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HERE THE PLAINTIFFS-TENANTS WERE ENTITLED TO A YELLOWSTONE INJUNCTION WHICH TOLLS THE CURE PERIOD UNTIL A COURT DETERMINES WHETHER THE TENANT HAS ACTUALLY DEFAULTED; PURPOSES OF AND CRITERIA FOR A YELLOWSTONE INJUNCTION CLEARLY EXPLAINED (FIRST DEPT). ​

The First Department reversed Supreme Court and granted plaintiff’s a “Yellowstone” injunction to allow time for a court to determine the nature and status of an ambiguous lease. Supreme Court had erroneously struck the “temporary restraining order” paragraph in plaintiffs-tenants’ order to show cause, which allowed the period to cure the alleged defaults to run out resulting in termination of the lease. The opinion includes a clear explanation of the nature and equitable purpose of a Yellowstone injunction, which is applicable to commercial leases. One of the issue here was whether the lease was commercial or residential:

A Yellowstone injunction “maintains the status quo so that a commercial tenant, when confronted by a threat of termination of its lease, may protect its investment in the leasehold by obtaining a stay tolling the cure period so that upon an adverse determination on the merits the tenant may cure the default and avoid a forfeiture” … .

… [T]he Yellowstone injunction tolls the relevant cure period, thereby preventing the termination of the lease … . With the Yellowstone injunction in place, the tenant can litigate with some confidence: if the tenant prevails in the underlying dispute with the landlord, the tenant walks away from the litigation with the lease intact; if the tenant loses the underlying dispute, the tenant can cure the demonstrated lease defaults before the expiration of the remaining cure period … .

* * * Yellowstone relief is a unique injunction. Unlike a standard preliminary injunction that can be granted only upon a demanding three-part showing of a likelihood of success on the merits, irreparable injury, and that the equities favor the party seeking the preliminary injunction, a Yellowstone injunction is granted on “far less” a showing … .

The party seeking Yellowstone relief must demonstrate the following four elements: “(1) It holds a commercial lease; (2) it received from the landlord either a notice of default, a notice to cure, or a threat of termination of the lease; (3) it requested injunctive relief prior to the termination of the lease; and (4) it is prepared and maintains the ability to cure the alleged default by any means short of vacating the premises” … . Wharton-Bickley v 388 Broadway Owners LLC, 2025 NY Slip Op 00802, First Dept 2-11-25

Practice Point: Consult this decision for a clear explanation of the purposes of and the criteria for a Yellowstone injunction.

 

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DEFENDANTS MOTION TO VACATE THE DEFAULT BASED UPON LAW OFFICE FAILURE AND PROOF OF A MERITORIOUS DEFENSE SHOULD HAVE BEEN GRANTED (THIRD DEPT).

The Third Department, reversing Supreme Court, determined defendants motion to vacate the default judgment based upon law office failure should have been granted:

In support of the motion to vacate, defendants affirmed that they had retained former counsel and that he had informed them that he would file an answer, but his office failed to do so. However, they did not become aware of this failure until they were served with the default. Although defendants could have provided stronger support by way of an affirmation from former counsel to better substantiate their claim of law office failure, this is not required. Markedly, plaintiff’s submissions in support of his application for costs — included in the record before this Court — establish that his counsel’s office was aware that defendants were represented. In fact, plaintiff’s counsel’s billing records specifically name former counsel and set forth that he was “attorney for defendant[s].” These billing records further demonstrate that plaintiff’s counsel had conversed with former counsel and been informed that an answer was being prepared. These facts, in conjunction with the short duration between entry of default in July 2023 and the subsequent motion to vacate in September 2023, establish that plaintiff was not prejudiced by the delay, and that defendants’ failure to file an answer was the result of law office failure and not willfulness on the part of defendants … . * * *

“To establish the existence of a potentially meritorious defense, defendants needed only to make a prima facie showing of legal merit, as the quantum of proof needed to prevail on a CPLR 5015 (a) (1) motion is less than that required when opposing a summary judgment motion” … . In consideration of this minimal standard of proof, defendants’ sworn assertions that plaintiff fraudulently induced them to enter the contract and then breached the contract before any breach on their part establishes a potentially meritorious defense … . Darling v Fernette, 2025 NY Slip Op 00507, Third Dept 1-30-25

Practice Point: Consult this decision for the criteria for vacating a default judgment based upon law officer failure, and for demonstrating a meritorious defense to a breach of contract action.

