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Duane Reade could be forced to pay more than $1.3 million in attorney’s fees to its landlord at the Chrysler Building in a dispute over the drugstore’s decor. The ruling on fees came a year after a Manhattan judge found that the drugstore chain had defaulted on two lease agreements with Tishman Speyers Properties, which manages the Chrysler Building for 405 Lexington, LLC. Duane Reade’s leases required it to maintain two upscale stores on the block known as the Chrysler Center, much like the store it had at the former World Trade Center. But according to Justice Louise Gruner Gans’ ruling last year, the two stores had several defects, including uneven red and white tiles that were shaded different colors. The stores’ aisles were blocked and cluttered, the judge said, and its sign was wired in a way that revealed its switch box and other electrical hardware, making it “unsightly.” The most recent ruling, released last week by Acting Supreme Court Justice Paul G. Feinman, held that Duane Reade was obligated to pay Tishman’s attorney’s fees because the landlord was the prevailing party. “If Duane Reade did not cure those items in which it was found to be in default, the petitioner could bring a summary proceeding to evict plaintiff,” Justice Feinman wrote in Duane Reade v. 405 Lexington, LLC, 0110178/99. The judge took over the case after Justice Gans retired. Schulte Roth & Zabel, the attorneys for Tishman, requested $1.3 million in fees. Justice Feinman said a referee should decide the proper amount. Schulte had originally requested $1.6 million before it recalculated its bills. It is seeking another $509,000 in fees in a related action that was not subject to the judge’s ruling. Robert M. Abrahams of Schulte, who litigated the case with Jeffrey P. Wade, declined to comment on pending litigation. David C. Rose, a partner at Pryor Cashman Sherman & Flynn who represents Duane Reade along with partner Joseph Z. Epstein, said the drugstore would appeal the ruling. “We believe that it was an erroneous decision and that we have a meritorious appeal,” he said. Tishman issued notices of default to Duane Reade as early as March 1999, and the store soon brought a declaratory judgment action seeking a ruling that it was not in default. Tishman counterclaimed for a declaration of default, the right to terminate the lease and damages. Justice Gans found Duane Reade in default for the decor and its sign, but she ruled in its favor on disputes over the plumbing and an escalator. Before Justice Feinman, Duane Reade made three arguments against having to pay attorney’s fees:

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