LLC v. MSK LLC (2026)

The following papers were read on Plaintiff's Order to Show Cause (Motion Seq. No. 1) for a Yellowstone injunction tolling the running of and expiration date of the cure period set forth in the Demand to Cure Default:

PAPERS NYSCEF DOC NOs

Order to Show Cause for Yellowstone Injunction with Temporary Restraining Order (Zugibe, J.), signed July 15, 2026; Emergency Affirmation and Affirmation in Support of Rajesh Sopariwala, sworn to July 13, 2026; Affidavit of Steven Yassky, sworn to July 13, 2026; Affirmation of Joseph

A. Churgin, Esq., dated July 13, 2026; Exhibits A through I; Memorandum

of Law in Support; Summons and Verified Complaint 1—15, 20—27

Affirmation in Opposition of Sherri L. Eisenpress, Esq., dated August 12, 2026; Memorandum of Law in Opposition; Verified Answer with

Affirmative Defenses and Counterclaims 31—33

Reply Affirmation of Joseph A. Churgin, Esq., dated August 20, 2026 34

Oral Argument held October 29, 2026

Plaintiff Hari Om Hotels LLC ("Plaintiff" or "Tenant") owns the Quality Inn hotel at 100 Spring Valley Marketplace, Spring Valley, New York, and holds, by assignment, the ground lease of the land beneath it. Defendant MSK Buildings LLC ("Defendant" or "Landlord") acquired the fee in July 2025. The parties dispute whether the ground lease, as restructured by a Third Amendment executed in 2019, presently obligates the tenant to pay "percentage rent"—2.5% of annual Gross Room Sales more than $1,000,000—or whether that obligation was deferred until the first renewal period commencing November 1, 2029.

Defendant served a thirty-day Demand to Cure Default asserting the former; plaintiff commenced this declaratory judgment action asserting the latter and now moves by order to show cause for a Yellowstone injunction tolling the cure period and restraining termination of the lease pending determination of the action. Defendant opposes, asks that the temporary restraining order be vacated, and further requests dismissal of the complaint, a declaration in its favor, and attorneys' fees.

For the reasons that follow, the motion is granted upon the conditions set forth below, and Defendant's requests for affirmative relief are denied without prejudice.

BACKGROUND

The documents material to this motion are not in dispute; their legal effect is. The following facts are drawn from the lease instruments and the parties' submissions.

I. The Ground Lease

By Land Lease dated January 26, 1987 (the "Original Lease"), Hopf Drive Associates, as landlord, leased the subject land to Chalet Susse International, Inc., as tenant, for the construction and operation of a motel. See NYSCEF Doc No. 5.¹ Through a series of assignments, Exit 14 Associates, L.P. ("Exit 14") became the landlord and, in 2007, Bhavi Spring Valley L.L.C. ("Bhavi") became the tenant. Under this ground lease structure the tenant owns the hotel improvements, and the landlord owns the land.

Article II of the Original Lease fixes the rent. Section 2.2, captioned "Annual Minimum Rent During Base Term," obligated the tenant, "[d]uring the Base Term (including extensions thereof)," to pay minimum rent of $100,000 per year in equal monthly installments (see Original Lease § 2.2). Section 2.3, captioned "Additional Rent," provides that "[i]n addition to the minimum rent, Tenant shall pay Landlord, commencing the sixth year following the expiration of the Preliminary Term, certain additional rent as hereinafter computed." Id. § 2.3. Subparagraph A requires the tenant to pay "annually, two and one-half percent (2-1/2%) of all 'Gross Room Sales' . . . derived from the Leased Premises in excess of ONE MILLION DOLLARS ($1,000,000)," and to deliver, "[w]ithin forty-five (45) days after the end of each lease year," a statement "signed by an officer of the Tenant attesting the computation of Tenant's Gross Room Sales and additional rent, if any, for said lease year," with any additional rent due "simultaneously with delivery of such statement." Id. § 2.3 [A].

Article IX addresses default. A failure to pay rent or other sums for five (5) days after they become due, subject to notice and a ten (10) day opportunity to cure, and a failure to perform any other covenant for thirty (30) days after notice, are events of default. See id. § 9.1 [B] [a], [b]. Upon such a default the landlord may serve a notice electing to terminate the lease on a specified date, "and this Lease shall then expire on the date so specified as if that date had been originally fixed as the expiration date of the term herein granted." Id. § 9.1. The lease thus contains a conditional limitation under which an uncured default may result in forfeiture of the leasehold.

II. The Third Amendment

In 2019, Bhavi sought rent relief, citing a substantial decline in room revenue following a change in the hotel's brand. See Yassky Aff. ¶ 4; NYSCEF Doc No. 12. On October 31, 2019, Exit 14 and Bhavi executed the Third Amendment of Land Lease (the "Third Amendment"). See NYSCEF Doc No. 7. Section 1 amends section 1.3 of the lease to define the Term as "Ten (10) years commencing on November 1, 2019, and terminating on October 31, 2029." Section 2 amends section 1.4 to grant the tenant six (6) successive five (5) year renewal options. Section 3, the provision at the center of this dispute, reads in pertinent part:

"3. Section 2.2 of the Lease is hereby amended so that the minimum rent shall be defined as follows:

a) For the period of November 1, 2019 through October 31, 2022, the annual minimum rent shall be $80,000, payable in equal monthly instalments of $6,666.67;

b) For the period of November 1, 2022 through October 31, 2025, the annual minimum rent shall be $95,000, payable in equal monthly instalments of $7,916.67;

c) For the period of November 1, 2025 through October 31, 2029, the annual minimum rent shall be $100,000, payable in equal monthly instalments of $8,333.33;

d) In the event Tenant exercises the first, the second, the third and the fourth options to extend the term of the Lease for the periods of November 1, 2029 through October 31, 2034 (the first option), . . . and November 1, 2044 through October 31, 2049 (the fourth option), the minimal rent shall be (i) $100,000.00 payable in equal monthly instalments of $8,333.33 plus (ii) an amount equal to 2.5% of the annual Gross Room Sales over $1,000,000.00, such amount to be paid monthly, once the Gross Room Sales during that year exceed $1,000,000.00. Tenant shall provide monthly statements of Gross Room Sales to Landlord for each month, in each year, whether or not the annual Gross Room Sales exceed $1,000,000.00.

