X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

159 MP Corp. ap, v. Redbridge Bedford, LLC, res — (Index No. 4599/14)APPEAL by the plaintiffs, in an action, inter alia, for a judgment declaring that two commercial leases are in full force and effect and that the plaintiffs are not in violation of their obligations under the leases, from an order of the Supreme Court (David I. Schmidt, J.) dated January 29, 2015, and entered in Kings County, which denied their motion for a Yellowstone injunction (see First Natl. Stores v. Yellowstone Shopping Ctr., 21 NY2d 630) and granted the defendant’s cross motion for summary judgment dismissing the complaint. Justice Dillon has been substituted for former Justice Dickerson (see 22 NYCRR 670.1[c]).Wenig Saltiel LLP, Brooklyn, NY (Meryl L. Wenig and Leslie Perez-Bennie of counsel), for appellants.Lupkin & Associates PLLC, New York, NY (Jonathan D. Lupkin and Rebecca C. Smithwick of counsel), for respondent.DILLON, J.P.This appeal raises an issue of first impression in the appellate courts of New York, which was identified in an Outside Counsel article in the New York Law Journal in 2014.1 Specifically, we address the question of whether written leases negotiated at arm’s length by commercial tenants may include a waiver of the right to declarative relief that is enforceable at law or, alternatively, whether such a waiver is void and unenforceable as a matter of public policy.For reasons set forth below, we conclude that under the circumstances of this case, the commercial tenants’ voluntary and limited waiver of declaratory judgment remedies in their written leases is valid and enforceable, and not violative of New York’s public policy, particularly as the tenants in this instance did not waive other available legal remedies.I.__Factual and_Procedural BackgroundOn April 7, 2010, the plaintiffs, 159 MP Corp. and 240 Bedford Ave Realty Holding Corp., entered into leases for 10,000 square feet of retail space and 3,000 square feet of storage space, respectively, at premises located at 159 North 3rd Street, a/k/a 241 Bedford Avenue, a/k/a 160 North 4th Street, in Brooklyn. The original landlord on the leases, BFN Realty Associates, LLC, was later succeeded by the defendant, Redbridge Bedford, LLC. Each lease was to run for 20 years from May 1, 2010, with a 10-year renewal option.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.”Four years later, on March 12, 2014, the defendant issued to each of the plaintiffs a “Ten (10) Day Notice to Cure Violations” (hereinafter Notice to Cure) arising out of their alleged breaches of stated paragraphs of the leases and their riders. The plaintiffs’ alleged breaches included the failure to obtain various permits, the arrangement of the premises in a manner that created fire hazards, the existence of nuisances and noises, and the failure to allow for sprinkler system inspections by the Fire Department. The Notices to Cure demanded that the alleged lease violations be cured by March 27, 2014, which was 15 days from the date of the documents, otherwise the defendant would terminate the tenancies and thereafter commence summary proceedings to recover possession of the premises.On or about March 19, 2014, the plaintiffs commenced an action in the Supreme Court for declaratory and injunctive relief, and to recover damages for breach of contract. Specifically, the first cause of action was for a judgment declaring that the leases are in full force and effect and that there are no lease violations as alleged by the defendant. The second cause of action was for preliminary and permanent injunctive relief, enjoining the defendant from taking any steps to terminate the leases. The third cause of action was for a judgment declaring that the defendant is equitably estopped from terminating the leases based on usages of the premises of which the defendant had been aware without objection. The fourth cause of action sought money damages for the defendant’s own breaches of contract.On March 26, 2014, prior to the expiration of the stated cure period, the plaintiffs moved by order to show cause for a Yellowstone injunction (see First Natl. Stores v. Yellowstone Shopping Ctr., 21 NY2d 630) staying and tolling the cure period and enjoining the defendant from terminating the leases or commencing a summary proceeding for eviction. In their supporting papers, the plaintiffs argued that although they disputed the claim that they had violated the leases, they were nevertheless ready, willing, and