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Women's Interart Center, Inc. v. New York City Economic Development Corp.

Supreme Court of New York, First Department

May 17, 2012

Women's Interart Center, Inc., Plaintiff,
v.
New York City Economic Development Corporation(EDC), et al., Defendants. Women's Interart Center, Inc., Plaintiff-Respondent,
v.
Clinton Housing Development Fund Corp., Defendant-Appellant, City of New York, Intervenor-Appellant.

Defendant Clinton Housing Development Fund Corp. appeals from the order of the Supreme Court, New York County (Karen S. Smith, J.), entered August 23, 2010, which, to the extent appealed from as limited by the briefs, denied its motion for summary judgment dismissing the complaint and for an order severing the summary holdover proceedings and transferring them to Civil Court, and, upon a search of the record, granted partial summary judgment to plaintiff and declared in plaintiff's favor. Intervenor appeals from an order of the same court (Cynthia S. Kern, J.), entered March 11, 2011, which, to the extent appealed from, denied its purported motion to renew.

Rappaport Hertz Cherson & Rosenthal, P.C., Forest Hills (Jeffrey M. Steinitz, Howard Levine and Milan Dey-Chao of counsel), for Clinton Housing Development Fund Corp., appellant.

Michael A. Cardozo, Corporation Counsel, New York (Dona B. Morris, Pamela Seider Dolgow and Susan M. Shapiro of counsel), for municipal appellant.

Bierman & Palitz, LLP, New York (Mark H. Bierman of counsel), for respondent.

Angela M. Mazzarelli, J.P., David B. Saxe, Dianne T. Renwick, Rosalyn H. Richter, Sheila Abdus-Salaam, JJ.

OPINION

RENWICK, J.

The Women's Interart Center (WIC), a non-for-profit cultural organization in Manhattan's Hell's Kitchen, commenced two separate actions with regard to properties it leases from the City of New York (the City) and which it intends to purchase and develop into rehearsal studios and a cultural center. The two actions have been consolidated for a joint trial. In the first action, WIC challenges the City's termination of a contract to sell the subject properties to WIC. In the second action, WIC challenges Clinton Housing Development Fund Corp.'s (CHDFC) attempt to evict WIC from the same properties after the former acquired a putative "net lease" of the same property from the City. This appeal involves a ruling in WIC's favor in the second action, declaring that CHDFC lacks standing to commence eviction proceedings against WIC.

WIC has been involved since 1971 with theatrical productions and the support of visual artists, writers, and smaller theatrical companies, as well as others. In July 1971, WIC began to lease space at 549 West 52nd Street from the City. The lease is month to month. In the past, WIC has used its space at 549 West 52nd Street as a theater and art gallery, and for workshops, among other things. Due to the terrible condition of the building, however, WIC ceased presenting public programming there. On January 25, 1996, WIC leased part of the second floor at 500 West 52nd Street from the City to be used as a theater. It is WIC's sole venue for public programming.

Beginning in the 1990s, WIC sought to purchase the building at 549 West 52nd Street, and an adjacent City-owned property consisting of vacant garages, for a nominal sum to create a cultural facility. The building's owner, the Department of Housing Preservation and Development (HPD), was to transfer ownership to defendant New York City Economic Development Corp. (EDC) which would then sell it and the adjacent property to WIC for two dollars. In August 2001, EDC and WIC executed a contract, which included a development plan, for the sale of the two City-owned parcels, each for one dollar. Reportedly, when all the conditions had not been met, EDC terminated the contract and the project in December 2002.

In April 2003, WIC commenced a federal action, raising both federal and state claims against the City and others. The two federal claims were a First Amendment retaliation claim and an equal protection claim. After completion of discovery, in an order dated May 23, 2005, the district court granted the defendants summary judgment dismissing WIC's federal claims. The district court declined to exercise supplemental jurisdiction over the state constitutional and common-law claims and thus dismissed those claims for lack of subject matter jurisdiction, but without prejudice. WIC then commenced the first action (index No. 109017-07) against EDC, for breach of contract, and the City, for tortious interference with WIC's contract with EDC.

Meanwhile, on or about April 15, 1999, CHDFC and the City entered into an agreement that they called a "net lease, " which was extended on October 11, 2007. The agreement covers multiple buildings, including 500 West 52nd Street and 543-549 West 52nd Street. The term of each contract is month-to-month. The rent paid by CHDFC for the entire term is one dollar and "such other amounts as shall be due and payable to [the City] hereunder." Each agreement states, "The sole and exclusive relationship of [the City] and [CHDFC] hereunder shall be that of landlord and tenant. [CHDFC] is not and shall not be deemed to be an agent... of [the City] by virtue of this Net Lease." Each contract says that CHDFC shall operate and manage the premises.

On March 31, 2006, the City sent WIC a letter regarding 500 West 52nd Street, stating, "effective May 1, 2006, [CHDFC] will assume management of the property that you currently lease from the Department of Housing Preservation and Development" and instructing WIC to send rent payments to CHDFC. On March 29, 2007, the City sent WIC a similar letter regarding 549 West 52nd Street for the period April 1, 2007 onward.

In August and September 2007, CHDFC informed WIC that it was terminating the latter's tenancies at 500 and 549 West 52nd Street. On March 24, 2008, CHDFC commenced holdover proceedings against WIC in Civil Court with respect to both buildings. On the same day, WIC commenced the second action in Supreme Court, seeking a declaratory judgment and a permanent injunction.

CHDFC then answered and asserted affirmative defenses. Supreme Court removed CHDFC's landlord-tenant petitions from Civil Court and consolidated them into the second action. After discovery, CHDFC moved for summary judgment dismissing the ...


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