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FILED: KINGS COUNTY CLERK 06/01/2021 04:35 PM INDEX NO. 510844/2016
NYSCEF DOC. NO. 732 RECEIVED NYSCEF: 06/01/2021
EXHIBIT B
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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 OF
-against- DEFENDANT'S MOTION FOR
PARTIAL SUMMARY
LUNDY'S MANAGEMENT CORP., JUDGMENT AND TO DISMISS
AFFIRMATIVE DEFENSES
Defendant.
X
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 of defendant Lundy's Management Corp.
("Lundy's").
2. I submit this affidavit, based on my personal knowledge and review of Lundy's'
books and records, in support of Lundy's' motion for, among other things, partial summary
judgment and to dismiss the affirmative defenses of plaintiff Cherry Hill Gourmet, Inc. ("Cherry
Hill").
3. This case involves an extensive litigation history between the parties that is
thoroughly detailed in my prior affidavit, sworn to August 15, 2016, as well as the affirmation of
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Brett B. Theis, dated August 15, 2016. A copy of my prior affidavit and the Theis affirmation
are attached here as Exhibit A and incorporated in this affidavit. The facts relevant to this
motion 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 "Property") pursuant to a 49-year commercial net lease, dated March
9, 1994 (the "Net Lease"), between Lundy's, as tenant, and non-party Sheepshead Restaurant
Associates, Inc. ("Sheepshead"), as landlord. A copy of the Net Lease is attached here as Exhibit
B.
5. The Property contains two commercial buildings: a two-story "main" building
(the "Main Building") and a three-story "annex" building (the "Annex").
6. In March 1992, the New York City Landmarks Preservation Commission (the
"LPC") designated the Main Building and the Annex collectively as a landmark.
7. Cherry Hill operates a grocery and delicatessen store in portions of the ground
floor and second floor in the Main Building (the "Premises") pursuant to three subleases — 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. Copies of the Subleases are
attached here as Exhibits C, D, and E, respectively.
8. As detailed below, Cherry Hill has repeatedly and continuously violated its
obligations under the law and the Subleases from the beginning of its tenancy in the Premises.
As a result, Lundy's has incurred significant damages and litigation costs for which Cherry Hill
should be held liable under the Subleases.
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B. The Subleases Require Cherry Hill to Comply with Laws and to
Indemnify Lundy's for Damages Incurred as a Result of Cherry Hill's Breaches
9. The Subleases require Cherry Hill to comply with laws and to indemnify Lundy's
for damages caused by Cherry Hill's breaches of the Subleases.
10. Specifically, Paragraph 6(a) of the Net Lease, which is incorporated by paragraph
5.2 of the 2007 Sublease (see 2007 Sublease, Exhibit C, at ¶ 5.2), provides, as relevant here, that:
"(a). . . Tenant shall be permitted to use the Leased
Premises for any and all lawful purposes, subject,
however to zoning ordinances, Laws, the orders,
rules and regulations of the Board of Fire Insurance
Underwriters and any similar bodies having or
asserting jurisdiction thereof now in effect or
hereafter adopted by any governmental authority
having or asserting jurisdiction, and such
conditions, restrictions and other encumbrances, if
any, to which the Leased Premises are subject . . .
(b) Tenant shall not use or occupy or permit the
Leased Premises to be used or occupied, nor do or
permit anything to be done in or on the Leased
Premises or any part thereof, in a manner that would
in any way violate any certificate of occupancy
affecting the Leased Premises . ."
(Net Lease, Exhibit B, at ¶ 6).
11. Paragraph 7(a) of the Net Lease, as incorporated by the Subleases, provides, in
relevant part:
"Tenant shall, throughout the Term of this Lease,
and at Tenant's sole cost and expense, promptly
comply, or cause compliance: (i) with all Laws,
whether present or future, foreseen or unforeseen,
ordinary or extraordinary, and whether or not the
same shall be presently within the contemplation of
Landlord and Tenant or shall involve any change of
governmental policy, or require structural or
extraordinary repairs, alterations, or additions, and
irrespective of the cost thereof, which may be
applicable to the Leased Premises . .
(Net Lease, Exhibit B, at ¶ 7[a]).
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12. Paragraph 10.3 of the 2007 Sublease provides, in relevant part, that:
"The Subtenant acknowledges that all or part of the
Overlease Premises (including the Sublease
Premises) is subject to the jurisdiction of the
Landmarks Preservation Commission, and therefore
that certain alterations to the Sublease Premises
may be prohibited or substantially restricted. The
Subtenant further agrees that it will not place any
sign on, or otherwise alter in any way, the exterior
walls of the Sublease Premises, without the prior
written consent of the Sublandlord . . ."
(2007 Sublease, Exhibit C, at ¶ 10.3).
13. In addition, Paragraph 6.3 of the 2007 Sublease, as incorporated by the 2011 and
2013 Subleases, requires Cherry Hill to indemnify Lundy's for all damages caused by Cherry
Hill's breaches of the Sublease, stating, as relevant here:
"Subtenant shall indemnify, defend and hold
harmless Sublandlord from and against any loss,
cost, damage or expense (including reasonable
attorneys' fees), or any claim therefor, arising out of
. . . any failure by Subtenant to observe or perform
any of the terms, covenants or conditions of this
Sublease required to be observed or performed by
Subtenant, including any loss, cost, damage or
expense which may result from (i) any default under
or termination of the Overlease arising by reason of
any such failure . . . "
(2007 Sublease, Exhibit C, at ¶ 6.3 [emphasis added]).
14. Paragraphs 2 of the 2011 Sublease and 2013 Sublease respectively incorporate the
terms of the 2007 Sublease, including the foregoing provisions (see 2011 and 2013 Subleases,
Exhibits D and E, at ¶ 2).
15. Thus, Cherry Hill must indemnify Lundy's if Cherry Hill either breaches the
Subleases or causes Lundy's to default under the Net Lease.
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(i) In Breach of the Subleases, Cherry Hill Violates
the Zoning Resolution and the Landmarks Law
16. The Premises are located in Area B of the Special Sheepshead Bay Zoning
District which (prior to May 2015) prohibited Use Group 6 food stores. I
17. To build-out the Premises, Cherry Hill filed an Alteration Type 2 application (the
"Alt-2 Application") with the New York City Department of Buildings (the "DOB") representing
that Cherry Hill was not changing the use of the Premises.
