FILED: NEW YORK COUNTY CLERK 09/27/2011

NYSCEF DOC. NO. 66

INDEX NO. 650358/2011 RECEIVED NYSCEF: 09/27/2011

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK

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Plaintiff,

BOWERY RESIDENTS COMMITTEE, INC., : Index No.: 650358/11 (Madden, J.)

IM

127 WEST 25TH STREET, LLC,

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Defendant.

MEMORANDUM OF LAW IN OPPOSITION TO DEFENDANTS MOTION FOR PARTIAL SUMMARY JUDGMENT AND IN SUPPORT OF PLAINTIFFS CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT

ROSENBERG & ESTIS, P.C. Attorneys for Plaintiff 733 Third Avenue New York, New York 10017 (212) 867-6000 JOHN HADLOCK ALEXANDER LYCOYANIS Of counsel

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TABLE OF CONTENTS Page PRELIMINARY STATEMENT FACTS AND RELEVANT LEASE PROVISIONS ......................................................................2 TheLease............................................................................................................................3 Defendants Funding and Access Obligations Under the Lease.........................................3 The Rent Abatement Periods.............................................................................................. DEFENDANT BREACHED MULTIPLE PROVISIONS OF THE LEASE, ENTITLING PLAINTIFF TO MULTIPLE CONSECUTIVE DAY-FOR-DAY RENT ABATEMENTS TOTALING541 DAYS .................................................................................................................7 DEFENDANTS ARGUMENT THAT THE FIRST RENT COMMENCEMENT DATE HAS ALREADY PASSED IS WITHOUT MERIT; THUS, PLAINTIFFS MOTION SHOULDBE DENIED ..................................................................................................................8 Plaintiffs Exclusive Remedies for Defendants Breaches of Section 12.3(c) are Rent Abatements.......................................................................................................................11 Plaintiff is Entitled to a Separate Rent Abatement Period for Each Independent Breach of Section 12.3(c) by Defendant ........................................................................... 11 CONCLUSION.............................................................................................................................13 5 .1

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TABLE OF AUTHORITIES Page(s) Cases Accurate Copy Service of America, Inc. v. Fisk Bldg. Associates L.L.C., 72 A.D.3d 456, 899 N.Y.S.2d 157 (1st Dept 2010) ........................................................10, 11 Avila Group Inc. v. Norma J. of California, 426 F. Supp. 537 (S.D.N.Y. 1977) .........................................................................................13 Fluor Daniel Intercontinental, Inc. v. General Elec. Co., 1999 WL 637236 (S.D.N.Y.)..................................................................................................13 George Backer Management Corp. v. Acme Quilting Co., Inc., 46 N.Y.2d 211, 413 N.Y.S.2d 135 (1978)........................................................................10, 11 Herman v. Associated Hospital Service of New York, 27 A.D.2d 545, 275 N.Y.S.2d 361 (2d Dept 1966)...............................................................13 Jet Acceptance Corp. v. Quest Mexicana S.A. de C.V., , 2011 WL 3847435 (1st Dept Sept. 1,2011) ........................................... 10 N.Y.S.2d Provident Loan Soc. of New York v. 190 East 72nd Street Corp., 78A.D.3d501,911N.Y.S.2d308(1stDept2010) ..............................................................10 Upstate Shredding, LLC v. Carloss Well Supply Co., 84 F. Supp. 2d 357 (N.D.N.Y. 2000)......................................................................................13 Vermont Teddy Bear Co., Inc. v. 538 Madison Realty Co., 1 N.Y.3d 470, 775 N.Y.S.2d 765 (2004)................................................................................11 W.W.W. Associates, Inc. v. Giancontieri, 77 N.Y.2d 157, 565 N.Y.S.2d 440 (1990)..............................................................................10

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SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK

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Plaintiff,

BOWERY RESIDENTS COMMITTEE, INC., Index No.: 650358/11 (Madden, J.)

