Case Notes

The legal dispute centered on parking, but community activists under the name Coalition Against Causeway Chaos added a political dimension to the deadlock.

The city's case fell apart when Miami-Dade Circuit Judge William Thomas ruled the company had complied with agreements and started work by the city's deadline. The judge noted the community group's involvement and called it "quite effective." The ruling triggered settlement talks.

The developer's attorney, Eugene Stearns, could have sought $200 million in damages. The parties reached an agreement that was approved in May calling for a settlement valued at $20 million and resumption of the project.

The city agreed to pay Flagstone Island Gardens $5 million upfront and $2.5 million payments in the next fiscal year and the year after. The city also agreed to erase $10 million in rent that otherwise would be due over 10 years.

Plans call for a 535-foot hotel with 305 rooms, including 105 timeshares, and a 375-foot hotel with 300 rooms. The retail portion would cover 221,000 square feet, and the parking garage would be up to three stories high with 1,500 spaces.

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Breach of Lease By Subsidiary Does Not Justify Piercing Corporate Veil

In landlord's action for rent against the alleged parent corporation of tenant, landlord appealed from the New York Supreme Court's dismissal of the complaint. The Appellate Division affirmed, holding that landlord was not entitled to pierce tenant's corporate veil. TMCC v. Jennifer Convertibles, Inc., NYLJ 10/25/19, p. 31, col. 5 AppDiv, Second Dept. (memorandum opinion).

Landlord leased the subject property to Hartsdale Convertibles. When Hartsdale Convertibles failed to pay rent, landlord brought this action against Jennifer Convertibles, Inc., alleging that Hartsdale was a wholly-owned subsidiary of Jennifer Convertibles. The Supreme Court dismissed the complaint, and the landlord appealed.

In affirming, the Appellate Division held that even if the parent company wholly dominated the subsidiary, the landlord was not entitled to pierce the subsidiary's corporate veil unless the landlord could show that the parent's used its domination to commit a wrong against the landlord. Mere breach of the lease — the only wrong alleged by the landlord — was insufficient to justify piercing the corporate veil.

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Tenant Not Entitled to Preliminary Injunction Requiring Landlord to Co-Operate

In commercial tenant's action for declaratory and injunctive relief, landlord appealed from the New York Supreme Court's grant of a preliminary injunction preventing the landlord from withholding or revoking consent to a city permit, and preventing landlord from demolishing sidewalk structures. The Appellate Division modified to delete the injunction against withholding or revoking consent, holding that the preliminary injunction did more than preserve the status quo. Shake Shack Fulton Street Brooklyn, LLC v. Allied Property Group, LLC, NYLJ 11/22/19, p. 33, col. 3, AppDiv, Second Dept. (memorandum opinion).

In 2010, tenant leased a portion of the ground floor and basement of landlord's building. The lease had a 20-year term with two five-year renewal options. The following year, as part of tenant's application to the city to operate a sidewalk café on the sidewalk adjoining the premises, landowner executed a form consenting to tenant's application. In 2015, tenant petitioned the city department of consumer affairs for consent to continue the sidewalk café. Owner, however, was unwilling to submit a new consent form, without which the Department of Consumer Affairs would not renew tenant's license. Tenant then brought this action for a judgment declaring that landlord must execute the consent form. Tenant also sought a preliminary injunction to prevent landlord from demolishing the sidewalk café, and to prevent the landlord from withholding or revoking its consent to a permit. Tenant's motion also sought an order requiring landlord to execute a consent. The Supreme Court granted tenant's motion.

In modifying, the Appellate Division concluded that a preliminary injunction requiring landlord to execute the consent would grant tenant some of the ultimate relief tenant sought in the action rather than simply maintaining the status quo. The court held that tenant had not demonstrated the need for such extraordinary relief, nor had tenant demonstrated a likelihood of success on the merits in light of unresolved questions about whether the lease contemplated use of the sidewalk space. The court, however, upheld the Supreme Court's grant of a preliminary injunction against demolition and removal of the café, holding that with respect to that branch of the injunction, equities favored maintenance of the status quo.