Pilot vs. Sutton

SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK: CIVIL TERM, PART 24
X
PILOT RECORDING STUDIOS, INC.,

Plaintiff,

—against—
6 SIXTH AVENUE, LLC, PROMENADE
REAL ESTATE CORP., SUTTON GYMNASTICS
AND FITNESS CENTER, INC., ADVANCED
CONTRACTING CORP., and SNAR
CONSTRUCTION CO., INC., LEE
ELECTRIC CORP., THE BERN COMPANIES, INC.,

Defendants. X

Index No. 603822/03
60 Centre Street
New York, New York
July15, 2004

B E F O R E:

HONORABLE ROSALYN RICHTER, Justice

A P P E A R A N C E S:

HELLER, HOROWITZ & FElT, P.C. Attorneys for the Plaintiff
Madison Avenue
New York, New York 10017
BY: STUART A. BLANDER, ESQ.

GOULD & CIMINO, ESQS.
Attorneys for the Defendant
Sixth Avenue, LLC and
Promenade Real Estate Corp.
Madison Avenue
New York, New York 10017
BY: KEVIN J. SPENCER, ESQ.

GORDON & SILBER, P.C.
Attorneys for the Defendant
Sutton Gymnastics and Fitness Center
Lexington Avenue
New York, New York 10017

BY: DAVID H. SCULNICK, ESQ.
COOKE & FRENCH, LLP
Attorneys for the Defendant
Snar Construction Co, Inc.
Exchange Place, 31st Floor
New York, New York 10005
BY: JAPHET BOUTIN ESQ.

[All emphasis ours]

THE COURT: The first thing I’d like to do is thank the attorneys for their excellent presentation and to say to the clients that the fact I’m rendering a decision from the bench does not mean I don’t know how serious this is. The seriousness, this is for everybody in this room, particularly the principals in these businesses, is perfectly apparent.

On the other hand, it’s also apparent to me the inevitable delays in the court system between witnesses’ schedules, lawyers’ schedules and the testimony I need to decide things is wreaking havoc on the lives of these businesses.

And so I’m prepared to proceed, having already given this some thought, read the transcripts and now considered counsels’ arguments. It not an easy decision. But what I’d like to do is take the suspense out of this, tell the parties in part what my position is. There is an open issue that I would like brief comments on.

To get to the bottom line, I am persuaded noise is still coming from Sutton Gymnastics in excess of the noise levels in the lease.

For information about the importance of lease language, especially for businesses that either make noise, or need quiet, see: Before You Sign a Lease

I make the following findings: I don’t think anybody here is proceeding in bad faith. I don’t think this case is about Sutton not wanting to do what’s necessary. It’s apparent to me both the plaintiff and the defendant realize their economic livelihood is at stake. But I have a number of problems with Ms. Stint's testimony on which the defendants rely.

First, as I did last time, I found Mr. Schillinger to be a very credible witness. I found the witness from Sutton to be credible. The witness from Sutton Gymnastics didn’t add a great deal to the noise assessment in this case except to again convey to me that there’s a lot for them on the line.

As I did last time, I found Mr. Schillinger, who is trained to be aware of noise issues, to be credible. But I found very credible, as I did last time, the testimony of the disinterested musician who came to testify, Mr. Aslan; despite some questioning doesn’t appear to be a big, close friend or relation of Mr. Schillinger. He persuaded me, as did the witnesses at the previous hearing, there is still, putting aside the lease levels for a minute as a practical matter, noise, thumping, vibration coming into the studio that is incompatible with their use as a recording studio.

He doesn’t have any motive in my opinion to testify otherwise. He may like working there but he doesn’t have a financial interest. He could record anywhere. He’s trained to experience noise

Central to my decision today is the fact that every single witness at this hearing and, to the best of my recollection, at the last hearing talked about noise and vibration that’s coming through the floor. Nobody, none of the musicians, not Mr. Schillinger, not any of the sound experts talked about noise, thumping above the heads of the people working in the studio.

Mr. Aslan, what I would describe as lay person’s testimony, talked about the fact you can feel it through your feet. I’m not going to repeat it.

Frankly so did the defendants’ expert. That’s critical to me, among many issues, because of the defendants’ suggestion maybe it’s coming from the yoga studio overhead.