 

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EVEN THOUGH THE COOPERATIVE LANDLORD WON IN THE UNDERLYING LITIGATION AGAINST A SHAREHOLDER TENANT, THE LEASE PROVISION REQUIRING THE TENANT TO PAY ATTORNEY’S FEES REGARDLESS OF DEFAULT OR MERIT WAS UNENFORCEABLE AS UNCONSCIONABLE (FIRST DEPT). ​

The First Department, reversing Supreme Court, determined the lease provision which provides for attorney’s fees regardless of default or merit unenforceable as unconscionable:

Because the lease provides for attorneys’ fees regardless of default or merit, in a dispute between a residential co-op [The Dakota] and a shareholder tenant [Fletcher] , we find this provision to be unenforceable as unconscionable … . The lease is not “silent as to whether such right is contingent upon the merits of plaintiff’s action” … , but explicitly provides for attorneys’ fees whenever the tenant sues The Dakota. This interpretation is not changed by the description of the fees as “reasonable” … . “Bearing in mind that agreements providing for payment of attorneys’ fees should be construed strictly” … , we will not rewrite the parties’ agreement simply because The Dakota prevailed in the underlying litigation … .”To enforce such a provision would produce an unjust result because it would dissuade aggrieved parties from pursuing litigation and preclude tenant-shareholders from making meaningful decisions about how to vindicate their rights in legitimate instances of landlord default” … . Kasowitz, Benson, Torres & Friedman, LLP v JPMorgan Chase Bank, N.A., 2025 NY Slip Op 00396, First Dept 1-28-25

Practice Point: A lease provision which requires a tenant to pay attorney’s fees regardless of default or merit is unconscionable and will not be enforced even where the landlord won the underlying litigation.

 

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IT WAS SUFFICIENTLY ALLEGED THE RELEASE WAS INDUCED BY FRAUD; THE COMPLAINT SHOULD NOT HAVE BEEN DISMISSED (FIRST DEPT).

The First Department, reversing Supreme Court, determined the complaint should not have been dismissed on the basis of the release because it was sufficiently alleged the release was induced by fraud:

Plaintiff’s complaint sufficiently alleges that the general release that was the basis for dismissal of the complaint was fraudulently induced based on defendant’s misrepresentations upon which plaintiff justifiably relied … . For example, the complaint alleges, among other things, that defendant induced plaintiff’s signature on the release by stating that if plaintiff did not sign, defendant would withdraw a New York Gaming Commission complaint that plaintiff had urged defendant to file, when, in fact, there was no complaint to withdraw because defendant had falsely represented he had filed the complaint.

Upon a “detailed analysis of whether plaintiff had sufficiently alleged the existence of overreaching or unfair circumstances such that enforcement of the general release[] would be inequitable” … , we concluded that dismissal of the complaint based on the release was not warranted. Jones v Jacobs, 2025 NY Slip Op 00377, First Dept 1-23-25

Practice Point: Here the complaint sufficiently alleged the release was induced by fraud. The complaint should not have been dismissed based on the release.​

 

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PRIVATE CONTRACT DISPUTES, UNIQUE TO THE PARTIES, ARE NOT COVERED BY GENERAL BUSINESS LAW 349 OR 35O WHICH ARE APPLICABLE ONLY TO CONSUMER-ORIENTED CONDUCT (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined that a General Business Law section 349 or 350 action must be based upon consumer-oriented conduct, not, as here, on a unique contract between private parties:

“To successfully assert a claim under General Business Law § 349 or § 350, a party must allege that its adversary has engaged in consumer-oriented conduct that is materially misleading, and that the party suffered injury as a result of the allegedly deceptive act or practice” … . “‘[P]arties . . . must, at the threshold, charge conduct that is consumer oriented'” … . “Private contract disputes, unique to the parties, . . . [do] not fall within the ambit of the statute” … . A “single shot transaction” … , which is “tailored to meet the purchaser’s wishes and requirements” … , “does not, without more, constitute consumer-oriented conduct for the purposes of [General Business Law §§ 349 and 350]” … . Here, the complaint … failed to sufficiently allege that the … defendants engaged in a consumer-oriented deceptive act or practice … . Katsorhis v 718 W. Beech St, LLC, 2025 NY Slip Op 00211, Second Dept 1-15-25

​Practice Point: General Business Law 349 and 350 actions must be based upon consumer-oriented conduct. Private contract disputes, unique to the parties, are not encompassed by General Business Law 349 and 350.

 

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PUNITIVE DAMAGES IN A DECEPTIVE BUSINESS PRACTICES ACTION PURSUANT TO GENERAL BUSINESS LAW 349 (H) ARE LIMITED TO THREE TIMES ACTUAL DAMAGES (CT APP).

The Court of Appeals, affirming the Appellate Division, in a full-fledged opinion by Judge Troutman, over a two-judge concurring opinion, determined the terms of the life insurance policy, which was terminated by the defendant insurer, were unambiguous and enforceable. The General Business Law section 349 (h) cause of action alleging deceptive business practices survived but any punitive damages were limited to three times actual damages. The nature of the life insurance policy and payment scheme are too complex to fairly describe here. The $2 million life insurance policy was issued to an 82-year-old woman. With respect to the available damages in a private General Business Law 349 (h) action, the court wrote:

… [T]he legislature carefully calibrated damages at the time section 349 (h) was enacted. We decline to alter that balance by making available a remedy that goes far beyond what the legislature contemplated. As evidenced by the increased penalties on similar statutes, the legislature will act where it believes current remedies are insufficient. It has not done so here. We therefore conclude that punitive damages in addition to the treble damages delineated in section 349 (h) are unavailable. Hobish v AXA Equit. Life Ins. Co., 2025 NY Slip Op 00183, CtApp 1-14-25

Practice Point: Consult this opinion for an in-depth discussion of the damages available in a private General Business Law 349 (h) deceptive-business-practices action.

 

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THE DEFENDANT HOTEL BOOKING SERVICE, AGODA, COULD NOT BE COMPELLED TO ARBITRATE IN PLAINTIFF’S SLIP AND FALL ACTION AGAINST THE HOTEL; AGODA’S TERMS OF USE LIMITED LIABILITY TO THE BOOKING SERVICES AND EXPRESSLY EXCLUDED LIABILITY FOR PERSONAL INJURY AT THE HOTEL (FIRST DEPT). ​

The First Department, reversing Supreme Court, determined the defendant hotel booking service, Agoda, could not be compelled to arbitrate in this slip and fall action against the hotel booked through Agoda. The terms of use confined Agoda’s potential liability to the booking services and expressly excluded liability for personal injury:

A “party cannot be compelled to submit to arbitration unless the agreement to arbitrate expressly and unequivocally encompasses the subject matter of the particular dispute” … . Where arbitration provisions do not clearly and unequivocally provide that questions about the scope of the arbitration provisions are for the arbitration panel to determine, the threshold question whether the dispute is encompassed within an agreement to arbitrate is for the courts (CPLR 7503[b] …).

