In Case of First Impression, Adam Leitman Bailey, P.C. Creatively Utilizes Archaic Code Section to Defeat Ice Cream Factory Tenant for Maliciously Wasting Water
Prior to hiring Adam Leitman Bailey, P.C., the client, a landlord and owner of a mixed-used building in the heart of Chinatown, had used another Manhattan Landlord-Tenant firm to bring an illegal sublet case against the tenant, a famous Chinatown Ice Cream Factory, and had been soundly defeated.
Subsequently, and in retribution to the client having brought an illegal sublet case against the tenant, out of pure spite driven malice, the tenant intentionally, knowingly, and recklessly began wasting copious amounts of water – to the tune of between $3,000 and $4,000 per month – that the client was responsible to pay for under the parties’ commercial lease agreement.
Without anywhere to turn, and with the substantial monetary losses piling up, as a result of the tenant’s malicious water waste, the client hired Adam Leitman Bailey, P.C. to develop creative and innovative legal solutions for it to defeat its spiteful tenant.
Facts
In or around 2005, Adam Leitman Bailey, P.C.’s client, purchased the subject property, where the tenant had been operating its ice cream business for approximately 30 years. Unfortunately, the client was represented by another law firm in connection with the purchase and sale of the building which failed to ensure that the client was adequately protected pursuant to the lease in question.
A. The Sweetheart Lease
Adam Leitman Bailey, P.C.’s client had purchased the building from the brother of the tenant’s principal. However, prior to the sale of the building to Adam Leitman Bailey, P.C.’s client, the tenant’s brother provided the tenant with a sweetheart lease deal, whereby the tenant was granted a twenty-four-year term at $1,000 a month with no escalations, no security deposit and no obligation on the part of the tenant to pay real estate taxes, utilities or other monthly ancillary charges that are commonly associated with a commercial lease. To boot, the landlord was required to pay all of the tenant’s water charges. Although the client purchased the property with full knowledge of the tenant’s lease, it believed that it could run the building for a profit, which it did successfully until the tenant started nefariously wasting water.
B. The Tenant’s Malicious Water Waste
Approximately nine months into the lease, the client, who was being represented by another Manhattan Landlord-Tenant firm, commenced an illegal sublet case against the tenant alleging that the tenant had assigned the underlying lease to another entity in violation of the lease. Following a two-day trial, the Housing Court judge dismissed the client’s case finding that the client failed to show that the tenant had illegally assigned the space to another entity.
The client then appealed to the Appellate Term, First Department, which affirmed the Housing Court’s decision. Thereafter, the client appealed to the Appellate Division, First Department, which similarly denied the client’s application seeking leave to appeal. It was at or around this very time that the client began to notice the excessive uptick in the tenant’s water usage. Amazingly, the tenant’s water usage continued to increase precipitously climbing to close to $4,000 a month.
In light of the fact that the client’s prior law firm was crushed by the tenant in the landlord-tenant proceeding, it hired Adam Leitman Bailey, P.C. to provide a new perspective to the case and to come up with a creative solution to stop the bleeding once and for all.
Innovative Lawyering Leads Client to Victory
After Adam Leitman Bailey, P.C. performed extensive due diligence in review of the subject lease, as well as the files from the parties’ prior litigation both at the civil and appellate court levels, Adam Leitman Bailey, P.C. developed a shrewd plan to defeat the tenant and put an end to its excessive and illegal water waste.
First, Adam Leitman Bailey, P.C. discovered that one of the provisions of the lease required the tenant to comply with all statutes, ordinances and regulations, and laws in order to abate nuisances during the term of the lease. In addition, as a result of comprehensive and diligent research, Adam Leitman Bailey, P.C. successfully located an archaic provision within the New York Administration Code, which has not been relied upon in any other reported case in New York as the basis of a nuisance commercial holdover proceeding, that could be used to evict the tenant for its malicious water waste.
Since Adam Leitman Bailey, P.C. found a sound legal basis upon which to evict the tenant, it advised the client to install a separate water meter to the tenant’s space in order to precisely gauge the tenant’s water usage. Once the separate water meter was installed, the proof of the tenant’s pernicious water waste was in the numbers, and the client was now well-positioned to commence a nuisance holdover proceeding against its spiteful tenant.
Accordingly, Adam Leitman Bailey, P.C. tailored a notice to cure to the tenant citing the specific antiquated provisions of the code making it illegal for the tenant to mischievously waste water, which it caused to be served upon the tenant. In the event that the tenant failed to cure its unlawful water waste within the time set forth in the notice, Adam Leitman Bailey, P.C. would bring a summary eviction proceeding against the tenant on behalf of the client. Upon being served with the notice to cure, the tenant immediately moved for a Yellowstone Injunction, which allows commercial tenants in New York City to obtain injunctive relief enjoining a landlord from going forward with the speedier summary eviction proceeding in housing court, and instead, to have the parties’ landlord-tenant dispute decided in the Supreme Court, a forum that is much more costly and slower. Courts invariably issue Yellowstone Injunctions so long as the tenant moves for such relief within the time period for curing defaults under the lease. Since the tenant here timely moved for a Yellowstone Injunction, the injunction was granted and the case was litigated in Supreme Court.
Despite the fact that the Supreme Court is generally recognized as being a slower forum, Adam Leitman Bailey, P.C. swiftly served discovery demands and noticed the deposition of the tenant’s principal. Moreover, to keep the pressure on, Adam Leitman Bailey, P.C. moved the court to direct the tenant to provide immediate access into the subject unit for purposes of a joint inspection, together with the parties’ respective experts.
During the joint inspection, Adam Leitman Bailey, P.C. learned that the water tower that was located on the rooftop of the building which exclusively services the tenant’s ice cream factory, had not been maintained in roughly 15 years was profusely leaking continuously 24 hours a day, seven days a week. Additionally, Adam Leitman Bailey, P.C., with the assistance of its expert plumbing specialist found that the tenant had illegally diverted some of the building’s water lines directly into the sewer lines, thereby causing additional substantial water waste.
The Settlement
Having caught the tenant red-handed after the court-mandated inspection, the tenant swiftly caved paving the way for Adam Leitman Bailey, P.C. to negotiate an extremely favorable settlement for the client.
Notably, the tenant agreed to repair the water tower at its cost and expense and to fully reimburse the client for all of its costs. Further, the tenant affirmatively took on the obligation to maintain the water tower through the expiration of its lengthy lease term. More importantly, the tenant also agreed to defend and indemnify the client for any future violations or damages resulting from the further operation of the water tower, which is a particularly important protection for the client, especially given the recent outbreak of Legionnaires’ Disease, which caused the death of at least 12 New Yorkers in 2015, and infected 100s more.
Adam Leitman Bailey, P.C. partner Jeffrey R. Metz litigated the case on behalf of the client.