Now, I’m not going to make a finding noise can’t come through the ceiling, travel through the walls, into the floor. But there is no evidence, not presented by anybody in this hearing that would lead me to that conclusion except by speculation. And that certainly is of significance to me.

Having now found based on the nonexpert testimony there is still noise and vibration levels coming into Pilot that are incompatible with Pilot’s work as a recording studio, I must then go on to address what both parties have acknowledged is the critical issue in this case, where is it coming from?

I don’t think it takes an ounce of pop science, respectfully, for me to conclude because I have found Mr. Schillinger and his witnesses at both hearings to be credible, that this problem is tied to the arrival of Sutton Gymnastics. Absolutely no evidence has been presented there was any problem before.

I credited the witnesses who testified otherwise. I am persuaded, as interesting as the explanations are maybe it’s the subway, maybe it’s deteriorating equipment, the circumstantial evidence as I found last time about the timing and the testimony about the vibration in the floor, and the testimony of trained musicians, sound engineering experts, and Mr. Schillinger, that the distraction is coming from the walls and in the direction of Sutton lead me to reject the argument that’s been sort of presented, especially this morning, maybe the equipment got old and that’s what caused the problem.

Defendant’s counsel is correct, the most difficult piece of evidence presented by Sutton is Ms. Schnitta’s testimony about her readings in what she describes as the controlled test. I’m going to put that aside and come back to it in a minute. It is certainly disappointing, as the Judge who had this case and has struggled with counsel to try to resolve this, that, candidly, neither of the expects did exactly what I might have hoped they would have done. Neither one of them made any effort, if you will, to rule out all the other possibilities. I’ll concede that.

Mr. Fierstein is correct, didn’t go upstairs, didn’t go downstairs, didn’t go in the hall, didn’t go in the bathroom. But I’m crediting his testimony that he took readings in the live room at the height of activity in the middle of the afternoon when a gymnastics class was going on and got readings in excess of the vibration level in the lease.

When I combine that testimony with the other testimony I’ve mentioned about the fact nobody is saying it’s coming from the ceiling, that the witnesses all talking about hearing sounds from a particular wall direction, I find that is sufficient to meet the movant’s burden on this hearing of showing there is a likelihood of success on the merits that the sounds are continuing to come from Sutton Gymnastics.

I also have to find as the finder of fact on these hearings that everybody including Ms. Stint conceded these sounds, which I’m not going to replicate, which everybody sat and listened to, the little rapping or the thud, as the nonexpert, seem to me to be consistent with the type of activity going on in a gymnasium.

It doesn’t matter whether there’s children's’ feet running or instructors running to catch up with children or adults running to answer a telephone, there’s a pattern of feet running or noise, not a big thud, it’s not somebody toppling over, it’s not an elevator door going bang, it’s not even a rumble, nobody described that, that would leave me questioning whether maybe it’s maybe the “wish” sound of a toilet or the thud or the tinkle of the heat or the air conditioning; these are things lay people, including judges, can figure out.

It’s feet moving. It’s a pattern of low level stepping, nonvibratory noise and some thuds. I’m going to come back to the controlled expert.

One of the troubling aspects of Ms. Schnitta’s testimony is, I’m going to reject any reliance on this experiment with the adult and the cell phone and her telling this person jump and then listening on the cell phone and watching the machine.

As I indicated a moment ago, it certainly would have been helpful had Mr. Fierstein done a test on a Sunday morning or 10 o’clock at night or in some period when the gym was closed. But there is validity at all in my opinion, I say this with due respect to Ms. Schnitta, with her testing, putting aside the adult child argument. There was much testimony here about adults being able to control their feet, the person who’s jumping knows exactly what’s being done, is being told when to do it, knows they’re being measured, knows they’re being watched. It is, respectfully, for me as the fact finder a useless experiment.

I also was troubled by her acknowledgment she can hear the thud through the cell phone through a wall. Everybody described the space between the wall, another wall and a room that’s soundproof. Whatever is going on is loud enough she can hear it through a cell phone. And yet she contends it shows no readings on her equipment.

I was not persuaded by her testimony there’s something different about noise that comes through a phone. I have to say if it is loud enough to hear through the double wall, insulated room and the cell phone, it supports my finding it’s causing problems for recording artists working in the live room.

I would not reach that conclusion absent Mr. Fierstein’s testimony. But it is really inconceivable to me she can hear this even when the person who is jumping knows they’re being tested yet her does not register any problem.

