Unconscionability Argument Fails:
The matter wound up in litigation after the elderly couple passed away and the executor of the surviving spouse’s estate (Kazaks) brought a “holdover” proceeding in Housing Court to evict Twersky from the apartment. Twersky then filed an action in the Supreme Court seeking an injunction to prevent Kazaks from evicting her family. Twersky relied upon both the option and lease agreements in her Complaint. Kazaks, for her part, claimed that (a) the 25-year lease was unenforceable as a matter of law; and (b) the purchase option agreement was unenforceable because not all of the heirs at law of original owners of the house signed it but just the Kimmels (who owned a portion of the house). She put forth two arguments concerning the lease: that, by law, a lease of 25 years with no rent increases throughout the term was unconscionable; and that the elderly couple suffered from various ailments and diseases during and after the time of lease execution.In making his decision, the trial judge (Justice Knipel) properly found that the lease agreement between Twersky and the Kimmels was valid and enforceable. The arguments by the executor that the lease agreement was unconscionable and should not be enforced pursuant to Real Property Law Section 235-c was determined to be without merit, and not supported by the evidence presented at trial. As Justice Knipel observed, the executor was “doubtless correct that a residential lease for a 25-year term is unusual, especially where, as here, no increases were provided for the entire term.”Real Property Law Section 235-c provides as follows:
- If the court as a matter of law finds a lease or any clause of the lease to have been unconscionable at the time it was made the court may refuse to enforce the lease, or it may enforce the remainder of the lease without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.
- When it is claimed or appears to the court that a lease or any clause thereof may be unconscionable the parties shall be afforded a reasonable opportunity to present evidence as to its setting, purpose and effect to aid the court in making the determination.
“An unconscionable contract has been defined as one which…”
In Gillman v. Chase Manhattan Bank, N.A., 73 NY2d 1, 10 , the NYS Court of Appeals (New York’s highest court) held, “An unconscionable contract has been defined as one which ‘is so grossly unreasonable or unconscionable in the light of the mores and business practices of the time and place as to be unenforceable according to its literal terms (See 1 Corbin on Contracts, Section 128, p. 400.).’” As further enunciated by the Court, a determination of unconscionability generally requires a showing that the subject contract was both (a) procedurally and (b) substantively unconscionable when made, i.e., “some showing of an ‘absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party.’” Gillman, supra at p. 10.At trial, Kazaks had not proven that the lease agreement was either procedurally or substantively unconscionable, by the standards set forth by the NYS Court of Appeals. There was no proof adduced at trial that there was an absence of meaningful choice or that the terms of the agreement were unreasonably unfavorable. On the contrary, all of the witnesses testified that the Kimmels were competent to act in their own affairs, and that the lease agreement was negotiated (including the 25-year term contained therein). Accordingly, Justice Knipel held “the court concludes that the lease is valid on its face and is enforceable.”