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FILED: NEW YORK COUNTY CLERK 10/23/2014 08:38 PM INDEX NO. 151330/2014
NYSCEF DOC. NO. 36 RECEIVED NYSCEF: 10/23/2014
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
DAVID L. ABRAMSON, M.D. and Index No, 151330/14
SCOT BRADLEY GLASBERG, M.D.,
Plaintiffs, AFFIDAVIT OF SCOT
BRADLEY GLASBERG, M.D.
V. IN SUPPORT OF
PLAINTIFFS' MOTION FOR
74TH LLC and BEN HELLER, PARTIAL SUMMARY
JUDGMENT
Defendants.
SCOT BRADLEY GLASBERG, M.D., being duly sworn, deposes and says:
1. I am a plaintiff in this action, together with David L. Abramson, M.D.' As such, I
have personal knowledge of, and am fully familiar with, the facts and circumstances set forth
herein. I respectfully submit this affidavit in support of Plaintiffs' motion for partial summary
judgment.
PRELIMINARY STATEMENT
2. The ultimate legal issue before this Court on this motion is a narrow one: whether
a commercial landlord may exercise its right under a lease to prematurely terminate a
commercial lease in exchange for a contractually mandated fixed payment to its tenant, and then
after having served that notice of termination, unilaterally withdraw it and deem it a nullity.
3. I will explain the relevant facts leading up to this issue below, but first some
context is appropriate.
4. For fifteen years, co-plaintiff Dr. David Abramson and I have operated a medical
practice out of leased space in a brownstone building located on Manhattan's Upper East Side,
1Occasionally in this affidavit I refer to plaintiffs as "Tenants" or "Plaintiffs."
• Almost from the inception of our lease in 1999, our Landlord, 74 th LLC ("Landlord") has been
difficult to deal with. For example, he has been unwilling to undertake even the most basic of a
landlord's mandated obligations, such as simple repairs or shoveling snow or remediating
significant leaks affecting the premises—and that's when we can actually reach him. Often, the
Landlord is impossible to contact at all. A true and correct copy of the lease agreement is
attached hereto as Exhibit "A."
5. For all intents and purposes, it's as if we are triple-net tenants, although our rent
most assuredly does not reflect such an arrangement.
6. Even though any number of the Landlord's breaches independently could have
warranted a lawsuit throughout the years, Dr. Abramson and I chose not to be litigious, having
reached the practical conclusion that it was easier to work around these grievances rather than to
run into court. While snow-covered sidewalks and buckets filled with water dripping from a
ceiling are not a welcome sight for patients, we dealt with it.
7. What we could not excuse, however, was Landlord's conduct in connection with a
dispute that began in 2011 and that ultimately ties into this motion.
8. During that year, we (Tenants) began experiencing problems with the Building's
heating and ventilation systems, which had the effect of significantly increasing the temperatures
to over 80 degrees Fahrenheit in the treatment rooms and in one of the staff rooms of our medical
practice, directly affecting our health and safety as well as the health and safety of our patients
and staff.
9. Landlord caused this heat issue when he transferred the heating system and
certain concomitant elements of the ventilation system to a different area of the basement of the
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Building that was directly below the first floor of our medical practice. The heat emanated into
our space and turned our treatment rooms into virtual ovens.
10. Notwithstanding our assiduous and repeated requests for remediation, Landlord
refused to take ownership of the problem and to address the issue at his expense.
11. To this day, the heat condition still exists.
12. As this dispute escalated, and around the time we sent Landlord a letter on
November 18, 2013 reflecting our justified frustration (Exhibit "B"), Landlord responded with a
notice of his own dated November 27, 2013, formally advising us that he would be selling the
Building. See Exhibit "C".
13. The timing of this notice, together with his previous failure to address our
complaints, left us with the impression that he was effectively punting the heat issue to the next
landlord.
14. Equally important was the nature of the notice he was serving: Landlord was
purporting to exercise his right to terminate our lease on six months' notice, which he was
permitted to do under section 61 of the Lease.
15. By exercising that right, Landlord was obligated under that same lease clause
(section 61) to pay to us an articulated sum equal to nine months' worth of base rent, or $111,000
(Termination Fee) in consideration for terminating our lease earlier than its natural expiration
date.
16. Critical to this motion for context, during this same month of November, and out
of the clear blue, Landlord also began sending us letters and notices indicating that we were in
arrears with respect to payment of additional rent. See Exhibit "D".
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17. Specifically, Landlord created for the first time, out of whole cloth, a claim that
we suddenly owe allegedly unpaid real estate taxes going back all the way to five years ago, or
2009, even though Landlord had never demanded payment of such amounts.
18. During that same period in November, Landlord also demanded—again for the
first time since the inception of our lease—water charges going back a number of years, even as
Landlord admitted that throughout the Lease, he had never demanded that Tenants pay any
portion of the Building's water charges. See Exhibit "D".
19. We believe that Landlord fabricated these claimed unpaid additional rent charges
in an attempt to put us in default under the Lease, thereby allowing Landlord to terminate the
Lease to deprive us of the contractually required six month period in which to vacate the
premises and to avoid having to pay us our commensurate Termination Fee in exchange for our
early departure.
