Housing Court Decisions October 1998

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Case Caption:

416 W. 47th Street Assocs. Ltd. v. Fountain House, Inc.

Issues/Legal Principles:

Corporate rent-stabilized tenant is not entitled to a renewal lease where the class of permitted occupants includes employees of corporate tenant.

Keywords:

corporations as rent-stabilized tenants

Court:

Civil Court, New York County, Housing Part

Judge:

Hon. Timmie Elsner

Date:

October 28, 1998

Citation:

NYLJ, page 29, col 5

Referred Statutes:

CPLR Section 3212; RSL Section 26-504(a)(1)(f); Chapter 940 of the Laws of 1984

Summary:

This case addresses the question of when a corporate rent stabilized tenant is entitled to a renewal lease. Under the circumstances of this case, the court decided that Fountain House, Inc. (the corporate rent-stabilized tenant) was not entitled to a renewal lease and may be evicted by landlord.

Landlord and Fountain House, Inc. (a not-for-profit corporation which provides social services, employment programs and housing for individuals with disabilities) entered into a rent stabilized lease in 1983. The first lease did not name an individual who would occupy the apartment, but provided that the apartment would be used for residential purposes by persons designated by Fountain House, including staff, trainees and other persons associated with Fountain House." The lease was renewed several times but, finally, landlord refused to offer a renewal lease and brought an eviction proceeding against tenant, alleging that it was not obliged to offer a rent stabilized renewal lease to a corporate tenant.

The Court noted that rent stabilization law protects tenants who occupy their apartments as their primary residence. The Court then reviewed all of the significant appellate cases involving corporate rent-stabilized tenants. In Matter of Cale (Court of Appeals, 1984), the named tenant in the lease was a corporation, and the named occupant was the president of the corporation and his wife. The court found that the corporate tenant was not entitled to a renewal lease, because the president and his wife did not use the apartment as their primary residence.

The Court was especially influenced by the case Manocherian v. Lenox Hill Hospital. In Manocherian, the lease named Lenox Hill Hospital as the tenant. Lenox Hill Hospital then sublet the rent stabilized apartments to nurses in its employ. When Manocherian refused to renew the rent stabilized leases, the Court found that Lenox Hill was not entitled to a renewal lease, because the corporation was essentially using the apartments to provide a "valuable perk" to certain of its employees. The Court held that the lease in this case was essentially the same as the lease in Manocherian, because both leases allowed a corporate tenant to give a "valuable perk" to its employees. The Court noted that although the apartment was presently occupied by a disabled person, presumably a client of Fountain House, the next tenant may very well be an employee of Fountain House.

The Court arrived at its decision despite the decision of the Court in Schwartz Landes Associates v. NYCAB, which held that a corporate tenant is entitled to a renewal lease if (1) the occupant is a member of the class designated in the lease as a person who may occupy the apartment; and (2) the occupant uses the apartment as his/her primary residence. The Court essentially said that the Schwarz Landes Associates case must be interpreted in light of Manocherian v. Lenox Hill Hospital, which was decided later. If the designated class of occupants in the lease includes employees of the corporate-tenant, then the corporate tenant is not entitled to a rent-stabilized renewal lease.

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Case Caption:

Libani v. Concorde & CIE, L.P.

Issues/Legal Principles:

Court interpreted language of first amendment to condo offering plan, interim lease and rider and found that tenants of unsold residential unit are not rent stabilized but are entitled to remain as tenants.

Keywords:

condominiums; rent-stabilization

Court:

Supreme Court, New York County

Judge:

Hon. Justice Alice Schlesinger

Date:

October 28, 1998

Citation:

NYLJ, page 28, col 6

Referred Statutes:

none cited

Summary:

Tenants held a rent-stabilized lease for Apt. 9M. Several years later, a condo plan was declared effective. The first amendment to the condo offering plan permitted tenants to rent vacant residential units instead of their original units. A "special risk" section of the first amendment warned that vacant units would not be subject to the Rent Stabilization Law and Code.

In 1991, pursuant to the first amendment, tenants moved into Apt. 10L and signed an interim lease and rider. Two months later, they entered into an agreement to purchase Apt. 10L. However, the tenants never purchased Apt. 10L and when the interim lease expired, the landlord commenced proceedings to evict the tenants from Apt. 10L.

Litigation ensued. The Landlord claimed that tenants should be evicted because their interim lease expired and they aare not entitled to a renewal lease. Tenants claimed that they are entitled to a renewal lease because they are rent stabilized tenants.

The Court agreed with landlord that tenants are not rent-stabilized but refused to evict tenants, finding that they are entitled to remain in the apartment.

The "special risk" provisions of the first amendment clearly warned tenants that they would not be rent stabilized if they chose to rent a vacant residential unit. In addition, the rider to the interim lease clearly warned tenants that Apt. 10L was not rent stabilized.

However, the first amendment specifically provided that tenants "may not be evicted for failure to purchase the vacant unit or for any other reason applicable to the expiration of his lease or tenancy." In addition, the interim lease did not provide that the tenant's failure to purchase the unit would constitute a default under the interim lease.

The Court further provided that landlord may commence another action or proceeding seeking use and occupancy or rent due since the lease expired.

Notes:

Will the parties agree on the rent for Apt. 10L? If the parties cannot agree, and litigation ensues, how will the Court determine the rent? If the Court determines that the rent should be set at a fair market rate, then, as a practical matter, tenants will be forced to vacate, despite the promise (in the first amendment) that they will not be evicted. The right to remain may well be meaningless if it is not accompanied by the right to rent regulation.

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Case Caption:

Slywotsky v. Francko

Issues/Legal Principles:

Court has discretion to assign counsel to represent an indigent party in a civil proceeding.