e) For each of the last two (2) options . . . the annual minimum rent shall be determined upon Tenant's election to exercise each extension option [by appraisal] . . . . In addition to the annual minimum rent, the Tenant shall also pay to Landlord an amount equal to 2.5% of the annual Gross Room Sales over $1,000,000.00, such amount to be paid monthly once the Gross Room Sales during that year exceed $1,000,000.00. Tenant shall provide monthly statements of Gross Room Sales to Landlord for each month, in each year, whether or not the annual Gross Room Sales exceed $1,000,000.00."

Third Amendment § 3. Section 4 amends section 2.5 of the lease to require payment of monthly rent by automatic ACH transfer. Section 5 provides that, "[e]xcept as expressly amended by this Third Amendment and as to those matters that are acknowledged, consented to and clarified hereinabove," the terms of the lease "shall continue in full force and effect," and that the Third Amendment "shall not be amended or modified except by a document in writing signed by the parties hereto." Id. § 5. The Third Amendment does not refer to section 2.3 of the Original Lease by number.

III. Performance Under the Third Amendment, the Assignment, and the 2025 Conveyance

Steven Yassky, the secretary of Exit 14's general partner, avers that he negotiated the Third Amendment on the landlord's behalf and that the parties agreed that the percentage rent "would not become effective until November 1, 2029, when a specific renewal option was scheduled for exercise." Yassky Aff. ¶¶ 2, 5. He characterizes the reference to section 2.2, rather than section 2.3, as an error, and states that "it was never intended that there be two such provisions." Id. ¶ 6. Rajesh Sopariwala, a member of Plaintiff who negotiated the amendment on the tenant's side, gives the same account. See Sopariwala Aff. ¶¶ 11, 14—15.

Exit 14's rent statements reflect that, before the Third Amendment, the tenant was billed and paid a monthly "Sales Overage" in addition to base rent; in 2017, for example, the overage invoice was $6,777.04 per month. See NYSCEF Doc No. 13. After the Third Amendment, Exit 14 billed only the scheduled minimum rent—$6,666.67 per month and, later, $7,916.67 per month—with no overage, through the July 2025 sale. See id.; Yassky Aff. ¶ 8.² Plaintiff also submits a chain of 2019 emails among Exit 14's principals. In the email Mr. Yassky circulated on October 8, 2019, describing "the final agreed upon proposal between parties," the rent for the "First 10 years" is listed as "$80,000 per annum for 3 years (no overages)," "$95,000 per annum for following 3 years (no overages)," and "100,000 for following 4 years (no overages)," followed by "Next 20 years[:] Then $100,000 per annum plus 2.5% of gross sales over $1,000,000"; the same email calls for "automatic ACH payment . . . including overages starting in Year 11." NYSCEF Doc No. 12.

In November 2021, Bhavi assigned the lease to Plaintiff, which assumed "all of the terms, covenants, agreements, conditions and obligations under and of the Lease on the part of the Assignor to be kept, observed and performed, including, without limitation, the payment of all rent, additional rent, costs, payments and charges." NYSCEF Doc No. 8, ¶ 3.³ On July 22, 2025, Exit 14 conveyed the fee to Defendant. The closing statement initially credited the seller with$3,750.60 in "[r]ent arrears," an amount the seller later returned to the buyer as having been "incorrectly credited." NYSCEF Doc No. 14.

IV. The Demand to Cure Default and This Action

On or about March 31, 2026, Defendant served a fourteen (14) day rent demand, accompanied by a notice of termination, demanding percentage rent. See Sopariwala Aff. ¶ 16; Def. Mem. at 4. Plaintiff's general counsel responded by letter dated April 8, 2026, contending that under section 3 of the Third Amendment no percentage rent accrues until November 1, 2029. See NYSCEF Doc No. 10.

By "Thirty Day Demand to Cure Default—Commercial Tenant" dated June 16, 2026 (the "Demand"), defendant gave notice that the tenant was required "to provide the Landlord with a signed statement attesting to computation of Tenant' Gross Room Sales . . . and to also pay to the Landlord . . . two and one-half (2.5%) percent of all Gross Room Sales in excess of One Million Dollars ($1,000,000.00) (the 'Additional Rent')," which "was due within forty-five (45) days after the end of the lease year for 2025." NYSCEF Doc No. 9. The Demand directed that the default be cured within thirty days, by July 17, 2026, and warned that, absent cure, the tenant "will be in default of the Lease and the Landlord will commence summary proceedings against you to recover any such monies due and/or possession of the Premises." Id..⁴

Plaintiff commenced this action on July 14, 2026. The verified complaint seeks a declaration that Plaintiff is not in default as alleged in the Demand and that the Demand is a nullity or, alternatively, that Plaintiff be afforded an opportunity to cure any default the Court may find, together with a permanent injunction, damages for breach of contract, and attorneys' fees. See NYSCEF Doc No. 1. By order to show cause signed July 15, 2026, the Court (Zugibe, J.) stayed and tolled the cure period pending the hearing and determination of the motion and temporarily restrained Defendant from serving a notice of termination, commencing summary proceedings or an ejectment action, or otherwise acting to terminate the lease based upon the Demand. See NYSCEF Doc No. 20. Defendant appeared and, on August 13, 2026, served opposition papers together with a verified answer asserting affirmative defenses and counterclaims for unpaid percentage rent, failure to furnish Gross Room Sales statements, a declaratory judgment, and attorneys' fees. See NYSCEF Doc Nos. 31—33. Plaintiff replied on August 20, 2026. See NYSCEF Doc No. 34.⁵ The matter was thereafter reassigned and is now before the undersigned. The Court heard oral argument on October 29, 2026.

