Supreme Court, Suffolk County, September 10, 2025

OPINION OF THE COURT

James Hudson, J.

{**89 Misc 3d at 172}The matter before us is a dispute concerning the operation of a cannabis dispensary. Plaintiffs' application obliges the court to decide the question of whether a restrictive covenant bars a use which has been sanctioned by both state and town government.

[*2]

This is an action sounding, inter alia, in breach of contract and nuisance as well as a statutory claim under Real Property Law § 339-j. Plaintiffs seek a permanent injunction and monetary damages. The instant motion, brought by order to show cause, is an application for a preliminary injunction. On August 13, 2025, the court issued a temporary restraining order (TRO) which (pending the determination of this motion) enjoined defendants from operating a cannabis dispensary at the locus in quo.

Defendants oppose this application and brought a separate motion by order to show cause seeking to renew and reargue the issuance of the temporary restraining order on August 13th. Defense counsel also requested that their papers in support of their CPLR 2221 motion be considered as the opposition to plaintiffs' motion.

Initially, the court would be remiss if it did not compliment Messrs. Egan, Schriever and Holland for the thoughtful, zealous advocacy they brought forward on behalf of their respective clients. Such counsel honor the court.

As stated in Merling v Ash Dev., LLC (198 AD3d 743, 745 [2d Dept 2021]), "The party seeking a preliminary injunction must demonstrate (1) a likelihood of success on the merits, (2) danger of irreparable harm in the absence of an injunction, and (3) a balance of the equities in favor of the injunction" (citations omitted).

CPLR 6301 and 6313 (a) provide for the granting of a temporary restraining order pending the hearing for a preliminary injunction where it appears that immediate and irreparable {**89 Misc 3d at 173}injury, loss or damage will result unless the defendant is restrained before the hearing can be had.

Although the standard of proof for the granting of a preliminary injunction is clear and convincing evidence, the case of Yonkers Racing Corp. v Catskill Regional Off-Track Betting Corp. (143 AD2d 345, 346 [2d Dept 1988] [internal quotation marks omitted]) acknowledges that a TRO may be based "on a demonstration [of] immediate and irreparable injury" in the absence of restraint (citing CPLR 6301).

As discussed below, plaintiffs have met the more stringent standard and shall be granted the relief requested.

The Stony Brook Technology Center (also known as the Complex, Tech Center) is a 103-acre technology park located in East Setauket. The defendant, SRM, is the owner of the Tech Center unit located within the Tech Center at 19 Technology Drive. The defendant Strong Strains is a tenant of SRM and is now operating a retail cannabis dispensary at the locus in quo. It is uncontroverted that Strong Strains has obtained the necessary license and permit from the State of New York and the Town of Brookhaven to operate a cannabis dispensary.

It is uncontroverted that the individual condominium units are burdened with restrictions on their use. They consist of (1) a declaration of restrictions filed with the County Clerk (restrictive covenant) and (2) the "Plan of Condominium Ownership: Declaration of Northgate Plaza at Stony Brook Pursuant to Article 9-B of the Real Property Law of the State of New York" (the plan) filed with the Suffolk County Clerk. Additionally, Northgate Plaza (the sub-association that manages Tech Center units 7 through 21) operates under its bylaws. All these documents prohibit uses in the units that contravene federal law. (Complaint, exhibits B, C, D.)

Section 1 of the restrictive covenant reads in pertinent part as follows:

"In addition, no part of the Property or any improvements thereon shall be used or occupied for any purpose which in Declarant's opinion constitutes a nuisance or is noxious or [*3]offensive or results in the emission or creation outside of any building of fumes or noise; or violates any federal, state, county or town laws." (Emphasis added.)

Section 19 of the Tech Center's offering plan "Covenants and Restrictions" at paragraph (f) states, "No . . . unlawful use shall be made of the property nor any part thereof and all {**89 Misc 3d at 174}valid laws, zoning ordinances and regulations of all governmental bodies having jurisdiction thereof shall be observed." (Emphasis added.)

Section 6 (3) of article IX ("Rules and Regulations") of the bylaws provides:

"No Unit Owner shall permit anything to be done, or kept in his Unit, or in the common elements, which will result in an increase or the cancellation of insurance on the Building, or contents thereof, or which would be in violation of any law or regulation. No waste shall be committed on the common elements." (Emphasis added.)

It is uncontroverted that the manufacture, possession, and/or distribution of cannabis is illegal under federal law (see e.g. 21 USC § 841 [a]).