Keywords:

poor persons; right to counsel

Court:

Civil Housing Court, New York County

Judge:

Hon. Lau

Date:

October 28, 1998

Citation:

NYLJ, page 29, col 5

Referred Statutes:

CPLR 1101 and 1102

Summary:

Landlord commenced an eviction proceeding against an elderly rent-controlled tenant on a fixed income. Landlord claimed that tenant violated a substantial obligation of her tenancy and that tenant does not primarily reside at the premises. Tenant was unsuccessful in her attempt to find free legal help. She therefore asked the Court for permission to proceed as a poor person and to assign an attorney to represent her.

The court noted that there is a right to assignment of counsel in criminal cases, but not in civil cases. Nevertheless, a certain section of the CPLR (Section 1102) provides that the Court has broad discretion to assign counsel for a poor person. The Court granted tenant's motion and assigned an attorney to represent her. The Court noted that it had no authority to order any governmental agency to compensate the assigned attorney and therefore he would have to respresent tenant without any compensation.

Notes:

Surely, all attorneys should spend a certain amount of time engaged in providing legal services for free ("pro bono"). However, pro bono services are not a viable substitute for adequate government funding of legal services programs for the poor. Support funding for legal services!

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Case Caption:

DiScala v. Facilities Development Corp. for Office of Mental Retardation & Developmental Disabilities, Staten Island Developmental Center

Issues/Legal Principles:

Landlord's eviction proceeding against New York State agency in charge of residential home for developmentally disabled persons is dismissed because landlord failed to serve the termination notice, notice of petition and the petition upon the occupants of the home.

Keywords:

due process; failure to serve necessary party

Court:

Civil Housing Court, Richmond County

Judge:

Hon. Straniere

Date:

October 28, 1998

Citation:

NYLJ, page 32, col 3

Referred Statutes:

Civil Court Act Section 204; CPLR Article 12; CPLR Sections 307, 403(c) and 3021; RPL Section 232-a; RPAPL Sections 741 and 753; Mental Hygiene Law Sections 13.01 et. seq. and Section 41.41; Unconsolidated Laws Section 4412; Public Authorities Law Title 4; Public Authorities Law Sections 1678 and 1691; NYS Constitution Art. 6, Section 15 and Art. 1, Section 6 and Art. 1, Section 11; Eminent Domaine Procedure Law Section 501 et. seq.; NYS Civil Rights Law Section 40-c; NYS Human Rights Law - Executive Law Section 290 et. seq.

Summary:

The Landlord brought an eviction proceeding to evict tenant, a NYS agency operating a residential facility in a private home occupied by persons with developmental disabilities. Since the lease had expired, the landlord served the NYS agency with a thirty-day notice to terminate a month-to-month tenancy, followed by a notice of petition and petition. Although the termination notice named the occupants of the home as "John and/or Jane Doe 1-5," the landlord made no attempt to serve the 30-day notice (or the notice of petition and petition) upon any of the occupants. The Court dismissed the proceeding because the landlord failed to serve the occupants, because all persons with rights of possession must be named in a summary eviction proceeding.

In addition, the Court found that the State of New York also failed in its obligation under the Mental Health Law to give notice of the eviction proceeding to the occupants, their parents or their legal guardians.

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Case Caption:

Fred Mengoni v. respondent (unnamed)

Issues/Legal Principles:

Tenant will not be evicted for making alterations to apartment without landlord's consent where tenant complained about defective items but landlord refused to replace them.

Keywords:

alterations

Court:

Appellate Division, First Department

Judge:

lower court judge: Hon. Anne Katz

Date:

October 29, 1998

Citation:

NYLJ, page 26, col 5

Referred Statutes:

none cited

Summary:

The tenant had removed and replaced the kitchen cabinets, air conditioners, refrigerators and the bathroom sink because they were in defective condition and the landlord refused to response to the tenant's complaints to fix them. The trial court refused to evict the respondent-tenant for breaching the "no alterations" clause of his lease. This decision was affirmed by both the Appellate Term, First Department and the Appellate Division, First Department.

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Case Caption:

Tri-Faith Housing Company, Inc. v. Fitzgerald

Issues/Legal Principles:

Tenant-shareholder is evicted for accumulating vast quantities of trash refuse in his apartment, but court stays eviction for ten days so that tenant may have an opportunity to cure by removing the trash.

Keywords:

breach of substantial obligation of the tenancy; accumulating trash in apartment

Court:

Appellate Term, First Department

Judge:

lower court judge: Hon. Arlene H. Hahn

Date:

October 30, 1998

Citation:

NYLJ, page 25, col 1

Referred Statutes:

RPAPL Section 753(4)

Summary:

The appellate term, first department upheld the trial court's determination, after trial, that the tenant-shareholder of a Mitchell-Lama cooperative apartment should be evicted for breaching a substantial obligation of his tenancy by accumulating vast quantitites of trash in his apartment. However the court's stayed its judgment of eviction for ten days after landlord serves tenant with a copy of the order with notice of entry, so that tenant has one final oppportunity to avoid eviction by curing the breach (that is, by removing the trash from his apartment).

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Case Caption:

NRP LLC II v. Morch

Issues/Legal Principles:

Housing Court Judge did not abuse her discretion to vacate stipulation on behalf of tenant under certain circumstances.

Keywords:

vacating stipulations

Court:

Appellate Term, First Department

Judge:

lower court judge: Hon. Anne Katz

Date:

October 30, 1998

Citation:

NYLJ, page 25, col 3

Referred Statutes:

none cited

Summary:

Tenant and Landlord entered into a stipulation of settlement of a nonpayment action in which they apparently agreed that tenant would vacate by a date certain. Shortly thereafter, tenant acquired the funds to pay the landlord's rent claims in full. The Housing Court judge thereupon vacated the stipulation and returned the parties to their status prior to signing the stipulation, conditioned upon full payment of the landlord's rent claims. The lanldord appealed. The Appellate Term, First Department held that it was not an abuse of discretion for the Housing Court judge to vacate the stipulation under these circumstances.

