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Industry: Commercial Real Estate

Second Department Finds Commercial Tenants Can Waive Their Right to a Yellowstone Injunction

On January 31, 2018, the Appellate Division, Second Department affirmed, in a 3-1 decision, the Kings County Supreme Court Commercial Division’s decision, denying 159 MP Corp. and 240 Bedford Ave Realty Holding Corp.’s (collectively the “Tenants”) motion for a Yellowstone injunction.  The case raised an issue of first impression for New York appellate courts: whether a written lease provision that expressly waives a commercial tenant’s right to declarative relief is enforceable at law and as a matter of public policy.  The Second Department ruled in the affirmative for both.


The Second Department Suggests That “Any Lawful Business” Clauses May Be Effectively Meaningless in LLC Dissolution Cases

In actions brought by minority members to dissolve an LLC, a key inquiry is whether the LLC’s managers are unable or unwilling to permit or promote the LLC’s “stated purpose.”  In many cases, an LLC’s operating agreement provides that the LLC’s “stated purpose” is “any lawful business.”  As a result, one might think that the central question in many judicial dissolution cases would end up being whether the LLC is engaged in lawful business.  Not necessarily.  Recently, in Mace v. Tunick,[1] the Second Department suggested that an “any lawful business” purposes clause is insufficient to conclusively refute an allegation that an LLC was formed for a particular purpose.  Mace could therefore be read to eliminate some of the protections against litigation that would be provided for by an “any lawful business” clause.