New York Law Review

Tag: Cure Period

  • Waldbaum, Inc. v. Fifth Ave. of Long Island Realty Assocs., 85 N.Y.2d 603 (1995): Exercising Renewal Options During Cure Periods

    Waldbaum, Inc. v. Fifth Ave. of Long Island Realty Assocs., 85 N.Y.2d 603 (1995)

    A tenant’s right to exercise a renewal option in a lease is contingent upon substantial compliance with the lease’s cure/default provisions, requiring reasonable diligence in undertaking and completing required restorations, even if a Yellowstone injunction is in place.

    Summary

    Waldbaum, Inc. sought to renew its lease with Fifth Avenue of Long Island Realty Associates. A dispute arose over whether Waldbaum was in default for failing to maintain the premises, triggering a cure period. Waldbaum obtained a Yellowstone injunction to prevent lease termination while addressing the alleged defaults. The core issue was whether Waldbaum could exercise its renewal option while still in the process of curing the defaults. The Court of Appeals held that the Yellowstone injunction didn’t automatically extend the renewal option. Waldbaum’s right to renew depended on its substantial compliance with the lease’s cure provisions, meaning it had to demonstrate reasonable diligence in addressing the defaults.

    Facts

    Waldbaum’s operated a supermarket in a shopping center owned by Fifth Avenue since 1959. In 1978, they entered a restated lease with renewal options, contingent on the tenant not being in default at the time of exercising the option or at the commencement of the renewal term. In October 1991, Fifth Avenue issued a notice of default, alleging Waldbaum’s failed to comply with applicable laws and maintain a “first-class facility,” citing violations from inspections. Waldbaum’s responded by seeking a Yellowstone injunction to toll the cure period.

    Procedural History

    Waldbaum’s initiated an action seeking a Yellowstone injunction. The Supreme Court initially granted a preliminary injunction, extending the cure period. A Referee was appointed to determine if Waldbaum’s was in breach and to oversee the cure. The Referee found Waldbaum’s in breach and recommended a further extension for renovations. The Supreme Court confirmed the Referee’s report, extending the renewal option. Fifth Avenue’s motion for reargument led to an order for an evidentiary hearing. The Appellate Division modified the Supreme Court’s order, holding the Yellowstone injunction tolled the cure period for the renewal option clause. The Supreme Court then limited the hearing to whether a cure was achieved within six months. The Court of Appeals granted leave to appeal.

    Issue(s)

    1. Whether a Yellowstone injunction automatically extends a tenant’s option to renew a lease until the completion of a cure of existing defaults.
    2. Whether a tenant’s right to exercise a renewal option is contingent upon substantial compliance with the cure/default provisions of the lease, requiring reasonable diligence in undertaking and completing restoration of the leased premises.

    Holding

    1. No, because the Yellowstone injunction only prevents premature cancellation of the lease to allow for a determination of breach and cure requirements; it doesn’t relieve the tenant of complying with conditions precedent to renewal.
    2. Yes, because timely compliance with cure provisions enables a tenant to exercise the renewal option, contingent upon their reasonable diligence in commencing, continuing, and successfully completing the necessary restoration.

    Court’s Reasoning

    The court stated that “[t]he Yellowstone injunction only served to forestall defendant from prematurely cancelling the lease during its initial term, in order to afford an opportunity for plaintiff to obtain a judicial determination of its breach and what would be required to cure it, and bring plaintiff in compliance with the terms of the lease.” The court emphasized that the injunction does not negate the need to meet the conditions precedent for renewal, namely not being in default. However, because the breach was not curable within 30 days, the court acknowledged that Waldbaum’s had an extended period to cure, provided they exercised reasonable diligence. Referencing Jefpaul Garage Corp. v Presbyterian Hosp., 61 NY2d 442, 446, the court reasoned that timely compliance with the cure provision would enable Waldbaum’s to exercise its renewal option. The court also considered Waldbaum’s good-faith reliance on the interpretation of the lease and its substantial investment in renovations. The court invoked its equity power to avoid forfeiture of Waldbaum’s improvements and goodwill, noting Fifth Avenue was not prejudiced since the premises were restored. The Court held that Waldbaum’s entitlement to renew hinged on substantial compliance with the lease’s cure/default provisions, requiring reasonable diligence in restoring the premises. Therefore, the case was remitted to Supreme Court for an evidentiary hearing on this issue.

  • Nestor v. Diamond, 79 N.Y.2d 490 (1992): RPAPL 753(4) Cure Applies in Supreme Court Ejectment Actions

    Nestor v. Diamond, 79 N.Y.2d 490 (1992)

    RPAPL 753(4), which allows a tenant to cure a lease violation within ten days to avoid eviction, applies to ejectment actions commenced in the Supreme Court, not just summary proceedings in Civil Court.

