Charter One wins
Midtown round

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Midtown Rochester LLC last week lost a bid in state Supreme Court to force Charter One Bank FSB to reopen its Midtown Plaza branch bank.
The embattled Midtown Rochester is facing unrelated foreclosure actions on much of the property making up the 1 million square foot Midtown Plaza.
In the Charter One case, the plaza owner had hoped to expand an earlier court victory in which state Supreme Court Justice Thomas Stander ordered the bank to honor a lease on three floors of Midtown space until July 2001.
Charter One moved the branch out of Midtown-the bank’s former Rochester headquarters location-in late 1998, and shortly thereafter sued Midtown Rochester in an attempt to break its lease.
Despite Stander’s October 1999 ruling, the bank did not reopen the ground-floor branch. Last month, it appealed the decision.
Pending a ruling by a Fourth Department Appellate Division panel, Charter One is paying rent only on the ground floor space at Midtown, and has replaced the retail branch with a 12-person administrative office, said Charter One attorney Christopher DiPasquale of Harris, Beach & Wilcox LLP.
“My client has been informed of (last week’s) ruling and is currently evaluating (its) options,” said Midtown Rochester attorney Warren Rosenbaum of Shapiro, Rosenbaum, Liebshcutz & Nelson LLP.
Charter One inherited the Midtown headquarters from Rochester Community Savings Bank, which the Cleveland-based Charter One acquired in 1998.
The lease dispute arose after Charter One decided to move its Rochester headquarters to RCSB’s landmark headquarters a block from the plaza on Franklin Street.
The bank claimed that Midtown Rochester principal Peter Arnold, president of the Tustin, Calif.-based Arnold Industries Inc., had negotiated in bad faith.
The bank’s lease on three floors was to have run until 2004. But Charter One wanted to pull out of two floors, keeping only the ground-floor space.
A much-amended 1971 rental agreement allowed for such a possibility, but required the plaza owner and the bank to come to terms over removal of an elevator the bank had installed. Charter One claimed Arnold refused to discuss the elevator and the bank should be allowed to break the lease.
Stander’s ruling cited another clause that calls for the bank to lease the entire space until July 2001. The clause the justice cited was supposed to kick in if the bank failed to submit adequate plans for returning the space to its original condition.
While Charter One is continuing to pursue the case on appeal, DiPasquale conceded the dispute could become moot if Blackacre Bridge Capital LLC succeeds in its pending foreclosure action against Midtown Rochester.
Blackacre now holds some $20 million in mortgages on the Rochester property.
The lender started foreclosure proceedings last spring, claiming Arnold is in default because he failed to make a $4 million deposit to a cash collateral account. That case is still pending before Stander.
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