able to cure any breaches of the leases if obligated to do so. The plaintiffs maintained that the defendant, as the property owner, was instead responsible for the necessary permits and certificates of occupancy, and that the defendant had waived its other objections by having accepted years of rent payments with knowledge of the alleged violations.The defendant interposed an answer dated April 25, 2014, denying the material allegations of the complaint and asserting an affirmative defense that the plaintiffs “have contractually waived the right to seek injunctive relief.” Contemporaneously, the defendant cross-moved for summary judgment dismissing the complaint based on the waiver language of Paragraph 67(H) in the two lease riders, contending that the mere commencement of the declaratory judgment action constituted contractual grounds for terminating the tenancies.In opposition to the cross motion, the plaintiffs argued that the provision of the leases waiving the right to declaratory relief did not separately prohibit Yellowstone injunctions. Further, the plaintiffs argued that a blanket covenant not to sue cannot be interpreted to extend to actions to enforce the obligations of the leases at issue.In the order appealed from, dated January 29, 2015, the Supreme Court denied the plaintiffs’ motion for Yellowstone relief. The court reasoned that although the leases did not expressly prohibit Yellowstone applications, such relief was nevertheless encompassed within the broader provisions of Paragraph 67(H) in the riders that prohibited declaratory judgment actions. The court construed the waiver of declaratory remedies as an agreement to instead resolve contractual disputes through the mechanism of summary proceedings. The court further noted that the waiver of declaratory remedies did not prevent any of the parties from performing the agreements, or from commencing actions seeking damages for either breach of contract or tortious conduct. The court did not address whether the plaintiffs’ waiver of declaratory judgment remedies in Paragraph 67(H) of the riders violated public policy, as the issue had neither been raised in the pleadings nor in any of the papers submitted in connection with the plaintiffs’ motion or the defendant’s cross motion. Finding that all the plaintiffs’ claims were actual or disguised causes of action for declaratory relief, the court denied the plaintiffs’ motion and granted the defendant’s cross motion for summary judgment dismissing the complaint.On March 2, 2015, this Court granted the plaintiffs’ application for a temporary stay of the defendant’s enforcement remedies, which was thereafter extended by a decision and order on motion of this Court dated March 26, 2015, pending the determination of this appeal.II.__Yellowstone Injunctions_GenerallyA Yellowstone injunction is not a creature of statute (see CPLR article 63). It is, instead, a creation of case law originating in 1968 with the decision of the Court of Appeals in First Natl. Stores v. Yellowstone Shopping Ctr. (21 NY2d 630). While Yellowstone is a relatively brief opinion, its brevity should not be interpreted as lacking in importance since Yellowstone‘s        impact in landlord-tenant litigation is as strong today as it was when it was rendered nearly 50 years ago (see Mark C. Dillon, The Extent to Which “Yellowstone Injunctions” Apply in Favor of Residential Tenants: Who Will See Red, Who Can Earn Green, and Who May Feel Blue?, 9 Cardozo Pub. L. Pol’y & Ethics J. 287, 312 [2011]).In Yellowstone, the landlord of commercial premises was contractually obligated to provide its tenant with a 10-day notice to cure for any default in the tenant’s performance of the lease, and the tenant’s failure to cure permitted the landlord to terminate the lease, re-enter the premises, and evict the tenant (see First Natl. Stores v. Yellowstone Shopping Ctr., 21 NY2d at 634-635). The landlord served the tenant with a 10-day default notice for the tenant’s failure to comply with a sprinkler order issued by the Fire Department. In response, the tenant commenced an action for a judgment declaring that sprinkler compliance was the responsibility of the landlord rather than the tenant. Nine days later, the tenant moved by order to show cause for a preliminary injunction to enjoin the landlord from enforcing its remedies under the lease. However, the tenant did not seek a temporary restraining order (hereinafter TRO) to prevent the landlord from enforcing default remedies while