On December 12, 2024, Mr. Mike Smith, Alisa Tarsa, Seth Walker and Mallory Guerin, on behalf of the Board of Managers and managing agent of Northgate Plaza at Stony Brook Condominium, sent a letter which listed as its subject "Request for Unit Owner Vote on Special Permit and Variance Request for Cannabis Retail Sales at Unit #19 (19 Technology Drive)" to all unit owners.

The letter detailed that the defendant Dr. Sandhu proposed the operation of a cannabis retail establishment at 19 Technology Drive, within the Northgate Plaza at Stony Brook Condominium. The letter specified, "The proposal seeks approval for changes to the current L-1 zoning regulations, which require the consent of unit owners. As such, your vote is necessary to approve or reject the requested special permit and variance."

With the exception of the defendant Dr. Sandhu, all the unit owners voted against the proposal.

The defendants assert that this action by the other owners did not constitute a rejection of the proposed use. The court disagrees. Although the wording of the proposal did not state that it was a vote to disallow the cannabis dispensary, the disapprobation of the other unit owners was clearly manifest.

Despite this action of the plaintiffs and being charged with knowledge of the negative easements governing the use of the realty, the defendants continued their preparations to open the facility.

Before their opening and on or about June 9, 2025, plaintiffs sent defendants a cease-and-desist letter outlining the above{**89 Misc 3d at 175} issues as well as defendants' violation of the Tech Center's sign regulations. (Exhibit F.)

According to Dr. Sandhu's affirmation, the business opened to the public on June 9, 2025.

[*4]

Before we consider if the plaintiffs have met their burden and established the tri-partite prerequisite for a preliminary injunction, the court will first consider the defendants' argument that the plaintiffs waived their right to enforce the covenant and are estopped from seeking this relief.

Defendants bring to the court's attention certain actions of Mr. Smith, specifically that he approved of the defendants' business and actively assisted them.

"This is not conduct evincing an unequivocal intention to enforce the 'unlawful use' restriction upon which plaintiffs' entire case rests—it shows the opposite of an intent to enforce that restriction. Defendants relied to their detriment on this conduct by moving forward after the December 2024 vote, with Smith's explicit encouragement." (NY St Cts Elec Filing [NYSCEF] Doc No. 38.)

In support of this contention, defense counsel cites to the holdings in Board of Mgrs., Washington's Headquarters Townhouses Condominium v Gottlieb (186 AD2d 525, 527 [2d Dept 1992]); Airco Alloys Div. v Niagara Mohawk Power Corp. (76 AD2d 68, 81 [4th Dept 1980]); and Nassau Trust Co. v Montrose Concrete Prods. Corp. (56 NY2d 175, 184 [1982]).

In Nassau Trust Co., the Court opined,

"an estoppel 'rests upon the word or deed of one party upon which another rightfully relies and so relying changes his position to his injury' (Triple Cities Constr. Co. v Maryland Cas. Co., 4 NY2d 443, 448; Lynn v Lynn, 302 NY 193, 205; Metropolitan Life Ins. Co. v Childs Co., 230 NY 285, 292). It is imposed by law in the interest of fairness to prevent the enforcement of rights which would work fraud or injustice upon the person against whom enforcement is sought and who, in justifiable reliance upon the opposing party's words or conduct, has been misled into acting upon the belief that such enforcement would not be sought (White v La Due & Fitch, 303 NY 122, 128). While estoppel requires detriment to the party claiming to have been misled, waiver requires no more than the voluntary and intentional abandonment of a known right which, {**89 Misc 3d at 176}but for the waiver, would have been enforceable (City of New York v State of New York, 40 NY2d 659; Davison v Klaess, 280 NY 252)" (56 NY2d at 184).

A fair review of the proffered cases indicates that they actually favor the plaintiffs' cause. In Board of Mgrs., Washington's Headquarters Townhouses Condominium v Gottlieb, estoppel was found to be appropriate because the plaintiff condominium board never formally demanded the cessation of the offending conduct and "at other times explicitly acquiesced in [defendant's] conduct" (186 AD2d at 525).

By contrast, the plaintiffs in the matter sub judice have established that they opposed the defendants' proposed use of unit 19 and took a vote disapproving of such behavior. We acknowledge the defendants' proof of communications between Mr. Smith and Dr. Sandhu which indicate that the former had privately expressed support for the dispensary. When this is juxtaposed, however, against the fact that there was a clearly worded covenant forbidding the defendants' desired use, any reliance on Mr. Smith's utterances cannot be considered reasonable. Dr. Sandhu proceeded with foreknowledge of the risk and cannot now use his current financial distress (or the straitened circumstances of his unfortunate employees) as a shield to continue violating a restrictive covenant.