20. When we attempted to communicate that the amount of real estate taxes Landlord
was seeking were in error—he was seeking recoupment of real estate taxes that we already had
paid or that he failed to substantiate with appropriate backup—Landlord did exactly as we
anticipated by serving us with a Notice to Cure dated January 22, 2014 (the "Notice to Cure"), in
which he alleged the following:
Take notice that you are justly indebted to the Landlord of the above described
Premises in the amount of $47,327.47 representing Tenant's Tax Payment for the
years 2009, 2010, 2011, 2012 and 2013 and you are justly indebted to Landlord of
the above described Premises in the amount of $836.22, representing Tenant's
Water Payment for the years 2010, 2011, 2012 and 2013. You are required to pay
the total sum of $48,163,69 on or before the expiration of the three days from the
day of the service of this Notice, or surrender up the possession of said Premises
to the Landlord, in default of which the Landlord will terminate the Lease and
commence summary proceedings to recover the possession of the Premises." [A
true, correct, and complete copy of the Notice to Cure is attached hereto as
Exhibit "E"1
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21. As noted above, we believed that this Notice to Cure was entirely pretextual and
in bad faith; now we have tangible evidence. In response to our document demands in this
litigation, Landlord recently produced correspondence between Landlord's counsel and a
potential purchaser, which substantiates our suspicion that Landlord was fully expecting to evict
us based on the above-described predicate and inaccurate Notice to Cure. In this correspondence,
Landlord's counsel communicated to the potential buyer's attorney that Landlord was
"attempting to remove the medical tenants currently occupying the first floor." ("January 23
Letter") See Exhibit "F".
22. Landlord's counsel went on to advise the potential buyer that he hoped that due to
Landlord's demand of additional rent, we would be required to pay to Landlord the entire rent
due through April 2015 and that, "[flailing that payment, the lease will be declared null and void
and the tenant will undoubtedly seek relief in court where, this being a commercial lease and the
facts clear, landlord expects a favorable ruling before the six month notice to vacate on sale
period expires." $ee Exhibit "F" (emphasis added).
23. In furtherance of what amounted to a scheme, about a week after sending this
correspondence to purchaser, Landlord then followed up the Notice to Cure with the "Notice of
Termination of Lease and Acceleration of Rent" dated February 4, 2014 ("Notice of Termination
of Lease and Acceleration of Rent") which purported to give us (Tenants) notice that the Lease
would terminate in 5 days. See Exhibit "G".
24. At this point we retained counsel, because now Landlord's conduct threatened our
leasehold interest and was causing an obvious disruption to the continuity of our medical practice.
25. Counsel for both parties then attempted to negotiate a withdrawal of the Notice to
Cure, Notice of Termination of Lease and Acceleration of Rent, but Defendants' counsel refused
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to withdraw those notices unless we performed the due diligence that Landlord should have
performed prior to serving a notice to cure; that is, Landlord's counsel informed us that Landlord
was unable to locate ledgers and related documents reflecting previous real estate tax statements
and related payments. In other words, Landlord admittedly served us with the Notice to Cure and
subsequent Notice of Termination of Lease and Acceleration of Rent based on missing and
inaccurate records.
26. Because these notices threatened our livelihood, and because Landlords' counsel
refused to withdraw the notices unless we first substantiated Landlord's own errors, we
instructed our attorneys to file a complaint; the complaint was in fact filed on February 13, 2014.
27. Shortly after filing the Complaint, Landlord finally succumbed and withdrew the
Notice to Cure and the Notice of Termination of Lease and Acceleration of Rent after his counsel
recognized the unequivocal errors in the Notice to Cure. See Exhibit "H".
28. As noted earlier, Landlord's attempt to terminate our lease based on false
pretenses occurred after Landlord had also served the 30-day offer notice exercising his right to
terminate our lease early with 6 months' notice, but that method required the payment of the
Termination Fee. Landlord, recognizing that it had no choice but to pursue the legitimate course
of a contractually contemplated buyout, and after our right of first refusal expired, on or about
March 5, 2014, served us with the Notice of Termination. See Exhibit "I".
29. The Notice of Termination indicated that the Lease would terminate on
September 10, 2014, or six months after its service.
30. Thereafter, Tenants relied on the Notice of Termination and acted upon it. With
the Notice of Termination indicating that the lease would terminate on September 10, 2014, we
began contemplating securing different space for our practice. We engaged a broker and began
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an extensive search to lease new medical office space in Manhattan. A true and correct copy of
the communications are attached hereto as Exhibit "J."
31. However, three weeks after Landlord exercised its right and notified us that our
lease would be expiring in six months, Landlord attempted a reversal: by notice dated March 26,
2014, Landlord unlawfully attempted to withdraw the Notice of Termination, in an unsuccessful
attempt to revoke the termination of the Lease. Exhibit "K".
32. Defendants' outrageous attempt to withdraw the Notice of Termination was
rejected by Tenants as our lawyers advised us that pursuant to the Lease and applicable case law,
Landlord was not permitted to unilaterally withdraw the Notice of Termination once it made the
election to terminate the Lease.
33. Pursuant to Landlord's own determination—set forth in the Notice of Termination
(which deadline the parties since have extended by stipulation during this litigation), the Lease
will irrevocably terminate on December 31, 2014. 2 Once Tenants vacate the Premises, Landlord
is obligated to pay Tenants the Termination Fee.
34. Landlord's victimization of us and his erratic conduct in serving and then
withdrawing two separate notices has significantly prejudiced Tenants by forcing us to initiate
this action and spend time, effort and a substantial amount in attorneys' fees and unnecessary
distractions from our practice. The lease between the parties does not give Landlord the right to
serve a notice cancelling our leasehold interest and then turn around and cancel that notice on a
whim. It is not what the parties bargained for under this commercial lease, and it was done in
bad faith, which underscores the improper nature of Landlord's conduct.
2On or about July 23, 2014, Tenants and Defendants agreed to extend the termination date of the Lease stated in the
Notice of Termination - originally set to terminate on September 10, 2014 - until December 31, 2014, without
prejudice to either party. (A true and correct copy of the so ordered stipulation dated July 23, 2014 is attached
hereto as Exhibit 'L").
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35. For the foregoing reasons and for those below, we ask this Court to grant
summary judgment.
BACKGROUND
A. The Lease Agreement
36. On or about November 18, 1999, Tenants and Ben Heller, as "Owner," 3 entered
into a written lease agreement for the rental of the Premises ("Lease) (Exhibit "A").
37, Tenants leased the ground floor and a portion of the basement (Premises) in a
brownstone building known as and located at 42 East 74th Street, New York, New York
(Building).
38. Within the Premises, Tenants operate one of the tri-state area's most successful
plastic surgery practices.
