Housing Court Decisions May 97

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Case Caption:

Classic Properties v. Martinez

Issues/Legal Principles:

Prevailing party in succession rights case of a rent controlled apartment is entitled to attorney's fees where the original lease had an attorney's fees clause.

Keywords:

attorney's fees; succession rights

Court:

Appellate Term, First Department

Judge:

lower court: Hon. Margaret Taylor

Date:

May 27, 1997

Citation:

NYLJ, page 27, col 1

Referred Statutes:

9 NYCRR 2204.6(d); RPL 234

Summary:

After trial tenant won his succession rights claim to the rent controlled apartment and the lower court granted attorney's fees. The landlord appealed the attorney's fees award and the Appellate Term upheld. Real Property Law 234 applies to the prevailing party in a rent controlled succession rights case if the original tenant had a lease with an attorney's fee provision. The Court rejected the landlord's argument regarding lack of mutuality, holding that if the landlord believed this way, it should have joined the estate of the deceased tenant as a party to the proceeding, and if the landlord had been successful, it could have obtained an attorney's fees award against the estate.

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Case Caption:

London Terrace Gardens v. Rentschler

Issues/Legal Principles:

Termination notice whose boilerplate authorization incorrectly listed the owner as a corporation instead of a partnership is not a fatal defect.

Keywords:

termination notice

Court:

Civil Court, New York County

Judge:

Hon. Douglas Hoffman

Date:

May 28, 1997

Citation:

NYLJ, page 27, col. 2

Referred Statutes:

CPLR 3211(a)(7); RSC 2524.3(b)(c) & (h), 2524.2, 2520.6(i); General Obligations Law 15-301(5)

Summary:

Tenant moved to dismiss the holdover petition on grounds of a defective termination notice. The notice was signed by Andrew Hoffman as authorized agent. The annexed authorization is signed by Onda D'Urso as partner on behalf of London Terrace Gardens, a partnership. The notarization of D'Urso's signature, however, describes London Terrace as a corporation. The tenant argued that this inconsistency renders the notice defective. The landlord countered that tenant's motion is in the nature of a motion to dismiss for failure to state a cause of action, and as such, the court is required to look at whether the complaint does in fact fail to state a cause of action. The court held that the authorization was proper, that the usage of the word corporation was simply in the boilerplate form, and tenant never argued that the person issuing the authorization or designated as an agent had not been a person with whom respondent had dealt.

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Case Caption:

Bedford Gardens Co. v. Sander

Issues/Legal Principles:

Parties who stipulated in court that HUD would resolve tenant's rental amount are bound by HUD's decision.

Keywords:

stipulations

Court:

Civil Housing Court, Kings County

Judge:

Hon. Peter Wendt

Date:

May 28, 1997

Citation:

NYLJ, page 28, col. 5

Referred Statutes:

none cited

Summary:

The apartment is a Mitchell-Lama project subject to the Private Housing Finance Law regulated by the City's HPD. The landlord brought a nonpayment proceeding against the tenant claiming that the tenant owed monthly rent at the market rate of $1,226.77 per month because the tenant's income exceeded the amount sufficient to qualify him for a rent subsidy. The tenant claims he is qualified and should only pay $1,045.77 per month. In a stipulation of settlement, the attorneys agreed to write HUD "to seek a resolution of the matter" by asking for a clarification on whether the tenant owed the $291 difference in rent . HUD decided in favor of the landlord on the basis of the tenant's income and that the tenant should pay the full market rent. Twice more tenant's attorney sought a decision from HUD and twice more HUD held the same opinion. The landlord then moved for summary judgment based on HUD's decision and the tenant argued that HUD incorrectly interpreted its own guidelines with respect to calculating a tenant's income. The court held that once the parties stipulated for HUD to resolve the issue, the tenant cannot now ask the court to disregard HUD's decision, particularly since the tenant provided no affidavits or legal arguments why the HUD decision was incorrect. The court granted the landlord's motion holding that tenant must pay a market rent.

Case Caption:

Brusco v. DHCR

Issues/Legal Principles:

DHCR erred in denying landlord due process rights to cure violations prior to DHCR's issuance of rent reduction orders.

