The Second Department, in a full-fledged opinion by Justice Dillon, over an extensive dissenting opinion, determined the waiver-of-declaratory-relief clause in the commercial leases was enforceable and precluded both the plaintiffs’ declaratory judgment action and the availability of a Yellowstone injunction (which would have stayed termination of the lease while the merits are considered). Although not raised below, the appellate court had the authority to consider whether the waiver violated public policy (no public policy violation found). The plaintiffs’ (tenants’) declaratory judgment and Yellowstone injunction actions were in response to the landlord’s notice to cure, which gave the tenants’ 15 days to cure certain alleged lease violations before termination of the leases. The waiver clause included a statement that the parties intended all disputes to be dealt with in summary proceedings:
Paragraph 67(H) in the rider of each lease provided that the tenant: “waives its right to bring a declaratory judgment action with respect to any provision of this Lease or with respect to any notice sent pursuant to the provisions of this Lease. Any breach of this paragraph shall constitute a breach of substantial obligations of the tenancy, and shall be grounds for the immediate termination of this Lease. It is further agreed that in the event injunctive relief is sought by Tenant and such relief shall be denied, the Owner shall be entitled to recover the costs of opposing such an application, or action, including its attorney’s fees actually incurred, it is the intention of the parties hereto that their disputes be adjudicated via summary proceedings.” * * *
… “[W]here a contract provision is arguably void as against public policy, that issue may be raised for the first time at the Appellate Division by a party, or by the court on its own motion” … . We therefore reach the merits of the public policy issue raised on appeal. * * *
Here, the parties were sophisticated entities that negotiated at arm’s length and entered into lengthy and detailed leases defining each party’s rights and obligations with great apparent care and specificity. 159 MP Corp. v Redbridge Bedford, LLC, 2018 NY Slip Op 00537, Second Dept 1-31-18
LANDLORD-TENANT (DECLARATORY RELIEF, YELLOWSTONE INJUNCTION, CLAUSE IN THE COMMERCIAL LEASES WHICH WAIVED THE AVAILABILITY OF DECLARATORY RELIEF WAS VALID AND ENFORCEABLE AND EXTENDED TO PRECLUDE THE AVAILABILITY OF A YELLOWSTONE INJUNCTION IN THIS LEASE TERMINATION PROCEEDING, WHETHER WAIVER VIOLATED PUBLIC POLICY, ALTHOUGH NOT RAISED BELOW, PROPERLY CONSIDERED ON APPEAL (FIRST DEPT))/CONTRACT LAW (LANDLORD-TENANT, LEASES, DECLARATORY RELIEF, YELLOWSTONE INJUNCTION, CLAUSE IN THE COMMERCIAL LEASES WHICH WAIVED THE AVAILABILITY OF DECLARATORY RELIEF WAS VALID AND ENFORCEABLE AND EXTENDED TO PRECLUDE THE AVAILABILITY OF A YELLOWSTONE INJUNCTION IN THIS LEASE TERMINATION PROCEEDING, WHETHER WAIVER VIOLATED PUBLIC POLICY, ALTHOUGH NOT RAISED BELOW, PROPERLY CONSIDERED ON APPEAL (FIRST DEPT))/YELLOWSTONE INJUNCTION (LANDLORD-TENANT, CLAUSE IN THE COMMERCIAL LEASES WHICH WAIVED THE AVAILABILITY OF DECLARATORY RELIEF WAS VALID AND ENFORCEABLE AND EXTENDED TO PRECLUDE THE AVAILABILITY OF A YELLOWSTONE INJUNCTION IN THIS LEASE TERMINATION PROCEEDING, WHETHER WAIVER VIOLATED PUBLIC POLICY, ALTHOUGH NOT RAISED BELOW, PROPERLY CONSIDERED ON APPEAL (FIRST DEPT))/DECLARATORY JUDGMENT (WAIVER, LANDLORD-TENANT, CLAUSE IN THE COMMERCIAL LEASES WHICH WAIVED THE AVAILABILITY OF DECLARATORY RELIEF WAS VALID AND ENFORCEABLE AND EXTENDED TO PRECLUDE THE AVAILABILITY OF A YELLOWSTONE INJUNCTION IN THIS LEASE TERMINATION PROCEEDING, WHETHER WAIVER VIOLATED PUBLIC POLICY, ALTHOUGH NOT RAISED BELOW, PROPERLY CONSIDERED ON APPEAL (FIRST DEPT))/COMMERCIAL LEASES (WAIVER OF DECLARATORY RELIEF, YELLOWSTONE INJUNCTION, CLAUSE IN THE COMMERCIAL LEASES WHICH WAIVED THE AVAILABILITY OF DECLARATORY RELIEF WAS VALID AND ENFORCEABLE AND EXTENDED TO PRECLUDE THE AVAILABILITY OF A YELLOWSTONE INJUNCTION IN THIS LEASE TERMINATION PROCEEDING, WHETHER WAIVER VIOLATED PUBLIC POLICY, ALTHOUGH NOT RAISED BELOW, PROPERLY CONSIDERED ON APPEAL (FIRST DEPT))/WAIVERS (LANDLORD-TENANT, COMMERCIAL LEASES, CLAUSE IN THE COMMERCIAL LEASES WHICH WAIVED THE AVAILABILITY OF DECLARATORY RELIEF WAS VALID AND ENFORCEABLE AND EXTENDED TO PRECLUDE THE AVAILABILITY OF A YELLOWSTONE INJUNCTION IN THIS LEASE TERMINATION PROCEEDING, WHETHER WAIVER VIOLATED PUBLIC POLICY, ALTHOUGH NOT RAISED BELOW, PROPERLY CONSIDERED ON APPEAL (FIRST DEPT))/APPEALS (CONTRACT LAW, PUBLIC POLICY, CLAUSE IN THE COMMERCIAL LEASES WHICH WAIVED THE AVAILABILITY OF DECLARATORY RELIEF WAS VALID AND ENFORCEABLE AND EXTENDED TO PRECLUDE THE AVAILABILITY OF A YELLOWSTONE INJUNCTION IN THIS LEASE TERMINATION PROCEEDING, WHETHER WAIVER VIOLATED PUBLIC POLICY, ALTHOUGH NOT RAISED BELOW, PROPERLY CONSIDERED ON APPEAL (FIRST DEPT))/PUBLIC POLICY (APPEALS, CONTRACTS, CLAUSE IN THE COMMERCIAL LEASES WHICH WAIVED THE AVAILABILITY OF DECLARATORY RELIEF WAS VALID AND ENFORCEABLE AND EXTENDED TO PRECLUDE THE AVAILABILITY OF A YELLOWSTONE INJUNCTION IN THIS LEASE TERMINATION PROCEEDING, WHETHER WAIVER VIOLATED PUBLIC POLICY, ALTHOUGH NOT RAISED BELOW, PROPERLY CONSIDERED ON APPEAL (FIRST DEPT))