Defendant YTK Corp. ("YTK") seeks a Yellowstone injunction enjoining Defendant 21st Century Fuel LLC ("Century") from terminating the parties' lease and/or commencing any eviction proceeding. YTK further seeks a preliminary injunction enjoining Century from refusing to accept rent.

In an omnibus motion, Century cross-moves for (1) summary judgment pursuant to CPLR 3212; (2) dismissal of Plaintiff's claims and YTK's cross-claims against it in the main action; (3) summary judgment its cross-claims in the main action; (4) dismissal of

all counterclaims against it in the third-party action; and (5) summary judgment all of its claims in the third-party complaint.

YTK and Third-party Defendants RC Oil Corp ("RC Oil"), Kyung Sik Choi ("Choi"), Talat K. Yilmaz, and Kasim G. Yilmaz cross-move for leave to amend their third-party answer and to join Penny Less Gasoline Inc. ("Penny") and Richard Finkelstein ("Finkelstein") as necessary parties.

BACKGROUND

This action and the third-party action arise out of the operation of a gas station, a convenience store and an ATM on one property in the Bronx. The owner of the property is Sun City Inc. It's lessee is Century.

Century subleased that portion of the premises upon which the convenience store was operated to YTK pursuant to a sublease dated April 23, 2003.

Plaintiff Bas Communications Inc. ("Bas") alleges in its complaint that it installed an ATM at the convenience store pursuant to an agreement with YTK dated September 5, 2003. Bas further alleges that in March 2005, Century demanded that it remove the ATM from the store. At some point thereafter, the ATM was removed although Century denies responsibility for this act.

Century subleased that portion of the premises upon which the gas station was operated to Penny, which then entered into a Management Agreement with YTK. YTK alleges that, in March 2005, Century repossessed the gas station business. YTK alleges further that, from January 2005 to date, Century stopped payments of the commission from the sale of gasoline as set forth in the Management Agreement with Penny.

Third-party Defendants Talat Yilmaz and Kasim Yilmaz (collectively "Yilmaz Brothers") are brothers who are the principals of YTK. Although Century alleges that these two [*2]Third-party Defendants executed personal guarantees of the sublease for the convenience store, the signature page on the copy of the guaranty submitted to this Court is missing.

Talat and Kasim Yilmaz aver, in separate affidavits, that Penny is the "sister corporation" of Century and that both corporations are owned and operated by Finkelstein. They claim that Penny acted as the landlord vis-a-vis YTK in that it collected the rent, paid the expenses and controlled and supervised the premises. Based on these acts, Penny is claimed to be the "alter ego" of Century even though it is not a party to either the main action or the third-party action.

Choi is the president of RC Oil, the prior sublessee of the convenience store and operator of the gas station. Century has submitted a copy of a limited guaranty by Choi of YTK's performance of the sublease. In their joint answer, Third-party Defendants allege that RC Oil no longer exists "as it has been dissolved". Attached to the end of the Management Agreement is a copy of a chattel mortgage between YTK and Choi, providing for monthly payments by YTK to Choi of $5,000.

Based upon a Notice of Intention to Terminate the Lease, ("Notice") YTK seeks a Yellowstone injunction from Century pursuant to First National Stores, Inc. v. Yellowstone Shopping Center, Inc., 21 NY2d 630 (1968). The Notice addresses YTK's alleged failure to pay rent and/or additional rent pursuant to the sublease for the convenience store It states that if YTK fails to cure its breach by August 4, 2006, the [sub]lease will be terminated. YTK obtained a temporary restraining order for this Court on July 31, 2006.

DISCUSSION

A.Yellowstone Injunction and Related Relief

A tenant seeking Yellowstone relief must demonstrate that (1) it holds a commercial lease; (2) it has received a notice of default, a notice to cure, or a threat of termination of the lease; (3) its application for a temporary restraining order must be made prior to the termination of the lease; and (4) it has the desire and ability to cure the alleged default by any means short of vacating the premises. Id. See also, Purdue Pharma, LP v Ardsley Partners, LP, 5 AD3d 654 (2nd Dept. 2004); Gihon, LLC v 501 Second Street, LLC, 306 AD2d 376 (2nd Dept. 2003); and Marathon Outdoor LLC v Patent Construction Systems Div. of Harsco Corp., 306 AD2d 254 (2nd Dept. 2003). Since a Yellowstone injunction is designed to avoid a tenant's forfeiture of its valuable leasehold interest while it challenges the propriety of the landlord's default notice, courts accept far less than the normal showing required for preliminary injunctive relief. Id. at 255.