Keywords:

rent reduction orders

Court:

Appellate Division, First Department

Judge:

lower court: Hon. Marilyn Diamond

Date:

May 19, 1997

Citation:

NYLJ, page 25, col 4

Referred Statutes:

none cited

Summary:

Tenants filed a DHCR complaint alleging problems with the boiler, elevators, hallways and waste areas. At the time of filing the complaint in 1991 the DHCR's practice was to notify landlords of the complaint and give them an opportunity to cure the allegations, if any were found during an inspection, before DHCR would issue a rent reduction order. The landlords notified DHCR that the violations were corrected and requested notice of any violations discovered by a DHCR inspection. Three years later the DHCR conducted an inspection and reported various violations related to the tenants' 1991 complaints. However, DHCR did not provide the landlords an opportunity to cure the violations as it used to do following an inspection. Instead the DHCR issued rent reductions orders retroactive to the 1991 rents for stabilized apartments and reduced by $5.00 per month the rents of rent controlled tenants. Landlord appealed DHCR's denial of the agency's failure to provide the landlord an opportunity to cure before it rendered the rent reduction orders. The Appellate Division reversed, finding that DHCR failed to explain its departure from its longstanding policy, and only did so at an Owners' Advisory Counsel 13 days after the DHCR issued its denial. Although there was no law mandating that the DHCR provide owners the opportunity to cure, the Appellate Division noted that such practice was unambiguously recognized "as a norm of procedural due process" during the period the case was pending. The Court found the DHCR's decision arbitrary and capricious as a denial due process rights and reversed the lower court's and the DHCR's rent reduction orders to enable the landlords an opportunity to cure the violations found by the DHCR in its inspection of the building.

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Case Caption:

Moorehead v. Mastrangelo

Issues/Legal Principles:

Landlord not entitled to keep security deposit based on alleged damages to apartment because landlord did not deposit the security monies in a separate account.

Keywords:

security deposit

Court:

City Court, Westchester County

Judge:

Hon. Washington

Date:

May 21, 1997

Citation:

NYLJ, page 32, col. 2

Referred Statutes:

General Obligations Law 7-103 & 105

Summary:

Tenants sued the landlord of a cooperative apartment because the landlord did not refund their security deposit of $3,000.00. Initially the tenants sued for only $1,500 because they applied the other $1,500 to the last month's rent. In small claims court they amended their complaint to seek the full $3,000 on the grounds that the landlord did not keep the security deposit in a separate account as required by law which prohibits landlords from commingling security deposit monies with personal monies. The court ruled that under contract law a violation of the commingling statute would allow the tenants the full return of the deposit. However, since the tenants already applied $1,500 towards rent, which the landlord was entitled to, the court ruled that the $1,500 left as security must be returned to the tenants. The court also rejected the landlord's claim that it was entitled to keep even the $1500 security deposit because of alleged damages by the tenants. The court ruled that not only did the landlord have insufficient proof on this issue, but commingling of funds meant the landlord would forfeit the security deposit regardless of whether the apartment had been left damaged by the tenants.

Notes:

Had the tenants not directed that the landlord could use one-half of the security deposit for the last month's rent, it seems that this court would have directed the full amount of the initial deposit be returned to the tenants and the landlord would have been out-of-pocket for the last month's rent.

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Case Caption:

Sanford Flushing Assoc. v. James

Issues/Legal Principles:

Single instance of objectionable conduct is insufficient grounds to evict tenant on a nuisance theory.

Keywords:

nuisance

Court:

Appellate Term, 2nd & 11th Judicial Districts

Judge:

lower court: Hon. Harriet George

Date:

May 21, 1997

Citation:

NYLJ, page 29, col. 6

Referred Statutes:

none cited

Summary:

The lower court granted the landlord a judgment of possession for a nuisance holdover against the tenant. Apparently, the tenant went one day to the landlord's office for a breakdown of her arrears. According to the tenant, she was made to wait unnecessarily and was treated with disrespect. As a result she became upset, shouted at and threatened landlord's employees and hurled a cup of coffee in their direction which splattered all over the office's glass partition. Her actions prompted the landlord to bring a nuisance holdover against her. (It was probably the attorneys themselves who sought the holdover!) The Appellate Term reversed, holding that a single instance of objectionable conduct by the tenant, especially since she lived in the building since 1972, was insufficient to make out of a case of nuisance.

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Case Caption:

Stanford Realty Assoc. v. DeSouza

Issues/Legal Principles:

Ex-husband's surrender of apartment does not automatically give ex-wife succession rights unless she can prove the apartment was her primary residence for two years prior to husband's surrender.