The fact patterns in Airco and Nassau Trust Co. (a breach of contract and a mortgage foreclosure case respectively) also limit their utility.

The Court in Nassau, however, made reference to an earlier decision, Imperator Realty Co. [*5]v Tull (228 NY 447 [1920]), in which the immortal Cardozo distilled waiver and estoppel to their essence: "The truth is that we are facing a principle more nearly ultimate than either waiver or estoppel, one with roots in the yet larger principle that no one shall be permitted to found any claim upon his own inequity or take advantage of his own wrong" (228 NY at 457 [Cardozo, J., concurring], citing Riggs v Palmer, 115 NY 506 [1889]).

Who then is the wrongful actor? Mr. Smith, who publicly opposed the offending use yet purportedly feigned acquiescence in private communiques to Dr. Sandhu? Or the defendants who, facing unanimous disapprobation from their fellow unit owners and, most importantly, the stark prohibition of a restrictive covenant, conceived and brought to fruition a business which exists in violation of the laws of these United States? {**89 Misc 3d at 177}This court finds that the defendants cannot assert estoppel in light of their own admitted behavior.

Ultimately, the actions of Mr. Smith are of no moment. The restrictive covenant did not require board action to govern the actions of the defendants. Given the clear, unambiguous language found in the negative easement, the relief which the defendants desire can only be provided by a successful plenary action "to obtain a declaration with respect to enforceability of the restriction" (RPAPL 1951 [2]) or by the federal government's repeal of those provisions of the Controlled Substances Act (CSA) of 1970 which trigger the restrictive covenant's prohibitions.

Moreover, in order for estoppel to apply, the court would be tacitly condoning (and enforcing) an agreement between Mr. Smith and Dr. Sandhu to violate a federal statute (see Kelley v Levitt & Sons, Inc., 262 App Div 92 [2d Dept 1941]). It has been pointed out by more learned courts that the federal government has been refraining from prosecuting under the CSA of 1970. This is a course fraught with peril. I remind the parties that absent a change in federal law, let Lord Coke's venerable, yet viable maxim Dormiunt aliquando leges, moriuntur nunquam^FN* serve to caution. Estoppel cannot lie under such circumstances.

The foregoing discussion constrained the court to consider the merits of the plaintiffs' claim for breach of contract. We find that, by clear and convincing evidence, the movants have proved a likelihood of success (EdCia Corp. v McCormack, 44 AD3d 991, 993 [2d Dept 2007]).

We next address the defense's argument that the granting of a preliminary injunction would impermissibly disturb the status quo. Relying on the holdings in Zoller v HSBC Mtge. Corp. (USA) (135 AD3d 932, 933 [2d Dept 2016]) and MacIntyre v Metropolitan Life Ins. Co. (221 AD2d 602, 602 [2d Dept 1995]), the defendants posit that the sought-after relief constitutes a mandatory injunction which would require a finding of "extraordinary circumstances" (Zoller at 933). This argument is problematic. Initially, the court finds that the status quo is the operation of a business in accord with the restrictive covenant. Additionally, as noted above, the defendants proceeded with their business plan even though they were forewarned by clear {**89 Misc 3d at 178}language from the restrictive covenant and the Board of Managers that this was unacceptable.

Defendants also argue that the plaintiffs seek the ultimate relief in the complaint and cite to Board of Mgrs. of Wharfside Condominium v Nehrich (73 AD3d 822, 824 [2d Dept 2010]); St. Paul Fire & Mar. Ins. Co. v York Claims Serv. (308 AD2d 347 [1st Dept 2003]); and SHS Baisley, LLC v Res Land, Inc. (18 AD3d 727, 728 [2d Dept 2005]).

[*6]

In order to obtain a preliminary injunction which has the effect of granting the ultimate relief sought, the party seeking same must show "extraordinary circumstances" are present (Nehrich at 824).

The actions of the defendants, described above, demonstrate an obdurate desire to commence a business which a reading of any of these documents (the declaration of restrictions, the plan or the bylaws) would have shown to be forbidden. In this light, the interest in enforcing the restriction on use rises to the level of an extraordinary circumstance.

The case of SHS Baisley, LLC v Res Land, Inc. involved a Yellowstone injunction which brings us to defendants' argument that the court should apply, by analogy, the case law pertaining to same.

