PURDUE PHARMA LP v. ARDSLEY PARTNERS LP (2004)

In an action for a declaratory judgment and injunctive relief, the plaintiff appeals, as limited by its brief, from so much of an order of the Supreme Court, Westchester County (Rudolph, J.), dated October 29, 2002, as denied its motion for a Yellowstone injunction and as granted that branch of the defendant's cross motion which was to dismiss the complaint pursuant to CPLR 3211(a)(1) and (7).

ORDERED that the order is reversed insofar as appealed from, on the law, with costs, the motion for a Yellowstone injunction is granted, the cross motion to dismiss the complaint is denied, and the complaint is reinstated.

The defendant landlord served a notice to cure on the plaintiff tenant alleging that it failed to pay certain utility charges pursuant to the parties' lease.   The plaintiff commenced this action, inter alia, for a judgment declaring that it was not in default of the lease because it did not owe the amounts claimed by the defendant.   The Supreme Court denied the plaintiff's motion for a Yellowstone injunction (see First Natl. Stores v. Yellowstone Shopping Ctr., 21 N.Y.2d 630, 290 N.Y.S.2d 721, 237 N.E.2d 868), and granted the defendant's cross motion to dismiss the complaint on the ground that the action was capable of resolution in landlord-tenant court.   We reverse.

 It is well settled that

“[t]he purpose of a Yellowstone injunction is to enable a tenant confronted by a notice of default, a notice to cure, or a threat of termination of the lease to obtain a stay tolling the running of the cure period so that after a determination of the merits, the tenant may cure the defect and avoid a forfeiture of the leasehold”

(Top-All Varieties v. Raj Dev. Co., 151 A.D.2d 470, 471, 542 N.Y.S.2d 259;  see Post v. 120 East End Ave. Corp., 62 N.Y.2d 19, 475 N.Y.S.2d 821, 464 N.E.2d 125;  First Natl. Stores v. Yellowstone Shopping Ctr., supra;  Golub Corp. v. Northeastern Indus. Park, 188 A.D.2d 729, 590 N.Y.S.2d 579).   A tenant seeking Yellowstone relief must demonstrate:

“(1) it holds a commercial lease;  (2) it has received from the landlord a notice of default, a notice to cure, or a threat of termination of the lease;  (3) the application for a temporary restraining order was made prior to the termination of the lease;  and (4) it has the desire and ability to cure the alleged default by any means short of vacating the premises”

(Long Is. Gynecological Servs. v. 1103 Stewart Ave. Assocs. Ltd. Partnership, 224 A.D.2d 591, 593, 638 N.Y.S.2d 959;  see Empire State Bldg. Assocs. v. Trump Empire State Partners, 245 A.D.2d 225, 667 N.Y.S.2d 31;  Stuart v. D & D Assocs., 160 A.D.2d 547, 554 N.Y.S.2d 197).

 In this case, the plaintiff satisfied all of the aforementioned criteria in support of its application for a Yellowstone injunction.   Contrary to the determination of the Supreme Court, the defendant did not serve a mere notice of nonpayment (cf. M.B.S. Love Unlimited v. Jaclyn Realty Assocs., 215 A.D.2d 537, 626 N.Y.S.2d 504;  Top-All Varieties v. Raj Dev. Co., supra ).   Rather, it served a notice to cure an alleged default which threatened termination of the lease (see Graubard Mollen Horowitz Pomeranz & Shapiro v. 600 Third Ave. Assocs., 93 N.Y.2d 508, 693 N.Y.S.2d 91, 715 N.E.2d 117;  King Party Ctr. of Pitkin Ave. v. Minco Realty, 286 A.D.2d 373, 729 N.Y.S.2d 183;  Kuo Po Trading Co. v. Tsung Tsin Assn., 273 A.D.2d 111, 709 N.Y.S.2d 89;  Bennigan's of N.Y. v. Great Neck Plaza, 223 A.D.2d 615, 636 N.Y.S.2d 835;  Lexington Ave. & 42nd St. Corp. v. 380 Lexchamp Operating, 205 A.D.2d 421, 613 N.Y.S.2d 402).   Under such circumstances, Yellowstone injunctions are routinely granted in order to maintain the status quo and prevent forfeiture of the lease while the parties litigate their dispute (see Post v. 120 East End Ave. Corp., supra at 25, 475 N.Y.S.2d 821, 464 N.E.2d 125;  Garland v. Titan W. Assocs., 147 A.D.2d 304, 307-308, 543 N.Y.S.2d 56).

 This action is amenable to declaratory relief (see e.g. Graubard Mollen Horowitz Pomeranz & Shapiro v. 600 Third Ave. Assocs., supra;  Kuo Po Trading Co. v. Tsung Tsin Assn., supra;  Bennigan's of N.Y. v. Great Neck Plaza, supra;  Lexington Ave. & 42nd St. Corp. v. 380 Lexchamp Operating, supra ).   The plaintiff disputed that it owed certain utility charges and that it was in default for not paying them.   The plaintiff seeks to clarify its rights and obligations under the lease while a Yellowstone injunction maintains the status quo between the parties (see Graubard Mollen Horowitz Pomeranz & Shapiro v. 600 Third Ave. Assocs., supra;  King Party Ctr. of Pitkin Ave. v. Minco Realty, supra).

 Contrary to the defendant's contention, the appeal has not been rendered academic by virtue of the plaintiff's payment of the disputed utility charges, as the plaintiff paid them “without prejudice” to its rights and remedies under the lease (see e.g. Lew Morris Demolition Co. v. Board of Educ. of City of N.Y., 40 N.Y.2d 516, 387 N.Y.S.2d 409, 355 N.E.2d 369;  Svenska Taendsticks Fabrik Aktiebolaget v. Bankers Trust Co., 268 N.Y. 73, 196 N.E. 748;  200 Eighth Ave. Rest. Corp. v. Daytona Holding Corp., 293 A.D.2d 353, 740 N.Y.S.2d 330;  Castano v. Gabriel, 60 Misc.2d 218, 302 N.Y.S.2d 943).