Tenant that Doesn’t Want to Cure Breach Not Entitled to Injunction

Facts: The tenant, the grocery store chain Gristede’s, asked the owner to assign its lease to Bayou Brother’s Food Corp. The owner refused, based on Gristede’s alleged failure to pay rent and the fact that Bayou was not a “high quality chain grocery chain store,” as the lease required.

Gristede’s sent the owner a Demand to Arbitrate, and the owner responded with a Notice of Default. Gristede’s then moved for a Yellowstone injunction—a court order keeping the owner from taking steps to terminate the lease while the court action was pending.

Decision: The court denied Gristede’s request for a Yellowstone injunction.

Reasoning: The court stated that there was no basis for believing that Gristede’s wanted to cure its violation of the continuous operation provision of the lease—something required for a court to grant a Yellowstone injunction. The court based that ruling on several things, the most significant of which was the fact that Gristede’s representatives seemed primarily interested in closing its store and assigning its lease.

The court also noted that there is no basis for a Yellowstone injunction if a tenant seeks one after the expiration of the period during which the tenant can cure its default. Gristede’s applied for a Yellowstone injunction after the cure period expired. The court noted that the lease—not service of a termination notice—determines the period during which a tenant can cure a breach.

• Gristede’s Operating Corp./Namdor Inc. v. Centre Financial LLC, August 2007