18. Cherry Hill, however, did change the use of the Premises and, thus, was required
to file an Alteration Type 1 application (the "Alt-1 Application"). In fact, Cherry Hill openly
violated the zoning laws by opening and operating a grocery and delicatessen store at the
Premises (the "Illegal/Non-Conforming Use").
19. Cherry Hill intentionally filed an Alt-2 Application (instead of an Alt-1
Application) in an attempt to conceal its Illegal/Non-Conforming Use from the DOB and to
avoid the lengthy approval process for Alt-1 Applications.
20. The DOB discovered Cherry Hill's Illegal/Non-Conforming Use and issued a
violation (see Exhibit A to the Notice of Default, dated August 6, 2012, attached here as Exhibit
G).
21. In addition, Cherry Hill — without obtaining the approvals and permits required by
applicable law and the Subleases — installed, among other things, an awning, a fence, and a
sidewalk enclosure on the Premises and altered the Property's rear façade, all in violation of the
New York City Landmarks Law.
1 The Zoning Resolution was amended to allow Use Group 6 food stores in the zoning district effective May 27,
2015 (see New York City Zoning Resolution § 94-061[B]). A copy of the foregoing section and Zoning
Resolution § 94-062 showing that the zoning district did not permit food stores as of right prior to May 2015 is
attached here as Exhibit F.
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22. As a result, from March 2009 through October 2016, the LPC issued numerous
violations relating to the Premises (collectively, the "LPC Violations"), including the following
violation that are active as of September 2017:
a. No. 17-0309 due to Cherry Hill's installation of sliding doors without a
permit;
b. No. 17-0310 due to Cherry Hill's installation of a side-walk enclosure
without a permit;
c. No. 17-0311 due to Cherry Hill's installation of a fence without a permit;
d. No. 17-0313 due to Cherry Hill's installation of cameras, light fixtures,
and conduits without a permit;
e. No. 17-0314 due to Cherry Hill's installation of signage on Emmons
Avenue and Ocean Avenue without permits;
f. No. 09-0980 due to Cherry Hill's installation of an awning without a
permit;
g. No. 09-0982 due to Cherry Hill's alteration of the rear façade and
installation of HVAC units without permits.
Copies of printouts from the DOB's website, each dated September 28, 2017, showing that the
foregoing active LPC Violations are attached here as Exhibit QQ.
23. Despite causing the LPC Violations, Cherry Hill did nothing to cure the
violations, which remained of record for years.
24. As detailed below, Cherry Hill's Illegal/Non-Conforming Use and LPC
Violations caused Sheepshead, the owner of the Property, to default Lundy's under the Net
Lease, triggering extensive litigation and jeopardizing Lundy's' Net Lease and multimillion-
dollar investments in the Property.
(ii) Cherry Hill's Illegal/Non-Conforming Use and LPC Violations
Cause Sheepshead to Default Lundy's Under the Net Lease
25. In August 2012, Lundy's issued multiple notices of default to compel Cherry Hill
to pay its arrears and to cure its Illegal/Non-Conforming Use and LPC Violations (among
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numerous other breaches of the Subleases), which put Lundy's in default of its obligations under
the Net Lease. Copies of the August 2012 notices of default are attached here as Exhibit G.
26. Cherry Hill, however, neither discontinued its Illegal/Non-Conforming Use nor
cured its LPC Violations, which precluded Lundy's from obtaining a certificate of occupancy for
the Main Building.
27. Instead, Cherry Hill continued to illegally operate its grocery and delicatessen
store and commenced an action in this Court seeking a Yellowstone injunction while it attempted
to legalize its Illegal/Non-Conforming Use (see Cherry Hill Gourmet, Inc v Lundy's
Management Corp., Sup Ct, Kings County, Index No. 502300/2012 [the "Cherry Hill
Yellowstone Action"]).2
28. In November 2013, Sheepshead (the overlandlord) issued a Twenty Day Notice to
Cure Default (the "November 2013 Default Notice") to Lundy's based on Cherry Hill's
Illegal/Non-Conforming Use, the LPC Violations, and the lack of a certificate of occupancy for
the Main Building. The November 2013 Default Notice threatened to terminate the Net Lease.
A copy of the November 2013 Default Notice is attached here as Exhibit H.
29. Until Cherry Hill resolved its Illegal/Non-Conforming Use and other violations, it
was impossible for Lundy's to cure its Cherry Hill-caused defaults.
2
In initiating the Cherry Hill Yellowstone Action, Cherry Hill first sought a Yellowstone injunction with regard to
its monetary defaults (i.e., the notice of default dated August 2, 2012) and did not initially seek an injunction for
its Illegal/Non-Conforming Use and LPC Violations (i.e.,the notice of default dated August 6, 2012) (see
Cherry Hill Yellowstone Action [NYSCEF Doc Nos. 1-10]. Only months later, after Sheepshead defaulted
Lundy's and Lundy's issued additional default notices to Cherry Hill (as discussed below), did Cherry Hill seek
a Yellowstone injunction for its Illegal/Non-Conforming Use and LPC Violations (see Cherry Hill Yellowstone
Action [NYSCEF Doc Nos. 40-50]). The Court granted a temporary restraining order with respect to Cherry
Hill's monetary default and directed Cherry Hill to give the unpaid rent to Lundy's to be held in escrow (see
Cherry Hill Yellowstone Action [NYSCEF Doc No. 28]). In September 2012, the Court denied Cherry Hill's
order to show cause seeking a Yellowstone injunction and released the escrowed rent to Lundy's (see Cherry
Hill Yellowstone Action [NYSCEF Doc No. 29]).
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30. Despite the foregoing, Cherry Hill refused to cooperate with Lundy's to address
the alleged defaults set forth in the November 2013 Default Notice and, thus, jeopardized
Lundy's ability to keep its Net Lease and possession of the Property.
31. As a result of Cherry Hill's defaults, Lundy's commenced an action in this Court
to protect its Net Lease and to avoid forfeiting its multimillion-dollar investments and
improvements in the Property, seeking, among other things, a Yellowstone injunction (see
Lundy's Management Corp. v Sheepshead Restaurant Associates, Inc., Sup Ct, Kings County,
Index No. 502226/2013 [the "Lundy's Yellowstone Action"]).
