FILED: NEW YORK COUNTY CLERK 10/02/ :22 PM INDEX NO /2016 NYSCEF DOC. NO. 71 RECEIVED NYSCEF: 10/02/2017 Motion Sequence No.

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1 FILED NEW YORK COUNTY CLERK 10/02/ PM INDEX NO /2016 NYSCEF DOC. NO. 71 RECEIVED NYSCEF 10/02/2017 Motion Sequence No. 001 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK x 862 SECOND AVENUE LLC, Index No /16 Plaintiff, - against - 2 DAG HAMMARSKJOLD PLAZA CONDOMINIUM, ALI BABA S TERRACE INC., and JOHN AND JANE DOE UNDERTENANTS 1-10, Defendants x MEMORANDUM OF LAW IN SUPPORT OF PLAINTIFF S MOTION FOR USE AND OCCUPANCY PENDENTE LITE PAUL HASTINGS LLP 200 Park Avenue New York, New York (212) and- CORNICELLO, TENDLER & BAUMEL-CORNICELLO, LLP Two Wall Street, 20th Floor New York, New York (212) Attorneys for Plaintiff 1 of 9

2 FILED NEW YORK COUNTY CLERK 10/02/ PM INDEX NO /2016 NYSCEF DOC. NO. 71 RECEIVED NYSCEF 10/02/2017 PRELIMINARY STATEMENT 1 This memorandum of law is respectfully submitted in support of Plaintiff s motion for an order (i) awarding Plaintiff a judgment against Tenant for interim use and occupancy of the Subject Premises in arrears in the amount of $291, (the Past-Due Use and Occupancy Amount ) for the period from August 18, 2016 through September 30, 2017; (ii) directing Tenant to pay use and occupancy pendente lite for the Subject Premises from October 1, 2017 through final determination of this action in the amount of $43, per month less any amounts received by Plaintiff from Subtenant for that month; and (iii) directing Tenant to maintain the insurance covering the Demised Premises required by the Lease, or requiring that Tenant pay an appropriate amount as additional interim use and occupancy from October 1, 2017 through final determination of this action to cover the cost for that insurance. Plaintiff commenced this proceeding on October 11, 2016 (the Commencement Date ) after Tenant failed, among other things, to pay Rent and Additional Net Rent for the period from March 2016 through August 2016 due under the Lease totaling almost $225,000. Moran Aff. Exhibit A. (This amount did not even include approximately $65,000 in past-due real estate taxes owed to New York City that Tenant was obligated to pay and failed to, forcing Plaintiff to pay those taxes to prevent tax liens from being filed against the Demised Premises plus additional taxes owed for the period through October 2016.) Plaintiff gave Tenant an opportunity to cure the noticed default and, when Tenant failed to do so, Plaintiff terminated the Lease effective August 17, 2016 (the Termination Date ) pursuant to its terms. Tenant has nevertheless held over in the Subject Premises for over a year without paying a single penny to 1 Capitalized terms used herein shall have the same meanings ascribed to them in the accompanying Affidavit of Timothy Mattison in Support of Plaintiff s Motion for an Award of Use and Occupancy Pendente Lite, sworn to on October 2, 2017 (the Mattison Aff. ). The pleadings filed in this action are attached to the accompanying Affirmation of Brian Moran in Support of Plaintiff s Motion for an Award of Use and Occupancy Pendente Lite dated October 2, 2017 (the Moran Aff. ) 2 2 of 9

3 FILED NEW YORK COUNTY CLERK 10/02/ PM INDEX NO /2016 NYSCEF DOC. NO. 71 RECEIVED NYSCEF 10/02/2017 Plaintiff and without paying the real estate taxes due on the Demised Premises. As of September 30, 2017, Tenant owes Plaintiff over $525,000 for past-due Rent, Additional Net Rent and real estate taxes alone for the period from March 2016 through September 30, When this action was commenced, Subtenant learned that Tenant had been pocketing the monies it had been paying to Tenant under the Sublease for the seven months before the Commencement Date instead of using any of that money to make even partial payment of the amounts owed to Plaintiff under the Lease. In accordance with the Lease, Subtenant then began tendering payments of the rent due under the Sublease directly to Plaintiff, who accepted those amounts as partial payments of use and occupancy without prejudice to Plaintiff s right to collect the full amount due to it from Tenant and without reinstating the Lease. However, there is a significant shortfall between the amount that Tenant is required to pay Plaintiff under the Lease and the amount Subtenant is now tendering directly to Plaintiff, and the amount that Tenant owes Plaintiff will continue to increase with each month that passes and Defendants remain in possession of the Subject Premises. Given that the Preliminary Conference Order issued in the case contemplates that Tenant could potentially remain in possession of the Subject Premises through the end of 2018, Tenant should be required to pay Plaintiff, as use and occupancy pendente lite, the full amount that Plaintiff would be entitled to under the Lease for monthly rent as a condition of remaining in possession of the Subject Premises. Tenant should be required to pay the Past-Due Use and Occupancy Amount immediately, and should also be required to pay $43, per month from October 1, 2017 forward for each month that Plaintiff remains in possession of the Subject Premises (less any actual amounts received by Plaintiff from Subtenant for that month) on or before the fifth of each month through the final determination of this action. Tenant also should 3 3 of 9

