39-50 24th St. Realty Corp. v Ol' Bridge Café Inc.
Annotate this CaseDecided on January 29, 2021
Civil Court of the City of New York, Queens County
39-50 24th Street Realty Corp., Petitioner-Landlord-Owner,
against
Ol' Bridge Café Inc. d/b/a Restaurant, 39-48/50 24th Street, Ground Floor Store, Long Island City, NY 11101, Respondents-Tenant-Assignee, "XYZ Corp.," "John Doe" and "Jane Doe," Respondent-Undertenants.
L & T 72985/19
Sally E. Unger, J.
On October 27th and November 5, 2020, this Court conducted a bench trial in the instant proceeding. The Court had ample opportunity to observe and assess the demeanor and credibility of the witnesses and carefully reviewed and considered all exhibits admitted into evidence.
Factual Background
On or about May 31, 2016, the parties to this litigation entered into a lease agreement for 39-48/50 24th Street, Ground Floor Store, Long Island City, New York 11101 (hereinafter "subject premises"), for a term of five (5) years commencing February 1, 2016 (hereinafter "Lease") with a monthly rent of $4,000.00.
The subject premises is commercial space which is to be utilized as a restaurant. Pursuant to the terms of the Lease, the respondent is responsible for real estate taxes, late fees in the amount of 10% of the monthly rent. The respondent is also liable for legal fees in the event of the tenant's default requiring the commencement or defense of an action or proceeding resulting from the default.
In the instant proceeding, the petitioner alleged that rather than use the subject premises as a restaurant, the respondent rented it out for use as an event space within which to host various parties and large gatherings in violation of the Lease. The petitioner also claimed this was tantamount to an unauthorized sublet. Moreover, the petitioner alleged the respondent was not compliant with relevant law pertaining to its usage of the subject premises. After the expiration of the deadlines set forth in the predicate notices, the respondent did not vacate the subject premises and allegedly did not cure the Lease violations.
Relevant Procedural Background and Trial
The instant summary eviction holdover proceeding was commenced in December 2019. The respondent interposed an answer on or about January 28, 2020, in which it raised numerous [*2]affirmative defenses, mainly devoid of facts and based upon alleged procedural deficiencies.
For several months and over the course of numerous adjournments, the parties attempted to settle the instant matter without success.
At trial, petitioner made out its prima facie case through two witnesses. The petitioner's first witness was Michael Christopher, the president of Proactive Management, the management company for the building in which the subject premises is situated. After Mr. Christopher, the superintendent of the building, Allen Durakovic testified and gave first-hand accounts of events that transpired at the subject premises.
While the Court attempted to keep the testimony restricted to events transpiring pre-petition, that became fruitless, because the acts alleged have been of an ongoing nature and the evidence demonstrated this. The testimony and documentary evidence included events that transpired up to and between the trial dates. Therefore, while there might otherwise have been a valid procedural reason to limit the testimony and evidence to pre-petition activities, those that were alleged to have occurred after the date of the petition were merely a continuing pattern of practice.
Through Mr. Christopher the landlord tenant relationship was established, as well as the amount of money due and owing for base rent/use and occupancy. The petitioner also admitted several photographs through Mr. Christopher. Many of the photographs were advertisements for "Event Space 2440" posted by respondent on Instagram, Facebook and most blatantly, signage right over the entrance door to the subject premises. The advertisements suggest uses for the subject premises including receptions, bridal showers, engagement parties and even a Super Bowl Party. The Super Bowl Party was advertised as being hosted by Zoe's Place and offering Premium Beverages. An open house was also advertised in which the subject premises was described by its size of 2,500 square feet "featuring a grand marble bar". Some of the photographs also depict the interior of the subject premises as raw open space and others show tables with place settings including wine glasses and lots of balloons.
By and large, the advertising photographs appear to have been posted prior to September 11, 2019, the date of the underlying notice to cure (hereinafter "NTC").[FN1] The NTC listed a deadline for cure of October 4, 2019. This date is notable as a marker in time, beyond which there ought not have been any violative behavior.
