Hussein Envt. Inc. v Roxborough Apt. Corp. & Katouna Inc.

[*1] Hussein Envt. Inc. v Roxborough Apt. Corp. 2007 NY Slip Op 52211(U) [17 Misc 3d 1130(A)] Decided on November 21, 2007 Supreme Court, New York County Kornreich, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. As corrected in part through December 3, 2007; it will not be published in the printed Official Reports.

Decided on November 21, 2007
Supreme Court, New York County

Hussein Environment Inc., a/k/a, Cleopatra's Needle, Plaintiff,

against

Roxborough Apt. Corp. & Katouna Inc., d/b/a, Perfecto Ristorante, Defendant.



114295/07

Shirley W. Kornreich, J.

Plaintiff, Hussein Environment Inc. ("Hussein"), brings this order to show cause seeking a preliminary injunction. Hussein and defendant Katouna Inc. ("Katouna") are long-term commercial tenants in a building owned and operated by defendant Roxborough Apartment Corp. ("Roxborough"), located at 251 West 91st Street. Hussein, a restaurant, does business as Cleopatra's Needle. Cleopatra's Needle has occupied its space, first, pursuant to a 1989 agreement and, subsequently, pursuant to a May 2004 lease. Katouna, a restaurant doing business as Perfecto Ristorante, has leased space since 1992. On May 31, 2007, Katouna leased the store adjoining its space for use as an "Italian and Greek Food Espresso Bar." Hussein, now, asks that Katouna be enjoined from doing business as an Italian restaurant. The application is denied.

I.Facts

A.Plaintiff's Submissions

Plaintiff, in support of its application, submits, inter alia: the pleadings, the affidavit of its president Maher Hussein, a copy of its 2004 lease, copies of menus from Cleopatra's Needles menu and Perfecto Restaurant and photographs of the restaurants' store fronts.

In its verified complaint, Hussein alleges that it operates a Mediterranean restaurant and bar that provides entertainment and has done so since June 1989. It alleges that its May 2004 lease restricts the landlord from entering into another lease for commercial space in the building "containing a use clause substantially identical to the use clause set forth in Article 2" of its lease. It further alleges that Roxborough violated this restrictive use clause by renting space to Katouna to expand "its pizza operation and facilitate Katouna's expansion into a full time restaurant serving a variety of foods and alcoholic beverages." It contends that it sent a cease and desist letter to Roxborough and Katouna on June 12, 2007 and, again, in July 2007. It asks for: 1) a judgment declaring that defendants willfully breached plaintiff's lease; 2) a declaration that [*2]Katouna's lease is void; 3) a permanent injunction against Katouna; 4) a permanent injunction against Roxborough enjoining it from renting space in the building as a restaurant and bar; and 5) attorney fees from Roxborough.

Mr. Hussein, in his affidavit, avers that he signed a ten year lease in May of 2004 containing the above-mentioned restrictive clause, that two store spaces adjacent to his restaurant became vacant and were rented to Katouna to expand its business and that Katouna has built out the two spaces into a large eat-in restaurant called Perfecto. The Rider to Hussein's May 2004 lease contains the following clause:

Article 43. No Similar Use

For so long as Tenant is not in default under this Lease, Owner agrees that it

shall not (other than with the named Tenant herein) enter into any lease for any

commercial portion of the Building containing a use clause substantially identical

to the use clause in Article 2 hereof. Except for any willful violation of the fore-

going provision, Owner shall in no event be liable to Tenant for the actual use and

operation of any tenant of the Building, whether or not such use in fact violates any

use clause in such tenant's lease.

Article 2 of the lease has been left blank as to the use plaintiff and Roxborough intended. Mr. Hussein avers that he is not in default under the lease.

