57th Street Day Spa, LLC v. 135 East 57th Street, LLC
July 5, 2010
(Sup. Ct. N.Y. Cty. 12/9/05)
Yellowstone injunction denied and tenant’s complaint dismissed. Lease required tenant to give defendant a $200,000 letter of credit as a security deposit; gave landlord the right to draw down on the letter of credit; required tenant to keep the letter of credit funded up to $200,000; required tenant to restore any of its proceeds applied by defendant to the payment of rent; and also gave landlord the right to treat tenant’s failure to replenish the letter of credit as a default. Tenant withheld $79,088.97 of its rent based upon a claim that an overpayment. Thereafter, landlord drew down the sum of $63,572.48 and applied same to the payment of rent. A notice to cure was served upon tenant’s failure to replenish the letter of credit. The relief prayed for in the complaint included a declaration that tenant was not obligated to pay the security deposit restoration as additional rent. Tenant’s obligation to replenish the letter of credit, however, was unqualified. Moreover, an estoppel letter precludes tenant’s claim of an overpayment where it acknowledged that it was not entitled to any offsets, abatements or deductions against the rent payable under the lease. Link to Full Text of Decision
