City of New York v Stapleton Studios, LLC
Annotate this CaseDecided on June 10, 2004
Civil Court of the City of New York, Richmond County
The City of New York, Petitioner, against Present HON. PHILIP S. STRANIERE
against
Stapleton Studios, LLC, Respondent,
Index No.: L&T 010558/04
Attorney for Petitioner:
Michael A. Cardozo
Corporation Counsel of the City of New York
100 Church Street
New York, NY 10007
Of Counsel: Tina Isselbacher
Tel: (212) 788-1222
Attorney for Respondent:
Dowd & Marotta, LLC
277 Broadway, Suite #1310
New York, NY 10007
(212) 349-1200
Philip S. Straniere, J.
Petitioner, The City of New York, commenced this summary proceeding against the respondents, Stapleton Studios, L.L.C., "John and Jane Doe" and "XYZ Corp.", alleging that the [*2]respondents remain in possession of certain premises at the Staten Island Homeport after the termination of the permit with occupancy license issued by the petitioner to the respondent. The petition and notice of petition were served on April 22, 2004. Respondent Stapleton Studios L.L.C., has not answered or filed a motion to dismiss the complaint. Instead respondent has sought an order staying this proceeding pending the outcome of a Civil Practice Law and Rules Article 78 proceeding between the parties in the Supreme Court New York County (Stapleton Studios L.L.C. v. The City of New York et al, Index No. 400167/03) and a separate civil suit Stapleton Studios L.L.C. eta l v. The City of New York et al Index #119708/03).
BACKGROUND:
This proceeding involves a premises on the waterfront of Staten Island, New York, not far from its beaches, known as the Homeport. The Homeport was waterfront property originally ceded to the US Navy for use. The Navy abandoned ship, waved goodbye to the city lights and closed the facility, opting instead for the Virginian waterfront as a base of operations rather than New York, New York. Since it had been determined that this property is condemned for public use, it was transferred back to the City of New York. The site has had a rocky history over the last few years as it has remained basically under utilized. The primary occupants are currently a division of the Supreme Court of the State of New York and some municipal agencies. The respondents, with the advice and consent of the City, entered into occupancy with the intent of creating a first class movie studio. Respondents at this point believed life is beautiful and that they would soon be enjoying the sweet smell of success in this endeavor. They thought they had a gentleman's agreement with the petitioner and that the City would do the right thing and enter into a long term lease with them which would permit them to continue to develop the studio. Respondent had no idea that stormy weather lay ahead in its dealings with the City. In September 2002, acting in its role as terminator of the agreement, the City gave the producers notice that it wanted the studio gone with the wind and that they should exodus the property by October 31, 2002. Respondent learned that even if they paid a few dollars more in occupancy charges or sought new investors from Wall Street they were expendable as a licensee. They did not need an insider to tell them they no longer welcome at the site. The City apparently believed there was some monkey business involved with the financing of the studio. This put a big chill on respondent's application. Respondent's dreams were up in smoke. It has been no picnic for the respondent in trying to negotiate with the City and the subsequent dispute has made the front page of the Staten Island Advance on a regular basis.
Petitioner and respondent entered into a written license agreement on or about January 1, 2002 which expired on June 30, 2002. On July 8, 2002 the parties signed a second license agreement for the period July 1, 2002 until October 31, 2002. On September 4, 2002, as permitted in the license agreement (permit paragraph 3), petitioner issued a 30 Day Notice of Termination to the respondents, informing them that the City had no intention of extending the license beyond its scheduled termination date of October 31, 2002 and requesting that the respondents vacate the premises by that date. Pursuant to the terms of the license agreement and Real Property Actions and Proceedings Law (RPAPL) 713(7) petitioner caused to be issued on [*3]March 29, 2004 a "10 Day Notice To Quit," alleging that the respondent had remained in possession beyond the license expiration date of October 31, 2002, without the City of New York's permission. Copies of this notice were served as required in RPAPL 735 on March 31, 2004, with additional copies being mailed on April 1, 2004. This summary proceeding was commenced on April 12, 2004 when the notice of petition and petition were issued by the City. It should be pointed out that summary proceedings pursuant to RPAPL 713 are utilized to recover possession of real property when no landlord-tenant relationship exists between the parties.
Since a summary proceeding is a special proceeding under CPLR Article 4, the respondent had the option to either answer (RPAPL 743) or file a motion seeking dismissal of the petition (CPLR 404(a)). Both of these statutes contemplate a response, raising either procedural challenges to the action or defenses that exist on the merits. Rather than utilize either of these potential responses, the respondent instead filed a motion to stay the summary proceeding on the grounds that an action is pending in Supreme Court, New York County. That litigation, a special proceeding brought in November 2002 by Stapleton Studios against the City of New York pursuant to CPLR Article 78 has had a lengthy procedural history. It was commenced in Richmond County by an Order to Show Cause signed by Hon. Joseph Maltese on November 1, 2002. In that special proceeding Stapleton Studio sought judicial annulment of the decision of the City not to renew the permit which expired on October 31, 2002. The matter was subsequently transferred to New York County as the venue provision of the license agreement required such actions to be litigated in Manhattan. The second action commenced by Stapleton Studios in New York County is for money damages and is not being cited by respondent as a grounds for the stay.