Case Caption:

Guccione v. Guccione

Issues/Legal Principles:

Tenant not required to provide landlord with access to inspect the apartment when landlord offers no reason for inspection request.

Keywords:

inspection; service of process

Court:

Civil Court, New York County

Judge:

Hon. Howard Malatzky

Date:

October 20, 1998

Citation:

NYLJ, page 27, col 1

Referred Statutes:

General Business Law 89-b; CPLR 3212

Summary:

Landlord brought a holdover proceeding against tenant (who is landlord's son). Landlord is the owner of the co-operative loft unit and sublet the unit to the tenant. Landlord brought a motion demanding access for an inspection and tenant denied access stating that the motive was just harassment. The court denied the landlord's motion because the landlord never provided a reason access was wanted. The court held: "The mere assertion that petitioner need only inform respondent that access is requested within some reasonable period of time is not sufficient for this Court to sign an Order granting petitioner carte blanche to enter the subject premises for any reason or not reason at all." The court also rejected the tenant's cross-motion seeking to dismiss the case because the process server's affidavit of service did not state whether he was licensed as a process server or not. The court ruled that no statute requires that a process server state this information in the affidavit of service.

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Case Caption:

Thelen v. Torres

Issues/Legal Principles:

Notice to cure must cite allegations with specificity, including the specific lease clause or statute that was allegedly violated.

Keywords:

nuisance; pets; notice to cure

Court:

Civil Housing Court, Bronx County

Judge:

Hon. Heymann

Date:

October 21, 1998

Citation:

NYLJ, page 29, col 5

Referred Statutes:

RPAPL 753(4); RSC 2524.2(b) & 2524.3(a)

Summary:

Landlord brought a holdover proceeding denominated as a nuisance petition against tenant on grounds of harboring dogs in violation of the lease. The tenant argued that the notice to cure did not set forth sufficient facts such as dates, locations, times or nature of the alleged violation. The court held that the notice was deficient, whether the holdover was grounded on a nuisance theory or a violation of the lease theory. The judge rejected a nuisance theory because (he held) no notice to cure is necessary since "a nuisance cannot be cured." He then rejected the notice on a violation of lease theory because of its lack of specificity. Further the notice did not contain the specific provision of the lease that was violated nor cite the specific statute that was violated. The court dismissed the petition without prejudice.

Notes:

The statement that "a nuisance cannot be cured," is not exactly correct. There are instances when serious types of nuisances cannot be cured, but there are curable nuisances. By dismissing the case without prejudice, the judge is allowing the landlord to bring the matter again and this time to draft a proper notice. Since the judge indicated that a nuisance is not curable, most likely the landlord will commence on a nuisance theory (with a proper termination notice) and not on a theory of breach of a substantial obligation of the lease.

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Case Caption:

BLF Realty Holding Co. v. Kasher

Issues/Legal Principles:

Loft tenant allowed to charge roommate any amount of rent without being guilty of profiteering; despite tenant's reconfiguration of the apartment, additional occupant is deemed a roommate not a subtenant.

Keywords:

roommates; subtenants

Court:

Civil Housing Court, New York County

Judge:

Hon. Douglas Hoffman

Date:

October 21, 1998

Citation:

NYLJ, page 29, col 1

Referred Statutes:

CPLR 408 & 325(d); RPAPL 745(2); 29 RCNY 2-09; RPL 235-f; RSC 2525.6(b) & 2524.3(h); MDL 286(6)

Summary:

The landlord originally sued the tenant in Supreme Court seeking a declaration that the loft tenant had illegally sublet the premises and that this breach is not curable in that the tenant overcharged the subtenant. The Supreme Court transferred the case to the Housing Court. In May 1990, tenant began to share his loft with a woman named Susanna Dent. Pursuant to an agreement entered into by both of them, he occupied one portion of the loft and she another, and the apartment retained a single kitchen, bathtub, entrance and other indicia of a single unit. They also shared common household appliances. The landlord claims that the loft was separated into two distinct living units, and that the tenant charged Dent $1700 per month in rent, while the tenant's rent was only $551.22. The landlord also claimed that there were two kitchens, bathrooms, buzzers and intercoms, although landlord concedes that there existed a single electrical meter and water line. In 1992, Dent married and her husband moved into the space. It did not work out with the tenant and he actually brought an eviction proceeding to have them removed. They agreed to move in two years or a cash incentive to vacate earlier. Dent also brought an overcharge claim, but it was understood it would be withdrawn provided the tenant complied with the terms of the agreement.

The tenant claims that the couple vacated the apartment before the Supreme Court case began, but the landlord claims that he witnessed the couple vacating in November, 1996 several months after the Supreme Court case already began. The court held that even if accepting the landlord's allegations as true, the tenant should still be the victor in this case because "as a matter of law" he had a roommate not a subtenant, in light of the "contemporaneous nature of the occupancy." The subdivision of the loft had no legal significance, according to the court. The court also determined that even if the living arrangements were deemed a sublet, the tenant had a contractual right to sublet without limitation pursuant to the language of the prime lease. With respect to the landlord's claim that the tenant profiteered during the term of the sublease, an allegedly incurable breach, this claim is mooted by the court's finding that the arrangement was that of roommate, not subtenancy, and case law has held that a tenant may charge a roommate any amount of rent. Further, the court found that even if the arrangement was a sublet, the loft law rules (unlike rent stabilization laws) do not provide a landlord with a cause of action for eviction on the basis of profiteering, but instead relegate the subtenant alone to a cause of action against the prime tenant for treble damages. With respect to the landlord's argument that the loft laws should be read "in pari materia" (i.e., in harmony) with the rent stabilization laws, the court held that according to the loft laws this is only applicable if and when a loft unit is legalized by obtaining a certificate of occupancy and tendering the tenant a rent stabilized lease, which is not the case here. For all these reasons, the court granted the tenant summary judgment and dismissed the petition.

