SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK -------------------------------------------------------------X LINIFRA, LLC, d/b/a/ BESPOKE KITCHEN, Index No. 651378/2017 Plaintiff, MEMORANDUM OF LAW IN SUPPORT OF YELLOWSTONE INJUNCTION - against - 615A HUDSON, LLC, Defendant. --------------------------------------------------------------X Plaintiff Linifra, LLC, DBA Bespoke Kitchen ( Bespoke or Plaintiff ) by and through its undersigned attorneys, The Landau Group, PC, respectfully submits this memorandum of law in support of its motion brought by Order to Show Cause for a Yellowstone injunction, preventing and enjoining its landlord, the Defendant 615A Hudson, LLC, from terminating Plaintiff s commercial tenancy based upon an invalid Five (5) Day Notice to Tenant dated February 27, 2017 (Exhibit One Notice of Default ). Statement of Facts Bespoke has been a tenant since November 4, 2014 at 615 ½ Hudson Street, New York New York, occupying the retail unit, located on the street, and cellar levels known as 615 ½ Hudson Street (the Premises ). (See Nicolas Bustamante Affidavit, 2 Bustamante Aff. ) Bespoke is a restaurant that sits in the heart of the West Village neighborhood, surrounded by some of the most expensive residential real property in the United States. It is a prime location for an up and coming restaurant in Manhattan. This valuable lease expires on October 31, 2024. (Exhibit Two Lease Agreement.) Bespoke has already spent upwards of $650,000.00 in repairs and capital improvements to the Premises. (Bustamante Aff. 5.) The premises building, and 1 1 of 15
Bespoke s unit in particular, has been beset by issues, requiring constant repairs, and rendering Bespoke s unit unusable for weeks at a time. The main cause of these disruptions was as a result of pipes bursting in the building, on 2 seperate occasions, flooding Bespoke s unit, and causing extensive damage to the restaurant s ceiling, walls, furniture, floors and electrical damage. (Bustamante Aff. 7.) The first flood occurred on August 15, 2016, in the residences above the restaurant, and rendered the unit completely unusable, and untenantable as defined in the parties agreement. (Bustamante Aff. 8; Ex. 2 Lease 21.8.) Following this flood, Bespoke was approached by Landlord s representative, who informed Bespoke that the damage caused by the pipe bursting was very little, and that Bespoke should close in the morning and open in the evening. (Bustamante Aff. 9) (Exhibit Three photographs of damage caused by flood.) Bespoke refused this offer, and instead submitted a claim to its insurance company - insurance came to the restaurant, and wrote an estimate for the damage, and started to work to repair the damage. (Bustamante Aff. 10.) However, a few days after Bespoke submitted its claim to insurance, Defendant appeared with City Marshalls, thereby locking Bespoke, its owners, and contractors, out of the Demised Premises. (Bustamante Aff. 11.) This action by Defendant prevented Bespoke from reconstructing its unit, and repairing the damage caused by the flood for close to a month. Bespoke was therefore forced to take out loans for $75,0000, which including interest, came to $102,000.00, just to get back into the unit to start repairing the damage caused by the flood. (Bustamante Aff. 13.) Notwithstanding the foregoing, Landlord demanded that Bespoke pay half of the rent for August (2016), all of September and all of October, in order for Bespoke to go back into the unit, 2 2 of 15
to do the necessary repairs (which were necessary because a pipe burst in Defendant s building). (Bustamante Aff. 12.) Further, when the pipes in the building burst, on August 15, 2016, Bespoke s unit was flooded, and there was extensive damage to the ceilings, floors, and walls of the unit, which rendered the unit Untenantable. (See Bustamante Aff. 14; Ex. 2: Lease 21.8: The term "Untenantable" as used in this Article shall mean that Tenant is unable to use more than twentyfive (25%) percent of the Demised Premises for the conduct of its business in the normal course. ) Therefore, as a result of being locked out by Defendant, and the extensive damage caused by the flood, which had to be repaired, Bespoke was unable to use its unit for months, and was forced to shut down its restaurant, so the unit could be repaired, and