Boro Grocery, Inc. v TOMTRO REALTY CORP.

[*1] Boro Grocery, Inc. v TOMTRO REALTY CORP. 2009 NY Slip Op 50930(U) [23 Misc 3d 1124(A)] Decided on May 5, 2009 Supreme Court, Kings County Lewis, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on May 5, 2009
Supreme Court, Kings County

Boro Grocery, Inc., Plaintiff,

against

TOMTRO REALTY CORP., Defendant.



26899/08



Plaintiff Attorney:Jonathan Y Sue, Esq

Defendant AttorneyMarc Aronson, Esq.

Yvonne Lewis, J.

Boro Grocery, Inc. (the plaintiff), brings this application for an order granting it a Yellowstone injunction. The action concerning a building located at 93 Court Street in Brooklyn arises from a 25-year lease, originally executed in 1987 between Tomtro Realty Corp. (the defendant) and tenant Dong Il Oh. That tenant had assigned the lease to Evergreen Deli, Inc., who, in turn, subsequently assigned it to the plaintiff in May 1994. The leased premises consists of "a basement, ground floor, second floor, third and fourth floor [s]." The plaintiff's instant application for a Yellowstone injunction results from the defendant's claims that the plaintiff violated "substantial obligations" of its tenancy agreement that caused the defendant to serve the plaintiff with a Notice to Cure and a Notice of Termination.

In its motion, the plaintiff recounts the "history between Boro Grocery Inc. and its landlord since the beginning of the tenancy" resulting in three prior Yellowstone injunctions based on alleged defaults under the lease and an injunction to compel the defendant to permit sublease of the premises. The plaintiff claims that all allegations of breach leveled by the defendant are "not set forth with specificity and have either been cured, are in the process of being cured or are not breaches at all." To that end, the plaintiff contends that the defendant's Notice to Cure is defective because the purported defaults are not sufficiently specific but mere "legal conclusions." [*2]

The plaintiff charges that the defendant appears to have regretted leasing the building for 25 years in 1987, at a time when the area had not developed as it has today, and that, the defendant appears to want to take back the premises and lease it out for higher rent. The plaintiff characterizes its differences with the defendant as purely a matter of opinion as to the degree of maintenance required, and that, in the past, it had requested that the court appoint a referee to provide an independent opinion of the reasonable degree of maintenance required.

The plaintiff also asserts that it will suffer irreparable harm if its lease is terminated "based on the landlord's unilateral contention that the plaintiff had breached the lease agreement." The plaintiff adds that it has already invested its "time, effort, energy and substantial [amounts of] money to establish and maintain its goodwill and reputation" while improving the property and must not be made to choose "between capitulation and the risk of loss of [its] entire business." The plaintiff urges the court to "enjoin the defendant from terminating the lease pending judicial resolution of the underlying controversy" because "the law disfavors forfeiture" and issuing a Temporary Restraining Order will toll the running of the period to cure and protect the plaintiff from suffering the irreparable harm of termination.

In its opposition, the defendant asserts that "the plaintiff has no right to bring the instant motion" because it has failed to satisfy the conditions precedent to bringing a Yellowstone injunction. The defendant submits that to be eligible for a Yellowstone injunction, "a tenant must demonstrate that: 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 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." The defendant charges that the plaintiff misrepresented the facts to the court by describing the Notice to Cure as vague because "the Notice to Cure in this matter is very specific and was served, pursuant to the lease." The defendant alleges, among other things, that the plaintiff breached paragraph 76 of the lease by illegally subletting part of the property, breached paragraph 48 of the lease and the Certificate of Occupancy by carrying out construction work at the premises without the defendant's consent, and failed to obtain relevant permits for the work it did at the premises. The defendant further alleges that the building received a violation notice from the Department of Buildings because the plaintiff failed to properly maintain the premises and to provide the defendant with a copy of the requisite insurance. The defendant asserts that, more importantly, it served a Notice to Cure defects, dated June 30, 2008, upon the plaintiff and requested the plaintiff "to cure said breach on or before July 18, 2008," [*3]failing which the defendant will "elect to terminate [the plaintiff's] tenancy." The defendant subsequently served a Notice of Termination dated September 16, 2008 on the plaintiff and asserted that the lease "is hereby terminated effective September 30, 2008" because the plaintiff failed to comply with the Notice to Cure by the July 18, 2008 deadline.

The defendant opines that the plaintiff currently has no lease as the lease that otherwise existed expired when it served the Notice of Termination on the plaintiff and, therefore, the plaintiff's motion is untimely and must be denied. The defendant further asserts that, in addition, the plaintiff has failed to demonstrate its willingness and ability to cure the defaults. In support, the defendant submits an affidavit by its president, John Vendikos, in which he reiterates that the plaintiff is not entitled to an injunction as the plaintiff has already received its Notice to Cure and the Notice of Termination. Mr. Vendikos claims that the plaintiff failed to obtain the defendant's consent for subletting part of the premises to another tenant as required by the lease and that the defendant should have been informed that the plaintiff intended to carry out construction work on the third floor of the property as well as the interior. Vendikos describes the construction work done at the premises as illegal and claims that the plaintiff violated the Department of Buildings' Code and caused a citation to be issued. Vendikos adds that, because the plaintiff has not shown its willingness and ability to cure these defects listed in the Notice to Cure, the plaintiff's motion must be denied.

