Source: https://casetext.com/case/1286-rr-operating-inc-v-herald-towers-llc-2010
Timestamp: 2019-04-22 16:51:10+00:00

Document:
ROSENBERG ESTIS, NEW YORK, NEW YORK, Plaintiff's atty.
AVROM R. VANN, P.C., NEW YORK, NEW YORK, Defendant's atty.
There are four separate motions and two cross-motions before the court in this matter, which the court consolidates for consideration in this single decision and order. The parties are respectively the plaintiff-tenant (1286 RR Operating, Inc. ["1286 RR"]) and the defendant-landlord (Herald Towers, LLC ["Herald"]) of a ground floor store ("demised premises") in a building located at 50 West 34th Street in Manhattan ("building"). 1286 RR operates the demised premises as a fast food court style restaurant that includes, among other food operations, Kentucky Fried Chicken and Tim Horton's concessions.
In the underlying action, 1286 RR sought a Yellowstone injunction and a declaration that it was not in violation of its lease, as claimed in an October 2, 2007 Notice to Cure ("October 2, 2007 Notice"). The crux of the claimed violation was that 1286 RR had created a private nuisance by emitting objectionable odors of fried food from the kitchen exhaust. Herald counterclaimed for its legal fees in defending the action.
By decision and order dated May 8, 2008, the court granted the Yellowstone injunction with respect to the October 2, 2007 Notice. On re-argument the decision was adhered to (Gische, J., Order dated June 12, 2008).
While the underlying action was proceeding, Herald brought a motion for a preliminary injunction directing 1286 RR to take all "proper, necessary and prudent steps to prevent the odors resulting from the frying of foods in the [demised] premises entering into the other portions of the building. "The court held a testimonial hearing on the motion and conducted an on site inspection of the demised premises. By decision and order made on the record in open court on May 12, 2009, the court denied the motion for a preliminary injunction. Insofar as relevant to the instant motions, the court held that Herald has not shown a likelihood of success on the merits of its claim that there was a private nuisance. While the court found that there were odors of frying food coming from the demised premises, Herald did not prove at the injunction hearing that the odors were anything more than what it reasonably should have expected once it rented to a business it knew would be frying foods. The court further found that if the odors wafting into the building were, as Herald claims, the result of some defect in the ventilation system, to the extent that ventilation system defect was physically outside the demised premises, it was Herald's responsibility to maintain under the parties' lease. The court also found that because there was no immediate irreparable harm shown, the interim relief requested, which was the ultimate relief in the case, should await the outcome of trial.
By Order to Show Cause ("OSC") dated June 11, 2009 (motion seq. # 004) Herald seeks an order granting it access on two separate dates to inspect the demised premises and that for at least two hours prior to and during such inspections, 1286 RR be enjoined from conducting its Kentucky Fried Chicken business operations. 1286 RR cross-moved for sanctions and for an order prohibiting Herald from making any further motions in this case without prior court permission.
By OSC dated June 26, 2009 (motion seq. # 005) 1286 RR seeks a second Yellowstone injunction in connection with a June 16, 2009 Ten Day Notice of Default served by Herald. It also seeks:  a declaration that the June 16, 2009 Ten Day Notice is a nullity,  alternatively an order giving it more time to cure the purported defaults,  leave to amend its complaint to add a cause of action for a declaration that 1286 RR is not in default as alleged in the June 16, 2009 Ten Day Notice of default,  sanctions, and  an order prohibiting Herald from serving any further default notices on 1286 RR without prior permission of the court. In connection with this OSC, 1286 RR obtained a temporary restraining order, pending determination of this motion, tolling its time to cure the alleged defaults in the June 16, 2009 Ten Day Notice of Default and restraining Herald from terminating 1286 RR's tenancy on the basis of such Notice.
By OSC dated July 13, 2009 (motion seq. # 006), 1286 RR seeks:  a preliminary injunction against Herald interfering with 1286 RR's use of the duct work in the building during its business hours,  leave to amend its complaint to seek a permanent injunction and  sanctions. Herald cross-moves for sanctions. In connection with this OSC, 1286 RR obtained a temporary restraining order, pending determination of this motion, prohibiting Herald from interfering with 1286 RR's use of the duct work during its hours of business operation.