127 WEST 25TH STREET, LLC, Defendant -----------------------------------------

MEMORANDUM OF LAW IN OPPOSITION TO DEFENDANTS MOTION FOR PARTIAL SUMMARY JUDGMENT AND IN SUPPORT OF PLAINTIFFS CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT Plaintiff Bowery Residents Committee, Inc. ("Plaintiff) respectfully submits this memorandum of law (a) in support of its cross-motion for an order granting partial summary judgment on its first, third and fifth causes of action and declaring that the Initial Premises Abatement Period Termination Date (as such term is defined in the subject lease), initially January 31, 2011, was abated by 541 days to July 26, 2012, such that the First Rent Commencement Date (i.e., the date Plaintiffs rent obligation begins under the subject lease) is July 27, 2012; (b) in opposition to the motion of defendant 127 West 25th Street, LLC ("Defendant") for partial summary judgment; and (c) granting Plaintiff such other and further relief as this Court deems just and proper. PRELIMINARY STATEMENT Plaintiff, as tenant, and Defendant, as landlord, are parties to a long-term ground lease for the subject property and building, which required extensive renovations before the Plaintiff could take possession. In view of those necessary renovations and the fact that the building remained partially occupied, Defendant agreed to partially fund Plaintiffs renovations and to provide access to occupied floors so that Plaintiff could perform necessary work. In the event that

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Defendant breached its funding and/or access obligations, the parties agreed in the lease that Plaintiff would be entitled to sequential and non-overlapping rent abatement periods for the length of time that each and every breach persisted. There is no dispute that Defendant breached such funding and access obligations; the only dispute between the parties is how to count the number of rent abatement days to which Plaintiff is entitled in the lease. As will be demonstrated below, a reading of the leases plain language entitles Plaintiff to 541 rent abatement days, such that its rent obligation begins on July 27, 2012. Defendant, by contrast, advances a demonstrably incorrect interpretation of the lease that, unsurprisingly, pegs the rent abatement at only 166 days, such that the rent commencement date would be July 17, 2011. Defendants argument ignores entire provisions of the Lease, patently misinterprets others and, as to the length of the rent abatement relating to its failure to provide access, is simply inaccurate. Accordingly, as will be demonstrated below, Plaintiffs cross-motion should be granted in full, and Defendants motion in chief should be denied in full. FACTS AND RELEVANT LEASE PROVISIONS The Court is respectfully referred to the accompanying affidavit of Christine Chisholm, sworn to on September 27, 2011 (the "Chisholm Affidavit"), for a full and complete recitation of the facts relevant to Defendants motion and Plaintiffs cross-motion. As is relevant to this memorandum of law, the facts will be summarized below. Plaintiff is a not-for-profit corporation engaged in providing services for New York Citys homeless population, including, without limitation, housing, counseling, addiction treatment and elder services. These services carry out the mission statement displayed on the front page of Plaintiffs website, http://www.brc.org/: "Helping people reclaim lives lost: We restore hope and dignity by offering opportunities for health and self-sufficiency." -2RE\1 1819\0001\456768v1

The Lease In furtherance of its mission, Plaintiff leased from Defendant the subject premises and building thereon (the "Building"), located at 127 West 25th Street in Manhattan (collectively, the "Premises"). The lease, dated February 18, 2010 (the "Original Lease"), was a long-term ground lease by which Defendant demised the Premises to Plaintiff for a 33-year term. The lease was amended by a First Amendment dated as of April 27, 2010 (the "First Amendment"), and a Second Amendment dated as of October 4, 2010 (the "Second Amendment") (such amendments, together with the Original Lease, shall sometimes be referred to collectively hereinafter as the "Lease") At the time the parties entered into the Original Lease, several tenants were occupying the Building and the Building was in need of substantial renovations. Accordingly, the parties agreed that Plaintiff would undertake the necessary renovations to the Building. Defendant also agreed to arrange for access to the occupied floors so that Plaintiff could perform the renovation work described in the Lease. Defendants Funding and Access Obligations Under the Lease Article I of the Lease defines Defendants obligation to fund its portion of Plaintiffs renovations to the Building as the "Overall Landlord Funding Requirement," which amount totals $12,540,000 -- one third of which was a direct contribution totaling $4,180,000 (defined as the "Landlord Aggregate Contribution"), and two thirds of which was intended to be a loan totaling $8,360,000 (defined as the "Landlord TI Loans"). These funds were to be deposited into an escrow account maintained by a third-party escrow agent pursuant to a separate tri-party agreement. Section 12.3 of the Lease, entitled "Tenants Initial Improvements; Landlords Contribution," details Defendants obligation to provide the Overall Landlord Funding