39. The Lease consisted of an initial 10-year term that commenced on April 10, 2000,
and expired on March 31, 2010. (Exhibit "A").
40. Pursuant to properly executed extensions, the natural termination date of the
Lease is March 31, 2015,
41. Under the Lease, the base rent increases 3% for each year of the Extended Lease
Term. (Exhibit "A", Articles 38, 61(A)) and presently totals $12,380 per month.
42. The Lease also calls for Tenants to pay "additional rent" which, among other
items, includes a portion of the Building's real estate tax charges and water charges. (Exhibit
"A", Articles 40, 41(d)).
3Upon information and belief, in 2009 Ben Heller transferred his entire ownership interest in the Building to 74th
LLC; consequently, 74th LLC was Ben Heller's successor in interest as landlord under the Lease.
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B. Landlord's Right to Terminate the Lease Prior to Its Expiration
43. The Lease provides that if Landlord desires to sell the Building during the term of
the Lease, Landlord must provide Tenants with written notice of any proposed sale prior to
offering the Building for sale to any third party. (Exhibit "A") Such "offer notice" must include
the price and "other material terms and conditions" upon which Landlord wishes to sell the
Building:
In the event that at any time during the Term the named Owner shall desire to sell
the building, provided Tenant is not then in default hereunder beyond any
applicable notice and cure period, Owner shall give Tenant the first opportunity to
acquire the building in accordance with the terms of this Section 61(B). Prior to
offering the building for sale to any third party, Owner shall deliver written notice
to Tenants of its proposed sale of the building, which notice shall include the
price and other material terms and conditions on which Owner wishes to sell the
building (the "Offer Notice"). [Exhibit "A", Article 61(B)]
44. If Landlord then desires to terminate the Lease prior to expiration, Landlord must
(i) provide written notice to Tenants at least six months prior to the termination date (the "Notice
of Termination") and (ii) pay to Tenants a termination payment in the amount of nine times the
current monthly rent (the "Termination Fee"), which must be paid on the specified early
termination date:
In the event that at any time during the term, Owner shall propose to sell the
building to a third party, (subject to Tenant's right to purchase the building from
the named Owner as provided in the preceding Paragraph), Owner shall have the
right to terminate this Lease effective as of the date that occurs six (6) months
following written notice to Tenant (the "Termination Date"). If Owner elects to
terminate this Lease as aforesaid, Owner shall pay Tenant a termination payment
equal to nine (9) times the monthly Base Rate payable during the Lease Year in
which the Termination Date shall occur. Such termination payment shall be
payable by bank check or certified check on the date that Tenant shall vacate the
Premises in accordance with Article 22 hereof. [Exhibit "A", Article 61(C))]
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C. Landlord Alleges Pretextual and False Defaults
and Simultaneously Exercises Early Termination
45. As evidenced by real estate listings and the November 27 Notice sent to Tenants,
Landlord desired to sell the Building.
46. As confirmed in subsequent correspondence with a potential purchaser (the
January 23 Letter; Exhibit "F"), Landlord apparently desired to rid the Building of Tenants prior
to such sale in order to present an empty Building to any potential purchaser.
47. In order to proceed with the intended sale while avoiding payment of the
Termination Fee to Tenants, Landlord fabricated a pretextual set of circumstances in an attempt
to put Tenants in technical default under the Lease, thereby allowing Landlord to terminate the
Lease on a much shorter timeline and without having to pay the Termination Fee. See Exhibit
"D" and "E".
48. Specifically, Landlord alleged for the first time that Tenants suddenly owed
allegedly unpaid taxes for each year going back to 2009, even though Landlord had never before
complained that Tenants failed to make additional rent payments or demanded payment of such
amounts.
49. Indeed, Landlord had admitted in writing that throughout the lease Tenants never
failed to make additional rent payments when they were due. Landlord made this allegation by
letter dated November 11, 2013 ("November 11 Letter"), claiming that Tenants owed payment
for 2013 real estate tax charges in the amount of $13,250.00. See Exhibit "D".
50. Notably, in the same November 11 Letter, Landlord actually admitted that
Tenants had always paid their real estate tax charges for every other year under the Lease:
"The lease agreement is totally clear...that you must make monthly rental
payments plus pay "Tenants Proportionate Share" of all annual real estate tax
payment in the amount of 25%....You have made these payments each
10
year...You have been informed that this year the tax has increased from the
original $26,000 to $79,000. You owe 74th LLC 25% of the difference, 25% of
$53,000, or $13,250.00." [See Exhibit "D"; emphasis added.]
51. In the November 11 Letter, Landlord also admitted that throughout the Lease it
had never demanded that Tenants pay any portion of the Building's water charges, See Exhibit
52. On or about January 22, 2014, Landlord sent to Tenants the Notice to Cure, which
stated the following:
Take notice that you are justly indebted to the Landlord of the above described
Premises in the amount of $47,327.47 representing Tenant's Tax Payment for the
years 2009, 2010, 2011, 2012 and 2013 and you are justly indebted to Landlord of
the above described Premises in the amount of $836.22, representing Tenant's
Water Payment for the years 2010, 2011, 2012 and 2013. You are required to pay
the total sum of $48,163.69 on or before the expiration of the three days from the
day of the service of this Notice, or surrender up the possession of said Premises
to the Landlord, in default of which the Landlord will terminate the Lease and
commence summary proceedings to recover the possession of the Premises." [See
Exhibit "E"]
53. Landlord followed up the Notice to Cure with the Notice of Termination of Lease
and Acceleration of Rent, which purported to give Tenants notice that the Lease not only would
terminate in 5 days, but also purported to accelerate the entire rent due for the remainder of the
Lease (total amount of $ 172,607.20). See Exhibit "G".
D. Landlord Serves the Offer Notice Concerning the Building
54. As Landlord was making the foregoing improper demands through inaccurate
notices, he was also exercising his right under the Lease to terminate it prematurely in exchange
for the Termination Fee.
