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PB 151 GRAND LLC, Petitioner, v. 9 CROSBY, LLC, Respondent.
The following e-filed documents, listed by NYSCEF document number 2, 8, 9, 10, 12, 13, 14, 15, 16, 17, 18, 19, 21, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42 were read on this motion to/for MISC. SPECIAL PROCEEDINGS
Upon the foregoing documents, it is ordered that the petition is decided as set forth below.
Petitioner PB 151 Grand LLC moves, pursuant to RPAPL § 881, for a license to enter the adjacent property, known as 9 Crosby Street, New York, New York, for the purpose of installing and maintaining overhead yard and rooftop protection secured to the adjacent property, as depicted in the site safety plan annexed to petitioner's motion as Exhibit A, which shall be permitted to remain in place for a period of 24 months or such reasonable time thereafter as shall be required by the New York City Department of Buildings, after which time it shall be removed by petitioner, as well as for such other and further relief as this Court deems just and proper.
FACTUAL AND PROCEDURAL BACKGROUND:
Petitioner PB 151 Grand LLC, the owner of a five-story, landmarked, 100 year-old, residential and commercial building located at 151 Grand Street, New York, New York (“the premises”), commenced this proceeding by filing a petition and order to show cause on or about July 11, 2017. Doc. 1; Doc. 6; Doc. 33, at p. 11; Doc. 35, at par. 25; Trans. of 11/1/17, at pp. 5, 11.1 Petitioner alleged that it was “engaged in a construction project that includes, among other things, the gut renovation of the interiors, the renovation of the façade, and the addition of a sixth floor to the existing building on the [p]remises.” Doc. 1, at par. 4. It further alleges that respondent 9 Crosby, LLC owns the building located at 9 Crosby Street, New York, New York (“the adjacent property”), a 26–story luxury hotel (the hotel), which abuts the southernmost wall of the premises. Doc. 1, at pars. 2–3.2 Petitioner claims that, in order to perform work on the project, it must be granted a license to access the adjacent property to install and maintain overhead yard and rooftop protection (“protection work”). Doc. 1, at par. 5.3 Without the protection work, urges petitioner, the “[p]roject cannot proceed and much needed repairs and renovations to the interior and the façade of the [p]remises cannot be completed. Doc. 1, at par. 7.
Respondent filed an answer to the petition on July 26, 2017 setting forth affirmative defenses as well as counterclaims seeking, inter alia, damages for the hotel's lost revenue in the event the petition is granted. Doc. 18.
Although the parties had three “meet and confer” sessions, at which they discussed a possible license fee to be paid to respondent by petitioner for allowing use of the adjacent property, the parties were unable to reach an agreement and petitioner commenced the instant proceeding.
CONTENTIONS OF THE PARTIES:
Petitioner initially asserts that it is entitled to a license pursuant to RPAPL § 881 since the protection work it needs to perform is required by the New York City Building Code (the Building Code) and the Department of Buildings (DOB). It maintains that, in order to perform the project, it has to enter the adjacent property to install protection work and must have access to the adjoining premises for 24 months. Doc. 3.
Nazar Altun, an authorized signatory of petitioner, asserts in an affidavit in support of the petition that, despite efforts to negotiate with respondent, the latter has not granted petitioner a license. Doc. 4, at par. 5. Altun further represents that the protection work needs to be installed and maintained until the project is completed, which petitioner “anticipates will not exceed 24 months.” Doc. 4, at par. 9.
Stephen Lampard of Domani Technical and Design Services, Inc. (“Domani”), a professional engineer licensed in New York, states in an affidavit in support of the petition that Domani was retained to review the Site Safety Logistics Plan (SSP) for the project. Doc. 5, at par. 1. Lampard states that, in order to protect the adjacent property, its occupants, and the public during the project, petitioner will need access to enter the adjacent property to install and maintain the protection work. Doc. 5, at par. 5–6. He further represents that the protection work is required by DOB. Doc. 5, at par. 6. Lampard, citing section 3307 of the New York City Administrative Code, states that the Building Code requires petitioner to provide a sidewalk shed “because a portion of the façade over 40 feet above curb level is being altered or repaired and the horizontal distance from the portion of the structure being altered or repaired and the horizontal distance from the portion of the structure being altered or repaired to the inside edge of the sidewalk, walkway or temporary walkway is less than one-half the height of the structure being altered or repaired. Doc. 5, at par. 8.
