Commercial Division Blog

Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: February 27, 2016

Yellowstone Injunction Denied Because of Defective Notice to Cure

On February 8, 2016, Justice Ramos of the New York County Commercial Division issued a decision in Lucky Dollar, Inc. v. Mount Calvary Pentecostal Church, 2016 NY Slip Op. 30259(U), granting a Yellowstone injunction because of deficiencies in the notice to cure, explaining:

The purpose of a notice to cure is to apprise the tenant of claimed defaults in its obligations under the lease and of the forfeiture and termination of, the lease if those defaults are not cured within a set period. The notice to cure must be unequivocal and unambiguous. Inasmuch as service of a proper notice to cure is a condition precedent to eviction under the lease, a deficient notice deprives the landlord of a predicate for reclaiming possession of the premises.

(Internal quotations and citations omitted) (emphasis added).

The court went on to explain why the notice was deficient. First, it failed to unequivocally and unambiguously inform the tenant of how it had violated the lease. Second, the court held that even if the notice had been proper in explaining how the lease had been violated, it was still deficient because it did not unequivocally and unambiguously inform the tenant of how to cure the violation, explaining:

A tenant’s failure to maintain adequate general liability insurance coverage exposes the landlord to an unknown universe of claims arising during the period of inadequate insurance coverage. A tenant may cure an alleged default arising from inadequate occurrence-based insurance coverage by retroactively amending the terms of coverage so that it is consistent with the lease. Had the Notice to Cure adequately alleged [the tenant’s] violation of Section 2(a) of the Rider, it still does not unequivocally and unambiguously inform [it] of the conduct required to prevent eviction. The Notice to Cure states that [the tenant] may prevent eviction by procuring an insurance policy that complies with the terms of the lease agreement, which includes the aforementioned requirement of $1,500,000.00 in general liability insurance. Such conduct would be insufficient to prevent eviction pursuant to the termi of Section 2(a). In order to prevent eviction pursuant to an effective notice to cure, [the tenant] would not only have to procure a general liability insurance policy that covers $1,500,000 per single risk and $500,000 property damage, single risk, but would also have to retroactively amend the terms of its inadequate past insurance coverage, so that the coverage is consistent with the Lease and does not expose the [the landlord] to an unknown universe of claims. By failing to unequivocally and unambiguously state the conduct required to prevent eviction, the [landlord] prejudiced [the tenant’s] right to cure.

(Internal quotations and citations omitted) (emphasis added).

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