The situation raises many legal questions, a discussion of which should be helpful to both commercial landlords and tenants who may find themselves in similar situations.
First, what happens in a legal sense once a landlord believes that a tenant is violating the terms of the lease? In general, most violations of a commercial lease will cause the landlord to issue a Notice to Cure. What this means is that the landlord, or their managing agent or attorney, will serve a Thirty Day Notice to Cure on the tenant. This document will formally notify the tenant that it is not in compliance with a material term of its lease, and that the tenant now has thirty days to cure the violation. In the case of Apollo Bagels, the landlord stated in its thirty-day notice that the lease was being violated in that business was being conducted outside of the premises, and that the lines of customers outside the store created a nuisance or unreasonable annoyance, another breach of the lease.
A Notice to Cure then will state that if the violation is not cured within the given time period, then the lease will be terminated, and the commercial tenant would be subject to eviction once an action is brought in landlord-tenant court.
Of course, although the landlord may believe that the tenant has breached the lease, the tenant may disagree with the landlord’s assessment. In the Apollo Bagel case, the bagel store has argued that it is not responsible for the large number of customers who seek to purchase its product, and that it is doing everything possible to organize the lines outside the store so that they are not disruptive, and have even hired guards to keep the lines organized and non-disruptive to pedestrians and traffic in the area.
Legally, what can the tenant do once it receives the notice to cure, when it believes it is not violating the lease terms? Keep in mind that the Notice to Cure generally gives the tenant thirty days to fix the violation. In this situation, a tenant who believes it has not violated its lease can, as Apollo Bagels did, file an action in New York Supreme Court, seeking what is commonly known as a “Yellowstone Injunction.” A Yellowstone injunction is named after a 1968 case, and allows the parties to litigate the issues in the Notice to Cure, while the Court temporarily “suspends” the thirty-day deadline to cure. As courts generally may take longer than thirty days to hear and resolve the issues between the landlord and the tenant, a Yellowstone injunction, when issued by the Court, allows the parties additional time to litigate, and perhaps settle, disputes regarding possible lease violations.
The attorneys for Apollo Bagels sought, and were granted, a Yellowstone injunction by New York State Supreme Court Justice Louis L. Nock. They can now attempt to resolve their dispute with the landlord without being concerned about failing to cure within the thirty day deadline.
Our firm represents both commercial landlords and tenants with respect to alleged violation of lease terms, and welcomes all inquiries, especially when delicious bagels are involved.