Respondent initially opposed the petition on the ground that the application was premature since it was unable to determine whether petitioner's proposed protection plans “use every reasonable means to avoid interference with the use of the adjoining [premises],” as required by Building Code section 3309.10. Doc. 12, at p. 8. It also initially asserted that petitioner was not entitled to a license pursuant to RPAPL § 881 because the petition failed to set forth the “dates on which entry is sought” to the adjacent property.4
Respondent requested that, if the petition were granted, that the license granted by this Court should be limited in the following respects: 1) the term of the license should be limited to 6 months; 2) petitioner must pay a monthly license fee; 3) petitioner must pay respondent for respondent's lost revenue; 4) petitioner must name respondent as an additional insured on its and its contractor's insurance policies; 5) petitioner must be directed to indemnify and hold harmless respondent for all claims, losses, damages and liability arising from the project or petitioner's access to the adjoining premises; 6) petitioner must be held liable for any damage or injury suffered by respondent as a result of the construction at the premises or petitioner's access to the adjacent property, and that all damages are to be repaired at petitioner's sole cost and expense; 7) petitioner must be required to post a bond or place into escrow the amount of $500,000 to secure the payment of damages; 8) petitioner must be directed to reimburse respondent for all fees and expenses incurred in conjunction with the license to date and continuing, including, but not limited to, attorneys' fees, engineers' fees, and other professional fees; and 9) petitioner must be responsible for such other relief as this Court deems just and proper. Doc. 12.
Respondent further asserts that petitioner fails to meet the criteria of RPAPL § 881 because the hardship it would face from having the protection work on the adjacent property would outweigh any inconvenience to petitioner. Specifically, respondent claims that petitioner's proposed construction will affect the habitability of at least 42 rooms at the hotel, resulting in nearly $2.75 million in expected lost revenue over a six-month period. Doc. 12.
In opposing the petition, respondent relies on the affidavit of Charlie Hillock, Chief Financial Officer of the Sapir Organization/ASSR (Sapir), an affiliate of 9 Crosby, LLC. Doc. 13. Hillock maintains that 42 rooms at the hotel will be impacted by petitioner's construction between July and December of 2017, the busiest time of the year. Doc. 13, at par. 6. He estimates that the hotel will suffer “Total Displacement Revenue of $2,750,795 from July 1, 2017 to December 31, 2017 by being unable to sell the impacted rooms.” Doc. 13, at par. 7. Hillock admitted that, with more information regarding the construction, particularly the schedule for the work, he could ascertain whether lost revenue could be minimized by selling some of the rooms during the construction. Doc. 13, at par. 8.
Respondent also submits the affidavit of Husein Sonara, Executive Developer of Sapir. Sonara asserts that the planned construction will impact the marketability and desirability of the hotel. Doc. 15, at par. 4. The work will further render the rooms next to the protection work uninhabitable due to noise and dust. Doc. 15, at par. 7. Sonara maintains that the economic impact of the construction on the hotel will be approximately $2.75 million over a six-month period. Doc. 15, at par. 15.
In a memorandum of law in further support of the petition (Doc. 40), petitioner argues that the $249,312 in license fees demanded by respondent at the parties' last meet and confer ($20,776 per month for 12 months) 5 is excessive and based on speculative and unprovable losses, including that respondent's claim of lost future revenue is based on the false assumption that the hotel is fully occupied every day of the year,6 and petitioner asserts that there is proof that the hotel is not fully occupied 365 days per year.7 Petitioner also argues that respondent is not entitled to a license fee because the protection work will have no physical interference with the adjacent property.
Joseph Basel, P.E., a licensed engineer and partner at the structural engineering firm Gilsanz Murray Steficek LLP (GMS), which was retained by respondent in connection with this matter, submitted an affidavit in opposition to the petition. Doc. 23. Basel represents that petitioner seeks to install protection work over the hotel's terrace, spanning the property line between the premises and the terrace and extending twenty feet from the property line onto the terrace; rear yard protection; roof protection and mechanical unit protections at the second floor setback on the Crosby Street side of the hotel; and scaffolding and a sidewalk shed in front of the hotel at Lafayette Street. Doc. 23, at par. 7. He further states that the additional story petitioner plans to build atop its existing building would be located directly against the 7th and 8th floor masonry walls of the hotel. Doc. 23, at par. 6. After reviewing the SSP submitted by petitioner, GMS issued a report suggesting an alternative means of protection which would limit the impact of the protection work on the hotel. Doc. 23, at par. 8.
According to Basel, the SSP reflects that pipe scaffolding wrapped with debris netting was to be built on the terrace along the shared property line. Doc. 23, at par. 9. The scaffold was to be supported by the terrace and built up to the future level of the premises. Doc. 23, at par. 3. After “meet and confer” sessions between the parties, petitioner amended the SSP to seek construction of a protection platform on the terrace extending 20' from the shared property line. Doc. 23, at par. 9. Petitioner proposed that all façade work on the premises would be performed via a swing stage scaffold, anchored from the roof of the premises and lowered along the property line in the airspace above the terrace. Doc. 23, at par. 9. Although the initial SSP called for the placement of 6 load bearing posts on the terrace to support the scaffolding, petitioner's amended plan called for only 2. Doc. 23, at par. 9. Since respondent believed that the amended plan would interfere with the hotel's operations, it requested that GMS suggest alternative methods of protection which did not require that any scaffolding be supported by the terrace. Doc. 23, at par. 11. Although Basel conceded that “[t]he protections proposed by [p]etitioner for the [t]errace [were] standard protections”, they “fail[ed] to account for [r]espondent's use of th[e] space.” Doc. 23, at par. 143.