Aside from the impermissible usage of the subject premises as an event space, the NTC also alleged the respondent violated §5.02 of the Lease which states in pertinent part,
Tenant shall not suffer or permit the Demised Premises or any part thereof to be used in any manner, or anything to be therein, which would in any way . . . (iii) constitute a public or private nuisance or disturb the quiet enjoyment of other tenants in the building . . . (vi) impair or interfere with any of the building services or the proper servicing of the Building or the Demised Premises or impair or interfere with the use of any of the other areas of the Building or occasion discomfort, annoyance or inconvenience to, Landlord or any of the tenants or occupants of the Building (ix) violate any law, ordinance regulation or statute of any governmental agency or (x) permit any noise to be audible outside of the Demised Premises audible in the Building or Premises of any other tenant . [*3]. . .In addition to the advertising photographs, the petitioner entered numerous photographs demonstrating a continuing pattern of practice. Several of the pictures introduced are depicting people milling about directly outside the subject premises. One of those photographs has as many as 15 people in several groups engaged in conversation, some with beverage glasses in their hands at approximately 12:30 am on September 26, 2020. The deadline to cure this activity expired nearly a full year earlier. And yet, one of the photographs date and time stamped as just after midnight on October 4, 2020, a year to the day later, shows 3 individuals outside the front of the subject premises engaged in conversation with two gentlemen in uniforms with badges.
The next sequence of photographs depicts a van on the sidewalk in front of the subject premises advertising "Luxury Chairs Party Rental", a man carrying a table out onto the sidewalk in front of the subject premises joining other tables already sitting there and one photograph where 5 round tables are sitting on the sidewalk. Most of this series of photographs were taken after 2 am on October 4, 2020.
The photographed activities did not end with October 4, 2020. On October 10, 2020, at nearly 2 am there were a few photographs taken which show people entering, exiting and milling about directly in front of the subject premises. The Court is cognizant of the fact that, as listed on the multiple dwelling registration, the subject premises is situated within a residential building with 31 dwelling units, whose residents' time, space and quietude were infringed upon by the activities of the respondent.
Once the cure period set forth in the NTC expired without cure, the petitioner served its notice of termination dated October 22, 2019 (hereinafter "NOT"). The lease termination date stated in the NOT was November 5, 2019.
The photographs annexed to the petition were merely advertising for the potential events and usage to be made of the subject premises. They give a literal snapshot of the activities taking place both in and around the subject premises. The photographs admitted into evidence that post-dated the expiration of the NTC demonstrate a continuing practice of behaviors outside the norm of a restaurant operating in a residential community.
With respect to the rent, Mr. Christopher demonstrated through his rent ledger combined with his testimony that respondent stopped paying rent in February 2020. According to petitioner's records, the amount of base rent/use and occupancy in arrears was $54,600.90 through September 2020. Additionally, as recited in petitioner's records, respondent owes real estate taxes together with late fees due to its nonpayment of rent/use and occupancy, as well as its late payment of real estate taxes to the petitioner. However, petitioner severed its claims for real estate taxes to be sought in a plenary action. Petitioner preserved its claim for legal fees and late fees to be determined later in the instant proceeding.
After Mr. Christopher, the superintendent testified. Mr. Durakovic lives in the building's basement. As a super for the building, he is present 24 hours a day. He gave eyewitness accounts of parties taking place in the subject premises from late in the evening until early in the morning on Fridays, Saturdays and Sundays, but no activity Mondays through Thursdays for at least the 11-month period leading up to the date of the petition, i.e. November 26, 2019. He approximated that the parties began at 6 pm and continued until 3 am. Mr. Durakovic also testified that the most recent party took place on Halloween, less than a week before the second trial date in this proceeding.
