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Flatiron Hot! News | December 15, 2017

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Flatiron Pundit: Pranna Restaurant Lives on in Flatiron Thanks to Ill-Considered Court Decision

Flatiron Pundit: Pranna Restaurant Lives on in Flatiron Thanks to Ill-Considered Court Decision
Flatironhot Contributor

Reported by the Flatiron Hot! News

Pranna Restaurant, the dining and drinking establishment that has been a source of problems and controversy in the Flatiron District, got an unexpected – and undeserved – last-minute reprieve from closing thanks to a recent court ruling that promises to keep the business going, at least for the next few months.

The Flatiron District and Chelsea have prospered over the last several years on account of the vibrant growth of the community, and the excellent cooperative efforts of the many dining and entertainment establishments in the neighborhood, working effectively with our local elected leaders, BIDs and civic organizations.  Flatiron has become one of the most popular destinations for those seeking fine dining, entertainment, a walk in the park, or increasingly, a great place for residents to live in a resurgent New York City. This formula, for the most part, has served both residents and local business well and for mutual benefit.  However, it is incumbent on all of us who call Flatiron and Chelsea home to pay attention when things go awry, and the actions of the unconscionable few call this state of affairs into question.  That is what has happened with the ongoing affair of Pranna’s bar and lounge, and the way it has operated its establishment at 79 Madison Avenue, just north of Madison Square Park.

As Flatiron residents may be aware, the management and owners of Pranna, Rajiv and Payal Sharma, have repeatedly been called to task by the community for public disturbances caused by their operation of the restaurant and the actions and escapades of its patrons.  Issues include  excessive sound late at night, drunkenness, rowdiness, and other disturbing consequences related to the operation of its bar and lounge these past few years; So much so, in fact, that their competence to run their current business at all in a lawful manner must be questioned. This has been well reported by the local media, and Pranna’s “Bottomless Brunches” and over-the-top advertisements promoting them have become a continuing sore point for many area residents and neighboring businesses.  (See here and here for some particularly egregious examples.)

Reacting  to these complaints, local residents, community groups,  and critically, Community Board 5, are trying to hold Pranna to account and put an end to this behavior using the power of public opinion, and such tools as are available to them under the law.  Pranna, as with any such establishment, must operate its business subject to compliance with local laws, and their continuing good behavior and respect for the good will and opinion of the community in which they reside, as a condition of retaining their liquor license via the New York State Liquor Authority (SLA).   The outcry by the public – or perhaps a downward trend in their business owing to the notorious and controversial operation of their establishment and the opprobrium Pranna’s owners have brought down upon themselves – has hit them in the pocketbook. It has compelled them to consider changing their business methods either before they go bankrupt, or they are forced to go before Community Board 5 and the SLA for their pending renewal in late 2016.

Pranna’s owners are compelled to come before CB5 and their Public Safety and Quality of Life Committee as required by state law as a condition of their liquor license granting and renewal, and must get approval from SLA, taking into account CB5’s opinion, for any change in their method of operation.  Their original proposed plan was to split up the current iteration of Pranna and replace it with a high end Indian restaurant (to be called “Ziya”), and a smaller, tamer, version of Pranna in the same space.  At a series of highly contentious meetings before CB5 dating back to last year, Pranna’s owners were lambasted and called to account by members of the public, civic groups, and others  about Pranna’s numerous problems.  Their credibility and right to go forward with this plan, or any others, were questioned, particularly as Pranna was still in operation and causing problems during this time.

CB5, which has a reputation in the community and with the SLA of being fair and pro-business to a fault, as well as a track record of working cooperatively with local establishments in almost every case, as evidenced by the great success of the Flatiron District as a dining mecca, bent over backwards, despite substantial opposition by CB5 members within the PSQL Committee itself, to give the owners and management of Pranna a chance to prove the establishment had changed its stripes. Owing to the strident community opposition evidenced at the public meetings, PSQL negotiated an unprecedented, tough-as-nails agreement whereby CB5 would give their recommendation for approval to the SLA of the change of the Pranna business method and conversion of the space to the new “Ziya” restaurant – but with a revised liquor license relevant to a a restaurant only.  This was on strict condition that the current liquor license for the reviled Pranna  be surrendered no later than January 5, 2016, effectively ending once and for all Pranna’s existence as a rowdy night destination with the its noisy shenanigans. (Click here to see the affidavit of Mr. Sharma agreeing to this state of affairs.)