In this case, YTK has demonstrated the first three prerequisites for Yellowstone relief. However, it has failed to submit any evidence whatsoever of its alleged ability to cure. The Yilmaz Brothers do not dispute that they have made no payments to Century since January 2005. Instead, they simply allege that they continued to "make rent payments to RC Oil." Choi also admits these payments. Furthermore the Yilmaz Brothers both aver that "the lease fixtures inventory and good will" of the convenience store are the only assets of YTK Corp. These allegations do not demonstrate a willingness and ability to cure the default in payments due to Century, which now exceed $100,000.

Under these circumstances, even taking into account the lesser standard of proof for Yellowstone relief, in the complete absence of a showing of the ability to cure, a Yellowstone injunction must be denied. 403 W. 43 Street Rest. Inc. v. Ninth Avenue Realty, LLC., 36 AD3d 464 (1st Dept. 2007); and JH Parking Corp. v. East 112th Realty Corp., 298 AD2d 258 (1st Dept. [*3]2002).

YTK further requests injunctive relief pursuant to CPLR 6302, enjoining Century from refusing to accept rent or otherwise disturbing or causing the termination of YTK's business occupancy. There is no CPLR 6302. More importantly, a preliminary injunction will only be granted if there is a clear right to relief which is plain from the undisputed facts. JDOC Construction LLC v. Balabanow, 306 AD2d 318 (2nd Dept. 2003).

At this juncture, the Court looks to the pleadings to analyze YTK's claims and the need for injunctive relief. In its answer to the main action, YTK alleges two cross-claims against Century, the first for interference with YTK's contract with Bas and the

second for common law indemnification and contribution. Neither of these cross-claims is related to the injunctive relief sought by YTK.

YTK does purport to allege cross-claims against Century in the third-party answer, but YTK is not a Third-party Defendant. While form should not be exalted over substance, basic compliance with the CPLR is necessary to provide all parties the proper framework for litigating their claims. As there is no provision in the CPLR for a defendant to plead cross-claims in a third-party answer when it is not a party to that aspect of the litigation, YTK's purported cross-claims in the third-party answer may not be considered. To the extent that YTK wishes to amend its answer in the main action to allege additional cross-claims against Century, it should formally seek leave to do so.

Thus, YTK's request for preliminary injunctive relief must be denied as lacking any basis in the appropriate pleadings.

B.Amend Pleadings/Necessary Parties

In its cross-motion,YTK and the Third-party Defendants seek leave to amend their counterclaims and cross-claims and to join Richard Finkelstein and Penny as parties in interest. Although leave to amend should be freely granted (CPLR 3025[b]), there must be a proper basis for granting the motion. Darbonne v. Goldberger, 31 AD3d 693 (2nd Dept. 2006). The proposed amendment must not be palpably insufficient or devoid of merit Negvesky v. United Interior Resources, Inc., 32 AD3d 530 (2nd Dept. 2006).

As to Finkelstein, it is perfectly legal to incorporate for the express purpose of limiting or shield the corporate owner from the corporate liability. Morris v New York State Dept. of Taxation and Fin., 82 NY2d 135, 140 (1993). To establish a basis for piercing the corporate veil, there must be a showing that the corporate owner exercised complete domination of the corporation and that such domination was used to commit a fraud or wrong. Id. at 141. Complete domination standing alone is not enough Id. In this case, there has been no allegation of anything other than Finkelstein acting through either of his two sister corporations, Century and Penny. No basis for individual liability, or piercing the corporate veil, has been demonstrated or sufficiently alleged. Therefore, leave to amend and for joinder of Finkelstein must be denied.

In order to determine whether Penny should be a party to this action, or the subject of a separate action by YTK, the court must first look to the relationship between the sublease with Century and the Management Agreement with Penny; namely, whether the parties intended to treat both documents as mutually dependent contracts, such that breach of one affects obligations under the other. See, Rudman v. Cowles Communications, 30 NY2d 1, 13 (1972). As a general [*4]rule, contracts remain separate unless their history and subject matter show them to be unified. See, Matter of Primex Intern'l Corp. v. Walmart Stores, Inc., 89 NY2d 594, 601-2 (1997). The primary standard is the intent manifested, viewed in the surrounding circumstances. Elite Promotional Marketing Inc v. Stumacher, 8 AD3d 525, 526 (2nd Dept. 2004); and

Nancy Neale Enterprises, Inc. v. Eventful Enterprises, Inc., 260 AD2d 453 (2nd Dept. 1999).

Here, both the Management Agreement and the Sublease are dated April 23, 2003. They govern different businesses on the same property. Each refers to the other. The relevant language in the sublease is very broad and states that a violation of the Management Agreement is a default under the sublease (Sublease, Article XIII[a][ix]). In addition, the Management Agreement is expressly incorporated by reference in the sublease. In contrast, according to the Management Agreement, only a default under the sublease by YTK is a default under the Management Agreement (Management Agreement, ¶ 8[b]). In other words, a breach of the Management Agreement by Penny does not automatically constitute a default under the sublease with Century. Under these circumstances, the two contracts must be viewed as independent. Thus, YTK's insistence that a breach of the Management Agreement justifies its failure or refusal to pay rent under the sublease is unsupported.

