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Key Drug Co. v. Luna Park Realty Associates
Citations: 221 A.D.2d 598; 634 N.Y.S.2d 502; 1995 N.Y. App. Div. LEXIS 12444
Court: Appellate Division of the Supreme Court of the State of New York; November 26, 1995; New York; State Appellate Court
In an appeal concerning a breach of lease and a request for a preliminary injunction, the Supreme Court of Kings County reversed a prior order that had granted the plaintiff pharmacy's request to enjoin the Health Insurance Plan of Greater New York, Inc. (HIP) from operating a pharmacy in the shopping center where both parties were tenants. The original lease between the pharmacy and Luna Park Realty Associates included a restrictive covenant preventing Luna from leasing to another pharmacy, but this covenant explicitly excluded existing tenants like HIP, which had been in the shopping center since 1984. The pharmacy initiated legal action in 1994 upon discovering HIP's intention to operate a pharmacy, seeking to prevent HIP from dispensing prescription drugs and to stop Luna from renting to HIP for that purpose. To obtain a preliminary injunction, the pharmacy needed to demonstrate a likelihood of success on the merits, potential for irreparable harm, and a favorable balance of equities. The court found that the pharmacy did not establish a likelihood of success because the restrictive covenant did not apply to HIP, an existing tenant at the time the pharmacy began its tenancy. Additionally, even without the express exclusion, the covenant would not bind HIP unless it could be shown that HIP was aware of the covenant when it leased from Luna. Since HIP's lease predated the pharmacy's lease by three years, it was determined that HIP could not have had notice of the covenant. Consequently, the court denied the pharmacy's motion for a preliminary injunction and reversed the previous order, concluding that the pharmacy's remaining arguments were unnecessary to address given the decision on the merits.