THE PARTIES' CONTENTIONS

Plaintiff contends that it satisfies each element of the Yellowstone standard: it holds a commercial lease; it received a notice to cure threatening termination; it sought relief before the cure period expired; and, while denying any default, it is ready, willing, and able to cure should the Court determine that percentage rent is owed. See Sopariwala Aff. ¶¶ 17—18. On the merits, Plaintiff argues that section 3(d) of the Third Amendment restates the percentage rent obligation verbatim but attaches it only to the renewal periods commencing November 1, 2029; that the later and more specific provision controls the earlier and more general one; and that Defendant's construction would render section 3(d)(ii) meaningless. See Churgin Reply Aff. ¶¶ 4—12.

Defendant contends that the Third Amendment, by its terms, amended only section 2.2 (minimum rent) and left section 2.3(A) (additional rent) untouched; that the preservation clause in section 5 continued section 2.3(A) in full force; that the Yassky affidavit, the 2019 emails, and Exit 14's billing history are inadmissible parol evidence that cannot vary an unambiguous writing; that the lease's non-waiver and written-modification clauses (see Original Lease §§ 12.1, 12.12, 12.17) foreclose any claim based on the prior landlord's forbearance; and that plaintiff therefore lacks a colorable defense to the Demand. See Eisenpress Aff. ¶¶ 4—25. Defendant further argues that plaintiff has not demonstrated an ability to cure, that the failure to furnish Gross Room Sales statements is an incurable default, and that equitable considerations, including Plaintiff's alleged unclean hands, warrant denial of relief. See Def. Mem. at 9—11.

At oral argument, Defendant maintained that a Yellowstone injunction exists to preserve the status quo, and that the status quo is the Original Lease, which the Third Amendment did not amend as to percentage rent. Defendant urged the Court to read the Third Amendment and ask whether section 2.3 was specifically amended, and maintained that it was not; Defendant argued that the Third Amendment reached only the sections it identified by number. Asked how its construction avoids a double charge during the renewal periods, Defendant responded that the tenant would pay percentage rent only once, under section 2.3(A). Defendant confirmed that it is not claiming percentage rent for 2019 through 2024, but that it is claiming percentage rent for the full 2025 lease year, including the period before it took title on July 22, 2025. Defendant also argued that the Yassky affidavit is hearsay and that Plaintiff has offered no evidence of its financial resources. It estimated its damages from the injunction at approximately $30,000, but requested an undertaking of $100,000.

Plaintiff acknowledged that the Third Amendment should have stated that both sections 2.2 and 2.3 were amended. Plaintiff represented that, under Defendant's construction, the Additional Rent for 2025 would be approximately $34,000, and that it would be paid from room revenues. It further represented that it has paid all minimum rent and that no rent or other charges are unpaid; that Exit 14 has no financial interest in the outcome of this action; and that it received a tenant estoppel certificate after the July 22, 2025 closing, a document that is not in the record. Plaintiff does not claim that it failed to receive the Demand. Plaintiff contends that, because the conveyance to Defendant did not assign accrued rents, Defendant is not entitled to any percentage rent for the period before July 22, 2025. Plaintiff consented to serving a statement of its 2025 Gross Room Sales and proposed an undertaking of $45,000, which it described as reflecting the period from July 22, 2025 to the present.

Both parties represented that the Fourth Amendment is not relevant to this dispute. Both agreed that the construction question can be presented by motion for summary judgment after limited discovery. Defendant seeks Plaintiff's Gross Room Sales for 2019 through 2026, and particularly for 2025 and 2026. Plaintiff seeks the testimony of Mr. Yassky, and the Court has scheduled a hearing for that testimony on December 17, 2026, at 11:30 a.m. The parties further represented that they can resolve paper discovery without the need for a preliminary conference.

DISCUSSION

I. The Yellowstone Standard

"A Yellowstone injunction maintains the status quo so that a commercial tenant, when confronted by a threat of termination of its lease, may protect its investment in the leasehold by obtaining a stay tolling the cure period so that upon an adverse determination on the merits the tenant may cure the default and avoid a forfeiture." Barsyl Supermarkets, Inc. v Avenue P Assoc., LLC, 86 AD3d 545, 546 [2d Dept 2011], quoting Graubard Mollen Horowitz Pomeranz & Shapiro v 600 Third Ave. Assoc., 93 NY2d 508, 514 [1999]; see First Natl. Stores v Yellowstone Shopping Ctr., 21 NY2d 630 [1968]. To obtain such relief, "the tenant must demonstrate that (1) it holds a commercial lease, (2) it received from the landlord either a notice of default, a notice to cure, or a threat of termination of the lease, (3) it requested injunctive relief prior to both the termination ofthe lease and the expiration of the cure period set forth in the lease and the landlord's notice to cure, and (4) it is prepared and maintains the ability to cure the alleged default by any means short of vacating the premises." Barsyl Supermarkets, 86 AD3d at 546; see JT Queens Carwash, Inc. v 88-16 N. Blvd., LLC, 101 AD3d 1089 [2d Dept 2012]; Trump on the Ocean, LLC v Ash, 81 AD3d 713, 716 [2d Dept 2011].

Because the remedy exists to preserve the status quo "until the merits of a landlord/tenant dispute are resolved in court" (Trump on the Ocean, 81 AD3d at 716; see Graubard Mollen, 93 NY2d at 514—515), "courts have generally accepted far less than the showing normally required for the grant of preliminary injunctive relief." Trump on the Ocean, 81 AD3d at 716; see Post v 120 E. End Ave. Corp., 62 NY2d 19, 25 [1984]; 159 MP Corp. v Redbridge Bedford, LLC, 33 NY3d 353, 366 [2019]. The office of a Yellowstone injunction is to toll the cure period, not to adjudicate whether a default exists; that question is reserved for determination on the merits of the underlying action.