Keywords:

succession rights

Court:

Civil Court, New York County

Judge:

Hon. Donna Mills

Date:

May 21, 1997

Citation:

NYLJ, page 28, col 1

Referred Statutes:

CPLR 3212, 408, 3103; RPL 226-b & 235-f; RPAPL 713(7); RSC 2523.5

Summary:

Respondent DeSouza was married to the rent stabilized tenant of record who has since surrendered the apartment. She was married to him from December 29, 987 to June 23, 1995. The landlord brought a licensee holdover against her claiming that she never occupied the apartment contemporaneously with the tenant, her ex-husband, and therefore was not entitled to succession rights and a renewal lease in her own name. In a prior holdover proceeding based on alleged unlawful subletting, the lower court dismissed the case, but the Appellate Term reversed, holding that a lease that permits occupancy by the tenant and immediate family members contemplates concurrent occupancy and does not authorize transfer of possession to a family member by a departing tenant as a matter of law. In short, the Appellate Term held that DeSouza had to prove succession rights in the unlawful sublet case. The landlord moved for summary judgment in the licensee holdover, attaching various documents and affidavits to show that DeSouza did not reside in the premises for two years with her spouse prior to his surrender. The documents included her application to another apartment owned by the landlord where she listed an address other than the subject premises. The landlord also obtained an affidavit from her ex-husband stating that she did not reside in the apartment with him for the requisite two years, and an affidavit from the super to the same affect. DeSouza stated that she is an international model and her work took her elsewhere often and that the marital problems also prevented her from continuous occupancy of the apartment, but she asserted it was her sole and only primary residency. As a result of the dispute in facts, the court held that a trial must determine whether she has succession rights, and denied the landlord's motion for summary judgment to recover the apartment. (To win a summary judgment motion, the moving party must show that there are no facts in dispute). The court granted DeSouza's motion to consolidate the two holdovers, holding that despite their different theories the two cases involved common questions of law and fact. However, the Court denied DeSouza's motion for discovery. She wanted to ask the landlord questions about the circumstances of her ex-husband's surrender of the apartment, but she admitted in her papers that he had indeed vacated and she failed to show how additional facts obtained in discovery would add to her defense.

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Case Caption:

Aston-Jones Management v. Campbell

Issues/Legal Principles:

Tenant's rent reverted back to last DHCR registered rent, not rent in effect when HPD owned the building.

Keywords:

overcharges; stipulations; rent registration

Court:

Civil Court, Kings County

Judge:

Hon. Peter Wendt

Date:

May 21, 1997

Citation:

NYLJ, page 30, col 3

Referred Statutes:

RSL 26-517(e)

Summary:

Tenant defaulted in this nonpayment proceeding on various stipulations. The court refused to sign a fifth order to show cause. The tenant then obtained the services of legal aid who argued that the stipulation must be vacated because of overcharges, failure to register the rents, and miscomputation of rents by the landlord. The landlord's attorneys argued that when HPD (the City) owned the building there was no requirement to register the rent because it was exempt from Rent Stabilization during their period of ownership. The tenant argued that when this landlord acquired the building in 1994 it was required to register the apartments with DHCR within one year of the purchase. The failure to timely register precludes the landlord from collecting any rents in excess of the last legal registered rent which was $220 a month. The landlord argued that the rent should stay at the amount set by HPD which was $302.77. To complicate matters further, DHCR had issued a rent reduction order which set the rent at the last guidelines rent order until repairs are made. The landlord argued that because the $302.77 was not the result of an increase in rent, there was no prior guideline adjustment to go back to, another reason why the rent should remain at $302.77. The court first ruled that where "just cause" exists, such as here, the stipulation may be vacated in the court's discretion. For one, the landlord did not dispute its miscomputation of the rent, and the court ruled that these mistakes alone are sufficient to vacate the stipulation. Also, at the time the tenant entered into the stipulations pro se, the court was never made aware of the DHCR rent reduction order or the fact that the premises were never registered. Because tenants cannot waive Rent Stabilization rights, these are further grounds for setting aside the stipulation. On the merits the court ruled that even though HPD was exempt from registering rents, this landlord was not, and the law provides that until the landlord does register the rent, the rent reverts back to the last legal registered rent with DHCR which was $220. The court also rejected the landlord's argument that the DHCR rent reduction order meant that the rent should be at the HPD rate. The court ruled that the rent reduction order required the rent to go back to the last DHCR rent (not the last HPD rent), which again would be the $220. While the court vacated the stipulation, it did not dismiss the petition because a trial was needed to determine the amount of the overcharges.

Case Caption:

Nunez v. Giuliani

Issues/Legal Principles:

Senior citizens tenants' eligibility date for SCRIE benefits begins on date of application for SCRIE funds, not date tenants' eligibility might have begun.

