NY Eatery Fighting Eviction Calls Times Square 'Ghost Town'

By Craig Clough
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Law360 (January 7, 2021, 10:43 PM EST) -- The owner of a Times Square restaurant filed suit Thursday in New York state court seeking to block its landlord's attempt to evict it amid the COVID-19 pandemic, which it said has turned Times Square into a "ghost town" and a "wasteland."

Little Fish Co., which operates an Italian restaurant called Carmine's, said its landlord Paramount Leasehold LP is trying to evict it while forcing it to pay $2.98 million in allegedly missing rent.

The restaurant said the pandemic, which resulted in government orders to shut down its business, constitutes a casualty under the lease and should relieve it of its lease obligations until the health emergency is over.

"Since March 2020, Times Square has become a ghost town," the restaurant said. "Prior to March 2020, tenant's business thrived on the presence of many thousands of tourists and office workers in Times Square. Both tourists and office workers have substantially disappeared."

The restaurant lays out a timeline of government orders it has been subjected to since March, including a March 16 order closing all restaurants except for takeout, a June order permitting outdoor dining, a September order allowing indoor dining at 25% capacity and a December order closing indoor dining again.

According to the restaurant, takeout was never a viable option because it operates a kitchen built for a 400-seat restaurant catering primarily to tourists, and takeout was traditionally only about 5% of its total business. When sidewalk dining was allowed, the sidewalk was the site of a construction project and would only allow for about 20 seats even in the absence of construction, the restaurant said.

The restaurant said its landlord gave it a notice of default on Dec. 9 due to unpaid rent, as well as for failing to install a required sprinkler system. The notice also seeks to enforce a 150% penalty on some of the rent due for not continuously operating its business or operating a full-service restaurant as required by the lease, the restaurant said.

The restaurant is seeking, among other things, a so-called Yellowstone injunction, which would freeze the expiration date of the default notice until the landlord and tenant litigate the dispute.

The restaurant also argues that the sprinkler system is the landlord's responsibility and seeks a declaratory judgment that it is not in violation of the lease due to a failure to continuously operate because it closed due to a government order.

The landlord is the latest in a growing list of companies and businesses facing litigation over rent amid COVID-19. In July, WeWork's landlord at a Los Angeles office building said the coworking company owed at least $54 million in damages after it backed out of a 10-year lease agreement.

That same month, Italian fashion brand Valentino sued its Fifth Avenue landlord, arguing it has been blocked from moving out of the Manhattan space even though the lease has been rendered void by the COVID-19-spurred shutdown. Meanwhile, Jenner & Block LLP said its Chicago landlord actually owes the firm $840,000 thanks to a rent abatement provision triggered by the pandemic.

Victoria's Secret has also sued the landlord of its midtown Manhattan store, claiming the building's owners attempted to collect more than $1 million per month in rent after the shutdown despite the terms of the lease being unenforceable.

In May, the NBA was accused of failing to pay rent for its store on Fifth Avenue for two months and purportedly owes its landlord more than $1.2 million. Similarly, The Gap Inc. and Ross Stores Inc. have also been sued over unpaid rent, according to complaints in New York and Florida federal courts, respectively.

Paramount Leasehold LP could not be reached for comment. Counsel for the restaurant did not immediately respond to a request for comment.

The restaurant is represented by David E. Frazer, Robert M. Olshever, and attorneys with Himmelstein McConnell Gribben Donoghue & Joseph LLP.

Counsel for Paramount Leasehold LP was not immediately available.

The case is Littlefish Corp a/k/a Little Fish Inc. v. Paramount Leasehold LP, case number 150164/2021, in the Supreme Court of the City of New York, County of New York.

--Additional reporting by Lauren Berg, Dave Simpson and Jeannie O'Sullivan. Editing by Ellen Johnson.

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