In reply, the plaintiff submits an affidavit by Minja Kim, Vice President of Boro Grocery, Inc. Kim alleges that Vendikos is "determined to terminate the lease with whatever excuses he can muster" and that the litany of lawsuits between them in the course of their landlord-tenant relationship proves that fact and is relevant to the renewed effort being undertaken by the defendant. According to Kim, Vendikos is "constantly looking for things he can use as an excuse to terminate the lease prematurely" and, to accomplish his goal, he tends to ignore significant improvements the plaintiff has made to the 100-year-old property. Kim alleges that in November, Vendikos photographed those areas of the building he believed had defects. Kim denies any violations of the lease and asserts that "there is nothing in the Notice to Cure that [the plaintiff] is unable or unwilling to cure if the Court deems it so." To buttress its position, the plaintiff's affidavit states that "[there] is approximately four years left on this valuable commercial lease and [the plaintiff] will do whatever is necessary to stay in the premises and operate the valuable business." Kim suggests, once again, that a disinterested third-party be appointed by the court, if necessary, "to expeditiously evaluate the alleged violations and inspect the premises." [*4]

In its affirmation, the plaintiff opposes the defendant's contentions of untimeliness and asserts that the Notice of Termination dated September 16, 2008 states that it is effective September 30, 2008, but that the plaintiff filed the instant order to show cause on September 25, 2008, five days prior to the effective termination date. The plaintiff argues that the order to show cause was timely as the defendant had not already terminated the lease, contrary to the defendant's averments. The plaintiff urges the court to maintain the status quo by granting its injunction in order to allow the underlying litigation to proceed.

Discussion

The purpose of a Yellowstone injunction is to allow a tenant faced with a threat of termination to obtain a stay tolling the running of the cure period so that after determination of the merits, the tenant may cure its defect and avoid forfeiture of the subject premises (see Long Is. Gynecological Services. v. 1103 Stewart Ave. Assoc. Ltd. Partnership, 224 AD2d 591 [1996]). A tenant seeking a Yellowstone injunction must demonstrate that: "(1) it holds a commercial lease, (2) it has received a notice of default, Notice to Cure, or threat of termination of the lease, (3) its application for a temporary restraining order was made prior to expiration of the cure period and 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" (see Xiotis Rest. Corp. v.LSS Leasing Ltd. Liab. Co., 50 AD3d 678, 679 [2008]; Hempstead Video, Inc. v.363 Rockaway Associates, LLP, 38 AD3d 838, 839 [2007]).

In the instant action, although the defendant's Notice to Cure explicitly requested that the plaintiff cure the alleged defects by July 18, 2008, "[f]ive (5) days after the service of [the] notice," the plaintiff failed to bring its Yellowstone application before that deadline. Rather, the plaintiff opted not to act until late September, and after the plaintiff had received the defendant's Notice of Termination. Bringing this order to show cause in a timely manner would have tolled the running of the cure period so that after a determination of the merits, the defendant may cure the defects and avoid forfeiture of the leasehold (see Graubard Mollen Horowitz Pomeranz & Shapiro v. 600 Third Ave. Assocs., 93 NY2d 508, 514 [1999]; Long Is. Gynecological Services., 224 AD2d at 593; Sportsplex of Middletown v. Catskill Regional Off-Track Betting Corp., 221 AD2d 428 [1995]).

As it has been repeatedly held that "there is no basis for a Yellowstone injunction where it is sought after the expiration of the period to cure or after the service of the notice of termination" (see King Party Ctr. of Pitkin Ave. v.Minco Realty, 286 AD2d 373, 374 [2001]; Long Is. Gynecological Services., 224 AD2d at 593; Rappa v.Palmieri, 203 AD2d 270 [1994]; T.W. Dress Corp. v.Kaufman, 143 AD2d 900 [1988]; [*5]S.E. Nichols, Inc. v.American Shopping Centers., 115 AD2d 856 [1985]). The plaintiff's failure "to seek a restraining order before the cure period ha[d] expired and before the landlord acted to terminate the leaseeven though such an order was obtained between the time the notice of termination was served and its expiration datedivest[ed] the court of its power to grant a Yellowstone injunction" (see Long Is. Gynecological Services., 224 AD2d at 593).

Accordingly, the plaintiff's application for a Yellowstone injunction is denied, and the stay contained in the court's September 25, 2008 show cause order is vacated. This constitutes the decision and order of the court.

E N T E R,

_______________________

YVONNE LEWIS,J. S. C.