Housing Court Decisions April 2000
Editors: Colleen F. McGuire, Esq., Chief Editor
Robert E. Sokolski, Esq., Catherine Grad, Esq. and David Weinraub, Esq.

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New York Law Journal,
decisions for the week of April 24-28, 2000 (4 cases)


Case Caption:
327 Central Park West, LLC v. Ashley
Issues/Legal Principles:
An occupant who moved into the apartment without the landlordĺs consent and who paid the agent cash rental payments for two years was not the legal tenant of the apartment entitled to remain in possession.
Keywords:
waiver
Court:
Appellate Term, First Department
Judge:
lower court: Hon. Howard Malatzky
Date:
April 24, 2000
Citation:
NYLJ, page 24, col 3
Referred Statutes:
none cited
Summary:
Roommate remained in possession of an apartment after the leasehold tenant moved out. Roommate began paying rent in cash to landlordĺs managing agent over a period of two years. The Court noted that the roommate had put their name on the renewal lease which the landlord struck from the lease renewal and that the landlord had always treated her as a roommate, not a tenant. The roommate argued that by accepting cash rent payments the landlord waived its right to object to her tenancy. The Court found that a tenancy may not generally be created by the acceptance of rent payments, and in this case, since the landlord always treated her as a sub-tenant or a roommate, the roommate was not the legal tenant.


Case Caption:
500 West End LLC v. Merkin
Issues/Legal Principles:
Failure by landlord (a limited liability company) to timely file proof that it advertised as required by the LLC law does not mandate dismissal because the landlord filed the proof after the case was commenced. A Jury waiver clause in a 1969 lease not binding in a non primary residence case.
Keywords:
Limited Liability Company, Jury waiver, Jury trial, contract
Court:
Civil Court, New York County
Judge:
Hon. Judge Fitzpatrick
Date:
April 26, 2000
Citation:
NYLJ, page 28, col 4
Referred Statutes:
Limited Liability Company Law,
Summary:
Respondent moved to dismiss based upon the landlordĺs, a limited liability company, (LLC) failure to file proof that it advertised as required by the LLC law. The Court found that as long as petitioner was able to cure this failure by filing the required proof, and since the petitioner did file the document, although it was filed late, that the case should not be dismissed. Petitioner moved to strike respondentĺs demand for a jury trial based upon a provision in respondentĺs lease which did not allow jury trials. The court denied petitionerĺs motion finding that since the lease predated the cause of action based upon non-primary residence, which was not added as a ground for eviction until 1983, that the tenant could not have knowingly waived its right to a jury trial on this issue. Thus the tenant was entitled to a jury trial despite the jury waiver clause in the lease.


Case Caption:
Myers v. Frankel
Issues/Legal Principles:
There is a general four year statute of limitations for filing rent overcharge complaints. However, where a Landlord who fails to file annual rent registrations, and filed the apartment as exempt with the DHCR, the Court can look back more than four years to calculate the lawful rent. However the rent overcharge judgment can only be based on overcharges paid in the last four years.
Keywords:
rent overcharge; statute of limitations; illusory tenancy
Court:
Appellate Term, 2nd and 11th Judicial Districts
Judge:
lower court: Hon. Gus Reichbach
Date:
April 26, 2000
Citation:
NYLJ, page 29, col 1
Referred Statutes:
CPLR 213-a, RSL Section 26-516(a), Rent Regulation and Reform Act of 1997
Summary:
The tenant moved into an apartment under a five year "sublease". At the end of the five years, the "prime tenant", who was the daughter of the owner of the building, moved to evict the tenant and the Court found that the sublease was not proper and the prime tenant was an illusory tenant and that the subtenants were the lawful rent stabilized tenants. The tenants then moved for rent overcharge and the landlord moved to dismiss that claim since it was more than four years since the tenants moved in and began paying the illegal rent. There is a general four year statute of limitations in CPLR 213-a which provides that an action on rent overcharge must be commenced within four years of such overcharge. The Rent Regulation and Reform Act ("RRRA") was enacted in 1997 and specifically stated that if the amount of rent set forth in the annual registration statement filed four years before to the most recent registration is not challenged within four years, it cannot be challenged after that. Thus, the Court found that the RRRA required proper annual registrations. Since no such annual registrations were filed in this case the Court found that the tenants were entitled to an award of rent overcharge and importantly were allowed to go back more that four years to determine the lawful rent stabilized rent. However, the tenants can only collect on a judgment for money which were overpaid within the last four years