The arbitration clause in the terms of use covers “all disputes or claims arising out of or relating to your relationship with Agoda.” The terms of use also define Agoda’s role as providing a platform for individuals to browse information about accommodations and make reservations at accommodations. Furthermore, the terms of use make clear that “Agoda does not in any way . . . own, manage, operate or control” the accommodations and that Agoda will not be liable in damages for any “(PERSONAL) INJURY . . ., OR OTHER DAMAGES, ATTRIBUTABLE TO THE ACCOMMODATION.” Because plaintiff’s claim is one to recover damages for a personal injury caused by the resort’s negligence, it does not arise from or relate to the relationship between plaintiff and Agoda, which was limited to plaintiff’s booking a reservation at the resort, and therefore is not arbitrable … .

As for Agoda’s motion to dismiss, the terms of use constitute documentary evidence under CPLR 3211(a)(1), and the limitation of liability clause in the terms of use definitively disposes of plaintiff’s claim to recover damages from Agoda for personal injury caused by the resort’s alleged negligence … . McWashington v Hyatt Corp., 2025 NY Slip Op 00050, First Dept 1-7-25

Practice Point: Here the hotel booking service’s terms of use expressly excluded liability for plaintiff’s personal injury at the hotel. Therefore the booking service could not be compelled to arbitrate in plaintiff’s slip and fall case.

 

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THE SIX-YEAR STATUTE OF LIMITATIONS BEGAN TO RUN WHEN THE LANDLORD COULD HAVE DEMANDED PAYMENT PURSUANT TO THE LEASE, NOT WHEN THE DEMAND WAS ACTUALLY MADE YEARS LATER (FIRST DEPT).

The First Department, reversing (modifying) Supreme Court, determined the six-year statute of limitations for breach of contract (here, a lease) started running when a demand for payment could have been made, not when the demand was actually made:

… [A]lthough the motion court awarded the entirety of the amounts of unpaid additional rent going back to 2006, the landlord’s inexplicable delay in asserting these counterclaims until September 13, 2019 rendered the amounts that accrued before September 13, 2013 time-barred (CPLR 213[2]). The law is well settled that the statute of limitations on breach of contract claims begin to run “when the party that was owed money had the right to demand payment, not when it actually made the demand” … . Because the limitations period cannot be extended “by simply failing to make a demand” … , the judgment must be reduced to include only those amounts that accrued on or after September 13, 2013, and we remand for the calculation of the proper award and commensurate reduction in statutory interest. Abarrotes Mixteca Corp., Inc. v Brisk, 2025 NY Slip Op 00034, First Dept 1-7-25

Practice Point: For a breach of contract, the statute of limitations begins to run when the party can demand payment pursuant to the contract, not when the demand is actually made. The statute of limitations cannot be extended by failing to make a demand.

 

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PLAINTIFF WAS INJURED IN A LYFT CAR WHICH HAD BEEN ORDERED BY HIS FRIEND THROUGH THE FRIEND’S ACCOUNT; BECAUSE PLAINTIFF HAD SCROLLED THROUGH AND AGREED TO LYFT’S TERMS OF SERVICE, WHETHER PLAINTIFF WAS BOUND BY THE ARBITRATION CLAUSE MUST BE DETERMINED BY THE ARBITRATOR (FIRST DEPT).

The First Department, reversing Supreme Court, determined plaintiff, who used another’s Lyft account to order transportation, and who was injured in an accident involving the Lyft car, was subject to an arbitration provision in the contract between Lyft and the account-holder. Whether the plaintiff was bound by the arbitration clause was deemed to be an issue to be decided by the arbitrator:

Arbitration must be compelled because plaintiff was a party to an arbitration agreement with Lyft that expressly delegated the threshold question of arbitrability to the arbitrator. It is undisputed that, prior to the subject accident, plaintiff scrolled through and agreed to Lyft’s Terms of Service (the TOS), which included an agreement to arbitrate. As part of the arbitration agreement, the parties agreed to delegate “disputes concerning the arbitrability of a Claim (including disputes about the scope, applicability, enforceability, revocability or validity of the Arbitration Agreement)” to the arbitrator. When the parties’ contract delegates the arbitrability question to an arbitrator, the courts must respect the parties’ decision “even if the arguments of the party seeking to arbitrate ‘appear[] to the court to be frivolous’ or even ‘wholly groundless'” … .