    Summary

    This case addresses whether a tenant can utilize RPAPL 753(4) to cure a lease breach in an ejectment action brought in Supreme Court, or if that remedy is limited to summary proceedings in Civil Court. The plaintiff, a cooperative apartment owner, sought to eject the defendant tenants for installing a washing machine without permission. The Court of Appeals held that RPAPL 753(4) applies to ejectment actions in Supreme Court, reasoning that the statute is remedial and should be liberally construed to allow tenants to cure breaches and remain in possession. The Court also denied the plaintiff’s claim for attorney’s fees, as she did not prevail on the central issue of possession.

    Facts

    The defendant, Helene Diamond, resided in a rent-stabilized apartment since 1965. The plaintiff, Marianne Nestor, purchased the apartment in 1982 subject to the defendant’s tenancy. In 1983, the plaintiff served notices to cure on the defendants for installing a washing machine and associated plumbing without the landlord’s consent. In 1985, the plaintiff initiated an ejectment action in Supreme Court, alleging breach of the lease.

    Procedural History

    The Supreme Court found a technical breach of the lease but granted the defendant time to cure the violation. The Appellate Division affirmed, holding that RPAPL 753(4) was available in an ejectment action in Supreme Court. The New York Court of Appeals granted leave to appeal.

    Issue(s)

    Whether RPAPL 753(4), which allows a tenant to cure a lease violation to avoid eviction, applies to ejectment actions commenced in the Supreme Court.

    Holding

    Yes, because RPAPL 753(4) is a remedial statute that should be liberally construed to permit tenants to cure lease violations and remain in possession, regardless of whether the action is brought in Civil Court as a summary proceeding or in Supreme Court as an ejectment action.

    Court’s Reasoning

    The Court reasoned that RPAPL 753(4) is procedural and remedial and should be liberally construed to spread its beneficial effects as widely as possible. The statute aims to allow tenants to remain in possession by curing violations after adjudication and obviates the need for tenants to seek a Yellowstone injunction. The Court rejected the plaintiff’s argument that the reference to “warrant” in the statute limits its applicability to Civil Court summary proceedings, stating that such a construction would frustrate the statute’s purpose. The Court quoted Killington Investors v. Leino, 148 AD2d 334, 336, stating that a residential tenant who forebears from commencing a declaratory judgment, believing that he [or she] can obtain complete relief in the Civil Court, would be deprived of the benefit of the statute if the landlord unexpectedly commences an action for ejectment in Supreme Court instead of a summary holdover proceeding in the Civil Court, if we were to hold that RPAPL 753 (4) [does] not apply. The result would clearly frustrate the very purpose underlying the statute. The Court also noted the Supreme Court’s broad constitutional jurisdiction, which includes “‘all cases of every description in law and equity, from the most important and complicated to the most simple and insignificant’.” The Court concluded that the Legislature’s creation of new remedies tracked to a particular court does not divest the Supreme Court of its general power. Finally, the Court denied the plaintiff’s claim for attorney’s fees, as she did not prevail on the central issue of obtaining a possessory judgment, stating that Ordinarily, only a prevailing party is entitled to attorney’s fees.

  • Post v. 120 East End Avenue Corp., 62 N.Y.2d 19 (1984): Impact of RPAPL 753(4) on Yellowstone Injunctions

    62 N.Y.2d 19 (1984)

    RPAPL 753(4) grants residential tenants a statutory right to cure lease violations within ten days after a court determination in a summary proceeding, potentially limiting the need for a Yellowstone injunction.

    Summary

    This case addresses the interplay between Yellowstone injunctions and RPAPL 753(4), which provides residential tenants in New York City a ten-day stay to cure lease violations after an adverse judgment in a summary proceeding. The plaintiff, a psychiatrist, sought a Yellowstone injunction to prevent the termination of his lease based on alleged violations of residential use covenants. The court considered whether the newly enacted RPAPL 753(4) negated the need for a Yellowstone injunction. The Court of Appeals held that RPAPL 753(4) effectively allows Civil Court to impose a permanent injunction barring forfeiture of the lease if the tenant cures within the statutory period, but remitted the case to determine if the tenant could obtain complete relief in Civil Court.

    Facts

    The plaintiff, a psychiatrist, used his residential apartment to see patients after vacating his private office.
    The defendant landlord sent notices to the plaintiff asserting that this use violated the lease’s residential use clause. The landlord subsequently issued a notice of termination of the lease if the violation wasn’t cured by a specific date. Before the cure period expired, the plaintiff initiated a Supreme Court action seeking declaratory and injunctive relief to prevent the lease termination.

    Procedural History

    The plaintiff obtained a temporary restraining order in Supreme Court.
    The defendant cross-moved to dismiss the complaint.
    The Supreme Court denied the defendant’s motion and granted the plaintiff a Yellowstone preliminary injunction.
    The Appellate Division affirmed, considering RPAPL 753(4), but differed on whether the violation could be cured within the statute’s ten-day period.
    The Court of Appeals granted leave to appeal.

