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Court Grants Yellowstone Injunction Tolling Cure Period In Cooperative-Shareholder Dispute

Wisoff v. 170-176 West 89th St. Apt. Corp., 2014 N.Y. Misc. LEXIS 4688, 2014 N.Y. Slip Op. 32773(U) (Sup. Ct. N.Y. Co. Oct. 21, 2014), is another recent case dealing with cure periods in a dispute between a cooperative and tenant-shareholders.  The tenant-shareholder plaintiffs in this case purchased their apartment in 1989.  Soon after purchasing, they installed a second bathroom within the unit, which they claim had board approval.  In 2013, the board of directors issued a notice of default alleging that the tenant-shareholders had “illegally expanded their apartment by annexing a portion of the common area and incorporating it into the subject unit and that the plaintiffs created an illegal second apartment occupied by a tenant.”  The notice allowed 30 days for the tenant-shareholders “to remove the tenant and restore the apartment to its original size and configuration.”


The tenant-shareholders sued the cooperative.  The next day, the cooperative served the tenant-shareholders with a 30-day notice to cure.  The notice to cure asserted multiple violations of the proprietary lease, including “that plaintiffs made unauthorized alterations and created an additional and illegal apartment adjacent to their own, which they rent out to a tenant in violation of law and the terms of the proprietary lease.”  The cooperative further alleged that the tenant-shareholders constructed an unauthorized bathroom, obstructed hallways with personal property, and permitted their dogs to roam in and soil common areas.  The tenant-shareholders disputed these allegations.


The tenant-shareholders moved for a “Yellowstone injunction” tolling their time to cure the defaults alleged in the board’s notice, or alternatively for a preliminary injunction against the board’s terminating their proprietary lease.  The tenant-shareholders asserted that they have meritorious defenses to the violations alleged by the board, but were prepared to cure any violations that the court might ultimately hold did exist.  The court observed that while this sort of relief is generally not necessary for residential tenants in New York City because a 10-day cure period is allowed by statute, this statute “does not limit Yellowstone where, as here, an action seeking a judgment declaring the parties’ rights and obligations under a proprietary lease remains pending,” but the lease has not been terminated.  After considering “the clear threat of termination of [the] proprietary lease and forfeiture of [the] cooperative shares, the timeliness of the plaintiffs’ application, and their desire to cure any breach,” the court granted a Yellowstone injunction tolling the running of the cure period so long as plaintiffs paid their maintenance during the proceedings.