A Yellowstone injunction is an equitable device limited to commercial leases; it allows a commercial tenant to "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 of the lease." (146 Broadway Assoc., LLC v Bridgeview at Broadway, LLC, 164 AD3d 1193, 1194-1195 [2d Dept 2018] [internal quotation marks omitted].)

In order to obtain a Yellowstone injunction, the tenant must demonstrate that

"(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 both the termination of the lease and the expiration of the cure period set forth in the lease and the landlord's notice to cure, and (4) it is prepared and maintains the ability to cure the alleged default by any means short of vacating the premises." (JT Queens Carwash, Inc. v 88-16 N. Blvd., LLC, 101 AD3d 1089, 1090 [2d Dept 2012], quoting Barsyl Supermarkets,{**89 Misc 3d at 179} Inc. v Avenue P Assoc., LLC, 86 AD3d 545, 546 [2d Dept 2011].)

This argument, though eloquently made, has a fatal defect. In obtaining a Yellowstone injunction, the tenant must possess an ability to cure the defect which gives rise to the landlord's desire to end the tenancy. In this case, the "cure" is for the defendants to cease the operation of the cannabis dispensary, precisely the relief sought in the complaint.

The next factor for review is whether the plaintiffs have shown that they will suffer irreparable harm if they do not obtain a preliminary injunction.

Defendants contend that the plaintiffs have failed to show any "concrete harm" as a result of the continued operation of the cannabis dispensary.

Against the defendants' position, however, are the array of cases submitted by plaintiffs: Moody v Filipowski (146 AD2d 675 [2d Dept 1989]); Board of Mgrs. of Bond Parc Condominium v Broxmeyer (62 AD3d 925 [2d Dept 2009]); North Haven Point Assn., Inc. v 27 on the Bluff LLC (2023 NY Misc LEXIS 66505 [Sup Ct, Suffolk County, June 13, 2023, index No. 606082/2023]); Board of Mgrs. of the S. Star v Grishanova (2013 NY Slip Op 33560[U] [Sup Ct, NY County, Feb. 7, 2013]); Board of Mgrs. of Clinton W. Condominium v Desmond (2018 NY Slip Op 30907[U] [Sup Ct, NY County, May 11, 2018]); and Beechwood Plainview Old Bethpage LLC v Grindell (2019 NY Slip Op 35260[U] [Sup Ct, Nassau County, May 9, 2019]).

In Moody v Filipowski, the defendants were constructing a dwelling on property which was the subject of a negative easement limiting the realty's use to beach recreation and swimming. In granting the preliminary injunction, the Court noted that "continued construction would interfere with the plaintiffs' full use of the property." (146 AD2d at 679.)

The proof offered by the plaintiffs on the subject of irreparable harm is found in the affidavit of Mr. Michael Smith dated August 5th, 2025:

[*7]

"A substance abuse medical treatment center operates at 21 Technology Drive, just next door to defendants' dispensary. Defendants' operation has impeded and will continue to impede that business's ability to treat patients. A childcare center and a school for special needs children are located on Research Way, approximately 1,500 feet and 1,000 feet respectively from defendants' dispensary. The {**89 Misc 3d at 180}dispensary also operates next to my gym, Outlift Athletics, which occupies 13, 15, and 17 Technology Drive. My gym is a family-oriented operation with beginner classes and customers of all age groups, including children and the elderly. Since defendants' opening, customers and employees of my gym have complained of cannabis smoke and aroma emanating from the parking lot and the Unit. The dispensary use . . . is also incompatible with the Tech Center's purpose and general light-industrial uses. The Tech Center is not made to accommodate busy retail uses such as defendants' operation. It is already disruptive to the parking and traffic in and around Northgate Plaza. Customers are and will be less likely to frequent the above-referenced businesses as a result of defendants' operation."

The court finds this to be a sufficient demonstration, by the necessary quantum of proof, of irreparable harm.

With respect to the balancing of competing equities, the court must decide whether the irreparable harm that the plaintiffs would suffer in the absence of an injunction "substantially outweighs the injury that the injunctive relief would cause to the defendant[s]" (Xiaokang Xu v Xiaoling Shirley He, 147 AD3d 1223, 1225-1226 [3d Dept 2017], citing Parry v Murphy, 79 AD3d 713, 715 [2d Dept 2010]; see Nassau Roofing & Sheet Metal Co. v Facilities Dev. Corp., 70 AD2d 1021, 1022 [3d Dept 1979], appeal dismissed 48 NY2d 654 [1979]).

