What does the Archdiocese of New York and the Sultan of Brunei have in common? The answer is a “ground lease” to the Palace Hotel.
The New York Palace Hotel at 50th and Madison was originally built in 1882 by Henry Villard and modeled after the Palazzo della Cancellaria in Rome. Harry Helmsley built a 55-story hotel on the site across the street from St. Patrick’s Cathedral, which operated from 1981-1992. The Sultan of Brunei bought the property after the Hotel was forced into Bankruptcy Court. In 2007 Fatima De La Cruz claimed injuries at the hotel when a freight elevator door closed striking her in the head. She sued Amadeo Hotels, Ltd., the Sultan’s Development Company, the owner of the Hotel, and the Archdiocese who owns the land upon which the Hotel is located. The Archdiocese moved for summary judgment claiming they were the owner of the land and had nothing to do with the operation of the Hotel. No one in the case opposed the motion. Judge Eileen Rakower, of New York County Supreme Court, saw the case differently than the Sultan and the Archdiocese.
In Fatima De La Cruz v. The New York Palace Hotel 2011 NY Slip Op 31937U (decided July 11, 2011), Judge Rakower indicated Section 78 of the New York City Multiple Dwelling Law states that “every multiple dwelling…shall be kept in good repair…[t]he owner shall be responsible for compliance with the provisions of this section…” The responsibility to ensure that a building is kept in good repair is non-delegable. (Bonifacio v. 910-930 Southern Boulevard, LLC, 295 AD2d 86 [1st Dept. 2002]). Here the Archdiocese would revert to the “owner” of the building when the lease ended in 2022. Judge Rakower stated, “Even if it can be considered an owner for purposes of Multiple Dwelling Law §78, the Archdiocese contends that it has transferred all responsibility for maintenance and repair to the Tenant. However, an out of possession landlord may only escape its duty if it “completely parted with possession and control” of the premises. (Worth Distributers, Inc. V. Latham, 59 NY2d 231). Where the landlord reserves a right to re-enter the premises for inspection and repairs, it constitutes “a sufficient retention of control to subject the owners to liability.” Here, Article 13 of the lease states, in relevant part: “Tenant will permit Landlord…to enter the demised premises at all reasonable times for the purpose of (a) inspecting the same, (b) making any necessary repairs thereto and performing any work therein that may be necessary by reason of Tenant’s failure to make any such repairs or perform such work or to commence the same for 10 days after written notice form Landlord…In light of its reservation of the right to re-enter for purposes of inspection and repair, the Archdiocese has failed to establish, as a matter of law, that it did not owe plaintiff a duty to maintain the building, including the elevator, in a safe condition.” (See Mas v. Two Bridges Associates by Nat. Kinney Corp., 75 NY2d 680).”