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Case Caption:

Little v. Steginsky

Issues/Legal Principles:

Lower court erred by not allowing tenant's evidence concerning the alleged invalidity of landlord's multiple dwelling registration statement.

Keywords:

registration statement

Court:

Appellate Term, First Department

Judge:

lower court: Hon. Howard Malatzky

Date:

October 22, 1998

Citation:

NYLJ, page 28, col 5

Referred Statutes:

RPAPL 711

Summary:

The Appellate Term held that the lower court did not abuse its discretion in failing to provide the tenant another adjournment. But the lower court did err when it did not permit tenant, on the same trial date, to reopen her case to submit documentary evidence that the multiple dwelling registration statement offered by landlord had been rejected as "invalid." In a summary proceeding under RPAPL 711 the landlord must plead and prove that a currently effective registration statement is on file for the multiple dwelling. The Appellate Term remanded the matter for a new trial on grounds that the tenant's offer of proof raised a factual question as to whether landlord was in compliance, and the court should have taken further evidence to resolve the discrepancy.

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Case Caption:

Keenan v. Perreault

Issues/Legal Principles:

Even if tenant had allegedly engaged in unlawful subletting and profiteering, the landlord was not justified in changing the locks, but rather should have commenced a court proceeding to oust the tenant.

Keywords:

illegal eviction

Court:

Appellate Term, First Department

Judge:

lower court: Hon. Laurie Lau

Date:

October 22, 1998

Citation:

NYLJ, page 28, col 5

Referred Statutes:

none cited

Summary:

The Appellate Term held that the lower court properly determined that the tenant had been unlawfully evicted thereby warranting the restoration of the tenant to the apartment. Even if the tenant was allegedly guilty of illegally subletting and profiteering, landlord's proper remedy was to commence a summary eviction proceeding rather than resort to self-help by changing the locks. The court noted there was a definite landlord-tenant relationship and no proof that the tenant had abandoned the property.

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Case Caption:

Gagen v. Hague

Issues/Legal Principles:

Landlord's mischaracterization of tenant as a month to month tenant after the rent stabilized lease expired did not justify dismissal of owner occupancy proceeding.

Keywords:

owner occupancy; Golub notice

Court:

Appellate Term, First Department

Judge:

lower court: Hon. Karen Smith

Date:

October 22, 1998

Citation:

NYLJ, page 28, col 5

Referred Statutes:

RPL 232-a; RSC 2524.2(c)(3)

Summary:

Landlord brought an owner occupancy proceeding which the lower court dismissed on the ground that the landlord had mistakenly alleged that tenant was a month to month tenant after the rent stabilized lease had expired. The lower court determined that due to this characterization the landlord was required to serve a thirty-day notice of termination to terminate the alleged month to month tenancy rather than serve a 120-150 day notice of nonrenewal of the lease. The Appellate Term disagreed, stating that the landlord's misstatement did not give rise to a jurisdictional defect and the tenant could not have been prejudiced in preparing for his defense based on this misstatement. The court reinstated the petition and allowed the landlord to amend the petition.

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Case Caption:

Sayagh v. Sayagh

Issues/Legal Principles:

Power of attorney attached to notice to quit is defective for improper acknowledgement.

Keywords:

notice to quit; acknowledgements

Court:

Appellate Term, 2nd & 11th Judicial Districts

Judge:

lower court: Hon. James Grayshaw

Date:

October 23, 1998

Citation:

NYLJ, page 34, col 5

Referred Statutes:

RPAPL 713; RPL 301 & 301-a

Summary:

Owner served occupant a ten-day notice to quit and then commenced a holdover proceeding. The lower court granted the owner a judgment of possession and the occupant appealed. The individual who gave the occupant-appellant the notice did so pursuant to a power of attorney from the owner which was annexed to the notice. The Appellate Term reversed and dismissed the petition on grounds that the power of attorney was defective. The Court did not spell out what the defect was, but Real Property Law 301 and 301-a deals with the requirements of notarized documents (acknowledgements) in conforming to New York law or laws of a foreign country.

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Case Caption:

Perlbinder v. Levey

Issues/Legal Principles:

Tenant not entitled to attorney's fees since tenant was not prevailing party in nonprimary residency action.

Keywords:

attorneys fees; stipulations

Court:

Appellate Term, First Department

Judge:

lower court: Hon. Marilyn Shafer

Date:

October 22, 1998

Citation:

NYLJ, page 28, col 5

Referred Statutes:

none cited

Summary:

The Appellate Term reversed the lower court's award of attorney's fees to the tenant in a nonprimary residency proceeding. The Appellate Term determined that the tenant was not the prevailing party. Apparently there was a stipulation of settlement which required tenant to pay certain rent arrears and landlord's legal fees and expenses in prosecuting the litigation. Landlord thereafter commenced a nonpayment proceeding to recover rent arrears due under the stipulation, plus additional rent arrears, rather than restore the nonprimary residency proceeding to the calendar. The Appellate Term held that the landlords never abandoned their claim that the tenant breached the payment terms of the stipulation.

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Case Caption:

Decandia v. Slein

Issues/Legal Principles:

Tenant cannot raise retaliatory eviction defense in holdover proceeding based on chronic nonpayment of rent.