55. Hence, on or about November 27, 2013, Landlord delivered to Tenant a letter
with the subject line "Notice of First Opportunity to Acquire 42 East 74th Street (the "November
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27 Notice"), which Landlord claimed was an official "offer notice" that would trigger Tenants'
right of first refusal pursuant to Article 61(B) of the Lease.
56. The "November 27 Notice" specifically provided, inter alia:
Please take notice that Owner desires to sell the building, in its existing physical
condition, for $ 17,600,000.00, all cash. Accordingly, this document constitutes
the Offer Notice referenced in the Lease Agreement. In the event that you elect to
purchase the building for the price and material terms set forth above, you must
proceed in strict accordance with all of terms and requirements of the Lease, time
being of the essence. [$ee Exhibit "C"]
57. Though the November 27 Notice arguably did not satisfy the requirements of
Article 61(B) of the Lease as an official notice of sale under that provision, Landlord
subsequently clarified and addressed those apparent defects by letter dated March 5, 2014, in a
way that left Plaintiffs satisfied that the notice was compliant with Article 61(B) of the Lease.
See Exhibit "H."
E. Landlord Serves Tenants with a Notice of Termination
58. In addition to the foregoing March 5, 2014 Letter, Landlord served also Tenants
(on that same day) with a "Notice of Termination of Lease" (the "Notice of Termination"),
which constituted Landlord's formal notice of termination of lease in accordance with Article
61(C) of the Lease, by which Landlord elected to terminate the Lease effective September 10,
2014 (such date being six (6) months following the date of the notice). See Exhibit "I".
59. Specifically, pursuant to the Notice of Termination, Landlord proposed to sell the
Building to a third party and elected to terminate the Lease:
In accordance with article 61(C) of the Lease, Owner hereby elects to terminate
the lease effective on September 10, 2014, such date being six (6) months
following the delivery of this notice. See Exhibit "I."
60. Finally, on March 5, 2014, subsequent to the commencement of this action and
after Landlord was served with Tenants' Complaint, Landlord's attorney withdrew the Notice to
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Cure and Notice of Termination of Lease and Acceleration of Rent, expressly admitting that it
had used incorrect information when preparing such notices ("It is true that the Tax Statements
were prepared using incorrect information"). See Exhibit "H."
F. Tenants Reasonably Rely on the Notice of Termination
61. After Landlord served Tenants with the Notice of Termination dated March 5,
2014, Tenants commenced an extensive search for alternative medical office space pursuant to
the Notice of Termination.
62. Tenants relied on the Notice of Termination and acted upon it. With the Notice of
Termination indicating that the lease would terminate on September 10, 2014, Tenants engaged a
broker and began their search to lease new medical office space in Manhattan. See Exhibit "J."
63. During that search, Tenants inspected and evaluated the potential rental spaces
located at 111 East 57th Street, 60 East 88th Street; 140 East 72nd Street, 30 East 72nd Street,
1095 Park Avenue; 161 East 69th Street, 160 East 66th Street; 230 East 61st Street, amongst
others. See Exhibit "J."
G. Landlord Purports to Withdraw the Notice of Termination
64. On or about March 26, 2014, three weeks after serving its Notice of Termination,
Landlord improperly served Tenants with a "Withdrawal of Notice of Termination of Lease" (the
"Withdrawal of Termination of Lease") dated March 26, 2014, by which Landlord purported to
withdraw the Notice of Termination (presumably to avoid once again payment of the
Termination Fee). See Exhibit "K."
65 On or about May 11, 2014, and due to Landlord's unlawful attempt to withdraw
the Notice of Termination, Tenants served the First Amended Verified Complaint, which
amended its first cause of action for declaratory judgment, requesting the declaration that the
Withdrawal of Termination of Lease is defective, null and void.
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LANDLORD IS NOT ENTITLED TO
WITHDRAW THE NOTICE OF TERMINATION
66. Notwithstanding Defendants' false assertions, my lawyers advise me that
Defendants are not permitted to withdraw the Notice of Termination for reasons that, from a
legal perspective, are addressed in the accompanying memorandum of law.
67. I note here, however, that we accepted the Notice of Termination and we acted
upon the Notice of Termination by reaching out to brokers, conferring with our counsel, and
generally consuming time and expending efforts that otherwise could have been spent operating
our medical practice.
68. Moreover, the Lease was extensively negotiated and agreed upon by
sophisticated parties and our respective attorneys. The Lease does not permit Landlord to
withdraw the Notice of Termination.
69. To the extent there is any doubt, and as more fully discussed in the memorandum
of law, where the parties contemplated that Landlord would be permitted to withdraw a notice,
the Lease expressly stated so. (See Exhibit "A", Section 61(B) (permitting Landlord to withdraw
its decision to sell the building PRIOR to service of the Notice of Termination):
"... it being expressly understood that the foregoing option to purchase the
Building shall be a "one-time" option and that if Tenant shall waive its
rights as aforesaid, Owner shall be free to withdraw the building from
the market or to sell the building on any terms Owner sees fit."
[Glasberg Aff., Exhibit "A", Section 61(3)] [emphasis added].
70. By contrast, Section 61(C), the provision at issue here, has no such language.
71. Finally, and in the end, this notice withdrawal ought to be viewed in the larger
context: It fits within Landlord's above-described pattern and practice of erratic conduct by, for
example, repeatedly serving and then withdrawing notices in an effort to avoid payment of the
Termination Fee.
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72. Landlord's breaches of the lease and tortious conduct have caused Tenants
significant harm and disruption in the course of their medical practice. Landlord's failure to
perform its obligations, coupled with its scheme to prematurely terminate the Lease and then to
attempt to withdraw that termination after service of the Notice of Termination, after we relied
upon it, constitutes improper conduct for which Tenants seek relief through this motion.
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CONCLUSION
For all of the foregoing reasons and those set forth in the accompanying papers, Plaintiffs
respectfully request that this Court grant Plaintiffs' motion for partial summary judgment,
together with any and further relief this Court deems just and proper.