32. In February 2014, Lundy's issued a Ten (10) Day Notice to Cure Default to
Cherry Hill in another attempt to compel Cherry Hill to cure its Illegal/Non-Conforming Use,
which was the cause of Lundy's' default under the Net Lease. A copy of the February 2014
notice is attached here as Exhibit I.
33. That same month, Cherry Hill moved for a second Yellowstone injunction in the
Cherry Hill Yellowstone Action and asked for more time to cure its admitted Illegal/Non-
Conforming Use (see Cherry Hill Yellowstone Action [NYSCEF Doc Nos. 40-50]).
34. In an affidavit in support of Cherry Hill's order to show cause, Novakh Yevadyev
(Cherry Hill's assistant manager at the time) stated that Cherry Hill hired a law firm to
"handl[e]. . . the City Planning issue" and to "hav[e] the use legalized" (Cherry Hill Yellowstone
Action [NYSCEF Doc No 42 at 4]). A copy of the foregoing affidavit, dated February 26, 2014,
is attached here as Exhibit HH.
35. Cherry Hill also attached a letter from its law firm, dated January 22, 2014,
explaining that it was representing Cherry Hill "in connection with the legalization of the Use
Group 6 food store located at the Premises, which is not permitted as-of-right in Area B of the
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Special Sheepshead Bay District" (Cherry Hill Yellowstone Action [NYSCEF Doc No 47]
[emphasis added]). A copy of the foregoing letter is attached here as Exhibit II.
36. Given Cherry Hill's foregoing admission that it was seeking to legalize its
Illegal/Non-Conforming Use in February 2014, there is simply no question that its use violated
the Zoning Resolution since the inception of its tenancy at the Premises.
37. During this time, Cherry Hill also wrongfully withheld rent from Lundy's without
any basis to do so. Thus, in March 2014, Lundy's commenced four non-payment proceedings in
Civil Court to recover approximately $300,000 in unpaid rent and additional rent from Cherry
Hill. Copies of the non-payment petitions are attached here as Exhibit J.
38. In April 2014, this Court held a joint hearing for the Cherry Hill Yellowstone
Action and the Lundy's Yellowstone Action.
39. Critically, after the hearing, this Court (Demarest, J.) issued an order vacating
Cherry Hill's Yellowstone injunction, holding that:
"Upon plaintiffs admission that its current use of
the premises is not in conformity with any
certificate of occupancy and undisputed evidence
that, since taking occupancy, plaintiff has modified
its use so as to create a non-conforming use, the
Yellowstone injunction ... is vacated" (emphasis
added).
A copy of the foregoing Decision and Order dated April 8, 2014, is attached here as Exhibit K.
40. This Court issued a separate order, also dated April 8, 2014, continuing Lundy's'
Yellowstone injunction on the condition that Lundy's purchase a $1,050,000 injunction bond (the
"$1MM Yellowstone Bond") and further stated that:
"[Lundy's] is now free to commence a summary
proceeding against its sub-tenant Cherry Hill so as
to cure the illegal occupancy which is one of the
allegations of default under the [Net] Lease"
(emphasis added).
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A copy of the foregoing Decision and Order dated April 8, 2014, is attached here as Exhibit L.
41. In light of the Court's two foregoing orders, there is simply no doubt that Cherry
Hill's Illegal/Non-Conforming Use violated the laws and the Subleases.
42. Cherry Hill's Illegal/Non-Conforming Use and the LPC Violations also forced
Lundy's to obtain the $1MM Yellowstone Bond to save its Net Lease and multimillion-dollar
investments and improvements in the Property.
43. To purchase the $1MM Yellowstone Bond, Lundy's actually needed $1,155,000
in cash because the bonding companies require 100% cash collateral as security and charge a
10% fee.
44. Unfortunately, Lundy's was unable to gather the cash for the $1MM Yellowstone
Bond in time to comply with the Court's order.
(iii) Sheepshead Forced Lundy's Into Bankruptcy
Due to Cherry Hill's Defaults Under the Subleases
45. As a result of Cherry Hill's defaults under the Subleases and Lundy's' inability to
obtain the $1MM Yellowstone Bond, Lundy's was forced to file for Chapter 11 bankruptcy in the
United States Bankruptcy Court, Eastern District of New York (the "Bankruptcy Court") to
protect its Net Lease and its creditors (see In re Lundy's Management Corp., Docket No. 1-14-
42318-ESS [the "Bankruptcy Proceeding"]).
46. Thus, Cherry Hill's utter disregard for the law and the Subleases had caused
Sheepshead to default Lundy's and forced Lundy's into bankruptcy.
47. Adding insult to injury, Cherry Hill then had the audacity to withhold hundreds of
thousands of dollars of rent while Lundy's was in bankruptcy without any basis whatsoever.
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48. Cherry Hill undoubtedly hoped that Lundy's would dissolve and that Cherry Hill
could avoid paying its significant rent arrears to Lundy's and to enter into a more advantageous
lease directly with Sheepshead.
49. To further its plan, Cherry Hill actively attempted in bad faith to destroy Lundy's'
business during the eighteen-month Bankruptcy Proceeding.
50. In fact, in addition to withholding rent, Cherry Hill filed papers in support of
Sheepshead's motion to convert the Bankruptcy Proceeding to a Chapter 7 liquidation
proceeding, which would have forced Lundy's out of business if successful. A copy of the
papers that Cherry Hill submitted in the Bankruptcy Proceeding is attached here as Exhibit JJ.
51. At the time that Cherry Hill filed the papers in the Bankruptcy Proceeding, it had
withheld approximately $400,000 in rent from Lundy's, including monthly rent and its overdue
share of the real estate taxes.
52. Further, Cherry Hill frivolously attempted to remove the non-payment
proceedings and the Cherry Hill Yellowstone Action from State Courts to the United States
District Court for the Eastern District of New York (the "EDNY") (see Cherry Hill Gourmet,
Inc. v Lundy's Management Corp., US Dist Ct, ED NY, 14 Civ 06282, Cogan, J., 2014 [the
"EDNY Action"]).
53. Cherry Hill's bad-faith actions in the EDNY Action forced Lundy's to incur
additional damages and legal fees, including to move for an order remanding the Cherry Hill
Yellowstone Action and the non-payment proceedings back to State Court.
