1611 Bway LLC v Times Sq. JV, LLC

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1611 Bway LLC v Times Sq. JV, LLC 2018 NY Slip Op 31044(U) May 30, 2018 Supreme Court, New York County Docket Number: 652044/2018 Judge: O. Peter Sherwood Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. [*FILED: NEW YORK COUNTY CLERK 05/30/2018 03:14 PM 1] INDEX NO. 652044/2018 NYSCEF DOC. NO. 58 RECEIVED NYSCEF: 05/30/2018 SUPREME c:ou1~T ()"F TllE s~rA1~E OF NEW \'{)IU( COUNT\1 OF Nl~W YORK: C<)MMEltCIAL DlVlSlON P.ART:49 ·----~--~----~---~---·------------~--~--~--X 1611 BWAY l:il.~C:, DEClSIC)N ANll ORDER Index ·No.: 652044/2018 J">Ja intiff, -against!\lotion Se:qucnce No . : 001 Tll\'IES SQUARE JV, ..LL(:, ·1Jefendant. - ................ - - - - - ........ u: ... • "" .... -- - - . . -- .. - - - ..... - ... - - ... ... ... ~: - -. - ..... ~ .......X. 0. PETER Sl-IER\\10·0D, .J.: On this n1otion sequence 001, plaintill: l 161 B\vay LLC (~'Tenant'~) seeks a Yelloi1tsfone inju11ction and a prelin1ina.ry i11junct.ion tolli11g termination of a 35 year lease of comn1ercia] space on the street level of a major hotel located' in the Ti1nes Square Area of New~ York City (the . ~~Lease''). 'rhc Lease provides for the space to be used as ·~'an upscale first-..cl,ass dining restaurant and/or coffee bar~' (Lease, il l .21, NYSC~EF Doc. No. 4). On April 3(},, 2(Jl 8,, the cot1rt denied plaintifI"s request f(Jr .~ ,Yellovvstone injunction. but stayed defendant tron1 taking steps to rcgai11 posscssio11 of the space, pending ·oral argtu11ent on the branch of the motion. sceki11g a preliminary inJunction. 'The Lease \\ras signed in 1995 and tl1ercafter the pre111ises !was operated by the Te11ant ini.tially as a cofTee shop a11d later as a ~'C.harley O"s'' restaurant_ ln 2()09; tl1e Landlord and Tenant entered intc> a Joint :Mark;eting .A grccment in an unsuccessful atternpt ~() 1narket and lease· the space. ln 2.01 t, the .Parties signed a '{.'Ninth [ . .case A1ncnd111ent'' whereby the t"andlord gave its consent to the Tenant subletting the space to ''Caffebcne, h1c''' ('\.Subtenant'~) to operate a coffee ·bar. 1 Tl1e Sublease \Vas signed at the sa111e titne. Under 1 19.3 of the Lease·,·the ·renant is authorized to sublet the space w·ith the. C(>nsentofthc La:ndlord (who "'shall not be unreasonably withhold or unduly delay its consent;'). The sublet spa~e may be used *"solely as an 1 upscale first-class dining restaurant~'. Page1of6 2 of 7 [*FILED: NEW YORK COUNTY CLERK 05/30/2018 03:14 PM 2] INDEX NO. 652044/2018 NYSCEF DOC. NO. 58 RECEIVED NYSCEF: 05/30/2018 In 2017, the ·renant comn1cnced a rent nonpay1ncnt proceeding against Caffcebene and secured its eviction in October 2017. Since that. time the space has been dark but the Tenant has continued to pay rent as it has become due. On April 24, 2018 the L.ru1dlord served a Notice of ·rermination on the ]"enant invoking 1 the "·~c;ontinuous Operation'~ provision of The I Jease (ii 8.4). ·rhat provision states in relevant part that: ~~onti11uous Operation. Tcna11t ackno\vledges tl1at its contin1t<)US operation at tl1e Demised Pre1nises for the regular conduc.t of its business therein is of utmost importance to Owner in the renc,:val of other leases in the Building, in the renting of vacant space in the Building and in tl1e inaintenance of the character and quality of the Building. Tenant there.fore covenants and agrees tht1t it will with due dispatch and diligence promptly OJJen for business in the Demised Pren1ises and thereafter conlinuous(v, active(v anti diligenl(y operl.1te such business in the i-vhole qf.the De1ni.,,·ed JJre1nises ... at least.five (5) da..vs JJer l1leek, ten (JO) hours per day. ... 