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Requirement ($12,540,000). Section 12.3(b) sets forth Defendants obligation to provide the Landlord Aggregate Contribution ($4,180,000) to Plaintiff in three separate tranches -$1,000,000 on March 1, 2010, $1,000,000 on April 1, 2010, and $2,180,000 after the plans for the construction and the building permit were in place. Section 12.3(c) 2 sets forth Defendants obligations to provide funding or evidence of funding of the Landlord TI Loans, and keep the Escrow Account funded up to $4 million as the construction progressed. In addition, Defendant, pursuant to Section 12.3(e), 3 was obligated to arrange for Plaintiff to have access to the occupied floors in the Building so that Plaintiff could perform "Tenants Penetration Work" in such occupied floors. Tenants Penetration Work was defined in the Lease

12.3(b) Landlords Aggregate Contribution - Landlord covenants and agrees that it shall contribute an amount equal to Landlords Aggregate Contribution towards Tenants Initial Improvements by paying to TrParty Escrowee (to be held in accordance with the Tr-Party Agreement) in the following manner: (i) Landlord shall deposit the Landlords First Benchmark Contribution with Tr-Party Escrowee not later than the First Benchmark date; (ii) Landlord shall deposit the Landlords Second Benchmark Contribution with Tr-Party Escrowee not later than the Second Benchmark Date; and (iii) Landlord shall deposit the Landlord Third Benchmark Contribution with Tr-Party Escrowee not later than the Third Benchmark Date.
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(c) Landlord TI Loans. Landlord covenants and agrees to make the Landlord TI Loans available to Tenant. The parties agree that the Landlord TI Loans are to be applied by Tenant for Tenants Initial Improvements pursuant to the Tr-Party Agreement. In connection therewith, Landlord covenants and agrees that it shall: (i) deliver the Landlord TI Loans Evidence to Tenant not later than the Third Benchmark Date; and (ii) deposit or cause to be deposited, within ten (10) Business Days after a written notice is received from the Escrowee that Landlords funds in the Tr-Party Escrow are less than $2,500,000, such amount of the Landlord TI Loans as is required to increase Landlords portion of the funds held in the Tr-Party Escrow to an amount equal to or greater than $4,000,000, provided, however, that (A) Landlord shall not be obligated to cause the funds described in clause (b) of the definition of Landlord TI Loans Evidence to be deposited in the Tr-Party Escrow and (B) Landlord shall not be required to deposit other portions of Landlords TI Loans into the TrParty Escrow in the event that Landlords Fee Mortgagee requires that such funds be deposited with such Fee Mortgagee, provided such Fee Mortgagee enters into an agreement with Landlord and Tenant pursuant to which Fee Mortgagee agrees to disburse such funds in the manner set forth in the Tr-Party Agreement, subject to any other similar and customary progress submissions required by such Fee Mortgagee. Tenants Access to Occupied Floors. Landlord covenants and agrees that it shall provide Tenant access, as required by Tenant for Tenant to perform Tenants Penetration Work, to each of the Occupied Floors upon three (3) Business Days notice from Tenant to Landlord that Tenant requires such access for Tenants Penetration Work. Landlord further agrees that it shall continue to provide such access to the applicable Occupied Floor for the entire period of time required by Tenant to perform such work on such Floor. Tenant covenants and agrees to perform Tenants Penetration Work in a commercially reasonable manner.