54. The EDNY (Cogan, J.) granted Lundy's motion, finding that:
"The cases have either been litigated in state court
for a number of years, or are on the eve of trial. All
of the cases were commenced prior to Lundy's'
Chapter 11 filing, yet Cherry Hill waited over five
months to remove these actions. This smacks of
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bad faith" (Decision and Order at 5 [emphasis
added]).
A copy of the EDNY's Decision and Order, dated November 13, 2014, is attached here as
Exhibit M.
55. Cherry Hill also continued attending all of the hearings in the Bankruptcy
Proceeding to support Sheepshead's attempts to terminate the Net Lease and to oppose Lundy's'
every move, further amplifying Lundy's' damages.
(iv) Lundy's Agreed to the Costly Bankruptcy
Settlement to Save Its Business and Net Lease
56. Ultimately, in November 2015, Sheepshead realized that it was unable to evict
Lundy's from the Property and agreed to a settlement.
57. As part of the agreement, Sheepshead agreed to waive its rights to seek to
terminate Lundy's Net Lease on the basis of Cherry Hill's Illegal/Non-Conforming Use and
associated DOB, Environmental Control Board, and landmark violations provided that Lundy's
agreed to: (a) pay an increased monthly rent to Sheepshead; (b) reimburse Sheepshead for legal
fees; and (c) pay escalating monthly penalties to Sheepshead until Cherry Hill obtained all
required sign-offs and properly closed out its Alt-1 Application, thus permitting Lundy's to
obtain a temporary certificate of occupancy for the Main Building (the "TCO") (the "Bankruptcy
Settlement," a copy of which is attached here as Exhibit N).3
58. 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
3
The terms of the Bankruptcy Settlement are set forth in Exhibit A to the "Stipulation Dismissing Debtor's
Chapter 11 Case with Prejudice, Retaining Jurisdiction Over Legal Fees, and Providing Other Relief' (i.e., the
Settlement Outline, dated November 13, 2015). All references to the Bankruptcy Settlement will be to the
Settlement Outline.
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$40,000 per month in penalties from October 2017 through March 2018 (the "TCO Penalties")
(see Bankruptcy Settlement [Settlement Outline], Exhibit N, at ¶ 4).
59. The amount of the penalties increase by $10,000 every six months until Lundy's
obtains the TCO (see Bankruptcy Settlement [Settlement Outline], Exhibit N, at ¶ 4), which it
was not able to do because Cherry Hill failed to close out its Alt-1 Application and failed to
resolve all of its DOB and LPC Violations.
60. In fact, Lundy's' architect, John Haskopoulos, signed an affidavit confirming that
Lundy's was unable to obtain the TCO until after Cherry Hill completed its Alt-1 Application
and resolved its LPC Violations. A copy of the affidavit, sworn to on November 2, 2015, is
attached here as Exhibit 0.
61. Accordingly, Lundy's can terminate its obligation to pay the increasing TCO
Penalties to Sheepshead only after Cherry Hill resolved its violations.
(v) Cherry Hill Continued Refusing to Cure
Its Violations and Causing Lundy's Damages
62. In March 2015, Cherry Hill obtained the City Planning Commission's approval to
amend the Zoning Resolution to legalize its Illegal/Non-conforming Use (see City Zoning
Resolution § 94-061[B], Exhibit F).
63. Legalizing its Illegal/Non-Conforming Use, however, was insufficient to resolve
the DOB violations because Cherry Hill was also required to file and to obtain a sign-off on its
Alt-1 Application.
64. Throughout 2016, Cherry Hill simply ignored Lundy's' repeated requests to
resolve the Alt-1 Application and the LPC Violations and prevented Lundy's from obtaining the
TCO.
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65. I wrote a letter to Cherry Hill, dated December 30, 2016, advising Cherry Hill that
its failure to obtain the sign-off on its Alt-1 Application and to cure its LPC Violations continued
to cause Lundy's to incur damages. A copy of my December 2016 letter is attached here as
Exhibit P.
66. Cherry Hill did not obtain the DOB's approval of its Alt-1 Application until April
2017 and continued refusing to cure the LPC Violations. A copy of a printout from the DOB's
website, dated September 27, 2017, showing the foregoing is attached here as Exhibit KK.
67. In light of the escalating TCO Penalties, Lundy's could no longer wait for Cherry
Hill to resolve the LPC Violations — Cherry Hill's prolonged and inexplicable failure to cure the
violations demonstrated its lack of intent to do so.
68. Thus, although Cherry Hill remains solely responsible for removing the LPC
Violations of record, Lundy's exercised its right to cure some of the LP
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FILED: KINGS COUNTY CLERK 06/01/2021 04:35 PM INDEX NO. 510844/2016 NYSCEF DOC. NO. 732 RECEIVED NYSCEF: 06/01/2021 EXHIBIT B FILED: KINGS COUNTY CLERK 10/12/2017 06/01/2021 05:19 04:35 PM INDEX NO. 510844/2016 NYSCEF DOC. NO. 134 732 RECEIVED NYSCEF: 10/12/2017 06/01/2021 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF KINGS X CHERRY HILL GOURMET, INC., Index No. 510844/16 Plaintiff, AFFIDAVIT IN SUPPORT OF -against- DEFENDANT'S MOTION FOR PARTIAL SUMMARY LUNDY'S MANAGEMENT CORP., JUDGMENT AND TO DISMISS AFFIRMATIVE DEFENSES Defendant. X 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 of defendant Lundy's Management Corp. ("Lundy's"). 2. I submit this affidavit, based on my personal knowledge and review of Lundy's' books and records, in support of Lundy's' motion for, among other things, partial summary judgment and to dismiss the affirmative defenses of plaintiff Cherry Hill Gourmet, Inc. ("Cherry Hill"). 