Symphony Space, Inc. v. Pergola Properties, Inc.

Facts

The defendant’s, Pergola, predecessor owned a two-story building on the Broadway block between 94th and 95th street, as well as two other adjacent properties. The plaintiff, Symphony, was a not-for-profit entity devoted to the arts that had previously rented the theater space in the two-story building. Pergola’s predecessor desired to obtain a tax exemption, and so it sold Symphony the profit for a below-market price and had Symphony lease back all space inside the building besides the theater for a dollar per year. In exchange for consideration of ten dollars, Symphony also granted Pergola’s predecessor the right to repurchase the entire building. Pergola’s predecessor maintained liability for the mortgage on the two-story building and for certain maintenance obligations. The option agreement provided that Pergola’s predecessor might repurchase the property during any of the following “Exercise Periods”: (1) at any time after July 1, 1979 so long as the Notice of Election specifies that the Closing is to occur during any of the calendar years 1987, 1993, 1998, and 2003; (2) at any time following the maturity of indebtedness evidenced by the Note and secured by the Mortgage, whether by acceleration or otherwise; (3) during the ninety days immediately following any termination of the Lease by the lessor thereof other than for nonpayment of rent or any termination of the Lease by the lessee thereof; and (4) during the ninety days immediately following the thirtieth day after Pergola’s predecessor shall have sent Symphony a notice specifying a default by Symphony of the Lease by the lessee thereof. The option provided a number of purchase prices dependent on the year it was exercised, and indicated the option granted is unconditional. Finally, the option was described as a covenant running with the land, inuring to the benefit of heirs, successors, and assigns of Broadwest. Pergola purchased its predecessor’s two adjacent properties and the option to purchase Symphony’s building in 1982. In 1985, Pergola sent notice that Symphony was in default and that it would be exercising the option to purchase.