Plaza Hotel Associates v. Wellington Associates, Inc.
| Decision Date | 15 June 1967 |
| Citation | 285 N.Y.S.2d 941,55 Misc.2d 483 |
| Parties | PLAZA HOTEL ASSOCIATES and Hotel Corporation of America, Plaintiffs, v. WELLINGTON ASSOCIATES, INC., Defendant. |
| Court | New York Supreme Court |
Paul, Weiss, Rifkind, Wharton & Garrison, New York City (Simon H. Rifkind, Arthur L. Liman, Sidney S. Rosdeitcher and Roy A. Heimlich, New York City, of counsel), for plaintiffs.
Anthony G. Di Falco, New York City, for defendant.
Plaintiffs move for summary judgment (1) declaring invalid an appraisal conducted for the purpose of determining the rent payable to defendant by Plaza Hotel Associates (hereinafter referred to as 'Associates', (2) directing a new appraisal, and (3) directing an accounting of excess rental payments claimed to have been made to defendant.
On October 1, 1953 Hilton Hotel Corporation (hereinafter 'Hilton'), the owner of the land and the buildings thereon known as the Plaza Hotel, sold the hotel property to Park-59th Street Corporation (hereinafter 'Park'). As part of the transaction, Hilton received an agreement entitling it to an option, exercisable between October 1, 1965 and March 31, 1966, to repurchase an undivided one-half interest in the land only for (1) $400,000 and (2) an assumption of one-half the mortgage indebtedness and one-half the real estate taxes applicable to the land itself. The option agreement provided that, upon exercise of the option, Hilton (or its assignee) would grant to the then owner of the other undivided one-half interest in the land a lease of Hilton's one-half interest in the land for a term of 20 years with an option to the lessee to extend the term for an additional 30 years. If, however, the property was no longer used primarily for hotel purposes at the time of the exercise of Hilton's option, Hilton (or its assignee), was not to be required to enter into such a lease and was to have all the rights of a tenant in common of the land. Annexed to the option agreement of October 1, 1953 was the form of the lease to be executed in the event that the option was exercised.
Article TWO of the lease form provides that 'Lessee shall pay as rent for the interest in the land hereby demised an annual ground rental equal to 3% Of the value of all of the land (wherever permitted by the context the word 'land' as herein used is intended to mean the land only, exclusive of the buildings and improvements thereon) as of the date of the commencement of the term of this lease.' The same article provides for an appraisal of the land value if the parties fail to agree as to the value within 60 days from the commencement of the term of the lease.
Article NINE of the lease form provides that the lessee shall have the right to alter, reconstruct, and demolish any and all buildings and improvements and erect new buildings and structures 'provided that if any such renovation, reconstruction, demolition or new building or structure is designed to be used primarily for purposes other than hotel purposes, the prior written consent of the Lessee (sic) shall be required.' (Italics the court's). The italicized word 'lessee' is obviously a typographical error and must be read as 'lessor'. Otherwise the article is wholly meaningless.
Article ELEVEN provides that 'if at any time the land and the buildings and improvements thereon shall cease to be used primarily for hotel purposes, the Lessor shall have the right to terminate this lease by written notice given * * * within six months from the date of the cessation of such use.'
Article NINETEENTH provides that upon the expiration or other termination of the lease for any reason whatever, the lessor and the owners of any other interest in the land or buildings shall thereupon have such 'rights, privileges and obligations as by law such ownership bestows or entails in the absence of any agreement.'
In the fall of 1965, Hilton sold its option rights to Chatham Associates, Inc. (hereinafter 'Chatham') which thereupon exercised the option and acquired a 50% Interest in the land underlying the Plaza Hotel structure. As required by the option agreement, Chatham granted a lease, in the form annexed to the agreement, to a subsidiary of plaintiff Associates. The subsidiary subleased the leasehold interest to Hotel Corporation of America (hereinafter 'HCA'), the co-plaintiff herein, and assigned the interest retained by it to Associates. Chatham transferred its half interest in the land to defendant Wellington Associates, Inc. At the present time, therefore, Associates and Wellington each own an undivided half interest in the land. Associates owns the entire building and is the lessee of Wellington's interest in the land. HCA is sublessee of Wellington's interest in the land and is the present operator of the hotel.
As the parties were unable to agree as to the value of the land for the purpose of determining the rental to be paid to defendant, an appraiser was selected by Associates and another by Wellington. Since the appraisers could not agree, a third appraiser was selected. He and the appraiser selected by Wellington appraised the value of the land at $28,000,000.
Concededly, all three appraisers valued the land as if it were unencumbered by the lease and by the restrictions to hotel use imposed by the lease. The third appraiser's appraisal states that the purpose of the appraisal is to establish the market value of the land 'as though free and clear of any encumbrances, Vacant and ready to be devoted to the highest and best use' and concludes 'Employing all available guides to value giving consideration to location, size of plot And highest and best use * * * the market value of the land is Twenty-Eight Million Dollars.' The appraisal of the appraiser selected by defendant also states that the land was to be appraised 'as if vacant and unimproved' and that he considered, Inter alia, the 'highest and best use to which the land may be put.' The appraisal by the appraiser selected by Associates states that it values the land 'as if vacant and unimproved' and also declares that 'in our determination of value, we have projected a hypothetical office building improvement' for the land. The valuation is based, in part, on 'earnings and residual land value which would be achieved if a multistory office building...
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Klair v. Reese
...land was to be determined by reference to two renewal options of 21 years each. Id.; See Hotel Plaza Associates v. Wellington Associates, Inc., N.Y.Supr., 55 Misc.2d 483, 285 N.Y.S.2d 941 (1967), aff'd, N.Y., 22 N.Y.2d 846, 293 N.Y.S.2d 108, 239 N.E.2d 736 (1968). In the rent setting contex......
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New York Overnight Partners, L.P. v. Gordon
...affecting the land (United Equities, Inc. v. Mardordic Realty Co., supra, at 400, 187 N.Y.S.2d 714; Plaza Hotel Assocs. v. Wellington Assocs., Inc., 55 Misc.2d 483, 487, 285 N.Y.S.2d 941, aff'd 28 A.D.2d 1209, 285 N.Y.S.2d 267, aff'd 22 N.Y.2d 846, 293 N.Y.S.2d 108, 239 N.E.2d 736; see also......
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Plaza Hotel Associates v. Wellington Associates, Inc.
...called upon to review the valuation given to the realty involved in this action. In the first proceeding (Plaza Hotel Assoc. v. Wellington Assoc., 55 Misc.2d 483, 285 N.Y.S.2d 941, affd. 28 A.D.2d 1209, 285 N.Y.S.2d 267, affd. 22 N.Y.2d 846, 293 N.Y.S.2d 108, 239 N.E.2d 736), it was held th......
- Plaza Hotel Associates v. Wellington Associates, Inc.