operational. During this period of time, Bespoke s rent was required to be abated under the parties lease agreement, as provided in Art. 21, Sec. 21.2: If the Building or the Demised Premises shall be partially damaged or partially destroyed by fire or other cause, the rents payable hereunder shall be abated to the extent that the Demised Premises shall have been rendered Untenantable (hereinafter defined) and for the period from the date of such damage or destruction to the date the damage shall be repaired or restored. ) Apparently, Bespoke s rent was not abated during this time period. On or about January 26, 2017, Mr. Bustamante, on behalf of Bespoke, had a meeting with Landlord s agent, Joseph Lopez. At this meeting, Bespoke paid Landlord $20,000.00; and Mr. Lopez advised Mr. Bustamante that he would work on getting Bespoke a reduction in rent. (Bustamante Aff. 16.) Further, Bespoke, and its insurance company have spent $305,000.00 during the past months, repairing and reconstructing the unit to make it tenantable so that Bespoke may operate its restaurant. (Bustamante Aff. 20..) However, on February 27, 2017, 3 3 of 15
Defendant sent Bespoke a 5-day Notice demanding $61,025.58 in rent for the months of November 2016 to February 2017. (Exhibit One; Bustamante Aff. 22.) Immediately, following this notice, bespoke wired an additional $18,035.00 to Defendant. (Bustamante Aff. 27.) Further, Landlord holds another $102, 000 of Plaintiff s as a security deposit. (Bustamante Aff. 19.) Moreover, counsel for Bespoke has engaged in conversations with Landlord s Agent, Mr. Lopez, emails have been exchanged, relative to the instant Notice. (See Landau Affirmation.) Bespoke is deeply invested in the Premises, and its restaurant. This location is the only location for the companies restaurant, and it is critical to their survival, and the livelihood of its employees and owners. To that end, Bespoke has spent upwards of $650,000.00 in capital improvements and marketing, and has 7 years remaining on its Lease Term. (Bustamante Aff. 27-28.) Further, Defendant was aware of the foregoing, and the substantial sums that have been invested in this unit, before the pipe burst, and since the pipe burst, and destroyed the unit, which was the fault of Defendant, not Plaintiff. Now that Plaintiff has finished with repairs to the unit, and is ready to operate its restaurant, Defendant has decided to try and reap the benefits free and clear by unjustly terminating Plaintiff s lease; and by deliberately choosing to ignore that their rent was to be abated while the unit was untenantable following the damage caused by the flood; and during the time Landlord locked Bespoke out of its unit, and demanded over $75,000.00 in unjust rental payments, just to let us back into the unit to complete repairs to the unit. (Bustamante Aff. 25.) Further, Landlord failed to provide any reasonable opportunity for Bespoke to cure the alleged rent deficiencies, and instead gave them 5-days to cure the alleged rent deficiencies or be 4 4 of 15
terminated from its lease. Therefore, the 5 Day Notice was improper, and Defendant s threats of termination are defective, in violation of New York law, and the parties lease agreement. Accordingly, Plaintiff is entitled to a Yellowstone injunction to maintain the status quo while the parties litigate the merits of the Notice of Default. Argument I. PLAINTIFF IS ENTITLED TO A YELLOWSTONE INJUNCTION A. Plaintiff Easily Meets the Legal Requirements for a Yellowstone Injunction The purpose of a Yellowstone injunction is to maintain the status quo, so the 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, whereby in the event of an adverse determination on the merits, the tenant may cure the default and avoid a forfeiture. (WPA/Partners. LLC v Port Imperial Ferry Corp., 307 AD2d 234, 236 [1st Dept 2003].) To succeed on an application for a Yellowstone injunction, a tenant must demonstrate that: (1) it holds a commercial lease; (2) it has received from the landlord a notice of default 1 ; (3) the application was made prior to the termination of the lease; and (4) it has the desire and ability to cure the alleged default by any means short of vacating the premises. (ERS Enterprises, Inc. v Empire Holdings, LLC, 286 AD2d 206 [1st Dept 2001].) 1 A Yellowstone injunction may be based on an alleged monetary default where the Landlord threatens to immediately terminate the lease pursuant to a conditional limitation therein. (Lexington Ave. & 42nd St. Corp. v 380 Lexchamp Operating, Inc., 205 AD2d 421, 423-24 [1st Dept 1994]; see also 3636 Greystone Owners, Inc. v Greystone Bldg., 4 AD3d 122, 1223 [1st Dept 2004] [ Yellowstone relief is proper even when nonpayment of rent is the only issue. ]; Unique Marble & Granite Org. Corp., v Hamil Stratten Props., LLC, 13 Misc 3d 1239[A] [Sup Ct, NY County 2006] [ the court may grant a Yellowstone injunction where the default in the lease is based on the nonpayment of rent. ].) 5 5 of 15