Basel suggested that, in order to avoid using the terrace as a source of any support for scaffold beams to be used by petitioner, petitioner should install outrigger beams at the 5th floor of the premises to support a working platform, which can be used to support the pipe scaffolding above. Doc. 23, at par. 14. Alternatively, a swing stage scaffold could be used to access the areas of the exterior wall above the platform. Doc. 23, at par. 14. By using either of these methods, urges Basel, there would be no need for there to be any protections installed directly on the terrace. Doc. 23, at par. 14.
Basel maintains that GMS participated in meetings with the parties and their consultants on August 11, September 8, and October 19, 2017. Doc. 23, at par. 15. Although the outrigger system was first proposed to petitioner on or about August 7, 2017, petitioner's consultant, Plan B Engineering (Plan B) did not provide petitioner with the proposed plans for the outrigger system suggested by respondent until October 19, 2017. Doc. 23, at par. 23. Plan B agreed that the outrigger plan, which called for the construction of a 20–foot working platform supported by outrigger beams extending 25 feet into the premises, was feasible. Doc. 23, at par. 16.
Although petitioner asserted that the outrigger beams extending into the premises would interfere with its elevator shafts, Basel maintains that the beams would not interfere with the elevator shaft or stair shaft of the premises, and that the outrigger method of protection would result in the least impact on the use of the terrace. Doc. 23, at pars. 18, 20.
Petitioner submitted the affidavit of John McErlean, a licensed engineer and principal of Plan B Engineering, LLC (Plan B), in support of the petition. Doc. 39. Plan B was retained by petitioner to design an alternative method of protecting the side of the hotel facing Lafayette Street. Doc. 39, at par. 3. McErlean designed an outrigger protection system to protect the terrace. Doc. 39, at par. 5. The outrigger system he designed was the only feasible method of providing overhead protection for the terrace which complied with DOB requirements and respondent's request that no support columns rest on the terrace. Doc. 39, at par. 5–7. However, he maintained that outrigger systems were typically used on buildings exceeding 100 feet in height, unlike the premises here. Doc. 39, at pars. 14–15.
At a meet and confer on October 19, 2017, McErlean stated that the outrigger protection would delay the project by 6 months and significantly increase the project budget. Doc. 39, at par. 12. McErlean thus suggested the use of a “2–Leg Protection Shed Design” (2 leg protection) which anchored the shed into the premises. Doc. 39, at pars. 10–13. This reduced the number of legs on respondent's terrace from 8 to 2, far lower than the industry standard design of 8 or more legs. Doc. 39, at par. 10. Plan B also offered to meet with respondent to determine the exact placement of the two legs, thereby minimizing any inconvenience to respondent. Doc. 39, at par. 10.
It was not until the October 19, 2017 meeting that McErlean and petitioner first learned that respondent intended to install a tent that would cover the entire terrace. Doc. 39, at par. 13. McErlean insisted that there was no reason why the 2 leg protection could not be integrated into or around a tent. Doc. 39, at par. 13. However, respondent flatly refused to allow any type of protection which touched the terrace. Doc. 39, at par. 13.
Petitioner urges that, if an outrigger system is used for the protection, it will incur a 25% increase in its budget for the project and the project will take 50% longer to complete. Doc. 40, at p. 4. This, urges petitioner, would be tantamount to stopping the project. Further, petitioner maintains that, since respondent intends to build a tent covering the entire terrace, the use of a 2 leg protection shed design would have “only a marginal increased impact” over the outrigger plan proposed by respondent. Doc. 40, at p. 4.8 Petitioner maintains that the “2 legs are movable to align perfectly with [r]espondent's vertical window mullions.” Doc. 40, at p. 5.
James Yakimoff, a project manager at Ross & Associates Construction Services and primary construction manager for the project, submits an affidavit in support of the petition. Doc. 37, at pars. 1–3. Yakimoff represents that petitioner initially proposed a standard, 8 legged sidewalk shed to provide overhead protection but respondent rejected that proposal. Doc. 37, at pars. 4–5. Although he and petitioner participated in three meet and confers with respondent, they were unable to agree on the type of overhead protection to be used. Doc. 37, at par. 6.9 Initially, respondent expressed concerns that the overhead protection and scaffolding would interfere with the terrace and adjacent hotel rooms. Doc. 37, at par. 7.
