Lease agreement; breach; Yellowstone injunction; timely motion; service of process
By Krisdy Portugal | Staff Writer
Plaintiff-landlord entered into a commercial lease agreement with Pi Associates and James Pi (“Mr. Pi”). The lease provided that Pi Associates would take possession of the premises on August 2011, and that “Neither [Pi Associates] nor Mr. Pi shall assign its or his rights and obligations under this Agreement without the consent of Lessor . . .”
In May 2011—prior to possessing the commercial real properties—Pi Associates assigned the lease to 3909 Main Street, LLC (“3909 Main St.”). Then, in June 2011, 3909 Main St. subleased the property to a third-party.
Neither Pi Associates nor 3909 Main St. sought Plaintiff’s consent prior to the assignment and the sublease.
When Plaintiff discovered the breach, on October 7, 2014, Plaintiff served Pi Associates, Mr. Pi, and 3909 Main St. (collectively the “Defendants”) with eight separate default notices for failing to comply with the lease terms. The lease terms required tenants to seek the landlord’s consent prior to assigning the lease. Plaintiff required Pi Associates and Mr. Pi to cure each default within 15 days of receiving the default notices. Since no cure was provided, on December 1, 2014, Plaintiff served Defendants with four notices of termination of the lease. 3909 Main St. did not commence this action for a Yellowstone injunction until December 4, 2014.
Defendants filed a motion for Yellowstone injunction on December 4, 2014 to protect their investment in the leasehold by obtaining a stay tolling the cure period, and avoiding a forfeiture of the lease.
The court denied the motion for a Yellowstone injunction because the motion was untimely.
The court rejected Defendants’ contention that the default notices were procedurally invalid because they listed erroneous addresses. Instead, the court looked to the language of the lease which provided: “All notices . . . required or permitted hereunder shall be in writing and shall be deemed delivered . . . to the last known address of the parties thereto.” Plaintiff submitted proof that notices were delivered to Defendants’ last known address. Contrary to Defendants’ assertion that they provided Plaintiff with notice of a change of address, the court found that Defendants only informed Plaintiff that they moved to a new location. The email received by Plaintiff, dated June 19, 2013, did not constitute written notice of a change of address. Rather, said email was sent by non-party, Pi Capital Partners LLC, and only informed Plaintiff that Defendants moved to another address. The email did not identify Pi Capital Partners LLC as the agent for either Defendant and did not set forth a new address for either Defendant. Therefore, the service of the notices was found to be procedurally valid.
Because Plaintiff sent the default notices no later than October 13, 2014, the 15-day period in which to cure or move for a Yellowstone injunction expired on October 28, 2014. Defendants did not seek to cure because they failed to seek Plaintiff’s prior consent as to the assignment and sublease, and further, failed to timely file the motion for the injunction.
Riesenburger Props., LLLP v. Pi Assoc., L.L.C., Index No. 709221/2014, 06/01/15 (Ritholtz, J.).