In an effort to prove to the Board and community that Pranna’s owners were sincere in wishing to put their problems behind them and start anew in their new venture, they hired Donald Bernstein of the well-known law firm Victor and Bernstein, P.C., to represent and advise them in their efforts to gain approval for their liquor license and put things right with the community and Board after Pranna’s past transgressions.   Mr. Bernstein, a well-regarded attorney who has a reputation of competence and of urging cooperation and reasonable compliance with the law on the part of the establishments he represents before the Community Boards and the SLA as part of his practice, was instrumental in persuading a bare majority of the of the CB5 Board to approve the revised plans. Mr. Bernstein, as part of the Stipulations and Agreements signed by Pranna and CB5 memorializing and confirming the agreement to close Pranna in return for the approval for the new restaurant, agreed to act as the Escrow Agent holding the Pranna liquor license until the agreed- upon date for surrender in early January.   With this agreement in hand, and over the strident objections of many residents and Board members at the full CB5 Board meeting that Pranna’s owners could not be trusted, a bare majority hoped that Pranna had breathed its last.  Click here to see Mr. Bernstein’s recollection of this state of affairs.

An escrow agreement such as this is the most simple and straightforward of legal devices – a simple conditional contract agreed to freely by two consenting parties where once the condition is satisfied – in this case the passing of a specific date – an action would be executed according to the terms of the escrow document–in this case, Mr. Bernstein surrendering the Pranna Liquor License to the SLA. Absent fraud or clear and convincing evidence of a mistake on the part of the parties it is routine, and such was the reasonable expectation of CB5, the owners of Pranna, and those members of the community that had not given up on Pranna’s trustworthiness.

The skeptics’ worst fears were confirmed.  As the January date approached for the surrender of the Pranna liquor license, Pranna reneged on the agreement, claiming that they had been unaware of the irrevocable nature of the deal.  They proceeded to fire Mr. Bernstein, claiming he had failed to represent them diligently and explain its consequences, and sued their own attorney in Supreme Court to rescind the Escrow Agreement of which he was the agent, thereby allowing Pranna to stay in business as before.  To claim that they had been ill-advised by Mr. Bernstein – the dean of attorneys practicing before the SLA and the acknowledged master of his craft on behalf of his clients – is to defy credibility.  (Click here to see Pranna’s complaint in their suit against their own attorney to prevent the cancellation of their license.)

This being New York City, one can always find a judge to give a plaintiff one more chance, even one with the track record of Pranna in causing problems, and plainly with a history of reneging on their commitments.  In an incredible miscarriage of justice and elementary failure of legal reasoning and the evidence at hand, Judge Kathryn Freed of Manhattan Supreme Court disregarded the plain language of the escrow agreement,  granting a restraining order in Pranna’s favor preventing the surrender and cancellation of their liquor license until further notice. (Click here to see Judge Freed’s Order.)

The judge, in so doing, failed to review and adequately consider, upon the submission of the motion, a detailed summary submitted by CB5’s PSQL Chair Nicholas Athanail recounting Pranna’s sordid past history of dealings with both the Community Board and the neighborhood.   (Click here to see the Mr. Athanail’s affidavit.) Nor was the judge troubled by the inherent unfairness and lack of equity in allowing Pranna’s owners to get away with reneging on their agreement, and at the same time “pocketing” CB5’s  contingent approval for the new Ziya License, which was fairly bargained for in return for shutting the truant Pranna by the surrender of their Pranna license as called for in Bernstein’s Escrow Agreement.

Most regrettably, at no point in this process did the judge give the proper consideration to the needs of the community and their having to endure past and possible future trauma owing to the owner’s stark history of mismanagement and blight on the area residents from the past operation of their establishment. What is really going on here is that Pranna has fallen behind in successfully managing the opening of the new restaurant and conversion of their business, and need to keep running the Pranna operation to keep the money flowing – and so the Community is forced to endure Pranna and its history of depredation yet again.

The one positive in the judge’s ruling is the explicit condition of the restraining order that ANY violations with regard to sound, rowdiness, excessive drinking, or other violations of the law or the conditions of their liquor license subsequent to the decision that comes to the attention of the court will result in the immediate lifting of the restraining order – and the end of Pranna’s ability to conduct business via the loss of their liquor license.

This is outrageous behavior, and the Community Board, The  BIDs, the public, as well as other establishments that play by the rules have a right and responsibility to denounce Pranna’s violation of their agreement, and express their utmost objection to Pranna’s continuing operation and failure to live up to their commitments.  At the very least, it should be brought to the SLA’s attention the full bill of particulars about the problematic operation of their establishment so they can draw the appropriate conclusions about the awarding, or extension, of any additional liquor licenses to Pranna and its owners.   The Community Board, other civic leaders and residents have every right to criticize and draw attention to the miscarriage of justice on account of this ruling and bring to the judge’s attention any further evidence of Pranna’s depredations, should they occur.  The community has suffered enough.

UPDATE!  Flatiron Hot! News has obtained from sources within the community evidence of the fact that Pranna has been cited for a violation of the terms of their Liquor License since the Judge’s ruling, apparently related to the remodeling and construction work on the Pranna and Ziya premises without obtaining the permission of the SLA under the law.  It remains to be seen whether this violation will trigger the surrender of the Liquor License according to the terms of the Restraining Order.