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Second on Second CafÉ, Inc. v. Hing Sing Trading

July 21, 2009

SECOND ON SECOND CAFÉ, INC., PLAINTIFF-RESPONDENT,
v.
HING SING TRADING, INC., DEFENDANT-APPELLANT.



Defendant appeals from an order of the Supreme Court, New York County (Karla Moskowitz, J.), entered November 26, 2007, which, insofar as appealed from, confirmed a prior order, same court and Justice, entered August 17, 2007, to the extent that order granted plaintiff a mandatory preliminary injunction directing defendant to permit plaintiff to install a new kitchen exhaust vent and fan on the roof of defendant's building, to install ductwork connecting plaintiff's kitchen equipment in the demised premises to the aforementioned vent and fan on the roof, and to install an air conditioning unit on the roof, to execute work permit applications for such work, all to be done in accordance with certain plans in the record.

The opinion of the court was delivered by: Friedman, J.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and subject to revision before publication in the Official Reports.

Angela M. Mazzarelli, J.P. David B. Saxe David Friedman Rolando Acosta Leland G. DeGrasse, JJ.

602627/07

"When premises are leased for an expressed purpose, everything necessary to the use and enjoyment of the demised premises for such expressed purpose must be implied where it is not expressed in the lease" (Gans v Hughes, 14 NYS 930, 931 [Brooklyn City Ct 1891], citing Kelsey v Durkee, 33 Barb 410 [Sup Ct, NY County 1861]; see also 1 Ambert, McAdam on Landlord and Tenant § 86, at 330 [5th ed]). In this case, therefore, under the commercial lease that permits "fast food cooking" in the bar the plaintiff tenant operates on the first floor of a two-story building, the tenant has an implied appurtenant right to install, at its own expense, an exterior exhaust vent and associated fan and ductwork necessary to the operation of a kitchen in the demised premises. Further, the defendant landlord may not unreasonably withhold consent to the location and design the tenant proposes for such equipment.

On the foregoing grounds, we affirm the order appealed from to the extent it grants the tenant a mandatory preliminary injunction directing the landlord to permit the tenant to install, at its own expense, a new exterior exhaust vent on the roof of the building, along with the necessary ducts between the kitchen and the roof, and further directing the landlord to execute the permit applications required for such work. The need for such relief was occasioned by the removal of the exterior exhaust vent that the tenant had originally installed, with the landlord's consent, in the south wall of the building, which bounds the demised premises. The landlord acceded to an adjoining property-owner's demand for the removal of the original exhaust vent from the south wall; the demand was made on the ground that such equipment encroached on the adjoining parcel. As more fully discussed below, the tenant demonstrated that it is likely to succeed in proving that the roof of the building is the only viable location for a new exterior exhaust vent; that the tenant will suffer irreparable harm (namely, the loss of the use of its kitchen and the loss of its liquor license) absent such provisional relief; and that the equities balance in the tenant's favor. While the alterations in question physically encroach on portions of the building (specifically, the roof and second floor) outside the demised premises, the record establishes that such encroachment does not materially detract from the beneficial enjoyment of such property.

We modify Supreme Court's preliminary injunction, however, to vacate the portion of the order directing the landlord to permit the tenant to relocate its air conditioning unit to the roof of the building. The tenant failed to demonstrate a likelihood that it will ultimately succeed in proving that it has a right to such relief on a permanent basis. In particular, the tenant failed to present any evidence that the relocation of the exterior exhaust vent (to which the air conditioning unit is connected) requires that the air conditioning unit itself also be relocated from the demised premises to the roof. While it may be that placing the air conditioning unit on the roof would allow the tenant to upgrade the quality of temperature control in the demised premises, nothing in the lease requires the landlord to afford the tenant such an accommodation. Factual

Background

In November 2002, defendant Hing Sing Trading, Inc. (HST), as landlord, and plaintiff Second on Second CafÉ, Inc. (CafÉ), as tenant, entered into a lease of premises on the first floor of HST's building at 27 Second Avenue in Manhattan. The lease is for a term of 10 years, beginning on February 1, 2003, and ending on January 31, 2013. The lease provides (in typewriting on the printed form) that CafÉ is to use and occupy the demised premises as a "[b]ar (dancing is forbidden)," with the further specification that "fast food cooking on the premises is permitted." The lease also provides that HST made no representations as to the physical condition of the demised premises and that CafÉ, having inspected the premises before entering into the lease, accepted the space from HST "as is."