Keywords:

retaliatory eviction; chronic nonpayment; stipulations

Court:

Civil Court, Richmond County

Judge:

Hon. Straniere

Date:

October 22, 1998

Citation:

NYLJ, page 30, col 6

Referred Statutes:

RPL 223-b; 22 NYCRR 1200; General Construction Law 30

Summary:

The landlord brought a nonpayment proceeding against the tenant which resulted in three stipulations and at least six court dates over a ten month period. The court noted that at no time during the tenancy was the tenant ever current with the rent, adding that "the situation cried out for the termination of the tenancy." Eventually the landlord did terminate the tenancy based on a chronic failure to pay the rent. During the holdover proceeding the tenant raised the defense that the landlord brought the proceeding in retaliation for the tenant's good faith complaints about repairs. The court noted that the tenant filed complaints about no electricity, leaked ceiling and other issues, but never did the tenant make mention of the repairs or seek an abatement of rent based on the complaints of conditions during the nonpayment stipulations. The court noted that the holdover proceeding arose out of the circumstances involving the nonpayment proceeding and that the retaliatory eviction law does not apply to a nonpayment proceeding. The court held that "although the action was commenced as a holdover proceeding, the gravamen of the complaint is a chronic failure to pay rent. This fact should make the retaliation defense unavailable to the tenant, since the Court must examine the facts and legal issues presented and not be bound by the labels placed on the litigation by the parties." The court rejected tenant's claim that the holdover proceeding was retaliatory in nature.

The tenant also alleged that she was coerced into signing a stipulation which had settled the holdover case. The court noted that the stipulation had been properly allocuted to her by another judge (i.e., she was asked if she understood what she was signing, if she was signing it by her own free will and if she agreed to its terms). The court found no basis for vacating the holdover stipulation of settlement on tenant's allegation that she had been coerced into signing the stipulation or its terms were misrepresented to her. The court likewise refused to set aside the stipulation on grounds that the rent alleged due was incorrect because "it would be ludicrous to set aside the stipulation when the evidence establishes that the tenant owes more money than the judgment amount and cannot pay it."

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Case Caption:

Cha Kai Brothers Inc. v. Nicholas G. Yeager, Inc.

Issues/Legal Principles:

Court determines commercial tenant is residential tenant and landlord is stayed from collecting rent until a certificate of occupancy is acquired.

Keywords:

horizontal multiple dwelling; mixed usage

Court:

Civil Court, New York County

Judge:

Hon. Debra James

Date:

October 22, 1998

Citation:

NYLJ, page 28, col 5

Referred Statutes:

Multiple Dwelling Law 4(7) & 301(1) & 302(1)(b) & 325(2); NYC Administrative Code 27-215 & 27-2097(b) & 27-2107(b)

Summary:

The landlord brought a nonpayment proceeding against an alleged commercial tenant who ran a bookbinding business. The court determined that the tenancy was also residential in nature. The court found that the landlord installed a shower in the bathroom after telling the tenant that if he did plan to live there he shouldn't mention it to the landlord. The landlord claimed that he came to the premises on 7 or 8 occasions to make repairs and allegedly never observed a refrigerators, cabinets, sink or stove nor partitions enclosing the two bedrooms. Testimony was also heard from the tenant's neighbors who testified that the landlord knew they lived and worked in their respective spaces, despite their commercial leases. The court determined that the building constituted a multiple dwelling as it contained three or more separate residential units. The court, however, found no evidence that the building and an adjacent building constituted a horizontal multiple dwelling (which would make all the tenants rent stabilized). The court found that the apartment was altered in a manner that increased the number of habitable rooms in the building and noted that the multiple dwelling laws prohibit a landlord from collecting rent if the occupancy of the unit does not comport to the certificate of occupancy. This landlord failed to procure a certificate of occupancy and failed to register the building as a multiple dwelling. The court, however, refused to grant the relief tenant requested (to dismiss the petition) because she found that the tenant had colluded with the landlord to reside in the premises after signing a commercial lease. And further, the tenant participated in the alterations of the premises. The court granted the landlord a judgment for the rent, but stayed the payment of the rent by tenant until such time as the landlord obtains a certificate of occupancy and complies with the multiple dwelling law. The court directed that the tenant deposit the rent into court.

Case Caption:

Myers v. Frankel

Issues/Legal Principles:

Tenant's overcharge claim, asserted four years after the overcharge began, is tolled by the landlord's failure to register.

Keywords:

rent overcharge; illusory tenancy

Court:

Civil Court, Kings County

Judge:

Hon. Gus Reichbach

Date:

October 14, 1998

Citation:

NYLJ, page 28, col 5

Referred Statutes:

Rent Regulation Reform Act of 1997; RSL Section 26-516(a); ETPA Section 12(a)(1); CPLR Section 213-a; RSC Sections 2522.5 and 2522.4

Summary:

CPLR Section 213-a (as amended by the Rent Regulation Reform Act of 1997) provides that a rent stabilized tenant must file an overcharge claim or action within four years of the alleged overcharge and that the court (or the DHCR) is precluded from "examination of the rental history of the housing accommodation prior to the four year period immediately preceding the commencement of the action." Under the circumstances of this case, the Court refused to dismiss tenant's rent overcharge claim although it was asserted more than four years after the overcharge commenced. Tenant took occupancy in 1990 at a rent of $2,000.00 per month and in 1995 asserted, in response to landlord's attempt to evict her, that she was a rent stabilized tenant and had been overcharged. The last registered rent was $502 for registration year 1988. (The landlord alleged that she did not register the rent thereafter because the apartment was occupied by the owner or a member of owner's immediate family). Since there was no rent in any amount registered four years before the tenant's overcharge claim was asserted, the Court found that the four-year statute of limitations period had not yet begun to run. The Court reasoned that CPLR Section 213-a must be interpreted in conjunction with RSL Section 26-516(a) which provides that a registered rent unchallenged for four years is not thereafter subject to challenge. (The court essentially found that the converse is true - an unregistered rent is subject to challenge after four years). The Court also compared the rent overcharge statute of limitations to the limitations period which applies to medical malpractice actions. The cause of action does not start to run when the tenant discovers the rent overcharge (the injury), but starts to run when the rent is registered (the last act which constitutes a basis for the claim of injury). The Court also found that the landlord had attempted to subvert the rent stabilization laws by arranging an "illusory tenancy." Landlord rented to her daughter and her daughter, in turn, sublet to tenant. Under these circumstances, the subtenant is actually the tenant and is therefore entitled to the protection of the rent laws (in this case, the rent stabilization law).