In response, respondent proposed a cantilevered outrigger protection system with steel beams piercing into the structure of the premises and scaffolding constructed on top of it. Doc. 37, at par. 8. Petitioner and Yakimoff discussed the outrigger system with their site safety consultant, Domani, and their scaffolding contractor, Colgate Scaffolding. Doc. 37, at par. 9. Domani and Colgate advised Yakimoff and petitioner that using the outrigger system would cause a 50% delay in the schedule of the project and a 25% increase in the cost of the project. Doc. 37, at par. 10. During the second meet and confer, petitioner and Yakimoff advised respondent of the detrimental impact the outrigger protection would have on cost and scheduling. Doc. 37, at par. 11. As a compromise, however, they offered to remove the pipe scaffolding to be located above the terrace and proposed that the façade of the premises be accessed by swing stage scaffolding, which would eliminate the presence of any pipe scaffolding on the terrace. Doc. 37, at par. 11. They also worked with Colgate to raise the ceiling of the proposed terrace sidewalk shed to match the floor level of the second/third floor and to reduce the number of legs to six. Doc. 37, at par. 11. However, respondent rejected these proposed modifications. Doc. 37, at par. 13.
Petitioner thereafter retained Plan B to design cantilevered terrace protection without any legs touching the terrace. Doc. 37, at par. 14. Yakimoff and petitioner reviewed Plan B's outrigger drawings and determined that the use of the outrigger would add 5.9 months, as well as significant additional expense, to the project. Doc. 37, at pars. 15–17. Yakimoff estimated that the outrigger system would increase the length of the approximately 12 month project by 50%. Doc. 37, at par. 20. Yakimoff represents that the project would be significantly delayed because the steel beams used to support the outrigger would penetrate the elevator shaft of the premises. Doc. 37, at pars. 18–19. Yakimoff asserts that “[t]he minimal, marginal benefit to [r]espondent by having no legs, rather than 2 legs on its terrace, does not justify the dramatic detrimental effect the [outrigger] will have on the project.” Doc. 37, at par. 20.
As a further compromise to respondent, petitioner had Plan B design a protection plan which reduced the number of legs on the terrace to 2 (the number was originally 8 and had previously been reduced to six). Doc. 37, at par. 28. If the 2 leg protection design were used, there would be less of an increase in the expense of the project and no increase in the duration of the project. Doc. 37, at par. 28. According to Yakimoff, Plan B was able to achieve the 2 leg protection design by anchoring the shed into the premises, and “[t]he 2 legs can easily be incorporated or placed behind existing planters and aligned horizontally with [r]espondent's mullion.” Doc. 37, at par. 29. Yakimoff represented that the 2 leg protection was not routine and was more costly than a routine scaffold. Doc. 37, at par. 29. The 2 leg protection was proposed to respondent at the final meet and confer on October 19, 2017, at which time it was rejected and respondent advised, for the first time, that it intended to construct a tent over the terrace in January of 2018. Doc. 37, at par. 30.
In an affidavit in support of the petition, David J. King, Jr., an authorized signatory of petitioner, asserts that the petition must be granted because “[p]etitioner has modified its proposed protection plan to reduce, if not eliminate, any interference with the [a]djacent [property].” Doc. 35, at par. 3. He reiterates the representations by McErlean and Yakimoff that the outrigger system will result in at least a 50% increase in the length of the project and 25% increase in the cost of the project. Doc. 35, at par. 13. He urges that the delay of the project would be prejudicial not only to petitioner but to the residents of other adjacent buildings and the neighborhood at large. Doc. 35, at par. 20. Further, he maintains that the increase in costs of at least $1,290,068 is extreme on a project totaling $5,082,183. Doc. 35, at pars. 21–22.
King maintains that the erection of a tent would eliminate many of the concerns petitioner initially had, including the visibility of the protection work from the terrace conference room and obstruction of the street view from several hotel rooms. Doc. 35, at par. 6. King further asserts that, although Plan B explained to respondent how the 2 leg design could be integrated into or around any tent design, respondent has yet to disclose any “design documents, sketches or specifications” for the tent which respondent purportedly wishes to place over the terrace. Doc. 35, at par. 7. King maintains that respondent's refusal to consider the 2 leg protection, even after petitioner demonstrated that the outrigger option was not feasible, demonstrates that respondent was unwilling to work in good faith toward the resolution of this matter, continuously “move[d] the goal posts”, and showed contempt for this Court's meet and confer process. Doc. 35, at pars. 8–9. Thus, petitioner asserts that its application should be granted, with the limitation that petitioner will use 2 leg protection and the license duration will be limited to 12 months. Doc. 35, at par. 10. King adds that petitioner has even offered to contribute funds towards hotel beautification efforts in the event the 2 leg protection is permitted. Doc. 35, at par. 34.
