With nowhere else to turn and little time to spare, a well-known Midtown antique and decorative rug business retained Adam Leitman Bailey, P.C. to defend it in an eviction proceeding instituted by its landlord, who was attempting to unlawfully cut short the client’s long-term lease so that it could recapture the space and re-let it to another tenant at a much higher rate.
The Notice to Cure
Initially, the Landlord advanced its illicit scheme to terminate the client’s valuable leasehold by serving a frivolous notice to cure upon the client alleging that the client breached the lease for, among other things, introducing a subtenant into the premises without the Landlord’s consent and for various building code violations.
Under well-settled New York law, the client, as the holder of a commercial lease was entitled to obtain a Yellowstone Injunction if it timely moved for such injunctive relief within the applicable cure period set forth in the parties’ lease agreement and showed that it had the ability and desire to cure the purported lease defaults. Where a Yellowstone Injunction is granted, then the case is fully adjudicated in Supreme Court, which typically involves lengthy and costly litigation. However, in instances where a tenant fails to timely move for a Yellowstone Injunction, it is relegated to a speedy summary eviction proceeding in the Civil Court – a court of limited jurisdiction with no discovery, as a matter of right – a forum that tremendously favors the landlord.
In the case at bar, the default provision in the parties’ lease only called for a five day cure period. Since the client retained ALBPC with less than 24 hours before the requisite cure period expired, ALBPC worked nonstop around the clock to compile all of the client’s relevant documents and review them, prepare papers and argue the client’s application for injunctive relief in Court.
ALBPC prepared the client’s emergency order to show cause application and supporting papers in a flash and incredibly, appeared in Court to argue the application on the very next day after its retention. Alongside the client’s emergency application, ALBPC also filed a comprehensive complaint for injunctive relief to stay the landlord from terminating the client’s extant commercial lease and for a declaratory judgment adjudging that the client was not in default of the underlying lease any of the violations recited in the notice to cure.
During oral argument on the client’s emergent application, ALBPC argued that since each and every one of the purported building code conditions set forth in the notice of default first arose openly and notoriously some 14 years ago, during which period the landlord had month by month accepted rent, even if these conditions did violate the lease, the landlord had long since waived any objection to them. In addition, ALBPC pointed out that because these conditions were created 14 years ago, the landlord failed to act within the applicable statute of limitations, and was therefore barred from asserting that these conditions constituted a breach of the client’s lease.
With regard to the supposedly non-consensual sublet, ALBPC demonstrated that the Notice to Cure was false because when the client first took occupancy of the subject premises, it did so with the alleged non-consensual sublessee from the very inception of the lease. Notably, ALBPC showed the Court the specific section of the lease which actually memorialized that the sublessee was a “qualified subtenant”, a provision that was explicitly consented to by the landlord. ALBPC further cited to the provision of the parties’ restatement of lease which similarly referred to the sublessee as a “qualified tenant”, thus establishing that with regard to the subtenancy, there was plainly nothing to cure.
Additionally, ALBPC demonstrated that pursuant to the lease in question, all of the items that the Notice to Cure seeks to have cured are with respect to the alterations that were effected to the premises were done at the time the parties’ entered the lease, and were specifically referenced in the lease sections related to the client’s initial build out.
Notwithstanding that the conditions in question were not defaults under the lease, rendering the notice to cure a nullity, ALBPC retained a New York State licensed architect for the client immediately upon being retained, who attested that in his professional opinion, the modifications required to cure the building violations were quick and relatively easy to make.
In granting the client a Yellowstone Injunction and tolling the curative period cited in the notice to cure, the Court agreed with all of the arguments advanced by ALBPC.
The next critical hurdle that ALBPC had to surmount was convincing the Court that a sizable bond was not required, although generally, Court’s condition the issuance of a Yellowstone Injunction on an undertaking. The landlord’s attorneys cited many cases in support of its position requiring the client to put up a multi million dollar bond which the landlord argued was needed to protect against a loss or casualty to the building caused by one of the tenant’s alleged construction violations. Since the case law was unsettled on the issue of whether a bond is required to secure the landlord in situations where a tenant’s building code violations may lead to damage or destruction of the subject property, the Court directed supplemental briefing on that issue. After engaging in exhaustive research, ALBPC found case law denying a landlord’s request for the posting of an undertaking where the tenant is current on its rental obligations to the landlord, which the client was, and argued that denial was especially warranted in this case because the landlord is adequately insured against any possible subsequent loss resulting from violations, which were apparently in existence for nearly two decades without causing damage, under the parties’ respective policies of insurance. The Court was persuaded by ALBPC’s arguments and denied the landlord’s request for its multimillion dollar bond. Had ALBPC not been successful in fending off the bond, the client would have lost its lease and been evicted because it did not have the financial wherewithal to place a sizable bond.
After the Court denied the landlord’s request for a bond, it immediately capitulated by agreeing to the withdrawal of the notice to cure in exchange for the client’s effectuation of some very minor repairs to the premises which were of a minimal cost to the client. Ultimately, in under 24 hours, ALBPC marshaled the evidence, prepared the client’s papers and successfully argued and obtained injunctive relief, thereby saving the client’s valuable leasehold and staving off the client’s eviction.
ALBPC attorney Dov Treiman handled the case for the client.