Landlord & Tenant Law

In reversing, the Appellate Division held that the tenant had failed to establish what steps it could or would take to provide retroactive changes in coverage if a court were to conclude that tenant had failed to procure the insurance required by the lease. Similarly, the court indicated that tenant had failed to explain how it would undo the challenged assignment if landlord were to establish that the assignment was not permitted by the lease. Because tenant had not established that it would be able to cure any alleged defects it was not entitled to a Yellowstone injunction. And, because Yellowstone injunctions require a lesser showing than other preliminary injunctions, tenant was also not entitled to any other form of injunctive relief. The court, however, made no determination on the merits of landlord's claims of breach, noting that the merits could be addressed in connection with the claim and counterclaim in this action.

Comment

A commercial tenant who has failed to procure the insurance required by the lease is not entitled to a Yellowstone injunction because the failure is not curable by procuring prospective insurance coverage. For instance, in Rui Qin Chen Juan v 213 W. 28 LLC, 149 A.D.3d 539, the court denied the Yellowstone injunction and held that the tenant's failure to obtain continuous insurance coverage could not be cured by procuring new insurance that would not protect landlord “against the unknown universe of any claims arising during the period of no insurance coverage.”

However, when tenant has continuously carried insurance, tenant may be able to cure a breach by retroactively amending the terms of an existing occurrence policy or by adding retroactive umbrella coverage to existing policies to meet the requirement of the lease. For instance, in Disc. Columbia LLC v. Bogopa-Columbia, Inc., 2017 N.Y. Misc. LEXIS 6100 (Sup. Ct. 1/29/2017), the court granted tenant a Yellowstone injunction, holding that tenant might be able to cure the inadequacy of insurance coverage by obtaining retroactive umbrella coverage in an amendment to the existing policy.