406 Broome St. Rest. Inc. v LaFayette Ctr., LLC

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406 Broome St. Rest. Inc. v LaFayette Ctr., LLC 2011 NY Slip Op 34099(U) October 3, 2011 Sup Ct, New York County Docket Number: 650358/2008E Judge: Paul G. Feinman Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various state and local government websites. These include the New York State Unified Court System's E-Courts Service, and the Bronx County Clerk's office. This opinion is uncorrected and not selected for official publication. [*FILED: NEW YORK COUNTY CLERK 10/04/2011 1] INDEX NO. 650358/2008 NYSCEF DOC. NO. 141 RECEIVED NYSCEF: 10/04/2011 SUPREME COURT OF THE STATE OF NEW YORK - NEW YORK COUNTY HON. P.AUL G. FEINMAN 0--61,Jl'-1..IN'I PRESENT: PART I ;i._ Justice INDEX NO. MOTION DATE -v- (_ ~~ c.;,. r--.~ I'"'~ {..) . , MOTION SEO. NO. /z_ MOTION CAL. NO. The following papers, numbered 1 to _ _ were read on this motion to/for - - - - - - PAPERS NUMBERED Notice of Motion/ Order to Show Cause - Affidavits - Exhibits ... - Answering Affidavits - <( tn w Cross-Motion: J("ves a: Upon the foregoing papers, it is ordered that this motion tn z 0 (!J ------------Rep Iyin g Affidavits ----------------- wz o- [] No r,,aTION Al~D CROSS r:mTIOH(S) ARE DECiDED ~~ tn ...I IN ACCORDANCE WITH AtiNEXED DECISIOtl rum ORDER. ::::> ...I ..., 0 0 u. I- Exhibits w c :c w l- a: a: a: 0 ~ u. w a: > ...I ...I ::::> u. l- o w ll. tn w a: tn w tn <( ,OCT 0 3 2011 z Dated:----------- l- Check one: 0 0 o 2 ,--, FINAL DISPOSITION Check if appropriate: J.S.C. ~ON-FINAL DISPOSITION L~ DO NOT POST ~ 1 SUBMIT ORDER/ JUDG. ~= REFERENCE [~ SETTLE ORDER/ JUDG. [* 2] SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: CIVIL TERM: PART 12 --------------------------------------------------------------------)( 650358/2008E 012 406 BROOME ST REST INC., Plaintiff, - against - Index No. Mot. Seq. Nos. LAFAYETTE CENTER, LLC, Defendant. DECISION AND ORDER --------------------------------------------------------------------)( For Plaintiff: For Defendant1 : The Stolper Group, LLP By: Randolph K. Adler, Jr., Esq. 24 7 Centre Street, 6th Floor New York, NY 10013 D. Reeves Carter, Esq. 401 Broadway, ste. 202 New York, NY 10013 E-filed papers considered in review of these motion seeking injunctive relief and cross motion seeking legal fees: Efiling Document No. Papers Order to Show Cause, Affidavit, Exhibits Notice of Cross Motion, Memo of Law in Opp. & Supp. 9]2 95, 96 PAUL G. FEINMAN, J.: In this bitterly contested commercial landlord-tenant litigation, plaintiff-lessee moves by order to show cause seeking a Yellowstone injunction. Defendant cross-moves seeking legal fees should the motion be denied. For the reasons set forth below, plaintiffs motion is granted and the cross motion is accordingly denied . The parties entered into a commercial lease agreement dated September 15, 2005 by 1 At the time the motion was filed, Mr. Carter was associated with the firm Guzov Ofsink, LLC. He has since filed a notice of appearance as indicated here and the firm of Guzov Ofsink relieved as counsel for defendant. See Doc. No. 117 (Notice of Appearance for incoming counsel) and Doc. No. 121 (So ordered Stipulation relieving outgoing counsel). 2 Movant's papers submitted along with the order to show cause are not yet uploaded into the NYSCEF system and exist only as hard copy. Movant is directed to upload the affirmation, affidavit, and exhibits into system, identified as part of motion sequence 012. 1 [* 3] which plaintiff leases the ground floor and basement of defendant's property for use as a restaurant (OSC Ex. 1 Lease). Litigation ensued in 2008 with plaintiff claiming, in essence, that defendant unreasonably withheld its consent to an assignment of its lease to a non-party. This current motion is brought following plaintiffs receipt of a notice of default issued by defendant landlord dated April 12, 2011, stating that plaintiff has breached the commercial lease by installing or placing a sign on the exterior of the building without defendant's authorization, and demanding that the sign be removed or proof of authorization provided by April 22, 2011 (OSC Ex. 2, Carter Letter 04/12/2011). By return letter dated April 21, 2011, plaintiffs attorney in part sought clarificatfon as to whether it is the "Brinkley's" sign or the new yellow awning replacing the old blue awning that is at issue (OSC Ex. 6, Adler, Jr. Letter 04/21/2011). His letter states that the sign was previously approved by defendant-landlord, its management company, its architect, and the Landmarks Commission, with the latter involved because the building is located in a Historic Landmark District such that it must approve any work or alteration to the exterior (id.) The letter further states that defendant had approved the previous awning, it is clearly visible in the website of the managing agent Veracity, and the new awning is identical in all respects except for the color (id.; Ex. 4 [Veracity website photos]; Ex. 5 [photo of "Brinkley's" sign, awning]). The letter reminds defendant's attorney that the commercial lease provides that the landlord's consent shall not be unreasonably withheld, asks what the reasoning is in this situation, and concludes by "formally placing the Landlord on notice" of various conditions that cause -defendant to be in default of its own lease commitments (OSC Ex. 6, Adler, Jr. Letter 04/21/2011, p. 2). Defendant's attorney's letter of April 25, 2011 indicates that it is the awning that is at issue, that permission to replace the old awning with the 2 [* 4] new one was not asked for nor granted, and that the new awning must be removed by May 5, 2011, otherwise defendant will cancel the lease pursuant to its terms (OSC Ex. 3, Carter Letter 04/25/2011 ). Plaintiff filed its motion brought by order to show cause thereafter seeking a Yellowstone injunction to stay the Notice of Default. A Yellowstone