Plaintiff's menu, although denominated "Mediterranean Cuisine" contains Italian dishes, fried chicken wings, vegetable and barley soups, roast cornish hen, curry dishes, hamburgers, steak, chicken breast, various fried and baked fish dishes, salads of all kinds, rice pudding, brownies, cheese cake mousse and pudding, as well as Mid-Eastern dishes. Perfecto's menu contains buffalo wings, chicken fingers, cole slaw, french fries, stuffed baked potato, steamed vegetables, various grilled chicken dishes, Mid-Eastern dishes, puddings, apple pie and cheese cake, as well as Italian dishes.

B.Katouna's Submissions

In opposition to plaintiff's application for a preliminary injunction, Katouna submits, inter alia, an affidavit from its principal Ioannis Berbeis and a copy of its May 31, 2007 lease. In his affidavit, Mr. Berbeis avers that he has operated a pizzeria and restaurant in the subject building since 1992. He states that the restaurant occupied two adjoining stores for three years until it surrendered the store adjacent to plaintiff's. He further avers that his menu has not changed since 1992 and that on May 31, 2007, Katouna entered into a new lease to reoccupy the store it had previously surrendered. He avers that neither the 2007 lease nor his previous lease contained a restriction in use, that the use specified in the 2007 lease is for service of Italian and Greek foods and an espresso bar and that he did not know of the terms of plaintiff's lease when he executed the 2007 lease. Mr. Berbeis explains that plaintiff's restaurant had originally been a bar and that plaintiff added live music in 1997 or 1998. He states that plaintiff then expanded into a restaurant and Jazz club. Finally, Mr. Berbeis lists the names of twenty-seven restaurants in the immediate area, noting that there are fifteen restaurants within three blocks of the building, in either direction. Katouna's May 2007 lease states that it is "a restaurant serving Italian & Greek dishes, Espresso Bar."

C.Roxborough's Submissions [*3]

Roxborough opposes the application for a preliminary injunction and submits in support, the affidavit of Paul Bogoni, a principal, and a copy of plaintiff's lease. Mr. Bogoni avers that the plaintiff is a different entity from the original tenant of the restaurant and, thus, was not the signatory of the original lease. He states that the original lease provided that the restaurant would be a "Middle Eastern Restaurant." In executing the 2004 lease, Mr. Bogoni avers, the parties agreed that Katouna would use the space for a "substantially similar" purpose. He contends that Katouna, a long term tenant, has leased additional space for an Italian restaurant, arguing that an Italian restaurant is not substantially similar to a Mid-Eastern restaurant.

D.Reply

Plaintiff has submitted an attorney's affirmation in reply. The facts in that affirmation cannot be considered by the court since they are not contained in an affidavit from a person with knowledge. See Zuckerman v. City of NY, 49 NY2d 557, 563 (1980)(affirmation of counsel is without evidentiary value if he has no personal knowledge of facts stated). At oral argument, plaintiff had a copy of the original lease which, in fact, stated in Article 2 of its Use Clause that the space was to be utilized as a Mid-Eastern Restaurant. The plaintiff did not submit that lease to the court.

II.Conclusions of Law

As noted by the Court of Appeals in Huggins v. Castle Estates, Inc., 36 NY2d 427, 430 (1975), the law favors free and unrestricted use of reality by its owner. Thus,

[r]estrictive covenants should not be interpreted beyond their clearly expressed meaning

and are to be construed strictly against those who formulate and seek to impose them.

"The general rule for construing restrictive covenants or conditions contained in a lease

is to so construe them as to carry out the intent of the parties." ( Bovin v. Galitzka, 250

NY 228, 232.) The courts will not deprive the owner of the right to the free and

unrestricted use of his land unless such intent is clearly made to appear. [citations omitted].

