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Waiving the Right to <i>Yellowstone</i> Injunctive Relief
In a case of first impression, and after it decided public policy would not be offended, New York's Appellate Division, Second Department, decided earlier this year that commercial tenants may contractually waive the right to seek a Yellowstone injunction in 159 MP Corp. v. Redbridge Bedford, 160 A.D.3d 176 (N.Y. App. Div., 2nd Dep't, 1/31/18). A Yellowstone injunction is derived from the 1968 New York high court case of First National Stores v. Yellowstone Shopping Center, 21 N.Y.2d 630, and it is actually a temporary restraining order (TRO) that preserves the status quo, preventing the landlord from evicting the tenant during the pendency of judicial proceedings concerning the underlying issues between the parties.
The 159 MP Corp. decision is not without controversy, as in certain circumstances it might leave some tenants in limbo, not knowing their rights and responsibilities yet unable to seek clarification from the courts. Commercial landlords and tenants negotiating leases need to understand 159 MP Corp. and proceed with caution — or with abandon, as the case may be.
The Yellowstone Injunction, Explained
In Yellowstone, a case decided 50 years ago, the landlord, in accordance with the terms of the lease, presented the tenant with a notice to cure that gave it 10 days to come into compliance, after which the landlord could enter and evict. The “cure” required was the installation of a sprinkler system that the fire department had ordered installed. The tenant believed that it was the landlord's responsibility to install the sprinkler system, so instituted a declaratory judgment action to settle that question. The tenant later also asked for an injunction prohibiting the landlord from evicting, but did not ask for a TRO. The 10 days allowed for cure passed as all of this was transpiring and the landlord moved to evict the tenant. The court thereafter declined to assert jurisdiction over the matter.
On appeal to the intermediate appellate court, it was determined that the tenant was the one who should in fact have installed the sprinkler system. However, also finding that the tenant had tried in good faith to settle the matter prior to eviction, the court used its equitable powers to permanently enjoin the landlord from evicting the tenant over the issue of the sprinkler system so long as the tenant made sure that it was installed within 20 days of the court's order.
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