Exhibit,Appendix: Cherry Hill Gourmet, Inc. v. Lundy'S Management Corp.

On June 27, 2016 a Exhibit,Appendix was filed involving a dispute between Cherry Hill Gourmet, Inc., and Lundy'S Management Corp., for Real Property - Other (Yellowstone Injunction) in the District Court of Kings County.

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EXHIBIT T
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SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF KINGS
---------------------------------X
CHERRY HILL GOURMET, INC., : Index No.: 510844/16
:

Plaintiff,
AFFIDAVIT IN SUPPORT
-against- OF ORDER TO SHOW CAUSE
WITH TEMPORARY
LUNDY'S MANAGEMENT CORP., RESTRAINING ORDER

Defendant.

:
------------------------------:
LUNDY'S MANAGEMENT CORP., :

Defendant and :

Third-Party Plaintiff, :

-against- :

:
SHEEPSHEAD RESTAURANT ASSOCIATES, INC., :

Third-Party Defendant. :
__________--______------------X

STATE OF NEW YORK )
) ss.:
COUNTY OF KINGS )

GEORGE E. KAZANTZIS, being duly sworn, deposes, and says:

1. I am Vice President of Operations for Lundy's Management Corp. ("Lundy's"), the

defendant and third-party plaintiff in this action.

Lundy's'
2. I submit this affidavit, based on my personal knowledge and review of

Lundy's'
books and records, in support of Order to Show Cause with Temporary Restraining Order

seeking, among other things: (1) aYellowstone injunction and a preliminary injunction tolling the

cure period and enjoining third-party defendant Shcopshead Restaurant Associates, Inc.

("Sheepshead") from terminating Lundy's 49-year net lease or otherwise attempting to evict

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Lundy's; (2) mandatory and preliminary injunctions (i) compelling plaintiff Cherry Hill Gourmet,

Inc. ("Cherry Hill") to complete the TCO Work (defined below) and (ii) enjoining Cherry Hill

from using itswood-burning charcoal grillin violation ofthe New York City Building Code, from

ofthepremises'
removing the garbage containers other subteñañts, and fromidlingits refrigeration

premises'
truck on the parking lot.

3. The disputes among these parties involve an extensive litigation history that is

thoroughly detailed in the affiññãtion of Brett Theis, dated, August 15, 2016 [NYSCEF Doc No.

30] and my affidavit, sworn to September 29, 2017. A copy of the affirmation and my affidavit

are attached here as Exhibits A and B and are incorporated in this affidavit. The facts relevant to

this order to show cause are set forth below.

A. The Parties, the Net Lease. and the Subleases

4. Lundy's leases the land and buildings located at 1901 Emmons Avenue, Brooklyn,

New York (the "Premises") pursuant to a 49-year commercial net lease, dated March 9, 1994 (the

"Net Lease"), betwecn Lundy's, as tenant, and Sheepshead, as landlord. A copy of the Net Lease

is attached here as Exhibit C. Pursuant to the Net Lease, Lundy's subleases the premises to

multiple restaurants and office subteñãüts, including plaintiff Cherry Hill.

5. After taking possession, Lundy's invested over $10,000,000 to substantially

improve and develop the Premises, which was previously blighted. In the process, Lundy's helped

revitalize the Sheepshead Bay neighborhood in which the Premises are located.

"main"
6. The Premises contains two commercial buildings: a two-story building (the

"annex"
"Main Building") and a three-story building (the "Annex").

7. In March 1992, the New York City Landmarks Preservation Commission (the

"LPC") designated the Premises as a landmark.

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8. Pursuant to three subleases for three separate spaces in the Main Building, dated

(1) August 1, 2007; (2) July 2011; and (3) October 2013 (collectively, the "Subleases") between

Lundy's, as sublessor, and Cherry Hill, as sublessee, Cherry Hill subleases portions of the Main

Building (separately and collectively, the "Cherry Hill Premises"). Copies of the Subleases are

attached hereto as Exhibits D, E, and F, respectively.

B. Brief Background Summary and Cherry Hill's Chronic
and Ongoing Violations of the Law and the Subleases

9. As detailed in my prior affidavit (see Exhibit B), all of the litigation among these

parties stems from Cherry Hill's former illegal use of its subleased premises in violation of the

New York City Zoning Resolution and associated Department of Buildings ("DOB") and

Landmarks Preservation Commissioñ violations (the "DOB and LPC Violations").