The conduct of the parties must also be considered. That is, whether there is any factual support in the record for the claim that Penny is the "alter ego" of Century, or that the two corporations have been operated as a single entity. Factors on making such a determination are whether there is an overlap in ownership, officers, directors and personnel, inadequate capitalization, a commingling of assets, or an absence of separate paraphernalia that are part of the corporate form. John John LLC v. Exit 63 Development, LLC, 35 AD3d 540 (2nd Dept. 2006). Here, there has been no showing that corporate formalities have not been observed. Nor is there evidence of commingling of assets or inadequate capitalization. On this record, there is no basis to treat Penny as the "alter ego" of Century. Therefore, the motion for leave to amend and join Penny must also be denied.

C.Summary Judgment

1.Bas' Complaint Against Century

Century submits an omnibus motion seeking summary judgment dismissing all claims and cross-claims against it in the main action, and all counterclaims against it in the third-party action. Century further seeks damages on its cross-claims in the main action and its six causes of action in the third-party action..

Summary judgment is the procedural equivalent of a trial. Capelin Assoc. Inc. v. Globe Mfg. Corp., 34 NY2d 338 (1974). It is a drastic remedy that will only be granted when the proponent establishes that there are no triable issues of fact Alvarez v. Prospect Hosp., 68 NY2d 320 (1986). On a motion for summary judgment, the court should refrain from making credibility determinations. Capelin Assoc. Inc. Assoc. Inc. v. Globe Mfg. Corp., supra ; Graham v. Mitchell, AD3d , NYS2d , 2007 WL 416490 (2nd Dept. 2007); and Keena v. Hudmor Corp., AD3d , NYS2d , 2007 WL 328881 (1st Dept. 2007).

Century points out that it is not a party to the agreement between Bas and YTK. It was informed that Bas was selling all or part of its business and that the ATM machine would be voluntarily removed.

Bas has failed to controvert Finkelstein's allegations or amend its complaint to allege [*5]anything other than breach of contract claims and a claim pursuant to Debtor and Creditor Law § 276-a. Consequently, Century is entitled to summary judgment dismissing Bas' claims against it.

2.TYK Cross-claims

In its first cross-claim in the main action, YTK alleges that Century interfered with its contract with Bas and had a contract with another company. YTK avers that the cash machine leased to it by Bas was taken out of the premises by Century without its consent, and that Century had a new one installed in its name. On this record, triable issues of fact are presented as to YTK's first cross-claim against Century for interference with the contract with Bas. Therefore, dismissal of this cross-claim must be denied.

YTK's second cross-claim against Century in the main action appears to be for common law indemnity and contribution based on Century's degree of fault in connection with Bas' claims. This second cross-claim is essentially duplicative of the first cross-claim, and for this reason, Century's request for summary judgment dismissing YTK's second cross-claim must be granted.

3.Third-party Complaint

Century also seeks summary judgment in the main action on its cross-claims against YTK for arrears. Century's answer in the main action contains cross-claims for

arrears in rent, additional rent and arrears in taxes, utilities and other charges under the sublease.

YTK's reliance upon a limitations defense to Century's cross-claims is misplaced. The statute of limitations for a claim for breach of a lease is six years (CPLR 213[2]), and commences to run after the first payment of rent became overdue. See, IG Second Generation Partners, LP v. Kaygreen Realty Co., 22 AD3d 463 (2nd Dept. 2005). Consequently, the limitations period has not expired for Century's cross-claims.

YTK's defense of "partial eviction" is also unavailing. Even if true, a "partial eviction" from that portion of the premises upon which the gasoline station is located, is not a defense to YTK's obligation to pay rent and additional rent and taxes for the convenience store pursuant to the Sublease.

YTK's conclusory response is that triable issues of fact are presented. YTK has failed to raise a triable issue of fact as to the parties' dispute under the Maintenance Agreement.Accordingly, Century's request for summary judgment on its cross-claims for arrears in rent, additional rent, taxes, and utilities must be granted on the issue of liability. Century's cross-claims shall be set down for a hearing on damages.

Moving to the third-party complaint, Century alleges six causes of action and seeks summary judgment on all of them. The first three causes of action are for indemnification and are based on the assumption that the Plaintiff will recover against Century in the main action. Under such circumstances, Century seeks judgment over against RC Oil (first cause of action), Choi (second cause of action) and the Yilmaz Brothers (third cause of action) on the basis of documentary evidence.