Mr. Durakovic did not go inside the subject premises. However, the photographs in [*4]evidence depict the subject premises with two exterior walls of glass, allowing passersby to see into the subject premises. He also testified that when the doors and curtains are open, an observer is able to see the party taking place. He did not state the frequency of the curtains and/or doors being open. Nonetheless, the level of discomfort caused to the residents of this building was made clear. Mr. Durakovic testified that although he did not enter the subject premises while the parties were going on, he knew there were parties taking place because there was music "blasting all hours of the day", he could see people both inside and outside the subject premises and the residents were calling him regularly to complain about it.
Once petitioner's witnesses completed their testimony, a prima facie motion to dismiss was made and denied. Respondent's application to dismiss based upon allegedly defective predicate notices was similarly denied. Thereafter, Marion Jefferson testified on behalf of the respondent as its only witness to put forth its defense.
Mr. Jefferson supervises all the events at the subject premises. On his direct examination, when his attorney inquired about Mr. Jefferson's actions in response to the NTC, he said he took down the advertisement that had graced the entrance doorway. When the Court asked whether he did anything else after receiving the NTC, the answer was a simple "No." Apparently, Mr. Jefferson was under the misguided belief that the only act required to effect a cure was to remove a sign.
Initially, Mr. Jefferson did not come across as a flagrant fabricator of untruths. When he stated the events determine the hours of operation of the respondent, that was entirely plausible. When Mr. Jefferson testified the hours are "Usually twelve in the afternoon to maybe six or six to eleven", this was clearly stretching the bounds of the truth. However, when he testified that no alcohol was served at the subject premises and none was brought to the subject premises by others, he lost all credibility with this Court. Advertisements including the phrase "Premium Beverages" or boasting the size of a marble bar do not connote service at a juice bar. To imply that bridal and engagement parties, as well as Super Bowl parties were dry events at the subject premises, and to expect the Court would actually believe this myth, Mr. Jefferson must have thought the presiding judge just fell off the proverbial turnip truck. Mr. Jefferson lost all credibility when he stated without equivocation that alcohol was not served at the subject premises or brought in by others.
At the conclusion of the trial, counsel for the petitioner sought a judgment of possession together with a money judgment in the sum of $54,600.90, representing all base rent/use and occupancy through September 2020. Petitioner reserved its claim for attorney's fees and late fees for a subsequent hearing in this proceeding. Petitioner's claim for real estate taxes was severed.
Discussion
In the case at bar, under the Lease, the only permitted use of the subject premises was for a restaurant. While some restaurants may have occasional parties at their sites, an establishment that runs its business solely to provide a party venue for the catering of various celebratory occasions until the wee morning hours on weekends, is not a restaurant in the true sense of the term. The subject premises had no activity whatsoever on Mondays through Thursdays. The only nights when business was conducted was Fridays through Sundays and obviously alcohol was served at these events.
The respondent made a feeble attempt to deflect the responsibility for its Lease violation by implying that if the petitioner had granted respondent access to the basement for the tenant to run a gas line, the respondent would not have violated the Lease. This is nothing but additional [*5]mythology. The respondent agreed to take the utilities in "as is" condition. Pursuant to §6 of the Lease, "Such electric current and gas shall be furnished to Tenant by means of the then existing Building systems, feeders, risers and wiring . . ." At the determination of the petitioner, if and when alterations are necessary, the Lease provides a means to accomplish that. No defense was raised, nor was any admissible evidence introduced, which either claimed such alterations were necessary or that the respondent followed the Lease requirements and was rebuffed by the petitioner.
Pursuant to NYC Administrative Code §436-1.0(3)(b), it is unlawful for the respondent "to conduct, maintain or operate, or engage in the business of conducting, maintaining or operating a public dance hall, cabaret or catering establishment unless the premises wherein the same is conducted, maintained or operated are licensed in the manner prescribed herein."
Further, according to NY Alcoholic Beverage Control Law (hereinafter "NY AL BEV CON") §64-d(5), the respondent is required to obtain a license to sell liquor in the subject premises, which is commonly known as a cabaret.
