Dublin Underground SP, Inc. v Harmony Mills S., LLC

[*1] Dublin Underground SP, Inc. v Harmony Mills S., LLC 2012 NY Slip Op 51546(U) Decided on July 5, 2012 Supreme Court, Albany County Lynch, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 July 5, 2012
Supreme Court, Albany County

Dublin Underground SP, Inc. and RED DAWN, INC., Plaintiffs,

against

Harmony Mills South, LLC, Defendant.



2053-12



LINNAN & FALLON, LLP

Attorneys for Plaintiffs

(James D. Linnan, Esq. of Counsel)

61 Columbia Street - Suite 300

Albany, New York 12210

COOPER, ERVING & SAVAGE, LLP

Attorneys for Defendant

(Michael A. Kornstein, Esq., of Counsel)

39 North Pearl Street

Albany, New York 12207

Michael C. Lynch, J.

By Order to Show Cause (Connolly, J.) dated April 12, 2012 and returnable April 19, 2012, plaintiff seeks a preliminary injunction precluding defendant from taking any action to evict plaintiffs as tenants in the defendant's premises at 90 State Street, Albany, New York. In the underlying action commenced on April 10, 2012, plaintiffs assert various claims of negligence and damages against the landlord and in the 9th cause of action, seek an interpretation of this lease as to additional rent due, and an accounting of such amount. A temporary restraining order was included in the Order to Show Cause, prohibiting defendant from taking any action to remove plaintiffs from the premises. Defendant has opposed the [*2]application.

The submissions show that plaintiff Dublin Underground SP, Inc. leased the ground floor, Store Number 1, premises for a ten year term, commencing March 11, 2008 (Exhibit "A"). By First Amendment to Lease dated February 27, 2009, Store No.2 was added to the Dublin Underground lease (Exhibit "B"). Dublin Underground operates a bar and restaurant known as Savannah's in the premises. Plaintiff, Red Dawn, Inc., owned by the two principals of Dublin Underground leased the contiguous premises identified as Store Number 16 "for a term of ten (10) years to commence upon receipt of Liquor license to end...on August 31, 2020 (Exhibit "C").

By Notice to Quit dated February 7, 2012, defendant advised Dublin Underground that the sum of $21,109.20 was due in rent and unless paid within five (5) days the lease would be terminated (see Exhibit "A" attached to Rowley Affirmation).

By Notice to Quit dated April 2, 2012, defendant advised Red Dawn that the sum of $2,610.08 was due in rent and unless paid within five (5) days the lease would be terminated (see Exhibit "B" attached to Rowley Affirmation).[FN1] In a supplemental affirmation by Peter Cusato, a principal of both plaintiff entities, he avers that he was actually served with a copy of the Notice to Quit issued to Red Dawn on April 6, 2012. In response, defendants' counsel does not dispute the service date but points out there is no dispute that a Notice to Quit was served on Dublin Underground on February 14, 2012.

In an instance as here, of a commercial landlord-tenant dispute, a tenant may seek a Yellowstone injunction when confronted with a termination of its lease in order to protect its investment in the leasehold (see First National Stores v. Yellowstone Shopping Ctr., 21 NY2d 630). Such an injunction serves to maintain the status quo and tolls the cure period pending a determination on the merits of the underlying dispute (Graubard Mollen Horowitz Pomeranz & Shapiro v. 600 Third Ave. Assoc., 93 NY2d 508, 514). "To obtain a Yellowstone injunction, 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 [*3]the lease, (3) it requested injunctive relief prior to both the termination of the 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, Inc. v. Avenue P. Associates, LLC, 86 AD3d 545, 546). An application for Yellowstone relief must be made prior to a termination of the lease and before the cure period set forth in the lease and the landlord's notice expires (Id. At 547; Korova Milk Bar of White Plains, Inc. v. PRE Props, LLC, 70 AD3d 646, 647).