Because the law disfavors forfeiture, a demonstration of success on the merits is not required for a Yellowstone injunction. (WPA/Partners, 307 AD2d at 237.) Thus, a commercial tenant need not prove the more stringent prerequisites to obtaining injunctive relief to prevail on an application for a Yellowstone injunction. (Garland v Titan West Assocs., 147 AD2d 304 [1st Dept 1989].) Preliminarily, here, there can be no serious dispute that the first two criteria are present here: Plaintiff (i) holds a commercial Lease (Bustamante Aff., 1-3 and Exhibit Two, lease agreement), and (ii) received a Notice of Default from Defendant threatening cancellation of Plaintiff s tenancy under the Lease. (Bustamante Aff., 17 and Exhibit One.) B. Plaintiff Made this Yellowstone Application before Termination of the Lease. Contrary to Defendant s spurious claims in its Notice of Default, Plaintiff makes this application for Yellowstone relief well before any claim of early termination that could be supported, even arguably, by the language of the Lease. First, failure to pay Rent is not an Event of Default that triggers a conditional limitation or right of Landlord to terminate the Lease. Second, even assuming arguendo that it was, Landlord must provide Tenant, at minimum, 30 days to cure any alleged default before the Lease can be terminated according to its terms. Third, Defendant s Notice of Default is, in any event, fatally defective because it fails to put Plaintiff on notice of the provisions of the Lease of which Plaintiff is supposedly in default. Where, as here, a notice of termination is served before expiration of the operable cure period, New York courts deem the notice ineffective, as the existence of a period in which a violation may be cured does not depend on the contents of the notice of default, but upon the terms of the lease. (Empire State Bldg. Assocs. v Trump Empire State Ptrs., 245 AD2d 225, 228 6 6 of 15
[1 st Dept 1997].) Specifically, where a notice of termination is premature under the terms of a lease, the notice is invalid, and thus the service of the notice will not bar a tenant from obtaining Yellowstone relief. (Vill. Ctr. for Care v Sligo Realty & Serv. Corp., 95 AD3d 219, 222 [1st Dept 2012], citing Empire State v Trump Empire, 245 AD2d at 229.) Nowhere does Article 24 of the Lease so much as mention that Landlord shall have a right to terminate unless Tenant cures an allegedly defective condition on five (5) days notice, as Defendant falsely sets forth in the Notice of Default (5 Day Notice). For instance, Section 24.1(F) of the Lease provides that Subject to this provision, Landlord may give to Tenant notice of intention to terminate this Lease and to end the Term and the estate hereby granted at the expiration of fifteen (15) days from the date of the giving of such notice, and, in the event such notice is given, this Lease and the Term and estate hereby granted (whether or not the Term shall have commenced) shall terminate upon the expiration of said fifteen ( 15) days with the same effect as if that day were the Expiration Date Conversely, 24.1(D) states in pertinent part as follows: [O]r if such default is of such a nature that it can be remedied, but cannot be completely remedied within said period of thirty (30) days, if Tenant shall not (i) promptly upon the giving by Landlord of such notice, advise Landlord of Tenant's intention to institute all steps necessary to remedy such situation, (ii) promptly institute and thereafter diligently prosecute to completion all steps necessary to remedy the same, and (iii) complete such remedy within a reasonable time after the date of the giving of said notice by Landlord