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Mark Hotel LLC v. Madison Seventy-Seventh LLC

Other Lower Courts

January 2, 2008

Mark Hotel LLC, Plaintiff,
v.
Madison Seventy-Seventh LLC, Defendant.

Editorial Note:

This case is not published in a printed volume and its disposition appears in a table in the reporter.

OPINION

Emily Jane Goodman, J.

Plaintiff Mark Hotel LLC (the Hotel), as tenant, and defendant Madison Seventy-Seventh LLC (Madison), as owner, bring a motion and cross motion, respectively, for summary judgment, in this action over disputed terms in a long-term lease (the Lease). A Yellowstone injunction, enjoining Madison from terminating the Lease, was granted to the Hotel in a prior decision of this court.

I. Background

The Hotel operates a luxury hotel, located as 25 East 77th Street, New York, New York (the premises), under the Lease, which will not expire until 2131. This action arises from the Hotel's desire to renovate the premises to include a number of luxury cooperative hotel units, and Madison's belief that the Hotel has no right to do so.

The Lease contains a clause defining the possible uses to which the premises can be made, as follows:

The Lessee covenants and agrees that it will not use or occupy the leased premises, or permit the said premises to be used or occupied for other than a luxury hotel (including a cooperative or condominium hotel such as the Hotel Carlyle) and for all operations and uses incidental to and/or customarily found in connection with such hotel use (including but not limited to restaurants, retail stores, professional offices and transient or permanent residential uses) or for a purpose or in a manner likely to cause structural or other injury to any building erected on the premises, or in a manner which shall violate any certificate of occupancy in force relating to any building thereon situated. Notwithstanding the foregoing, if any law, ordinance or regulation is now or hereafter enacted or any event hereafter occurs which renders such hotel use illegal or impossible, the Lessee may thereafter use the premises for a Class A multiple dwelling, or if that use is rendered illegal or impossible, then for any other legal purpose.

Complaint, Ex. 2, Art. Fifth, at 15-16.

By a letter dated December 1, 2006, the Hotel advised Madison that it intended to renovate the premises in a manner that would include several floors of luxury cooperative hotel units, and requested Madison's approval, as required by the Lease. The Hotel's letter included a complete copy of the architect's plans, and indicated the Hotel's anticipated schedule for the project. According to the letter, the Hotel expected to start the project after the New Year, and concluding it 18 months later. The letter also informed Madison that the Hotel intended to secure all necessary permits required for the project.

The Lease contains a provision regarding requests by the Hotel for Madison's approval of the project. The provision reads:

Whenever the Lessor's consent or approval is requested by the Lessee under this Lease and whenever such consent or approval is not to be unreasonably withheld pursuant to the terms of this Lease and, if the Lessor does not respond to the Lessee's request within 15 days after its receipt of such request, then the Lessee shall have the right to send a second request to the Lessor and, if the Lessor fails to respond to such request within five days after its receipt, the consent or approval of the Lessor so requested shall automatically and conclusively be deemed to have been given.

Id., Art. Fortieth, (7), at 103-103A. The Lease further provides that Madison's consent to a project of this size "shall be required but shall not be unreasonably withheld." Id., Article Thirty-Fourth, subparagraph (B), at 91.

When the Hotel received no reply to its initial request, the Hotel, pursuant to the Lease, sent a second request to Madison for approval of the Hotel's planned renovations, in a letter dated December 20, 2006. Complaint, Ex. 6. Madison responded to the Hotel's December 20, 2006 letter, through its attorney, in a letter ...


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