Case Caption:
Etlin v. Pepper
Issues/Legal Principles:
In a commercial building where a six independent units are occupied for living purposes the apartments are subject to rent stabilization.
Keywords:
loft law, commercial, rent stabilization coverage
Court:
Civil Court, Kings County
Judge:
Hon. Judge Silber
Date:
April 26, 2000
Citation:
NYLJ, page 30 col 5
Referred Statutes:
RSL Section 26-504, Emergency Tenant Protection Act
Summary:
In a formerly commercial building in Williamsburg, Brooklyn, the landlord served holdover petitions on the tenants alleging that they were month to month tenants whose tenancy was terminated. The tenants alleged that they were rent stabilized tenants because there were six or more independent units. The Court found that the while the loft law did not apply (because these tenants moved in after 1981) that since there were six independent units, which were converted from commercial to residential use that they were subject to rent stabilization.


New York Law Journal,
decisions for the week of April 17-21, 2000 (8 cases)


Case Caption:
King Enterprises v. El-Guindi
Issues/Legal Principles:
Managing agent may sign nonrenewal notice of lease without attaching proof of authority.
Keywords:
renewal lease; managing agent
Court:
Appellate Term, First Department
Judge:
lower court: Hon. Brenda Spears
Date:
April 18, 2000
Citation:
NYLJ, page 26, col.2
Referred Statutes:
none cited
Summary:
The registered managing agent of the building signed the nonrenewal notice without attaching proof of authority. The lower court dismissed the holdover petition for the lack of proof of authority, but the appellate court reversed on grounds that no authority is necessary for a managing agent to sign such a notice. In this case the principal of the corporate managing agent signed this nonrenewal notice, as well as prior renewal leases. The Appellate Term held that the tenant cannot reasonably argue that he was misled as to the agent's authority.


Case Caption:
55 Management Corp. v. Chiate
Issues/Legal Principles:
Where landlord recovered none of the rent demanded due to tenant's recovery of overcharges which completely off-set the rent, tenant was entitled to recover legal fees.
Keywords:
overcharge; attorneys fees
Court:
Appellate Term, First Department
Judge:
lower court: Hon. Marian Doherty
Date:
April 18, 2000
Citation:
NYLJ, page 26, col. 1
Referred Statutes:
none cited
Summary:
In the nonpayment proceeding, the parties settled the matter by agreeing that landlord's claim for rent would be dismissed because it was entirely off-set by tenant's rent overcharge award. Landlord agreed to pay the tenant $750 and accept only one-half of the next month's rent. All funds held by tenant's attorney in escrow were to be released to the tenant. The lower court denied tenant's request for attorney's fees, but the Appellate Term reversed, holding that by the terms of the stipulation, the tenant won "substantial relief" in the proceeding. Since the stipulation expressly preserved the parties' respective claims for legal fees, tenant's motion seeking fees should have been granted.


Case Caption:
Faustin v. 103 Equity Holding LLC
Issues/Legal Principles:
Tenant who was not in possession when allegedly evicted, who did not pay rent after the alleged eviction, and who waited 7 months before bringing alleged unlawful eviction case was found to have abandoned the apartment.
Keywords:
unlawful eviction; abandonment
Court:
Appellate Term, First Department
Judge:
lower court: Hon. Ruben Martino
Date:
April 18, 2000
Citation:
NYLJ, page 26, col. 3
Referred Statutes:
RPAPL 853
Summary:
Tenant brought an illegal lockout proceeding, but the lower court found that tenant had abandoned the apartment and was not in occupancy at the time of the alleged lockout. Tenant made no effort to gain access to the apartment or possession for some 7 months thereafter, and ceased paying rent. The Appellate Term upheld the lower court's ruling that there was no illegal eviction based on tenant's abandonment of the premises.