10. As a result of Cherry Hill's illegal use and DOB and LPC Violations, Lundy's was

unable to obtain a certificate of occupancy ("CO") from the DOB and therefore Sheepshead

defaulted Lundy's under itsNet Lease. In turn, Lundy's defaulted Cherry Hill under the Subleases

due to Cherry Hill's illegal use and violations.

11. Cherry Hill and Lundy's both sought Yellowstone injunctions (see Cherry Hill

Gourmet, Inc. v. Lundy's Management Corp., Sup Ct, Kings County, Index No. 502300/12;

Lundy's Management Corp. v. Sheepshead Restaurant Associates, Inc., Sup Ct, Kings County,

Index No. 502226/13) and obtaiñed temporary restraining orders preserving the status quo.

12. However, on April 8, 2014, this Court ultimately denied Cherry Hill's Yellowstone

injunction. Simultaneously, this Court condnued Lundy's Yellowstone injunction to protect

Lundy's Net Lease from termination due to Cherry Hill's violations, and directed Lundy's to

proceed to evict Cherry Hill in Civil Court. Copies of these April 2014 orders are attached here

as Exhibits G and H, respectively.

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13. Ultimately, Cherry Hill avoided eviction by obtaining an amendment to the Zoning

Resolution to legalize its use. To cure the related DOB violations issued as a result of the illegal

1"
use, Cherry Hill was required to file and complete an "Alteration application with the DOB but,

years later, Cherry Hill has failed to obtain a sign-off on itsapplication (the "Alt-1 Application").

14. Hill's failure to complete itsAlt-1 Application and obtain other DOB sign-
Cherry

offs prevented (and continue to prevent) Lundy's from obtaining a temporary and permanent

certificate of occupancy ("TCO") for the Main Building and a CO for the Annex.

15. In order to save its valuable commercial Net Lease and multi-million-dollar

Lundy's'
investments in the Premises from a forfeiture, Lundy's made a deal with Sheepshead in

Lundy's'
bankruptcy proceeding In a nutshell, Sheepshead agreed not to terminate net lease on

the basis of a lack of a TCO provided that Lundy's agree to pay substantial monetary penalties (on

a monthly basis, which increase every six months) until Cherry Hill's violations are cured and

Lundy's is able to obtain a TCO (the "Bankruptcy Settlement"). A copy of the Bankruptcy

Settlement is attached here as Exhibit I.

16. Specifically, until Cherry Hill cured all of its DOB and LPC Violations, the

Bankruptcy Settlement required Lundy's to pay Sheepshead $10,000 per month in penalties from

April 2016 through September 2016, $20,000 per month in penalties from October 2016 through

March 2017, $30,000 per month in penalties from April 2017 through September 2017, and

$40,000 per month in penalties from October 2017 through March 2018 (the "TCO Penalties")

(see Bankruptcy Settlement [Settlement Outline] at ¶ 4). The TCO Penalties continue increasing

by $10,000 per month every six months.

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17. Obtaining a TCO for the Main Building, however, is impossible until Cherry Hill

completes its Alt-1 Application and resolves all of its issues with the DOB. To date, Cherry Hill

has failed to do so.

18. The Bankruptcy Settlement also required Lundy's to pay Sheepshead: $2,500 per

month in penalties from May 2016 through October 2016; $7,500 per month in penalties from

November 2016 through April 2017; $12,500 in penalties from May 2017 through October 2017;

and $17,500 in penalties from November 2017 through April 2018 until Lundy's obtains a

Premises'
certificate of occupancy for the Annex (the "Annex Penalties") (see Bankruptcy

3).1
Settlement {Settlement Outline] at ¶

19. The Bankruptcy Settlement further stated that if a TCO for the Annex lapses and:

"[I]s not fully restored within nine (9) months after

lapse, or is not replaced by a permanent certificate of
TCO penalties (all of which are non-
occupancy,
permanent) of $10,000.00 per month resume and
increase by $10,000.00 per month for each
period."
successive 6 month

(see Bankruptcy Settlement (Settlement Outline] at ¶ 5).