The concepts of irreparable harm and balancing of the equities are slightly different. The former focuses on an individual litigant as well as the urgency of the moment. The latter is not so constrained by time and allows the court to look at the prospect of the ultimate consequences of granting or denying a preliminary injunction.

Defense counsel states that if the motion is granted, the "defendants will lose their business, fifteen employees will lose their livelihoods (with irreparable consequences like foreclosure), and defendants will be out $3 Million invested plus profits they would have made plus the opportunity to have a long-standing business indefinitely at this state-and-locally approved location" (Mr. Schriever's mem of law dated Aug. 26, 2025). In addition to their argument, the defense has proffered affidavits from 15 of the defendants' employees which detail their financial predicament in the event of the dispensary closing (NYSCEF Doc Nos. 22-37).

{**89 Misc3d at 181} The court must point out to the defendants that they are not being dispossessed of their property. Their title is undisturbed. They may put it to productive commercial use, and employ those persons affected by this decision, within the bounds of the covenant.

The plaintiffs, if denied injunctive relief, will suffer from a continuous use of unit 19 in a manner which violates the covenant (see Real Property Law § 339-j) and results in the harm described by Mr. Smith. Additionally, given the manner in which the defendants proceeded to knowingly breach the condominium plan and open their business in the absence of authority shows that for the purpose of this application, it is they who have unclean hands (Amarant v D'Antonio, 197 AD2d 432, 434 [1st Dept 1993]; Peconic Surgical Group, P.C. v Cervone, 31 Misc 3d 1240[A], 2011 NY Slip Op 51059[U] [Sup Ct, Suffolk County 2011, Emerson, J.]). Additionally, the interests of the general [*8]public will not be affected whether the establishment remains open or closed (De Pina v Educational Testing Serv., 31 AD2d 744, 745 [2d Dept 1969]). Accordingly, at this time the balancing of the equities favor the plaintiffs (see Clarion Assoc. v Colby Co., 276 AD2d 461, 463 [2d Dept 2000]).

Under the circumstances presented, the court finds that the plaintiffs have established, by clear and convincing evidence, the elements necessary for a preliminary injunction (Broadway-Flushing Homeowners' Assn., Inc. v Dilluvio, 97 AD3d 614, 616 [2d Dept 2012]).

This holding in no way conflicts with the decisions found in Matter of Buenos Hill Inc. v Saratoga Springs Planning Bd. (83 Misc 3d 494 [Sup Ct, Saratoga County 2024, Richard A. Kupferman, J.], affd 240 AD3d 990 [3d Dept 2025]); Cannabis Impact Prevention Coalition, LLC v Hochul (85 Misc 3d 827 [Sup Ct, Albany County 2024, James H. Ferreira, J.]); and Cannabis Impact Prevention Coalition, LLC v New York State Cannabis Control Bd. (87 Misc 3d 205 [Sup Ct, Albany County 2025, Peter A. Lynch, J.]).

Those courts considered the question of whether the State Cannabis Law was preempted by the Federal Controlled Substances Act of 1970. All answered that question in the negative. None of those cases involved a determination of whether the State Cannabis Law overrides a restrictive covenant which forbids uses in violation of federal law.

We have considered the remaining contentions of defense counsel and although they have been argued with commendable zeal, they fail to persuade the court.{**89 Misc 3d at 182}

The court having granted plaintiffs' motion must next determine the proper amount to set as an undertaking. CPLR 6312 (b) states,

"prior to the granting of a preliminary injunction, the plaintiff shall give an undertaking in an amount to be fixed by the court, that the plaintiff, if it is finally determined that he or she was not entitled to an injunction, will pay to the defendant all damages and costs which may be sustained by reason of the injunction" (2339 Empire Mgt., LLC v 2329 Nostrand Realty, LLC, 71 AD3d 998, 999 [2d Dept 2010]).

The parties are directed to submit affirmations and any documentary proof for the court's consideration on or before October 1, 2025. The court will set the undertaking on or before October 7, 2025. As stated in Lelekakis v Kamamis (303 AD2d 380, 380-381 [2d Dept 2003] [citations omitted]), the amount "must be rationally related to the amount of the defendant's potential liability if the preliminary injunction later proves to be unwarranted . . . and not based upon speculation."

Accordingly, it is ordered that the motion (seq No. 001) for a preliminary injunction is granted. The temporary restraining order issued by the court in connection with this matter shall continue until October 7, 2025, to permit the setting of an undertaking. It is further ordered that the defendants' motion (seq No. 002) seeking an order vacating the temporary restraining order issued on August 13, 2025, is denied.