Case Caption:
Matter of Langdale Owners Corp. v. DHCR
Issues/Legal Principles:
Landlord failed to prove that parking spaces in garages for 90 rent stabilized tenants was not a required service, and thereby landlord was required to repair and rehabilitate them, not demolish the garages.
Keywords:
garages; demolition; required service; ancillary service
Court:
Supreme Court, Queens County
Judge:
Hon. Milano
Date:
April 17, 2000
Citation:
NYLJ, page 30, column 5
Referred Statutes:
9 NYCRR 2522.4(d)(e); RSC 2520.6(r)(3)
Summary:
The landlord applied to the DHCR to demolish 7 garage buildings for the 90 rent stabilized tenants and replace them with open-air asphalt parking spaces on grounds that the garages were in a hazardous condition. The tenants answered the application by observing that the owner■s own engineer■s report recommended repair or replacement, not demolition. The tenants also pointed out that an amendment to the Co-op offering plan stated that the co-op corporation received $111,000 to repair the spaces back in 1995. The owner offered all sorts of information in support of its claim of damaged and deteriorating condition, including photographs and an architect■s reports. DHCR denied the owner■s application on grounds that the owner■s plan would constitute a decrease in services. The DHCR directed the owner to repair the structures with the $111,000 insurance proceeds. The owner appealed on a PAR and inundated the proceeding with more evidence supporting its position of a dangerous condition, including a vacate order from the Queens Department of Buildings. Additionally, the owner said that the garages were never even included in the monthly rent. The PAR decision in 1997 resulted in another denial on grounds that the owner presented insufficient information ■to establish that rehabilitation of the garages or replacement of the garage structures, if demolition is necessary, is cost prohibitive or that the proposed parking lot is an adequate substitute for the service currently provided.■ Confusingly, the PAR order also observed concern for conditions which warrant repairs ■or if required, the demolition of any hazardous garages.■ And if demolitions are undertaken, then temporary parking areas should be built and the garages restored as soon as possible.

In 1998, the garages were demolished. The owner also appealed the PAR in an Article 78 to the Supreme Court whose job was to determine whether the PAR decision was arbitrary or capricious. The court first noted that it is DHCR■s job to determine what is a required service under the Rent Stabilization Code, and whether that service has been maintained. The court noted that ■required service■ also includes ancillary services, including garage facilities. In a prior Court of Appeals case, it was held that garages were required services where there is common ownership of the rent stabilized building and the parking garage. The court found that in this case the garages are required services. The burden, therefore, was on the owner to show why it was necessary to decrease this service. The court upheld the DHCR■s decision that the owner failed to prove that the garage could not be rehabilitated or replaced if demolished, that it was cost prohibitive to do so, and that the proposed parking lot would be an adequate substitute. Further, the owner■s evidence to the DHCR was contradictory. The owner failed to show the actual cost of repair or replacement and only supplied an unsubstantiated estimate and failed to establish that an open parking lot would provide the tenants with an adequate level of services. Rather the owner stubbornly insisted on demolition and its evidence was directed to that avenue. The court denied the owner■s Article 78 to reverse the DHCR■s decision.

Notes:
The decision does not state what consequences, if any, the owner faces when it demolished the garages. It does not state whether the demolition was justified. It does not state whether the tenants are entitled to money damages or an ongoing reduction in the rent until their garages are/were restored.


Case Caption:
287 Hudson Realty Corp. v Golfinopoulos
Issues/Legal Principles:
No statute of limitations exists for tenant seeking Loft Law protection in Supreme Court.
Keywords:
loft law; certificate of occupancy; multiple dwellings
Court:
Supreme Court, New York County
Judge:
Hon. Leland DeGrasse
Date:
April 19, 2000
Citation:
NYLJ, page 26, column 4
Referred Statutes:
MDL 4(7), 281, 301
Summary:
Tenant, an artist, began living in the premises in 1964. According to the last certificate of occupancy dated 1946, the building consists of four floors and a cellar. The first floor is used as a restaurant. The second floor where tenant lives is described as ■offices.■ The third and fourth floors each contain one residential apartment. Tenant has consistently used his space as a home and his art studio. In 1981 tenant■s lease increased from $350 per month to $700 per month, then $800, then $900. Finally, in 1984 tenant filed a complaint with the Office of Rent Control that the owner refused to recognize his rent control rights by overcharging him and failing to register the premises. In 1986, the DHCR ruled that tenant was subject to rent control. The case worked itself up and down and back up the DHCR until finally in 1998 the DHCR ruled that tenant■s apartment was not subject to rent control. The DHCR relied on an obscure law which neither party cited in its papers to the DHCR. (In other words, the DHCR came up with its own legal argument for why the tenant is not protected under the rent control laws . . . 12 years after ruling he was).