and in any event prior to such time as would either (x) subject Landlord, Landlord's agents, superior lessor or superior mortgagee to prosecution for a crime or (y) cause a default under the superior lease or the superior mortgage; Here, Defendant s Notice of Default merely proclaims by fiat that Landlord has the right to cancel the Lease unless Tenant pays tens of thousands of dollars in past rent upon five days notice a cure period so short so as to appear insufficient on its face, and which is, in any event, ineffectual as it is entirely of Defendant s own invention and nowhere found in the Lease. Further, as demonstrated above, the provisions of the lease (within Art. 24.1) are vague and ambiguous. See (Runes v Douglas Elliman-Gibbons & Ives), 83 A.D.2d 805 (1st Dept. 1981). 7 7 of 15
( In these circumstances the temporary injunction should have issued to preserve the status quo... ) Further, Bespoke wired Landlord $20,000.00 on January 26, 2017; and an additional $18, 035.00 immediately upon receiving the Notice. (Bustamante Aff. 16, 18.) See (Village Ctr. for Care v Sligo Realty & Serv. Corp)., 95 A.D.3d 219 (1st Dept. 2012) ( where plaintiff's lease defined the cure period as 10 days, but also contained an unspecified longer period of cure ) Further, Landlord holds an additional $102,000 of Plaintiff as a security deposit, which Landlord is required to use. (Bustamante Aff. 19; Lease 39.1.) c. The Notice of Default Fails to Identify Any Provision of the Lease upon which the Alleged Default Is Predicated. Defendant s Notice of Default failed to identify a single provision of the Lease giving rise to Plaintiff s supposed default a fatal defect under New York law. Failure to identify the provisions of the Lease giving rise to the default claimed in the Notice of Default is defective for failing to demonstrate that [the demanded] remedial action was required by the lease. (31 West 47th Street, LLC v Nelly s Fine Jewelry, Inc., 8 Misc. 3d 1014[A], *5, 801 NYS2d 782 [City Civ.Ct. NY County 2005], citing Chinatown Apartments v. Chu Cho Lam, 51 N.Y.2d 786, 787 (1980), infra. Indeed, the very purpose of a Notice to Cure is to specifically apprise the tenant of claimed defaults in its obligations under the lease and of the forfeiture and termination of the lease if the claimed default is not cured within a set period of time. (Filmtrucks, Inc. v Express Indus. & Terminal Corp., 127 AD2d 509, 510 [1st Dept 1987] [emphasis supplied].) In finding that it was compelled to hold that [landlord s] notice was ineffective and could not serve as the predicate for an automatic termination of the tenancy, the Court of Appeals held: The deficiency in [landlord s] notice arises from its failure to cite any specific prohibition in the lease which had been violated. Since respondent could not be expected to 8 8 of 15
take remedial action unless his landlord first demonstrated that such remedial action was required by the lease, the omission in the notice must be considered a fatal defect. (Chinatown Apartments, Inc. v Chu Cho Lam, 51 NY2d 786, 788 [1980].) Here, Defendant s Notice of Default wholly fails to identify a single provision or article of the Lease under which it was claiming a default. (Bustamante Aff., 21; Exhibit One.) The Notice of Default simply demands that Plaintiff pay its indebted[ness] to Landlord of $61, 025.58 by on or before March 10, 2017, or surrender up possession of said premises to Landlord. (Bustamante Aff. 21; Exhibit One.) This is insufficient to apprise Plaintiff of the Lease provisions of which it is allegedly in violation. Accordingly, the Notice of Default here is fatally deficient for failing to identify any provision of the Lease supposedly violated. C. Plaintiff Is Ready, Willing, and Able to Cure Any Default under the Lease Finally, although the Notice of Default is substantively baseless as set forth above, nevertheless, should the court determine that a default occurred, Plaintiff is ready, willing and able to take necessary steps to pay the current amount demanded, and is willing to consent to the remaining amounts indicated in the Notice, pending ultimate adjudication of this dispute.. (Bustamante Aff. 27.) Further, Bespoke paid Landlord $20,000.00 on January 26, 2017, and wired another $18, 035.00 immediately following receiving the Notice of