3. This case involves an extensive litigation history between the parties that is thoroughly detailed in my prior affidavit, sworn to August 15, 2016, as well as the affirmation of RE\87804\0002\2185478v3 1 of 25 FILED: KINGS COUNTY CLERK 10/12/2017 06/01/2021 05:19 04:35 PM INDEX NO. 510844/2016 NYSCEF DOC. NO. 134 732 RECEIVED NYSCEF: 10/12/2017 06/01/2021 Brett B. Theis, dated August 15, 2016. A copy of my prior affidavit and the Theis affirmation are attached here as Exhibit A and incorporated in this affidavit. The facts relevant to this motion 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 "Property") pursuant to a 49-year commercial net lease, dated March 9, 1994 (the "Net Lease"), between Lundy's, as tenant, and non-party Sheepshead Restaurant Associates, Inc. ("Sheepshead"), as landlord. A copy of the Net Lease is attached here as Exhibit B. 5. The Property contains two commercial buildings: a two-story "main" building (the "Main Building") and a three-story "annex" building (the "Annex"). 6. In March 1992, the New York City Landmarks Preservation Commission (the "LPC") designated the Main Building and the Annex collectively as a landmark. 7. Cherry Hill operates a grocery and delicatessen store in portions of the ground floor and second floor in the Main Building (the "Premises") pursuant to three subleases — 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. Copies of the Subleases are attached here as Exhibits C, D, and E, respectively. 8. As detailed below, Cherry Hill has repeatedly and continuously violated its obligations under the law and the Subleases from the beginning of its tenancy in the Premises. As a result, Lundy's has incurred significant damages and litigation costs for which Cherry Hill should be held liable under the Subleases. 2 RE\87804\0002\2185478v3 2 of 25 FILED: KINGS COUNTY CLERK 10/12/2017 06/01/2021 05:19 04:35 PM INDEX NO. 510844/2016 NYSCEF DOC. NO. 134 732 RECEIVED NYSCEF: 10/12/2017 06/01/2021 B. The Subleases Require Cherry Hill to Comply with Laws and to Indemnify Lundy's for Damages Incurred as a Result of Cherry Hill's Breaches 9. The Subleases require Cherry Hill to comply with laws and to indemnify Lundy's for damages caused by Cherry Hill's breaches of the Subleases. 10. Specifically, Paragraph 6(a) of the Net Lease, which is incorporated by paragraph 5.2 of the 2007 Sublease (see 2007 Sublease, Exhibit C, at ¶ 5.2), provides, as relevant here, that: "(a). . . Tenant shall be permitted to use the Leased Premises for any and all lawful purposes, subject, however to zoning ordinances, Laws, the orders, rules and regulations of the Board of Fire Insurance Underwriters and any similar bodies having or asserting jurisdiction thereof now in effect or hereafter adopted by any governmental authority having or asserting jurisdiction, and such conditions, restrictions and other encumbrances, if any, to which the Leased Premises are subject . . . (b) Tenant shall not use or occupy or permit the Leased Premises to be used or occupied, nor do or permit anything to be done in or on the Leased Premises or any part thereof, in a manner that would in any way violate any certificate of occupancy affecting the Leased Premises . ." (Net Lease, Exhibit B, at ¶ 6). 11. Paragraph 7(a) of the Net Lease, as incorporated by the Subleases, provides, in relevant part: "Tenant shall, throughout the Term of this Lease, and at Tenant's sole cost and expense, promptly comply, or cause compliance: (i) with all Laws, whether present or future, foreseen or unforeseen, ordinary or extraordinary, and whether or not the same shall be presently within the contemplation of Landlord and Tenant or shall involve any change of governmental policy, or require structural or extraordinary repairs, alterations, or additions, and irrespective of the cost thereof, which may be applicable to the Leased Premises . . (Net Lease, Exhibit B, at ¶ 7[a]). 3 RE\87804\0002\2185478v3 3 of 25 FILED: KINGS COUNTY CLERK 10/12/2017 06/01/2021 05:19 04:35 PM INDEX NO. 510844/2016 NYSCEF DOC. NO. 134 732 RECEIVED NYSCEF: 10/12/2017 06/01/2021 12. Paragraph 10.3 of the 2007 Sublease provides, in relevant part, that: "The Subtenant acknowledges that all or part of the Overlease Premises (including the Sublease Premises) is subject to the jurisdiction of the Landmarks Preservation Commission, and therefore that certain alterations to the Sublease Premises may be prohibited or substantially restricted. The Subtenant further agrees that it will not place any sign on, or otherwise alter in any way, the exterior walls of the Sublease Premises, without the prior written consent of the Sublandlord . . ." (2007 Sublease, Exhibit C, at ¶ 10.3). 13. In addition, Paragraph 6.3 of the 2007 Sublease, as incorporated by the 2011 and 2013 Subleases, requires Cherry Hill to indemnify Lundy's for all damages caused by Cherry Hill's breaches of the Sublease, stating, as relevant here: "Subtenant shall indemnify, defend and hold harmless Sublandlord from and against any loss, cost, damage or expense (including reasonable attorneys' fees), or any claim therefor, arising out of . . . any failure by Subtenant to observe or perform any of the terms, covenants or conditions of this Sublease required to be observed or performed by Subtenant, including any loss, cost, damage or expense which may result from (i) any default under or termination of the Overlease arising by reason of any such failure . . . " (2007 Sublease, Exhibit C, at ¶ 6.3 [emphasis added]). 14. Paragraphs 2 of the 2011 Sublease and 2013 Sublease respectively incorporate the terms of the 2007 Sublease, including the foregoing provisions (see 2011 and 2013 Subleases, Exhibits D and E, at ¶ 2). 15. Thus, Cherry Hill must indemnify Lundy's if Cherry Hill either breaches the Subleases or causes Lundy's to default under the Net Lease. 4 RE\87804\0002\2185478v3 4 of 25 FILED: KINGS COUNTY CLERK 10/12/2017 06/01/2021 05:19 04:35 PM INDEX NO. 510844/2016 NYSCEF DOC. NO. 134 732 RECEIVED NYSCEF: 10/12/2017 06/01/2021 (i) In Breach of the Subleases, Cherry Hill Violates the Zoning Resolution and the Landmarks Law 16. The Premises are located in Area B of the Special Sheepshead Bay Zoning District which (prior to May 2015) prohibited Use Group 6 food stores. I 17. To build-out the Premises, Cherry Hill filed an Alteration Type 2 application (the "Alt-2 Application") with the New York City Department of Buildings (the "DOB") representing that Cherry Hill was not changing the use of the Premises. 