Court Opinion

ID: 9930975
Source: CourtListenerOpinion
Date Created: 2024-02-07 21:09:21.787318+00
Date Added: 2024-06-11T12:12:29.060993
License: Public Domain

East 54th Operating LLC v Brevard Owners, Inc.
               2024 NY Slip Op 30387(U)
                    January 31, 2024
           Supreme Court, New York County
        Docket Number: Index No. 656258/2023
                  Judge: Arlene P. Bluth
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.
                                                                                                                     INDEX NO. 656258/2023
  NYSCEF DOC. NO. 41                                                                                           RECEIVED NYSCEF: 01/31/2024

                                   SUPREME COURT OF THE STATE OF NEW YORK
                                             NEW YORK COUNTY
            PRESENT:             HON. ARLENE P. BLUTH                                            PART                              14
                                                                                      Justice
            ---------------------------------------------------------------------------------X   INDEX NO.          656258/2023
             EAST 54TH OPERATING LLC
                                                                                                 MOTION DATE             N/A
                                                         Plaintiff,
                                                                                                 MOTION SEQ. NO.         001
                                                 -v-
             BREVARD OWNERS, INC.,                                                                 DECISION + ORDER ON
                                                                                                         MOTION
                                                         Defendant.
            ---------------------------------------------------------------------------------X

            The following e-filed documents, listed by NYSCEF document number (Motion 001) 1- 24, 25, 27, 28, 29,
            31, 32, 33, 34, 35, 36, 37, 38, 39, 40
            were read on this motion to/for                                           INJUNCTION/RESTRAINING ORDER                 .

                      Plaintiff’s motion for a Yellowstone injunction is granted.

            Background

                      This action relates to a pending commercial landlord tenant dispute concerning a parking

            garage. Both parties agree that the parking garage needs repairs; however, they disagree about

            nearly everything else related to the garage repairs including the severity of the garage’s

            condition, the best method to complete the repairs, which party is responsible for paying for the

            repairs and the impact of the repairs on the tenant’s (plaintiff) obligation to pay rent.

                      In this motion, plaintiff seeks injunctive relief related to the most recent default notice.

            This notice, dated December 7, 2023, provides that plaintiff failed to pay rent in November and

            December 2023 (NYSCEF Doc. No. 15). It also claims that plaintiff has not yet paid outstanding

            legal fees and real estate taxes (id.).

                      Plaintiff explains that as part of the ongoing repair work at the garage, it has been forced

            to close the first floor of the parking garage and, therefore, has lost the use of 135 parking
             656258/2023 EAST 54TH OPERATING LLC vs. BREVARD OWNERS, INC.                                            Page 1 of 5
             Motion No. 001

                                                                           1 of 5
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                                                                                                     INDEX NO. 656258/2023
  NYSCEF DOC. NO. 41                                                                           RECEIVED NYSCEF: 01/31/2024

            spaces. It claims that under the lease, the defendant (the landlord) is required to compensate

            plaintiff for damages for each day it is deprived of the use of a parking space. It adds that

            defendant seeks the payment of legal fees for the related case despite the fact that defendant has

            not yet prevailed in that case.

                   Plaintiff attaches the affidavit of its member, Mr. Spindler, who insists that the plaintiff

            allowed the defendant’s contractors to install bracing and shoring the lower level of the garage as

            part of the anticipated repair work (NYSCEF Doc. No. 4, ¶ 6). Mr. Spindler observes that despite

            the fact that the shoring work was inserted in October 2023, the repairs have not been started (id.

            ¶ 7). He insists that defendant wants the parking garage to completely vacate the premises first

            before any more work is done.

                   Plaintiff calculates that if the provision in the lease whereby it is to be compensated for

            the loss of parking spaces were invoked, defendant would actually owe it money given the length

            of time and the number of spaces.

                   In opposition, defendant contends that plaintiff has repeatedly breached the terms of the

            lease. It insists it has served numerous notices of default to protect its rights under the lease.

            Defendant complains that plaintiff has simply refused to pay rent since October 2023. It contends

            that plaintiff is now running its business without having to pay rent.

                   Defendant insists that it has not threatened to terminate the lease and the default notice is

            merely a five-day written request for payment in which defendant reserves its right to pursue

            legal remedies. In fact, defendant argues that it is still barred from threatening to terminate the

            lease under the Yellowstone injunction granted in the related action commenced by plaintiff and

            so defendant drafted the instant notice to ensure it did not violate that order.

             656258/2023 EAST 54TH OPERATING LLC vs. BREVARD OWNERS, INC.                            Page 2 of 5
             Motion No. 001

                                                           2 of 5
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                                                                                                       INDEX NO. 656258/2023
  NYSCEF DOC. NO. 41                                                                           RECEIVED NYSCEF: 01/31/2024

            Discussion

                      In order to obtain a Yellowstone injunction, “The tenant need only demonstrate that (1) it

            holds a lease; (2) it received a notice of default, notice to cure, or threat to terminate the lease;

            (3) it requested injunctive relief prior to the termination of the lease or expiration of the cure

            period; and (4) it is prepared to cure the alleged default by any means short of vacating the

            premises” (Elite Wine & Spirit LLC v Michelangelo Preserv. LLC, 213 AD3d 143, 148 [1st Dept

            2023]).

