Goodbye 'Yellowstone' Road

Yellowstone injunctions have long constituted important protection for commercial tenants in New York. Originating with the 1968 Court of Appeals decision in First Nat'l Stores v. Yellowstone Shopping Ctr, 21 N.Y.2d 630 (1968), New York courts permit a commercial tenant who has been served with a notice to cure or a notice of a default from its landlord to obtain a stay tolling the cure period and enjoining the landlord from terminating the lease or commencing a summary proceeding. See, e.g., Graubard Mollen Horowitz Pomeranz & Shapiro v. 600 Third Ave. Assocs., 93 N.Y.2d 508, 514 (1999). A Yellowstone injunction thus preserves the status quo while the tenant challenges the validity of the landlord's actions. Yellowstone injunctions are “routinely” granted and courts “accept[] far less than the normal showing required for preliminary injunctive relief.” Post v. 120 E. End Ave., 62 N.Y.2d 19, 25 (1984). Yellowstone injunctions are creatures of case law and not statute or regulation.

Recently, however, New York's Appellate Division, Second Department, acknowledged that commercial landlords may employ a strategy that prevents tenants from exercising Yellowstone rights.

'159 MP Corp.'

In 159 MP Corp. v. Redbridge Bedford, No. 2015-01523, 2018 N.Y. App. Div. LEXIS 557 (2d Dept. Jan. 31, 2018), the Second Department upheld a contractual waiver of the right to bring a declaratory judgment action as enforceable and not violative of public policy. The court determined that by waiving the right to bring a declaratory judgment, the tenants also waived their right to bring a motion for a Yellowstone injunction. Unless a contrary result is reached in New York's highest court, the Court of Appeals, such waivers could begin to become routine in commercial leases.