PATRICIA A. CINA,TTI
Notary Public, State of New York
No. 01C16103487 SCOT BRADLEY GLASBERG, M.D
Qualified in Queens County
'Commission Expires Dec. 29, 2016g
Sworn to and subscribed before me
/ day of October, 2014
Notary Public
Preview
FILED: NEW YORK COUNTY CLERK 10/23/2014 08:38 PM INDEX NO. 151330/2014 NYSCEF DOC. NO. 36 RECEIVED NYSCEF: 10/23/2014 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK DAVID L. ABRAMSON, M.D. and Index No, 151330/14 SCOT BRADLEY GLASBERG, M.D., Plaintiffs, AFFIDAVIT OF SCOT BRADLEY GLASBERG, M.D. V. IN SUPPORT OF PLAINTIFFS' MOTION FOR 74TH LLC and BEN HELLER, PARTIAL SUMMARY JUDGMENT Defendants. SCOT BRADLEY GLASBERG, M.D., being duly sworn, deposes and says: 1. I am a plaintiff in this action, together with David L. Abramson, M.D.' As such, I have personal knowledge of, and am fully familiar with, the facts and circumstances set forth herein. I respectfully submit this affidavit in support of Plaintiffs' motion for partial summary judgment. PRELIMINARY STATEMENT 2. The ultimate legal issue before this Court on this motion is a narrow one: whether a commercial landlord may exercise its right under a lease to prematurely terminate a commercial lease in exchange for a contractually mandated fixed payment to its tenant, and then after having served that notice of termination, unilaterally withdraw it and deem it a nullity. 3. I will explain the relevant facts leading up to this issue below, but first some context is appropriate. 4. For fifteen years, co-plaintiff Dr. David Abramson and I have operated a medical practice out of leased space in a brownstone building located on Manhattan's Upper East Side, 1Occasionally in this affidavit I refer to plaintiffs as "Tenants" or "Plaintiffs." • Almost from the inception of our lease in 1999, our Landlord, 74 th LLC ("Landlord") has been difficult to deal with. For example, he has been unwilling to undertake even the most basic of a landlord's mandated obligations, such as simple repairs or shoveling snow or remediating significant leaks affecting the premises—and that's when we can actually reach him. Often, the Landlord is impossible to contact at all. A true and correct copy of the lease agreement is attached hereto as Exhibit "A." 5. For all intents and purposes, it's as if we are triple-net tenants, although our rent most assuredly does not reflect such an arrangement. 6. Even though any number of the Landlord's breaches independently could have warranted a lawsuit throughout the years, Dr. Abramson and I chose not to be litigious, having reached the practical conclusion that it was easier to work around these grievances rather than to run into court. While snow-covered sidewalks and buckets filled with water dripping from a ceiling are not a welcome sight for patients, we dealt with it. 7. What we could not excuse, however, was Landlord's conduct in connection with a dispute that began in 2011 and that ultimately ties into this motion. 8. During that year, we (Tenants) began experiencing problems with the Building's heating and ventilation systems, which had the effect of significantly increasing the temperatures to over 80 degrees Fahrenheit in the treatment rooms and in one of the staff rooms of our medical practice, directly affecting our health and safety as well as the health and safety of our patients and staff. 9. Landlord caused this heat issue when he transferred the heating system and certain concomitant elements of the ventilation system to a different area of the basement of the 2 Building that was directly below the first floor of our medical practice. The heat emanated into our space and turned our treatment rooms into virtual ovens. 10. Notwithstanding our assiduous and repeated requests for remediation, Landlord refused to take ownership of the problem and to address the issue at his expense. 11. To this day, the heat condition still exists. 12. As this dispute escalated, and around the time we sent Landlord a letter on November 18, 2013 reflecting our justified frustration (Exhibit "B"), Landlord responded with a notice of his own dated November 27, 2013, formally advising us that he would be selling the Building. See Exhibit "C". 13. The timing of this notice, together with his previous failure to address our complaints, left us with the impression that he was effectively punting the heat issue to the next landlord. 14. Equally important was the nature of the notice he was serving: Landlord was purporting to exercise his right to terminate our lease on six months' notice, which he was permitted to do under section 61 of the Lease. 15. By exercising that right, Landlord was obligated under that same lease clause (section 61) to pay to us an articulated sum equal to nine months' worth of base rent, or $111,000 (Termination Fee) in consideration for terminating our lease earlier than its natural expiration date. 16. Critical to this motion for context, during this same month of November, and out of the clear blue, Landlord also began sending us letters and notices indicating that we were in arrears with respect to payment of additional rent. See Exhibit "D". 3 17. Specifically, Landlord created for the first time, out of whole cloth, a claim that we suddenly owe allegedly unpaid real estate taxes going back all the way to five years ago, or 2009, even though Landlord had never demanded payment of such amounts. 18. During that same period in November, Landlord also demanded—again for the first time since the inception of our lease—water charges going back a number of years, even as Landlord admitted that throughout the Lease, he had never demanded that Tenants pay any portion of the Building's water charges. See Exhibit "D". 19. We believe that Landlord fabricated these claimed unpaid additional rent charges in an attempt to put us in default under the Lease, thereby allowing Landlord to terminate the Lease to deprive us of the contractually required six month period in which to vacate the premises and to avoid having to pay us our commensurate Termination Fee in exchange for our early departure. 