                      The parties’ positions in the instant motion practice confer a baffling scenario. Defendant

            argues that it has not threatened to terminate the lease despite the fact that the 5-day notice warns

            that if the amounts are not paid, then, defendant “continues to reserve its right to seek legal

            action to exercise any of its rights, including, but not limited to, terminating the Lease and

            commencing summary proceedings to recover possession of the leased premises” (NYSCEF

            Doc. No. 15). Obviously, that warning implicates a possible Yellowstone injunction.

                      And plaintiff met its burden for such injunctive relief. The fact is that there is a

            legitimate and ongoing dispute about the repair of the parking garage and the effect on plaintiff

            and defendant. Defendant does not dispute the fact that the lower half of the parking garage and

            135 spaces are unavailable to plaintiff. Moreover, plaintiff pointed to other items that it might

            not have to pay, including the legal fees incurred by defendant in the ongoing related action. At

            least until the related matter is resolved, there is no reason to find that plaintiff is in default for

            not paying ongoing legal fees incurred by defendant in that related litigation. To be clear, an

            attorneys’ fees provision is not a basis to run up the amounts which may be eventually owed by a

            party while that litigation is ongoing. That is, an attorneys’ fee provision is not a blank check.

             656258/2023 EAST 54TH OPERATING LLC vs. BREVARD OWNERS, INC.                              Page 3 of 5
             Motion No. 001

                                                             3 of 5
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                                                                                                      INDEX NO. 656258/2023
  NYSCEF DOC. NO. 41                                                                          RECEIVED NYSCEF: 01/31/2024

                    And, it is axiomatic that the purpose of a Yellowstone injunction is to “maintain[] the

            status quo so that a commercial tenant, when confronted by a threat of termination of its lease,

            may protect its investment in the leasehold by obtaining a stay tolling the cure period so that

            upon an adverse determination on the merits the tenant may cure the default and avoid a

            forfeiture” (Graubard Mollen Horowitz Pomeranz & Shapiro v 600 Third Ave. Assoc., 93 NY2d

            508, 514, 693 NYS2d 91 [1999]).

                    Here, the Appellate Division, First Department has ordered that this Court hold a hearing

            “to determine how to best reconcile plaintiff's lease obligation to provide access to the garage to

            defendant with plaintiff's right to remain in the premises and conduct its business” and to “ensure

            that the timing, duration, and conditions of vacatur are appropriate” (E. 54th Operating LLC v

            Brevard Owners, Inc., 2024 NY Slip Op 00023 [1st Dept 2024]). Under these circumstances,

            before the hearing has been held (it is scheduled to begin in March 2024), the Court finds that

            maintaining the status quo is served by granting the instant relief. That way, there is no

            confusion that the leasehold cannot be terminated until further order of this Court.

                    The remaining issue in this motion is the question of an undertaking. Plaintiff insists it

            should not have to pay anything while defendant demands that plaintiff pay everything it says is

            owed.

                    The Court’s primary focus in fashioning an undertaking amount is to preserve the status

            quo without granting a windfall to either side. On the one hand, defendant is correct to point out

            that plaintiff should not be permitted to run a garage without having to pay any rent. And

            similarly, it would be manifestly unfair at this stage of the litigation to insist that plaintiff pay for

            defendant’s legal fees in a pending matter as well as the full rent where there is no dispute that it

            does not have access to 135 spaces.

             656258/2023 EAST 54TH OPERATING LLC vs. BREVARD OWNERS, INC.                              Page 4 of 5
             Motion No. 001

                                                            4 of 5
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                                                                                                      INDEX NO. 656258/2023
  NYSCEF DOC. NO. 41                                                                            RECEIVED NYSCEF: 01/31/2024

                    “An undertaking should be set in an amount rationally related to the quantum of damages

            which [landlord] would sustain in the event that [tenant] is later determined not to have been

            entitled to the injunction” (id. [internal quotations and citations omitted]). The Court agrees with

            plaintiff that no undertaking is appropriate here. Plaintiff has argued, and defendant does not

            dispute, the fact that it has lost access to many parking spaces in its garage for months and that

            the repair work has not yet begun. Therefore, the status quo (at least on these papers) is that

            plaintiff has access to only a few spaces while defendant is waiting until there is some resolution

            on the manner and scope of repairs (the very issues to be explored at the hearing). And there is a

            provision in the lease (section 6.01[e]) that ostensibly provides plaintiff with compensation for

            lost spaces (although the Court makes no affirmative finding of its effectiveness here).

                    The best course of action, in this Court’s view, is simply to go forward with the hearing

            and let the results of that hearing guide the financial issues raised here.

                    Accordingly, it is hereby

                    ORDERED that plaintiff’s motion for a Yellowstone injunction is granted and the cure

            period in the December 7, 2023 notice is hereby tolled and defendant is enjoined from taking any

            action to terminate or cancel the commercial lease between plaintiff and defendant or starting a

            proceeding to evict plaintiff until further order of this Court.

                    1/31/2024                                                              $SIG$
                      DATE                                                         ARLENE P. BLUTH, J.S.C.
             CHECK ONE:                   CASE DISPOSED                X    NON-FINAL DISPOSITION

                                      X   GRANTED             DENIED        GRANTED IN PART             OTHER

             APPLICATION:                 SETTLE ORDER                      SUBMIT ORDER

             CHECK IF APPROPRIATE:        INCLUDES TRANSFER/REASSIGN        FIDUCIARY APPOINTMENT       REFERENCE

             656258/2023 EAST 54TH OPERATING LLC vs. BREVARD OWNERS, INC.                             Page 5 of 5
             Motion No. 001

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