Cinema World Prods., Inc. v MBA-Brooklyn LLC.

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Cinema World Prods., Inc. v MBA-Brooklyn LLC. 2021 NY Slip Op 32704(U) December 16, 2021 Supreme Court, Kings County Docket Number: Index No. 503698/2021 Judge: Leon Ruchelsman 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: 1] KINGS COUNTY CLERK 12/16/2021 03:53 PM NYSCEF DOC. NO. 73 INDEX NO. 503698/2021 RECEIVED NYSCEF: 12/16/2021 SUPREME COUR'I' OF THE STATE OF NEW YORK COUNTY OF KINGS : CIVIL TERM: COMMERCIAL PART 8 ----· --------. ----. ·-.-----·-·----------------·X. CINEMA WORLD PRODUCTS, INC.i Plaintiff, Decision and order Index Nb. 503698/2021 - against""'" MBA-BROOKLYN LLC., T. CO METALS, INC. & John Does 1, 2, t 3, Defendants, -----· . --------- :-. --· ----- .---------. - ... -x PRESENT: HON. LEON RUCHELSMAN December 16, 2021 The plaintiffs have moved by order to show cause seeking a Yellowstone injunction and an injunction re.straining defendant from.terminating Plaintiff's lease. motion. The defendants oppose the Papers were submitted by the parties and arguments held. After reviewing all the arguments this Court how makes the following determination. On April 11, 1990 the plaintiff tenant ehtered ihto a lease with the defendant landlord concerning rental space located at 220 Dupont Street in Kings County. The lease was amended on March 27, 2002 and provided a termination date of April 30, 2011. Paragraph 8 of the second a:mehdment provided that the tenant could extend the lease four times for five years each. To do so t.he second amendment required the tenant to notify the landlord one hundred anci ~ighty days prior to the extension date. On April 22, 2021 the parties entered into a third amendment which extended the lease unti1 April 30; 2021. Further~ th'e third 1 of 8 -------------..·····-·--·---·---------------------------- [*FILED: 2] KINGS COUNTY CLERK 12/16/2021 03:53 PM INDEX NO. 503698/2021 NYSCEF DOC. NO. 73 RECEIVED NYSCEF: 12/16/2021 amendment amended Paragraph 8 of the second amendment by replacing the four five-year options to renew with ohe teri....,year option to renew. The third amendment also amended configuratiOhs of rent hot relevant here and notably made no other changes to . . the second amendment. On October 20, 2020, within the one hundred and eighty days required by the second amendment, the tenant notified the landlord they sought to exercise the option to extend the lease for the ten-year period. Indeeq, on that same date Richard Thypin, the principal of the landlord at the time, sent an email to tenant's counsel acknowledging the extension request and provided the proposed rents for the ensuing ten years. The tenant objected to the rental terms proposed and on November 10, 2020 the tenant issued a formal writing in the form of any email to Mr. Thypin expressing the rejection bf the lease terms. The following day the landlord responded that the tenant had failed to properly exercise the option to renew b:y failing to provide notice one hundred and eight days prior to the renewal as outlined in the Original lease and that consequently the option to renew wa:s deemed null artd void. The parties continued to negotiate a new lease and finally in February 2021 the tenant instituted this lawsuit. The amended complaint asserts the t~nant v:a:Lidly .exercised the option to maintains. a. cause of action for breach of contract. 