Such cabaret license shall in form and in substance be a license to the person specifically licensed to operate a cabaret and sell liquor at retail to be consumed on the premises specifically licensed. Such license shall also be deemed to include a license to sell wine and beer at retail to be consumed under the same terms and conditions, without the payment of any additional fee.The "sale" of alcohol is defined pursuant to NY AL BEV CON §3(28) as
any transfer, exchange or barter in any manner or by any means whatsoever for a consideration, and includes and means all sales made by any person, whether principal, proprietor, agent, servant or employee of any alcoholic beverage and/or a warehouse receipt pertaining thereto. "To sell" includes to solicit or receive an order for, to keep or expose for sale, and to keep with intent to sell and shall include the delivery of any alcoholic beverage in the state.The respondent is not licensed to operate a catering establishment and is unlicensed to sell alcohol. Hence, it is not legally permitted to operate a catering facility or to serve alcoholic beverages. Therefore, it may not conduct its business without violating the lease covenant prohibiting it from violating "any law, ordinance regulation or statute of any governmental agency". Cemco Restaurants, Inc. v. Ten Park Ave Tenants Corp., 135 AD2d 461, 522 NYS2d 151 (1st Dept. 1987) The respondent is presumed to know that such licenses are required, particularly since by this time Mr. Jefferson should be a seasoned businessman. This establishment has been in operation since 2016 and by his own admission, he has a separate restaurant at another location.
The Court finds the respondent violated §5.02 of the Lease. The respondent used the subject premises as an unlicensed catering facility which violated laws, ordinances regulations or statutes of a governmental agency, i.e. the New York State Liquor Authority. This impermissible usage was conducted in a manner that constituted a public or private nuisance and disturbed the quiet enjoyment of other tenants in the building. The respondent also interfered with the use of other areas of the building in that it caused discomfort, annoyance or inconvenience to the petitioner and the tenants of the building. Furthermore, this behavior created noise to be audible outside of the subject premises audible in and around the building or residences of other tenants.
Finally, the Court finds it troublesome that the respondent continued to run indoor events [*6]with gatherings of many people throughout the pandemic. In doing so, the respondent created and maintained a public health hazard. Some of the evidentiary photos depict people in close proximity of each other in groups on the sidewalk in front of the subject premises. Others show people entering or leaving the subject premises. It is noteworthy that, other than the police officers, none of the people featured in the photographs captured by the security cameras are wearing face masks. One can only hope no one was rendered ill from their attendance as guests or employees of the respondent's establishment.
Conclusion
The petitioner proved the landlord tenant relationship between the parties and that the lease between them was violated by the respondent. The respondent did not sustain its defenses against the allegations of wrongdoing and those of a procedural nature were not successful. The respondent is responsible for payment of rent arrears and late fees as calculated under the Lease freely executed by the parties.
The petitioner is awarded a judgment of possession against all the respondents and a money judgment for all rent and additional rent against Ol' Bridge Café Inc., through September 2020, in the sum of $54,600.90, together with the costs and disbursements of this proceeding. A warrant of eviction shall issue forthwith as to all respondents, with a 5 day stay of execution.
Although use and occupancy is set at a holdover rate of 150% upon termination of the Lease, the petitioner did not seek use and occupancy at the holdover rate in its petition. Therefore, use and occupancy is set at the rates set forth in the Lease, i.e. $4,370.91 for the months of October 2020 through January 2021 (the natural expiration of the Lease).
Petitioner may restore this matter to the calendar for the purpose of an attorneys' fee and late fee hearing, once it obtains possession from the respondent. If respondent remains in possession past January 31, 2021, the amount of reasonable monthly use and occupancy for the time frame of February 1, 2021 through the return of possession to petitioner shall be determined at the attorney's fee hearing. The petitioner's claim for real estate taxes is preserved and severed for a plenary action.
This constitutes the decision and order of this Court.
Dated: January 29, 2021
SALLY E. UNGER, J.C.C./A.J.S.C. Footnotes
Footnote 1:Several of the advertising photographs are undated and some have incomplete dates. Others have the same date as the NTC.
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