City of New York v Tokyo Pop LLC

[*1] City of New York v Tokyo Pop LLC 2013 NY Slip Op 50126(U) Decided on January 25, 2013 Supreme Court, New York County Schoenfeld, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on January 25, 2013
Supreme Court, New York County

City of New York, Plaintiff,

against

Tokyo Pop LLC, Papasito Midtown Corp., Inc. et al., Defendants.



400472/12



Attorney for City of New York:

Michael A. Cardozo, Esq.

Corporation Counsel

S. Andrew Schaffer, Esq.

N.Y.C. Police Department

Legal Bureau

Civil Enforcement Unit

2 Lafayette Street, 5th Floor

New York, New York 10007

Attorney for Defendants:

Faga Savino, LLP

399 Knollwood Road, Suite 301

White Plains, New York 10603

Martin Schoenfeld, J.

In this summary proceeding commenced pursuant to the New York City Administrative Code §§7-707, 7-709, 7-710 and 7-711 (Nuisance Abatement Law or NAL), Defendants, Tokyo Pop LLC and Papasito Midtown Corp., move to dismiss the action on several grounds. Plaintiff, the City of New York (the City), opposes the motion.

For the following reasons, the Court denies the motion in its entirety.

Background

The commercial establishment that is the subject of this proceeding operates as Papasito Mexican Grill and Agave Bar (the Premises). It is located at 2728 Broadway, New York, New York. According to a print-out of a State Liquor Authority (SLA) record annexed to the Order to Show Cause, the principals of Tokyo Pop LLC are Matthew Tivy, Nadine Chevreux and Jeremy J. Satkiewicz. These records show two liquor licenses for the Premises. One is an active liquor license for Tokyo Pop LLC, with the trade name Papasito Mexican Grill. The other, under the name Papasito Midtown Corp Inc., with the trade name Papasito Mexican Grill and Agave Bar, is inactive. Defendant 2728 Broadway Housing Development Fund Corporation is the last recorded owner of the real property.

On October 15, 2011, following an incident at the Premises, a disorderly patron was [*2]arrested outside on a number of charges, including Inciting a Riot, Assaulting a Police Officer and Disorderly Conduct. Subsequently, on each of the following dates, October 22, 2011, November 5, 2011, November 12, 2011[FN1] and January 6, 2012, an underage auxiliary police officer was able to purchase one alcoholic beverage from a member of the wait staff at the Premises. As a result, the City commenced this proceeding pursuant to NAL seeking closure of the Premises and payment of a penalty. According to the Complaint, the abovementioned incidents constitute public and criminal nuisances under NAL § 7-703 because they are violations of New York State Alcoholic Beverage Control (ABC) Law §123 and Penal Code § 240.45(2).

On February 29, 2012, the City made an ex-parte application for a temporary closing order and a temporary restraining order. The Court signed the TRO and closing order on March 2nd, 2012 and set a hearing date of March 6, 2012 for a preliminary injunction. On the night of March 2nd New York City police officers entered the Premises with the closing order and shut it down. At the hearing on March 6, 2012, however, the Court directed that the Premises be reopened immediately; that the TRO dated March 2, 2012 remain in effect; and that "the last patron shall leave the establishment no later than 1:00 am."

Defendants now move to dismiss the complaint and ask the Court to deny the City's motion for a preliminary injunction. They advance several arguments. First, they contend that the complaint should be dismissed because NAL is preempted by the ABC Law as applied to the sale of alcohol in this case and thus violates Article IX, §2 of the New York State Constitution. Second, they argue that the City has not made out its case for injunctive relief because 1) it is unlikely to be able to demonstrate that Defendants "trafficked in alcohol" in violation of ABC Law §123 or engaged in a pattern of continuous behavior which violates any law; and 2) there is no irreparable harm because the nuisance has been abated. Third, they argue that injunctive relief would be punitive rather than remedial as intended by NAL. Finally, they argue that the complaint should be dismissed as to Defendant Papasito Midtown Corp., Inc. (Papasito), because the City is unable to demonstrate that Papasito conducted or permitted the alleged public nuisance. Defendants posit that Papasito is a potential buyer of the business from Tokyo Pop LLC and not the current owner or operator of the Premises.