By OSC dated August 3, 2009 (motion seq. # 007),1286 RR seeks a third Yellowstone injunction in connection with a July 23, 2009 Ten Day Notice of Default. It also seeks:  a declaration that the July 23, 2009 Ten Day Notice of Default is a nullity,  alternatively an order giving it more time to cure the purported default, and  leave to amend its complaint to add a cause of action for a declaration that 1286 RR is not in default as alleged in the July 23, 2009 Ten Day Notice of default. In connection with this OSC 1286 RR obtained a temporary restraining order, pending determination of this motion, tolling its time to cure the alleged defaults in the July 23, 2009 Ten Day Notice of default and restraining Herald from terminating 1286 RR's tenancy on the basis of such Notice.
Herald seeks an injunction directing Herald to permit access so its consultants can conduct inspections (mot. Seq. # 004). Herald claims that it needs access to the demised premises to "inspect" the ventilation system to determine what work needs to be done. The two experts it proposes for these inspections are: Scientific Fire Prevention and Chief Fire Prevention. It requires that 1286 RR shut down its cooking and frying business operations for at least two hours before the inspections. It seeks access on two separate dates from 8 o'clock in the evening on. The scope of the work and inspections is otherwise unspecified, and there is no written proposal of affidavits before the court from either of the consultants. The stated purpose of the inspections is for "determining steps which may be taken by Herald Towers to prevent the permeation of the odor of fried chicken from entering the public portions of the building. "Herald seeks this relief pursuant to Articles 13, 18 and 47 of the parties' lease, which it claims permits the landlord to have reasonable access to the demised premises to inspect and repair.
In connection with the parties ongoing dispute about the odors at the building, Herald has already had two other experts inspect the demised premises and/or the ventilation system. Those inspectors were Michael Borello of Environmental Building solutions, LLC and Lawrence Green, a Mechanical Engineer. Although these experts have made recommendations about maintaining the ventilation system, Herald has not done any of the recommended work, nor is it seeking access to do such work now. On this application Herald makes no representation that it will, itself, do the work it expects the new experts will find `is necessary to alleviate the condition that it claims exists.
The court declines to direct access for "inspections" because Herald has not made a showing of the need for, or the legal right to, such relief. Since there is no indication that Herald is seeking the inspections to itself do work in the premises, the provisions of the lease on which it relies are inapposite. The lease provisions pertain to reasonable access for the landlord to do repairs. In any event, Herald has not shown that the access it seeks is reasonable. There are no proposals from either of the "consultants." The scope of the inspections they seek to do is otherwise completely undefined. The time Herald claims is needed for such inspections has not been shown to bear any reasonable relationship to the work proposed, because the scope of the work is undefined. In this regard Herald seeks on this motion for two access days, yet in prior letters to 1286 RR it sought four access days for the same purported work. There is no indication of why two "consultants" are necessary and whether the work they need to do can be done without disruption to 1286 RR's business operations.
If the inspections are for the purpose of Herald presenting a stronger legal position in this action, then it has not been explained to the court why the two prior inspections were inadequate and why further inspections are needed for Herald to prepare its case. Herald's application is completely devoid of any reason why further inspection is warranted in this case at this time and it must be denied.
On or about July 7, 2009 Herald notified 1286 RR that for a period of 3 to 5 business days it would be cleaning the duct work in that portion of the ventilation system that was in the building but outside the demised premises. It informed 1286 RR that during such time 1286 RR would not have the duct work available to it for any purposes, including the ventilation of cooking and /or frying exhaust and odors. 1286 RR now seeks to enjoin Herald from interfering with its use of the exhaust duct work in the building except between the hours of 12:00 Midnight and 8:00 am and to limit Herald s work to the cleaning of the duct work only (mot. seq. # 006).
Under CPLR § 6301, a preliminary injunction may be granted in any action where it appears that a party is doing something in violation of the other party's rights respecting the subject of the action and tending to render the judgment ineffectual. In order to be entitled to a preliminary injunction, a movant must clearly demonstrate: (1) a likelihood of success on the merits, (2) irreparable injury absent granting of the preliminary injunction, and (3) a balancing of the equities in the movant's favor. Paine v. Chriscott v. Blair House Associates, 70 AD2d 571 (1st Dept. 1979); Aetna Insur. Co. v. Capasso, 75 NY2d 860 (1990).1286 RR has claimed in this action that under the parties' lease the building duct work that is inside the building, but is outside the demised premises, is Herald's responsibility to maintain. This court, in finding for 1286 RR on Herald's prior motion for a preliminary injunction, agreed with that position (see: Gische, J., Order dated May 12, 2009). Herald's experts have already opined at the preliminary injunction hearing that the odors complained of can be mitigated, if the duct work in the building is cleaned. Consequently, there is no legal basis for prohibiting Herald from undertaking that work. The only real dispute is whether the court should compel Herald to undertake such work outside of business hours and/or to take other reasonable measures to limit any interference with 1286 RR's business operations while the duct work is being done.
