Rosenberg & Estis, P.C., (“R&E”) a premier New York City real estate law firm, obtained a victory at the Supreme Court, Kings County involving a long-term ground lease of a building located at 170 Tillary Street in Brooklyn, by crucially maintaining a second Yellowstone injunction for the ground lessee in a dispute between the ground lessee and its landlord.
Norman Flitt, a member of Rosenberg & Estis, and Laura A. Raheb, an associate with the firm, represented the ground lessee.
R&E prevailed on all points on a motion brought by the landlord to reargue a decision entered by the Hon. Leon Ruchselsman of Supreme Court. In that decision, Judge Ruchselsman granted a Yellowstone injunction with respect to a certain 15-day notice (the “15 Day Notice”) served upon the ground lessee. Rosenberg & Estis successfully argued that the 15 Day Notice, although labeled as a “rent demand” was in fact a notice to cure because the items of “additional rent” at issue involved the ground lessee’s direct payment of real estate taxes and water charges to the City. Specifically, Rosenberg & Estis argued that there is a difference between a ground lessee’s obligation to pay base rent and other charges to a landlord directly, and a ground lessee’s further obligation to pay real estate taxes or water charges relating to a premises directly to a city agency. The payments could not, therefore, properly be categorized as “rent” for a “rent demand” served before commencing a non-payment proceeding in landlord-tenant court. The Court agreed with R&E’s argument that the substance of the obligation must override its labeling or classification.
In denying the landlord’s motion to reargue Judge Ruchselsman’s decision, which granted ground lessee its second Yellowstone injunction related to the ground lease, the Court held that the 15 Day Notice “regardless of how it is classified or labeled, is not a mere rent demand” and thus it “may be the subject of a Yellowstone injunction.” The Court went on to say that “there would be no basis to conduct a non-payment proceeding at all” and that the 15 Day Notice “could only be challenged by seeking a Yellowstone regardless of the notice’s purported representations as nothing more than a rent demand.”
As Norman Flitt of Rosenberg & Estis stated: “It is gratifying that the Court analyzed the substance of the obligation rather than relying merely on the labeling of the obligation to arrive at a just and equitable result.”