King maintains that, within 24 hours after respondent rejected the 2 leg protection, deeming the discussion thereof as a waste of time, respondent offered to allow the 2 leg protection in exchange for license fees totaling $249,312 for a period of 12 months, or $20,776 per month. Doc. 35, at pars. 37, 41. King urges that the proposed license fee is speculative and should be disregarded by this Court insofar as it is based on projected decreases in revenue (as set forth in a Future Revenue Chart submitted to the court confidentially) for certain rooms located directly above the terrace which would be unoccupied during the work, as well as decreased food and beverage revenues given the decrease in occupancy of those rooms. Doc. 35, at par. 43.10 Additionally, King argues that the future revenue chart is misleading since it assumes full occupancy of the hotel when in fact there are times of the year, such as summer, when it is 82% occupied. Doc. 35, at par. 44.
In a supplemental affidavit in opposition to the petition, Sonara represents that “[f]or months, [p]etitioner claimed that the outrigger system was not feasible from an engineering perspective” but “failed to produce any support” for that claim. Doc. 31, at par. 8. Sonara further asserts that the outrigger system “will not impact [the premises] as claimed [i.e., causing delays because beams will penetrate the elevator shaft] and will not delay construction. Therefore, all of [petitioner's claims of] delay costs are unsupported.” Doc. 31, at par. 10.
In a supplemental affirmation in further opposition to the petition, counsel for respondent argues, inter alia, that “[r]espondent is entitled to a license fee commensurate with the financial losses it will incur” as a result of its “inability to rent the hotel rooms in the area of the protections.” Doc. 34, at par. 4. Additionally, counsel maintains that any license should be limited to 10 months, since that is the period set forth in the cost comparison chart prepared by petitioner. Doc. 34, at par. 7. Counsel further maintains that respondent is entitled to recover the attorneys' fees and consultants' fees it incurred in defending the petition. Doc. 34, at par. 6.11
In a supplemental affidavit in opposition to the petition, Hillock represents that respondent made a business decision to renovate the terrace and transition its use from a private event space to a food and beverage space. Doc. 29, at par. 5. This transition, which will commence in January of 2018 with the construction of a tent over the terrace, is expected to increase revenues derived from the terrace. Doc. 29, at par. 5. He argues that petitioner's construction will significantly interfere with the hotel's operations, maintaining that, although the terrace is still rented out for private events, patrons will no longer be able to use a portion of the terrace extending 20 feet from the property line due to the presence of protections. Doc. 29, at par. 8. He further asserts that the protections will obstruct views and sunlight entering the adjoining gallery/conference room and that this will prevent the hotel from renting these spaces at full value. Doc. 29, at par. 8. In addition, Hillock represents that the posts supporting the protections will interfere with the use of the space and prevent the installation of the tent. Doc. 29, at par. 9. Hillock maintains that, “[r]egardless of the protection method used, the hotel will suffer losses in the form of lost room rates and income.” Doc. 29, at par. 11. He claims that, if the outrigger system is used by petitioner, the hotel will lose revenue of $20,776 per month from November 1, 2017 to August 3, 2018 due to its inability to rent rooms affected by the protection, and if the 2 leg protection is used during that same period, the hotel will lose $38,470 per month. Doc. 29, at pars. 14–15.
RPAPL 881 provides that:
When an owner or lessee seeks to make improvements or repairs to real property so situated that such improvements or repairs cannot be made by the owner or lessee without entering the premises of an adjoining owner or his lessee, and permission so to enter has been refused, the owner or lessee seeking to make such improvements or repairs may commence a special proceeding for a license so to enter pursuant to article four of the civil practice law and rules. The petition and affidavits, if any, shall state the facts making such entry necessary and the date or dates on which entry is sought. Such license shall be granted by the court in an appropriate case upon such terms as justice requires. The licensee shall be liable to the adjoining owner or his lessee for actual damages occurring as a result of the entry.
Granting of License
In analyzing petitions pursuant to section 881, “courts generally apply a standard of reasonableness” and “are required to balance the interests of the parties and should issue a license ‘when necessary, under reasonable conditions, and where the inconvenience to the adjacent property owner is relatively slight compared to the hardship of his neighbor if the license is refused.’ ” Board of Mgrs. of Artisan Lofts Condominium v. Moskowitz, 114 AD3d 491, 492 (1st Dept 2014), quoting Chase Manhattan Bank v. Broadway, Whitney Co., 57 Misc 2d 1091, 1095 (Sup Ct, Queens County 1968), aff'd 24 NY2d 927 (1969).
