57th Street Day Spa v. 135 East 57th Street, LLC

(Sup. Ct. N.Y. Cty. 3/26/02)

We represented: Defendant

Marylin G. Diamond, J.

This case presents a landlord tenant dispute. The plaintiff is a commercial tenant in a building owned by the defendant. Under its lease, the plaintiff is required to obtain the landlord's prior consent in order to assign the lease to another party. However, such prior consent is not required if the net worth of the assignee is at least equal to plaintiff's net worth. The dispute herein arises from the plaintiff's assignment of its lease to the Greenhouse Day Spa, Inc., without the defendant's approval. As a result of this assignment, the defendant claims that, pursuant to the procedures set forth under the lease, it mailed to the plaintiff a notice to cure dated August 14, 2001 advising that plaintiff was in default of the contractual requirement that the defendant's prior consent to an assignment be obtained and giving plaintiff until September 17, 2001 to cure the breach. Thereafter, by notice of termination dated September 24, 2001, the defendant informed the plaintiff that the default had not been cured and that defendant had elected to terminate the lease. The plaintiff then commenced this action seeking an order declaring that it was not required to obtain the defendant's consent in order to assign the lease to Greenhouse and that it is not therefore in default of the terms of the lease. In conjunction with the commencement of this action, the plaintiff submitted to the court an order to show cause for a preliminary injunction preventing the defendant from taking any steps to terminate the lease during the pendency of the action. In signing the order to show cause on October 3, 2001, the court issued a temporary restraining order which tolled the plaintiffs time to cure its alleged default.

In its motion, the plaintiff seeks a Yellowstone injunction. The purpose of a Yellowstone injunction is to allow a commercial tenant facing the threat of termination 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, if any is found, and avoid a forfeiture of the lease. See Long Island Gynecological Services v. 1103 Stewart Avenue Associates Limited Partnership, 224 AD26 591, 593 (2d Dept. 1996). Unless the tenant's application for a Yellowstone injunction is made before its time to cure has expired, the court is unable to grant this relief. See Daashur Associates v. December Artists Apartment Corp., 226 AD2d 114 (1st Dept. 1996).

Here, the plaintiff's time to cure is alleged to have expired as of September 18, 2001. The plaintiff did not, however, seek Yellowstone relief until October 3, 2001. The court is therefore unable to grant a Yellowstone injunction. Although the plaintiff claims that it never received the notice to cure and that its time to cure has not therefore even begun to run, this argument is not relevant to the question of whether a Yellowstone injunction may be issued. If, as plaintiff argues, a notice to cure was not properly sent, then a Yellowstone injunction will serve no purpose since there is no effective cure period to stay. On the other hand, if a proper notice was served, the plaintiff's time to cure expired prior to this court's issuance on October 3, 2001 of a temporary restraining order.

In view of the fact that this court is therefore unable to grant Yellowstone relief, the complaint must be dismissed. See Gold Lang Inc. v. Haskell, 248 AD2d 132 (1st Dept. 1998). As the Court of Appeals has stated, "Civil Court has jurisdiction of landlord tenant disputes . . . and when it can decide the dispute, as in this case, it is desirable that it do so." Post v. 120 E. End Ave. Corp., 62 NY2d 19, 28 (1984). See also Cox v. J.D. Realty Assocs., 217 AD2d 179,181 (1st Dept 1995). In this respect, there is nothing in the plaintiff's papers which suggests that the Civil Court, in a holdover proceeding, would be unable to determine whether a proper notice to cure was mailed as the defendant alleges and, if it were, whether the defendant's prior consent was necessary in order for the plaintiff to assign its lease to Greenhouse. Although this court may have general jurisdiction over this matter, the Appellate Division, First Department has nevertheless observed "that judicial proceedings might be commenced is not a sufficient basis for the exercise of Supreme Court's equitable powers." Cox v. J.D. Realty Assocs., 217 AD2d at 181. Indeed, in Handwerker v. Ensley, 261 A62d 190 (1st Dept 1999) and in Gold Lang, Inc v. Haskell, 248 AD2d at 132, the First Department held that a landlord tenant dispute brought in Supreme Court but resolvable in Civil Court should be dismissed even though no Civil Court action was pending.

Accordingly, the plaintiff's motion is denied and the action is hereby dismissed without prejudice to the plaintiff's assertion of its claim in defense to a holdover proceeding which defendant may choose to bring in Civil Court.

The foregoing constitutes the decision and order of the court.