2 2 of 8 renew and thus The tenant [*FILED: 3] KINGS COUNTY CLERK 12/16/2021 03:53 PM INDEX NO. 503698/2021 NYSCEF DOC. NO. 73 RECEIVED NYSCEF: 12/16/2021 has now moved seeking a Yellowstone injunction and an injunction preventing the landlord from terminating the lease. The landlord has opposed the motion. Conclusioris 6f Law A Yell,owstone injunction is a remedy whereby a tenant may obtain a stay tolling the cure period "so that upon an adverse cietermination on the merits the tenant may cure the default and avoid a forfeiture'; v. 600 Third Ave. (Graubard Mallen Horowitz Pomeranz As socs. & Shapiro , 93 NY2d 508, 693 NYS2d 91 [1999], First National Stores v, Yellowstone Shopping Center NY2d 630, 290 NYS2d 721 [1968}). For a: Inc., 21 Yellowstone injunction to be granted the Plaintiff, among other ·things, must demonstrate that "it is prepared and maintains the ability to cure the alleged default by any means short of vacating the premises'' (Graubard, supra). Thus, a tenant seeking a Yellowstone must demonstrate that:.. (1) i t holds a commercial leaser received from the landlord a notice of default, (3) ( 2) i t has its application for a temporary restraining order was made prior to expiration of the cure period and termination of the lease, arid (4} it has the desire and ability to. cure the: alleged default by any means short of vacating. the premises (see, Xiotis Restaurant Corp .• v. LSS Leasing: Ltd. Liability Co., 50 AD3d 678; 8.55 NYS2d 3 3 of 8 [*FILED: 4] KINGS COUNTY CLERK 12/16/2021 03:53 PM INDEX NO. 503698/2021 NYSCEF DOC. NO. 73 RECEIVED NYSCEF: 12/16/2021 578 [2d Dept., 2008]) . While the precise facts o:f this case might not fit perfectly follow a standard Yellowstone pattern since no notice to cure or notice of default has been served, ne.verth.eless, the core relief sought, namely a determination the plaintiff validly exercised the renewal option must be explored. Thus, in relevant part, CPLR §6301 allows the court to issue a preliminary injunction "in ah:y actioh ... where the plaintiff has demanded arid would be entitled to a judgment restraining defendant from the commission or the continuance of an act, which, if committed or continued during the pendetiCy of the action, would produce injury to the plaintiff" (id). It is well established that "the party seeking a preliminary injunction must demonstrate a probability of success on the merits, danger of irr~parable inj_ury in the absence of the injunction and a balance of the equities in its favor" (Nobu Next Door, LLC v. Fine Arts Housing, Inc., 4 NY3d 839, [2005], ™ [ 2d Dept . ; remedy of also, Alexandru v, 2 0 09 I) . Pappas, 800 68 AD3d 690, NYS2d 48 890 NYS2d 593 The Second Department has noted that "the granting a preliminary injunction is a drastic one which s_hould be used sparingly" (Town of Smi thtowh v. Carlson, . . . . . 204 AD2d 537, 614 NYS2d 18 [2d.Dept;, 1994]). Thi,rs, the Second Department has been clear that the party seeking the drastic remedy of a preJiminary irij 1.mction has the burden of proving each 4 4 of 8 [*FILED: 5] KINGS COUNTY CLERK 12/16/2021 03:53 PM NYSCEF DOC. NO. 73 INDEX NO. 503698/2021 RECEIVED NYSCEF: 12/16/2021 of the above rioted elements "by clear and convincing evidence" (Liotta v. Mattone, 71 AD3d 741, 900 NYS2d 62 [2d Dept., 2010]). Para.graph 2·s of the original lease states that "any notice by Tenant to Owner must be se:rved by registered or certified mail addressed to Owner" (id), There is no di$pute the option to renew was not served by registered or certified mail; Notwithstanding the admissions of the tenant and tenant's counsel that such f.ailure was an inaq.vertent mistake there are que-stions whether the failure to serve such noticE) in the manner prescribed ' rendered the option renewal void. ' As noted, the notice was forwarded by telephone in full compliance with Paragraph 8 of the second amendment. Further, as noted, the landlord acknowledged such notice and even commenced the process outlined in Paragraph 8 by providing a rental schedule. Three weeks later upon discovery the tenant wa.s unsatisfied with the lease terms presented retreated from its earlier endorsement of the notice presented and insisted upon the precise notice requirements of the original lease. However, there are seTiot.1s questions whether the landlord's response to the