Papaya King settles latest legal dogfight with landlord; owner still hopes to reopen

Is Papaya King finally out of the doghouse? The renowned Upper East Side hot dog joint shuttered last year and was trying to reopen at a new location across the street until late last year, when the arrangement landed them in legal hot water. But now owner Sajid “Sid” Sohail and the landlord of the Third Ave.

property where the eatery tried to move into have dropped the lawsuits they filed against each other over a lease disagreement, according to court records. Papaya King closed last spring after 90 years on the corner of 86th St. amid legal troubles and the threat of eviction, with the promise it would soon set up shop across the street at 1535 Third Ave.

The Daily News previously reported the location down the block where it was supposed to open would no longer be Papaya’s new kingdom. The storefront had shuttered and all signs of a new Papaya King were gone. The space is currently available for lease . It has since emerged that a tortious tiff was at the heart of the botched reopening, with both Papaya King and their would be new landlord suing each other late last year.

Sohail filed his suit in Manhattan civil court on Nov. 14, alleging he was illegally locked out after a ventilation issue made it impossible for him to open a restaurant there despite spending $500,000 to fix up the space. Days later, building owner 3rd and 87th L.P. sued Papaya King for millions in Manhattan Supreme Court.

They claimed Sohail violated the lease agreement and demanded he fork over $4 million in damages and more than $372,000 in back rent. Local news outlet Upper East Site first reported the countersuit last week. But the matter has since been formally settled, with both sides filing notices of discontinuance, Sohail on Dec.

8 and the ex landlord on Jan. 10 . Luise Barrack, a lawyer for the owner, said things have been “amicably” resolved. “It was unfortunate that the other space did not work for a number of physical reasons. We spent huge amounts of money to build the space, but it would not work,” Sohail told The News.

“We lost all that money but are out of that space. I truly wish we could have made it work there.” The future of the eatery remains up in the air. Sohail maintains they plan to reopen “soon” in the same neighborhood, but would not confirm when or where. “We have over 10 employees that have been working at Papaya King for over 15 years and will continue to work at the new store and can’t wait to get back to work,” Sohail said in an email, adding they would have 1932 prices on opening day.

“We are looking forward to the future.” In the now dead suit , 3rd and 87th L.P. alleged Papaya King failed to open the store within six months of signing the lease. It also claimed they did not get proper insurance coverage or replace the cash security deposit with a line of credit in time. When Papaya King closed its first home on 86th St., it was embroiled in a lengthy legal battle with its former landlord over $120,000 in unpaid rent; the case was ultimately settled .

The original building was facing demolition before being sold last fall for $24.5 million to developer ZD Jasper Realty, whose plans for the space remain unknown..