C. The Annex's TCO Lapsed in November 2016

20. Critically, during the bankruptcy proceedings, Lundy's invested tens to thousands

of dollars to remove old violations and was able to obtain a TCO for the Annex.

21. The TCO for the Annex was in effect until November 2, 2016 and lapsed after that

date, and has not been renewed, in part, because of Cherry Hill's open issues.

22. Thus, under paragraph 5 the Bankruptcy Settlement's Outline, the Annex Penalties

should have been stayed for nine months and should not have resumed until August 2017 (see

Cherry Hill'sstore islocated in theMain Buildin;;,not the Annex.

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Bankruptcy Settlement [Settlement Outline] at ¶ 5). After this nine-month period, Lundy's was

only required to pay $10,000 per month in Annex Penalties to Sheepshead from August 2017

through January 2018 (see Bankruptcy Settlement [Settlement Outline] at ¶ 5).

23. Despite the foregoing, Sheepshead continued charging Lundy's for the Annex

Penalties as if the Annex's TCO never lapsed.

D. The July 2017 Lease Modification Agreement

24. In July 2017, the parties memorialized the terms of the Bankruptcy Settlement into

a modifkation of the Net Lease as required by the Bankruptcy Settlement (the "Lease Modification

Agreement,"
a copy of which is attached here as Exhibit J).

25. The provision with respect to the TCO Penalties is set forth in paragraph 5 of the

Lease Modification Agreement (see Exhibit J at ¶ 5).

26. The Annex Penalties and TCO lapse provisions are set forth in paragraphs 4 and 6,

respectively, of the Lease Modification Agreement (see Exhibit J at ¶¶ 4 and 6).

27. I understand that both the TCO and Annex Penalties are unenforceable and void

against public policy. Thus, itis respectfully submitted that Sheepshead may not evict Lundy's

and/or seek to terminate the Net Lease based on these unenforceable penalties. In fact, Lundy's

has paid over $707,500 in TCO and Annex Penalties since 201 6 and Sheepshead should be

required to either give Lundy's a rent credit or refund those amounts to Lundy's. As further set

Lundy's'
forth below and in memorandum of law, ifthis Court determines, after a trial on the

merits, that the penalties are enforceable, Lundy's is willing and able to pay the Disputed Charges.

E. Cherry Hill Is Currently Preventing Lundy's from Obtaining
the TCO and Is Câüsiñg Lundy's to Incur Significant TCO Penalties

Lundy's'
28, In January 2018, the DOB's Brooklyn Borough Commissioner denied

application for a TCO because Cherry Hill had:

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a. Failed to get a plumbing sign-off for Job No. 321267847;

b. Failed to submit its flood zone compliance certificate for Job No. 321267847;

c. Failed to get a sign-off for its fire suppre:ssion system for Job No. 321578903; and

d. Failed to get a sign-off for its charcoal grill and exhaust system for Job No.

321397859 (collectively, the "TCO Work").

Copies of printouts from the DOB's website showing that Cherry Hill's engineer and architect

K.2
filed the applications for the foregoing jobs are attached here as Exhibit

29. On January 22, 2018, I emailed Cherry Hill notifying itof the foregoing issues and

demanding that it resolve them. A copy of this email is attached here as Exhibit L.

30. The following day, after Cherry Hill failed to respond, I followed up with another

Lundy's'
email (see Exhibit L). counsel also sent a letter to Cherry Hill's counsel demanding that

Cherry Hill resolve the DOB issues in order for Lundy's to obtain the TCO. A copy of the letter,

dated January 23, 2018, is attached here as Exhibit M.

Lundy's'
31. On January 24, 2018, Cherry Hill's counsel advised counsel that Cherry

Hill was working to resolve the issue with the charcoal grill, which requires changing the grill and

submitting a new filing to the DOB. A copy of the email exchange is attached here as Exhibit N.

32. This remains unresolved as of the date of this affidavit.

33. On February 2, 2018, I met with Alex Rabinovich (Cherry Hill's engineer). At that

meeting, he agreed to obtain the plumbing sign-off and flood zone compliance certificate. As of

the date of this affidavit however, Cherry Hill has neither obtained the plumbing sign-off nor

provided Lundy's with a copy of the compliance certificate.

