Oceana Holding Corp. v Atlantic Oceana, Inc.
Annotate this CaseDecided on August 2, 2006
Supreme Court, Kings County
Oceana Holding Corp., Petitioner,
against
Atlantic Oceana, Inc., Respondent.
18031/06
Ira B. Harkavy, J.
Petitioner, Oceana Holding Corp. ("Oceana"), moves by Order to Show Cause to permanently enjoin respondent, Atlantic Oceana Inc. ("Atlantic"), from conducting a boxing match event on leased premises.
On January 24th 1999, petitioner leased the ground floor of premises located at 1029 Brighton Beach Avenue, Brooklyn, New York to respondent. Respondent Atlantic operates a catering facility and banquet hall which has catered large events including sporting events. Atlantic has held boxing events at the leased premises for several years. These boxing events were fully insured by both Atlantic and the boxing promoter. In addition, the events were sanctioned by the New York Athletic Commission.
Petitioner claims that the lease only permits the ground floor of the premises to be used exclusively as a restaurant/night club. Petitioner further claims that respondent should be precluded from scheduling a public boxing match at the premises unless it obtains permission of petitioner landlord. Specifically, petitioner claims that such a boxing event would violate both paragraph No.2 and paragraph #50 of the lease. Paragraph #2 constitutes the occupancy and use provision of the lease and states:
Tenant shall use and occupy demised premises for RESTAURANTS AND NIGHT CLUB and for no other purpose.
Paragraph #50 states:
Without limiting any other provisions of this Lease (including, without limitation, the provisions of Article 11), Tenant covenants and agrees that it will not license any person to do business on the premises or grant any concession thereon without the prior written consent of Owner in each instance.
Any transfer by operation of law or otherwise of Tenant's interest in this Lease (in whole or in part) or of any interest in Tenant (whether stock, partnership interest or otherwise) shall be deemed an assignment of this Lease, requiring Owner's prior written consent. The issuance of fifty-[*2]one percent (51%) or more of shares of stock or control to other than existing shareholders is deemed to be a transfer of stock for this purpose.
Notwithstanding the provisions of Article 11, Tenant shall have the right to assign this lease one time to a corporation formed for this purpose, for the same use as set forth in Article 2.
Atlantic argues that they have not violated any provision contained in the lease. It has not granted a license or concession to any entity. Furthermore, Atlantic has presented evidence that the premises had been utilized to hold fully sanctioned boxing events for several years in the past without complaint from the landlord. Atlantic further claims that its temporary Certificate of Occupancy lists the premises as a banquet hall. It argues that a banquet hall falls under zoning Use Group 9 which allows a catering establishment that serves food and beverages to hold licensed sporting events.
In response to a planned boxing event on June 25, 2006, petitioner obtained the within ex-parte Order to Show Cause seeking a temporary restraining order and a permanent injunction prohibiting Atlantic from holding boxing events at the premises. The Order to Show Cause was made returnable after the event in question was held. Accordingly, the specific relief requested became moot. The court now has before it the question of whether future boxing events may be held at said premises.
The lease permits Atlantic's use of the premises as a "nightclub." This term is somewhat ambiguous as many activities fall within the constraints of what are deemed nightclub activities. A nightclub may have charity functions, comedic performances, or contests which may include athletic elements. Unless the language of the lease makes it clear that a restriction is intended, the language is construed as merely descriptive of the use, and not as a limitation on that use. See, Herman Miller, Inc. v Thom Rock Realty Co. L.P., 46 F.3d 183, 185 (2nd Cir. 1995). Petitioner fails to point to any provision in the lease that directly prohibits the activity in question. Rather, petitioner relies on an ambiguous clause of the lease, paragraph 50, which prohibits granting a license to do business on the premises without the owner's consent. However, this clause also provides that it does not limit any other provision in the lease. "Classic lease construction is that if there are any ambiguities in lease interpretation, making two constructions possible, any such ambiguities are to be resolved in the tenant's favor ... Moreover, the interpretation should be adopted that limits restrictions on the free use of property." Green Avenue Assoc. v Cardwell, 191 Misc 2d 795, 743 N.Y.S.2d 842, 851 (2002); see also, Mihil Co. v Paradiso, 107 Misc 2d 867, 871, 436 N.Y.S 2d 115, (1980).