Petitioner states a basis for the granting of a license pursuant to RPAPL § 881 through the affidavit of Lampard submitted in support of the petition, attesting, inter alia, to the fact that work on petitioner's project cannot be performed without the necessary protection work, which is required by the Building Code and the DOB. Doc. 5, at pars. 2–6, 8. Lampard maintains that the necessary protection work cannot be installed without access to the adjacent property. Doc. 5, at par. 5.
Upon weighing the interests of the parties herein, this Court determines that petitioner is entitled to a license to enter respondent's property in order to install the 2 leg protection work proposed by petitioner. Although respondent vehemently objects to the 2 leg protection, such protection is, in this Court's opinion, the most reasonable option for the parties under the circumstances.
At respondent's request, petitioner explored the use of an outrigger system, which would avoid having any scaffold legs resting on the terrace. However, McErlean, Yamikoff, and King represent that, if the outrigger system were used, petitioner would incur a 50% increase in the length of the project and a 25% increase in the cost of the project. Doc. 35, at par. 13; Doc. 37, at p. 10; Doc. 39, at p. 12. King reasonably asserts that $1,290,068 would be an extreme increase in cost on a project totaling $5,082,183. Doc. 35, at pars. 21–22. McErlean further maintains that outrigger systems are typically used on buildings exceeding 100 feet in height, unlike the premises here. Doc. 39, at pars. 14–15. The Court also notes that the subject premises is a landmark building over 100 years old and structurally less able to bear the additional stress of the outrigger system.
Since the use of the outrigger system would be highly detrimental to petitioner, McErlean suggested the use of the 2 leg protection, which entailed anchoring the protection into the premises. Doc. 39, at pars. 10–13. It also reduced the number of legs on respondent's terrace from 8 to 2. Doc. 39, at par. 10.12 Plan B even offered to meet with respondent to determine the exact placement of the two legs, thereby minimizing any inconvenience to respondent. Doc. 39, at par. 10. Nevertheless, petitioner's proposal regarding the 2 leg protection was rejected by respondent. Doc. 37, at p. 30.
Although Basel concedes that “[t]he protections [initially] proposed by [p]etitioner for the [t]errace [were] standard protections”, they “fail[ed] to account for [r]espondent's use of th[e] space.” Doc. 23, at par. 143. This argument is disingenuous given that, at the final meet and confer, respondent surprised petitioner by announcing that a tent was to be built over the terrace in January of 2018. Doc. 37, at p. 30. McErlean advised respondent that there was no reason why the 2 leg protection could not be integrated into or around a tent. Doc. 39, at par. 13.
Nor is this Court persuaded by Hillock's argument against the 2 leg protection, i.e., that it will significantly interfere with the hotel's operations since the terrace is still rented out for private events and patrons will no longer be able to use a portion of the terrace extending 20 feet from the property line due to the protection. Doc. 29, at par. 8. He also asserts that the 2 legs supporting the protection will interfere with the use of the space and prevent the installation of the tent. Doc. 29, at par. 9. However, as petitioner correctly asserted at oral argument of the motion on November 1, 2017, respondent “raise[s] no concrete specific ways in which the two-legged shed design actually physically interferes with their use of the [terrace].” Trans. of 11/1/17, at p. 3.13
Respondent's attorney also conceded at oral argument that, if petitioner worked with respondent to minimize impact of the two legs resting on the terrace, “then the impact on the terrace would be dramatically reduced and the major impact would be to the hotel rooms above.” Trans. of 11/1/17, at p. 33. Respondent further maintained that, in January 2018, it intended to put a temporary tent in place over the terrace until a permanent structure was designed, and that the two legs would prohibit the construction of a permanent tent. Trans. of 11/1/17, at p. 22. However, given respondent's concession that it did not yet have plans for a permanent tent, as well as the fact that respondent did not give any indication when such plans would be ready, this Court rejects respondent's argument that the 2 leg protection would prevent or impede it from constructing a permanent tent.
Perhaps the most important factor in this Court's determination is that, within 24 hours after respondent rejected the 2 leg protection, it offered to allow the 2 leg protection in exchange for license fees totaling $249,312 for a period of 12 months, or $20,776 per month. Doc. 35, at pars. 37, 41. This Court views this offer as tantamount to a tacit admission by respondent that petitioner is entitled to a license, so long as petitioner is willing to pay dearly for the same.
Given its review of the foregoing factors, this Court grants a license to petitioner to use the 2 leg protection since the inconvenience to the hotel, i.e., having two legs of a scaffold on its terrace, is relatively slight compared to the hardship petitioner would sustain if the license were denied, specifically the inability to renovate a century-old landmarked building.