7enan(further agrees thal !f it ..fc1ils to so conduct continuouslJl its b1.lsiness in the J)e1nised J>re1nises as hereinabove set_fort/1 . .. then such failure shall he clee1ned to rent.fer the Detnised Pre111ises vacant and deserted. .. Not\vithstanding~ any provision of this Scctio11 8.4 to the contrary, ·re11ant sl1all be permitted to close the Demised Premises for a period of up to six (6) months, solely for the purpose of n1aking alterations, repairs, re.novations and additions to the Demised. Premises. + Lease,§ 8.4 (etnJJhcrsis atf<led). The l"cnant maintains tl1at it is not in default of the Continut)US ()peration clause because that clause does not require it to O})Cn and operate a restaurant during the period tl1at it is nlarketing, negotiating and subletli11g the space to permitted subtenants under Article I 9 of the l.Jcase or at any time. The Tenant an. ivcs at this conclusion by noting first, that the Lease does not define the tenn '"'its business'.'', a phrase found in 1 8.4''. Tenant's then argues that "its business" consists of both operation of restaurants and subletting restaurant spaces to non-affiliated entities. ·rhus, its efforts to n1arket and sublet the space in its role as a sub-landlord operates as a \vavier of any Pagel of 6 3 of 7 [*FILED: NEW YORK COUNTY CLERK 05/30/2018 03:14 PM 3] INDEX NO. 652044/2018 NYSCEF DOC. NO. 58 RECEIVED NYSCEF: 05/30/2018 o~jcctions to ]"enant not personally occupying and operating the spac.e during the niarketing and subletting period. The Tenant argues it is entitled to a Yello1vstt.Jne injunction because it received a threat of tern1ination of the I_Jeasc; the application for an injunction \Vas n1ade prior to expiration of any termination peri{.ld set forth in the l"case~ and it has the desire and ability to cure any defaults if it is dctcrrnined a default exists. ·r·he ·Landlord replies~ and the cot1rt agreed, that Tenant is not eligible for a Yelloit·'stone ren1edy because ii 20. l (d.) of the L~case did not ret1uire service of any notice to cure or granting of any cure period to l"'cnant as a result of its ""desertio11" of the Pren1iscs (see Tenant Opp. Br. at 5, NYSCEF Doc. No. 20). 011 that branch of the motion that seeks a prclin1inary injunction, under CPLR 630 I, Tenant argues it has shovvn a likelihood of success on the 1ncrits because it has been continuously operating the space for years as a sub-landlord and by threatening to terminate the l.,casc, the Landlord is impeding its ability to sublet the space to prospective subtenants that \Vould comply \vi th the Per1nitted Use (,I 1.21) clause of the Lease. 'fhc "rcnant also argues that if the IJcase is terminated~ it will be irreparably har1ncd by loss of a valuable long term lease (see Tenant Br. at 13, .N.YSCEF Doc. No. 11 ). Finally·, '"rcnant asserts that the equities favor it because grant of tl1e preliminary injunction \¥ill n1aintain the status quo (see id at 13 citing ,Second on ,.';econd c: a./e, Inc. 1 v Hing i)ing T'racling l11c., 66 AD 3d 255 l l st Dept 20091) ru1d tem1ination of the 1.#casc \vould result in loss to ·rcnai1t of a valuable long term leasehold without benefit of a judicial determination (see iti at 14). ·rhc l.,andlord ·rcs_ponds that Tenant has t1ot. sl1own a likelihood of success or the n1erits. First, in violation of il 8.4 of the l.Jcasc, the space remained dark for tnore tl1an six months after it was vacated by subtenant, Catl~bcnnc. Second:- contrary to ·renant's claim the "'bttsiness':o Page 3of6 4 of 7 [*FILED: NEW YORK COUNTY CLERK 05/30/2018 03:14 PM 4] INDEX NO. 652044/2018 NYSCEF DOC. NO. 58 RECEIVED NYSCEF: 05/30/2018 mandated by the Lease is the '"Pennittcd Use of the Detniscd Pre1nises"' as Han upscale first-class dining restaurant and/or coffee if 8.2). bar~' (Lease, if 1f 1.2 l and 8.1 ). No other use is authorized (see itl, As to the clain1 of irreparable harm, the f.,andlord observes that Tenant has not occupied suJl~r the space or done business there since 20 l L. T'hus, Tenant cannot claim that it \vill '°'"irreparable har1n:-' fron1 the loss of '~good if injunctive relief is denied and it is ultimately vvill'~ evicted (see ()pp. Br. at 8). Accordingly" any loss the 'l'enant tnight sutfcr is purely li11ancial and is fully compe11sablc with 1noney dan1agcs (see 233 East 861h 5·/t. ('011'- v Park East Apts., Inc .. 