Default. (Bustamante Aff. 27, 30.) Further, Landlord holds another $102,000.00 of Bespoke as a security deposit.. (Bustamante Aff. 19.) A Yellowstone injunction is appropriate and routinely granted under circumstances like these. In granting such relief, the First Department has explained: Where, as here, a tenant denies any default and demonstrates that the landlord has given notice of default, and that a period of time remains within which to cure the tenant is entitled to a grant of preliminary relief. Since the tenant risks forfeiture of its leasehold, and the law does not favor [such] forfeiture the tenant need not, as a prerequisite to the granting of a Yellowstone injunction, demonstrate a likelihood of success on the merits. Nor is a tenant required to prove its ability to cure prior to obtaining a Yellowstone injunction. The proper inquiry is whether a basis exists for believing that the tenant desires to cure and has the ability to do so through any means short of vacating the premises. (Herzfeld & Stern v Ironwood Realty Corp., 102 AD2d 737, 738 9 9 of 15
[1st Dept 1984]. See also, e.g., 225 E. 36th St. Garage Corp. v 221 E. 36th Owners Corp., 211 AD2d 420, 422 [1st Dept 1995] [plaintiffs contention that they had made efforts and cured some of the purported breaches and that they were continuing to take various steps to remedy other alleged defaults was sufficient].) Here, tenant denies any default, and has already made efforts to cure some of the purported breaches as demonstrated above. Moreover, Plaintiff just spent nearly $305,000.00 repairing the damages caused by the flooding; and has invested and borrowed upwards of 650,000.00 in capital improvements and marketing. (Bustamante Aff. 27.) Accordingly, Plaintiff has more than adequately demonstrated that it has met all four criteria required for the issuance of a Yellowstone injunction. II. PLAINTIFF IS LIKELY TO SUCCEED ON THE MERITS While not a necessary showing on a motion for Yellowstone relief, Plaintiff is also likely to succeed on the merits in this case. A. Plaintiff s Unit was rendered Untentable as a result of the flood, and therefore, the rent was required to be abated under Art. 21, Sec. 21.1 and Sec 21.2 of the parties lease agreement. Here, as set forth more fully above, Bespoke s unit sustained extensive damage to the ceilings, floors, and walls of the unit, as a result of the pipes bursting, and the subsequent flooding. (Lease 21.1-21.2.) Said damages rendered the unit completely Untenantable during repairs and restoring the Demised Premises, as defined in the parties lease agreement. (Bustamante Aff. 14; Lease 21.8: The term "Untenantable" as used in this Article shall mean that Tenant is unable to use more than twenty-five (25%) percent of the Demised Premises for the conduct of its business in the normal course. ) Plaintiff was not able to use any portion of the premises during repairs and restoring the Demised Premises. (Bustamante Aff. 14.) 10 10 of 15
Accordingly, the rents paid, were in reality, supposed to be abated for the period from the date of such damage or destruction to the date the damage shall be repaired or restored. (Lease 21.2.) Plaintiff s unit was rendered completely untentenantable, following the flood on August 15, 2016, for a period of nearly 2 months. During this period of time, Bespoke s rent was required to be abated pursuant to Art. 21, Sec. 21.2 of the parties lease agreement. However, Bespoke s rent was not abated during this period. The failure of Defendant to abate Bespoke s rental payments during this period, therefore, violates of 21.2, of the parties lease agreement. B. Defendant s willful acts of locking Plaintiff out of the Demised Premises ; and demanding that Plaintiff pay 2 ½ Months in unjustified rent to perform repairs caused Plaintiff substantial damages, and was a material violation of 20.1, and 21.1. Following the incident, Bespoke was approached by Defendant, in regards to the damage caused by the pipe burst. Defendant informed Bespoke that the damage caused by the pipe bursting was very little, and that Bespoke should close in the morning and open in the evening. Bespoke refused this offer. Landlord then offered to only pay for the damage done to the ceiling, which Bespoke also refused. Without any other choice, Bespoke submitted its claim to