20. When we attempted to communicate that the amount of real estate taxes Landlord was seeking were in error—he was seeking recoupment of real estate taxes that we already had paid or that he failed to substantiate with appropriate backup—Landlord did exactly as we anticipated by serving us with a Notice to Cure dated January 22, 2014 (the "Notice to Cure"), in which he alleged the following: Take notice that you are justly indebted to the Landlord of the above described Premises in the amount of $47,327.47 representing Tenant's Tax Payment for the years 2009, 2010, 2011, 2012 and 2013 and you are justly indebted to Landlord of the above described Premises in the amount of $836.22, representing Tenant's Water Payment for the years 2010, 2011, 2012 and 2013. You are required to pay the total sum of $48,163,69 on or before the expiration of the three days from the day of the service of this Notice, or surrender up the possession of said Premises to the Landlord, in default of which the Landlord will terminate the Lease and commence summary proceedings to recover the possession of the Premises." [A true, correct, and complete copy of the Notice to Cure is attached hereto as Exhibit "E"1 4 21. As noted above, we believed that this Notice to Cure was entirely pretextual and in bad faith; now we have tangible evidence. In response to our document demands in this litigation, Landlord recently produced correspondence between Landlord's counsel and a potential purchaser, which substantiates our suspicion that Landlord was fully expecting to evict us based on the above-described predicate and inaccurate Notice to Cure. In this correspondence, Landlord's counsel communicated to the potential buyer's attorney that Landlord was "attempting to remove the medical tenants currently occupying the first floor." ("January 23 Letter") See Exhibit "F". 22. Landlord's counsel went on to advise the potential buyer that he hoped that due to Landlord's demand of additional rent, we would be required to pay to Landlord the entire rent due through April 2015 and that, "[flailing that payment, the lease will be declared null and void and the tenant will undoubtedly seek relief in court where, this being a commercial lease and the facts clear, landlord expects a favorable ruling before the six month notice to vacate on sale period expires." $ee Exhibit "F" (emphasis added). 23. In furtherance of what amounted to a scheme, about a week after sending this correspondence to purchaser, Landlord then followed up the Notice to Cure with the "Notice of Termination of Lease and Acceleration of Rent" dated February 4, 2014 ("Notice of Termination of Lease and Acceleration of Rent") which purported to give us (Tenants) notice that the Lease would terminate in 5 days. See Exhibit "G". 24. At this point we retained counsel, because now Landlord's conduct threatened our leasehold interest and was causing an obvious disruption to the continuity of our medical practice. 25. Counsel for both parties then attempted to negotiate a withdrawal of the Notice to Cure, Notice of Termination of Lease and Acceleration of Rent, but Defendants' counsel refused 5 to withdraw those notices unless we performed the due diligence that Landlord should have performed prior to serving a notice to cure; that is, Landlord's counsel informed us that Landlord was unable to locate ledgers and related documents reflecting previous real estate tax statements and related payments. In other words, Landlord admittedly served us with the Notice to Cure and subsequent Notice of Termination of Lease and Acceleration of Rent based on missing and inaccurate records. 26. Because these notices threatened our livelihood, and because Landlords' counsel refused to withdraw the notices unless we first substantiated Landlord's own errors, we instructed our attorneys to file a complaint; the complaint was in fact filed on February 13, 2014. 27. Shortly after filing the Complaint, Landlord finally succumbed and withdrew the Notice to Cure and the Notice of Termination of Lease and Acceleration of Rent after his counsel recognized the unequivocal errors in the Notice to Cure. See Exhibit "H". 28. As noted earlier, Landlord's attempt to terminate our lease based on false pretenses occurred after Landlord had also served the 30-day offer notice exercising his right to terminate our lease early with 6 months' notice, but that method required the payment of the Termination Fee. Landlord, recognizing that it had no choice but to pursue the legitimate course of a contractually contemplated buyout, and after our right of first refusal expired, on or about March 5, 2014, served us with the Notice of Termination. See Exhibit "I". 29. The Notice of Termination indicated that the Lease would terminate on September 10, 2014, or six months after its service. 30. Thereafter, Tenants relied on the Notice of Termination and acted upon it. With the Notice of Termination indicating that the lease would terminate on September 10, 2014, we began contemplating securing different space for our practice. We engaged a broker and began 6 an extensive search to lease new medical office space in Manhattan. A true and correct copy of the communications are attached hereto as Exhibit "J." 31. However, three weeks after Landlord exercised its right and notified us that our lease would be expiring in six months, Landlord attempted a reversal: by notice dated March 26, 2014, Landlord unlawfully attempted to withdraw the Notice of Termination, in an unsuccessful attempt to revoke the termination of the Lease. Exhibit "K". 32. Defendants' outrageous attempt to withdraw the Notice of Termination was rejected by Tenants as our lawyers advised us that pursuant to the Lease and applicable case law, Landlord was not permitted to unilaterally withdraw the Notice of Termination once it made the election to terminate the Lease. 33. Pursuant to Landlord's own determination—set forth in the Notice of Termination (which deadline the parties since have extended by stipulation during this litigation), the Lease will irrevocably terminate on December 31, 2014. 2 Once Tenants vacate the Premises, Landlord is obligated to pay Tenants the Termination Fee. 34. Landlord's victimization of us and his erratic conduct in serving and then withdrawing two separate notices has significantly prejudiced Tenants by forcing us to initiate this action and spend time, effort and a substantial amount in attorneys' fees and unnecessary distractions from our practice. The lease between the parties does not give Landlord the right to serve a notice cancelling our leasehold interest and then turn around and cancel that notice on a whim. It is not what the parties bargained for under this commercial lease, and it was done in bad faith, which underscores the improper nature of Landlord's conduct. 2On or about July 23, 2014, Tenants and Defendants agreed to extend the termination date of the Lease stated in the Notice of Termination - originally set to terminate on September 10, 2014 - until December 31, 2014, without prejudice to either party. (A true and correct copy of the so ordered stipulation dated July 23, 2014 is attached hereto as Exhibit 'L"). 7 35. For the foregoing reasons and for those below, we ask this Court to grant summary judgment. BACKGROUND A. The Lease Agreement 36. On or about November 18, 1999, Tenants and Ben Heller, as "Owner," 3 entered into a written lease agreement for the rental of the Premises ("Lease) (Exhibit "A"). 37, Tenants leased the ground floor and a portion of the basement (Premises) in a brownstone building known as and located at 42 East 74th Street, New York, New York (Building). 