the motion for a preliminary injunction was pending. Absent a TRO, the cure period expired, and the landlord terminated the lease. The Supreme Court ultimately declined to exercise jurisdiction over the matter, finding that the tenant’s defenses could be asserted in a summary proceeding (see id. at 635). On appeal to this Court, we reached the merits of the declaratory judgment action by unanimously finding that the tenant was the party responsible for sprinkler compliance under the relevant language of the lease (see id.). However, this Court split 3-2 on the collateral question of whether to recognize the tenant’s request for a preliminary injunction. The majority, invoking powers of equity, noted that since the tenant had acted in apparent good faith by promptly initiating its declaratory judgment action, it would be harsh and inequitable to allow a termination of the lease and the tenant’s eviction from the premises (see id. at 637). This Court therefore permanently enjoined the landlord from commencing a summary proceeding on the condition that the tenant install and pay for a sprinkler system within 20 days (see id.). The dissent reasoned that since the tenant had, in fact, defaulted, and the lease was terminated while no injunction was in place, the courts were without authority to even recognize a continuing landlord-tenant relationship between the parties (see First Natl. Stores v Yellowstone Shopping Ctr., 28 AD2d 873, 874).On further appeal, the Court of Appeals, while agreeing with this Court that the tenant had breached a provision of its lease by failing to install a sprinkler system at the premises, nonetheless agreed with the dissent that given the landlord’s 10-day notice to cure and the lease’s termination thereafter, the Supreme Court had no basis to fashion any relief for the tenant, legal, equitable, or otherwise (see First Natl. Stores v. Yellowstone Shopping Ctr., 21 NY2d at 637-638).Yellowstone is a case where the result might well have been different had the tenant sought and obtained a TRO at the outset of the litigation, to preserve the status quo and continue the lease while the declaratory judgment action was pending. Such are the vagaries and pitfalls of litigation. The true importance of the case is its implicit acceptance of a commercial tenant’s presumptive right of action to extend noticed cure periods and thereby forestall or avoid lease terminations and evictions until the merits of commercial lease disputes can be resolved by the courts (see Graubard Mollen Horowitz Pomeranz & Shapiro v. 600 Third Ave. Assoc., 93 NY2d 508, 514; Post v. 120 E. End Ave. Corp., 62 NY2d 19, 25; Korova Milk Bar of White Plains, Inc. v. PRE Props., LLC, 70 AD3d 646, 647; Hopp v. Raimondi, 51 AD3d 726, 727).In the years since the Yellowstone case was decided in 1968, the courts have defined the four elements that tenants must establish for Yellowstone injunctions: (1) the existence of a commercial lease, (2) the issuance by the landlord of a notice of default, notice to cure, or threat of termination of the lease, (3) an application for a TRO made prior to the expiration of the cure period, and (4) the tenant’s desire and ability to cure any alleged default by means short of vacating the premises (see Graubard Mollen Horowitz Pomeranz & Shapiro v. 600 Third Ave. Assoc., 93 NY2d at 514; Korova Milk Bar of White Plains, Inc. v. PRE Props., LLC, 70 AD3d at 647; Caldwell v. American Package Co., Inc., 57 AD3d 15, 20; Xiotis Restaurant Corp. v. LSS Leasing Ltd. Liab. Co., 50 AD3d 678, 679; Hempstead Video, Inc. v. 363 Rockaway Assoc., LLP, 38 AD3d 838, 839). These elements are less stringent than those required for the issuance of standard preliminary injunctive relief under CPLR article 63 (see Post v. 120 E. End Ave. Corp., 62 NY2d at 25-26; Marathon Outdoor v. Patent Constr. Sys. Div. of Harsco Corp., 306 AD2d 254, 255). Perhaps the most contentious of the Yellowstone elements are the third element regarding the timing of the application for injunctive relief, and the fourth element regarding the tenant’s desire and ability to cure alleged lease breaches.III.