Defendant argued at oral argument that, because a Yellowstone injunction preserves the status quo, the Court should preserve the Original Lease as written, unamended as to percentage rent. That argument conflates the status quo with the merits. The status quo that a Yellowstone injunction protects is the continued existence of the leasehold while the dispute is decided, not either party's construction of the lease. See Graubard Mollen, 93 NY2d at 514. Preserving the leasehold favors neither side's reading. If Defendant's construction prevails, the tolled cure period will allow Plaintiff to pay what is owed; if Plaintiff's construction prevails, no cure will be needed. Accepting Defendant's framing would require the Court to decide the merits on a motion for provisional relief, which is precisely what the Yellowstone remedy is designed to avoid.

II. Commercial Lease, Notice, and Timeliness

The first three elements are not contested. Defendant admits that the instrument is a commercial ground lease and that plaintiff holds the tenant's interest by assignment. See Answer ¶¶ 10, 20. The Demand is a notice to cure that expressly threatens summary proceedings for possession if the alleged default is not cured within thirty days, and the lease itself permits the landlord, upon an uncured default, to fix a date on which the term will expire. See Original Lease § 9.1. Plaintiff thus faces a genuine threat of forfeiture. Finally, plaintiff sought and obtained a temporary restraining order on July 15, 2026, two days before the cure period was to expire on July 17, 2026, and before any notice of termination issued. The application was timely. See Barsyl Supermarkets, 86 AD3d at 546.

III. Defendant's Merits Argument Does Not Defeat Yellowstone Relief

Defendant's principal argument is that Yellowstone relief should be withheld because the Third Amendment unambiguously preserves the percentage rent obligation, leaving plaintiff without a colorable defense. The Court is not persuaded, for two independent reasons.

A. The Alleged Defaults Are Curable

Defendant relies on JT Queens Carwash for the proposition that Yellowstone relief is unavailable where the tenant has no colorable basis to contest the default. However, the Appellate Division affirmed the denial of relief because the tenant failed to demonstrate that it was not in breach of the lease's insurance requirement, and the failure to maintain the requisite insurance was an incurable default—an independent ground for denial. See JT Queens Carwash, 101 AD3d at 1089—1090. The rationale is straightforward: a tolling injunction serves no purpose where nothing remains to be cured.

The defaults alleged here are of an entirely different character. The Demand charges plaintiff with failing to deliver a signed statement of 2025 Gross Room Sales and failing to pay the resulting Additional Rent. The payment default is curable by definition. Defendant argues, however, that the reporting default is "a separate, incurable default" (see Def. Mem. at 10), and the argument warrants a fuller answer than the conclusory form in which it is presented. The contention, at its strongest, is that section 2.3(A) required the statement "[w]ithin forty-five (45) days after the end of each lease year," that the window has closed, and that timely performance is therefore no longer possible.

The Court rejects that contention for three reasons. First, the lease itself forecloses it. Section 9.1(B)(b) makes the failure to perform a non-monetary covenant an event of default only if it continues "for a period of thirty (30) days after notice," and section 9.1 permits the landlord to fix a termination date only "after having previously given the thirty (30) day notice required under subparagraph 'B.(b)' " (Original Lease § 9.1). Every non-monetary covenant that is subject to a deadline is, by definition, already breached when the deadline passes. If a missed deadline made the covenant incurable, the notice-and-cure provision would never apply to any time-bound covenant, which would render it largely meaningless. See Beal Sav. Bank v Sommer, 8 NY3d 318, 324 [2007].

The parties instead agreed that a tenant who has missed a covenant may cure after notice. Second, Defendant's own Demand treats the default as curable. It directs plaintiff "to provide such Statement and cure the default within thirty (30) days of this Notice" and threatens consequences only "[i]f you fail to provide such Statement" within that period. See NYSCEF Doc No. 9. Having invoked the lease's cure mechanism for this very default, Defendant cannot now be heard to say that nothing remains to be cured. Third, the incurable defaults recognized in the case law are those whose consequences cannot be undone after the fact. A lapse in required insurance, for example, leaves the landlord unprotected against losses during the uninsured period, and a later policy cannot cover that exposure. See JT Queens Carwash, 101 AD3d at 1089—1090. A late statement of room revenue is different. It gives the landlord everything the covenant was meant to secure: the information needed to compute the Additional Rent, together with the right to audit the tenant's books. See Original Lease § 2.3. Any harm from the delay is fully compensable by interest, which the lease separately provides for late payment. See id. § 9.1 [B] [a].

At oral argument, the Court asked Defendant how the reporting default could be incurable when the Demand itself fixed a thirty-day period to cure it. Defendant did not defend that characterization. It responded instead that Plaintiff has offered no evidence of its financial resources. That is an argument about Plaintiff's ability to cure, the fourth Yellowstone element, which is addressed in Part III.D below. It does not suggest that the reporting default cannot be cured.

This is the paradigmatic circumstance for which the Yellowstone remedy was devised. A tenant that disputes in good faith whether a payment obligation has accrued should not be forced to choose between forfeiting its leasehold and giving up the very question it seeks to have adjudicated. Because both alleged defaults are curable, this ground alone suffices to reject defendant's contention that Yellowstone relief is unavailable, whatever the ultimate construction of the Third Amendment.

B. Plaintiff's Construction Is Not Foreclosed by the Instruments

Even assuming that a tenant's position could be so devoid of merit as to warrant denial of Yellowstone relief, defendant has not made that showing. The Court does not here decide the ultimate question of construction, including whether the Third Amendment is ambiguous. It holds only that Defendant has not demonstrated that Plaintiff's reading is untenable on the face of the instruments. That conclusion rests solely on the text of the Original Lease and the Third Amendment, read together. Extrinsic evidence may not be used to create an ambiguity in a writing that is otherwise clear (see W.W.W. Assoc. v Giancontieri, 77 NY2d 157, 163 [1990]), and the Court has not relied on any.