Pursuant to paragraph 14 of the Dublin Underground lease, which defines "Landlord's Remedies on Default", where the tenant defaults in the payment of basic rent or any additional rent, the landlord may issue a notice of default advising that the default must be cured within five (5) days. In the event the default is not cured within this five (5) day period, the landlord may terminate the lease on not less than ten (10) days notice (Exhibit "A"). The Red Dawn lease includes the same provision (Exhibit "B").

From the submissions presented, there is no indication that defendant issued the ten day notice to either plaintiff. Instead, only a five (5) day "Notice to Quit" was issued to each tenant. Such a notice fails to comport with the default procedure outline in paragraph 14, and improperly directed plaintiffs to vacate the premises within the five (5) day cure period.

Given that neither lease has been terminated in accord with the defined lease procedure, and the Notice to Quit issued to each plaintiff was defective, the Court deems plaintiffs' application for injunctive relief timely.

As for the underlying merits, plaintiffs have raised serious issues as to the hazardous conditions at the premises compromising the use of same, and the overcharging of additional rent. They have also asserted, without contradiction, that a substantial investment has been made in the Red Dawn premises. Defendant does not respond to these contentions in its opposition papers — choosing instead to assert that plaintiffs do not meet conditions (3) and (4) for a Yellowstone injunction. The Court has already deemed the application timely. As for condition (4), plaintiffs have represented that $18,000 has been placed in escrow pending a resolution of the dispute, and that they will continue to make payments of base rent for Dublin Underground pending a resolution of this action (see "Petition" of Peter Cusato dated April 12, 2012 at paragraph 34). This representation adequately demonstrates that plaintiffs have the intention and ability of meeting their lease obligations.

Accordingly, it is hereby [*4]

ORDERED, that plaintiff's application for a preliminary injunction is granted and defendant is hereby enjoined from taking any actions to evict either plaintiff pending a resolution of this action on the merits, on the condition that plaintiffs continue to make timely payments of base rent for Dublin Underground pending a resolution of this action and post an injunction bond in the principal amount of $20,000 to reimburse the defendant for all damages and costs which may be sustained by reason of the injunction, if it is finally determined that plaintiffs were not entitled to an injunction, in accord with CPLR 6312(b).

This Memorandum constitutes the Decision and Order of the Court. This original Decision and Order is being returned to the attorney for plaintiffs. The original papers are being sent to the Albany County Clerk. The signing of this Decision and Order shall not constitute entry or filing under CPLR 2220. Counsel is not relieved from the provision of that rule regarding filing, entry, or notice of entry.

SO ORDERED!

ENTER.

Dated: Albany, New York

July 5, 2012

_________________________________________

Michael C. Lynch

Justice of the Supreme Court

Papers Considered:

(1)Order to Show Cause (Connolly, J.) dated April 12, 2012, returnable April 19, 2012,

with "Petition" of Peter Cusato, dated April 12, 2012 with Exhibits "A" - "C";

(2)Affirmation of James Linnan, Esq. (undated) filed April 12, 2012, with Exhibits

"A" - "B";

(3)Affirmation of James Linnan, Esq. dated April 27, 2012;

(4)Affidavit of Peter Cusato dated May 15, 2012; [*5]

(5)Affidavit of Joseph Schaefer dated May 31, 2012;

(6)Affirmation of David Rowley, Esq. dated April 18, 2012, with Exhibits "A" and "B";

(7)Reply Affidavit of Denise Williams dated June 11, 2012;

(8)Amended Complaint dated April 27, 2012; and

(9)Verified Amended Complaint dated June 4, 2012. Footnotes

Footnote 1:The submissions indicate this lease was signed on June 7, 2010. Although the parties represent that Red Dawn has yet to obtain a liquor license, and the lease term is defined as commencing "upon receipt of a liquor license" (see Exhibit "C" annexed to Order to Show Cause at paragraph 2), the affirmed submissions do not explain how it is that the April 2, 2012 "Notice to Quit" asserted that $2,610.68 in rent was overdue. It appears the plaintiffs began paying rent in October, 2011.