38. Within the Premises, Tenants operate one of the tri-state area's most successful plastic surgery practices. 39. The Lease consisted of an initial 10-year term that commenced on April 10, 2000, and expired on March 31, 2010. (Exhibit "A"). 40. Pursuant to properly executed extensions, the natural termination date of the Lease is March 31, 2015, 41. Under the Lease, the base rent increases 3% for each year of the Extended Lease Term. (Exhibit "A", Articles 38, 61(A)) and presently totals $12,380 per month. 42. The Lease also calls for Tenants to pay "additional rent" which, among other items, includes a portion of the Building's real estate tax charges and water charges. (Exhibit "A", Articles 40, 41(d)). 3Upon information and belief, in 2009 Ben Heller transferred his entire ownership interest in the Building to 74th LLC; consequently, 74th LLC was Ben Heller's successor in interest as landlord under the Lease. 8 B. Landlord's Right to Terminate the Lease Prior to Its Expiration 43. The Lease provides that if Landlord desires to sell the Building during the term of the Lease, Landlord must provide Tenants with written notice of any proposed sale prior to offering the Building for sale to any third party. (Exhibit "A") Such "offer notice" must include the price and "other material terms and conditions" upon which Landlord wishes to sell the Building: In the event that at any time during the Term the named Owner shall desire to sell the building, provided Tenant is not then in default hereunder beyond any applicable notice and cure period, Owner shall give Tenant the first opportunity to acquire the building in accordance with the terms of this Section 61(B). Prior to offering the building for sale to any third party, Owner shall deliver written notice to Tenants of its proposed sale of the building, which notice shall include the price and other material terms and conditions on which Owner wishes to sell the building (the "Offer Notice"). [Exhibit "A", Article 61(B)] 44. If Landlord then desires to terminate the Lease prior to expiration, Landlord must (i) provide written notice to Tenants at least six months prior to the termination date (the "Notice of Termination") and (ii) pay to Tenants a termination payment in the amount of nine times the current monthly rent (the "Termination Fee"), which must be paid on the specified early termination date: In the event that at any time during the term, Owner shall propose to sell the building to a third party, (subject to Tenant's right to purchase the building from the named Owner as provided in the preceding Paragraph), Owner shall have the right to terminate this Lease effective as of the date that occurs six (6) months following written notice to Tenant (the "Termination Date"). If Owner elects to terminate this Lease as aforesaid, Owner shall pay Tenant a termination payment equal to nine (9) times the monthly Base Rate payable during the Lease Year in which the Termination Date shall occur. Such termination payment shall be payable by bank check or certified check on the date that Tenant shall vacate the Premises in accordance with Article 22 hereof. [Exhibit "A", Article 61(C))] 9 C. Landlord Alleges Pretextual and False Defaults and Simultaneously Exercises Early Termination 45. As evidenced by real estate listings and the November 27 Notice sent to Tenants, Landlord desired to sell the Building. 46. As confirmed in subsequent correspondence with a potential purchaser (the January 23 Letter; Exhibit "F"), Landlord apparently desired to rid the Building of Tenants prior to such sale in order to present an empty Building to any potential purchaser. 47. In order to proceed with the intended sale while avoiding payment of the Termination Fee to Tenants, Landlord fabricated a pretextual set of circumstances in an attempt to put Tenants in technical default under the Lease, thereby allowing Landlord to terminate the Lease on a much shorter timeline and without having to pay the Termination Fee. See Exhibit "D" and "E". 48. Specifically, Landlord alleged for the first time that Tenants suddenly owed allegedly unpaid taxes for each year going back to 2009, even though Landlord had never before complained that Tenants failed to make additional rent payments or demanded payment of such amounts. 49. Indeed, Landlord had admitted in writing that throughout the lease Tenants never failed to make additional rent payments when they were due. Landlord made this allegation by letter dated November 11, 2013 ("November 11 Letter"), claiming that Tenants owed payment for 2013 real estate tax charges in the amount of $13,250.00. See Exhibit "D". 50. Notably, in the same November 11 Letter, Landlord actually admitted that Tenants had always paid their real estate tax charges for every other year under the Lease: "The lease agreement is totally clear...that you must make monthly rental payments plus pay "Tenants Proportionate Share" of all annual real estate tax payment in the amount of 25%....You have made these payments each 10 year...You have been informed that this year the tax has increased from the original $26,000 to $79,000. You owe 74th LLC 25% of the difference, 25% of $53,000, or $13,250.00." [See Exhibit "D"; emphasis added.] 51. In the November 11 Letter, Landlord also admitted that throughout the Lease it had never demanded that Tenants pay any portion of the Building's water charges, See Exhibit 52. On or about January 22, 2014, Landlord sent to Tenants the Notice to Cure, which stated the following: Take notice that you are justly indebted to the Landlord of the above described Premises in the amount of $47,327.47 representing Tenant's Tax Payment for the years 2009, 2010, 2011, 2012 and 2013 and you are justly indebted to Landlord of the above described Premises in the amount of $836.22, representing Tenant's Water Payment for the years 2010, 2011, 2012 and 2013. You are required to pay the total sum of $48,163.69 on or before the expiration of the three days from the day of the service of this Notice, or surrender up the possession of said Premises to the Landlord, in default of which the Landlord will terminate the Lease and commence summary proceedings to recover the possession of the Premises." [See Exhibit "E"] 53. Landlord followed up the Notice to Cure with the Notice of Termination of Lease and Acceleration of Rent, which purported to give Tenants notice that the Lease not only would terminate in 5 days, but also purported to accelerate the entire rent due for the remainder of the Lease (total amount of $ 172,607.20). See Exhibit "G". D. Landlord Serves the Offer Notice Concerning the Building 54. As Landlord was making the foregoing improper demands through inaccurate notices, he was also exercising his right under the Lease to terminate it prematurely in exchange for the Termination Fee. 55. Hence, on or about November 27, 2013, Landlord delivered to Tenant a letter with the subject line "Notice of First Opportunity to Acquire 42 East 74th Street (the "November 11 27 Notice"), which Landlord claimed was an official "offer notice" that would trigger Tenants' right of first refusal pursuant to Article 61(B) of the Lease. 