I thought -- I say this respectfully -- it was just too convenient she acknowledged she’s in what they called the quiet room, which sounded an awful like a locker room to me. She acknowledged she could hear the very same sound that Mr. Fierstein, the musician, Mr. Schillinger, everybody admits it’s going on, including the defendants’ expert, but it’s coming from she doesn’t know where. She doesn’t say it’s coming from the walls. She doesn’t say it’s coming from the elevator or subway. She didn’t test.

Now, I understand the defendants’ argument it’s the movant’s burden. But since I am crediting Mr. Fierstein’s testimony regarding what he found in the live room, the absence of any explanation, circumstantial or scientific, by the defendants’ expert to rebut the explanation for the noise levels offered by the plaintiff’s expert supports my position they met their burden.

As to the controlled experiment, my doubts about the reliability of Ms. Schnitta’s use of this controlled experiment leads me to question the reliability of the results she reached during the period when she says there was no activity at the gym. I’m not finding Ms. Schnitta lied. I’m sure she got reading she testified to. But I do not find her testimony persuasive and scientifically reliable enough for me to rely on it.

I note repeatedly she kept saying she’s not using the most up-to-date equipment, the most current techniques. She kept describing herself, as other people -- I’m going to paraphrase this -— I’ll acknowledge it’s not what the current state of the art is but I have special qualifications, I have a Ph.D., I understand this issue better than most people and, therefore, even though it’s not state of the start, it’s scientifically reliable.

As the finder of fact, when presented with two experts whose opinions are virtually impossible to reconcile, one factor I have to consider is who is using the most current technology and is there any other fallacy in their testimony that would lead me to doubt their findings.

Ms. Schnitta also conceded the device she used is still patent pending. I couldn’t begin to tell you whether or not it would be approved, whether or not it is worthy of being patented but it’s her device. It’s her technique. It’s her methodology. She certainly didn’t persuade me these are reasonably current scientific techniques for measuring noise.

There has been a great deal of discussion today about the burden. And certainly the burden is on the plaintiffs. The burden is also on the defendant as the cross movant to persuade me to change the injunction. My findings make it clear the defendants have not persuaded me at all of their position on the cross-motion. For the purpose of this hearing, I do not believe it is of any legal significance whether I treated this as a contempt motion or simply to reargue the original preliminary injunction. The Court in its preliminary injunction ruling anticipated its attempt to craft a more limited remedy might not work.

I am therefore going to make some findings addressing the original scope of the preliminary injunction. My conclusion that Sutton Gymnastics is trying in good faith but failing to address the noise problem would be inconsistent with a finding they had willfully and knowingly violated the Court order. They relied on their sound expert. I don’t think there would be any basis to fine them and impose some of the other remedies courts normally apply in contempt. That doesn’t seem to me to belong here.

I am finding at this point the evidence on this contempt motion has persuaded me the Court has to modify the original preliminary injunction in favor Pilot.

I am going to be ordering Sutton Gymnastics cease operations now. I have a number of things to say about that. I’m going to stay this order until Friday, close of business, so that if some party wants to go seek some relief, I’m not suggesting I think the appellate court should or will do anything, but there are employees involved here, there are classes, there are people to notify.

I think out of the spirit of justice and fairness the Court will simply, once I’m done today, stay any full closure until close of business on Friday. That will allow Sutton —- I’ll let Pilot say something but I think there are employees here.

Is there something you want to say about this particular issue?

MR. BLANDER: Can we go off the record?

(There was an off the record discussion.)

THE COURT: With the thanks to Pilot, they indicated it will stay enforcement of this order until the close of business on Monday.

I have given a great deal of thought to the balance of the equities issue here. Certainly it’s a close balance. There isn’t any question about it.

I don’t think anybody would want to put business into the place this case has forced me to put them. But the balance of the equities last time shifted to some degree to Sutton who I allowed to continue operating, albeit in a much more limited noneconomic vein. I have certainly given some liberal extensions with the consent of all parties in an effort to get Sutton to resolve the problem.

I’m persuaded by the amount of time that passed, the testimony here, Pilot virtually has had virtually no income for much of the year 2004. Their situation is critical. I expect Sutton is critical too given the economic investment they had, the loss of business.