__Whether Yellowstone_Relief Was_Timely Sought_in This_ActionWe note that the plaintiffs timely sought Yellowstone relief at the trial and appellate levels, thereby effectively extending the cure period, and thus, the appeal has not been rendered academic.The Notices to Cure were dated March 12, 2014, and provided the plaintiffs with 15 days, until March 27, 2014, to cure the alleged breaches. The plaintiffs moved in the Supreme Court for Yellowstone relief on March 26, 2014, one day before the cure period expired. The Supreme Court’s order effectively lifting the temporary stay, although dated January 29, 2015, was not entered prior to March 2, 2015, the day the plaintiffs sought and obtained from this Court a temporary stay of any action that would terminate their leases, subject them to summary proceedings, or evict them from the premises. The temporary stay was extended by this Court on March 26, 2015, pending the determination of this appeal. As such, the plaintiffs are not in the same posture as the tenants in Yellowstone, where the cure period had expired before any court could reach the merits of the parties’ claims and defenses.IV.__Whether Yellowstone_Relief May_Be Sought_HereBy nature and definition, a Yellowstone injunction is inextricably intertwined with the court’s role in resolving whether a tenant has breached provisions of the lease and, if so, whether any such breach shall be cured. As here, a tenant’s preemptive action to have the court determine that the lease has not been breached is in the nature of declaratory judgment (see CPLR 3001; see e.g. Hughes v. Lenox Hill Hosp., 226 AD2d 4, 13).A practical interpretation of the language of Paragraph 67(H) in the parties’ lease riders is that declaratory relief that is waived by the tenants includes Yellowstone relief such as that sought here from the Supreme Court (see 403 W. 43 St. Rest. Inc. v. Ninth Ave. Realty, LLC, 36 AD3d 464). This is true in light of other language, also contained within Paragraph 67(H), that“[i]t 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        (emphasis added).The plaintiffs’ argument that there is a distinction between a prohibited declaratory judgment action on the one hand, and permissible Yellowstone relief on the other, is of no moment, as the latter cannot exist without the former. By nature and definition, a Yellowstone injunction springs from the declaratory judgment action that gives rise to it. By contrast, breach of contract actions commenced by tenants lend themselves to standard injunctive remedies under CPLR article 63 (see e.g. South Amherst, Ltd. v. H.B. Singer, LLC, 13 AD3d 515, 516-517; Wendling v. 136 E. 64th St. Assoc., 128 AD2d 419, 421). Accordingly, we hold that insofar as the plaintiffs expressly waived both declaratory and Yellowstone relief pursuant to the terms of Paragraph 67(H) in their lease riders, the Supreme Court properly denied their motion for a Yellowstone injunction and granted those branches of the defendant’s cross motion which were for summary judgment dismissing the first, second, and third causes of action.V.__Public PolicyAs a threshold matter, the plaintiffs, in opposing the defendant’s cross motion for summary judgment, argued that the defendant’s proof was insufficient, that injunctive relief was independent of declaratory relief, that the waiver was a product of mutual mistake, that the defendant was the party in breach of contract, and that equitable estoppel barred the defendant from relying on the waiver language of Paragraph 67(H). They never argued that the waiver language of Paragraph 67(H) was unenforceable on public policy grounds.2 Moreover, in the order appealed from, the Supreme Court did not discuss public policy. Accordingly, we agree with the defendant that any issue of whether the waiver of declaratory relief violates public policy is being raised for the first time on appeal. Generally, an issue raised for the first time on appeal is improperly before this Court and will not be considered (see Matter of 148 S. Emerson Partners, LLC v. 148 S. Emerson Assoc., LLC, __ AD3d __, 2018 NY Slip Op 00423 [2d Dept 2018]). However, “[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” (Matter of Niagara Wheatfield Adm’rs Assn. [Niagara Wheatfield Cent. School Dist.], 44 NY2d 68, 72). We therefore reach the merits of the public policy issue raised on appeal.The plaintiffs and our dissenting colleague maintain that even if the waiver provision of Paragraph 67(H) is interpreted as prohibiting both declaratory and Yellowstone relief, the waiver is nevertheless unenforceable as against public policy. We disagree.The defendant, in support of its cross motion, established its prima facie entitlement to judgment as a matter of law dismissing the first, second, and third causes of action for declaratory and injunctive relief by submitting the two subject leases with their waiver