2 The DOB website listsedditise! items that will have tobe resolvedby Lundy's once Cherry Hill finishesits
TCO Work. However, there is(and can be) no dispute thatCherry Hill'sincomplete TCO Work must be resolved
in orderfor Lundy's tobe able to obtain a TCO and avoid paying the penalties and the riskof being evicted.

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34. Moreover, the issues involving the fire suppression and charcoal grill present a far

larger problem. Mr. Rabinovich and I inspected Cherry Hill's existing charcoal grill and agreed

Lundy's'
that the DOB will never approve itbecause itis a wood-burning grill, which (according to

counsel) is prohibited in New York City (see NY City Building Code [Administrative Code of the

City of NY, tit 27, ch 14} § BC 27-826.01 ["Only accepted natural gas-fired barbecues or grilles

that employ an open flame for roasting or broiling . .. shallbe installed."]).

35. In fact, upon information and belief, it was Cherry Hill's wood-burning grill that

previous fire in the Main Building resulting in approximately $200,000 in property damage.

36. Thus, Cherry Hill must immediately cease using itswood-burning charcoal grill

and file a post-amendment application to replace the grill with a gas-fired grill in the Premises.

There is no telling how long Cherry Hill will take to resolve this issue caused by its illegal grill,

Premises'
which jeopardizes the health and safety of the other subtenants.

37. Until Cherry Hill resolves all ofits issues with the DOB, Lundy's cannot obtain the

TCO and continues incurring TCO Penalties.

38. To date, as a result of Cherry Hill's failure to resolve its issues, Lundy's has paid

Sheepshead $520,000 in unenforceable TCO Penalties.

Lundy's'
39. counsel has advised me that Lundy's needs a mandatory injunction

against Cherry Hill requiring Cherry Hill to resolve the issues in order to obtain the TCO and stop

the TCO Penalties.

F. Cherry Hill Violated Its Sublease by
Lundy's'
Improperly Moving Garbage Containers

Lundy's'
40. Cherry Hill has also hicached its2013 Sublease by improperly moving

garbage containers.

41. Paragraph 3.4 of the 2013 Sublease provides, in relevant part:

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"The Sublandlord exercises itsright, pursuant to . ..
the Sublease, to designate the area specified in
Exhibit B of this Agreement as the location where

Subtenant shall store its garbage from the Aggregate
Premises until the time that it is collected, at the

Subtenant's expense, by the garbage disposal service
engaged by Subtenant. The Subtenant acknowledges

that the area specified in Exhibit C of thisAgreement

is the location where the Sublandlord and its

subtenants, licensees and occupants, other than the

Subtenant, may store any garbage until it iscollected
service."
by the applicable garbage disposal

(2013 Sublease, Exhibit F, at ¶3.4).

42. Cherry Hill violated (and continues to violate) paragraph 3.4 of the 2013 Sublease

Lundy's'
by removing the garbage and garbage containers of subtenants from the designated area

marked in Exhibit C to the 2013 Sublease and placing the garbage and garbage containers on the

sidewalk, the street, and an alleyway that blocks egress, causing serious safety issues.

43. In June 2016, Lundy's issued a Notice to Cure demanding that Cherry Hill cure this

default. A copy of the Notice to Cure, dated June 20, 2016, is attached here as Exhibit O.

44, Cherry Hill complied until recently when itnotified Lundy's on February 13, 2018

out"
at 4:24 p.m. that "we pulled the dumpster of the parking lot. A copy of this email, my

Lundy's'
response, and letter to all subtenants are attached here as Exhibit P.

45. The 2013 Sublease is crystal clear that Lundy's has the right to maintain a garbage

Lundy's'
coñtaiñer in the parking lot. Cherry Hill's brazen removal of garbage container is causing

Lundy's'
health and safety issues, and is interfering with managcment of the Premises and the

Lundy's'
businesses of other subtenants.

46. Itis respectfully submitted that this Court should issue an order directing Cherry

Hill to return the garbage containers to the locations set forth on Exhibit C to the 2013 Subicase

and enjoining Cherry Hill from removing the containers.