There is no dispute that if plaintiff had ordered the subject ride through his own Lyft account, then the instant claims would be subject to arbitration because plaintiff was party to a valid and enforceable arbitration agreement with a valid and enforceable delegation provision — even if there were a question as to the arbitration agreement’s scope … . We find that the question of whether the agreement to arbitrate encompassed claims stemming from plaintiff’s presence in a Lyft that he did not order is a question of arbitrability that must be decided by the arbitrator … . Samuel v Islam, 2024 NY Slip Op 06675, First Dept 12-31-24

Practice Point: If you scroll through and agree to the terms of service when a Lyft car is ordered though another’s account, and you are subsequently injured in an accident in the Lyft car, you are compelled to arbitrate the question whether you are subject to the arbitration clause just as the account-holder would be.

 

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DEFENDANT SNOW-REMOVAL CONTRACTOR WAS ENTITLED TO SUMMARY JUDGMENT IN THIS SLIP AND FALL CASE; NO “ESPINAL” EXCEPTIONS WERE ALLEGED IN THE COMPLAINT OR DEMONSTRATED IN RESPONSE TO THE SUMMARY JUDGMENT MOTION; THE CONTRACT WITH THE PROPERTY OWNER DID NOT MAKE THE SNOW-REMOVAL CONTRACTOR COMPLETELY RESPONSIBLE FOR MAINTENANCE OF THE PARKING LOT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendant snow-removal contractor was entitled to summary judgment in this parking-lot slip and fall case. The defendant demonstrated plaintiff was not a party to the snow-removal contract with the owner of the parking lot, a nursing home. The plaintiff had not alleged in the complaint that any “Espinal” exception applied and was unable to raise a question of fact on the “Espinal” issue in response to defendant’s summary judgment motion:

“‘As a general rule, a limited contractual obligation to provide snow removal services does not render the contractor liable in tort for the personal injuries of third parties'” … . However, the Court of Appeals has recognized three exceptions to the general rule: “(1) where the contracting party, in failing to exercise reasonable care in the performance of his [or her] duties, launche[s] a force or instrument of harm; (2) where the plaintiff detrimentally relies on the continued performance of the contracting party’s duties and (3) where the contracting party has entirely displaced the other party’s duty to maintain the premises safely” …  * * *

… [T]he defendants demonstrated their prima facie entitlement to judgment as a matter of law dismissing the complaint by submitting evidence that the plaintiff was not a party to the snow removal contract … . Since the plaintiff did not allege facts in the pleadings that would establish the possible applicability of any of the Espinal exceptions, the defendants were not required to affirmatively demonstrate that these exceptions did not apply to establish their prima facie entitlement to judgment as a matter of law … .

… [T]he plaintiff failed to raise a triable issue of fact based on any of the Espinal exceptions. The plaintiff failed to raise a triable issue of fact as to whether the defendants launched a force or instrument of harm. The affidavit of a former coworker that the plaintiff relied upon was insufficient because it only addressed the general conditions of the parking lot and not the cause of the specific ice on which the plaintiff allegedly was injured … . The plaintiff also failed to raise a triable issue of fact as to whether the defendants entirely displaced the nursing home’s duty to maintain the parking lots. The affidavit of the former assistant to the head administrator of the nursing home that the plaintiff submitted failed to address the language in the snow removal contract that provided that the nursing home retained some duties and responsibilities to maintain the parking lots … . Brito-Hernandez v Superior Contr., 2024 NY Slip Op 06619, Second Dept 12-24-24

Practice Point: Consult this decision for a discussion of all the issues relevant to suing a snow-removal contractor for a slip and fall. Are any “Espinal” exceptions raised or applicable? Did the snow-removal contract make the contractor completely responsible for maintenance of the parking lot, or did the property-owner retain some responsibility?

 

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