provisions (see generally Giuffrida v. Citibank Corp., 100 NY2d 72, 81; Winegrad v. New York Univ. Med. Ctr., 64 NY2d 851, 853; Friends of Animals v. Associated Fur Mfrs., 46 NY2d 1065, 1067). The burden then shifted to the plaintiffs to raise a triable issue of fact as to whether the waiver provision of Paragraph 67(H) is void as against public policy (see generally Alvarez v. Prospect Hosp., 68 NY2d 320, 324; Zuckerman v. City of New York, 49 NY2d 557, 562; Friends of Animals v. Associated Fur Mfrs., 46 NY2d at 1068).For the three distinct reasons that follow, the plaintiffs failed to meet their burden.A bedrock principle of our jurisprudence is the right of parties to freely enter into contracts. So fundamental is the right to contract without interference from any state, that it is ensconced in Article 1, Section 10, Clause 1 of the United States Constitution. Not only is the freedom to contract constitutionally protected, but federal and New York courts have recognized that the autonomy of parties to contract is itself a sacred and protected public policy that should not be interfered with lightly (see Baltimore & Ohio Southwestern R. Co. v. Voight, 176 US 498, 505-506; New England Mut. Life Ins. Co. v. Caruso, 73 NY2d 74, 81; Miller v. Continental Ins. Co., 40 NY2d 675, 679).Indeed, our jurisprudence provides citizens with the freedom and opportunity to abandon rights and privileges (see Fundamental Portfolio Advisors, Inc. v. Tocqueville Asset Mgt., L.P., 7 NY3d 96, 104; Hannigan v. Hannigan, 104 AD3d 732, 734; Town of Hempstead v. Incorporated Vil. of Freeport, 15 AD3d 567, 569). Rights that may be abandoned, of both constitutional and statutory dimension, include many that are otherwise inviolate. Examples abound, such as the waiver of the constitutional right to a jury at civil trials (see NY Const, art I, §2; CPLR 4102[a]; DiStephan v. DiStephan, 106 AD2d 603, 607; O’Brien v. Moszynski, 101 AD2d 811, 812) and even criminal trials (see NY Const, art I, §2; CPL 320.10; People v. Smith, 6 NY3d 827, 828), the waiver of the constitutional right to indictment by a State grand jury (see NY Const, art I, §6; CPL 190.10, 190.20), the waiver of the right against self-incrimination (see Miranda v. Arizona, 384 US 436, 444), the waiver of the right to counsel (see NY Const, art I, §6; People v. McIntyre, 36 NY2d 10, 15), the waiver of the right to appeal (see People v. Seaberg, 74 NY2d 1, 9-10), waivers in the nature of noncompete clauses that are reasonable in time and area (see BDO Seidman v. Hirshberg, 93 NY2d 382, 388-389; Thomas A. Sbarra Real Estate, Inc. v. Lavelle-Tomko, 117 AD3d 1210, 1211; Gimper, Inc. v. Giacchetta, 221 AD2d 682, 683-684), radius clauses in marital separation and settlement agreements (see e.g. Matter of Rodriguez v. Gasparino, 218 AD2d 739, 740), reasonable contractual reductions of the applicable statute of limitations (see CPLR 201; White v. Continental Cas. Co., 9 NY3d 264, 267; John J. Kassner & Co. v. City of New York, 46 NY2d 544, 550-551; Sapinkopf v. Cunard S.S. Co., Ltd., 254 NY 111, 114; City of Yonkers v. 58A JVD Indus., Ltd., 115 AD3d 635, 637-638), contractual choice of law provisions where the law of the selected forum is not “‘truly obnoxious’” to New York law (Welsbach Elec. Corp. v. MasTec N. Am., Inc., 7 NY3d 624, 629, quoting Cooney v. Osgood Mach., 81 NY2d 66, 79; see General Obligations Law §5-1401[1]), contractual venue-selection provisions (see Karlsberg v. Hunter Mtn. Ski Bowl, Inc., 131 AD3d 1121, 1122; Trump v. Deutsche Bank Trust Co. Ams., 65 AD3d 1329, 1331), liquidated damages clauses that do not amount to penalties (see Truck Rent-A-Ctr. v. Puritan Farms 2nd, 41 NY2d 420, 424), contractual waivers to personal jurisdictional defenses (see Alfred E. Mann Living Trust v. Etirc Aviation S.A.R.L., 78 AD3d 137, 140-141; cf. Hunt Constr. Group, Inc. v. Oneida Indian Nation, 53 AD3d 1048, 1049-1050), indemnification agreements where the indemnitor does not contract away liability for its own negligence (see General Obligations Law §5-322.1; see also Brooks v. Judlau Contr., Inc., 11 NY3d 204, 209; Lazarro v. MJM Indus., 288 AD2d 440, 441), and agreements to submit disputes to arbitration (see CPLR 7501; Matter of Waks, 59 NY2d 723, 725-726; Matter of New York City Tr. Auth. v. Amalgamated Tr. Union of Am., AFL-CIO, Local 1056, 284 AD2d 466, 468).Leases, in particular, are known for the rights that tenants oftentime waive within the four corners of the documents. For example, tenants surrender rights by