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G. Cherry Hill Is Violating the Subleases and Is Creating a Nuisance

by Continuously Idling Its Refrigeration Truck on the Premises

47. Cherry Hill further breached the Subleases by parking and idling a refrigeration

Premises'
truck on the parking lot. Cherry Hill uses the truck for cold storage and idles the truck

Premises'
all day, creating noise and air pollution that contimiously harms the other subtenants

and violates the City's regulations.

48. Last week, I repeatedly emailed Cherry Hill demanding that it remove the truck

from the Premises. Copies of emails with attachments and pictures Hill's
my showing Cherry

truck are attached here as Exhibit Q.

49. To date, Cherry Hill has failed to do so and continues idling the truck.

H. The January 2018 Stipulation

50. Cherry Hill's breaches of its subleases caused Lundy's enormous fiñañcial strain

and forced Lundy's to enter into certain agreements to pay the penalties to Sheepshead to avoid

being evicted, As a result, Lundy's occasioned a cash-flow issue in January 2018 and requested a

payment schedule from Sheepshead.

51. As relevant here, by stipulation dated January 30, 2018 (the "January 2018

Stipulation"), Lundy's agreed to pay $154,251.93 (representing the arrears due through January

to Sheepshead in five installments or $30,850.38 per inanth A of the
2018) approximately copy

January 2018 Stipulation is attached here as Exhibit R. The first installment under the January

2018"
2018 Stipulation was due "on or before . .. February 15, (January 2018 Stipulation at13).

52. The January 2018 Stipulation also stated that Lundy's would make the final

payment of $30,479.92 due under a prior stipulation on or before February 15, 2018 (see January

2018 Stipulation at 15 and footnote 1). In addition, paragraph 4 of the January 2018 Stipulation

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time"
states, as relevant here, that the paymeñts "rnay be pre-paid at any (January 2018 Stipulation

at ¶ 4).

53. Pursuant to the January 2018 Stipulation, Lundy's pre-paid the two February 2018

payments to Sheepshead. Copies of the checks, dated February 6, 2018 and ñürñbered 2097 and

2099, and proof that Sheepshead deposited the checks are attached here as Exhibit S.

L The Current Default Notice

54. Despite making the foregoing payments as required by the January 2018

Stipulation, Lundy's received a Five Day Notice of Default, dated February 16, 2018 (the "Default

Notice,"
a copy of which is attached here as Exhibit T) from Sheepshead's counsel alleging that

Lundy's defaulted on the January 2018 Stipulation. Specifically, the Default Notice states:

"[Lundy's'] payments via checks dated February 6,
2018 in the respective amounts of$30,479.82 (Check

#2097) and $30,850.38 (Check #2099) were first

applied to the current rent and additional rent charges
."
for February 2018 . .

(Default Notice at p. 1).

55. The Default Notice demanded that Lundy's pay Sheepshead $147,962.5 (the

"Disputed Charges") by February 21, 2018 and threatened to evict Lundy's if itdid not do so (see

Default Notice at p. 2).

56. Under the Net Lease, however, the February 2018 rent was not due until February

Lundy's'
10, 2018. Paragraph 3A of the Net Lease specifically states that monthly rent is due by

month"
"the tenth (10th) day of each and every calendar (Net Lease at ¶ 3A).

57. Thus, when Sheepshead received the two February 2018 checks from Lundy's, it

was obligated to apply the amounts as payments under the January 2018 Stipulation, not towards

February's rent. Sheepshead only did so to manufacture a basis to claim a default under the

January 2018 Stipulation and attempt to evict Lundy's from the Premises.

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58. Moreover, Sheepshead has overcharged (and Lundy's has overpaid) a significant

amount for the Annex Penalties. As discussed above, the Annex's TCO lapsed in November 2016.

-- in the event this Court determines that the penalties do not violate public --
Accordingly policy

Lundy's was not required to pay any Annex Penalties to Sheepshead for nine months, until August

2017 (see Bankruptcy Settlement [Settlement Outline] at ¶ 5; Lease Modification Agreement at

¶ 6). From August 2017 through January 2018, the Lundy's was only required to pay $10,000 per

month in Annex Penalties to Sheepshead -- $60,000 in total (see Settlement
Bankruptcy

[Settlement Outline} at ¶ 5; Lease Modification Agreement at ¶ 6).