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to include either altering the existing, or installing new heating, ventilating, electrical systems, air conditioning and the life-safety systems, as provided in the construction plans. The Rent Abatement Periods In recognition of the substantial work that was necessary to renovate the Building and make it usable by Plaintiff, the Lease provided for an initial free-rent period through December 31, 2010. It further provided, inter alia, that the rent-free period would be extended on a day-to-day basis in the event Defendant failed to meet certain obligations detailed in the Lease, including, without limitation, its obligations relating to its funding of the renovations to the Building and to its providing access to occupied floors in the Building so that the renovations could move forward (Lease at Section 3.8). The "First Rent Commencement Date" was defined as "the day following the Initial Premises Abatement Period Termination Date" and that term was defined as: "Initial Premises Abatement Period Termination Date" shall mean January 31, 201 1, 5 as the same may be extended in accordance with Section 12.7 and Section 36.4, each such day of adjournment pursuant to any provision to be sequential and not overlapping with any other day of adjournment pursuant to any other provision (emphasis supplied). Accordingly, Plaintiff is entitled to a distinct abatement period for each separate breach of the Lease. Thus, to the extent that the Leases terms entitle Plaintiff to more than one day-forday rent abatement, each such abatement would be sequential, and not overlapping. 4

"Tenants Penetration Work" shall mean that portion of the construction work of Tenants Initial Improvements required for purposes of (a) altering the existing heating, ventilating electrical systems, air conditioning or life-safety systems in the Building or (b) installing such new heating, ventilating, electrical systems, air-conditioning or life-safety systems in the Building as Tenant may require, each of (a) and (b) as substantially consistent with the plans attached as Exhibit K hereto. The Initial Premises Abatement Period Termination Date in the Original Lease was December 31, 2010. That date, however, was changed to January 31, 2011 in the Second Amendment.

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During the negotiation process, the parties considered the possibility that Defendant would fail to provide the necessary funding after construction had started and agreed that a rent abatement (and rent offset) should be the protection that Plaintiff would have -- and the only protection. Accordingly, the rent abatement (and rent offset) provisions in Section 12.7 of the Lease were made Plaintiffs "sole remedy" for such a default on Defendants part. Section 12.7(b) 6 provides, in combination with the definition of Initial Premises Abatement Period Termination Date in Article I, that any breach by Defendant of any obligation relating to Defendants obligation to furnish the Landlord Aggregate Contribution or all or any part of the Landlord TI Loans would constitute an independent breach of the Lease, each of which would entitle Plaintiff to a day-for-day abatement of Plaintiffs rent obligation until such time as Plaintiff obtains alternate financing. In addition, Section 12.7(d) 7 of the Lease, in combination with the definition of Initial Premises Abatement Period Termination Date in Article I, further provides, in relevant part, that Plaintiff is entitled to an independent day-for-day abatement of Plaintiffs rent obligation for any period that Defendant fails to provide Plaintiff access to any of the Occupied Floors to perform Tenants Penetration Work.

Section 12.7 Tenants Sole and Exclusive Remedies Regarding Certain of Landlords Obligations.

