Penn Palace Operating, Inc. v. Two Penn Plaza Associates
Court: Appellate Division of the Supreme Court of the State of New York; May 6, 1997; New York; State Appellate Court
The Supreme Court of New York County issued an order and judgment on February 26, 1996, regarding a dispute between a tenant and landlord over the enforcement of a right of first refusal concerning leased premises. The court granted the tenant's cross motion for summary judgment, partially declaring that a specific lease provision allowing the landlord to terminate the lease due to the tenant's failure to provide financial statements is no longer applicable. The court further modified the ruling to declare that the tenant properly exercised its right of first refusal and is entitled to a lease of the disputed space. The ruling affirms the tenant's motion for summary judgment on its first cause of action, with costs awarded to the tenant. The case involved Longchamps, which guaranteed the original 1965 lease and later executed a 1975 Lease Modification Agreement, assuming certain tenant obligations. Notably, changes in 1980 and 1981 included a reduction in leased space and rent, as well as the addition of a right of first refusal for the tenant, followed by a 16-year lease extension in 1987. These alterations were significant and made without the consent of Longchamps or its successors, releasing them from their obligations as sureties. The court concluded that the tenant was not required to prove Longchamps' financial condition to enforce the lease, and the tenant's lack of demonstration of its own financial ability to perform, as required by a separate lease amendment, was incorrect. The landlord's notice from September 14, 1993, which outlined material lease terms for the disputed space, was deemed sufficient despite the need for negotiation on nonmaterial terms, thus confirming the tenant's right to summary judgment on the first cause of action.