Withdrawal of a Notice to Cure is not an Adjudication on the Merits

A recent case from the Appellate Division, First Department has affirmed a principle of law - when a landlord withdraws a notice to cure that withdrawal is not an adjudication of the merits of the allegations stated in the notice to cure. BLT Steak, LLC v. 57th St. Dorchester, Inc., 2012 NY Slip Op 02159 (1st Dept. March 22, 2012).In BLT Steak the landlord had served the commercial tenant with a notice to cure. The commercial tenant sought a Yellowstone Injunction by commencing a declaratory judgment action. The commercial tenant also stated a cause of action for a breach of the implied covenant of good faith. With the temporary restraining order in place the landlord withdrew the notice to cure.The commercial tenant then sought judgment on its causes of action. The trial court and the Appellate Division both denied the tenant's claim for summary judgment. It was held that the withdrawal of the notice to cure rendered moot the tenant's claim for declaratory relief and for injunctive relief.In other words - the tenant no longer need a determination that it was in compliance with the lease and no longer needed a temporary restraining order enjoining the landlord from terminating the valuable commercial tenancy because the notice to cure had been withdrawn and there was no longer a possibility of termination.The tenant further argued that the withdrawal of the notice to cure was an adjudication on the merits. However, the Appellate Division held that because the landlord had never started a lawsuit seeking eviction (or more precisely a determination that it was correct that the tenant had breached the lease) the claims stated in the notice to cure had not been litigated.A lesson to all - when a landlord is trying to evict a tenant from a valuable commercial space the parties should be aware that unless the claims statedin the notice to cure are litigated the dispute will remain open.