18. Cherry Hill, however, did change the use of the Premises and, thus, was required to file an Alteration Type 1 application (the "Alt-1 Application"). In fact, Cherry Hill openly violated the zoning laws by opening and operating a grocery and delicatessen store at the Premises (the "Illegal/Non-Conforming Use"). 19. Cherry Hill intentionally filed an Alt-2 Application (instead of an Alt-1 Application) in an attempt to conceal its Illegal/Non-Conforming Use from the DOB and to avoid the lengthy approval process for Alt-1 Applications. 20. The DOB discovered Cherry Hill's Illegal/Non-Conforming Use and issued a violation (see Exhibit A to the Notice of Default, dated August 6, 2012, attached here as Exhibit G). 21. In addition, Cherry Hill — without obtaining the approvals and permits required by applicable law and the Subleases — installed, among other things, an awning, a fence, and a sidewalk enclosure on the Premises and altered the Property's rear façade, all in violation of the New York City Landmarks Law. 1 The Zoning Resolution was amended to allow Use Group 6 food stores in the zoning district effective May 27, 2015 (see New York City Zoning Resolution § 94-061[B]). A copy of the foregoing section and Zoning Resolution § 94-062 showing that the zoning district did not permit food stores as of right prior to May 2015 is attached here as Exhibit F. -5- RE\87804\0002\2185478v3 5 of 25 FILED: KINGS COUNTY CLERK 10/12/2017 06/01/2021 05:19 04:35 PM INDEX NO. 510844/2016 NYSCEF DOC. NO. 134 732 RECEIVED NYSCEF: 10/12/2017 06/01/2021 22. As a result, from March 2009 through October 2016, the LPC issued numerous violations relating to the Premises (collectively, the "LPC Violations"), including the following violation that are active as of September 2017: a. No. 17-0309 due to Cherry Hill's installation of sliding doors without a permit; b. No. 17-0310 due to Cherry Hill's installation of a side-walk enclosure without a permit; c. No. 17-0311 due to Cherry Hill's installation of a fence without a permit; d. No. 17-0313 due to Cherry Hill's installation of cameras, light fixtures, and conduits without a permit; e. No. 17-0314 due to Cherry Hill's installation of signage on Emmons Avenue and Ocean Avenue without permits; f. No. 09-0980 due to Cherry Hill's installation of an awning without a permit; g. No. 09-0982 due to Cherry Hill's alteration of the rear façade and installation of HVAC units without permits. Copies of printouts from the DOB's website, each dated September 28, 2017, showing that the foregoing active LPC Violations are attached here as Exhibit QQ. 23. Despite causing the LPC Violations, Cherry Hill did nothing to cure the violations, which remained of record for years. 24. As detailed below, Cherry Hill's Illegal/Non-Conforming Use and LPC Violations caused Sheepshead, the owner of the Property, to default Lundy's under the Net Lease, triggering extensive litigation and jeopardizing Lundy's' Net Lease and multimillion- dollar investments in the Property. (ii) Cherry Hill's Illegal/Non-Conforming Use and LPC Violations Cause Sheepshead to Default Lundy's Under the Net Lease 25. In August 2012, Lundy's issued multiple notices of default to compel Cherry Hill to pay its arrears and to cure its Illegal/Non-Conforming Use and LPC Violations (among -6- RE87804\0002\2185478v3 6 of 25 FILED: KINGS COUNTY CLERK 10/12/2017 06/01/2021 05:19 04:35 PM INDEX NO. 510844/2016 NYSCEF DOC. NO. 134 732 RECEIVED NYSCEF: 10/12/2017 06/01/2021 numerous other breaches of the Subleases), which put Lundy's in default of its obligations under the Net Lease. Copies of the August 2012 notices of default are attached here as Exhibit G. 26. Cherry Hill, however, neither discontinued its Illegal/Non-Conforming Use nor cured its LPC Violations, which precluded Lundy's from obtaining a certificate of occupancy for the Main Building. 27. Instead, Cherry Hill continued to illegally operate its grocery and delicatessen store and commenced an action in this Court seeking a Yellowstone injunction while it attempted to legalize its Illegal/Non-Conforming Use (see Cherry Hill Gourmet, Inc v Lundy's Management Corp., Sup Ct, Kings County, Index No. 502300/2012 [the "Cherry Hill Yellowstone Action"]).2 28. In November 2013, Sheepshead (the overlandlord) issued a Twenty Day Notice to Cure Default (the "November 2013 Default Notice") to Lundy's based on Cherry Hill's Illegal/Non-Conforming Use, the LPC Violations, and the lack of a certificate of occupancy for the Main Building. The November 2013 Default Notice threatened to terminate the Net Lease. A copy of the November 2013 Default Notice is attached here as Exhibit H. 29. Until Cherry Hill resolved its Illegal/Non-Conforming Use and other violations, it was impossible for Lundy's to cure its Cherry Hill-caused defaults. 2 In initiating the Cherry Hill Yellowstone Action, Cherry Hill first sought a Yellowstone injunction with regard to its monetary defaults (i.e., the notice of default dated August 2, 2012) and did not initially seek an injunction for its Illegal/Non-Conforming Use and LPC Violations (i.e.,the notice of default dated August 6, 2012) (see Cherry Hill Yellowstone Action [NYSCEF Doc Nos. 1-10]. Only months later, after Sheepshead defaulted Lundy's and Lundy's issued additional default notices to Cherry Hill (as discussed below), did Cherry Hill seek a Yellowstone injunction for its Illegal/Non-Conforming Use and LPC Violations (see Cherry Hill Yellowstone Action [NYSCEF Doc Nos. 40-50]). The Court granted a temporary restraining order with respect to Cherry Hill's monetary default and directed Cherry Hill to give the unpaid rent to Lundy's to be held in escrow (see Cherry Hill Yellowstone Action [NYSCEF Doc No. 28]). In September 2012, the Court denied Cherry Hill's order to show cause seeking a Yellowstone injunction and released the escrowed rent to Lundy's (see Cherry Hill Yellowstone Action [NYSCEF Doc No. 29]). -7 - RE87804\0002\2185478v3 7 of 25 FILED: KINGS COUNTY CLERK 10/12/2017 06/01/2021 05:19 04:35 PM INDEX NO. 510844/2016 NYSCEF DOC. NO. 134 732 RECEIVED NYSCEF: 10/12/2017 06/01/2021 30. Despite the foregoing, Cherry Hill refused to cooperate with Lundy's to address the alleged defaults set forth in the November 2013 Default Notice and, thus, jeopardized Lundy's ability to keep its Net Lease and possession of the Property. 