Whether a contract is ambiguous is a question of law for the court. See W.W.W. Assoc., 77 NY2d at 162. An agreement is unambiguous if its language has "a definite and precise meaning, unattended by danger of misconception in the purport of the [agreement] itself, and concerning which there is no reasonable basis for a difference of opinion." Greenfield v Philles Records, 98 NY2d 562, 569 [2002] [internal quotation marks omitted]. The parties' intent must be discerned "within the four corners of the contract, giving a practical interpretation to the language employed and reading the contract as a whole" (Ellington v EMI Music, Inc., 24 NY3d 239, 244 [2014]), and "[a] reading of the contract should not render any portion meaningless." Beal Sav. Bank, 8 NY3d at 324. Where general and specific provisions conflict, the specific provision controls. See Muzak Corp. v Hotel Taft Corp., 1 NY2d 42, 46 [1956].

Defendant's argument rests almost entirely on the introductory clause of section 3—"Section 2.2 of the Lease is hereby amended so that the minimum rent shall be defined as follows"—and on the absence of any reference to section 2.3. But the text that follows that clause is not confined to minimum rent in the sense defendant ascribes to it. Subparagraph (d) folds the percentage rent—2.5% of annual Gross Room Sales over $1,000,000—into what it calls "the minimal rent" for the first four renewal periods, and prescribes for that obligation a payment and reporting regime (monthly payment, monthly statements) materially different from the annual payment and annual officer's statement required by section 2.3(A). Subparagraph (e) likewise imposes the percentage rent "[i]n addition to the annual minimum rent" for the last two renewal periods. Section 3 thus restructures the tenant's entire rent obligation, percentage component included, for every period through 2059. By contrast, subparagraphs (a) through (c), governing the ten-year Term from November 1, 2019, through October 31, 2029, fix specific annual sums and say nothing about percentage rent.

Defendant's construction encounters a structural difficulty. If section 2.3(A) continued in force unaltered throughout the Term and every renewal period, then the percentage rent provisions of subparagraphs (d)(ii) and (e) would either be surplusage or would impose a second, cumulative 2.5% charge on the same Gross Room Sales during the renewal periods. Neither result is readily reconciled with the principle that no provision should be rendered meaningless (see Beal Sav. Bank, 8 NY3d at 324), and Defendant does not contend that the parties intended a double charge. Yet if, to avoid that result, section 3(d) and (e) are understood to displace section 2.3(A) during the renewal periods, then the Third Amendment did modify the percentage rent obligation without naming section 2.3—which undercuts the premise of Defendant's argument that the amendment reached only those lease sections it identified by number. A reasonable reader could conclude that the parties used section 3 as the vehicle for a comprehensive restatement of the rent, and that the inclusion of percentage rent in subparagraphs (d) and (e), coupled with its omission from subparagraphs (a) through (c), reflects a deliberate deferral. Nor does the preservation clause resolve the question; it continues the lease in force "[e]xcept as expressly amended" and "as to those matters that are acknowledged, consented to and clarified hereinabove" (Third Amendment § 5), which presupposes, rather than answers, the scope of what section 3 amended.

Defendant's position at oral argument sharpens this difficulty rather than resolving it. Defendant stated that the tenant would pay percentage rent only once, under section 2.3(A), and maintained that the Third Amendment did not change the percentage rent obligation at all. On that view, sections 3(d)(ii) and (e) impose no obligation that section 2.3(A) does not already impose, and their requirements of monthly payment and monthly statements give way to section 2.3(A)'s annual payment and annual statement. Defendant thus avoids a double charge only by giving the percentage rent language of section 3 no operative effect. The Court does not decide whether that reading is ultimately correct. It is, however, in tension with the principle that a contract should not be read to render any portion meaningless. See Beal Sav. Bank, 8 NY3d at 324.

Plaintiff's acknowledgment that the Third Amendment should have stated that both sections 2.2 and 2.3 were amended also bears noting. To the extent Plaintiff's position depends on correcting the amendment's reference to section 2.2, rather than on construing section 3 as a whole, it would implicate the narrow doctrine permitting judicial correction of a scrivener's error, or the remedy of reformation for mutual mistake, which Plaintiff has not pleaded. Plaintiff's principal argument, however, does not depend on correcting the reference. It rests on the substance of section 3, which restates the percentage rent obligation for the renewal periods and omits it from the base term. As set forth above, that argument is not foreclosed by the text. Whether the amendment can be enforced as Plaintiff reads it without correction or reformation is a question for the merits.

Defendant's own submissions illustrate the point. Its attorney's affirmation and verified answer posit that the operative obligation is section 2.3(A) of the Original Lease—an annual payment, supported by an annual officer's statement—which the Third Amendment left untouched. See Eisenpress Aff. ¶¶ 5—9; Answer ¶¶ 48, 82—85. Its memorandum of law, however, asserts that "[t]he Third Amendment of Land Lease unambiguously requires Plaintiff to pay percentage rent . . . commencing November 1, 2019," that the percentage rent formula "appears throughout Section 3 and applies consistently during both the base term and renewal periods," and that plaintiff is in default of the Third Amendment's requirement of monthly Gross Room Sales statements. See Def. Mem. at 1, 7, 10. The text of subparagraphs (a) through (c) contains no percentage rent, and the monthly-statement requirement appears only in subparagraphs (d) and (e), each of which is expressly conditioned on the exercise of renewal options that have not yet arisen. That Defendant itself locates the obligation it seeks to enforce in two different instruments, with different payment and reporting mechanics, tends to confirm rather than refute that the documents are reasonably susceptible of more than one reading.

