the bargain originally knowingly, voluntarily and intelligently struck by the defendant with the People. Section 70.85 did not “remov[e] PRS as a direct consequence of [the defendant’s] plea” (see dissenting op at 438 n).

       This dissent is consistent with People v Pignataro (22 NY3d 381 [2013]). In reaching a different result, that decision turned on the presence of legislative action. By removing PRS as a direct consequence of Pignataro’s plea (see Penal Law § 70.85), the legislature effectively eliminated the factor responsible for the plea’s constitutional infirmity. Here, the legislature has not reduced the mandatory minimum sentence applicable to count five from 10 to 5 years. Accordingly, the five-year sentence remains illegal and the plea involuntary.