As Bas' claims against Century in the main action have been dismissed, the factual predicate for the alleged indemnification as set forth in the third-party complaint is no longer viable. Consequently, Century's request for summary judgment on its first three causes of action must be denied as moot. Under the circumstances, the first three causes of action be dismissed (CPLR 3212[b]). [*6]

In the fourth, fifth, and sixth causes of action in the third-party complaint, Century seeks payment of the alleged outstanding rent arrears under the lease from RC Oil, Choi, and the Yilmaz Brothers, respectively, based upon an alleged sublease with RC Oil, the guaranty by Choi and the incomplete guaranty by the Yilmaz Brothers.

As to the fourth cause of action, Century has failed to submit a copy of its former sublease with RC Oil. As to the sixth cause of action, Century has failed to submit a complete copy of the Yilmaz' Brothers' guaranty. As to the fifth cause of action, the Choi Guaranty provides, in pertinent part:

It is understood that the within Limited Guaranty shall have no force or effect until such time, if ever, that RC Oil Corp obtains an assignment of the Lease pursuant to the terms of a certain Collateral Assignment and Assumption of Lease which is being executed simultaneous.

Century has failed to submit the assignment of the lease to RC Oil or the Collateral Assignment and Assumption of Lease. For this reason, summary judgment on the fourth, fifth, and sixth causes of action in the third-party complaint must be denied.

4.Third-party Counterclaims

Century further requests summary judgment dismissing all of the cross-claims and counterclaims alleged against it in the Third-party answer. The claims in the third-party answer have been considered counterclaims by the Third-party Defendants only.There are six counterclaims against Century in the third-party answer; namely, breach of the Management Agreement and partial eviction; common law contribution and indemnification; breach of the covenant of quiet enjoyment; breach of the sublease and Management Agreement; unlawful eviction from the gas station; and specific performance of the sublease and Management Agreement.

None of the Third-party Defendants are parties to, or guarantors of, the Management Agreement. Therefore, the first and fifth counterclaims for breach of the Management Agreement and unlawful eviction from the gas station, must be dismissed.

The second counterclaim is for common law indemnification and contribution against Century. This claim fails to state a cause of action on behalf of the Yilmaz Brothers because it is expressly predicated on a breach of contract by Century, not tortious conduct.

To the extent that the third counterclaim alleges a cause of action for breach of the covenant of quiet enjoyment against Penny, which appears to have ousted YTK from the gasoline station, the claim must be dismissed for failure to join Penny. To the extent that the third counterclaim alleges such a cause of action against Century in connection with the convenience store, it must be dismissed as there has been no eviction and/or ouster. Reade v. Reva Holding Corp., 30 AD3d 229, 237 (1st Dept. 2006).

Century's limitations defense to the counterclaims must be summarily rejected. YTK is currently in possession of the convenience store, thereby negating any claim of eviction. In the absence of eviction, the one-year limitations period for wrongful eviction is not applicable.

The remaining counterclaims are based upon allegations, at least in part, of breach of the sublease. However, none of the Third-party Defendants' affidavits present factual detail regarding the basis for a claim of breach of the sublease. The Third-party Defendants' allegations are conclusory at best. Accordingly, Century's request for summary judgment dismissing the [*7]fourth and sixth counterclaims alleged against it in the third-party answer must also be granted.

Accordingly, it is,

ORDERED, that YTK's motion for a Yellowstone injunction and preliminary injunctive relief is denied; and it is further,

ORDERED, the cross-motion by YTK and the Third-party Defendants for leave to amend and join Penny and Richard Finkelstein as parties in interest is denied; and it is further,

ORDERED, that Century's cross-motion for summary judgment dismissing Plaintiff's claims against it in the main action is granted; and it is further,

ORDERED, that Century's additional request for summary judgment dismissing all cross-claims and counterclaims against it is denied as to YTK's first cross-claim in the main action, granted as to YTK's second cross-claim in the main action, and granted as to all counterclaims against it in the third-party action; and is further,

ORDERED, that Century's further additional request for summary judgment on its cross-claims against YTK for arrears is granted as to liability, and shall be set down for a hearing on damages; and it is further,

ORDERED, that Century's further additional request for summary judgment on its causes of action in the third-party action is denied; and it is further,

ORDERED, that, on the Court's own motion, Century's first three causes of action in the Third-party complaint for indemnification are hereby dismissed as moot; and it is further,

ORDERED, that counsel for the remaining parties shall appear for a preliminary conference on April 20, 2007 at 9:30 a.m.

This constitutes the decision and Order of the Court.

______________________________

HON. LEONARD B. AUSTIN, J.S.C.

Dated: Mineola, NY

March 12, 2007