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Case Caption:

Kouletas Real Estate v. Collado

Issues/Legal Principles:

Spiegel Law defense cannot be asserted by tenant where, prior the commencement of the nonpayment proceeding, tenant did not notify landlord about conditions and violations had not yet been placed.

Keywords:

Spiegel Law

Court:

Civil Court, New York County

Judge:

Hon. Arber

Date:

October 14, 1998

Citation:

NYLJ, page 26, col 6

Referred Statutes:

Section 5 of Social Services Law Section 143-b

Summary:

Landlord sued tenant for nonpayment of rent. The Court ordered an inspection by DHPD which revealed four violations, including two hazardous ("B") violations. Tenant, a recipient of public assistance, moved to dismiss the nonpayment proceeding on the grounds that the Spiegel Law (Section 5 of the Social Services Law Section 143-b) provides that "it shall be a valid defense in any action or summary proceeding against a welfare recipient for non-payment of rent to show existing violations in the building wherein such welfare recipient resides which relate to conditions which are dangerous, hazardous or detrimental to life or health as the basis for non-payment." The Court's decision noted that the Spiegel Law defense is most often raised when the rent has been withheld from the landlord by the social welfare agency or where the agency appears before the court as "amicus curiae" (friend of the court) to argue that the defense should apply. The Court noted that in a recent decision (Dearie v. Hunter, decided July 8, 1998), another court permitted an individual tenant to raise the Spiegel Law defense. Under the circumstances of this case, however, the Court refused to allow the tenant to raise the defense. Tenant acknowledged that she never complained about the conditions until after the nonpayment proceeding was initiated. At the time the proceeding was initiated, there were no hazardous violations on record. Furthermore, the landlord corrected the violations within one month after receiving notice of them. The Court denied the tenant's motion to dismiss the petition on the basis of the Spiegel Law.

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Case Caption:

45 Gramercy Park Tenants Corp. v. Weiss

Issues/Legal Principles:

Court finds that doctor may not permit other doctors to use his co-op for professional purposes without first obtaining the consent of the co-op board.

Keywords:

co-op; illegal sublet; permitted use and occupancy of co-op

Court:

Civil Court, New York County

Judge:

Hon. Ryp

Date:

October 14, 1998

Citation:

NYLJ, page 27, col 2

Referred Statutes:

(none cited)

Summary:

Respondent-tenant is a medical doctor and a shareholder / proprietary lessee of a cooperative apartment which he uses to practice medicine. Tenant allowed two other doctors into the unit to practice medicine with him, as employees of his professional corporation, without first obtaining the consent of the co-op board. The co-op board then brought an eviction proceeding against him alleging illegal sublet. After trial, the Court found that the co-op proved that the tenant was allowing persons other than himself to use the unit, but refused to evict the tenant. Instead the Court ordered the tenant to stop allowing medical doctors other than himself to use the unit, unless he first obtained the consent of the Board. The Court found that when the tenant was interviewed by the co-op board prior to his purchase of the unit, a board member informed him that he must obtain the board's permission before he allowed other doctors to practice with him. On the other hand, the Court was persuaded that the tenant misunderstood paragraph 17 of the proprietary lease (the clause which prohibits subletting except to the tenant's family and servants). At one time, the tenant allowed a psychiatrist, who was not employed by his professional corporation, to use the unit for a short time. The board informed the tenant that he was in violation of paragraph 17 of the proprietary lease, and tenant immediately asked the psychiatrist to leave. Based on this experience, tenant understood only that professionals who were not his employees (servants) cannot occupy the unit without prior board consent. Tenant therefore believed that occupancy by two doctors who were employees of his professional corporation did not violate paragraph 17. In light of this misunderstanding, the Court decided that it would be inequitable to evict the tenant-doctor, thereby causing him to lose his financial investment in the unit.

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Case Caption:

Marrazzo v. Waiters

Issues/Legal Principles:

Tenant will not be charged with an adjournment pursuant to the rent deposit law for requesting a DHPD inspection.

Keywords:

rent deposit law

Court:

Civil Court, Richmond County

Judge:

Hon. Straniere

Date:

October 14, 1998

Citation:

NYLJ, page 29, col 3

Referred Statutes:

RPAPL Section 745 (rent deposit law); RPAPL Section 755; RPAPL Section 731; RPL Section 235-b; Civil Court Act Section 110(a)(5).

Summary:

Landlord brought a nonpayment proceeding against tenant and tenant requested an adjournment to allow an inspection for housing code violations by DHPD. If the inspection report indicated violations, then there would be a defense against the nonpayment proceeding. Violations would show that the landlord had breached the warranty of habitability and entitle the tenant to a rent abatement. The request for an inspection required an adjournment of the proceeding. The landlord then referred the Court to the rent deposit law (RPAPL Section 745, as amended in 1997) and asked that the adjournment be charged to the tenant. RPAPL Section 745 requires the Court to direct that the tenant deposit with the Court all rent which has accrued since the petition was served upon tenant upon the tenant's second request for an adjournment or on the 30th day after the first court appearance (less the number of days that the proceeding has been adjourned at landlord's request), whichever event occurs first. Failure to make this rent deposit may result in a final judgment against tenant without a trial. (The rent deposit law notes four exceptions to the rent deposit requirement, none of which apply in this case). The court noted that the legislature passed this amendment to prevent tenants - who have no ability to pay rent - from delaying meritorious nonpayment proceedings while rent continues to accrue. The landlord asked that the tenant's first adjournment request (for a DHPD inspection) be charged to the tenant so that the rent deposit requirement would be triggered as soon as the tenant made a second adjournment request. The Court refused to do so. The Court reasoned that a request for a DHPD inspection benefits the general public as well as the tenant. If DHPD places a violation, the Court could order the landlord to correct the violation, which would benefit not only the tenant but third parties who may be endangered by the violations. However, if the DHPD inspection requested by the tenant results in a report of no violations, it may be appropriate for the Court to charge the adjournment request to the tenant, assuming that the tenant was merely attempting to delay the nonpayment proceeding. In addition, when the tenant requests a DHPD inspection and a rent deposit issue is raised, the relevant statute is RPAPL Section 755 (passed in 1963) not RPAPL Section 745 (amended in 1997). RPAPL Section 755 gives the court the authority to grant the tenant a stay of nonpayment proceedings if violations have been placed at the premises, on the condition that the tenant deposit all rent due with the Court. The landlord can ask the Court to vacate the stay after all the violations have been corrected. The Court decided that RPAPL Section 755 effectively preempts the use of RPAPL Section 745 when the tenant requests an adjournment for a DHPD inspection, unless the Court determines that the tenant requested the inspection for dilatory purposes or the inspection report reveals no violations.

Case Caption:

In Re BN Realty Associates v. State of New York DHCR

Issues/Legal Principles:

Owner's late filing of annual registration for 1990 does not validate or legalize rent registered in filings for subsequent years.

Keywords:

overcharges; rent registration

Court:

Appellate Division, First Department

Judge:

lower court: Hon. Kenneth Thompson

Date:

October 5, 1998

Citation:

NYLJ, page 26, col 2

Referred Statutes:

RSL 26-517 & 26-511(c)(13); RSC 2522.4(a)(1) & (4)

Summary:

The owner failed to file an annual registration statement for the tenant's apartment in 1990, although it did file timely registrations in the years immediately preceding and following 1990. The owner did not file 1990's registration until 1994. The owner did not dispute that certain of the increases in rent over the amount of the legal regulated rent stated in the 1989 statement were unlawful for reasons other than the failure to timely register. The DHCR found that the owner's 1994 registration did not retroactively validate its prior collection of rent increases, i.e., those increases were unlawful. The DHCR also rejected the owner's contention that its filing of timely registrations for the years immediately following 1990 permitted the owner to increase the rent for those years before it finally made its late filing for 1990. The Supreme Court upheld the DHCR's findings and the Appellate Division likewise affirmed. Therefore, the landlord owed the tenant $29,654.28 in overcharges.

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Case Caption:

Frank Pizza Irrevocable Trust v. Burns

Issues/Legal Principles:

Landlord's multiple dwelling registration listing three legal units does not allow landlord to utilize Housing Court to evict tenants living in illegal basement unit which lacks a certificate of occupancy.

Keywords:

certificate of occupancy; illegal units

Court:

Civil Housing Court, Kings County

Judge:

Hon. Sikowitz

Date:

October 7, 1998

Citation:

NYLJ, page 29, col 1

Referred Statutes:

Multiple Dwelling Law 301 & 325 & 411; 25 NCYRR 208.42; NYCCCA 203(j)

Summary:

Landlord sought to evict tenant who was leased an illegal basement apartment. It was illegal because the basement unit lacked a certificate of occupancy for residential usage. The multiple dwelling registration cites three "legal" apartments above the basement and two "illegal" apartments in the basement. The landlord desired to recover possession from the tenant for its eventual plans to legalize the building and bring the basement units into compliance with the certificate of occupancy. The court observed that the law provides that a summary proceeding cannot be maintained where the apartment is located in a multiple dwelling but lacks a multiple dwelling registration. (A multiple dwelling consists of three or more residential units). In this case, there are five residential units, three above the basement and two in the basement. The certificate of occupancy lists only three residential units (the ones above the basement). The purpose of the multiple dwelling laws, the court noted, is to assure tenants of safe and sound construction of the homes in which they live. The landlord argued that since it has a multiple dwelling registration number, it is not precluded from commencing this eviction proceeding in Housing Court. The court held that simply because the landlord has a multiple dwelling registration number, this will not insulate the landlord from the consequences of violating the certificate of occupancy requirements and the public policy reasons for complaince with same, nor will this document alone enable landlord to recover possession of an illegal unit in Housing Court. The court held that the landlord would have to bring an ejectment action in Supreme Court to evict a tenant of an illegal unit that does not have a certificate of occupancy.

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Case Caption:

Crystal Apartments Group v. Hubbard

Issues/Legal Principles:

Nonpayment proceeding against tenant, a recipient of public assistance, is stayed until all repairs are done, notwithstanding that City continued to pay its portion of the tenant's rent.

Keywords:

Spiegel Law; warranty of habitability

Court:

Civil Housing Court, Queens County

Judge:

Hon. Brown

Date:

October 7, 1998

Citation:

NYLJ, page 29, col 3

Referred Statutes:

Social Services Law 143(b) (a/k/a the "Spiegel" law); CPLR 4539; RPAPL 745

Summary:

The tenant is a public assistance recipient receiving a shelter allowance from the Department of Social Services (DSS). The tenant and DSS jointly pay the rent, but in 1966 the tenant stopped paying her portion because of the conditions in the apartment, including leaky roof, inadequate hot water, vermin infestation, etc. DSS, however, continued to pay their portion of the tenant's rent. Landlord commenced a nonpayment proceeding for rents from January through May 1998. The landlord used the DSS payments to credit the arrears prior to January 1998. The "Spiegel" Law operates as a complete defense to a nonpayment eviction proceeding, allowing the tenant to withhold rent for violations that are dangerous, hazardous or detrimental to life or health. The tenant may continue to withhold the rent until such time as the repairs are made and an owner cannot obtain an eviction against such a tenant in such circumstances. The court held that the Spiegel law is not just applicable to DSS's rent payments. Rather, the entire eviction proceeding must be stayed until the repairs are made. The court also ruled that computer print-outs are admissible as business records if the data was stored in the normal course of business, and thus are an exception to the hearsay rule. The court found that the Department of Housing Preservation and Development issued violations against the building, recorded the violations on the computer, and the print-out of these violations are exceptions to hearsay. The print-outs also constituted constructive knowledge to DSS that violations existed on this building, and the court found it troubling that DSS continued to pay its portion of the rent seemingly impervious to the existence of violations and the Spiegel Law's provision that rent should not be paid until such violations are corrected.