Furthermore, the expired temporary certificate of occupancy shows that the first floor of the premises is zoned to permit Use Group 9 activities, with a description of the use as a "Banquet Hall." The New York City Zoning Resolution allows Group 9 establishments to conduct a wide range of activities including automobile and motorcycle showrooms or sales, public auction rooms, catering establishments, music and dance studios, and banquet halls. See NYC Zoning Resolution, City Planning. Comm., Dept. of City Planning., Art. III Chap. 2 §32-18 (last updated 2/26/98). The uses enumerated under the particular Use Groups are uses permitted as of right. Id. The fact that the temporary certificate of occupancy has expired bears no weight on what the premises may currently be used for. A specified occupancy or use of an existing building shall remain the same as the last issued certificate of occupancy for the same premises. See NYC Admin. Code., § 27-217 [*3](2005).
The language of Use Group 9 does not delineate what specific activities constitute the normal and proper use of a banquet hall. More specifically, the language used is "appropriate for" rather than "intended for", "designed for", or "occupied for" as used in other provisions of the zoning code. NYC Zoning Resolution, §32-18.
Whether a licensed boxing event is within the limit of activities that may be appropriately conducted in banquet halls is a question of fact that cannot be decided on a motion for summary judgment. See, Alvarez v. Prospect Hosp., 68 NY2d 320, 324, 508 N.Y.S.2d 923 (1986); Zuckerman v. City of New York, 49 NY2d 557, 562, 467 N.Y.S.2d 595 (1980).
Petitioner fails to adequately distinguish the boxing events from a host of other activities that may be permitted on the premises. While there may be merit to petitioner's claim that boxing events may be more susceptible to incident than more tranquil activities, this is not dispositive of whether the events at issue may be held. The boxing events have been fully insured and are licensed by the State Athletic Commission. Notably, the boxing events have been carried on for several years without complaint. Atlantic has held over thirty of these events in the past few years and has advertised and publicized their occurrence. Oceana had continued to accept rent while having been aware that these events were taking place. Petitioner correctly points out that the lease contains a "no waiver" clause which states that receipt by the landlord of rent with knowledge of the breach of any covenant of the lease shall not be deemed a waiver unless in writing and signed by the landlord. However, Oceana's continued acceptance of the boxing matches may evince both parties continued understanding of the use of the premises as a nightclub which holds fully sanctioned boxing events and thus demonstrates that no breach of the lease has in fact occurred. See, Jefpaul Garage Corp. v Presbyterian Hosp. in the City of NY, 61 NY2d 442, 446, 462 N.E.2d 1176, 1178 (1984)
A permanent injunction cannot be issued in advance of trial or summary judgment so long as a factual dispute exists. Oppenheim v. Thanasoulis, 123 A.D. 494, 108 N.Y.S 505 (1908). The court's reluctance to grant a motion that will have the effect of ultimate relief is based upon a desire to decide litigation only after a full hearing on the merits. Graham v. Board of Supervisors, 49 Misc 2d 459, 267 N.Y.S.2d 383 (1966). There have been demonstrable questions of fact as to whether Atlantic may be permitted to use the premises to hold licensed boxing events without expressly violating the lease. Furthermore, there is a clear question of fact as to whether zoning Use Group 9 permits a banquet hall to conduct sporting events while serving food and beverages, as is typical of a licensed boxing event. As questions of fact exist regarding respondent's right to hold licensed boxing events on the premises, petitioner's request for a permanent injunction is denied.
This constitutes the decision, order and judgment of the Court.
Dated: August 2, 2006
Brooklyn, New York
E N T E R
IRA B. HARKAVY
J.S.C.
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