GAP INC v. 44 45 BROADWAY LEASING CO LLC (2021)

Order, Supreme Court, New York County (Debra A. James, J.), entered July 22, 2020, which granted plaintiffs’ motion for a Yellowstone injunction, conditioned on the posting of an undertaking, unanimously modified, on the law, to provide that pending the termination of the Yellowstone injunction ongoing future use and occupancy shall be paid to defendant, and otherwise affirmed, without costs.

Plaintiffs demonstrated their entitlement to a Yellowstone injunction because each respectively showed that “(1) it holds a commercial lease;  (2) it received from the landlord ․ a notice of default ․;  (3) it requested injunctive relief prior to the termination of the lease;  and (4) it is prepared and maintains the ability to cure the alleged default by any means short of vacating the premises” (Graubard Mollen Horowitz Pomeranz & Shapiro v. 600 Third Ave. Assoc., 93 N.Y.2d 508, 514, 693 N.Y.S.2d 91, 715 N.E.2d 117 [1999] [internal quotation marks omitted]).  Contrary to defendant's contention, plaintiffs may plead in the alternative that the leases were terminated without abandoning their request for Yellowstone relief, as they asserted that if found in default, they were ready, willing, and able to cure, and the purpose of a Yellowstone injunction is to preserve the status quo, not to resolve the underlying merits of the parties’ dispute (CPLR 3014;  Bliss World LLC v. 10 W. 57th St. Realty LLC, 170 A.D.3d 401, 402, 95 N.Y.S.3d 183 [1st Dept. 2019]).

We disagree with defendant that the motion court abused its discretion in setting use and occupancy at a rate of approximately 90% of the lease rates.  “[T]he remedy for any over or underpayment [of use and occupancy] is a speedy trial” (Mushlam, Inc. v. Nazor, 104 A.D.3d 483, 483, 961 N.Y.S.2d 120 [1st Dept. 2013]).  We also find that the trial court did not abuse its discretion in directing that rental arrears be deposited with the clerk of the court while the parties resolve their dispute (Alphonse Hotel Corp. v. 76 Corp., 273 A.D.2d 124, 124, 710 N.Y.S.2d 890 [1st Dept. 2000];  Real Property Actions and Proceedings Law § 745[2][a]).  Because, however, plaintiff is continuing to use and occupy the premises as a retail business while the Yellowstone injunction is in place, the Court abused its discretion in failing to require that ongoing use and occupancy, at the temporarily reduced amount, be paid directly to defendant (see 61 West 62nd Owners Corp. v. Harkness Apt. Owners Corp., 173 A.D.2d 372, 570 N.Y.S.2d 8 [1st Dept. 1991]).