Key Points

  • The Appellate Division, First Department, unanimously affirmed a $1,216,177.36 jury verdict for Monica Iken and Ordinary Faces LLC against their landlord, Bohemian Brethren Presbyterian Church.
  • The panel held that the evidence supported findings that the church breached lease section 18(a) by failing to clear Department of Buildings violations and breached the rider by failing to act expeditiously and diligently on the fire alarm system.
  • A 50 percent rent abatement was not the tenants' exclusive remedy, and lost profits were proved with reasonable certainty under Kenford and Biotronik, using operating figures the church itself supplied.
  • The lease clause limiting recovery to the landlord's estate in the building did not bar the award after the church's 2019 sale, because such clauses permit recovery from sale proceeds.
  • The trial court reasonably found the church waived the lease's jury waiver by raising it four months after the note of issue and after its counsel stated there was no disagreement about the right to a jury trial.

A New York appeals court on Tuesday upheld a $1.2 million jury verdict against a Presbyterian church that failed to help its preschool tenant clear city building violations and install a fire alarm. The court also rejected the church's argument that the case should never have gone to a jury because the lease waived a jury trial.

A four-justice panel of the Appellate Division, First Department, unanimously affirmed the $1,216,177.36 judgment that Monica Iken and Ordinary Faces LLC won against Bohemian Brethren Presbyterian Church after a trial before Justice Joel M. Cohen of State Supreme Court in New York County. The unsigned decision was issued by Justices Moulton, Scarpulla, Michael and Hagler, with Justice Moulton presiding.

The panel held that the tenants proved lost profits with reasonable certainty, that a rent abatement was not their only remedy, and that a lease clause limiting recovery to the landlord's interest in the building did not shield the church after it sold the property. It also held that Justice Cohen reasonably found the church had forfeited the lease's jury waiver by waiting to invoke it.

The dispute arose from two lease obligations. Section 18(a) of the lease required the church to cooperate with the tenants in obtaining the approvals needed to run the preschool. A rider to the lease required the parties to act "expeditiously and diligently" to install a fire alarm system.

To operate a preschool, the tenants needed a letter of no objection, a document issued by the city's Department of Buildings. According to the decision, the evidence at trial was undisputed that the department denied the tenants' first application for that letter because the building lacked a working fire alarm. The Fire Department did not sign off on the alarm until July 26, 2016, which the panel said was "nearly two years after the lease was signed."

The tenants also faced Buildings Department violations tied to a defunct dumbwaiter shaft. Because the violations were issued against parts of the building outside the leased premises, the panel held that curing them was the church's obligation. The church argued that the tenants had offered no evidence that the violations blocked the letter. The panel disagreed, pointing to a department training module, admitted as a joint exhibit, that it said expressly states that a request for the letter generally will be denied if there are active violations.

Iken testified that the violations were the only remaining obstacle to a permanent letter. Deborah Ann Widerkehr, the church's treasurer and an elder, testified that the church never had its elevator company file the paperwork to clear the violation. Beyond two letters telling the department that the building had no elevator, the panel found no evidence that the church tried to cure the violations.

The church argued that the tenants' sole remedy for the fire alarm delay was the 50 percent rent abatement they received from January through August 2015. The panel held that the rider's text did not make the abatement the exclusive remedy. It cited the Court of Appeals' 2014 decision in Biotronik A.G. v. Conor Medsystems Ireland, which rejected an argument that lost profits were barred because "[t]he limitations provision does not specifically preclude recovery for lost profits."

Biotronik also supplied the test for the lost-profits award. Under that test, the tenants had to show that the damages were caused by the breach, that "the extent of the loss is capable of proof with reasonable certainty," and that the damages were within the parties' contemplation. The panel held that the tenants met each part. Their figures drew on data from a preschool that had operated in the same location for nearly 40 years, their first-year profits matched their projections, and their business plan was "prepared at defendant's request."

The church contended that the profits required expert testimony and that Iken had not laid a foundation for the earlier preschool's numbers. The panel wrote that the argument ignored Iken's testimony that the church itself had given her those figures, "a fact which could have persuaded the jury that the numbers were acceptable to defendant." The lost-profits award of $734,353 approximates two and a half years of projected profits, according to the tenants. The panel also noted that the church "failed to present any countervailing evidence to show that plaintiffs' 2016 profits were an aberration."

The church next relied on Section 19 of the lease, which provided that "Tenant shall look only and solely to Landlord's estate and interest in and to the Building and the rents and profits therefrom" to satisfy any judgment. The church sold the building in 2019. The panel held that courts have read similar clauses to allow recovery from sale proceeds, "which reflect the seller's equity in the property." It added that the church "presented no evidence that the jury award exceeds its profits from the 2019 sale."

On the jury waiver, the panel recounted that the church first raised the lease's waivers four months after the tenants filed their note of issue. Before then, the church's lawyer had told the court on the record that there was "[n]o disagreement about the right to a jury trial." The panel concluded: "Under the circumstances, the court reasonably determined that the jury waiver had been waived."

The panel also refused to order a new trial over Iken's testimony that her husband died in the September 11, 2001, attacks. The church acknowledged that plaintiffs' counsel never directly asked about the death, and the panel found that the brief, unsolicited testimony explained how Iken obtained a donated fire alarm system. Although the church had moved before trial to exclude the testimony, its lawyer did not object at trial. Quoting a 2012 First Department decision, the panel held that the "isolated" statements were "not the type of comments that could have deprived defendant of a fair trial."

Lawyers for the church included Charles F. Kellett of McLaughlin & Stern LLP. Iken and Ordinary Faces were represented by Jonathan E. Neuman of the Law Offices of Jonathan E. Neuman.

The decision affirms the August 20, 2025, judgment and four orders brought up for review with it, including Justice Cohen's order, entered on or about May 16, 2025, denying the church's motion to set aside the verdict. The panel awarded neither side costs on the appeal.