    Issue(s)

    Whether RPAPL 753(4) eliminates the need for a Yellowstone injunction by providing sufficient protection to tenants facing lease termination for alleged violations?

    Holding

    No, not necessarily. The Court of Appeals reversed and remitted the matter. While RPAPL 753(4) provides a mechanism for tenants to cure lease violations after a determination in Civil Court, the statute’s applicability depends on whether the tenant can obtain complete relief in Civil Court. If the tenant cannot obtain complete relief in Civil Court, the jurisdiction of Supreme Court is still available because “the tenant is unable to make the necessary showing to invoke the equitable powers of Supreme Court.”

    Court’s Reasoning

    The court reasoned that RPAPL 753(4) was intended to provide tenants with an opportunity to cure lease violations even after a court determination, effectively granting them what a Yellowstone injunction would provide. The Court of Appeals interpreted RPAPL 753(4) as “impressing its terms on residential leases and, in effect, authorizing Civil Court at the conclusion of summary proceedings to impose a permanent injunction in favor of the tenant barring forfeiture of the lease for the violation in dispute if the tenant cures within 10 days.” The court acknowledged that this interpretation limits the holding in First Nat. Stores v Yellowstone Shopping Center, where failure to obtain a stay resulted in lease termination. The court emphasized the policy benefits of resolving landlord-tenant disputes in Civil Court, and avoiding the delays associated with Supreme Court actions and pretrial proceedings. However, the court clarified that Supreme Court jurisdiction remains available if the tenant cannot obtain complete relief in Civil Court. Because the facts regarding the curability of the violation within ten days were not fully developed, the court remitted the case to Supreme Court for further proceedings. The court also cited the general rule that “a court applies the law as it exists at the time of appeal, not as it existed at the time of the original determination.”

  • Chinatown Apartments, Inc. v. Chu Cho Lam, 51 N.Y.2d 786 (1980): Sufficiency of Notice to Terminate Lease

    Chinatown Apartments, Inc. v. Chu Cho Lam, 51 N.Y.2d 786 (1980)

    A notice to terminate a lease must adequately describe the alleged violation and specifically reference the lease provisions that have been breached to provide the tenant with a reasonable opportunity to cure.

    Summary

    Chinatown Apartments, Inc. sought to evict Chu Cho Lam for erecting a “partition” in violation of his lease. However, Lam had built a freestanding “cube” instead. The notice to terminate cited lease clauses but failed to show how they prohibited the cube. The court held the notice was insufficient because it misidentified the structure and failed to link it to specific lease violations, thus not giving Lam proper notice to cure as required by the lease. The amendment to the dispossess petition did not retroactively cure the defective notice.

    Facts

    Chu Cho Lam, a tenant, constructed a freestanding, cube-like structure in his apartment. Chinatown Apartments, Inc., the landlord, served Lam with a “Notice of Intention to Terminate Occupancy,” alleging that he had erected a “partition” in violation of specific clauses in the lease. The notice demanded that Lam cure the alleged breach within 10 days. The notice cited several lease covenants, but none specifically prohibited the erection of a freestanding structure like the cube.

    Procedural History

    The landlord, Chinatown Apartments, Inc. initiated a dispossess proceeding against the tenant, Chu Cho Lam, based on the notice to terminate. The trial court conducted an on-site inspection and allowed the landlord to amend the petition to describe the structure as a “cube-shaped wooden and plasterboard structure.” The trial court also noted that the cube violated city health and safety ordinances. The trial court ultimately dismissed the petition. The Appellate Division affirmed. The New York Court of Appeals affirmed the Appellate Division’s order.

    Issue(s)

    Whether a notice to terminate a lease is sufficient when it (1) misidentifies the alleged violation (a “partition” instead of a “cube”) and (2) fails to specify how the tenant’s actions violated any specific prohibition in the lease.

    Holding

    No, because the notice failed to adequately describe the violation and link it to specific lease provisions, thus failing to provide the tenant with a fair opportunity to cure. The subsequent amendment of the dispossess petition could not retroactively cure the defective notice.

    Court’s Reasoning

    The Court of Appeals focused on the sufficiency of the notice, emphasizing that it was a condition precedent to terminating the tenancy. The Court reasoned that even if the misidentification of the structure as a “partition” was not fatal, the failure to cite any specific lease provision prohibiting the erection of the cube was a critical defect. The Court stated that “[s]ince respondent could not be expected to take remedial action by removing the ‘cube’ unless his landlord first demonstrated that such remedial action was required by the lease, the omission in the notice must be considered a fatal defect.” The Court highlighted that the tenant must understand what actions are required to cure the breach based on the lease terms. The subsequent amendment to the petition clarifying the nature of the structure was irrelevant because it could not retroactively validate a deficient notice. The Court also dismissed the trial court’s observation about health and safety ordinances because the dispositive issue was the sufficiency of the termination notice under the lease terms.