Key Points

  • The First Department unanimously affirmed orders denying motions by Heritage Health and Housing Inc. and Ralph K. Jackson, M.D., P.C. to dismiss ejectment and trespass actions brought by the City of New York and NYC Health and Hospitals Corporation.
  • The panel held that Heritage's agreement, which disclaimed a landlord-tenant relationship, gave both sides a no-cause 60-day termination right and barred assignment, indicated a license rather than a lease.
  • The Jackson practice's purported sublease did not establish a tenancy because HHC was not a party, disputed the sublease, treated Jackson at best as a sublicensee and never accepted use-and-occupancy payments directly from it.
  • HHC's deputy general counsel attested that City Charter section 384's prerequisites for leasing city-owned property were never satisfied, and the court held that municipal contracts violating express statutory provisions are invalid.
  • The defendants failed to show conclusively that they were entitled to tenancy-termination notice, a receptionist may accept service if authorized, and the trespass claims are not duplicative of the ejectment claims.

A New York appeals court on Thursday allowed New York City and the New York City Health and Hospitals Corporation to press lawsuits to remove Heritage Health and Housing Inc. and a physician's practice from premises they occupy, ruling that both occupants had failed to show they were tenants entitled to the notice that must precede the end of a tenancy.

The Appellate Division, First Department, unanimously affirmed two orders by Justice Jeanine R. Johnson of State Supreme Court in New York County, entered on or about March 31, 2025, that denied motions to dismiss by Heritage and by Ralph K. Jackson, M.D., P.C. The panel consisted of Justices Manzanet-Daniels, who presided, Shulman, Rodriguez, Higgitt and Rosado.

The ruling rests on the line between a lease and a license. Because both defendants failed to prove conclusively that they were tenants, they had not conclusively shown that the notice requirements that govern terminating a tenancy protected them. The city's actions for ejectment and for trespass will go forward.

In the Heritage case, the organization argued that its license agreement with the plaintiffs was in fact a lease and that it was a month-to-month tenant. Heritage also contended that the plaintiffs had failed to properly terminate its tenancy.

The panel began with a 1994 First Department decision. "[W]hat defines the proprietary relationship between the parties is not its characterization or the technical language used in the instrument, but rather the manifest intention of the parties," the court wrote, quoting American Jewish Theatre v. Roundabout Theatre Co.

Applying that test, the panel found that the agreement "contains multiple provisions indicating an intention to create a license rather than a tenancy." Paragraph 13(a) of the agreement expressly disclaimed a landlord-tenant relationship. Paragraph 6(a) gave the parties "the absolute right to terminate this License agreement without cause upon [60] days' notice to the other party."

On that clause, the panel quoted a 2014 Court of Appeals decision for the principle that "[a] broad termination clause reserving to the grantor the right to cancel whenever it decides in good faith to do so is strongly indicative of a license as opposed to a lease."

The court also pointed to paragraph 14, which barred Heritage from transferring or assigning any portion of the space. That restriction, the panel wrote, "is also indicative of a licensor-licensee relationship," citing decisions from 1892 and 2001.

The Jackson practice relied on a purported sublease. The panel held that the city and the hospital corporation were not parties to that document. According to the court, the documentary evidence Jackson submitted showed that the hospital corporation knew Jackson was occupying the premises but "always took the position that it was, at best, a sublicensee of another entity, who was in turn a licensee of HHC."

The same evidence, the panel wrote, indicated that the hospital corporation "disputed the validity of the purported sublease in its entirety." The court added that the hospital corporation never accepted payments for use and occupancy of the premises directly from Jackson.

The panel then turned to the City Charter. Section 384 of the charter sets statutory prerequisites for leasing city-owned property, and in both cases the hospital corporation's deputy general counsel attested that those requirements were never satisfied. Quoting a 1990 First Department decision in Henry Modell & Co. v. City of New York, the court wrote that "municipal contracts which violate express statutory provisions are invalid."

Those findings decided the notice question. Because Heritage had not shown that its agreement was meant to be a lease, and Jackson had not shown that it "is or was a tenant of the premises," the panel held, "they have also not conclusively demonstrated that they benefit from the notice requirements for termination of a tenancy."

Jackson also argued that the plaintiffs had improperly served predicate notices. The panel said that even if it considered the argument, a receptionist may accept service on a party's behalf when authorized to do so, citing the state's Civil Practice Law and Rules.

Dr. Jackson had stated in an affidavit that his own receptionist and the building's front-desk receptionist both lacked permission to accept the notices. The panel wrote that "this statement simply contradicts the process server's affidavits of service," so Jackson had not conclusively established that either receptionist lacked authority to accept service on its behalf.

Finally, the panel rejected the defendants' contention that the trespass claims merely repeated the ejectment claims. The trespass claims against both defendants are not duplicative, the court held. The panel said it had considered the defendants' remaining arguments and found them "unavailing or unnecessary to reach in light of our decision."

Heritage and Jackson were represented by Avi Strauss of Smith Buss & Jacobs LLP in Yonkers. The city and the hospital corporation were represented by the office of Steven Banks, the city's corporation counsel.

The affirmance in the Heritage appeal was without costs. The decision, 2026 NY Slip Op 05998, is uncorrected and subject to revision before publication in the Official Reports.