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 [* 1] 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 [* 2] 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 [* 3] 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
Free access — add to your briefcase to read the full text and ask questions with AI
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 [* 1] 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 [* 2] 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 [* 3] 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 [* 4] 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
5 of 5 [* 5]