It should be pointed out that as a court of general jurisdiction the Supreme Court, where respondent's suit is pending, has the power to issue a stay of this proceeding (although it may be argued that in such a case the application is really for the equitable relief of injunction). No such stay was issued. In fact, in its original Order to Show Cause submitted to Judge Maltese, Stapleton Studios sought an order preventing the City from taking "any steps to evict" Stapleton Studios from the premises. Judge Maltese refused to grant that request and his order only restricted the City from using "self-help" to evict the studio. Clearly nothing in the original order, nor is there any evidence of a subsequent order, prevented the City from utilizing legal process to recover the premises whether it be instituted under RPAPL Article 6 or Article 7. Stapleton Studios is seeking the stay of the eviction pursuant to CPLR 2201 which permits "the court in which an action is pending to grant a stay of proceedings in a proper case, upon such terms as may be just."
LEGAL ISSUES PRESENTED:
A. Is Respondent Entitled To A Stay? [*4]
There are several reasons why the application for a stay must be denied.
First, the Appellate Division of the First Department, in a decision rendered on the issue of what discovery would be permitted in the Supreme Court Article 78 action, stated the following: "Stapleton did not have a right, either vested or contingent, to continue to occupy the Homeport property after the Permit's stated expiration date, and the document production ordered by the IAS court could not impact the outcome of this proceeding. While we recognize that the merits of the City's business judgment in refusing to renew Stapleton's Permit is a valid topic of debate, that decision is not, on this record subject to judicial review." The Appellate Division found that Stapleton was not entitled to the discovery it sought because it has no right of occupancy to the premises. Although not faced with specific issue of the right of Stapleton to remain in possession, the Court reached the conclusion that Stapleton had no such right when it determined the issue of the availability of discovery.
Second, the respondent appears to be seeking to utilize the stay provisions of the CPLR for an improper purpose. The idea of a summary proceeding is to achieve a legal determination in an expeditious manner. The issuance of a stay is a direct contradiction of that goal. At a minimum it would seem that to be entitled to a stay there must be both a compelling reason, such as irreparable harm to the applicant, as well as some showing of ultimate success in either the action being stayed or in the New York County proceeding. The respondent is alleging that the stay is necessary because the New York County litigation will be dispositive of the issues of this Civil Court matter. Respondent has not provided this Court with any legal basis or defense to the eviction proceeding. At this point in the litigation, all of the allegations of the City's holdover petition remain unchallenged and uncontradicted. Respondent has not given this Court any documentation from which it can conclude respondent will ultimately be successful in the New York County Article 78 proceeding.
Third, the relief being sought in the Article 78 proceeding by Stapleton Studios and the relief being sought by the City in this action, although similar in that the ultimate result will be a finding as to who is entitled to occupancy, the purpose of each proceeding is not identical. There is no question the most recent permit with its license to occupy terminated on October 31, 2002 and that the City chose not to renew it. The permit did not contain any automatic renewal clause. In fact the permit states that it is an "Occupancy Permit at will" and can be "terminated for any reason or no reason at any time" by giving the permitee thirty days written notice (Permit paragraph 30(a)). On its face it appears that the City was acting within its rights. Stapleton Studio is contending that the City either acted in "bad faith" or violated statutes, rules, regulations and procedures in failing to negotiate an extension of the old permit or a new permit with Stapleton Studios. Whether or not Stapleton Studios is entitled to remain in occupancy under a new permit is not relevant to the issue of whether or not the City is entitled to an order of possession on the grounds that the respondent's license to occupy has been terminated. The Court realizes that the respondent is claiming it will suffer "irreparable harm" by being evicted from the premises in that it will lose substantial income because it cannot contract to produce films without a long term commitment from the City. In addition respondent will be unable to [*5]recover the monies expended in making capital improvements to the premises. However, such issues can be resolved by awarding Stapleton Studios monetary damages if it prevails in its Supreme Court civil action. It is also obvious that perhaps a more favorable contract should have been negotiated initially. Why sink this amount of money into a project when there is no long term commitment from the City? The Permit contains a clause stating that the document is the entire agreement and "all prior negotiations, representations and agreements, whether written or oral" are integrated into this document (Permit paragraph 41). If there existed other agreements that contradict the terms of this permit, why did Stapleton sign a document with this clause? Whether or not Stapleton Studios made a "bad deal" is not a defense to the summary proceeding. Respondent, to a certain degree, took a business risk that the City would not extend its permit. Such a result was a disclosed possibility under the terms of the permit.
