Billionaires’ Row landlord fed up with outdoor dining

Drunk diners, ugly signs have turned West 57th Street into “three-ring circus”: lawsuit

NYC outdoor dining being swept up
(iStock, Google Maps / illustration by Ilya Hourie for The Real Deal)

UPDATED June 27, 2022, 5:39 p.m.: Some landlords have embraced outdoor dining to save their struggling tenants, but one Billionaires’ Row building owner is decidedly not a fan.

The restaurants renting space at the Osborne have turned the landmarked apartment building into a “three-ring circus,” the owner declares in a lawsuit.

The Open Restaurants program, which oversees New York City’s outdoor dining situation, provided a pandemic lifeline to as many as 12,500 restaurants, and the landlords — including many co-ops — who rely on their rent. Embraced by many New Yorkers but despised by others, the program was made permanent in February.

That left lawsuits as the only option for opponents, among them the Osborne Tenants Corporation, which owns the apartment building at 205 West 57th Street, just south of Central Park. Streeteasy describes the 19th century building as “a kind of Dakota across the street from Carnegie Hall.”

Complicating matters, the residents lease their building’s commercial space not to the restaurants directly but to 57th and 7th Associates, a commercial tenant since 1962, which subleases to seven retailers. The owners have raised a number of complaints, but it’s the outdoor dining that irks them the most.

Last month they went so far as to demand 57th and 7th dismantle the outdoor seating and “unauthorized signage” or risk termination of the lease. That set off a Russian nesting doll of litigation.

The middleman served similar notices to its subtenants, asking them to remove the street seating and signage lest their leases be ripped up.

At the same time, 57th and 7th Associates sued Osborne Tenants, calling its demands “ambiguous.” Then two restaurants and a pizza place — Carnegie Diner, P.J. Carney’s, and Pizza and Shakes — served up lawsuits to both landlords.

In court, Judge Andrew Borrok extended some sympathy to 57th and 7th for “being the ham between two slices of bread” and trying to placate Osborne Tenants and the subtenants.

Joseph Goldsmith, a partner at Kucker Marino Winiarsky & Bittens, which represents Carnegie Diner and Pizza and Shakes, called the situation “an internal dispute” between the owner and its tenant “over the amount of rent that is paid, while the restaurants are trapped in the middle.”

The triangular litigation comes at a time when New York’s restaurants are still struggling. Osborne Tenants had been “extraordinarily sensitive” to their plight, its attorney, Steven Sladkus, testified this week when his legal team and lawyers for 57th and 7th met in court.

However, he said the Dos Equis umbrellas, neon signs and inebriated patrons sleeping on the sidewalk detracted from the beauty of the building, where Leonard Bernstein and Bobby Short once lived.

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While restaurateurs await regulations from the Department of Transportation for the ubiquitous sidewalk structures, they are bound by few rules.

Since September, the Osborne’s address has been the subject of at least 30 complaints to 311 relating to outdoor dining or sidewalk issues.

“If the restaurants are unable to have signs informing customers that the businesses are open and what is being sold, or unable to have outdoor seating in accordance with Open Restaurants program, it is not known how these businesses can survive,” said Goldsmith, their lawyer.

Carnegie Diner removed its outdoor seating on West 57th Street but it and P.J. Carney’s maintained their outdoor structures on 7th Avenue.

Manhattan Community Board 5, which covers Midtown including the Osborne, supports the program but recommended stringent guidelines if the originally temporary program is to be permanent.

“CB5 would like outdoor dining structures to be integrated into the streetscape aesthetically and organically, instead of isolating diners from the space around them as has been observed in the emergency period,” the board recommended.

In addition to requesting that the restaurants remove their sidewalk seating, Osborne Tenants also asked several retailers to remove signs, even though some reportedly date from the 1960s. The signs “impair the reputation of the building,” according to Osborne Tenants’ notice to P.J. Carney’s.

One of the signs, which included a poster advertising happy hour at Carnegie Diner, was removed. The shoe repair store removed its “expert shoe repair” neon sign, but P.J. Carney’s has not removed its neon signs that say “Pub,” “Bass,” and “Est. 1927.”

“Some of this stuff has been up on the building for decades,” said Heath Kushnick, attorney for 57th and 7th, according to testimony. “The P.J. Carney’s has been there for decades, and now suddenly they are saying that has to be taken down.”

The owner’s lawyers called that “of no consequence.”

Attorneys for 57th and 7th Associates and P.J. Carney’s declined to comment on the lawsuits. Osborne Tenants’ lawyers did not immediately respond to requests for comment.

This article has been updated with comments from an attorney for two of the retailers.