Keywords:

SCRIE

Court:

Appellate Division, First Department

Judge:

lower court: Hon. Louis York

Date:

May 12, 1997

Citation:

NYLJ, page 26, col 1

Referred Statutes:

Real Property tax Law 467-b; Administrative Code 26-509

Summary:

In this class action, the recipients of SCRIE benefits challenged the City's method for calculation senior citizen rent increase exemptions (SCRIE). At issue was the meaning of the law's phrase "eligibility date." For 20 years the Department for the Aging has interpreted the phrase to mean the application date in which the benefits are applied for. The plaintiffs argued that the phrase refers to the earliest date that an applicant met the qualifying criteria of age, income and rent, so that a tenant who qualified for the exemption may require the landlord to roll back the applicant's date to a date preceding the application, perhaps by many years. The lower court adopted plaintiffs' interpretation of the statute and ruled that the Department must alter their calculation method for awarding exemptions to include benefits available prior to the tenant's application date for SCRIE funds. The Appellate Division reversed, holding that the language of the law itself conflicts with plaintiffs' interpretation, such as, the law's language that income eligibility for the exemption must be measured for the year immediately preceding the application date.

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Case Caption:

Pandora Enterprises, Inc. v. DHCR

Issues/Legal Principles:

Landlord improperly increased the rent by including costs for repairs that did not qualify under the Code, and such increases were wilful.

Keywords:

overcharges; treble damages

Court:

Appellate Division, Second Department

Judge:

lower court: Hon. Goldstein

Date:

May 13, 1997

Citation:

NYLJ, page 30, col. 1

Referred Statutes:

RSC 2522.4(a), 2526.1(a)(1)

Summary:

The landlord appealed the DHCR's decision that the landlord had wilfully overcharged the tenant. The Appellate Division upheld the decision finding that the landlord had imposed a rent increase which improperly included the costs for repairs and other work which did not qualify under the Code.

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Case Caption:

Ferrante v. 55 Spring Street Associates

Issues/Legal Principles:

Overcharge claims may include unlawful payment of broker's fee.

Keywords:

overcharges; broker's fees

Court:

Civil Court, New York County

Judge:

Hon. Debra James

Date:

May 14, 1997

Citation:

NYLJ, page 29, col. 4

Referred Statutes:

RSC 2521.2(a), 2526.1(a)(1)

Summary:

Tenant commenced an action in Civil Court for a judgment based on rental overcharges. The tenant produced a copy of a DHCR order pertinent to the prior tenant which found that the prior owner had initially registered the rent at an excessive rental. The new owner charged the tenant a rental based on the unlawful amount. The owner argued that over four years had elapsed from the date the prior owner charged the wrongful rent and therefore the tenant's claim could not be heard (since there is a four-year limitation on collecting overcharges). The judge disagreed, stating that the four-year period begins running from the date of the DHCR determination which was 1995. The tenant also claimed that he had paid the owner or its employee an illegal broker's fee or finder's fee of $4,276.70 for the apartment. The owner argued that this could not be subject to an overcharge claim, but the judge ruled that the law defines rent, for the purpose of an overcharge claim, to include payments of a fee or rental commissions. The court set the matter down for a hearing on whether the owner's actions were willful.

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Case Caption:

430 Realty Co. v. Baird

Issues/Legal Principles:

Two tenants on lease not entitled to have a roommate if both tenants reside in the apartment.

Keywords:

roommates

Court:

Civil Court, New York County

Judge:

Hon. Donna Mills

Date:

May 14, 1997

Citation:

NYLJ, page 29, col 5

Referred Statutes:

RPL 235-f;

Summary:

The tenants, husband and wife, lease a room in their apartment to a subtenant for $800 per month. The landlord brought a holdover claiming that the tenants violated the roommate law. Where there are two tenants on a lease, the law permits occupancy by the tenants (and their immediate family members) and occupants so long as the total number of tenants (exclusive of family members) does not exceed the number of tenants on the lease. The court interpreted the law with respect to multiple lease holding tenants as permitting an additional occupant (i.e., roommate) only where one of the named tenants was not in occupancy. In other words, the roommate would act as a replacement of the absent tenant. The court granted summary judgment to the landlord, but gave the tenants ten days to cure the violation, which means the roommate must leave in 10 days.

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Case Caption:

4 East 28th St. Corp. v. Tandjigora

Issues/Legal Principles:

To justify 1/40th increase of rent for improvements, landlord must prove improvements are not maintenance, decoration or repairs, and must prove the cost of each item.