Val-Kill Co. v. Cities Service Oil Co., 278 A.D. 164, 166-167 (1st Dept. 1951), aff'd. 303 NY 823 (1952). Accord Modell's NY, Inc. v. Macerich Queens Ctr, Ltd. P'ship, 309 AD2d 625, 626 (1st Dept. 2003). The burden of enforcing a restrictive covenant, therefore, rests on the party seeking to enforce it, and that party must establish the restriction by clear and convincing proof. Huggins, supra; Modell's, supra. In addition, a non-party to a lease containing a restrictive covenant will not be bound by the restriction unless it had knowledge of it. Blueberries Gourmet, Inc. v. Aris Realty Corp., 255 AD2d 348, 350 (2d Dept. 1998); Key Drug Co., Inc. v. Luna Park Realty Assocs., 221 AD2d 598, 599 (2d Dept. 1995); Won's Cards, Inc. v. Samsondale/Haverstraw Equities, Ltd., 165 AD2d 157, 162 (3d Dept. 1991); Shoe Town, Inc. v. Indep. Props. Co., 89 AD2d 674 (3d Dept. 1982); Fox v. Congel, 75 AD2d 681 (3d Dept. 1980). Cf. Weiss v. Mayflower Doughnut Corp., 1 NY2d 310, 315-16 (1956); Waldorf-Astoria Segar Co. v. Acker, Merrall & Condit Co., 109 A.D. 65, 69-70 (1st Dept. 1905), aff'd.184 NY 584 (1906).

Finally, to succeed on a motion for a preliminary injunction, a movant must demonstrate: a likelihood of ultimate success on the merits; that irreparable injury would result in the absence of injunctive relief; and that a balancing of the equities to effect substantial justice and to preserve the status quo warrants the grant of this extraordinary relief. Key Drug Co., supra; [*4]Pilgreen v. 91 Fifth Ave. Corp.,91 AD2d 565, 567 (1st Dept.1982), app. dismissed, 58 NY2d 1113 (1983). Movant "must demonstrate a clear right to relief which is plain from the undisputed facts,'" to establish its likelihood of success. Blueberries Gourmet, supra at 349-50. Where an issue of fact exists, a temporary injunction will not be granted. Id.; Emerald Enterprises of Rochester, Inc. v. Chili Plaza Assocs., 237 AD2d 912 (4th Dept.), amended on rehearing 1997 NY App Div LEXIS 4871 (1997). Plaintiff has failed to carry its burden.

Here, a number of facts are in dispute. To begin, an issue exists as to the restriction itself and the intent of the parties to the lease. The 2004 lease prohibits the letting of commercial space for a substantially identical use as described in Article the Use Clause. The Use Clause, however, is not filled in. There is some evidence, however, that the Use Clause was intended to state "Mid-Eastern Restaurant." Consequently, the meaning of the restriction, at best, is an issue of fact. See Blueberries Gourmet, supra at 350 (where disputed issues of fact as to precise language of restrictive covenant, preliminary injunction denied). Similarly, there is a clear factual issue as to whether Katouna had notice of the restriction. The principal of Katouna disputes that he knew of the restrictive covenant when he entered into the lease. Although plaintiff disputes this, he does so only by affirmation of counsel. See Fox, supra (where defendant tenant submitted affidavit stating he did not know of restrictive covenant, he was not bound by restriction even though he was notified of covenant after he signed lease). Finally, it is not apparent from the facts whether Katouna was already a tenant in the building when plaintiff contracted for the restrictive clause. If in fact, plaintiff was not the same party who had previously leased the space and Katouna was a commercial tenant at the time the present lease was signed by plaintiff, Katouna may not be bound by the restriction. See Key Drug, supra at 599 (restrictive covenant did not apply to tenants who were already in occupancy).

Weiss, supra, cited by plaintiff in support of its motion, is distinguishable from this action. In Weiss, the restrictive covenant was conclusive, the tenant to whom the landlord leased had not been a commercial tenant in the building when the restriction was executed and the new tenant had notice of the covenant. In sum, plaintiff has failed to demonstrate s liklihood of success, injury that could not be cured with money damages and equities balancing in its favor. Accordingly, it is

ORDERED that the motion by Hussein Environment Inc. for a preliminary injunction is denied; and it is further

ORDERED that the parties are to appear in Part 54 for a preliminary conference on December 6, 2007 at 9:30 in the forenoon.

Dated: November 21, 2007ENTER:

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J.S.C.