“Although the determination of whether to award a license fee is discretionary, in that RPAPL 881 provides that a license shall be granted by the court in an appropriate case upon such terms as justice requires,’ the grant of licenses pursuant to RPAPL 881 often warrants the award of contemporaneous license fees” (DDG Warren LLC v. Assouline Ritz 1, LLC, 138 AD3d 539, 540, 30 N.Y.S.3d 52 [1st Dept 2016] [emphasis in original] [parenthetical omitted] ). This is because “the respondent to an 881 petition has not sought out the intrusion and does not derive any benefit from it ․ Equity requires that the owner compelled to grant access should not have to bear any costs resulting from the access’ ” (id. at 540, quoting Matter of North 7–8 Invs., LLC v. Newgarden, 43 Misc 3d 623, 628, 982 N.Y.S.2d 704 [Sup Ct, Kings County 2014]).
Matter of Van Dorn Holdings, LLC v. 152 W. 58th Owners Corp., 149 AD3d 518, 518–519 (1st Dept 2017).
Although respondent argues that it “is entitled to a license fee commensurate with the financial losses it will incur” as a result of its “inability to rent the hotel rooms in the area of the protections” (Doc. 34, at par. 4), this contention “ignores the fact that recovery for actual damages [pursuant to section 881] and a license fee compensate two entirely different things. Unlike damages, a license fee compensates the owner for the use the petitioner makes of his or her property and his or her temporary loss of enjoyment of a portion of his or her property.” North 7–8 Invs., LLC v. Newgarden, 43 Misc 3d at 634. Petitioner has been extremely accommodating to respondent in minimizing its interference with the adjacent property. Petitioner's initial 8–legged scaffold was reduced to six legs, and then to two. Petitioner has assured respondent that it will work with respondent to minimize the interference of the two legs with the terrace. Indeed, petitioner has advised respondent that the two legs can be integrated into or around a tent. Doc. 39, at par. 13.
Although the 2 leg protection will not result in significant physical intrusion on the adjacent property, this Court finds that it will have at least a slight effect on respondent's ability to use the terrace. Thus, this Court awards respondent a monthly license fee of $2,500 for 12 months. See North 7–8 Invs., LLC v. Newgarden, 43 Misc 3d at 634 ($3,500 monthly license fee where respondent will have a cantilevered balcony protrude six feet into his air space, approximately six feet above his roof deck, his only recreational space, for one year); Ponito Residence LLC v. 12th St. Apt. Corp., 38 Misc 3d 604 (Sup Ct NY County 2012) (license fee of $1,500 to maintain sidewalk shed extending 20 feet in front of adjoining property); Matter of Rosma Dev., LLC v. South, 5 Misc 3d 1014(A) (Sup Ct Kings County 2004) ($2,500 monthly license fee for limited purpose of building sidewalk bridging, abutting approximately 10 feet onto the sidewalk in front of respondent's property).
Respondent's claims that the hotel's earnings will be affected by the protection work are, at this time, largely speculative. Additionally, respondent's lost earnings claim is based, in part, on projections which assumed that petitioner's work would take place during certain portions of the year. Trans. of 11/1/17, at pp. 29–30. Given the speculative nature of the claims, and since the work will not proceed pursuant to the schedule respondent had contemplated, the issue of whether respondent sustains damages as a direct result of the issuance of the license (and is thus entitled to reimbursement pursuant to section 881), as well as the amount of actual damages sustained, must await the conclusion of the license period, at which time a Special Referee shall make such determination based on the rules of evidence.
Respondent is entitled to reimbursement by petitioner for reasonable attorneys' fees incurred in this action. DDG Warren LLC v. Assouline Ritz 1, LLC, 138 AD3d at 540; Matter of North 7–8 Investors, LLC v. Newgarden, 43 Misc 3d at 632. Respondent had to retain counsel to oppose the petition, as well as to draft a proposed license agreement.
Justice also requires that petitioner reimburse respondent for its reasonable engineering costs incurred in this matter. Matter of North 7–8 Investors, LLC v. Newgarden, 43 Misc 3d at 629–630. Respondent had to retain an engineer to explore the various methods of protection which could be used in connection with petitioner's project.
Since the motion papers reflect neither how much respondents paid their engineer nor their attorneys, and since further legal fees may be incurred in this proceeding, the matter of calculating these damages will be determined by a Special Referee, based on the rules of evidence, at the end of the license period.