It is undisputed that, before opening its establishment, CafÉ spent at least $500,000 renovating the demised premises and bringing the space up to code. Specifically, CafÉ (as alleged in its verified complaint) "gutted the entire first floor of the [b]uilding, installed a new kitchen, two bars, a Karaoke room with soundproofing and lighting, new bathrooms, furniture, fixtures and restaurant equipment." HST does not dispute that these renovations were made with its knowledge and consent, as required by the lease.

Among the improvements CafÉ effected were an exterior vent for the release of exhaust from the demised premises' kitchen and heating and air conditioning units. The vent, which provided ventilation for the kitchen as required by the Building Code and the Fire Prevention Code of the City of New York (see Administrative Code of City of NY § 27-758[b]; § 27-4275), was located in the building's south exterior wall and was connected by ductwork to the equipment to be vented. HST's principal, Lai Ha Wong, as owner, signed a work permit application, dated March 27, 2003, to which were attached drawings of the "[d]etail of [the] proposed kitchen exhaust hood," covering the stove, deep fryers and rice cooker. The drawings showed that the kitchen exhaust hood, as well as the demised premises' air conditioning unit, would be vented through the south wall of the building.

The property immediately adjacent to the subject building on the south is 12-26 East First Street (hereinafter, the adjacent property). In 2006, the owner of the adjacent property, CVP III, LLC (CVP), began construction of a new apartment building on that parcel. In connection with the construction of the new building, CVP complained to HST that the exhaust vent that CafÉ had installed on the south side of HST's building encroached on the adjacent property. In November 2006, HST and CVP entered into a license agreement providing, among other things, that HST, in exchange for a payment of $25,000, would permit CVP to remove "the flue pipe and vent" on the south side of HST's building.

By letter dated March 2, 2007, CVP advised CafÉ that CVP intended, pursuant to its license agreement with HST, "to remove the flue pipe and vent which encroach over [the adjacent] property." The letter continued: "Please be aware that, once the flue pipe and vent are removed, the restaurant in the first floor of your building will not be in compliance with Building Code regulations regarding kitchen venting and may not be able to operate its kitchen safely." Subsequently, by letter dated March 21, 2007, CVP informed CafÉ that "we have proceeded to cut the bottom part of the flue pipe and vent servicing your kitchen ventilation and heating/air conditioning system, which were encroaching over our property." The March 21 letter added: "Please be aware that now that the flue pipe and vent are cut, your kitchen and air conditioning system will not be in compliance with Building Code regulations and you may not be able to operate them safely."

After the removal of the vent from the south wall of the building, CafÉ had no choice but to stop using its kitchen until a new venting system was in place. CafÉ alleges that the inability to use its kitchen caused an immediate and substantial loss of revenue. Food sales were totally eliminated, and liquor sales and party bookings allegedly declined due to the unavailability of food at the bar. CafÉ also alleges that the lack of an exhaust vent has interfered with its ability to operate its heating and air conditioning systems. Moreover, the inability to prepare food threatened to destroy the business altogether, as CafÉ's liquor license is conditional on its operation of a restaurant in its establishment. If CafÉ were forced out of the demised premises due to the inability to use the kitchen, not only would it forfeit its $500,000 investment in the renovation of the demised premises, but, in addition, it would lose the goodwill it developed at the demised premises over the four years it operated the bar before March 2007 (when CVP removed the vent).

After CVP closed the vent on the south side of the building, CafÉ retained an architectural firm to prepare new plans for venting the kitchen. The architectural firm drew up plans for a new vent to be installed on the roof of the building and for ductwork to run from CafÉ's kitchen through the second floor (which is not part of the demised premises) to the proposed new vent on the roof. The plans also contemplated relocating CafÉ's air conditioning unit to the roof. When ...


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