A Manhattan judge has enjoined Consolidated Edison from evicting a would-be developer from a property near Ground Zero where he wants to build a controversial mosque and community center.
Manhattan Justice Richard F. Braun (See Profile) granted 51 Park Place and developer Sharif el-Gamal a so-called Yellowstone injunction blocking the utility from ejecting 51 Park Place for allegedly violating a default notice issued on Sept. 14.
Yellowstone injunctions are pursued by commercial tenants seeking to suspend the cure period imposed by landlords before a lease is terminated—in 51 Park Place’s case, 20 days—so tenants have time to meet the deficiencies alleged in the cure notice or to challenge them.
Consolidated Edison’s default notice contended that 51 Park Place had fallen $1.7 million in arrears on rent on the one-acre property near the site of the former World Trade Center towers.
ConEdison raised the rent to $47,437 a month from $2,750 a month, retroactive to July 31, 2008. The utility said it and 51 Park Place had been stalled for years in negotiations over a new rent for the property, which once housed a Burlington Coat Factory and a utility substation.
51 Park Place has leased the structure in the hopes of knocking it down to build an Islamic community center.
Justice Braun noted, without commenting further, the argument by 51 Park and its attorney, Matthew Hearle of Goldberg Weprin Finkel Goldstein, that ConEdison’s attempt to substantially raise the rent was in response to protests over using the site as a Muslim center and mosque so near the site of the Sept. 11, 2001, attack by Islamic terrorists.
“Plaintiff speculates as to whether defendant may be bowing to unspecified political pressure,” the judge wrote in 51 Park Place LH, LLC v. Consolidated Edison Company of New York, 111237/11.
Justice Braun said 51 Park Place had met the burdens established by the Court of Appeals in First Nat. Stores Inc. v. Yellowstone Shopping Center Inc., 21 N.Y.2d 630 (1968), to qualify for an injunction against termination of its lease for failure to cure.
Those conditions are that it holds a commercial lease; it received from the landlord either a notice of default, a notice to cure or a threat of termination of the lease; it requested injunctive relief prior to the termination of the lease; and it is prepared and maintains the ability to cure the alleged default by any means short of vacating the premises.
“While defendant disputes plaintiff’s calculation of the arrears, it is the very purpose of a Yellowstone injunction to afford the tenant an opportunity to contest the alleged violation in the notice to cure while preserving the tenant’s right to cure in the event that the tenant is wrong and a violation is found to exist,” Justice Braun wrote. “Indeed, in order to obtain a Yellowstone injunction, plaintiff need not establish a probability of success on the merits or the other elements normally required for a preliminary injunction.”
The judge noted that while it is clear 51 Park Place and Mr. el-Gamal do not have $1.7 million, they appear able to generate significant funds by mortgaging a property next to 51 Park Place that the company currently owns.
Justice Braun said he would grant the injunction request if 51 Park Place pays $25,875 a month during the pendency of the action and post $881,519, which the judge said is the undisputed amount of the arrears. He set the lower figures on Oct. 4, though ConEdison argued they are not high enough.
Mr. Hearle said the increase was not necessary and disputed Justice Braun’s characterization of the $881,519 as a minimum total of arrears both sides agreed on. He said 51 Park Place does not accept that amount.
“I think the increase in the undertaking is unnecessary,” Mr. Hearle said yesterday. “But I am happy [with the Yellowstone injunction] because I don’t want to have my client’s tenancy threatened.”
Scott E. Mollen of Herrick, Feinstein, who is representing ConEdison, argued during oral arguments before Justice Braun that 51 Park Place and Mr. el-Gamal were financially unable to cure the defects because of their past failure to meet guarantees made to four other creditors and the inability to rectify hundreds of code violations in three other buildings.
Mr. Mollen declined comment, saying he is not authorized to speak for the utility.
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