Notes:

The Spiegel Law is useful to counteract the effects of the new rent deposit law (RPAPL 745) which requires the tenant to deposit the rent accrued from the time the petition was served if the tenant asks for a second postponement or thirty days have elapsed from the commencement of the proceeding. This court in effect ruled that the Speigel law trumps RPAPL 745.

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Case Caption:

54 West 16th Street Apartment Corp. v. Dawson

Issues/Legal Principles:

Tenant's request to stay illegal usage holdover proceeding pending the outcome of the criminal court case is denied by the civil court judge.

Keywords:

illegal usage; stays; constitutional rights

Court:

Civil Court, New York County

Judge:

Hon. Martin Shulman

Date:

October 7, 1998

Citation:

NYLJ, page 26, col 6

Referred Statutes:

CPLR 2201; RPAPL 711 & 715 & 741; RPL 231; CPLR 210.40

Summary:

The landlord brought a holdover proceeding against the tenant, a co-op owner, on grounds of illegal usage of the apartment, specifically trafficking in drugs. A criminal case was also pending against the tenant for alleged drug dealing. The tenant asked the court to stay ("freeze") the holdover proceeding until the criminal proceeding was determined. The reason the tenant asked to do this was because of the possibility that if the holdover went forward the tenant would have to choose between preserving his fifth amendment privilege or possibly losing the housing case. The Fifth Amendment provides that an accused in a criminal proceeding is not required to testify and no inference of guilt may be made against the defendant for opting not to testify. The court held that a stay may be granted by a judge pending the outcome of related litigation provided there is an identity of parties, causes of action and remedies sought. The court concluded that the prosecution of the criminal action and the holdover proceeding are not identical with respect to burdens of proof. The purpose of the illegal use evictions is not to provide an additional penalty for criminal behavior, but to protect the community from illegal activities. A criminal court's determination of those activities are not relevant to the Housing Court because the landlord need only prove its case by a preponderance of evidence that it is entitled to possession, whereas the standard in criminal law is beyond a reasonable doubt that the crimes were committed. The court observed that the landlord does not have to prove the commission of the crimes (as the criminal prosecutor must) but rather that the acts and conduct proven warrant "an inference" that the premises were being used for an illegal purpose. The court held that if the tenant testifies in Housing Court the tenant might not be asked any incriminating questions which would jeopardize his criminal case. Further, the tenant can rebut the inference of an illegal trade with exculpatory testimonial evidence from other witnesses or forensic evidence. The court noted that the tenant is faced with a difficult choice between his right to testify in the holdover and his right to assert a 5th Amendment defense in the criminal case. Although the choice is difficult, the court concluded that it is not unconstitutional. The court declined to stay the holdover proceeding pending the outcome of the criminal case.

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Case Caption:

In Re 430 East 86th Street Tenants Committee v. DHCR

Issues/Legal Principles:

Tenants' architect's report constituted a "reply" to landlord's submission and tenants had no further right to submit additional reply papers.

Keywords:

major capital improvements

Court:

Appellate Division, First Department

Judge:

lower court: Hon. Richard Lowe

Date:

October 8, 1998

Citation:

NYLJ, page 26, col 2

Referred Statutes:

RSC 2522.4(a)(2)(ii)

Summary:

Landlord was granted a rent increase based on major capital improvements by the DHCR and the tenants appealed this decision in an Article 78 proceeding to the Supreme Court. The Court affirmed the DHCR's ruling. The owner replaced the roof and related work involving replacement of 80% of the building's parapets and masonry repairs. The DHCR and the Court rejected the tenants' architect's report's findings. It appears as if this report was submitted on behalf of the tenants without their ever seeing it. In reading into the limited facts set forth, it seems as if the tenants were not wholly satisfied with their architect's submission (which claimed poor workmanship on the owner's part). The report was considered a "reply" by the DHCR. The DHCR did not allow the tenants themselves to submit any additional reply papers which apparently the tenants wanted to do.

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Case Caption:

Matter of Corry Associates v. DHCR

Issues/Legal Principles:

Two individual partners in a partnership were not liable to tenant for overcharges since they were not parties to the DHCR proceedings.

Keywords:

overcharges; partnership

Court:

Appellate Division, Second Department

Judge:

lower court: Hon. Schmidt

Date:

October 9, 1998

Citation:

NYLJ, page 29, col 1

Referred Statutes:

CPLR 7803(3); 9 NYCRR Part 25

Summary:

The Appellate Division affirmed the Supreme Court's finding that the DHCR's order finding that various landlords, including the prior owners who filed the appeal, had overcharged the tenant. The Court rejected the prior owners' argument that the decision should not be binding on them because they were merely partners of the partnership, Corry Associates. The Court held that the DHCR decision does not purport to impose personal liability on them and no judgment could be executed against them personally since they were not parties to the proceeding. Apparently, another person who was also a partner in Corry Associates, and although this person purchased the property seemingly in his own name, he continued to use the partnership name in his dealings with the tenant and DHCR. The appellants viewed the DHCR's decision against Corry Associates as binding on them personally, but the Appellate Division held this was not the case or the law.