Magno Sound, Inc. v 729 Acquisition LLC
Annotate this CaseDecided on April 20, 2006
Supreme Court, New York County
Magno Sound, Inc., Plaintiff,
against
729 Acquisition LLC et al., Defendants.
104327/06
Marylin G. Diamond, J.
Upon the foregoing papers, it is ordered that: The plaintiff, Magno Sound, Inc., is a business engaged in film, video and tape recording, screening theater, production and post-production activities. Its studios are in a building located in Times Square at the corner of Seventh Avenue and 49th Street. The building consists of a cellar, ground floor and 15 additional stories. It was developed as a commercial condominium consisting of only two separate units, Unit 1 and Unit 2. Unit 2 is the much larger of the two units. It essentially consists of all floors other than the ground floor and has approximately 164,000 rentable square feet. Unit 2 is owned by defendant 729 Acquisition LLC. The plaintiff, pursuant to a lease, occupies a major portion of Unit 2, consisting of the second through seventh floors and a portion of the penthouse. Unit 1 is comprised of only the ground floor and mezzanine, having 16,300 rentable square feet. It is owned by defendant 729 Seventh Owner LLC ("729 Owner") and leased to defendant 729 7th Realty Corp. ("729 Realty") under a master lease. Until the Summer of 2005, it had been occupied in recent years, pursuant to a sublease, by a Houlihan's restaurant. Sometime in the past year, 729 Realty entered into a sublease with nonparty HT Rest NYC, LLC under which the Houlihan's restaurant would be replaced by a Hawaiian-themed restaurant tentatively named Hawaiian Tropic Zone. Construction on the new restaurant, involving a substantial amount of work, began in October, 2005.
On or about March 30, 2006, the plaintiff commenced this action alleging that the noise and vibrations from the construction of the new restaurant were substantially interfering with the recording, theater and production activities in its studios and that, as a result, it was suffering the permanent loss of business. Claiming that its landlord, 729 Acquisition, refused to take the appropriate legal measures to stop this interference with the enjoyment of its lease, plaintiff brought this action alleging that the noise and vibrations from the construction constitute a nuisance. The complaint seeks a permanent injunction preventing the defendants from engaging in any construction work on the new restaurant during plaintiff's business hours, which are purported to be from Monday to Friday, 5:30 a.m. through 10:30 p.m. [*2]
In addition, there are two other types of relief which plaintiff seeks in the complaint that are of particular importance at this stage of the proceeding. First, plaintiff seeks an order tolling the time to exercise its option to renew its lease for a five-year term. Under the plaintiff's lease, the option must be exercised no later than April 1, 2006. Contending that it should not be required to exercise the option until it has had time to determine whether the operation of the new restaurant will create unacceptable noise in its studios, the plaintiff seeks an order extending the date by which the option must be exercised until 90 days after the restaurant opens for business. Second, relying on a provision in the lease which entitles it to an abatement of its rent if the leased premises are "untenantable," plaintiff seeks a Yellowstone-type injunction which would essentially permit it to withhold rent by restraining 729 Acquisition from serving it with a default notice or commencing a nonpayment proceeding during the pendency of this action.
In conjunction with the commencement of this action, the plaintiff has moved, by order to show cause, for a preliminary injunction (1) restraining the defendants from continuing construction work on the new restaurant during plaintiff's business hours and (2) tolling its time to exercise its option to renew. It also seeks, during the pendency of this action, the same Yellowstone-type injunction sought in the complaint. In signing the order to show cause on March 31, 2006, the court issued a temporary restraining order which granted the same relief sought in the underlying motion, pending a hearing on the motion. After the hearing, the court extended the TRO but modified that portion of the order which restrained the defendants from engaging in the construction work by enlarging the hours during which such work would be permitted.
Discussion
1. Preliminary Injunction As to the Construction Work - On a motion for a preliminary injunction, the movant must demonstrate, by clear and convincing evidence, that 1) there is a likelihood that it will succeed on the merits of its claim, 2) it will suffer irreparable injury absent the issuance of the requested relief and 3) the balance of equities lies in its favor. See Aetna Ins. Co. v. Capasso, 75 NY2d 860 (1990); Little India Stores, Inc. v. Singh, 101 AD2d. 727 (1st Dept. 1984).
Here, the court finds that the plaintiff is unlikely to succeed on the merits of its claim for a permanent injunction restraining the construction work on the new restaurant from being performed during plaintiff's business hours. Plaintiff's claim is based on its contention that the noise and vibrations from the work (1) violate the condominium's by-laws and (2) constitute a private nuisance.
As to the condominium's by-laws, plaintiff invokes two provisions, sections 12 and 14 of article V, which are allegedly being violated. Section 12 provides that no nuisance shall be allowed on the property and that there shall be no use or practice which unduly interferes with the peaceful possession or proper use of the property by its occupants. Section 14 provides that all structural alterations or additions by unit owners shall be performed so as not to duly interfere with the use or occupancy of the other unit.
