170 Tillary Corp. v Gold Tillary Realty, LLC
Attorneys and Parties
Brief Summary
Commercial landlord-tenant dispute over the scope of Yellowstone injunction relief for a rent demand covering taxes, water/sewer charges, and late fees, and alleged insurance/indemnification defaults under a long-term ground lease.
Granted a Yellowstone injunction as to both the December 23, 2021 rent demand and the notice to cure, conditioning relief on the tenant showing readiness and ability to cure the alleged insurance-related defaults.
Yellowstone relief for late fees listed in the rent demand was denied on appeal.
Late fees were indisputably "additional rent" and therefore addressable in a nonpayment summary proceeding that affords the tenant cure protections under RPAPL 751(1) [in a summary nonpayment proceeding, a tenant can avoid eviction by paying the amounts due (rent, interest, and costs) before the warrant issues], obviating the need for Yellowstone relief.
Background
Under a 1999, 48-year commercial lease for 170 Tillary Street, the tenant was responsible for real estate taxes and water/sewer charges (styled as "additional rent") but required to pay them by delivering a certified check to the landlord payable to the relevant city agency. The lease also required insurance naming the landlord as an additional insured, contractor insurance, and indemnification. In 2019, the tenant hired Liftco Elevator Group as GC, which subcontracted NYC Elevator; two NYC Elevator employees were injured in 2020 and sued both tenant and landlord. On December 23, 2021, the landlord served (1) a 15-day rent demand (taxes, water/sewer, and late fees) and (2) a 15-day notice to cure alleging insurance/indemnity defaults. Cure periods were extended to April 8, 2022. The tenant sued in April 2022 and moved for a Yellowstone injunction; the court issued a TRO, then granted Yellowstone relief in September 2022, conditioning it as to the notice to cure. The landlord later moved to vacate or reargue; the court denied that motion in February 2023 and found the tenant had satisfied the September order’s directives.
Lower Court Decision
The Supreme Court, Kings County, granted a Yellowstone injunction tolling the cure periods for both the rent demand and the notice to cure, but required the tenant to demonstrate readiness, willingness, and ability to cure the insurance/indemnification defaults. A later order denied the landlord’s motion to vacate or for leave to reargue and found the tenant had complied with the September directives.
Appellate Division Reversal
The court dismissed as academic the tenant’s cross-appeal challenging the conditions on the Yellowstone injunction because the February 2023 order resolved those issues. The court dismissed the appeal from the denial of reargument as non-appealable. It modified the September 2022 order by denying Yellowstone relief as to late fees in the rent demand, holding those fees are recoverable as additional rent in a nonpayment proceeding with RPAPL 751(1) protections. It affirmed Yellowstone relief as to real estate taxes and water/sewer charges, noting uncertainty whether those items—given the lease’s certified-check-to-city-agency mechanism—could be pursued in a standard nonpayment proceeding and whether RPAPL 751(1) protections would apply, and emphasizing the equitable nature of Yellowstone relief. It also affirmed the denial of the landlord’s motion to vacate the Yellowstone injunction related to the notice to cure, finding no compelling or changed circumstances; the tenant’s insurance and indemnification materials were adequate and, with both the tenant and Liftco having procured proper insurance, no incurable default was shown.
Legal Significance
Clarifies that Yellowstone injunctions may be appropriate for charges labeled as additional rent when lease payment mechanics cast doubt on the availability of a nonpayment summary proceeding and the statutory cure under RPAPL 751(1) [tenant may avoid eviction by tendering amounts due before the warrant issues]. Conversely, where the item (here, late fees) is plainly recoverable as additional rent in a nonpayment proceeding, Yellowstone relief is unnecessary. The decision also underscores the high bar to vacate a Yellowstone injunction—requiring compelling or changed circumstances—and that adequate insurance procurement by a tenant and its contractor can defeat claims of incurable breach.
Yellowstone relief remains available, in equity, where lease terms make it uncertain that a tenant could obtain the RPAPL 751(1) cure in a nonpayment proceeding (e.g., taxes and water/sewer paid via certified check to city agency), but not for straightforward additional rent items like late fees. Efforts to vacate Yellowstone require compelling new circumstances, and tenants who secure proper additional insured coverage (directly and through contractors) can avoid claims of incurable default.