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Citibank files to block Toy Building eviction
Citibank has filed for an injunction against the former Toy Building to
block the landlord, Yitzchak Tessler, from evicting a branch location
from the building’s commercial space.
Citibank says it stopped paying the monthly rent in March and has since
placed more than $296,300 in escrow amid claims that the landlord
failed to pay for utilities and keep the building, at 1107 Broadway
between 24th and 25th streets, in safe condition. The building, a
stalled condominium conversion, is currently being foreclosed on by
Lehman Brothers.
“In violation of the lease, 1107 Broadway has failed to make all
necessary repairs (including structural repairs) to keep the premises
in good working order and condition,” attorney Cari Lewis, representing
the plaintiff, alleged in the injunction request filed July 20.
The lawyers for Tessler counter that Citibank withheld rent in
violation of its lease, which it signed in 2004. They also claim that
Citbank continues to operate a branch at the location despite filing
complaints with city officials about alleged safety issues.
“There were some violations that were issued as a result of Citibank
calling various agencies to complain,” Mitchell Kosoff, attorney for
Tessler, told The Real Deal.
“The owner of the building is making arrangements with the Department
of Buildings to ensure that the building continues to be in compliance
with all applicable rules and regulation. None of these violations,
however, is a basis for Citibank to withhold its rent pursuant to its
lease.”
The dispute comes at a time when bankrupt Lehman is trying to foreclose
on the 16-story building, which Tessler wanted to convert into a
165-unit condo. The investment firm filed suit in May seeking $136.8
million from Tessler, after he allegedly defaulted
by not making payments when the loan came due in 2008. Tessler,
president and chief executive of Tessler Development, is being held
personally accountable for the default, as he signed guarantees linked
to the mechanic’s liens and other default items, according to Lehman’s
suit.
Citibank initially filed suit in June, seeking to block the eviction,
alleging not only was the building unsafe, but that the building failed
to maintain working sprinkler systems and then that the bank was forced
to pay all of the building’s Consolidated Edison payments since March,
totaling tens of thousands of dollars.
According to the DOB website, there are 49 open violations at 1107 Broadway.
A stop-work order was issued against the building in October 2008 for
failure to maintain a site safety officer at the site. A second
stop-work order was issued in May 2010 after the construction permits were revoked.
In addition to the restraining order, the Citibank suit demands that
DOB issue an immediate vacate order and that the landlord pay damages
of more than $1 million.
Tessler was not immediately available for comment. Beth Huffman, a
spokesperson for Dechert, which represents Lehman, declined to comment,
and DOB officials were not immediately available for comment.