31. As a result of Cherry Hill's defaults, Lundy's commenced an action in this Court to protect its Net Lease and to avoid forfeiting its multimillion-dollar investments and improvements in the Property, seeking, among other things, a Yellowstone injunction (see Lundy's Management Corp. v Sheepshead Restaurant Associates, Inc., Sup Ct, Kings County, Index No. 502226/2013 [the "Lundy's Yellowstone Action"]). 32. In February 2014, Lundy's issued a Ten (10) Day Notice to Cure Default to Cherry Hill in another attempt to compel Cherry Hill to cure its Illegal/Non-Conforming Use, which was the cause of Lundy's' default under the Net Lease. A copy of the February 2014 notice is attached here as Exhibit I. 33. That same month, Cherry Hill moved for a second Yellowstone injunction in the Cherry Hill Yellowstone Action and asked for more time to cure its admitted Illegal/Non- Conforming Use (see Cherry Hill Yellowstone Action [NYSCEF Doc Nos. 40-50]). 34. In an affidavit in support of Cherry Hill's order to show cause, Novakh Yevadyev (Cherry Hill's assistant manager at the time) stated that Cherry Hill hired a law firm to "handl[e]. . . the City Planning issue" and to "hav[e] the use legalized" (Cherry Hill Yellowstone Action [NYSCEF Doc No 42 at 4]). A copy of the foregoing affidavit, dated February 26, 2014, is attached here as Exhibit HH. 35. Cherry Hill also attached a letter from its law firm, dated January 22, 2014, explaining that it was representing Cherry Hill "in connection with the legalization of the Use Group 6 food store located at the Premises, which is not permitted as-of-right in Area B of the 8 RE\87804\0002\2185478v3 8 of 25 FILED: KINGS COUNTY CLERK 10/12/2017 06/01/2021 05:19 04:35 PM INDEX NO. 510844/2016 NYSCEF DOC. NO. 134 732 RECEIVED NYSCEF: 10/12/2017 06/01/2021 Special Sheepshead Bay District" (Cherry Hill Yellowstone Action [NYSCEF Doc No 47] [emphasis added]). A copy of the foregoing letter is attached here as Exhibit II. 36. Given Cherry Hill's foregoing admission that it was seeking to legalize its Illegal/Non-Conforming Use in February 2014, there is simply no question that its use violated the Zoning Resolution since the inception of its tenancy at the Premises. 37. During this time, Cherry Hill also wrongfully withheld rent from Lundy's without any basis to do so. Thus, in March 2014, Lundy's commenced four non-payment proceedings in Civil Court to recover approximately $300,000 in unpaid rent and additional rent from Cherry Hill. Copies of the non-payment petitions are attached here as Exhibit J. 38. In April 2014, this Court held a joint hearing for the Cherry Hill Yellowstone Action and the Lundy's Yellowstone Action. 39. Critically, after the hearing, this Court (Demarest, J.) issued an order vacating Cherry Hill's Yellowstone injunction, holding that: "Upon plaintiffs admission that its current use of the premises is not in conformity with any certificate of occupancy and undisputed evidence that, since taking occupancy, plaintiff has modified its use so as to create a non-conforming use, the Yellowstone injunction ... is vacated" (emphasis added). A copy of the foregoing Decision and Order dated April 8, 2014, is attached here as Exhibit K. 40. This Court issued a separate order, also dated April 8, 2014, continuing Lundy's' Yellowstone injunction on the condition that Lundy's purchase a $1,050,000 injunction bond (the "$1MM Yellowstone Bond") and further stated that: "[Lundy's] is now free to commence a summary proceeding against its sub-tenant Cherry Hill so as to cure the illegal occupancy which is one of the allegations of default under the [Net] Lease" (emphasis added). 9 RE\87804\0002\2185478v3 9 of 25 FILED: KINGS COUNTY CLERK 10/12/2017 06/01/2021 05:19 04:35 PM INDEX NO. 510844/2016 NYSCEF DOC. NO. 134 732 RECEIVED NYSCEF: 10/12/2017 06/01/2021 A copy of the foregoing Decision and Order dated April 8, 2014, is attached here as Exhibit L. 41. In light of the Court's two foregoing orders, there is simply no doubt that Cherry Hill's Illegal/Non-Conforming Use violated the laws and the Subleases. 42. Cherry Hill's Illegal/Non-Conforming Use and the LPC Violations also forced Lundy's to obtain the $1MM Yellowstone Bond to save its Net Lease and multimillion-dollar investments and improvements in the Property. 43. To purchase the $1MM Yellowstone Bond, Lundy's actually needed $1,155,000 in cash because the bonding companies require 100% cash collateral as security and charge a 10% fee. 44. Unfortunately, Lundy's was unable to gather the cash for the $1MM Yellowstone Bond in time to comply with the Court's order. (iii) Sheepshead Forced Lundy's Into Bankruptcy Due to Cherry Hill's Defaults Under the Subleases 45. As a result of Cherry Hill's defaults under the Subleases and Lundy's' inability to obtain the $1MM Yellowstone Bond, Lundy's was forced to file for Chapter 11 bankruptcy in the United States Bankruptcy Court, Eastern District of New York (the "Bankruptcy Court") to protect its Net Lease and its creditors (see In re Lundy's Management Corp., Docket No. 1-14- 42318-ESS [the "Bankruptcy Proceeding"]). 46. Thus, Cherry Hill's utter disregard for the law and the Subleases had caused Sheepshead to default Lundy's and forced Lundy's into bankruptcy. 47. Adding insult to injury, Cherry Hill then had the audacity to withhold hundreds of thousands of dollars of rent while Lundy's was in bankruptcy without any basis whatsoever. - 10 - RE\87804\0002\2185478v3 10 of 25 FILED: KINGS COUNTY CLERK 10/12/2017 06/01/2021 05:19 04:35 PM INDEX NO. 510844/2016 NYSCEF DOC. NO. 134 732 RECEIVED NYSCEF: 10/12/2017 06/01/2021 48. Cherry Hill undoubtedly hoped that Lundy's would dissolve and that Cherry Hill could avoid paying its significant rent arrears to Lundy's and to enter into a more advantageous lease directly with Sheepshead. 49. To further its plan, Cherry Hill actively attempted in bad faith to destroy Lundy's' business during the eighteen-month Bankruptcy Proceeding. 