The balance of the equities here goes with Pilot which (a) was in place to begin with and (b) who is the movant and (C) I can’t think, there’s been nothing presented to me, of anything more I could tell Pilot to do to solve this problem. I didn’t hear anything at this hearing or at the last one that yet persuaded me there is no solution to the noise problem. It may not be an economically viable one.

I’m not naive. There was testimony the cost to Sutton of trying to do anything more including a full floating floor, I don’t know what else would have to happen, would be significant. But when faced with a record in which right now there is nothing but speculation that maybe Pilot could fix the problem, there are recommendations of experts, including the original report, that lead me to conclude there may be something Sutton can do to fix the problem, the balance of the equities lies with Pilot.

The Court hopes the parties can come up with some other answer. I, frankly, have been unable to come up with a remedy at this point other than this one in light of the answers counsel gave me today. I believe the law warrants the remedy that I’ve provided because of what is now the perilous financial situation of Pilot and, more significantly, how long they’ve had no work. But I have wondered all along in this case whether in an effort to try to alleviate the potential damages here the parties could try voluntarily to come to some other arrangement either as to the days of the week each business operates, whether or not - I am not ordering this. I am simply stating what I think are options.

Whether Pilot records on the weekends and whether Sutton can run a weekend program. Whether Sutton can run an evening program if Pilot is not recording. Because at the end of this case there will be huge damages for one side or the other if this is not the right remedy

I’m raising this not because I believe it is anything the law would require but because this case is going to go to trial. There are consequences for the landlord, there are consequences for Sutton and there are consequences for Pilot if this is not a legal ruling that ultimately either would be upheld or at the end of the trial.

I would be concerned if I were either of the businesses here about the next stage of this case. It just seems to me as an equitable manner if Pilot knows it doesn’t record between 9 and noon or between 7 or 9 or on Saturdays, that counsel ought to be talking to each other.

I am persuaded the need for Pilot to bring in work now is severe enough that -— I’m not ordering this —- but it certainly is something I would suggest the parties might want to explore in an effort to mitigate damages at the end of the case.

The Court is not finding that Sutton is in contempt because the Court finds that their violation of the Court’s original order and the terms of the lease was not willful although it currently exists. The Court is rejecting the cross-motion to modify the te5’ms of the preliminary injunction.

And pursuant to CPLR 6314 the Court is modifying its original injunction by granting the original relief requested by Pilot which is ordering closure of Sutton Gymnastics until the Court is satisfied either by testimony of an independent sound engineering expert mutually agreed upon by both parties that the noise levels in the live room in Pilot Recording during a. period when a gymnastics class is in operation are in conformance with the lease levels.

The Court believes it would be, respectfully, a waste of the client’s limited funds and the Court time for me to have another hearing involving experts, competing experts hired by the parties. And the Court asks, although I’ll certainly do that if that’s what the parties want to do, but the Court is strongly suggesting since this is a preliminary injunction that could be modified at any time, that if Sutton believes it has remedied the problem, that the parties pick the expert who would be acceptable to Pilot and acceptable to Sutton and to the landlord so that perhaps we could come to a solution here.

If the parties do not wish to do that Sutton would have an absolute right, as any litigant, to make another motion at any time based on any evidence it has to ask me to modify the injunction.

The Court is not finding the landlord to be in any contempt because the Court believes the landlord legitimately relied on Sutton’s expert, concluding Sutton had remedied the problem.

The Court is holding in abeyance the request by Pilot for an abatement of the rent and the Court at this time, I’ll tell the parties, it’s going to leave the rent payments in escrow. However the Court directs next month since I’m allowing Pilot to start running effective August, Pilot needs to begin paying rent.

The Court is vacating the portion of its previous order concerning future rent payments on Pilot. The Court is keeping in abeyance until the release of the funds in escrow any rent abatement because the Court believes there has been inadequate and incomplete evidence presented as to what efforts the landlord has made since the inception of this litigation to remedy the problem, whether it has made good faith efforts to ensure Sutton is in compliance, whether it did nothing, what it did. And this issue really has not been adequately briefed by the landlord nor in the time I’ve had have I had a full chance to research it myself. I think it would be a mistake to release those funds until that has happened.

I believe that covers the issues here. As I said earlier, unless the parties come to a voluntarily solution, this appears to me to be the only available remedy.

