Pete’s Tavern sues over sidewalk café rights

Pete’s Tavern, the historic ale house located near Union Square in Manhattan, is suing its landlord after the owner of the space had its sidewalk café license revoked in what lawyers say is an attempt to evict the pub out of a lucrative retail space.

The 148-year-old tavern, located at 129 East 18th Street, at Irving Place, alleges that its landlord, the Lillian Troy 1999 Trust, told the city’s Department of Consumer Affairs that it would not consent to a renewed sidewalk café license. The bar has been operating a sidewalk café since at least 1938, according to the tavern’s records.

“This willful and malicious action is part of [the landlord’s effort] to ruin plaintiff’s restaurant business in order to break plaintiff’s net lease on this historically landmarked property [which] was made in 1964 and is not set to expire [until] Nov. 30, 2020,” attorney Burton Ross, representing Pete’s, wrote in a New York State Supreme Court filing on June 28.

Bruce Friedman, owner of Pete’s Tavern, alleged in court filings that the landlord has been trying to break the restaurant’s under-market lease in any way possible, and wrote a March 7 letter to the city refusing to grant consent to the sidewalk café.

Operating the tavern without a sidewalk café would cost the institution millions of dollars, Friedman said.

Lawyers for the Trust did not return calls, and Troy family members were not immediately available for comment.

The tavern is the only commercial tenant at a historic, 150-year-old, five-story apartment building at 66 Irving Place. In 1964, Pete’s Tavern, whose business name is DMF Gramercy Enterprises, entered into a net lease agreement with Lillian Troy. The current landlord is a trust controlled by the descendants of Lillian Troy.

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Friedman, who is also president of DMF Gramercy, told the court that his firm entered into a May 2009 agreement to sell the tavern to a third party, which would result in assigning the lease to the third-party buyers, who were not identified. He claims that after asking the consent of the landlord, that the Trust demanded major revisions to the lease and demanded that his company surrender the fixtures of Pete’s Tavern to the landlord.

Ultimately, the landlord did not consent to the new lessee. To date, Pete’s Tavern continues to be owned and operated by DMF Gramercy.

He claimed that Troy Trust insisted that emergency repairs be done and made other demands. That resulted in the issuance of a February 2010 lease default notice, which were later settled after Pete’s Tavern took the landlord to court. Another default notice was issued in May 2011 and repairs were done by February 2012 to settle that dispute.

Friedman claims the landlord sent the sidewalk café revocation letter in March 2012. He said that his company only learned of the letter on June 26, when they tried to get their permit renewed.

Ross told The Real Deal said the sidewalk café was shut down for a couple of days last week before they got an injunction, to keep the sidewalk café open until the license dispute could be resolved in court.

“If it continued [Friedman] would have had to fire employees,” Ross said in a phone interview.

City officials note that if the landlord prevails in a court hearing later this month, Pete’s Tavern would no longer be able to operate the café, but added that the café is temporarily open, as of last week.

“[Department of Consumer Affairs] rules require that the landlord consent to the operation of the sidewalk café,” Melanie Sadok, senior counsel of the NYC Law Department told The Real Deal. “Therefore, if the court determines that the landlord properly revoked its consent, DCA cannot renew the license.”