For completeness, the Court notes the extrinsic material in the record and its limited role at this stage. Only if the Third Amendment is first found ambiguous from its four corners will extrinsic evidence of the contracting parties' intent become admissible. See W.W.W. Assoc., 77 NY2d at 162—163). Plaintiff has submitted three kinds of such evidence. The first is the sworn account of the landlord's own negotiator. The second is internal correspondence among the landlord's principals describing the "final agreed upon proposal" as providing for "no overages" during the first ten years and "overages starting in Year 11." The third is nearly six (6) years of billing by the original contracting landlord that omitted the percentage rent it had invoiced monthly before the amendment. Defendant reads one sentence of the October 8, 2019, email—"Told them no benefit to us to extend and we wanted this back in"—as evidence that the landlord refused to defer percentage rent. See Eisenpress Aff. ¶ 18) Read in full, the sentence appears to concern the sales threshold rather than the commencement date: "They also agreed to the original base on overages after 10 years of $2.5% over $1.0 million (we were originally going with $2.5% over $1.25 million in sales. Told them no benefit to us to extend and we wanted this back in." NYSCEF Doc No. 12. The Court identifies this material only to show that the matter is genuinely contested. It does not rely on it, and it expresses no view on its admissibility or weight. The evidence has not been tested through discovery or cross-examination.

Defendant argued at oral argument that the Yassky affidavit is hearsay. To the extent the affidavit recounts negotiations in which Mr. Yassky personally participated and billing practices of the landlord he represented, it is sworn testimony based on personal knowledge, not hearsay. The admissibility of the 2019 emails and of statements attributed to others, and the application of the parol evidence rule, are questions the Court need not reach, because it has not relied on this material. Defendant's concern will in any event be addressed by Mr. Yassky's live testimony, subject to cross-examination, at the hearing scheduled for December 17, 2026.

Defendant's reliance on the non-waiver and written-modification clauses, and on the rule that a prior landlord's forbearance does not bind a successor (Original Lease §§ 12.1, 12.12, 12.17; Third Amendment § 5), does not alter this analysis, because those principles answer a different argument from the one plaintiff makes. Plaintiff does not contend that Exit 14 waived the percentage rent, that the lease was orally modified, or that defendant is bound by Exit 14's course of dealing as such. Plaintiff contends that the signed Third Amendment itself deferred the percentage rent. That is a question of what a written, executed amendment means. A successor landlord takes subject to the lease as written and is bound by the true meaning of that writing no less than its predecessor was. If the amendment proves ambiguous, the original contracting parties' conduct under it may bear on what it meant when executed. That use of the evidence is distinct from treating the conduct as a waiver or modification, which the non-waiver and written-modification clauses address. Whether, and to what extent, the clauses defendant invokes limit that evidence are merits questions for another day, as is the effect of Plaintiff's assumption of the lease.⁶ For present purposes, it is enough that Plaintiff's position rests on the text of a signed amendment and is not foreclosed by it.

IV. Desire and Ability to Cure

The fourth element requires a showing that the tenant "is prepared and maintains the ability to cure the alleged default by any means short of vacating the premises." Barsyl Supermarkets, 86 AD3d at 546. The tenant need not prove its ability to cure; "[t]he proper inquiry is whether a basis exists for believing that the tenant desires to cure and has the ability to do so through any means short of vacating the premises" Herzfeld & Stern v Ironwood Realty Corp., 102 AD2d 737, 738 [1st Dept 1984].

Plaintiff's member has sworn that, should the Court determine that the additional rent is due, plaintiff "is ready, willing and able to cure said default pursuant to the Court's determination" Sopariwala Aff. ¶ 18. Defendant dismisses this as a "conditional, hypothetical statement" (Def. Mem. at 10), but a tenant that denies the existence of a default can only ever offer to cure conditionally; that is the very premise of the Yellowstone remedy. The record supplies an ample basis for crediting plaintiff's representation. Plaintiff owns and operates the hotel, a going concern whose improvements plaintiff values in the millions of dollars and whose loss would render that investment "essentially valueless." See Churgin Aff. ¶ 3; Sopariwala Aff. ¶¶ 5, 19. Defendant does not contend that plaintiff has failed to pay the minimum rent, and the closing statement confirms that, after correction, no rent arrears existed at the time of the 2025 conveyance. See NYSCEF Doc No. 14.

The record on this element has been supplemented at oral argument. Plaintiff represented that, under Defendant's construction, the Additional Rent for 2025 would be approximately $34,000, payable from room revenues, and that it has paid all minimum rent and owes no other rent or charges. Defendant did not dispute either representation. Defendant argued that Plaintiff has offered no evidence of its financial resources, but it acknowledged that there is no evidence either way bearing on Plaintiff's ability to satisfy a judgment. The Yellowstone standard does not require the tenant to prove its ability to cure. See Herzfeld & Stern, 102 AD2d at 738. The disputed sum is modest relative to the hotel's operations and to the value of the leasehold Plaintiff seeks to protect, and Plaintiff has a demonstrated record of paying the rent billed to it. That record supplies a basis for believing that Plaintiff can cure.

Defendant also confirmed at oral argument that it is not claiming percentage rent for 2019 through 2024. Its written argument that Plaintiff cannot demonstrate an ability to pay percentage rent accrued since November 1, 2019, has therefore been abandoned. In any event, the Demand is confined to the statement and Additional Rent for "the lease year for 2025." See NYSCEF Doc No. 9. The Yellowstone injunction granted herein tolls only the cure period for the defaults set forth in the Demand. The Court is satisfied that a basis exists for believing that Plaintiff both desires and has the ability to cure those defaults, by furnishing the required statement and paying any sum found due, should the Court ultimately sustain Defendant's construction.

V. Defendant's Equitable Objections

Defendant argues that Plaintiff comes to equity with unclean hands because it assumed the lease in 2021 with notice of the Third Amendment and "remained silent for years" before contesting the percentage rent claim. See Def. Mem. at 11. The record does not support that characterization. Plaintiff paid the rent the landlord billed; the landlord, for nearly six years, billed no percentage rent; and Plaintiff's position, asserted promptly upon Defendant's first demand in March 2026, rests on a good-faith reading of a signed amendment. The doctrine of unclean hands requires immoral or unconscionable conduct directly related to the subject matter of the litigation (see National Distillers & Chem. Corp. v Seyopp Corp., 17 NY2d 12, 15—16 [1966]), and nothing of the kind appears here.