agreeing to the waiver of the right to a jury trial in nonpayment proceedings (see e.g. Phoenix Garden Rest. v. Chu, 234 AD2d 233), the waiver of counterclaims (see Trump Vil. Section 2 v. Semler, 111 Misc 2d 167 [Civ Ct, Kings County]), nonexcessive late fees for the untimely payment of rent (cf. Rock v. Klepper, 23 Misc 3d 1103[A], 2009 NY Slip Op 50558[U], *7 [Plattsburgh City Ct]; Dashnaw v. Shiflett, 10 Misc 3d 1051[A], 2005 NY Slip Op 51874[U], *3 [Plattsburgh City Ct]), automatic rent escalation clauses (see CBS Inc. v. P.A. Bldg. Co., 200 AD2d 527; 75 Henry St. Garage v. Whitman Owner Corp., 79 AD2d 1001), and rent acceleration clauses upon the tenants’ default (see Fifty States Mgt. Corp. v. Pioneer Auto Parks, 46 NY2d 573, 577; Ross Realty v. V & A Iron Fabricators, Inc., 5 Misc 3d 72, 73 [App Term, 2d Dept]).Conversely, the State Legislature has enacted protections for tenants that explicitly identify rights that may not be validly waived by them in oral or written leases. These statutory prohibitions include any waivers to the right of habitability (see RPAPL 235-b; Park W. Mgt. Corp. v. Mitchell, 47 NY2d 316, 326), the right to written receipts for rent paid (see RPAPL 235-e), the right to nonelectronic billing (see RPAPL 235-g[1], [2]), the right of deceased tenants’ estates to assign the leases to others (see RPAPL 236; Joint Props. Owners v. Deri, 113 AD2d 691, 694), the right of tenants to bear children during the term of the lease (see RPAPL 237), the right of tenants to recover attorneys’ fees if successful in defending summary proceedings on the merits, where a reciprocal right exists in favor of the landlord in the lease (see RPAPL 234; Graham Ct. Owner’s Corp. v. Taylor, 115 AD3d 50, 56, affd 24 NY3d 742), the right of tenants to seek damages for injuries to persons or property caused by the negligence of the landlord (see General Obligations Law §5-321; Wagner v. Waterman Estates, LLC, 128 AD3d 1504, 1507; Ben Lee Distribs., Inc. v. Halstead Harrison, 72 AD3d 715, 716), and the right of tenants in six or more multi-unit dwellings to have rent security deposited for their benefit into interest-bearing bank accounts (see General Obligations Law §7-103[2-a]; Mancini v. DMJ Mgt. Corp., 195 Misc 2d 656, 657-658 [Mount Vernon City Ct]). The State Legislature has not enacted any specific or blanket statutory provision prohibiting as void or unenforceable a tenant’s waiver of declaratory judgment remedies (cf. RPAPL 235-c). Therefore, this Court, which is not a legislative body, should not attempt to create such a blanket prohibition here.Waivers of rights should not be lightly presumed and, in the contractual context, must reflect a clear manifestation of intent to relinquish the protections that are otherwise afforded to the waiving party (see Fundamental Portfolio Advisors, Inc. v. Tocqueville Asset Mgt., L.P., 7 NY3d at 104, quoting Gilbert Frank Corp. v. Federal Ins. Co., 70 NY2d 966, 968; Stassa v. Stassa, 123 AD3d 804, 805-806). But even if the consideration for a waiver is grossly unequal or of dubious value, the adequacy of consideration is not subject to judicial review absent fraud or unconscionability (see Apfel v. Prudential-Bache Sec., 81 NY2d 470, 475; Moezinia v. Ashkenazi, 136 AD3d 988, 989).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. While standardized lease forms were used, the record reflects that each such lease agreement consisted of 39 paragraphs of initial or boilerplate terms, 9 paragraphs of “Rules and Regulations” incorporated into the leases by reference, a rider consisting of 36 paragraphs, and several initialed handwritten changes and deletions. Paragraph 67(H) in each rider contains the provision by which the tenants waived their right to declaratory judgment actions, in favor of, instead, expressly adjudicating disputes via summary proceedings.The right to a declaratory judgment, inclusive of the Yellowstone relief sought here, is not so vaulted as to be incapable of self-alienation.3 As noted earlier, Yellowstone remedies are not a creature of any constitution or statute. As conceded by our dissenting colleague, the principle of not enforcing contracts on grounds of public policy “must be cautiously applied” (Steele v. Drummond, 275 US 199, 204). To hold that the waiver of declaratory judgment remedies in contractual leases between sophisticated parties is unenforceable as a matter of public policy does violence to the notion that the parties are free to negotiate and fashion their contracts