157 v. 157 LP (2023)

The following e-filed documents, listed by NYSCEF document number (Motion 001) 2, 11, 12

were read on this motion for INJUNCTION/RESTRAINING ORDER.

Gerald Lebovits, J.

This order resolves a request for a temporary restraining order, sought in the context of a newly commenced commercial landlord-tenant action. The requested TRO is denied for the reasons below.

BACKGROUND

In January 2020, plaintiff-tenant, 157 Enterprises Inc., agreed to lease premises owned by defendant-landlord, 157 West 47th Street Hotel Owner LP, for use as a restaurant. Due to COVID-19-related complications, tenant was not able to open its restaurant until the fall 2022.

On December 20, 2022, landlord mailed tenant a letter that stated in its subject line that it was a "Notice of Default." (See NYSCEF No. 6 at 1.) The letter described what landlord asserted to be a series of rent- and security-deposit-related defaults by tenant, dating back to July 2021 and totaling $1,457,507.37. (See id. at 2-3, 4.) The letter asked tenant and its guarantors to respond by December 30, 2022, acknowledging their liabilities to landlord and committing to pay those liabilities by January 14, 2023. (See id. at 4.) The letter stated that absent a response by December 30, or full payment on or before the following January 14, "Landlord will be forced to pursue all of its remedies under the Restaurant Lease, at law and in equity, including, but not limited to claims against the Guarantors." (Id.)

On December 30, tenant brought this action. Tenant's complaint alleges, in brief, that it does not owe the sums claimed in landlord's letter (in part because much of the $1.45 million at issue was composed of rent that the landlord had agreed not to charge); and that shortly after the restaurant opened, landlord put up scaffolding that improperly obscured tenant's façade and thereby injured tenant's business. The complaint also contends that the December 20 letter does not constitute a valid default notice that could support further legal action by landlord against tenant (whether in the form of terminating the lease, suing for nonpayment of rent, or otherwise).

When tenant filed the complaint, it also sought to bring on the current motion by order to show cause. As filed, tenant's proposed order to show cause seeks injunctive relief restraining landlord from enforcing the December 20 letter against tenant; terminating or attempting to terminate the underlying lease based on the notice; or bringing a summary proceeding or ejectment claim against tenant based on the notice. (See NYSCEF No. 2 at 1.) In the alternative, tenant asks this court, should it deem the December 20 letter a default notice, to grant a Yellowstone injunction tolling tenant's time to cure the asserted defaults. (See id. at 2.) And tenant seeks a temporary restraining order granting these same forms of relief pending the hearing of the motion.

Upon receiving tenant's proposed order to show cause and TRO request, the court emailed counsel for the parties to ask for letter briefing addressing the nature of landlord's December 20 letter, the nature of the relief sought by tenant, and whether a TRO should issue. The parties have filed the requested letters. (See NYSCEF Nos. 11-12.) The court has determined that it will sign tenant's proposed order to show cause. This decision addresses only tenant's TRO request.

DISCUSSION

Tenant's argument for interim relief, as stated in its TRO-letter-brief is (i) that the December 20 letter is not a valid default notice, because it demands a response from tenant within 10 days, rather than the longer periods provided for by § 26.01 of the lease (see NYSCEF No. 4 at 33-34 [copy of lease]); (ii) a real risk exists that landlord will nonetheless treat the December 20 letter as a valid notice and use it improperly as a predicate to act to terminate tenant's lease; and (iii) in that circumstance, tenant would be irreparably injured. (See NYSCEF No. 11 at 2, 3-4.)

1. As an initial matter, this court is somewhat skeptical that the December 20 letter was rendered invalid as a default notice by having sought a response from tenant by December 30. That is, the letter does not identify any binding legal consequences that might result should tenant fail to respond within that 10-day period. (See NYSCEF No. 6 at 5.) At most, the letter says that if tenant does not respond, the landlord will pursue its available remedies under the lease—not that the absence of a response expands what remedies the lease makes available.¹ (See id.) This court is thus unpersuaded that tenant has shown either (i) a likelihood of success on a claim that the notice is invalid; or (ii) any potential irreparable injury stemming from landlord's use against tenant of the December 20 letter's 10-day response deadline.