Nor will the injunction permit plaintiff to occupy the premises "rent-free." See id. A Yellowstone injunction does not relieve the tenant of its obligations under the lease; it merely suspends the landlord's termination remedy while the dispute is adjudicated. Defendant's claim to the disputed percentage rent, with interest, is fully preserved and is pleaded in its counterclaims. To protect defendant's interests further, the injunction granted herein is conditioned upon plaintiff's continued, timely payment of all minimum rent and other undisputed charges as they come due.

VI. Defendant's Requests for Affirmative Relief

In its memorandum of law, defendant asks the Court to dismiss the declaratory judgment action, to declare that defendant properly invoked the lease's default and cure provisions, and to award attorneys' fees. See Def. Mem. at 12—13. No notice of cross-motion was served (see Civil Practice Law and Rules § 2215), and a request for affirmative relief embedded in opposition papers is not properly before the Court.

The Court has considered whether, despite that defect, the merits should be reached now on the documentary record the parties have assembled. It declines to do so, for reasons that go beyond procedural form. No motion under Civil Practice Law and Rules §§ 3211 or 3212 is pending. Treating defendant's opposition as a motion for summary judgment would require "adequate notice to the parties" under Civil Practice Law and Rules § 3211(c), or a record showing that both sides were "deliberately charting a summary judgment course." Sokol v Leader, 74 AD3d 1180, 1183 [2d Dept 2010]; See Mihlovan v Grozavu, 72 NY2d 506, 508 [1988]. Neither condition is met. Plaintiff moved only for provisional relief, under a standard that does not require it to lay bare its proof on the merits, and it has had no occasion to do so. Moreover, issue was joined only on August 13, 2026, the same day Defendant served its opposition. No discovery has occurred. Both parties agreed at oral argument that limited discovery is needed before the construction question can be presented: Defendant seeks Plaintiff's Gross Room Sales for 2019 through 2026, and Plaintiff seeks the testimony of Mr. Yassky. The principal nonparty affiant has not been examined; he is scheduled to testify at a hearing on December 17, 2026. A determination of the parties' rights for the remainder of a ground lease that may run to 2059 should not be made on that footing.

Nothing in this decision forecloses an early merits determination, and both parties agreed at oral argument that the construction question can be presented by motion for summary judgment after limited discovery. As noted above, the Court has not decided whether the Third Amendment is ambiguous. If either party believes the instruments can be construed as a matter of law, it may move for summary judgment on a properly noticed motion and a complete record, and the Court will consider such a motion on an expedited basis. Defendant's requests for affirmative relief are therefore denied without prejudice to such an application. Defendant's request that the temporary restraining order be vacated is denied as academic in light of the relief granted herein.

VII. Conditions and Undertaking

A Yellowstone injunction is a preliminary injunction, and the plaintiff must give "an undertaking in an amount to be fixed by the court, that the plaintiff, if it is finally determined that he or she was not entitled to an injunction, will pay to the defendant all damages and costs which may be sustained by reason of the injunction." Civil Practice Law and Rules § 6312 [b]; See Tahmin v Interlaken Owners, Inc., 2024 NY Slip Op 03511 [2d Dept 2024]. The amount "must not be based upon speculation" and "must be rationally related to the damages the [defendant] might suffer" if the injunction proves to have been unwarranted. See Congregation Erech Shai Bais Yosef, Inc. v Werzberger, 189 AD3d 1165, 1168 [2d Dept 2020] [internal quotation marks omitted].

Defendant's potential exposure by reason of the injunction must be measured with care. In one respect it is narrow: the injunction does not extinguish or reduce any claim to percentage rent, and Defendant's right to recover any sum ultimately found due, with interest, is fully preserved in its counterclaims. In another respect it is broader than mere delay. The termination remedy that the injunction suspends is a landlord's principal source of leverage to compel payment. If the injunction is later found to have been unwarranted, Defendant will have been without that leverage for the entire pendency of the action. During that time it bears the risk that the disputed sum, although adjudged owing, cannot readily be collected. An undertaking measured only by the time value of the disputed sum would not account for that risk. Defendant's own claim to contractual attorneys' fees, by contrast, depends on the outcome of the merits rather than on the injunction. It is pleaded as a counterclaim and is not the proper measure of the undertaking.

Oral argument supplied a better measure than the 2017 proxy on which the Court would otherwise have relied. Plaintiff represented that, under Defendant's construction, the Additional Rent for 2025 would be approximately $34,000. Defendant estimated its damages from the injunction at approximately $30,000, but requested an undertaking of $100,000 without identifying any basis for the difference. Plaintiff proposed $45,000. The parties dispute whether Defendant may recover percentage rent for the part of 2025 that preceded its acquisition (see n 6, supra). That issue is reserved; for purposes of the undertaking only, the Court resolves it in Defendant's favor by including the full 2025 lease year. Taking $34,000 as the principal and adding statutory interest at nine percent per annum (see Civil Practice Law and Rules § 5004) for an anticipated pendency of approximately two years, roughly $6,100, yields approximately $40,100. The Court fixes the undertaking at $45,000.

That amount exceeds Defendant's own estimate of its damages and is rationally related to its exposure. An undertaking of $100,000, by contrast, would bear no demonstrated relation to the damages Defendant might suffer. See Congregation Erech Shai Bais Yosef, 189 AD3d at 1168. Because the $34,000 figure rests on counsel's representation, Plaintiff is directed, on consent, to serve upon Defendant a statement of its 2025 Gross Room Sales, sworn to by an officer. The statement is ordered solely so that the undertaking can be verified. It is without prejudice to Plaintiff's position on the merits, and it does not constitute an admission that any percentage rent is owed, or a cure of any default alleged in the Demand. Either party may move to adjust the undertaking upon that showing.