Keywords:

overcharges; improvements

Court:

Civil Court, New York County

Judge:

Hon. Richard Braun

Date:

May 14, 1997

Citation:

NYLJ, page 29, col 6

Referred Statutes:

RSC 2520.6(j), 2520.11(g), 2522.4(a)(1) & (4), 2528.4; RSL 26-517(e)

Summary:

In a nonpayment proceeding involving a hotel tenant who is stabilized, the tenant alleged that the landlord overcharged him based on claimed improvements. The court found that landlord's increase of the rent by 1/40th was not proven. The court ruled that it was landlord's burden of proof to justify the increase by submission of documents which demonstrate that each item was an improvement, not maintenance, decoration or repairs and proof of the cost of each item. The court directed a trial on the amount of the overcharges.

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Case Caption:

Eastlite Corp. v. Barth

Issues/Legal Principles:

Nonprimary residency holdover cannot be stayed pending Loft Board's decision on landlord's compliance with Loft Law timetable.

Keywords:

lofts; nonprimary residency; disclosure

Court:

Appellate Term, First Department

Judge:

lower court: Hon. Margaret Taylor

Date:

May 16, 1997

Citation:

NYLJ, page 25, col 2

Referred Statutes:

MDL 286(2)(i)

Summary:

Civil Court granted tenant's motion to stay a nonprimary residency holdover proceeding pending resolution of issues pending before the loft board. The Appellate Term reversed, holding that a stay was not warranted since nonprimary residency cases involving lofts may be litigated in Civil Court. Although noncompliance with the Loft Law's legalization timetable may affect the amount of rent the tenant must pay, this issue pending before the Loft Board did not warrant staying the entire holdover case. The Appellate Term also granted landlord's application for discovery on the tenant.

Case Caption:

Community Housing Improvement Program v. DHCR

Issues/Legal Principles:

DHCR's method of calculating rent increases is deemed improper.

Keywords:

MBR rent increases

Court:

Appellate Division, Third Department

Judge:

lower court: Hon. Cobb

Date:

May 7, 1997

Citation:

NYLJ, page 25, col 3

Referred Statutes:

Administrative Code 26-401 (a) & 26-405(a) (3), (4) & (5); RPTL Article 12 & 12-A & 1802; 9 NYCRR 2201.4(d), 2202.8(a)(4)

Summary:

In 1970, the City enacted Local Law #30 which allowed landlords of rent controlled units to receive rent increases based on a maximum base rent system (MBR) established for each apartment every two years. The MBRs are based on a mathematical formula whose factors include the capital value of the property. The MBRs were designed to allow landlords an 8.5% return on capital investment based on the assessed value of the buildings for real estate tax purposes after equalization. Regardless of the formula used, in no event can landlords recover more than 7.5% on MBR rent increases. The petitioners in this lawsuit were owners of rent controlled units in New York City and industry trade organizations representing property owners throughout New York City. The petitioners argued that in calculating the MBRs DHCR has improperly relied on RPTL Article 12 as opposed to Article 12-A. If Article 12 were used the assessed valuation would be based on all property in the City. Instead DHCR has used Article 12-A based on multi-unit residential property which DHCR claims more accurately measures the value of apartment buildings. The landlords argued that DHCR's calculations result in a formula designed to keep rents artificially low. The DHCR argued that if Article 12 were used it would create an absurd result, increasing the MBR for 1996-97 by 32.5% instead of the normal 3% which would lead to evictions of elderly tenants. The Appellate Division held that usage of Article 12 was mandated by the statute's language; however, Article 12 could not override statutory caps on all increases of 7.5%. The Court also noted that senior citizens are protected by SCRIE benefits. The Court further noted that the legislative history of the rent controlled laws revealed that the MBR was set up not only to protect tenants against oppressive rents, but also to allow landlords to collect sufficient rent "to encourage and promote the improvement and rehabilitation" of rent controlled units.

Notes:

In 1996 and 1997 the DHCR limited landlords to 3% for MBR rent increases on rent controlled apartments. The Appellate Division, Third Department's decision would allow a different formula whereby landlords would be entitled to a rent increase of 32.5%. Actual rent increases are capped by 7.5% which means that all rent controlled landlords would get to receive the maximum increase available (i.e., 7.5%). Following the decision, a DHCR spokesperson said that roughly half of rent controlled tenants are already paying the maximum 7.5% increase each year anyway. It is not stated why the landlords' attorneys, the New York City law firm of Borah, Goldstein, Altschuler & Schwartz, chose to litigate this matter in the Third Department. Presumably they chose the Third Department (located upstate) because the First Department (located in New York County) might very well have ruled against their client's interpretation of the law. This is known as forum shopping for the most favorable court. The Third Department's statement that the rent controlled laws also protect landlords is specious, since it is highly doubtful that by receiving the maximum MBR of 7.5% as opposed to 3% in rent increases that these landlords would rush to "improve and rehabilitate" the rent controlled units they own.