(b) (i) In the event that Landlord fails to meet its funding obligations under Section 12.3 (b) or (c), then (x) the Initial Premises Abatement Period Termination Date shall be extended on a day-for-day basis for the total number of days it takes for Tenant to obtain alternative financing on terms satisfactory to Tenant for the Except as set forth in Section 12.7(e) hereof, the foregoing shall be Tenants Replacement Funding Amount sole and exclusive remedy at law, equity, under this Lease or otherwise, notwithstanding any other remedy that may exist elsewhere or may otherwise be set forth in this Lease (emphasis supplied).
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(d) In the event that Landlord fails to provide access to any of the Occupied Floors as required under Section to extend the Initial Premises Abatement Period Termination Date on 12.3(e) hereof, Tenant shall be entitled a day-for-day basis for the total number of days of such obstruction of access to the extent such obstruction continues after Tenant notifies Landlord that there has been such an obstruction. The foregoing shall be Tenants sole and exclusive remedy at law, equity, under this Lease or otherwise, notwithstanding any other remedy that may exist elsewhere or may otherwise be set forth in this Lease.
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DEFENDANT BREACHED MULTIPLE PROVISIONS OF THE LEASE, ENTITLING PLAINTIFF TO MULTIPLE CONSECUTIVE DAY-FOR-DAY RENT ABATEMENTS TOTALING 541 DAYS As set forth in greater detail in the Chisholm Affidavit, Defendant breached the Lease in three separate respects, all of which gave rise to independent day-for-day rent abatements that, pursuant to the definition of "Initial Premises Abatement Period Termination Date" in Article I of the Lease, run sequentially and do not overlap: In violation of Section 12.3(c)(ii), Defendant, after ten days from receipt of notice that the Tr-Party Escrow Fund had fallen below $2.5 million, or November 12, 2010, failed to deposit $1,762,913.64 to replenish it to at least $4 million. Pursuant to Article I and Section 12.7(b), Plaintiff is entitled to a day-for-day rent abatement from that date to the date Plaintiff secured alternative financing sufficient to adequately fund the escrow account. Plaintiff did not secure alternative financing until June 30, 2011, 230 days after November 12, 2010. Plaintiff is entitled to a 230 day rent abatement measured from February 1, 2011, by reason of Defendants breach of its funding obligations under Section 12.3(c)(ii). In violation of Section 12.3(c)(i), Defendant failed to deliver the "Landlord TI Loans Evidence" (i.e., either cash or an adequate commitment from an institutional lender or a private investor) in the amount of $8,360,000 to Plaintiff on or before the Third Benchmark Date (i.e., December 3, 2010, per the Second Amendment). Pursuant to Article I and Section 12.7(b), Plaintiff is entitled to a separate and distinct day-for-day rent abatement from that date to the date it secures alternative financing (June 30, 2011). Plaintiff is entitled to a separate and distinct 209 day rent abatement by reason of Defendants default of that obligation. In violation of Section 12.3(e), Defendant failed to provide access to the eleventh floor of the Building for Plaintiff to conduct Tenants Penetration Work from October 28, 2010 to February 7, 2011, a period of 102 days. Accordingly, pursuant to Article I and Section 12.7(d), Plaintiff is entitled to a separate and distinct IQ day rent abatement by reason of Defendants violation of Section 12.3(e). In all, the rent abatement days set forth above total 541. Thus, by operation of the Leases express language, the Initial Premises Abatement Period Termination Date has been extended 541 days from January 31, 2011, to July 26, 2012. As a result, pursuant to the express terms of the Lease, the Court should hold that the First Rent Commencement Date is July 27, 2012.

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DEFENDANTS ARGUMENT THAT THE FIRST RENT COMMENCEMENT DATE HAS ALREADY PASSED IS WITHOUT MERIT; THUS, PLAINTIFFS MOTION SHOULD BE DENIED
Defendants counsel, by contrast, claims, without any support in the Lease whatsoever, that the First Rent Commencement Date was July 17, 2011. See August 31, 2011 affirmation of Claude Castro (the "Castro Affirmation"), at 25. Counsel purports to compute that date as follows: the Initial Premises Abatement Period Termination Date, according to counsel, ended on June 30, 2011, the date Plaintiff obtained alternative financing to replace the financing that Defendant failed to provide pursuant to Section 12.3(c). As a result, he claims the First Rent Commencement Date became July 1, 2011. See Castro Affirmation at 12. Counsel (and Defendants principal in a supporting affidavit) then asserts that Plaintiff was deprived of access to the 11th floor of the Building for only 16 days, rather than 102. See Castro Affidavit at 25;

Affidavit of Dan Shavolian, sworn to on August 31, 2011, at 28. Adding those 16 days to July 1, 2011, the First Rent Commencement Date supposedly became July 17, 2011. See Castro Affirmation at 25. Defendant argues that since Plaintiff received alternate financing on June 30, 2011, there should be no rent abatement days thereafter other than 16 additional days attributable to its failure to provide access in accordance with the Lease. That would result in a rent abatement of 166 days (February 1, 2011 - July 16, 2011). Defendant conveniently ignores that Defendants first funding default occurred on November 12, 2010, resulting in 230 abatement days, and its second funding default occurred on December 3, 2010, resulting in 209 abatement days. The two together total 439 abatement days, not the 150 that Defendant had acknowledged. Defendants argument concerning the limited 16 day length of its deprivation of access to the Buildings 11th floor is meritless, and is allegedly addressed in the Chisholm Affidavit. The facts relevant to that issue need not be addressed again in this Memorandum of Law. -8RE\1 1819\0001\456768v1