Accordingly, it is hereby

ORDERED that Plaintiff's motion for a Yellowstone injunction (Motion Seq. No. 001) is

GRANTED, upon the conditions set forth below; and it is further

ORDERED that, pending the final determination of this action, the running of the cure period set forth in defendant's Thirty (30) Day Demand to Cure Default—Commercial Tenant dated June 16, 2026 (the "Demand") is stayed and tolled; and it is further

ORDERED that, pending the final determination of this action, defendant MSK Buildings LLC, its agents, attorneys, employees, and all persons acting on its behalf or in concert with it, are enjoined and restrained from serving a notice of termination, commencing a summary proceeding or action in ejectment, or otherwise taking any step to terminate or purport to terminate the ground lease, as amended, based upon the defaults alleged in the Demand; and it is further

ORDERED that the foregoing injunction is conditioned upon Plaintiff's continued, timely payment, during the pendency of this action, of all minimum rent and all other charges, other than the percentage rent in dispute, as they come due under the ground lease, as amended, and that, upon plaintiff's failure to make any such payment, defendant may move, on notice, to vacate the injunction; and it is further

ORDERED that, pursuant to Civil Practice Law and Rules § 6312 (b), the foregoing injunction is conditioned upon plaintiff's filing with the Rockland County Clerk, within fifteen

(15) days after service of a copy of this Decision and Order with notice of entry, an undertaking in the sum of $45,000, and upon Plaintiff's filing proof thereof on NYSCEF; the temporary restraining order contained in the order to show cause signed July 15, 2026 shall remain in effect until the undertaking is filed, and, should Plaintiff fail to file the undertaking within the time provided, Defendant may move, on notice, to vacate the injunction; and it is further

ORDERED that, within thirty (30) days after service of a copy of this Decision and Order with notice of entry, Plaintiff shall, on consent, serve upon Defendant's counsel a statement, sworn to by an officer or member of Plaintiff, setting forth Plaintiff's Gross Room Sales, as defined in section 2.3(B) of the Original Lease, for the lease year November 1, 2024, through October 31, 2025, and for calendar year 2025. The statement is ordered solely for the purpose of calibrating the undertaking. It shall be without prejudice to Plaintiff's position on the merits, it shall not constitute an admission that any percentage rent is owed, or a cure of any default alleged in the Demand, and its use shall be limited to this action. Upon service of the statement, either party may move, on notice, to modify the amount of the undertaking; and it is further

ORDERED that nothing herein shall be construed as a determination of whether any percentage rent or additional rent is due under the ground lease, as amended, or as limiting Defendant's right to prosecute its counterclaims for any sums found due, which questions are reserved for determination on the merits; and it is further

ORDERED that those branches of Defendant's opposition seeking dismissal of the complaint, a declaratory judgment in Defendant's favor, and an award of attorneys' fees are DENIED without prejudice to a properly noticed motion, including a motion for summary judgment upon a complete record, and Defendant's request to vacate the temporary restraining order is DENIED as academic; and it is further

ORDERED that a hearing shall be held before the undersigned on December 17, 2026, at 11:30 a.m., at which nonparty Steven Yassky shall testify; and it is further

ORDERED that, the parties having represented at oral argument that they can resolve paper discovery without a preliminary conference, the parties shall promptly exchange paper discovery, including Defendant's request for Plaintiff's Gross Room Sales for 2019 through 2026, and shall appear at the December 17, 2026 hearing prepared to address a schedule for the motions for summary judgment discussed at oral argument; and it is further

ORDERED that Plaintiff shall serve a copy of this Decision and Order with notice of entry upon Defendant via NYSCEF within ten (10) days of the date hereof.

This constitutes the Decision and Order of the Court on Motion Sequence No. 1.

Dated: October 30, 2026

New City, New York

ENTER:

HON. JOHN P. COLLINS, JR., J.S.C.

FOOTNOTES

1.   The lease instruments were annexed to the moving papers as Exhibits A through I (see NYSCEF Doc Nos. 5—10, 12—14) and were refiled with the conformed order to show cause. See NYSCEF Doc Nos. 21—26. For convenience, the Court cites the original filings. Plaintiff's papers refer to the original landlord as "Hopp Drive Associates"; the instruments themselves use "Hopf."

2.   Mr. Yassky dates the increase to $7,916.67 per month to November 2021 (see Yassky Aff. ¶ 8), whereas the Third Amendment schedules it for November 1, 2022 (see Third Amendment § 3 [b]). The discrepancy is immaterial to this motion.

3.   The assignment, the copy of a Landlord's Consent and Estoppel Certificate included among Plaintiff's exhibits, and the Demand all refer to a "Fourth Amendment" of the lease dated November 2021. No party has placed that instrument before the Court, and both parties represented at oral argument that it is not relevant to this dispute. The copy of the estoppel certificate in the record is unexecuted.

4.   The Demand is addressed to Bhavi Spring Valley, LLC as "Tenant" and to Rajesh and Ami Sopariwala as guarantors, rather than to Plaintiff, the assignee in possession. The order to show cause recites the Demand as dated June 15, 2026; the Demand bears the date June 16, 2026. At oral argument, Plaintiff confirmed that it does not claim that it failed to receive the Demand. Neither party has raised any issue concerning the addressee or date of the Demand, and the Court expresses no view on either point.

5.   The opposition and reply papers were served after the dates originally fixed in the order to show cause. Defense counsel appeared and corresponded with the Court in late July 2026. See NYSCEF Doc Nos. 28—30. Neither party has objected to the timing of its adversary's submissions, and the Court, in the exercise of its discretion, has considered all of the papers. See Civil Practice Law and Rules § 2004).

6.   The Court likewise does not reach the parties' dispute over percentage rent for the portion of the 2025 lease year that preceded Defendant's acquisition. Defendant confirmed at oral argument that it claims percentage rent for the full 2025 lease year, including the period before July 22, 2025. Plaintiff contends that, because the conveyance did not assign accrued rents, Defendant may not recover rent for that period. See Pl. Mem. at 2 n 1. The contract of sale is not in the record.

John P. Collins Jr., J.