Empire State Building Co. v. New York Skyline, Inc. (In Re New York Skyline, Inc.), 471 B.R. 69

Background

Skyline operates an Empire State Building attraction under a Lease and License with ESB Associates and ESBI owning the Building and observatories.
The Lease/License were amended, notably by a May 2005 Agreement; disputes concern which amendments are part of the current lease framework.
Two parallel adversary proceedings exist: Skyline v. ESB (State Court Action removed) and ESB v. Skyline (ESB Action) proceeding in this Court.
ESB seeks partial summary judgment on two affirmative claims and dismissal of three Skyline claims; Skyline opposes on jurisdiction and fact issues.
Key issues involve ESB recovering attorneys’ fees under contract, interpretation of the May 2005 Agreement, and Skyline’s claims under the implied covenant, prima facie tort, and tortious interference theories.
The Court addresses subject matter jurisdiction, Stern v. Marshall implications, and whether it may enter final judgments on non-core but consented claims.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Court's jurisdiction post-Stern	Skyline contends no authority to decide non-core/state-law claims.	Court retains jurisdiction; consent via Plan § 11 and express consent in letters.	Court has subject-matter jurisdiction and authority to grant final judgments.
Attorneys' fees under lease provisions	ESB can recover fees for breach-related actions under Article 5 of the Lease and Article 11 of the License.	ESB cannot recover fees for Skyline’s counterclaims and Skyline's defenses; splitting of claims limits recovery; some fees pertain to defensive claims.	ESB is entitled to partial summary judgment on recovery of fees for Counts VIII–IX; ESB cannot recover fees for ESB Counterclaims or Skyline’s defense; fees must be tied to a successful breach claim in the same action.
Ambiguity of May 2005 Agreement 7(d)	May 2005 Agreement forbids any compensation based on ticket sales (or broadly sales incentives).	Prohibition is ambiguous and could cover both commissions and broader sales incentives.	Provision is ambiguous; summary judgment denied; trial necessary to interpret the clause.
Good faith and fair dealing claim and fee recovery	Implied covenant warrants recovery of Skyline’s fees due to ESB’s bad-faith actions.	No independent fee-recovery under bad-faith/American Rule; contract-based remedies only; no bad-faith exception applicable here.	No fee recovery for good-faith claim; bad-faith exception not satisfied; ESB granted summary judgment dismissing this claim.
Prima facie tort viability	ESB acted with malice to drive Skyline out for profit; merits should survive summary judgment.	Motives are economic rather than malicious; prima facie tort requires improper motive; not satisfied.	Grant of summary judgment in ESB’s favor; Skyline’s prima facie tort claim dismissed.

Key Cases Cited

Freeport-McMoRan, Inc. v. KN Energy, Inc., 498 U.S. 426 (1991) (jurisdictional analysis preserved at commencement)
In re WorldCom, Secs. Litig., 294 B.R. 553 (S.D.N.Y. 2003) (jurisdiction retained post-removal)
Publicker Indus., Inc. v. United States (In re Cuyahoga Equip. Corp.), 980 F.2d 110 (2d Cir. 1992) (related-to jurisdiction and bankruptcy matters)
In re Winimo Realty Corp., 270 B.R. 108 (S.D.N.Y. 2001) (core vs non-core and cure costs context)
815 Park Ave. Owners, Inc. v. Metzger, 250 A.D.2d 471 (N.Y. App. Div. 1998) (splitting causes of action for attorneys' fees)
Bi-Economy Mkt., Inc. v. Harleysville Ins. Co. of N.Y., 10 N.Y.3d 187 (N.Y. 2008) (consequential damages for bad-faith insurance claims context)
Meridian Capital Partners, Inc. v. Fifth Ave. 58/59 Acquisition Co. LP, 60 A.D.3d 434 (N.Y. App. Div. 2009) (prima facie tort motive and business purpose context)
Lama Holding Co. v. Smith Barney Inc., 88 N.Y.2d 413 (N.Y. 1996) (tort interference elements framework)
Huron Assocs., LLC v. 210 East 86th St. Corp., 18 A.D.3d 231 (N.Y. App. Div. 2005) (attorneys' fees under landlord-tenant provisions; doctrine)