with terms to which they freely and voluntarily bind themselves. The fact that with the benefit of hindsight, a party believes that it had agreed to an unfavorable contractual term, does not provide courts with authority to rewrite the terms of a contract or to extricate parties from poor bargains (see New England Mut. Life Ins. Co. v. Caruso, 73 NY2d at 81). Rather, parties to contracts must ordinarily remain free to make the agreements they wish, on terms they deem satisfactory, no matter how unwise it might appear to a third party (see Rowe v. Great Atl. & Pac. Tea Co., 46 NY2d 62, 69) or to a party with the benefit of 20/20 hindsight. As aptly noted by the Court of Appeals, absent counteravailing public policy, if parties “are dissatisfied with the consequences of their agreement, ‘the time to say so [was] at the bargaining table’” (Oppenheimer & Co. v. Oppehneim, Appel, Dixon & Co., 86 NY2d 685, 695, quoting Maxton Bldrs. v. Lo Galbo, 68 NY2d 373, 382; see Bloomfield v. Bloomfield, 97 NY2d 188, 193; Miller v. Continental Ins. Co., 40 NY2d at 679). Here, the plain language of the lease riders reflects the parties’ mutual intent to adjudicate disputes by means of summary proceedings. Declaratory and Yellowstone remedies are rights private to the plaintiffs that they could freely, voluntarily, and knowingly waive. We therefore enforce the waivers in the lease riders and decline to strike them (see Fisk Bldg. Assoc. LLC v. Shimazaki II, Inc., 76 AD3d 468, 469; Hamza v. Alphabet Soup Assoc., LLC, 2011 NY Slip Op 30973[U] [Sup Ct, NY County] [Yellowstone waiver]; Aloyts v. 601 Tenant’s Corp., 2007 WL 6938117 [Sup Ct, Kings County, index No. 30043/06 ] [Yellowstone waiver]).A further reason that the declaratory judgment waiver in this case cannot be held to be unconscionable involves the record on appeal. We cannot ascertain from the record what good and valuable consideration the tenants may have received in exchange for their declaratory judgment waivers. Likely, all consideration exchanged by any party was aggregated within the broader bargains reached. Nevertheless, the plaintiffs, bearing the burden of demonstrating a triable issue of fact as to whether the waiver provisions violate public policy, are unable to do so where the record is silent as to the consideration they received in exchange for their waivers.VI.__The Plaintiffs’_Available RemediesOur dissenting colleague argues that since in-possession lessees have no statutory authority to commence summary proceedings under RPAPL 721, our enforcement of the declaratory judgment waiver provision leaves the plaintiffs without affirmative judicial remedies. Respectfully, the argument fails, and thus presents the third and final reason for affirming the order appealed from.The waiver provision is, itself, a limited one, thereby mitigating the public policy concerns. While the right to bring a declaratory judgment action was surrendered in Paragraph 67(H) in the lease riders, other judicial remedies remained available to the plaintiffs. Indeed, despite the provisions of Paragraph 67(H), the plaintiffs had the contractual right to receive notices to cure and an opportunity to correct any claimed breaches. The plaintiffs did not expressly surrender the right to seek money damages from the defendant if the defendant were to breach the contract or commit tortious conduct injurious to persons or property (see General Obligations Law §5-321). The plaintiffs also did not surrender the right to fully litigate and defend themselves in any summary proceeding that the defendant might commence in Civil Court (see Aloyts v. 601 Tenant’s Corp., 2007 WL 6938117 [Sup Ct, Kings County, index No. 30043/06]).Moreover, as a practical matter, the plaintiffs necessarily remain in possession of the demised premises if no summary proceeding is commenced against them, in which case inconvenience or prejudice to the plaintiffs is significantly reduced, if not eliminated altogether. If a summary proceeding is commenced, the plaintiffs are permitted to present whatever factual and legal defenses may be available to them. If the plaintiffs are vindicated at any such summary proceeding, they may continue to quietly enjoy possession of the premises without legal molestation. If the plaintiffs are unsuccessful with their summary proceeding defenses, they are, absent a mutual settlement of issues, properly evicted from the premises from which they would have no further right to use and enjoy and no procedural cause to complain.