insurance, insurance thereafter came to the restaurant, and wrote an estimate for the damage, and started to work to repair the damage. (Bustamante Aff. 9-10.) A few days after Bespoke submitted its claim to insurance, however, Defendant appeared with City Marshalls, thereby locking Bespoke, its owners, and contractors, out of the Demised Premises. (Bustamante Aff. 11.) First, Defendant was required to, repair the damage and restore and rebuild the Building and/or the Demised Premises, at its expense, with reasonable dispatch after notice to it of the damage or destruction. (Lease 21.1.) Defendant violated this section by refusing to repair the damage and restoring Plaintiff s unit. Further, Defendant s actions of locking Plaintiff out of the unit, rendered the unit completely Untenantable on account of fire or other cause. Other 11 11 of 15
cause is not defined in the parties lease agreement, however, untenantable is defined as the Tenant being unable to use more than twenty five (25%) percent of the Demised Premises. (Lease 21.8.) Plaintiff was unable to use any portion of the Demised Premises because it was locked out of it by Defendant. Therefore, the rents payable were required to be abated to the extent that the Demised Premises shall have been rendered Untenantable. (See Lease 21.1 and 21.2.) Defendant failed to abate the rents payable during this period, which violated the terms of the parties lease agreement. Article 19, Section 20.1, of the parties lease agreement, provides that: Neither Landlord, nor any agent or employee of Landlord, shall be liable to Tenant for any injury or damage to Tenant or to any other person or for any damage to, or loss (by theft or otherwise) of, any property of Tenant or of any other person, irrespective of the cause of such injury, damage or loss, unless caused by or due to the willful acts or gross negligence of Landlord, its agents or employees occurring within the scope of their respective employments without negligence on the part of Tenant, it being understood that no property, other than such as might normally be brought upon or kept in the Demised Premises as an incident to the reasonable use of the Demised Premises for the purpose herein permitted, will be brought upon or be kept in the Demised Premises. (Art. 19, Section 20.1, p. 27.) The action by Defendant of locking Bespoke out of its unit, and preventing it from repairing its unit from, the damage caused by the flood, for close to a month, was a willful act that caused substantial damage to Bespoke. Further, Defendant demanded that Bespoke pay half of the rent for August (2016), all of September and all of October, in order for Bespoke to go back into the unit, to do the necessary repairs (which were necessary because a pipe burst in Defendant s building). (Bustamante Aff. 13-14). This also constitutes a willful act by Defendant that caused substantial financial damage to Bespoke, as Bespoke was forced to take out loans for $75,0000, which including interest amounted to $102,000, just to get back into the unit to start repairing the damage caused by the flood. (Bustamante Aff. 13.) Therefore, Defendant s willful and deliberate acts prevented Bespoke from repairing the damage caused by the flood, and 12 12 of 15
forced it to expend substantial sums of money on completely unjustified rental payments, just to get back into the unit to repair the extensive damage caused by the flood. Accordingly, Defendant s willful acts were plainly in violation of Article 19, Section 20.1, of the parties lease agreement. Fundamental tenets of contract law require that the provisions of the Lease, as with any contract, be construed as a whole to determine the purpose and intent of the parties. (See, e.g., W.W.W. Assocs., Inc. v Giancontieri, 77 NY2d 157, 162 [1990].) Here, the Lease provisions above and the parties course of conduct support that the parties meant what the Lease expressly requires: that rent was to be abated when Plaintiff s unit was rendered Untenantable. Further, the Lease is read as a whole, (Mount Sinai Hosp. v 1998 Alexander Karten Annuity Trust, 110 AD3d 288, 297-98 [1st Dept 2013]; [citing Oppenheimer & Co. v Oppenhim, Appel, Dixon & Co., 86 NY2d 685, 690-91 (1995), and in accordance with longstanding equitable precepts and the covenant of good faith implied in