The problem with plaintiff's reliance on these provisions is that, under the by-laws and under the Real Property Law, it lacks standing to invoke or enforce them. Under article V, section 9 of the by-laws, only a unit owner is given the right to bring a legal proceeding to enjoin [*3]a violation of any by-law. Under RPL 339-j, an action to enforce a condominium's by-laws is maintainable only by the Board of Managers or, in a proper case, by an aggrieved unit owner. Since plaintiff is only a tenant of a unit owner, it is unable to enforce these provisions.
Moreover, even if it could seek to enforce these provisions, plaintiff has failed to show that they have been violated by the construction work at issue. Although plaintiff asserts that it has been advised by its "sound experts" that the noise from the construction exceeds the acceptable levels of the relevant New York City laws, it has notably failed to provide any affidavit or documentation from any such expert. It has also failed to even suggest, much less establish, that the construction, which has been ongoing for more than five months, has been cited by the city authorities for any violation of any governmental rule or regulation relating to noise. Under article V, section 14 of the condominium by-laws, a unit owner is specifically permitted to make structural alterations to its unit. Clearly, when those alterations are significant, noise and vibrations will be produced. The fact that the plaintiff's business operation, involving sound studios, is particularly sensitive to and affected by such noise and vibrations does not, without more, mean that the construction is in violation of the proscription in the by-laws against undue interference with the use or occupancy of the other unit. There is nothing in the by-laws, or in any case law which plaintiff has cited, which suggests that whether or not noise emanating from construction work constitutes "undue interference" with the other unit turns on the specific use which the occupants of the other unit make of their premises. Under the circumstances, a determination of whether construction work unduly interferes with the use or occupancy of another unit must be based on the application of an objective standard. Since plaintiff has not shown that the hours of construction or the noise created by the construction is significantly different or more intrusive than any of the hundreds of construction projects which are underway on any given day in Manhattan, the court is not persuaded that, even if the plaintiff had standing to enforce the condominium by-laws, it would likely establish that any of the provisions which it has invoked have been breached.
The court reaches the same conclusion with respect to the issue of whether the construction constitutes a private nuisance. It is well settled that in order to prevail on a claim for private nuisance, a party must show that the conduct at issue is, inter alia, intentional and unreasonable. See Copart Indus. v. Cons. Edison Co. of NY, 41 NY2d 564, 570 (1977); McNeary v. Niagara Mohawk Power Corp., 286 AD2d 522, 524-25 (3rd Dept 2001). The reasonableness of conduct is measured by reference to the "ordinarily reasonable person." Id. at 524. In Celebrity Studios, Inc. v. Civetta Excavating, Inc., 72 Misc 2d 1077 (Sup Ct NY Co 1973), the court denied a private nuisance claim asserted by a rehearsal studio that, by reason of dynamite explosions producing concussions and vibrations, its business was disrupted by the construction work being performed in the adjacent lot. In its decision, the court held that even though plaintiff maintained a rehearsal studio affected by the sound and vibrations of the blasts, it was in "no essentially different position from hundreds or thousands of adjacent offices and stores, the smoothness of whose operations might likewise be affected by the inconvenience. If all of those businesses affected in varying degrees were to be permitted the right to recover for all those construction noises, the scope of liability confronting any prospective builder would be so vast as to immobilize all areas of the city into permanent rigidity......The originator of noise cannot be held to varying standards dependent upon the identity and characteristics of his neighbor." Id. at [*4]1081. Employing this same rationale, the court finds that plaintiff is unlikely to prevail on its private nuisance claim.
2. Preliminary Injunction as to Plaintiff's Time to Exercise Its Option to Renew - The court also finds that plaintiff is unlikely to succeed on the merits of its claim that its time to exercise its option to renew should be extended to 90 days after the new restaurant opens. As already noted, the basis of this claim is the plaintiff's assertion that it cannot properly determine whether it wishes to remain as a tenant in the building until it is able to assess the amount of noise emanating from the restaurant and intruding into its studios. However, the mere fact that, because of unsettled circumstances beyond its control, a party is uncertain whether to exercise an option to renew its lease does not entitle that party to an order from the court which essentially rewrites the lease so as to change the terms of the renewal clause by extending the time to exercise its option until the circumstances are settled. The plaintiff has not cited any authority which suggests otherwise. If the plaintiff had wanted the flexibility of extending its time to exercise its option to renew until unsettled circumstances were resolved, it could have sought to include such a provision in the lease. It would be inappropriate for the court to essentially add a provision which the parties could have, but did not, negotiate.