59. Sheepshead, however, charged (and Lundy's paid in good faith) approximately

$187,500 in Annex Penalties. Thus, even if the TCO and Annex Penalties are enforceable,

Lundy's was overcharged by $127,500 and is entitled to recover this amount from Sheepshead.

60. Lundy's further believes that Sheepshcad has substantially overcharged Lundy's

Lundy's'
for water and sewer charges for which Lundy's is entitled to a refund or a credit to

account. Lundy's has repeatedly demanded a reconciliation of water and sewer charges and

refused.3
payments but Sheepshead has Lundy's requires an accounting of all water and sewer

charges paid to Sheepshead to determine how much Lundy's has overpaid.

61. Relatedly, Lundy's previously paid considerable late charges to Sheepshead

attributable to the real estate tax charges that were charged to Lundy's -- for which
improperly

Lundy's was never refunded -- and therefore Lundy's is entitled to be refunded those improper

Lundy's'
late charges for which itpaid. counsel sent a letter to Sheepshead's counsel setting forth

3 Lundy's'
At request, Sheepshead performed a similarreconcilisticiiof realestate taxcharges and ecñceded that
Sheepshcad had overcharged Lundy's by approximately $26,000. A copy of thisreconciliation isanached here
as ExhibitU.

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these claims to Sheepshcad's counsel seventeen months ago. A copy of this letter is attached as

Exhibit V.

Lundy's'
62. In sum, Sheepshead is once again seeking to capitalize on untenable

situation -- as is caused Hill's breaches of its subleases and failure to
which, discussed, by Cherry

resolve its DOB issues -- to evict Lundy's and force Lundy's to forfeit its multi-million dollar

investments in the Premises.

63. Accordingly, to protect itsNet Lease and significant investments in the Premises

Lundy's'
and the health, safety, and welfare of subtenants and their customers, Tenant is filing this

order to show injunctive relief to prevent

Case Info

Judge

Karen B Rothenberg Track Judge’s New Case

Case No.

(Subscribe to View)

Document Filed Date

April 16, 2021

Case Filing Date

June 27, 2016

County

Parties

Cherry Hill Gourmet, Inc. Plaintiff
KEZUNOVIC, DEJAN Attorney for the Defendant
Lundy's Management Corp. Defendant
NAPOLETANO, DOMENICK Attorney for the Plaintiff
SEDDIO, FRANK R. Attorney for the Defendant
TAMIR, ZAKI ISAAC BAHAR Attorney for the Plaintiff
THEIS, BRETT B Attorney for the Defendant
WONG, GREGORY Attorney for the Defendant
ZINGMAN, MITCHELL S Attorney for the Plaintiff
GEOFFREY BOWSER Attorney
ALEX KLEYMAN Attorney
CHERYL GINSBURG Attorneys for Plaintiffs
ETERI SALADZE Attorney
WILLIAM COURY Attorney
HAJIN SUH Attorney
PAUL GOLDEN Attorney
ASA HYDE Attorneys for Defendants
BROOK BOYD Attorney
HOWARD HORNSTEIN Attorney
JACOB SUSLOVICH Attorney
RALPH PREITE Attorneys for Defendants
NAZAR KHODOROVSKY Attorney
MICHAEL KING Attorney
JIMMY WAGNER Attorney
STUART ISRAEL Attorney
STUART JACOBS Attorney
WILLIAM CHOU Attorneys for Plaintiffs
STACY JACOBS
ABRAHAM DAVID Attorney
MICHAEL MARTENS Attorney
FRANK LIVOTI Attorney
NICHOLAS YOKOS Attorneys for Plaintiffs
KENNETH KNUCKLES Attorney
ROBERT GUERRA Attorney
JACK EVANS Attorney
ALLEN POPPER Attorney
FRANCIS POLI Attorney
HOWARD HO Attorney
DOUGLAS PICK Attorneys for Plaintiffs
FRANK WAGNER Attorney
ANDREW KURTZ Attorney
SIMOS DIMAS Attorneys for Plaintiffs
GREGORY MESSER Attorney
William Curtin Attorney
RICHARD WEINBERGER Attorney
DUSTIN BOWMAN Attorney
PETER KAKOYIANNIS Attorney

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