Empire State Building v. New York Skyline

U.S. BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
Landlord/Tenant Law

New York Law Journal

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Bankruptcy Judge Stuart Bernstein

In an adversary proceeding, Skyline argued it was overcharged for electricity billed as additional rent under an "Electrical Rent Inclusion Factor" provision of its lease with Empire State Building Co. (ESB). Skyline argued that the "connected load" survey required by the lease and conducted by ESB overestimated costs associated with its actual electricity usage. Skyline asserted that a "demand load" survey—recognizing that equipment does not run continuously—would provide a more accurate estimate. It also argued a different agreement as to electricity was reached during lease negotiations. In addition to finding Skyline's claims barred because it did not challenge the additional rent pursuant to the lease's dispute resolution procedure, bankruptcy court held that even though a "demand load" survey may provide a more accurate estimate of Skyline's actual electricity consumption, the controlling lease called for a "connected load" survey. The court observed "the [l]ease does not provide for electricity charges based on actual consumption or a different method of estimating actual consumption, and the merger clause bars the admission of testimony to the effect that the parties reached a contradictory agreement during earlier negotiations."

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