2. In addition to that 10-day response deadline, the December 20 letter also demands that tenant pay the alleged rent and security deposit arrears by January 14, 2023—i.e., 25 days from the date of the letter. (See id.) That date appears unlikely to be coincidental. The lease provides that if landlord notifies tenant for the first time that tenant is in default on payment of rent (or in restoring a drawn-down security deposit), and the tenant fails to act for 25 days after the notice of default, landlord may then serve tenant with a 10-day notice of termination of the lease. (See NYSCEF No. 4 at 33 § 26.01 [c].) And the December 20 letter itself states in multiple places that it is providing notice of tenant's asserted lease defaults. (See NYSCEF No. 6 at 1.)

Thus, considered in isolation, the December 20 letter appears to be a typical lease-default notice. If this court were to deem that letter a default notice, the letter would present the question whether this court should grant tenant a Yellowstone TRO tolling tenant's time to cure the defaults asserted by landlord. The court need not reach that question here, however, because landlord's TRO-letter-brief disavows that reading of the December 20 letter.

Landlord's letter brief says expressly that the requested TRO should be denied because "the [December 20] Letter was purely informative, did not threaten termination of the Lease, and cannot serve as a predicate to termination of the Lease." (NYSCEF No. 12 at 1.) The letter was instead prompted by landlord's "growing concerns about plaintiff's intentions to abide by its obligations under the lease," and was intended only "to persuade [tenant] to address [tenant's] outstanding defaults expeditiously." (Id.) In the alternative, "should the Court disagree with Owner, interpret the Letter as a threat to terminate the Lease," and grant a Yellowstone TRO, the letter brief asks this court to require tenant to pay use & occupancy pendente lite. (Id. at 2 [emphasis added].)

This court chooses to take landlord at its word. That is, on this court's understanding of landlord's TRO-letter-brief, landlord represents that the December 20 letter cannot serve as a valid predicate to terminating tenant's lease—as would be the case were the December 20 letter a notice of default under § 26.01 (c). Given that representation, the court does not see a need or a basis for interim relief barring landlord from enforcing or attempting to enforce that letter against tenant, or from terminating or attempting to terminate the lease upon the letter.

3. Tenant also seeks interim relief restraining landlord from "commencing any summary proceeding and/or asserting an ejectment claim against Tenant based on the Notice." (NYSCEF No. 2 at 2.) This branch of tenant's TRO request is denied as well.

Section 26.01 (c) of the lease provides expressly that the notice-of-default procedure described in that paragraph "shall not preclude Landlord from commencing and pursuing a summary non-payment proceeding in accordance with statutory notice requirements and procedures." (NYSCEF No. 4 at 34.) Similarly, § 26.02 provides that "[n]othing in Section 26.01 shall be deemed to require Landlord, unless required by law, to give the notices therein provided" before bringing a summary nonpayment proceeding or a plenary rent-collection action. (Id. at 35.) Those notices are instead "for the sole purpose of creating a conditional limitation hereunder pursuant to which this lease shall terminate," such that tenant remaining in possession will constitute a holdover. (Id.)

In other words, landlord's right to bring a summary proceeding or ejectment claim for nonpayment of rent does not depend on the nature of the December 20 letter or its validity as a notice under the lease. Tenant has not identified a basis to conclude it is likely to succeed on a notice-related defense to a nonpayment proceeding or ejectment claim. Nor has tenant explained how it would be irreparably injured merely by having to raise such a defense in any event—let alone to such a degree that this court should grant a TRO.²

Accordingly, for the foregoing reasons, it is

ORDERED that tenant's request for a temporary restraining order is denied in its entirety.

1/5/2023

FOOTNOTES

1.   The court's conclusion on this point is bolstered by landlord's statement in its TRO-letter-brief that the 10-day response deadline set by the December 20 letter does not have "any legal significance under the lease." (NYSCEF No. 12 at 1.)

2.   At most, tenant's principal asserts that the pendency of a summary proceeding or ejectment action "would damage Tenant's business," and that if tenant loses in court, it would have to "forfeit its valuable leasehold interest in the Demised Premises." (NYSCEF No. 8 at ¶ 23.) This court is not persuaded that either of these harms constitutes irreparable injury supporting the grant of interim relief.

Gerald Lebovits, J.