Fourth, a stay of proceedings is an equitable remedy. In order to be entitled to it, Stapleton Studios would have to have "clean hands." It is impossible to conclude that respondent is entitled to this relief since its hands are far from "clean." The permit in question fixed the monthly charge at $54,895.00 for the duration of the permit term. The petition by Stapleton Studios in the Article 78 proceeding asked that figure to be considered as "use and occupancy and maintenance fees" beginning November 1, 2002 and continuing until a further court decision or order. Judge Maltese granted that request. Stapleton now is repudiating the very relief for which it asked. After the case was transferred to Manhattan, Judge Goodman held hearings on the issue of what would be a fair amount of use and occupancy to charge. In her decision she questioned whether the proper term for the payments was "use and occupancy" since that is the charge assessed when a landlord-tenant relationship exists (Real Property Law 220) and this case involves a license, a situation that is not a landlord-tenant relationship under the law (RPAPL 713). In the first permit between the parties the charge was $6,500.00 a month, while in the second it was $54,895.00. Judge Goodman conducted these hearings on October 20-24, October 27, and November 23, 2003. It should be pointed out that between the Maltese order in November 2002 and the Goodman decision in February 2004 there was an interim order from Judge Goodman on July 30, 2003 requiring the Stapleton Studios to pay the original use and occupancy at the rate of $6,500.00 a month until the issue was finally decided. Stapleton Studios did not even pay this sum. In fact, it admits in its application for the stay that it only paid the first "$54,000.00" as required by Judge Maltese but has made no payments since then because "the City stalled the proceedings by switching venue." (The Court is unclear as to whether the respondent only paid $54,000.00, which is less than the agreed amount or whether counsel was just speaking in "round numbers." The Court is presuming the amount was the $54,850.00) As a result of those hearings, Judge Goodman on February 17, 2004 fixed use and occupancy at $8.50 a square foot or $54,850.00 a month from November 1, 2002 and $125,290.70 for electricity used by respondent for the period January 28, 2002 until September 30, 2003. All of these sums remain unpaid. Stapleton Studios is in utter disregard of these court orders. It cannot seriously expect this or any other court to grant relief, such as a stay of the eviction, when it has flaunted the reasonable determinations of the courts hearing its application.
B. Is The Petitioner Entitled To An Order Of Possession? [*6]
The petition of the City of New York is unchallenged by the respondent. Any allegation not denied is deemed admitted. Since no answer was ever filed in this summary proceeding nor was an appropriate motion to dismiss as permitted by the CPLR ever submitted, it can only be concluded that the respondent is in default. Petitioner is entitled to a judgment of possession.
As there has been a finding that the fair use and occupancy for the premises has been both by agreement of the parties in the license agreement, and by subsequent court order fixed at $54,850.00 a month since November 1, 2002, the City is entitled to a money judgment in that regard. Judgment in favor of petitioner for use and occupancy in the amount of $1,042,150.00. This is calculated as $54,850.00 a month for 20 months, November 1, 2002 to June 30, 2004 less a credit for the one payment of $54,850.00 respondent made.
In addition, since the permit required the respondent to pay electric bills (Permit paragraph 6), petitioner is entitled to a judgment in the amount of $125,290.70 for electricity use at the premises from January 28, 2002 through September 30, 2003 as found by Judge Goodman.
CONCLUSION:
Judgment in favor of the City of New York for the period November 1, 2002 to June 30, 2004 in the amount of $1,045,150.00 for use and occupancy and $125,290.70 for electricity for a total of $1,167,440.70 with interest from June 30, 2004, costs and disbursements.
A warrant of eviction to be issued forthwith. The execution of warrant is stayed until June 30, 2004.
In view of the fact that there continues an action in New York County between the parties and the respondent will suffer severe financial harm if put out of possession and then ultimately is restored by succeeding on its Article 78 suit, the Court will re-consider an application for a stay of execution of the warrant of eviction provided respondent pay on or before June 30, 2004 the sum of $1,045,150.00 for use and occupancy to its attorneys to be held in escrow in an interest-bearing account pending resolution of the proceedings. In addition, to obtain such a stay Respondent will have to continue to pay to its attorneys in escrow the sum of $54,850.00 a month on the first day of each month until the current litigation is resolved. Further, as a condition of any such stay respondent is to pay directly to the City of New York the sum of $125,290.70 on or before June 30, 2004 for electricity charges set forth above. Finally, also as a condition of any such stay, upon submission by petitioner of a certified statement on notice to respondent of any other charges due to the City for the period November 1, 2002 through June 30, 2004, the respondent will have to pay those charges directly to the City within 30 days of receipt to such billing.
If the money is not paid as directed above, the City may execute on the warrant of eviction without further application to the Court. [*7]
The foregoing constitutes the decision and order of the Court.
Court attorney to notify.
Dated: June 10, 2004_____________________________
Staten Island, NY PHILIP S. STRANIERE
Judge, Civil Court
ASN by ______ on ___________________.
The City of New York v. Stapleton Studios, LLC
Index No. L&T 010558/04
Attorney for Petitioner:
Michael A. Cardozo
Corporation Counsel of the City of New York
100 Church Street
New York, NY 10007
Of Counsel: Tina Isselbacher
Tel: (212) 788-1222
Attorney for Respondent:
Dowd & Marotta, LLC
277 Broadway, Suite #1310
New York, NY 10007
(212) 349-1200
Contact Person:Helene Donlan Sacco, Esq.
Court Attorney to Hon. Philip S. Straniere
(718) 390-5425
Hsacco@courts.state.ny.us
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