3. Yellowstone-Type Injunction Permitting Plaintiff to Withhold Rent - Paragraph 67 of the plaintiff's lease provides that in the event the premises become "untenantable" for a period of two days, plaintiff shall be entitled to a partial rent abatement equal to the percentage of the premises which is untenantable. It also provides that if the plaintiff's video department becomes untenantable, plaintiff is entitled to a complete rent abatement. On its motion, the plaintiff seeks a Yellowstone-type injunction which would permit it to withhold rent until it is finally determined in this proceeding whether it is entitled to an abatement of rent under paragraph 67 of the lease because of the interference with its business caused by the construction of the new restaurant.
The purpose of a Yellowstone injunction is to allow a tenant facing the threat of termination to obtain a stay tolling the running of the cure period so that after a determination of the merits, the tenant may cure the defect, if any is found, and avoid a forfeiture of the lease. See Long Island Gynecological Services v. 1103 Stewart Avenue Associates Limited Partnership, 224 AD2d 591, 593 (2nd Dept. 1996). Unlike a general preliminary injunction, the issuance of a Yellowstone injunction does not require a showing that the plaintiff will likely succeed on the merits of its claim. Rather, a tenant seeking a Yellowstone injunction must demonstrate only that (1) it holds a commercial lease, (2) it has received from the landlord a notice of default, a notice to cure or a threat of termination of the lease, (3) the application for a temporary restraining order was made was made prior to the termination of the lease and (4) it has the desire and ability to cure the alleged default by any means short of vacating the premises. Id. at 593. If the criteria for a Yellowstone injunction are met, the issuance of an order granting such relief falls within the discretion of the court. See Tag 380 LLC v. Sprint Spectrum, LP, 290 AD2d 404 (1st Dept 2002).
It is true, as plaintiff contends, that Yellowstone relief is proper even where nonpayment of rent is the only issue. See 3636 Greystone Owners, Inc. v. Greystone Building, 4 AD3d 122 (1st Dept 2004). However, it is not available in all nonpayment cases. A landlord which believes that its tenant has failed to pay the rent due and seeks the tenant's eviction may proceed in one of two ways. The first way is to serve the tenant with a notice of non-payment, pursuant to RPAPL [*5]711(2), and then commence a non-payment proceeding. Under RPAPL 751(1), a tenant faced with such a proceeding may cure its breach at any time prior to the issuance of a warrant of eviction by paying the amount due. See Lexington Ave & 42nd Street Corp. v. 380 Lexchamp Operating, Inc., 205 AD2d 421, 423 (2nd Dept 1994). Since the tenant may thus cure its default on its own, there is no need for a Yellowstone injunction and such relief is not available. See M.B.S. Love Unlimited, Inc. v. Jaclyn Realty Assocs., 215 AD2d 537 (2nd Dept 1995); Lexington Ave & 42nd Street Corp. v. 380 Lexchamp Operating, Inc., 205 AD2d at 423. See also Purdue Pharma, LP v. Ardsley Partners, LP, 5 AD3d 654,655 (2nd Dept 2004). The second way is for the landlord to serve a notice to cure or notice of default alleging that non-payment is a breach of a substantial lease term and threatening the termination of the lease. Such a notice allows the landlord to terminate the lease prior to the full adjudication of the parties' rights. See Lexington Ave & 42nd Street Corp. v. 380 Lexchamp Operating, Inc., 205 AD2d at 423. Under such circumstancers, a Yellowstone injunction is warranted to preserve the status quo. See Purdue Pharma, LP v. Ardsley Partners, LP, 5 AD3d at 655.
Here, the plaintiff's landlord, 729 Acquisition, proceeded by the first method, serving plaintiff with an RPAPL 711(2) notice of non-payment. It has never served plaintiff with a notice to cure or a notice of default. Under such circumstances, Yellowstone relief is not available.
In any event, even if a Yellowstone injunction were available, the court, in its exercise of discretion, would decline to issue any such relief. The plaintiff has provided little proof that its premises have become untenantable as a result of the construction below. Notwithstanding the many clients who have used its studios since the commencement of the construction, the plaintiff has submitted only two e-mails in which any of these clients have complained about how the noise and vibrations have interfered with their work. Although plaintiff asserts that the construction has also caused the cancellation of business, it has failed to identify any clients who cancelled business and has failed to offer the court any indication of the extent, if any, that its business has diminished. In view of such scant evidence, the plaintiff is hardly entitled to an order which, in effect, would permit it, a major tenant of Unit 2, to withhold rent during the pendency of this action.
Accordingly, the plaintiff's motion is hereby denied in its entirety and the TRO which the court previously issued is hereby vacated.
The parties shall appear before the court in Room 412, 60 Centre Street, New York, New York on May 2, 2006 at 10:30 a.m. for a status conference.
ENTER ORDER
Dated: April 20, 2006 MARYLIN G. DIAMOND J.S.C.
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