Yellowstone Injunction Undertaking Cannot Be Used to Pay Use and Occupancy

On May 25, 2021, the First Department issued a decision in Booston LLC v. 35 W. Realty Co., LLC, 2021 NY Slip Op. 03277, holding that a Yellowstone injunction undertaking cannot be used to pay use and occupancy, holding:

The subject bond was imposed on plaintiff for the specific purpose of protecting defendant from any liability claims while the parties litigated the merits, not for the payment of pendente lite use and occupancy. Thus, rather than directing plaintiff's surety to pay ongoing use and occupancy from the bond, the court should have granted defendant's alternative request to direct plaintiff to pay use and occupancy going forward in the amount of $49,515.39 per month while it remains in occupancy of the premises.

The order to draw down on the bond for the alleged arrears in the payment of use and occupancy following the lifting of the stay pending appeal is tantamount to a grant of summary judgment to defendant on the ultimate relief sought in its counterclaim, despite the absence of a request for such relief in the motion and the fact that the claim has not been finally resolved. Although CPLR 6315 permits a party to recover damages sustained by the improper issuance of an injunction, the damages, if any, must await a determination on the merits.

(Internal citations omitted).

We frequently litigate disputes over the sale or leasing of commercial property. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you are involved in a dispute regarding a commercial real estate transaction.