4 FILED NEW YORK COUNTY CLERK 10/02/ PM INDEX NO /2016 NYSCEF DOC. NO. 71 RECEIVED NYSCEF 10/02/2017 be required to maintain the requisite insurance on the Demised Premises in full force and effect for so long as Tenant and Subtenant remain in possession. STATEMENT OF FACTS The Court is respectfully referred to the Mattison Affidavit and the exhibits thereto for a full recitation of the relevant background facts. ARGUMENT Tenant Must Pay Past-Due Use And Occupancy And Use And Occupancy Going Forward Pendente Lite It is well-settled under New York law that a landlord is entitled to an interim award of use and occupancy pendente lite pending the determination of an action where, as here, the tenant remains in possession of the subject premises. MMB Assocs. v. Dayan, 169 A.D.2d 422, 422, 564 N.Y.S.2d 146, 147 (1st Dep t 1991) (reversing lower court s decision denying landlord use and occupancy pursuant to Real Property Law 220); Marbru Assocs. v. White, 114 A.D.3d 554, 555, 981 N.Y.S.2d 48, 49 (1st Dep t 2014) (holding landlord was entitled to an award of use and occupancy arrears and monthly use and occupancy going forward pending the determination of the action); East 4th St.Garage, Inc. v. Estate of Berkowitz, 265 A.D.2d 249, 249, 697 N.Y.S.2d 266, 267 (1st Dep t 1999) (affirming lower court s decision awarding landlord retroactive use and occupancy pending final determination of action). See also D. Camilleri, LLC v. Burgess, No /10, 2011 N.Y. Misc. LEXIS 3023 (Sup. Ct. N.Y. Cty. June 17, 2011) (awarding landlord pendente lite use and occupancy); C&N Camera & Elecs., Inc. v. Farmore Realty, Inc., 178 A.D.2d 310, 311, 577 N.Y.S.2d 613, 615 (1st Dep t 1991) ( a prevailing landlord is entitled to use and occupancy for the period of the unauthorized holdover ). 4 4 of 9

5 FILED NEW YORK COUNTY CLERK 10/02/ PM INDEX NO /2016 NYSCEF DOC. NO. 71 RECEIVED NYSCEF 10/02/2017 The general right to seek use and occupancy is codified in Section 220 of the Real Property Law, which states The landlord may recover a reasonable compensation for the use and occupation of real property, by any person, under an agreement, not made by deed; and a parol lease or other agreement may be used as evidence of the amount to which he is entitled. The rationale for such an award is clear. A tenant is not entitled to stay in possession of a landlord s property without paying for the fair use for that property The award of use and occupancy during the pendency of an action or proceeding accommodates the competing interests of the parties in affording necessary and fair protection to both and preserves the status quo until a final judgment is rendered.... It is manifestly unfair that [the tenant] should be permitted to remain in possession of the subject premises without paying for their use. MMB Assocs, 169 A.D.2d at 422, 564 N.Y.S.2d at 147 (internal quotations and citations omitted; emphasis added). Indeed, the grant of interim use and occupancy ensures that the landlord will not suffer prejudice, as the tenant would have been required to pay the landlord the same rent had the proceeding not been commenced. Here, there is no dispute that Tenant has not surrendered possession of the Subject Premises, nor is there any dispute that Tenant has not paid Plaintiff a single penny since (long before) the Termination Date and Plaintiffs subsequent commencement of this action. While Tenant continues to enjoy all of the benefits of the Subject Premises, it should be compelled to pay Plaintiff for the use of those premises, retroactive to the day after the Termination Date or, at a minimum, retroactive to the Commencement Date. 5 5 of 9

6 FILED NEW YORK COUNTY CLERK 10/02/ PM INDEX NO /2016 NYSCEF DOC. NO. 71 RECEIVED NYSCEF 10/02/2017 The Court Should Award Use And Occupancy Pendente Lite In The Amount Of The Last Lease Rent To maintain the status quo while Tenant remains in the Subject Premises, Tenant should be directed to pay interim use and occupancy in the amount of the last Lease rent, including Rent, Additional Net Rent and real estate taxes, all of which are Tenant s monthly obligation under the Lease. Andejo Corp. v. South St. Seaport Ltd. P ship, 35 A.D.3d 174, 174, 825 N.Y.S.2d 50, 51 (1st Dep t 2006) (affirming lower court s decision fixing interim use and occupancy, without a hearing, in the amount of the full monthly rent due pursuant to the last lease between the parties, including charges disputed by tenant). It is fair, as a matter of law, to award interim use and occupancy, both retroactive to cover arrears and prospective pending the determination of the action, in the amount of monthly rent under the last lease. Marbru Assocs., 114 A.D.3d at 555, 981 N.Y.S.2d at 50 (affirming decision awarding use and occupancy in arrears and pendente lite in amount of monthly rent under lease); 64B Venture v. Am. Realty Co., 179 A.D.2d 374, 375, 579 N.Y.S.2d 1, 3 (1st Dep t 1992) (affirming award of interim use and occupancy in amount of the last lease rent plus 20%). As the First Department has held, directing a tenant to pay interim use and occupancy at the rate currently provided for as rent on each rental due date... accommodates the competing interests of the parties in affording necessary and fair protection to both parties, to the tenant through possession,... and, at the same time, to the landlord by requiring the tenant to pay the landlord for use and occupancy. Eli Haddad Corp. v. Cal Redmond Studio, 102 A.D.2d 730, 731, 476 N.Y.S.2d 864, 865 (1st Dep t 1984) (reversing lower court s decision denying landlord award of interim use and occupancy in full amount provided for under last lease). See also New York Physicians LLP v. Ironwood Realty Corp., 103 A.D.3d 410, , 959 N.Y.S.2d 176, 177 (1st Dep t 2013) (affirming decision directing tenant to pay rent in amount specified in lease, 6 6 of 9