There is no dispute that under the lease, 1286 RR has a right, on a non-exclusive basis, to use the building's exhaust system. 1286 RR, however, claims that paragraph 47 (A) of the lease requires that duct work be done, "so far as practicable, in such a manner as to avoid interference with [1286 RRs'] use of the Demised Premises." 1286 RR also relies on paragraph 22 of the lease which permits it to "peaceably and quietly enjoy the premises hereby demised."
"Landlord shall maintain and repair the public portions of the building, both exterior and interior . . . [T]here shall be no allowance to the tenant for the diminution of rental value and no liability on the part of the landlord by reason of inconvenience, annoyance or injury to business arising from landlord, tenant or others making . . . any repairs, alterations, addition or improvements in or to any portion of the building. . ."
The court agrees that the lease requires Herald to make the repairs necessary for the public portions of the building and that 1286 RR has no express rights by reason of its own inconvenience thereof. The lease, as a contract, however, still requires that the parties proceed in good faith and engage in fair dealing. P.T. L Contracting Corp. v. Trataros const., Inc., 29 AD3d 763 (2nd dept. 2006). The covenant of quiet enjoyment is still viable and may limit a landlords rights to make repairs or renovations that disrupt a tenant's business to what is reasonable under the circumstances. Bijan Designer for Men v. St. Regis Sheraton Corporation, 142 Misc 2d 175 (NY County Supreme Ct. 1989), aff'd 150 AD2d 244 (1st dept. 1989).
1286 RR argues that is it unreasonable to shut down its business operations for three to five business days and that the court should require that the work be done during the night. Herald claims that doing the work during the night, as demanded by 1286 RR, will unreasonably increase its costs to do the work. It is perfectly willing to do the work at night, if 1286 RR pays for any related additional costs.
While the court believes that it is reasonable for Herald to do the duct work with minimal disruption to 1286 RR business operations, reasonableness does require that Herald incur the additional costs necessary to do the work during the night. The court, therefore, finds that 1286 RR is not entitled to a preliminary injunction against Herald doing duct work in the building (but otherwise outside the demised premises) at such times as Herald sees fit. 1286 RR has not shown a likelihood of success on the merits of its underlying claim that the lease or law require that the work be done outside of 1286 RR's business hours.
It is reasonable, however, to require that Herald present 1286 RR with a specific plan from a specific contractor that proposes the work to be done within a realistic timetable with as little disruption to the tenant's business as possible. A variance of 3 to 5 days to complete the work, with a concomitant requirement that business be shut down during that period of time is, by its terms, unreasonable. It may result in 1286 RR's business being closed for period in excess what is necessary to do the actual work. Moreover, to the extent that 1286 RR is willing to pay for the additional costs of doing the work during the night, Herald should accommodate 1286 RR by having the work done at night.
Consequently, this court directs that Herald provide 1286 RR with a realistic and tailored plan to clean the duct work, that may be done during business hours, but will otherwise minimize any disruption to 1286 RR's business operations. The plan shall include the name, address and contact information of the contractor being hired to do the work. The information shall be provided to 1286 RR no later than fourteen (14) days before the actual work may be scheduled to take place. 1286 RR shall have the right to directly contact the named contractor to determine what, if any, additional costs may result if the work is scheduled for hours during which 1286 RR is not operating its business. If 1286 RR is willing to pay for such additional costs, then, within seven (7) days of receiving such information from Herald, it will notify Herald of its intent to pay the additional costs and it will set aside such monies in a separate escrow account for such purpose. Proof that the necessary monies have been put in escrow will also be provided to Herald.
If Herald does not receive notice of 1286 RR's intent to pay for such additional costs and proof of escrow, then Herald may schedule the work to be done no sooner than fourteen (14) days from the date it first provides 1286 with the required information. If 1286 RR provides notice of its intent to pay and proof of escrow, the 1286 may schedule to work to take place no later than fourteen (14) days from the date it first was provided with the required information from Herald. All notifications required by this order shall be in writing and shall be delivered in such a manner so as to be received by the other party on the day it is actually sent.