56. The "November 27 Notice" specifically provided, inter alia: Please take notice that Owner desires to sell the building, in its existing physical condition, for $ 17,600,000.00, all cash. Accordingly, this document constitutes the Offer Notice referenced in the Lease Agreement. In the event that you elect to purchase the building for the price and material terms set forth above, you must proceed in strict accordance with all of terms and requirements of the Lease, time being of the essence. [$ee Exhibit "C"] 57. Though the November 27 Notice arguably did not satisfy the requirements of Article 61(B) of the Lease as an official notice of sale under that provision, Landlord subsequently clarified and addressed those apparent defects by letter dated March 5, 2014, in a way that left Plaintiffs satisfied that the notice was compliant with Article 61(B) of the Lease. See Exhibit "H." E. Landlord Serves Tenants with a Notice of Termination 58. In addition to the foregoing March 5, 2014 Letter, Landlord served also Tenants (on that same day) with a "Notice of Termination of Lease" (the "Notice of Termination"), which constituted Landlord's formal notice of termination of lease in accordance with Article 61(C) of the Lease, by which Landlord elected to terminate the Lease effective September 10, 2014 (such date being six (6) months following the date of the notice). See Exhibit "I". 59. Specifically, pursuant to the Notice of Termination, Landlord proposed to sell the Building to a third party and elected to terminate the Lease: In accordance with article 61(C) of the Lease, Owner hereby elects to terminate the lease effective on September 10, 2014, such date being six (6) months following the delivery of this notice. See Exhibit "I." 60. Finally, on March 5, 2014, subsequent to the commencement of this action and after Landlord was served with Tenants' Complaint, Landlord's attorney withdrew the Notice to 12 Cure and Notice of Termination of Lease and Acceleration of Rent, expressly admitting that it had used incorrect information when preparing such notices ("It is true that the Tax Statements were prepared using incorrect information"). See Exhibit "H." F. Tenants Reasonably Rely on the Notice of Termination 61. After Landlord served Tenants with the Notice of Termination dated March 5, 2014, Tenants commenced an extensive search for alternative medical office space pursuant to the Notice of Termination. 62. Tenants relied on the Notice of Termination and acted upon it. With the Notice of Termination indicating that the lease would terminate on September 10, 2014, Tenants engaged a broker and began their search to lease new medical office space in Manhattan. See Exhibit "J." 63. During that search, Tenants inspected and evaluated the potential rental spaces located at 111 East 57th Street, 60 East 88th Street; 140 East 72nd Street, 30 East 72nd Street, 1095 Park Avenue; 161 East 69th Street, 160 East 66th Street; 230 East 61st Street, amongst others. See Exhibit "J." G. Landlord Purports to Withdraw the Notice of Termination 64. On or about March 26, 2014, three weeks after serving its Notice of Termination, Landlord improperly served Tenants with a "Withdrawal of Notice of Termination of Lease" (the "Withdrawal of Termination of Lease") dated March 26, 2014, by which Landlord purported to withdraw the Notice of Termination (presumably to avoid once again payment of the Termination Fee). See Exhibit "K." 65 On or about May 11, 2014, and due to Landlord's unlawful attempt to withdraw the Notice of Termination, Tenants served the First Amended Verified Complaint, which amended its first cause of action for declaratory judgment, requesting the declaration that the Withdrawal of Termination of Lease is defective, null and void. 13 LANDLORD IS NOT ENTITLED TO WITHDRAW THE NOTICE OF TERMINATION 66. Notwithstanding Defendants' false assertions, my lawyers advise me that Defendants are not permitted to withdraw the Notice of Termination for reasons that, from a legal perspective, are addressed in the accompanying memorandum of law. 67. I note here, however, that we accepted the Notice of Termination and we acted upon the Notice of Termination by reaching out to brokers, conferring with our counsel, and generally consuming time and expending efforts that otherwise could have been spent operating our medical practice. 68. Moreover, the Lease was extensively negotiated and agreed upon by sophisticated parties and our respective attorneys. The Lease does not permit Landlord to withdraw the Notice of Termination. 69. To the extent there is any doubt, and as more fully discussed in the memorandum of law, where the parties contemplated that Landlord would be permitted to withdraw a notice, the Lease expressly stated so. (See Exhibit "A", Section 61(B) (permitting Landlord to withdraw its decision to sell the building PRIOR to service of the Notice of Termination): "... it being expressly understood that the foregoing option to purchase the Building shall be a "one-time" option and that if Tenant shall waive its rights as aforesaid, Owner shall be free to withdraw the building from the market or to sell the building on any terms Owner sees fit." [Glasberg Aff., Exhibit "A", Section 61(3)] [emphasis added]. 70. By contrast, Section 61(C), the provision at issue here, has no such language. 71. Finally, and in the end, this notice withdrawal ought to be viewed in the larger context: It fits within Landlord's above-described pattern and practice of erratic conduct by, for example, repeatedly serving and then withdrawing notices in an effort to avoid payment of the Termination Fee. 14 72. Landlord's breaches of the lease and tortious conduct have caused Tenants significant harm and disruption in the course of their medical practice. Landlord's failure to perform its obligations, coupled with its scheme to prematurely terminate the Lease and then to attempt to withdraw that termination after service of the Notice of Termination, after we relied upon it, constitutes improper conduct for which Tenants seek relief through this motion. 15 CONCLUSION For all of the foregoing reasons and those set forth in the accompanying papers, Plaintiffs respectfully request that this Court grant Plaintiffs' motion for partial summary judgment, together with any and further relief this Court deems just and proper. PATRICIA A. CINA,TTI Notary Public, State of New York No. 01C16103487 SCOT BRADLEY GLASBERG, M.D Qualified in Queens County 'Commission Expires Dec. 29, 2016g Sworn to and subscribed before me / day of October, 2014 Notary Public