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No Sanctions for Sending Tenant Three Day Notice to Cure After Court Issues Yellowstone Injunction: Fucile v. L.C.R. Development, Ltd.

Posted in Breach of Contract, Commercial Real Property, Industry: real estate, Justice Bucaria, Stephen A., Nassau, Yellowstone Injunctions

In an August 12, 2011 decision by Justice Bucaria the court partially granted a motion to dismiss and denied a cross motion for sanctions. The litigation stems from a commercial lease which was assigned to the current tenant. The landlord served the tenant with a notice to cure for failure to pay rent. The tenant then brought a declaratory judgment action and sought (and was granted) a Yellowstone injunction. The landlord then moved to dismiss the entire litigation.

The landlord argued that the statute of limitations had run on the tenant’s breach of contract and reformation claims. The court held that where a tenant challenges the calculation of a rent escalation the cause of action accrues on the date the tenant received constructive knowledge of the landlord’s method of computation. And because the tenant’s claim was brought within six-years of gaining that knowledge, its claim was timely. The court also ruled that a reformation claim must be brought within six-years of the date of the mistake in the contract, and dismissed that claim as untimely.

In addition, months after the commencement of the action the landlord served the tenant with an additional three day notice to cure, seeking the same rent it sought in a prior rent demand. The court found that “since no other action to terminate plaintiffs’ tenancy was taken” the court would not construe the notice as a violation of the Yellowstone injunction and denied plaintiffs’ cross motion for sanctions.

Fucile v. L.C.R. Development, Ltd., Sup Ct, Nassau County, August 12, 2011, Bucaria, J, Index No. 525/11.