1286 RR has separately moved for Yellowstone injunctions with respect to two Ten Day Notices of Default dated June 16, 2009 ("June 2009 Notice of Default") and July 23, 2009 ("July 2009 Notice of Default") (mot. seq. # 005 and 007). It collaterally seeks an order from the court extending its time to cure on each Notice of Default.
The purpose of a Yellowstone injunction is to allow a tenant, threatened with the termination of its lease, to obtain a stay. The stay tolls the running of the cure period so that, after a determination of the merits, the tenant may cure the defect and avoid a forfeiture of the leasehold. First Natl. Stores v. Yellowstone Shopping Ctr., supra; Long Island Gynecological Servs. v. 1103 Stewart Avenue Associates, 224 AD2d 591 (2nd dept. 1996). In order to obtain a Yellowstone injunction the tenant must demonstrate that:  it holds a commercial lease;  it has received from the landlord a threat that the lease will be terminated;  it requested injunctive relief prior to the termination of the lease and  it is prepared and able to cure the alleged defaults. Graubard Mollen Horowitz Pomeranz Shapiro v. 600 Third Associates, 93 NY2d 508 (1999).
The June 2009 Notice of Default sets forth five separately claimed defaults consisting of:  failure to deliver to Herald statements of gross receipts;  failure to remit to Herald a percentage of gross receipts;  failure to deliver to Herald annual statements;  failure to exterminate and  denial of access. According to the June 2009 Ten Day Notice of Default, the cure period was due to expire on June 27, 2009. 1286 RR brought a motion for a Yellowstone injunction and obtained a temporary restraining order on June 25, 2009.
1286 RR claims that it is not in default of any of the provisions regarding statements of gross receipts and payment of additional rent and that the predicate notice itself is hopefully defective. If the court finds that it is in default, however, 1286 RR stands ready to provide the information and make any required payment. Likewise 1286 RR claims that it is not in default of the lease provisions requiring that it exterminate the demised premises. If the court finds it is in default, 1286 RR stands ready to so exterminate. Finally 286 RR denies that it has denied Herald reasonable access to the demised premises, but if it has it can easily so provide access.
Most of Herald's opposition to the motion concerns what it believes was 1286 RR's failure to provide it access. It relies in large part upon its request for access for the inspecting consultants. As previously indicated in this decision there is serious question about whether the consultants are entitled to access under the lease. Herald implores the court to deny the Yellowstone injunction to prevent 1286 RR from getting away with violating the lease. It also claims that it has only just received the required statements of gross receipts.
In connection with 1286 RR changing one of its food concessions from a Dunkin Donuts to a Tim Hortons, Herald claims that  1286 RR made alternations, installations, addictions and/or improvements to the demised premises without its prior written approval;  1286 RR failed to submit plans and specifications for installations to the demised premises to Herald;  1286 RR installed a new Tim Horton's sign on the exterior of the demised premises without Herald's prior written approval and  1286 RR installed a new Tim Horton's sign on the exterior of the building without obtaining required approvals and permits from appropriate governmental agencies. According to the terms of the July 2009 Notice of Default, the cure period was set to expire on August 2, 2009. The OSC requesting a temporary restraining order ("TRO") was presented to the court on July 30, 2009. Herald's attorney, who wanted to be heard on the TRO could not be present in court that day. Accordingly, the court issued an order tolling the cure period until August 3, 2009, when both parties could be heard. On August 3, 2009 the court signed the OSC with the attendant TRO tolling the cure period under the July 2009 Notice of Default.
1286 RR claims that it is not in default under the lease in connection with the change of part of its operations from Dunkin' Donuts to Tim Hortons. It states, however, that if this court should find that it is in default, it stands ready willing and able to cure the defaults short of terminating the lease hold.
In opposition Herald argues the 1286 RR's conduct was a clear violation of multiple provisions of the lease. It argues that given these clear violations, the court should "enforce the terms of the written agreement of the parties and each of its covenants."