every New York contract. (Mount Sinai Hospital, 110 AD3d at 298-99 [holding that tenant s obligation to pay additional rent for a given year was constructively conditioned upon landlord s timely submission of a statement in accordance with the lease].) Moreover, under these circumstances, equity mandates against entertaining Landlord s attempt to recover a windfall (as more fully set forth infra). There, as here, the landlord seem[ed] to have entirely forgotten about the additional rent provisions of this lease until 2011, when it retroactively billed tenant for the prior 12 years, the court there perceive[d] no unfairness to deeming the landlord to have assumed the risk of its own failure to bring about events that were entirely (and easily) under its control. (Mount Sinai Hosp., 110 AD3d at 300.) To hold otherwise would allow the [landlord] to reap a windfall not envisioned by the parties agreement. (S.B.S. Assocs. v Weissman-Heller, Inc., 190 AD2d 529, 529-30 [1st Dept 1993]; see also Wellington Tower Associates, L.P. v New York First Ave. CVS, Inc., 3 AD3d 460, 461 [1st Dept 2004], [citing S.B.S.].) 13 13 of 15
Thus, under such circumstances, Defendant is estopped by New York law from recovering an inequitable windfall for rental payments that were required to be abated, and for hundreds of thousands of dollars in repairs that it refused to perform, and never paid. III. PLAINTIFF WILL BE IRREPARABLY HARMED BY DEFENDANT S CONTINUED TREATMENT OF THE LEASE AS TERMINATED. Consistent with the maxim equity abhors forfeiture, a commercial tenant who has made valuable improvements to the premises and faces dispossession under inequitable circumstances may be caused irreparable harm. Where such tenant has, for instance, inadvertently failed to timely exercise a renewal option, New York courts have held that [e]quity may intervene because [tenant] might suffer a forfeiture if he has made valuable improvements on the property. (135 E. 57th St. LLC v Daffy s Inc., 91 AD3d 1, 5 [1st Dept 2011], quoting J.N.A. Realty Corp. v Cross Bay Chelsea, 42 NY2d 392, 397 [1977] [a tenant in possession, who has made a considerable investment improvements on the premises and who would undoubtedly lose a considerable amount of its customer good will if it lost its location, may suffer a forfeiture justifying equitable intervention].) Even where no substantial improvements to the premises were made, equitable relief to the commercial tenant may be granted to preserve the tenant s interest in a long-standing location for a retail business because this is an important part of the good will of that enterprise, [and thus] the tenant stands to lose a substantial and valuable asset. (Daffy s, supra, citing J.N.A. Realty, 42 NY2d at 398; see also Zaid Theatre Corp. v Sona Realty Co., 18 AD3d 352, 355 [1st Dept 2005]. [longstanding movie theater tenant s goodwill was a valuable right warranting equitable protection of its ability to cure a default after a determination of the merits].) 14 14 of 15
Equitable relief is clearly called for here. Plaintiff has expended upwards of $650,000.00 in capital improvements, and repairs at the Premises. This is Bespoke s only restaurant, and its owners have invested their entire life savings into it, and they, and their families, and employees, depend on it for their livelihood. Further, Bespoke has a loyal clientele, and has received acclaim for the quality of its restaurant. Bespoke has a bright future as a staple restaurant in the West Village. Plaintiff would undoubtedly suffer considerable good will if it were unceremoniously evicted from its restaurant with seven years remaining on its Lease. This presents a textbook case for this Court to exercise equitable intervention and prevention of a forfeiture. Conclusion Based upon the foregoing, and as set forth in the pleadings and accompanying supporting papers, Plaintiff Linifra, LLC, d/b/a Bespoke Kitchen respectfully requests that this Honorable Court grant its motion for a Yellowstone injunction, and award such other and further relief as this Court deems just and proper. Dated: New York, New York March 17, 2017 Respectfully submitted, THE LANDAU GROUP, PC Kevin A. Landau 45 Rockefeller Plaza, Suite 2000 New York, New York 10111 212.537.4025 kevin@thelandaugroup.com Linifra, LLC, d/b/a Bespoke Kitchen 15 15 of 15