With respect to Plaintiffs right to separate and distinct day-for-day rent abatements by reason of Defendants two separate funding defaults, counsel unilaterally claims that Plaintiffs two funding claims are "duplicative" and that "Defendants funding obligations are lumped together, not set forth individually." Additionally, regardless of the number of funding default claims or the accrued abatement days, Defendant claims that Plaintiff "is only entitled to delay its rent obligations until it obtains alternative financing," or June 30, 2011. Castro Affirmation at 31. Defendant argues that the claim for abatement for failure to fund the Tr-Party Escrow accrual on November 12, 2010 (First Count of Plaintiffs Amended Complaint) is "duplicative of its claim for failure to produce the $8,360,000 on December 3, 2010, when it was contractually committed to do so (Third Count of Plaintiffs Amended Complaint). That is clearly a meritless argument. The two funding obligations are separately provided for in the Lease. Section 12.3(c)(ii) provides for the escrow funding obligation, and a separate action, Section 12.3(c)(i), provides for the balance of the $8,360,000 funding obligation on a different date and under different circumstances. It was specifically provided in the Second Amendment to the Lease that although the date for Defendant to produce the $8,360,000 was delayed to December 3, 2010, the dates when the escrow fund would be funded was not being delayed. Thus, both parties acknowledged that the 12.3(c)(ii) escrow funding obligation was separate -and earlier than the 12.3(c)(i) funding of the balance of the $8,360,000. Clearly, the parties did not intend to treat them as duplicative obligations and the language in the definition of Initial Premises Abatement Period Termination Date, that each abatement for a default by Defendant should be "sequential and not overlapping" makes it clear that each funding default was intended to give Plaintiff-- as its sole remedy -- a separate rent abatement.

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It is axiomatic that "a lease is subject to the rules of construction applicable to any other agreement." George Backer Management Corp. v. Acme Quilting Co., Inc., 46 N.Y.2d 211, 217, 413 N.Y.S.2d 135 (1978); see Accurate Copy Service of America, Inc. v. Fisk Bldg. Associates L.L.C., 72 A.D.3d 456, 899 N.Y.S.2d 157 (1st Dept 2010). "A familiar and eminently sensible proposition of law is that, when parties set down their agreement in a clear, complete document, their writing should as a rule be enforced according to its terms." W.W.W. Associates, Inc. v. Giancontieri, 77 N.Y.2d 157, 162, 565 N.Y.S.2d 440 (1990); see Jet Acceptance Corp. v. Quest Mexicana S.A. de C.V., N.Y.S.2d , 2011 WL 3847435 (1st Dept Sept. 1, 2011); Provident Loan Soc. of New York v. 190 East 72nd Street Corp., 78 A.D.3d 501, 911 N.Y.S.2d 308 (1st Dept 2010). This rule has special significance "in the context of real property transactions, where commercial certainty is a paramount concern, and where the instrument was negotiated between sophisticated, counseled business people negotiating at arms length." Vermont Teddy Bear Co., Inc. v. 538 Madison Realty Co., 1 N.Y.3d 470, 475, 775 N.Y.S.2d 765 (2004) (citation and internal quotation marks omitted). Furthermore, "[o]nce a contract is made, only in unusual circumstances will a court relieve the parties of the duty of abiding by it." Accurate Copy Service of America, Inc., supra, 72 A.D.3d at 457 (citing George Backer Management Corp., supra, 46 N.Y.2d at 217). In addition, "the unambiguous terms of a lease will not be disregarded for the purpose of alleviating a hard or oppressive bargain." Id. (citing George Backer Management Corp., supra, 46 N.Y.2d at 219). Defendant attempts to construct an argument that its independent breaches of the two separate subsections actually constitute the same breach. That argument is belied by the plain language of Section 123(c).