50. In fact, in addition to withholding rent, Cherry Hill filed papers in support of Sheepshead's motion to convert the Bankruptcy Proceeding to a Chapter 7 liquidation proceeding, which would have forced Lundy's out of business if successful. A copy of the papers that Cherry Hill submitted in the Bankruptcy Proceeding is attached here as Exhibit JJ. 51. At the time that Cherry Hill filed the papers in the Bankruptcy Proceeding, it had withheld approximately $400,000 in rent from Lundy's, including monthly rent and its overdue share of the real estate taxes. 52. Further, Cherry Hill frivolously attempted to remove the non-payment proceedings and the Cherry Hill Yellowstone Action from State Courts to the United States District Court for the Eastern District of New York (the "EDNY") (see Cherry Hill Gourmet, Inc. v Lundy's Management Corp., US Dist Ct, ED NY, 14 Civ 06282, Cogan, J., 2014 [the "EDNY Action"]). 53. Cherry Hill's bad-faith actions in the EDNY Action forced Lundy's to incur additional damages and legal fees, including to move for an order remanding the Cherry Hill Yellowstone Action and the non-payment proceedings back to State Court. 54. The EDNY (Cogan, J.) granted Lundy's motion, finding that: "The cases have either been litigated in state court for a number of years, or are on the eve of trial. All of the cases were commenced prior to Lundy's' Chapter 11 filing, yet Cherry Hill waited over five months to remove these actions. This smacks of RE\87804\0002\2185478v3 11 of 25 FILED: KINGS COUNTY CLERK 10/12/2017 06/01/2021 05:19 04:35 PM INDEX NO. 510844/2016 NYSCEF DOC. NO. 134 732 RECEIVED NYSCEF: 10/12/2017 06/01/2021 bad faith" (Decision and Order at 5 [emphasis added]). A copy of the EDNY's Decision and Order, dated November 13, 2014, is attached here as Exhibit M. 55. Cherry Hill also continued attending all of the hearings in the Bankruptcy Proceeding to support Sheepshead's attempts to terminate the Net Lease and to oppose Lundy's' every move, further amplifying Lundy's' damages. (iv) Lundy's Agreed to the Costly Bankruptcy Settlement to Save Its Business and Net Lease 56. Ultimately, in November 2015, Sheepshead realized that it was unable to evict Lundy's from the Property and agreed to a settlement. 57. As part of the agreement, Sheepshead agreed to waive its rights to seek to terminate Lundy's Net Lease on the basis of Cherry Hill's Illegal/Non-Conforming Use and associated DOB, Environmental Control Board, and landmark violations provided that Lundy's agreed to: (a) pay an increased monthly rent to Sheepshead; (b) reimburse Sheepshead for legal fees; and (c) pay escalating monthly penalties to Sheepshead until Cherry Hill obtained all required sign-offs and properly closed out its Alt-1 Application, thus permitting Lundy's to obtain a temporary certificate of occupancy for the Main Building (the "TCO") (the "Bankruptcy Settlement," a copy of which is attached here as Exhibit N).3 58. 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 3 The terms of the Bankruptcy Settlement are set forth in Exhibit A to the "Stipulation Dismissing Debtor's Chapter 11 Case with Prejudice, Retaining Jurisdiction Over Legal Fees, and Providing Other Relief' (i.e., the Settlement Outline, dated November 13, 2015). All references to the Bankruptcy Settlement will be to the Settlement Outline. - 12 - RE\87804\0002\2185478v3 12 of 25 FILED: KINGS COUNTY CLERK 10/12/2017 06/01/2021 05:19 04:35 PM INDEX NO. 510844/2016 NYSCEF DOC. NO. 134 732 RECEIVED NYSCEF: 10/12/2017 06/01/2021 $40,000 per month in penalties from October 2017 through March 2018 (the "TCO Penalties") (see Bankruptcy Settlement [Settlement Outline], Exhibit N, at ¶ 4). 59. The amount of the penalties increase by $10,000 every six months until Lundy's obtains the TCO (see Bankruptcy Settlement [Settlement Outline], Exhibit N, at ¶ 4), which it was not able to do because Cherry Hill failed to close out its Alt-1 Application and failed to resolve all of its DOB and LPC Violations. 60. In fact, Lundy's' architect, John Haskopoulos, signed an affidavit confirming that Lundy's was unable to obtain the TCO until after Cherry Hill completed its Alt-1 Application and resolved its LPC Violations. A copy of the affidavit, sworn to on November 2, 2015, is attached here as Exhibit 0. 61. Accordingly, Lundy's can terminate its obligation to pay the increasing TCO Penalties to Sheepshead only after Cherry Hill resolved its violations. (v) Cherry Hill Continued Refusing to Cure Its Violations and Causing Lundy's Damages 62. In March 2015, Cherry Hill obtained the City Planning Commission's approval to amend the Zoning Resolution to legalize its Illegal/Non-conforming Use (see City Zoning Resolution § 94-061[B], Exhibit F). 63. Legalizing its Illegal/Non-Conforming Use, however, was insufficient to resolve the DOB violations because Cherry Hill was also required to file and to obtain a sign-off on its Alt-1 Application. 64. Throughout 2016, Cherry Hill simply ignored Lundy's' repeated requests to resolve the Alt-1 Application and the LPC Violations and prevented Lundy's from obtaining the TCO. - 13 - RE\87804\0002\2185478v3 13 of 25 FILED: KINGS COUNTY CLERK 10/12/2017 06/01/2021 05:19 04:35 PM INDEX NO. 510844/2016 NYSCEF DOC. NO. 134 732 RECEIVED NYSCEF: 10/12/2017 06/01/2021 65. I wrote a letter to Cherry Hill, dated December 30, 2016, advising Cherry Hill that its failure to obtain the sign-off on its Alt-1 Application and to cure its LPC Violations continued to cause Lundy's to incur damages. A copy of my December 2016 letter is attached here as Exhibit P. 66. Cherry Hill did not obtain the DOB's approval of its Alt-1 Application until April 2017 and continued refusing to cure the LPC Violations. A copy of a printout from the DOB's website, dated September 27, 2017, showing the foregoing is attached here as Exhibit KK. 67. In light of the escalating TCO Penalties, Lundy's could no longer wait for Cherry Hill to resolve the LPC Violations — Cherry Hill's prolonged and inexplicable failure to cure the violations demonstrated its lack of intent to do so. 68. Thus, although Cherry Hill remains solely responsible for removing the LPC Violations of record, Lundy's exercised its right to cure some of the LP