7 FILED NEW YORK COUNTY CLERK 10/02/ PM INDEX NO /2016 NYSCEF DOC. NO. 71 RECEIVED NYSCEF 10/02/2017 plus escalation and real estate taxes to maintain status quo pending litigation while Yellowstone injunction preventing termination of tenancy remained in place); Kuo Po Trading Co. v. Tsung Tsin Ass n, 273 A.D.2d 111, 709 N.Y.S.2d 89 (1st Dep t 2000) (same); Parker 24 Commercial Assocs. v. Sakow, No /05, 2005 WL , at *8 (Civ. Ct. N.Y. Cty. Oct. 11, 2005), aff d, No /06, 2007 WL (1st Dep t Feb ) (granting final award of use and occupancy based on amount of the last rent due under expired lease). This is particularly appropriate where, as here, the lease obligates the tenant to pay as damages all rent and additional rent (including taxes, assessments and other charges) that would have been due each month, less amounts received by the landlord after re-letting, upon termination of the lease. See Mattison Aff., Exhibit 2 at Article Fourteenth (b)(2) and (d), pp Here, the Lease required that Tenant pay Rent, Additional Net Rent and real estate taxes for the Subject Premises totaling $42, per month from March to June 2016, $42, per month from July 2016 to June 2017, and $43, per month from July 2017 onward. Mattison Aff and Exhibits 1-5, 7-11, and From the Termination Date through September 30, 2017, after applying all amounts Plaintiff received from Subtenant for those months to Tenant s rental account, the Past-Due Use and Occupancy Amount totals $291,342.58, which Tenant should be directed to pay immediately. Mattison Aff and Exhibit From October 1, 2017 forward, Tenant should be directed to pay interim use and occupancy in the amount of $43, per month (i.e., the 2017 Monthly Payment ) on or before the fifth of 2 Were the Court to calculate past-due use and occupancy beginning on the Commencement Date (rather than the Termination Date) through September 30, 2017, taking into account all amounts received from Subtenant for those months, there would be past-due arrears of $215, Mattison Aff. 21 and Exhibit of 9

8 FILED NEW YORK COUNTY CLERK 10/02/ PM INDEX NO /2016 NYSCEF DOC. NO. 71 RECEIVED NYSCEF 10/02/2017 each month, less any amounts actually received by Plaintiff from Subtenant for that month. 3 Assuming that Subtenant continues to pay $26, per month directly to Plaintiff, Tenant should be required to pay the difference of $17, per month to cover the shortfall in use and occupancy through June 30, 2018 when the amount of real estate taxes due to New York City for the Demised Premises typically increases. Mattison Aff Tenant should also be required to maintain, in full force and effect, the Existing Insurance covering the Demised Premises for so long as Tenant and Subtenant remain in possession of those premises. Article Tenth of the Lease requires that Tenant, at its own expense, keep the demised premises insured against all loss and that Tenant provide Plaintiff with rental insurance, liability coverage, machinery coverage and other coverages appropriate and customary for the type of building at issue. Mattison Aff., Exhibit 2 at Article Tenth, pp In the event that Tenant fails to provide such coverage, the Lease provides that Plaintiff can do so and the expense is deemed to be additional rent and added to the amounts due under the Lease. Id. at Articles Tenth and Twelfth, pp and 29. Because the cost for insurance was intended to be included as rent, Tenant should either be directed to maintain the Existing Insurance or pay the cost for Landlord to procure the same insurance as additional monthly use and occupancy. Mattison Aff. 8, Exhibit 6. 3 Plaintiff can confirm to Tenant, on or before the 3rd of each month, whether Subtenant has paid any amount to Plaintiff directly so that Tenant can make any deduction in its 2017 Monthly Payment amount before the 5th of each month. 8 8 of 9

9 FILED NEW YORK COUNTY CLERK 10/02/ PM INDEX NO /2016 NYSCEF DOC. NO. 71 RECEIVED NYSCEF 10/02/ of 9