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Case Caption:

AC Investments v. Males

Issues/Legal Principles:

Tenant's 55-year dentistry practice in apartment requires trial to determine if premises are substantially used for commercial purposes.

Keywords:

illegal business usage; waiver

Court:

Civil Court, New York County

Judge:

Hon. Donna Mills

Date:

May 7, 1997

Citation:

NYLJ, page 30, col. 6

Referred Statutes:

RPL 231(2); Rent and Evictions Regulations 2204(a)(3); CPLR 3211(b) & 1001

Summary:

The tenant is an 87 year old rent controlled tenant who has lived in the 6-room apartment for 55 years and practiced dentistry there throughout his tenancy. The landlord brought a holdover against him on grounds of illegal commercial usage. The tenant moved to dismiss the petition based on the fact that prior landlords consented to his dentistry practice and one of the landlords was even his patient and had allowed him to put up signs advertising his dentistry. The tenant also argued that the landlord had accepted his rent all these years knowing of his dentistry practice and therefore waived the alleged violation of the certificate of occupancy which does not zone the apartment for commercial usage. The court rejected the argument that the landlord had voluntarily waived a right to evict on this ground because the last lease contained a no waiver clause which the court held to be enforceable. However, the court ruled that there was a question of fact requiring a trial as to whether the premises were being used for commercial purposes "in a substantially commercial sense."

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Case Caption:

Sharp v. Norwood

Issues/Legal Principles:

Landlord's chronic non-payment holdover based on nuisance dismissed where no evidence exists that tenant interfered with the use or enjoyment of the property

Keywords:

chronic non-payment; nuisance

Court:

Court of Appeals

Judge:

lower court: Arthur Scott (Civil Court)

Date:

May 9, 1997

Citation:

NYLJ, page 28, col. 3

Referred Statutes:

RPAPL 711(1); 9 NYCRR 2204.2(a)(2); CPLR 5601(b)(2)(i)

Summary:

Landlord was the co-operative owner of the shares to the rent controlled tenant's apartment. The landlord brought a holdover proceeding on grounds that the tenant's chronic tardiness in paying the rent constituted a nuisance. The Civil Court dismissed the petition on grounds that the landlord failed to state a claim for nuisance. The Appellate Term reversed, holding that chronic late payment and nonpayment of rent may constitute a nuisance "if not adequately explained by the tenant." The Appellate Term sent it back to Civil Court for trial and after trial the Civil Court dismissed the petition again on grounds that the landlord did not prove that the tenant's conduct rose to the level of nuisance behavior. The Appellate Term affirmed (with one dissent). The Appellate Division also affirmed the Civil Court order (with two justices dissenting). The Court of Appeals affirmed with an important clarification of the issue. It held that repeated nonpayment proceedings might constitute a substantial violation of the tenancy, but they did not in and of themselves constitute a nuisance. Since the landlord could not establish that the tenant's conduct substantially interfered with the use or enjoyment of landlord's property (the standard for proving nuisance), the Court of Appeals ruled that the holdover petition was properly dismissed. The Court, however, noted that it was not asked to render a ruling on whether chronic late payment or nonpayment of rent, when combined with "aggravating circumstances," could ever support an eviction based on nuisance within the meaning of the rent controlled laws, and thus it did not address that distinct issue.

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Case Caption:

GSL Enterprises v. Lopez

Issues/Legal Principles:

Respondent denied succession rights for failing to show financial and emotion interdependence as a nontraditional family member with the tenant of record.

Keywords:

succession rights

Court:

Appellate Division, First Department

Judge:

lower court: Hon. Arlene Hahn

Date:

May 5, 1997

Citation:

NYLJ, page 27, col 4

Referred Statutes:

9 NYCRR 2204.6(d)(2) & (3)

Summary:

The respondent failed to prove the emotional and financial commitment and interdependence between himself and the tenant of record so as to establish succession rights to the rent controlled apartment as a nontraditional family member. The respondent merely testified that he and the deceased tenant shared expenses, held some credit cards jointly and vacationed together on some five occasions over their 11-year relationship and that he helped care for the tenant during his illness. The Appellate Term upheld the lower court ruling, noting that there was no testimony from friends, neighbors or family members to corroborate that the respondent had a family-type relationship with the tenant, as opposed to being a close friend or roommate. The Appellate Division likewise upheld the ruling, noting that there was no documentation in the record in the respondent's behalf. In fact, the tenant named his sister in his will and gave her a power of attorney.