The Court also ‘strongly urges the parties to begin to move this case to trial quickly so that a final determination on the merits can be made without causing any further unnecessary financial damage to Sutton.

The Court granted the plaintiff’s request for ‘preliminary injunction. And given the severity of the remedy, I would anticipate Sutton will want the posting of an undertaking. I do not believe the parties are fully prepared today to address what that is.

Let’s go off the record.

(There was an off the record discussion.)

THE COURT: There is no question Pilot will have to post an undertaking in an amount sufficient to ensure any damages to Sutton arising out of the issuance of this injunction if it were to be found this was not legally correct, that Sutton would be compensated.

The Court suggested the parties speak to each other on Monday. If you cannot agree on the amount of an undertaking, the Court will (l have a conference call with counsel. If there’s a need for a hearing, we’ll set that up next week so the undertaking is posted fairly quickly.

The Court also suggests that you adjourn case for maybe a week for a control date to see where we are.

This decision placed on the record constitutes the order of the Court. Either party may submit a proposed judgment and order based on the oral ruling I made. The Court’s position is it is ordering, for appellate purposes, the Court is ordering the preliminary injunction in favor of plaintiff against Sutton Gymnastics be granted and that effective -- I’m not here Monday. Effective Monday at 5 o’clock, close of business Sutton Gymnastics will be closed.

(There was an off the record discussion.)

THE COURT: The Court’s position is essentially based on what I have heard and how long I think this case will take to get to the next stage, a reasonable preliminary solution would be to order the posting of a $50,000 bond. I’m offering that as a suggestion to the parties.

The Court will make itself available on Monday for a conference call at some point. The parties can call my chambers. They’ll know where to find me. And the Court agrees the injunction cannot formally go into effect until some bond is posted but the Court’s position is the injunction cannot go into effect until at least 5 o’clock on Monday provided a bond at some amount, at least a preliminary amount agreeable to the parties is posted. If no bond is posted by 5 o’clock Monday, the injunction will not go in effect until proof is provided to Sutton that at least a bond has been posted in an amount agreeable by Sutton.

The parties can enter into a stipulation this will cover, let’s say, the rest of this month and we can have a further hearing. Is there anything else by way of clarification of the order plaintiff needs today?

MR. BLANDER: Just, your Honor, could submit a ‘proposed order.

THE COURT: The Court is ordering this. This constitutes the decision and order of the Court. My experience, sometimes attorneys do not want to order a long transcript and want to memorialize the Court order to something shorter. That’s up to the parties. This is an order. This is an injunction. The Court ruled on the motion. The Court will not be making any further rulings on this motion sequence and cross—motion. Is there any further clarification defendant’s counsel needs for today?

(There was an off the record discussion the bench.)

THE COURT: The Court has conferenced the logistics with counsel. The Court will put this on its calendar for Wednesday, the 21st, at 2:15. In event the parties are not able to reach an agreement and if the parties are in need of a hearing, what I would suggest on the bond is the parties call my chambers on Monday or Tuesday and speak to my law secretary. He’ll tell you what the calendar looks like, whether I can do that on Wednesday or Thursday.

I’d like it on Wednesday so we have control over what’s going on. The Court also, I think it’s clear, any suggestions I’ve made about amounts are not an indication of what I think the right amount is, simply something I think will preserve the status quo if that were acceptable to the parties pending a hearing.

The parties can agree on a interim bond amount. Or if Pilot is not in a financial position to post a bond and the posting of any bond would turn on the Court’s ruling on the rent abatement. The Court I think was clear. The law is, especially when the Court is granting such a strong, perhaps severe interim relief, the bond has to be posted before the injunction goes into effect.

If there is no bond posted at 5 o’clock Monday there will be no injunction going into effect. I know plaintiff’s counsel and defendant’s counsel, everybody is aware the parties here have ongoing businesses. I think if it’s looking like Pilot is not going to be able

to post that bond, simply out of professional courtesy you alert your adversary. I don’t want to be undoing closure orders on Wednesday. If by midday Monday it’s clear you do have the bond, I’m sure you will be talking to each other. This matter is adjourned and concluded for today. Good luck. Thank you.

It is hereby certified that the foregoing is a true and accurate transcript of the proceedings. JOHN A. BONACCOLTA, C.S.R. OFFICIAL COURT REPORTER