injunction maintains the status quo by tolling the cure period so that a commercial tenant faced with a threat of the termination of its lease can protect its leasehold and, where there is an adverse determination on the merits, cure the default and avoid a forfeiture (Graubard Mallen Horowitz Pomeranz & Shapiro v 600 Third Ave. Assoc., 93 NY2d 508, 514 [1999]). The purpose of a Yellowstone injunction is to stop the running of the cure period and maintain the status quo while the underlying dispute is litigated (E. C. Elec., Inc. v Amblunthorp Holding, Inc., 38 AD3d 401, 401 [!51 Dept 2007]; First Natl. Stores, Inc. v Yellowstone Shopping Ctr. Inc., 21 NY2d 630 [1968]). "[F]ar less than the normal showing required for preliminary injunctive relief' is needed, as the "threat of termination of the lease and forfeiture, standing alone, has been sufficient to permit maintenance of the status quo by injunction (Post v 120 East End Ave. Corp., 62 NY2d 19, 25-26 [1984]). Defendant opposes the granting of injunctive relief, relying in particular on Excel Graphics Technologies, Inc. v CFG/AGSCB 75 Ninth Ave. LLC, 1 AD3d 65 (1st Dept 2003) (Doc. 96 Cross Mot. and Opp. pp. 2 et seq.). In Excel Graphics, the commercial tenant, who acknowledged subletting premises without the landlord's permission, sought a declaration that the landlord had waived prior written consent because it had accepted rent and allowed the subtenants' names to be listed in the building's directory; it also sought a Yellowstone injunction to prevent termination of the lease in the interim. The landlord cross-moved to dismiss the 3 [* 5] complaint based on documentary evidence, namely explicit terms in parties' lease providing that neither the listing of subtenants in the building directory nor the acceptance of rent constituted a waiver of the requirement of prior written consent. The lower court's granting of the Yellowstone injunction was reversed based on the lease terms which established that the tenant- plaintiff could not win a declaration that the landlord had waived its rights; Here, defendant's reliance on Excel Graphics is not persuasive. Defendant argues that plaintiff installed a new awning without prior written permission, and has thus materially breached the lease (Doc. 96 Cross Mot. and Opp. pp. 2 et seq.). Defendant points to paragraph 50 of the lease which prohibits placing or installing "any signs, flashing signs, animated signs, or otherwise, without first obtaining in each instance, landlord's prior written consent and approval which shall not be reasonably withheld," the provision of which is termed an "essential condition of the lease" (OSC Ex. 1 Lease ii 50). It is arguable, however, whether an "awning" is the equivalent of a "sign," or is only deemed a sign if it contains words. Unlike the tenant in Excel Graphics who clearly knew it was violating the lease by subletting without permission, it is not clear here that plaintiff realized that replacing the existing awning ran afoul of an essential term of the lease and required permission which would not have been unreasonably withheld. Thus, it is proper that plaintiff seeks a Yellowstone injunction so that if it is found to have breached the lease, it can cure by removing the awing, and, assuming, without deciding, that it is reasonable for defendant to withhold consent in this instance. Therefore, plaintiffs motion for a Yellowstone injunction is granted. 3 3 The court notes without further comment that plaintiffs April 21, 2011 Jetter requested defendant to "immediate[ly] cure" four alleged ongoing defaults in defendant's lease obligations. 4 [* 6] The cross motion seeking recovery of legal fees is denied, as there has not yet been a "favorabl[e]" disposition of the motion or the action (OSC Ex. 1 Lease ii 46). In granting the order to show cause and directing the service of opposition papers, the court requested that the parties be prepared at oral argument to address the issue of an undertaking being fixed pursuant to CPLR 6312 (b) should plaintiffs motion be granted. Neither party has made any submission on the issue nor submitted any minutes containing a discussion of the issue. 4 Thus, the Court is unable to fix the amount of an undertaking without resort to sheer speculation as to the potential damages should it tum out this preliminary injunctive relief was improvidently granted. Accordingly, it is ORDERED that the motion by plaintiff for a Yellowstone injunction is granted upon the condition that plaintiff continues to pay as use and occupancy its rent and additional rent as provided for in the lease; ORDERED that the plaintiff is directed to post a preliminary injunction bond in an amount to be determined upon the serving and filing of a motion by plaintiff to fix the bond amount within 15 (fifteen) days of entry of this decision. Defendant may submit its position on the amount of the bond in the form of opposition or al::ross motion; and it is further ORDERED that defendant, its agents, servants, employees and all other persons acting under the jurisdiction, supervision and/or direction of defendant, are enjoined and restrained, during the pendency of this action, from taking any action to cancel or terminate plaintiff's lease based on the April 25, 2011 Notice of Default, for the premises located at 406 Broome Street/199 Lafayette Street, New York, New York; and it is further 4 Neither party ordered the transcript of the June 1, 2011 oral argument. 5 [* 7] ORDERED that the cross motion for attorney fees is denied; and it is further ORDERED that the time to file a note of issue, previously extended to June 17, 2011 by the decision and order dated April 22, 2011, is extended one further time to December 2, 2011. This constitutes the decision and order of the court. Dated: October 3, 2011 New York, New York 2011Pt12 D&0_650358_2008_012jh / 6 J.S.C.

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