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Case Caption:

S E & K Corp. v. DHCR

Issues/Legal Principles:

Landlord's alleged inexperience or claim of unavailable records from prior owner fails to rebut tenant's claim of willful overcharge.

Keywords:

overcharges; willfulness

Court:

Appellate Division, First Department

Judge:

lower court: Hon. Ira Gammerman

Date:

May 5, 1997

Citation:

NYLJ, page 27, col 5

Referred Statutes:

9 NYCRR 2526.1(a)(1)

Summary:

The Supreme Court dismissed the landlord's Article 78 petition appealing the DHCR's determination that the landlord failed to show by a preponderance of evidence that the overcharges were not willful. The Appellate Division rejected landlord's argument that its inexperience caused it to be misled by the advice of the prior owner that a fair market rent could be charged for the apartment upon vacatur by the prior tenant. The court noted that even had the landlord been entitled to charge a fair market rent, the rent it did initially charge still was an overcharge of the fair market rent. Nor did the Appellate Term accept the landlord's allegation that the full rental history was allegedly unavailable at the time the landlord took title to the building.

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Case Caption:

City of New York v. Scott

Issues/Legal Principles:

Respondent entitled to litigate succession rights defense in holdover where the City of New York landlord failed to provide him due process at the agency hearings.

Keywords:

HPD succession rights

Court:

Appellate Division, First Department

Judge:

lower court: Hon. Carl Callender

Date:

May 5, 1997

Citation:

NYLJ, page 27, col 1

Referred Statutes:

CPLR 1018

Summary:

The City sought to evict the respondent from an apartment he lived in with his mother, the tenant of record, from 1985. She died in 1991. The City denied the respondent's application to succeed to the apartment on grounds that he had engaged in "unacceptable activity" of drug trafficking in the vicinity of the premises. The decision, however provided no details of the allegations. The respondent lost his administrative appeal, but the City did not advise him that he could appeal the decision in an Article 78 to the Supreme Court. Thereafter the City brought a licensee holdover proceeding against him. The Civil Court and the Appellate Term held that the respondent received no meaningful opportunity at the agency level to confront the evidence of his alleged drug trafficking, no notice by HPD as to how it came to this determination, and no advice in informing him that he could appeal. Absent such due process the Appellate Division held that he could litigate his succession rights claim in the Civil Court holdover proceeding. The Court also noted that the respondent made a prima facie showing of entitlement to the apartment under the City's Successor Tenant's policy.

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Case Caption:

Ammon v. DHCR

Issues/Legal Principles:

Tenant's right to challenge rent stabilization rental allowed despite prior waiving of potential rent controlled rights.

Keywords:

waiver of Rent Stabilization rights; succession rights; res judicata

Court:

Supreme Court, New York County

Judge:

Hon. Franklin Weissberg

Date:

May 9, 1997

Citation:

NYLJ, page 29, col 4

Referred Statutes:

9 NYCRR 2520.13

Summary:

The petitioner-tenant lived in the rent controlled unit with the now deceased tenant of record who died in 1988. In a 1988 holdover proceeding brought by her landlord she argued that she possessed succession rights as a common law spouse. The parties negotiated a settlement wherein the landlord named her the tenant of record, but the apartment was converted from a rent controlled unit to a rent stabilized unit and her monthly rent increased from $696.51 to $1,000. In 1989, the Court of Appeals held that remaining family members were entitled to succession rights. See Braschi v. Stahl Associates, 74 N.Y.2d 201 (1989). Based on the Braschi decision, the tenant started paying the lower rent. The landlord brought a nonpayment proceeding and Judge Wendt held that the Rent Stabilized lease was enforceable because the holdover settlement was a fair and reasonable compromise entered into without duress. (It is doubtful the tenant would have settled had she litigated her case after the Braschi decision came down.) In 1992, the tenant filed a Fair Market Rent Appeal with the DHCR claiming that the initial rent of her apartment exceeded the permissible stabilization rent. The landlord responded that the complaint must be dismissed because the judge already ruled that the lease was enforceable and she must be bound by Judge Wendt's decision. The DHCR ruled that the landlord was only entitled to a 25% rental increase and the tenant's rent was set at $899.34. On a PAR appeal, the DHCR decided that the tenant had knowingly waived her right to have her initial rent calculated pursuant to the stabilization guidelines because she had settled her case and that by the doctrines of res judicata and collateral estoppel she must be bound by Judge Wendt's decision. The tenant appealed by way of an Article 78 to the Supreme Court. The Court found that to hold the tenant to Judge Wendt's decision it must be shown that her DHCR complaint sought the same relief as sought during the nonpayment proceeding. The DHCR complaint objected to the initial stabilized rent of the apartment. The Court noted that there was no indication that this issue was put before Judge Wendt. Although she objected to the amount of her rent and questioned the validity of the holdover settlement (which converted her apartment from controlled to stabilization), her objections before Judge Wendt were with reference only to her Braschi rights, and were not a challenge of the rent stabilization rent. In essence, the Court found that Judge Wendt merely determined whether she had waived her right to litigate succession rights, not whether she could challenge the stabilization rent. The Court ruled that she could not waive her right to challenge the initial stabilized rent where she never made such a challenge prior thereto.