 
Reprints & Licensing
Mentioned in a Law.com story?

License our industry-leading legal content to extend your thought leadership and build your brand.

More From ALM

With this subscription you will receive unlimited access to high quality, online, on-demand premium content from well-respected faculty in the legal industry. This is perfect for attorneys licensed in multiple jurisdictions or for attorneys that have fulfilled their CLE requirement but need to access resourceful information for their practice areas.
View Now
Our Team Account subscription service is for legal teams of four or more attorneys. Each attorney is granted unlimited access to high quality, on-demand premium content from well-respected faculty in the legal industry along with administrative access to easily manage CLE for the entire team.
View Now
Gain access to some of the most knowledgeable and experienced attorneys with our 2 bundle options! Our Compliance bundles are curated by CLE Counselors and include current legal topics and challenges within the industry. Our second option allows you to build your bundle and strategically select the content that pertains to your needs. Both options are priced the same.
View Now
September 05, 2024
New York, NY

The New York Law Journal honors attorneys and judges who have made a remarkable difference in the legal profession in New York.


Learn More
September 06, 2024
Johannesburg

The African Legal Awards recognise exceptional achievement within Africa s legal community during a period of rapid change.


Learn More
September 12, 2024
New York, NY

Consulting Magazine identifies the best firms to work for in the consulting profession.


Learn More

Wisniewski & Associates, LLC seeks attorney licensed in NJ and NY with 2-5 years experience for its multi-state real estate, land use, ...


Apply Now ›

Labor Relations CounselUS-GA-AtlantaJob ID: 2024-0042Type: 4 (Exempt, Bargaining Unit 1 (EB)# of Openings: 1Category: Contract Administratio...


Apply Now ›

ASSISTANT FEDERAL PUBLIC DEFENDERS Two posi...


Apply Now ›
06/27/2024
The American Lawyer

Professional Announcement


View Announcement ›