## Facts

- The United States, acting through the Department of State’s Office of Foreign Missions (OFM), controlled a New York City building under the Foreign Missions Act after diplomatic relations with Iran were severed.
- In 1992, OFM leased the building to Jeffrey E. Epstein.
- The lease restricted occupancy and required OFM’s prior written consent for any assignment or sublease; it contained no term requiring that consent not be unreasonably withheld.
- In 1996, Epstein sublet the entire premises to Ivan S. Fisher, and Fisher sublet portions to additional occupants, without OFM’s written approval.
- After discovering Epstein was no longer in possession and the premises were occupied under unapproved subleases, the United States terminated Epstein’s lease and sued for ejectment of Epstein, Fisher, and the subtenants, and sought back rent from Epstein and Fisher.
- On the government’s motion for partial summary judgment, the remaining defenses to ejectment were that OFM orally consented to the sublease and that federal law imposed a reasonableness and good-faith limit on OFM’s ability to withhold consent.

## Issues

1. Whether the lease’s requirement of OFM’s prior written consent for any sublease or assignment foreclosed reliance on alleged oral consent.
2. Whether state landlord–tenant law or federal law governed the consent standard, and whether the United States was required to act reasonably and in good faith when withholding consent to a sublease.

## Decision

- The court granted the United States partial summary judgment on ejectment.
- The court held the lease unambiguously required OFM’s prior written consent for any sublease or assignment, and alleged oral consent could not satisfy that condition.
- The court applied New York landlord–tenant law and rejected defendants’ argument that federal law imposed a reasonableness requirement on OFM’s consent decision.
- Under New York law, because the lease did not expressly limit the landlord’s discretion, OFM could withhold consent for any reason or no reason.
- Because the subletting occurred without required written consent, the United States was entitled to terminate the lease and eject Epstein, Fisher, and the subtenants.

## Legal Principles

- Clear lease terms requiring a landlord’s prior written consent for subleasing or assignment are enforced according to their plain language; alleged oral permission does not satisfy an unambiguous writing requirement.
- In a landlord–tenant dispute involving federally controlled property, state law may supply the governing landlord–tenant rules absent a statute or federal rule displacing state law.
- Under New York law, a landlord may refuse consent to a proposed sublease arbitrarily unless the lease expressly restricts that discretion (for example, by stating consent will not be unreasonably withheld).
- The implied covenant of good faith and fair dealing does not add a reasonableness limit on withholding consent where the parties’ lease does not include such a limitation.

## Conclusion

The court ordered ejectment on summary judgment because the prime lease required OFM’s prior written consent for any sublease and no such consent was obtained, and because New York law permitted the landlord to withhold consent without justification when the lease contained no express reasonableness constraint.


United States v. Epstein, 27 F. Supp. 2d 404 (S.D.N.Y. 1998)