It is undisputed that 1286 RR holds a commercial lease. It is also undisputed that it separately received both the June and July of 2009 Notices of Default, each specifying separate claimed defaults under the lease, and each of which threatened termination of the tenancy in the event the claimed defaults were not cured. It is also undisputed that with respect to each separate Notice of Default, 1286 RR sought intervention from the court tolling the cure periods before they had each expired and the lease had been terminated. 1286 RR vehemently denies that it has acted in violation of the lease. In each situation, however, it has asserted that if this court should find that it is in violation, it stands ready the cure the claimed defaults to prevent a forfeiture of the leasehold. In each case Herald claims that it is acting within its rights and the court should not let 1286 RR get away with violating the lease. It does not claim that 1286 RR is unable to cure any of the claimed defaults, only that it would be "inequitable" to allow such a "cavalier" leaseholder to cure any defaults at this time. Herald's arguments in opposition miss the import of a Yellowstone injunction. The issue of who is correct in the parties' myriad disputes about the provisions of the lease will be heard by the court as part of the underlying actions for declaratory relief. If 1286 RR does not prove its defenses to the Notices, then this court will not be letting 1286 RR get away with violating the lease because 1286 RR will be made to cure any adjudicated violation thereof.
The motions for Yellowstone injunctions with respect to both the June 2009 and Jule 2009 Notice of Default are therefore granted.
To the extent 1286 RR seeks the collateral relief of having this court extend its time to cure under each of the Notices, it is denied. The effect of the Yellowstone injunction is to toll the running of the cure period while the parties are litigating the bona fides of the claimed defaults. The court does not have the power to rewrite the lease to provide cure periods beyond other than what the parties agreed to. Reade v. Highpoint Associates, IX, LLC, 36 AD3d 496 (1st dept. 2007); EC Electronics, Inc. V. Amblunthorp Holding, Inc., 38 AD3d 401 (1st dept. 2007).
Default, 1286 RR seeks an immediate declaration from the Court that each is a nullity. The relief is denied as premature. It is the ultimate relief that 1286 RR is seeking in the pleadings that it seeks leave to amend. Not only is it before the joinder of issue, but 1286 RR is seeking this ultimate relief before it even has a viable pleading seeking such relief before the court.
1286 RR seeks leave to amend its pleadings to:  add a cause of action for a declaration that it is not in default as alleged in the June 2009 Notice of Default (mot. Seq/ # 005);  add a cause of action for a permanent injunction against Herald interfering with its sue of the duct work int the building (mot. Seq. # 006) and  add a cause of action for a declaration that it is not in default as alleged in the July 2009 Notice of Default (mot. Seq. # 007).
In the absence of prejudice or surprise resulting directly from the delay, leave to amend a pleading is freely given, pursuant to CPLR § 3025(b). Fahey v. County of Ontario, 44 NY2d 934 (1978). Moreover, leave should be granted when the denial of the motion would create a greater prejudice than granting it. Murray v. City of New York, 43 NY2d 400 (1977); Adams Drug Co. v. Knobel, 129 AD2d 401 (1st Dept 1987). The moving party is required to show that it the new claims have a colorable basis. NAB Construction Corp. v. Metropolitan Transportation Authority, 167 AD2d 301 (1st dept. 1990).In evaluating prejudice to the other side, the court may look at any delay and its effect on the parties' positions in the underlying litigation. There should be some explanation for the delay, and prejudice may be found if some special right is lost by the passage of time or if undue expense is implicated. Barbour v. Hospital for Special Surgery, 169 AD2d 385 (1st dept. 1991).
1286 RR seeks sanctions against Herald in mot. Seq #s 004, 005 and 006. Herald seeks sanctions against 1286 RR in mot. seq. # 006. Each claims that the other party is pursuing its legal rights and remedies as a means of harassing them.
(3) it asserts material factual statements that are false."
While this had been a hotly contested litigation by both sides and each party has aggressively looked for every tactical advantage it can get, the court cannot say that either party's conduct has been frivolous as that term has been defined by the court rules. The court denies all requests for sanctions by each party against the other.
By mot seq #s 004 and 005 1286 RR seeks an order prohibiting Herald from making further motions and/or serving further notices without prior court approval. The basis for this relief is 1286 RR's claim that herald actions have are calculated, frivolous and harassing, all with a view of getting 1286 RR out of the premises.
Public policy mandates free access to the courts. While the court has to power to enjoin a party from commencing actions or proceedings without prior court approval, that relief is limited to situations where a litigant is repeatedly pressing frivolous litigation that amounts to an abuse of the judicial process. Pavia v. Couri, 19 Misc 3d 1105(A); 859 NYS2d 905 (NY Co. Sup Ct. 2008). The parties to this action are both sophisticated business parties. At this point even if 1286 RR is correct that Herald actions are tactically motivated by a business goal of encouraging them to forfeit their leasehold, the court is not persuaded that the actions are so devoid of legal merit that Herald's future conduct should be enjoined.
ORDERED that and requested relief not expressly granted herein is denied and that this constitutes the decision and order of the court.

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