tenant's option request constituted a waiver of any other formal notice requirements. Mr. Thypin has submitted an affidavit wherein he seeks. to temper the impact of the email. he sent on October 20, 2020 acknowledging the option request. .He asserts that "in the J;:>horie tail~ the 5 5 of 8 [*FILED: 6] KINGS COUNTY CLERK 12/16/2021 03:53 PM NYSCEF DOC. NO. 73 INDEX NO. 503698/2021 RECEIVED NYSCEF: 12/16/2021 attorney never notified me that the tenant was exercising the option to renew. Indeed, in October 2020, the attorney ~a§ trying to negotiate a rent reduction for the next six months of the current lease'' (..§.gg, Affidavit of· Ric:hard Thypin, '1l 12) . However, the email subject line sent by Mr. Thypin that day states "Proposed Terms of 2021 Lease Extension, MBA - Brooklyn LLC" arid the opening sentence of the email £.rom Mr. Thypin States "per our discussion this morning, attached is a schedule of rent we would be looking for a ten year extension of the Lease" {see, email from Richard Thypin to Frank Taddeo, October 26, 2020 at 2-:29 PM). There can be no reasonable examination of that email that does not unequivocally acknowledge the tenant's exercise of the option to renew. It is true the email further declines to afford any concessions to the teriartt for the next six months and that might have also been a discussion between the parties earlier that day, however, tha.t does not undermine the clear and unmistakable acceptance o:f the renewal option and a. response to that request. Thu.sf there are surely questions whether the exercise of the option was proper under the circumstances. In any event, t~ere is no reasonable view of the events which can lead. to the conc:li.ision the exercise of the optiqn was void as a matter of law effectively enciing the lease. 6 6 of 8 [*FILED: 7] KINGS COUNTY CLERK 12/16/2021 03:53 PM INDEX NO. 503698/2021 NYSCEF DOC. NO. 73 RECEIVED NYSCEF: 12/16/2021 Therefore, c011siderirtg all the Criteria, the plaintiff has satisfied the necessa:cy elements for an injunction maintaining the status quo until these iss11es are fully resolved. The request seeking an injunction preventing the landlord from taking any action to treat the lease a-s terminated is granted. As a consequence.of this injunction, the landlord cannot take any action to market the property, contact real estate brokers or any Of other activity one would ordinarily take with vacant space. course, the tenant must continue to pay rent, at the current rate, d.uring the pendency of the litigation. be made when the lawsuit concludes. Any aqjustments can Thus, to the extent the tenant seeks a Yellowstotre, such injunction is granted as noted. In this vein, the plaintiff furthe.r seeks an order requiring the parties to submit to arbitration to resolve the issue Of appropriate rent pursuant to the lease agreements. That request assumes the lease option has been properly exercised. as However, noted there are further questions that must be explored in that regard. Therefore, imposing that mandatory ihjunction requiring arbitration would effectively resolve the lawsuit in ;favor of the plaintiff, First, neither party has moved for s.µrnmary judgement seeldng such sweeping and final relief.. More importantly, it is well settled that absent extraordinary circumstances a preliminary injuriction is improper where to grant 7 7 of 8 [*FILED: 8] KINGS COUNTY CLERK 12/16/2021 03:53 PM NYSCEF DOC. NO. 73 INDEX NO. 503698/2021 RECEIVED NYSCEF: 12/16/2021 such relief the movant would thereby obtain the ultimate :relief the party would receive in a final judgement (Zoller v. HSBC Mortgage Corp. 2016]) ,, {USA)~ 135 AD3d 932, 24 NYS3d 168 [2d Dept~, Therefore, that portion of the relief sought is denied. So ordered. ENTER: , DATED: December 16, 2021 Brooklyn N.Y. Hon. JSC LE;!OD 8. 8 of 8

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