ORDERED AND ADJUDGED that petitioner is granted a license from April 1, 2018 to March 31, 2019, to enter onto respondent's property to perform work adjacent to respondent's building and to install a scaffold necessary to conduct such work, and, after conferring with respondent as to the placement, the two legs of the scaffold shall be permitted to rest on respondent's terrace; and it is further,
ORDERED that petitioner is directed to pay respondent a monthly license fee in the sum of $2,500 for the period of April 1, 2018 to March 31, 2019 with the sum of $15,000 for the months of April through September of 2018 due within 20 days of service of this order with notice of entry and payment of the license fee for the remaining six months to be paid no later than the fifth day of each month; and it is further,
ORDERED that, if petitioner does not complete its work adjacent to respondents' roof by March 31, 2019, then it shall apply for an extension of its license, which extension will be granted only for good cause shown and with the potential increase of license fees to be decided upon the granting of such extension; and it is further
ORDERED that petitioner shall notify respondent in writing when its work has been completed and it has removed all protection from respondent's property; and it is further,
ORDERED that petitioner is solely responsible for the installation, maintenance, and removal of the temporary protection; and it is further,
ORDERED that at the completion of the term of the license, respondents' property within the license area shall be returned to its original condition, and all materials used in construction and any resultant debris shall be removed from the license area; and it is further,
ORDERED that petitioner shall not interfere with respondent's necessary access to its property and quality of life, and shall take the necessary steps, measures and precautions to prevent any damage to respondent's property; and it is further,
ORDERED that petitioner shall procure a commercial general liability policy insuring its work with limits of no less than $5 million and excess limits of no less than $10 million, and petitioner shall name each contractor it may hire, as well as respondent, as an additional insured on its policy insuring work arising from petitioner's project, and such coverage shall remain in place until the completion of petitioner's work; and it is further,
ORDERED that petitioner shall be liable to respondent for any damages which it may suffer as a result of the granting of this license and all damaged property shall be repaired at the sole expense of petitioner; and it is further,
ORDERED that petitioner shall indemnify and hold harmless respondent to the fullest extent permitted by law for any liability, claims, damages or losses, including attorneys' fees, respondent may incur as a result of petitioner's work, whether or not caused by the negligence of petitioner or its employees, agents, contractors or subcontractors; and it is further,
ORDERED that petitioner shall immediately report, in writing, to respondent any damage to respondent's property cause by petitioner's work; and it is further,
ORDERED that petitioner shall cure any violation placed against respondent's property by a governmental or administrative agency as a result of petitioner's work, and petitioner shall reimburse respondent for any fines or penalties imposed as a result of such violations; and it is further,
ORDERED that petitioner is to reimburse respondent for all reasonable attorneys' fees incurred by respondent in connection with this proceeding; and it is further,
ORDERED that petitioner is to reimburse respondent for all reasonable engineering fees incurred by respondent in connection with this proceeding; and it is further,
ORDERED that the amount of reasonable attorneys' fees and reasonable engineering fees incurred by respondent in connection with this proceeding, as well as the amount of any actual and provable damages owed by petitioner to respondent incurred directly as a result of the issuance of the license (if not covered by insurance) is hereby referred to a Special Referee for determination based on the rules of evidence at the conclusion of the license period; and it is further,
ORDERED that this Court will retain jurisdiction over this matter; and it is further
ORDERED that this constitutes the decision and order of the court.
1. Unless otherwise noted, all references are to the documents filed with NYSCEF in this matter.
2. The hotel is called the NoMoSoHo Hotel. Doc. 18, at par. 24.
3. This Court notes that two separate paragraphs of the petition are numbered “5”.
4. As noted below, however, Charlie Hillock submits an affidavit on behalf of respondent in which he acknowledges that the work was to be performed between July and December of 2017. Doc. 13, at pars. 5–6. Petitioner also represented to this Court that the project required a one-year license. Pcdgs. of 9/12/17, at p. 16.
5. Although petitioner initially sought a 24–month license, it shortened that period to 12 months. trans. of 9/12/17, at p. 16.
6. Petitioner asserts that, during those periods of the year when the hotel is not fully booked, patrons can be moved to portions of the hotel where the construction work would not affect the use of the rooms. Doc. 40, at p. 9.
7. Specifically, petitioner maintains that 2017 securities filings reflect that respondent's 2017 occupancy rate was 82%.
8. Petitioner also asserts that the 2 leg protection will cause no more interference than the outrigger (Doc. 40, at p. 5) and that it will “not physically interfere with [r]espondent's use of [the adjacent property] in any meaningful way.” Doc. 40, at p. 10.
9. During negotiations, petitioner rejected a proposed license agreement drafted by respondent's attorney.
10. King further asserted that, during the first two meet and confers, respondent focused on the potential impact of the protection work on the terrace conference room but that after respondent decided to build a tent over the terrace, its focus shifted to the hotel rooms affected by the work. Doc. 35, at par. 48.
11. Although respondent's counsel asserts that petitioner should be entitled to recover these fees, this is an apparent typographical error.
12. McErlean represented that the industry standard was 8 or more legs. Doc. 39, at par. 10.
13. This Court has reviewed photographs of the proposed outrigger system and the proposed 2 leg protection and it finds that the only discernible difference between the two systems are the two legs supporting the protection, which rest on the terrace and consume minimal space.
Kathryn E. Freed, J.
Response sent, thank you
Docket No: 156225/2017
Decided: February 02, 2018
Court: Supreme Court, New York County, New York.
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