Discussion

1. Preemption

The doctrine of preemption holds that where the State "has enacted comprehensive legislation on a subject and has evidenced a desire to occupy the entire field to the exclusion of local legislation, a municipality cannot act in that area." Landsdown Entertainment Corp. v. New York Dept. Of Consumer Affairs, 133 Misc 2d 206, 208 (Sup.Ct. NY County 1986); see New York City Health & Hosps. Corp. v. Council of City of New York, 303 AD2d 69, 74 (1st Dept. 2003); People v. De Jesus, 54 NY2d 465, 468 (1981). Even if a local law does not "deviate in the slightest" from a state law but merely makes minor additions, it will be held invalid if it intrudes in an area that falls within the parameters of the regulatory scheme preempted by the State. De Jesus, 54 NY2d at 469; New York City Health & Hosps. Corp., 303 AD2d at 74. However, a local law does not preempt a state law when it only "incidentally touches on the regulation or has only a tangential impact on the body's power or functions or state legislative [*3]objective and . . . is a law of general application." New York City Health and Hosps. Corp., 303 AD2d at 74 (citations and internal quotation marks omitted).

Here, Defendants argue that NAL, as applied to the sale of alcohol to minors, is preempted by section 123 of the ABC Law, and consequently violates Article IX of the New York State Constitution. ABC Law §123 allows for injunctive relief for the unlawful sale of alcoholic beverages without a license or where there is unlawful "traffic in liquor, wine or beer." NAL §7-703(h) defines a public nuisance as "any building, erection or place, including one or two family dwellings, used for any of the unlawful activities described in" ABC Law §123. NAL sections 7-706 and 7-707 discuss available injunctive relief where there is a public nuisance. Defendants argue that NAL sections 7-703(h), 7-706 and 7-707, by allowing the grant of a permanent or preliminary injunction for a violation of the ABC Law, proscribe and regulate activity that is already regulated in detail by the ABC Law. In support of this argument, Defendants rely exclusively on two cases: People v. De Jesus, 54 NY2d 465 (1981) and New York City Health & Hosps. Corp. v. Council of City of NY, 303 AD2d 69 (1st Dept. 2003).

The facts of this case are not analogous to those in either New York Health and Hospitals Corp. or De Jesus. In De Jesus, the Court of Appeals struck down an ordinance of the Rochester Municipal Code on the ground that it was preempted by state law. DeJesus, 54 NY2d at 472. It found that the ordinance was not a law of general application because it specifically targeted and prohibited any person from patronizing an establishment selling alcoholic beverages after 2:00 a.m., impinging impermissibly on the exclusive field of the ABC Law. Under the ABC law, licensed establishments were allowed to stay open and sell alcoholic beverages until 4:00 a.m. Id. at 471-72. Similarly, in New York City Health & Hospitals Corp., the First Department found that the local law was not a law of general application because it "applies only to HHC's facilities and not all hospitals in the City." 303 AD2d at 79.

In contrast, here NAL was enacted with the overarching legislative purpose of promoting public health, welfare and safety. The legislative declaration of the nuisance abatement section of the New York City Administrative Code states that "public nuisances exist in the city of New York in the operation of certain commercial establishments," and in the use of property in violation of, among other things, "the building code, zoning resolution, health laws, multiple dwelling law, . . . [and] laws relating to the sale and consumption of alcoholic beverages." New York City Administrative Code §7-701. These violations "interfere with the interest of the public in the quality of life and total community environment, the tone of commerce in the city, property values and public health, safety, and welfare." Id. The purpose of the statute is to set forth "one standardized procedure for securing legal and equitable remedies" where such public nuisances exist. Id. As such, NAL does not expressly restrict the activity of patrons in establishments that sell alcoholic beverages or restrict the hours of operations of such establishments as in De Jesus. Nor does NAL have as its principal objective the regulation of the sale of alcohol. Moreover, in contrast to the law at issue in New York City Health and Hospitals Corp., here NAL broadly applies to the activity of any premises that violates a laundry list of statutes including the multiple dwelling law, fire regulations, drug laws and the ABC Law. The focus of NAL, both expressly and implicitly, is to promote public safety and welfare generally. Therefore, the Court finds that as applied to the facts here NAL is a general application law that only incidentally touches on the regulation of alcohol pursuant to the ABC Law.

The Nuisance Abatement Law as applied here is not pre-empted by the Alcoholic [*4]Beverage Control Law. Thus, the Court denies this part of Defendants' motion.

2. Case for Injunctive Relief

A preliminary injunction may only be granted if Plaintiff proves "a probability of success on the merits, danger of irreparable injury in the absence of injunction and a balance of equities in its favor." Nobu Next Door LLC v. Fine Arts Housing, Inc., 4 NY3d 839 (2005) (citing CPLR 6301). Defendants argue that under this test the City is not entitled to temporary injunctive relief for two reasons.[FN2] First, Defendants argue that the City has not shown that a violation of ABC Law §123 occurred. A violation of ABC Law §123 occurs when a person "traffic[s] in" the sale of alcohol to minors. A few isolated incidents of sales of alcohol to minors, they contend, do not constitute trafficking as contemplated by the law. Second, they argue that injunctive relief is not warranted because the City can show no irreparable harm. According to Defendants there is no harm because the nuisance has been abated by hiring of new personnel and the establishment of a new policy regarding sales of alcohol to minors.