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Case Caption:

Gutman v. August

Issues/Legal Principles:

Keywords:

overcharges; statute of limitations

Court:

Civil Court, Kings County

Judge:

Hon. Baynes

Date:

May 7, 1997

Citation:

NYLJ, page 32, col. 6

Referred Statutes:

RSC 26-517, 26-5116, 2520.3; RSL 26-516(a)(1) & (g) & 517(e); 9 NYCRR 2526.1(a)(3)

Summary:

In a nonpayment proceeding, both parties agreed that the landlord had overcharged the tenant. She leased the apartment in 1984 at a rent of $250, although the prior tenant's rent was only $135. By 1994, the tenant was paying $315 per month. The landlord failed to file annual registration statements with the DHCR during her tenancy. The landlord argued that it had now registered the apartment and a "statute of limitations" precluded the tenant from calculating or collecting rents beyond a four-year period from the landlord's most recent registration. The tenant argued that the landlord's most recent annual registration was based upon unlawful rent increases and thereby it cannot be deemed to have been "duly registered" pursuant to RSL 26- 516 & RSL 26-517, the latter of which holds that where an apartment is "duly registered" a landlord is not obligated to retain or produce records beyond four years. The tenant argued that RSL 517 is not applicable to this landlord since it failed to file duly or "proper" registrations and the rent recently registered was based on unlawful increases going back to the initial unlawful rent in 1984. The court noted that 26-516 in fact refers to three different four-year periods. 26-516(a)(i) and 26-516(g) refer to a four-year period prior to the most recent registration statement. 26-516(a)(2) refers to both a four-year period from the first alleged overcharge and a four-year period preceding the time the overcharge complaint was filed. The 3 four-year periods do not necessarily coincide. As a further confusion, 26-517(e) bars all overcharge claims without reference to any four-year period where a late registration containing no unlawful rent increases has been filed. This must be distinguished by situations where the most recent annual registration statement contains unlawful increases. In the first instance, the law bars overcharge claims without respect to any four year period, even if the registration statement is filed late. In the latter instance, there is a window spanning from four years prior to the date of the overcharge complaint and continuing through the date of the owner's most recent filing. In this case the tenant filed her overcharge complaint on October 29, 1996 as a counterclaim to the nonpayment proceeding. The landlord's most recent registration statement was filed in June of 1996. The applicable four-year period would be four years prior to October 29, 1996 through June, 1996 (a period of three years and 9 months). The Court ruled that the tenant could calculate the overcharges (as opposed to collecting overcharges) as far back as necessary even relying on her own or DHCR's records if the landlord did not keep its own records beyond four years. The court stated it would be prudent for a landlord to keep records beyond four years and that the statute does not bar a tenant from producing any records. The court rejected the tenant's argument that the landlord's failure to file annual statements constituted willfulness in and of itself as a matter of law. The court held that this act alone did not constitute willfulness or fraud per se so as to impose treble damages. The court set the matter down for a trial (a) to calculate tenant's legal rent, (b) to determine her overcharge damages from four years prior to October 29, 1996 through June, 1996, and (c) for a determination as to whether or not the overcharge was wilful.

Notes:

The issue raised in this case is one of the most difficult ones to understand in Housing Law, primarily because the laws are so tediously convoluted. This judge made an admirable effort to make sense out of the conflicting laws and the opinion is worth reading. The judge came to the same conclusion as another case currently pending on appeal at the Appellate Division, Hart-Zafra v. Pilkes, NYLJ, April 12, 1996, 25:3 (Appellate Term, First Department). The Appellate Term upheld the principle that a tenant may go beyond four years to calculate the lawful rent, but is, of course, limited to a four-year period from the time the complaint is filed in the collection of any overcharges. The Appellate Division's determination of this issue is expected soon since it was submitted for appeal last year.