131 Misc 2d 242 [Sup Ct NY Co 1986], aff'd 123 Al) 2d 536 [lst Dept 1986] rHl)otential loss of incon1e tron1 the rental of the street level store premises is compensable in dollars"]). Regarding ba1ancc of the equities~ there is no cure period for tl1e court. to exercise its equitable po\>vers to preserve and the L,andlord is e-ntitled to have the issues adjudicated through an. expedited sun11nary preceding process. Moreover, the Ne\\J' 'lork City Civil Court is the preferred forum for resolving landlord-tenant issues, \Vhere the pri1nary relief sought here is possession of the Pre.mises (see Opp. Br. at 9, citing Ji,fabru "'4ssoc. v l't1hite, 114 AD 3d 554, 555 [1st Dept 2014)). 01scuss·10N To <Jbtain a preli1ninary injunctio11 a mo\dng party n1ust prove: (a) a likelihood of success on. the merits; (b) that it will sutler irreparable harn1 in the absence of injunction relief; and ( c) that the equities 1avor the granting of the requested rtlief (see Aetna Ins·. c~o. v <_-:ttpasso, 75 NY 2d 860, 862 1· 1990]; ff~ 1~ (ira11t (_'10. v ,Srogi, 52 NY 2d 496, 517 [1981]; CPLR 6301, et. setJ). Here, the Ten.ant satisiies none of these ..A.ccordh1glye the request f'l1r an Article 63 preliminary injunction 1nust be denied. Paragraph 20.l (d) of the Lease does not provide for a cure period upon a default ttnder iI 8.4 of the Lease. Neither the Ninth ·Lease Amcndn1enl nor the t,ease recognizes subletting by the Tenant as a permitted •'business''. Were 1 8.4 interpreted to permit the Tenant to keep the Page 4of6 ' 5 of 7 [*FILED: NEW YORK COUNTY CLERK 05/30/2018 03:14 PM 5] INDEX NO. 652044/2018 NYSCEF DOC. NO. 58 RECEIVED NYSCEF: 05/30/2018 Pren1iscs dark ft1r cxtended'pcriods while it n1arketed the space in its role as a ~~sub-landlord"', the very purpose of that paragraph as described in the first sentence would be defeated (The sentence roads: '~Tenant ackno"lledgcs that its continuous operatio11 at the Demised Premises for the regular conduct of its business therein is of t.h.e utmost importt111ce lo the ()wner ... '' [e1npht1sis adde(l]). Further, the only '1.pcrrnitted use' . of the space under the I"ease is as restaurant and/or coffee bar'~ 1.~an upscale first-class dining (Lease, i11..21 ). E'len if one \Vere to accept the ·rcnant ~s farfctched argument that its ~-business''! is subletting of the space, ~rcnant 's request for a preliminary injtinction would still fail because an:y injury that might be 5uffcrcd would be entirely financial and thus co1npensablc with a money award (see 233 l~..ast 8611t ~SJ. (_?orp., 131 fvlisc 2d 242}. As such, Tenant cannot demonstrate irreparable C~iting harn1. § 6 of the Ninth l.1casc An1endmcnt (NYSCEF l)oc. No~ 10), rfenant attcn1pts lo read the Pen11ittcd ljse pro\dsion out of the I~case. The effort fails. lJndcr § 5~ the "f"cnant or Subtenant. is pem1ittcd to 1nake alterations, including alterations that are so extensive as to require amendn1cnt of the certificate of occupancy. LJnder § 6 \vhich states: At the end of the tcm.1 of the Sublease, neither l~andlord nor '"rcnant shall be required to restore the Premises, or any portion of the storefront, signs or other exterior portions of the Prctnises. Tenant shall deliver the Premises to landlord at the end of the ~rcrrn [oftl1e I,,casc in 2035] as, and in the manner required by the lease Thus~§ 6 merely relieves the 'fenanl and its lcasee of an.y obligation to restore the space to its prior condition at the end of the tern1 of the Sublease. This reading of the Ninth r~ase Amendn1ent is confinned by§ 7 which provides that: re]xcept as herein an1ended~ all of the otl1er terms~ provisions., conditions and agreen1ents contai11ed in tl1e I."casc, as ai11ended) shall remain in full force and effect, it is being the intention of the parties to a1nend only the specific ter1ns, provisions and conditions referred to herein. Page S of 6 6 of 7 [*FILED: NEW YORK COUNTY CLERK 05/30/2018 03:14 PM 6] INDEX NO. 652044/2018 NYSCEF DOC. NO. 58 RECEIVED NYSCEF: 05/30/2018 The N inll1 Lease An1end1ncnt does not alter the Permitted lJsc Clause and does not authorized tl1e Tenant to conduct subletti11g of the space as i,•its business". Accordingly, the Tenant having failed t J carry' its burden of showing any of the tlvec 1 conditions for grant of a preliminary injunction, the motion must be DENif~I). l""his co11stitutcs the decision and order of the court. Di\TED: l\tlay 30, 2018 Page 6 of 6 7 of 7

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