Pursuant to New York City Administrative Code §§7-709 and 7-710, when either a temporary closing order and/or a temporary restraining order is granted, "the court shall direct the holding of a hearing" prior to any determination on a motion for a preliminary injunction. In City of New York v. Untitled LLC, 51 AD3d 509 (1st Dept. 2008), the City sought preliminary and permanent injunctions against the premises "based on three separate sales of alcohol to underage auxiliary police officers within a 15-month period" in violation of the ABC Law §65.1 and §123 Id at 510. The City alleged that the sales constituted a nuisance under NAL §7-703. The Supreme Court summarily denied the City's motion for a preliminary injunction, finding that the underage sales in the time period alleged were insufficient to constitute a pattern of illegal activities giving rise to a public nuisance and that there was no evidence of "trafficking" in alcohol or that the summonses led to convictions. 2007 WL 6030273 (Sup. Ct. NY County 2007). The Appellate Division, First Department, reversed holding that the City is entitled to a hearing. Untitled LLC, 51 AD3d at 511. It found that the court below erred in denying the City "a fair opportunity to demonstrate that the three alleged sales to underage persons constitute a public nuisance" and "prejudiced the defendants, who were denied an opportunity to contest the factual allegations underlying the three summonses." Id.

Here, the City has offered the affidavits of individuals with personal knowledge of underage sales at the premises. Similarly, Defendants support their case with an affidavit from one of Tokyo Pop's principals who has personal knowledge of the steps Defendants have taken to ensure that underage customers are not served alcohol. Following the Appellate Division's decision in Untitled LLC, this Court finds that it would be premature to grant Defendants' motion without first holding a hearing where both parties have the opportunity to be heard with regard to the City's application for injunctive relief.

3. Injunction Would Be Punitive

Defendants also argue that the NAL is remedial, not punitive in nature and that the restaurant has already been punished enough by the four-day closing. For the same reasons as discussed above, the Court finds that prior to making a decision the parties are entitled to a hearing on these issues. [*5]

4. Papasito

Finally, Defendants argue that the complaint should be dismissed against Papasito. They contend that Papasito is neither the owner of the building, nor the owner of the restaurant, but only a potential buyer of the premises who has no affiliation with the present ownership.

The City argues that it is unclear what ownership role Papasito has to the Premises. In support, the City offers a copy of a lease dated September 2011 that was entered into between Papasito Midtown Corp. and the landlord of the subject premises, 2728 Broadway HDFC. The City also offers an application that Defendant Papasito Midtown Corp., Inc. submitted in January 2012 for a liquor license to the SLA for the premises Papasito Mexican Grill and Agave Bar at 2728 Broadway.

The Court agrees with the City. NAL §7-706 permits the City to bring an action against "the person or persons conducting, maintaining or permitting the public nuisance from further conducting, maintaining or permitting the public nuisance." Based upon the documents submitted to the Court, it is unclear what relationship Papasito had to the Premises during the relevant time period. The SLA printout annexed to the City's papers indicates that the license is active for the "premises name: Tokyo Pop LLC, trade name: Papasito Mexican Grill," but inactive for the "premises name: Papasito Midtown Corp Inc., trade name: Papasito Mexican Grill and Agave Bar." The menu, which was submitted as Exhibit "B" by Defendants contains the name of the restaurant "Papasito Mexican Grill & Agave Bar" at 2728 Broadway. Based upon this, the lease and the liquor license application offered by the City, a hearing is required to determine the relationship of all Defendants to the Premises.

For the reasons stated above, the Court denies Defendants' motion in its entirety.

Therefore, in accordance with the foregoing, it is

ORDERED that Defendant's motion is denied.

J.S.C.

Dated:New York, New York

January 25, 2013 Footnotes

Footnote 1:Based upon these occurrences, the State of New York Division of Alcoholic Beverage Control commenced proceedings to cancel or revoke the liquor license of Tokyo Pop LLC/Papasito Mexican Grill in December 2011.

Footnote 2:Defendants begin this argument by stating that they were not charged with a violation of ABC Law §123; the summons they received only cited violations of ABC Law §65.1. They do not, however, explain the relevancy of these statements to this case. Under NAL there is no requirement that a defendant in a public nuisance case actually be charged with a violation of ABC Law §123.