SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK THE CITY OF NEW YORK, Plaintiff, - against - FC 42 ND STREET ASSOCIATES, L.P., Defendant. Index No. 451648/2017 ANSWER Assigned to Justice Ramos Commercial Division Part 53M Defendant FC 42 nd Street Associates, L.P. ( FC 42 nd Street ), by its undersigned attorneys, answering the Complaint, alleges as follows: RESPONSE TO SUMMARY OF ACTION 1. Admits that Plaintiff purports to have brought this action for the reason stated in paragraph 1 and states that paragraph 1 includes conclusions of law as to which no response is required. To the extent paragraph 1 may be deemed to consist of or include allegations that require a response, they are denied. 2. Admits that Plaintiff purports to state certain of its positions regarding the meaning of certain terms in a certain ground lease and to inaccurately characterize FC 42 nd Street s position concerning the determination of rent, admits that a dispute exists between the parties, denies that a judicial declaration is required or appropriate given that the parties disputes are required to be arbitrated, and otherwise denies knowledge or information sufficient to form a belief as to the truth of the remaining allegations of paragraph 2. 1 of 6
THE PARTIES 3. Denies knowledge or information sufficient to form a belief as to the truth of the allegations of paragraph 3. 4. Admits the allegations of paragraph 4. VENUE 5. States that the allegations of paragraph 5 consist of legal conclusions to which no response is required. RESPONSE TO FACTUAL BACKGROUND 6. Admits the allegations of paragraph 6. 7. Admits the allegations of paragraph 7 and refers to the subject leases for their complete and accurate contents. 8. Denies knowledge or information sufficient to form a belief as to the truth of the allegations of paragraph 8. 9. Denies knowledge or information sufficient to form a belief as to the truth of the allegations of paragraph 9. 10. Admits the allegations of paragraph 10. 11. Admits the allegations of paragraph 11. 12. Denies the allegations of paragraph 12. RESPONSE TO ALLEGATIONS CONCERNING FC SUBLEASES 13. Admits the allegations of paragraph 13. 14. Admits the allegations of paragraph 14. 15. Admits the allegations of paragraph 15. 2 2 of 6
RESPONSE TO ALLEGATIONS CONCERNING GROUND LEASE RENT RE-SET 16. States that the allegations of paragraph 16 include legal conclusions and selective quotations of certain portions of the Ground Lease, to which no response is required. To the extent the allegations are deemed to require a response, they are denied except FC 42 nd Street admits that, to determine the Base Rent under the Ground Lease for the 2 nd Rental Period, the Ground Lease requires that the Fair Market Value of the Land and the New 42 Land be determined and that the Base Rent under the Ground Lease is equal to ten percent (10%) of the Allocable Share of the Fair Market Value of the Land and the New 42 Land, determined as of the end of the 1 st Rental Period, and that the Allocable Share of the Land is 78.95% and the Allocable Share of the New 42 Land is 21.05%. 17. States that the allegations of paragraph 17 contain selective quotations from the Ground Lease and refers to the Ground Lease for its true and complete contents. To the extent that any allegations of paragraph 17 are deemed to require a response, they are denied. 18. States that the allegations of paragraph 18 purport to describe portions of the Ground Lease and refers to the Ground Lease for its true and complete contents. To the extent that any allegations of paragraph 18 are deemed to require a response, they are denied. 19. Admits the allegations of paragraph 19 and refers to the relevant schedule for its true and complete contents. 20. Admits the allegations of paragraph 20 and refers to the relevant schedule for its true and complete contents. 21. Admits the allegations of paragraph 21 and refers to the relevant schedule for its true and complete contents. 3 3 of 6
22. States that the allegations of paragraph 22 contain selective quotations from Schedule H, refers to the relevant schedule for its true and complete contents, and otherwise denies knowledge or information sufficient to form a belief as to the truth of the allegations of paragraph 22. 23. Denies knowledge or information sufficient to form a belief as to the truth of the allegations of paragraph 23. 24. Denies the allegations of paragraph 24 except admits that the Land and New 42 Land were appraised for approximately $27.24 million and this was communicated to New York City Economic Development Corporation. 25. Admits that there exists a dispute between the parties that is subject to arbitration, and otherwise denies knowledge or information sufficient to form a belief as to the truth of the allegations of paragraph 25. 26. Admits that the Ground Lease contains references to AMC and Tussauds and their respective leases, and that the Ground Lease s requirement that these subleases be entered into must be taken into account in connection with the determination of Fair Market Value, and otherwise denies knowledge or information sufficient to form a belief as to the truth of the allegations of paragraph 26. 27. Denies the allegations of paragraph 27. 28. States that the allegations of paragraph 28 contain selective quotations from the Ground Lease and the Dictionary of Real Estate Appraisal and refers to the Ground Lease and the Dictionary of Real Estate Appraisal for their true and complete contents. 29. States that the allegations of paragraph 29 consist of legal conclusions to which no response is required. 4 4 of 6
30. States that the allegations of paragraph 30 contain selective quotations from the Ground Lease and refers to the Ground Lease for its true and complete contents, and otherwise denies the allegations of paragraph 30. 31. States that the allegations of paragraph 31 purport to describe portions of the Ground Lease and refers to the Ground Lease for its true and complete contents, and otherwise denies the allegations of paragraph 31. 32. States that the allegations of paragraph 32 purport to describe portions of the Ground Lease and refers to the Ground Lease for its true and complete contents, and otherwise denies the allegations of paragraph 32. 33. Denies the allegations of paragraph 33. 34. Denies the allegations of paragraph 34. 35. Admits that an arbitrable dispute exists regarding issues relating to the determination of Fair Market Value and otherwise denies the allegations of paragraph 35. 36. Denies the allegations of paragraph 36. 37. Denies any and all allegations contained in the Complaint not specifically admitted. AFFIRMATIVE DEFENSES Arbitration 38. The Ground Lease requires that any dispute regarding the Fair Market value be arbitrated, and FC 42 nd Street has not waived its right to arbitration. Accordingly, Plaintiff s claims may not be maintained in this action and this action is required to be stayed pending arbitration for the reasons stated in FC 42 nd Street s outstanding motion to stay, (NYSCEF Doc. Nos. 4-16) which is incorporated by reference. 5 5 of 6
Estoppel 39. Plaintiff s proposed declaration is barred, in whole or in part, by the doctrines of equitable and promissory estoppel. Counterclaims 40. FC 42 nd Street may not assert its counterclaims against Plaintiff in this action on account of the fact that any such claims are required to be arbitrated. FC 42 nd Street reserves the right to assert its counterclaims in an amended pleading in this action or in a separate action in the event that the Court declines to compel arbitration. PRAYER FOR RELIEF WHEREFORE FC 42 nd Street requests that the Complaint be dismissed with prejudice, and that the Court issue such orders as may be appropriate to compel arbitration, and grant such others and further relief as the Court may deem just and proper including award of costs, disbursements, and reasonable attorneys fees. Dated: New York, New York September 20, 2017 FRIED, FRANK, HARRIS, SHRIVER & JACOBSON LLP By: /s/ Janice Mac Avoy Janice Mac Avoy Helene Gogadze Shannon N. Doherty One New York Plaza New York, New York 10004-1980 (212) 859-8000 janice.macavoy@friedfrank.com helene.gogadze@friedfrank.com shannon.doherty@friedfrank.com Attorneys for Defendant FC 42nd Street Associates, L.P. 6 6 of 6