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Plaintiffs Exclusive Remedies for Defendants Breaches of Section 12.3(c) are Rent Abatements Contrary to counsels argument, Section 12.7(b) explicitly provides that Plaintiff is entitled to a rent abatement for Defendants failure to replenish the Tr-Party Escrow in accordance with Section 12.3(c)(ii) on November 12, 2010, and its failure to provide the balance of the $8,360,000 loan in accordance with Section 12.3(c)(i). Section 12.7(b)(i), as noted, expressly provides, in relevant part: In the event that Landlord fails to meet its funding obligations under Section 12.3(b) or (c), then ... the Initial Premises Abatement Period Termination Date shall be extended on a dayfor-day basis for the total number of days it takes for Tenant to obtain alternative financing on terms satisfactory to Tenant for the Replacement Funding Amount (emphasis supplied). Clearly, Section 12.7(b)(1) contemplates that Defendants failure to comply with its obligations set forth at Section 12.3(c) results in a day-for-day rent abatement. Moreover, as noted above, a day-for-day rent abatement (together with Plaintiffs right to a rent offset that is not the subject of this motion), is Plaintiffs exclusive remedy. Defendant would strip from Plaintiff its only substantive remedy under the Lease, for Defendants failure to comply with Section 12.3(c). This absurd and commercially unreasonable interpretation of the Lease cannot be countenanced. Plaintiff is Entitled to a Separate Rent Abatement Period for Each Independent Breach of Section 12.3(c) by Defendant Moreover, Defendants counsel assiduously avoids mentioning the definition of "Initial Premises Abatement Period Termination Date" at Article I of the Lease, which, as noted, states: "Initial Premises Abatement Period Termination Date" shall mean January 31, 2011, as the same may be extended in accordance with Section 12.7 and Section 36.4, each such day of adjournment pursuant to any provision to be sequential and not overlapping with any other day of adjournment pursuant to any other provision (emphasis supplied). -11RE\1 1819\0001\456768v1

Defendants failure to mention this provision of the Lease is not surprising. Not only does Section 12.7(b)(i) apply to any breach of Section 12.3(c), it applies separately to Defendants breach of both subsections (c)(i) and (c)(ii), which are two completely different obligations as has been demonstrated. Contrary to Defendants argument, breach of these two obligations are not "duplicative" and do not constitute the same breach; Defendant could have replenished the escrow account in compliance with subsection (c)(ii) while failing to provide the complete $8,360,000 funding obligation required by subsection (c)(i). Defendants two breaches of these independent subsections entitle Plaintiff to two separate periods of rent abatement. Defendant implicitly concedes that rent abatements for multiple breaches of the Lease are consecutive and not concurrent. Specifically, it asserts that the First Rent Commencement Date was extended to July 1, 2010, the day after Plaintiff obtained alternative funding, and then was further extended to July 17, 2010 by what it claims was only a 16-day delay in providing access to the 11th floor of the Building (a claim refuted by the Chisholm Affidavit). See Castro Affirmation at 25. By conceding in its counsels affirmation that breaches of separate

provisions of Section 12.3 result in separate, consecutive periods of rent abatement, Defendant cannot shift its position and assert that breaches of separate subsections of Section 12.3(c) result in only one rent abatement. Since Defendant moved based on the language of the Lease, it is bound by all of the terms thereof, and cannot pick and choose which provisions to apply or in what circumstances to apply them. See Herman v. Associated Hospital Service of New York, 27 A.D.2d 545, 545, 275 N.Y.S.2d 361 (2d Dept 1966); Upstate Shredding, LLC v. Carloss Well Supply Co., 84 F. Supp. 2d 357, 363-364 (N.D.N.Y. 2000); Fluor Daniel Intercontinental, Inc. v. General Elec. Co., 1999 WL 637236, *7 (S.D.N.Y.); Avila Group Inc. v. Norma J. of California, 426 F. Supp. 537, 542 (S.D.N.Y. 1977) (see especially cases compiled at footnote 15 therein).

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In short, a straightforward reading of the Lease establishes that Plaintiff has correctly calculated July 27, 2012 as the First Rent Commencement Date under the Lease, and that Defendants interpretation of the Lease is simply wrong. CONCLUSION For all of the foregoing reasons, Plaintiff respectfully requests that its cross-motion be granted in its entirety and that Defendants motion-in-chief be denied in its entirety, together with such other and further relief as this Court deems just and proper. Dated: New York, New York September 27, 2011 Respectfully submitted, ROSENBEG & ESTIS, P.C. Attorneys f41 Plaintiff / / John Hafflok Third Avenue /ew York, New York 10017 (212) 867-6000 JOHN HADLOCK ALEXANDER LYCOYANNIS Of counsel

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