When the landlord brought an eviction action the tenant switched gears and claimed he was protected by the Loft Law as a loft tenant. The landlord tried to argue that only the Loft Board can hear a coverage claim and that the Loft Board■s deadline for coverage applications expired. The court rejected this argument, holding that it has concurrent jurisdiction with the Loft Board to determine coverage applications and that no statute of limitations applied to coverage defenses exists for the court. The court proceeded with an analysis of the three elements a loft tenant must show to receive Loft Law status, and determined that this tenant satisfied each provision. Those provisions include whether all or portions of a building were occupied for commercial purposes. Further, the building lacks a certificate of occupancy for a multiple dwelling (i.e., 3 or more residential units), because this building■s certificate of occupancy only cites 2 residential units. The tenant also proved that the building was in fact occupied by three or more residential tenants for the requisite time period. The court rejected landlord■s argument that tenant waited far too long to seek protection of the Loft Law. The court held that tenant■s delay is excused by ■its understandable reliance on DHCR■s initial orders that he was a rent controlled tenant.■ The court referred ancillary matters to the Loft Board, such as setting the first rent for the premises and increases, if any, for code compliance costs.

Notes:
The typical Loft Law coverage application involves a building which completely lacks a residential certificate of occupancy since all the units are listed as commercial. In this case, the building did have a residential certificate of occupancy, but covering only two residential units. It takes three residential units to issue a multiple dwelling certificate of occupancy. The tenant here argued that this building was in fact a multiple dwelling since three units were occupied residentially during the relevant time period to trigger Loft Law protection. The law firm of Colleen McGuire, editor of Housing Court Decisions represents the tenant.


Case Caption:
Cousins v. Duane Street Associates
Issues/Legal Principles:
Tenant who fails to assert an FDCPA counterclaim in a nonpayment proceeding cannot then maintain a federal FDCPA lawsuit.
Keywords:
FDCPA; rent arrears; res judicata
Court:
United States District Court for the Southern District of New York
Judge:
Hon. Casey
Date:
April 20, 2000
Citation:
NYLJ, page 35, column 4
Referred Statutes:
15 USC 1692 et seq; New York City Civil Court Act 110, 204; RPAPL 711, 731
Summary:
The tenant (an attorney) filed a law suit in federal court against the landlord, the landlord's attorneys, and the landlord's agents based on violations of the Fair Debt Collection Practices Act. The landlord's attorneys signed a Three Day Rent Demand Notice and thereafter commenced a nonpayment proceeding against the tenant. The nonpayment proceeding was filed only 7 days after the FDCPA case was filed based on the notices relevant to the rent demanded in the nonpayment proceeding. The tenant did not advise the federal court of the pending Housing Court action. The nonpayment proceeding resulted in a judgment in the landlord's favor. (Actually, several nonpayment proceedings were initiated but discontinued on technicalities). The federal case was marked off calendar pending the outcome of Romea v. Heiberger & Associates which was on appeal and which eventually established the precedent that a landlord's attorney must comply with FDCPA requirements including providing the tenant 30 days to dispute a debt, such as rent. Once Romea was affirmed on appeal, the federal case came back on the calendar whereupon the defendant law firm (Gutman, Mintz, Baker & Sonnenfeldt, and the individual attorneys in that firm) asked the judge to dismiss the FDCPA claim.

The defendant attorneys argued that since the tenant failed to raise an FDCPA claim in Housing Court, he is barred from bringing an FDCPA suit in federal court involving the same three day notice which formed the basis of the nonpayment proceeding. The tenant argued that he couldn't bring an FDCPA counterclaim in Housing Court because that court lacks jurisdiction to hear this type of claim. The federal judge, however, disagreed and pointed to section 204 of the New York City Civil Court Act which grants the Civil Court jurisdiction over "any counterclaim for money only." The judge also pointed to RPAPL 731 which states that when a tenant is sued for rent, and if the tenant fails to "interpose and establish any defense that he may have, he may be precluded from asserting such defense or the claim on which it is based in any other proceeding or action." The court also noted that since the tenant is an attorney, he should have known to assert the FDCPA defense in Housing Court in response to the nonpayment proceeding. The judge noted that New York does not have a compulsory counterclaim rule, but held that "a party cannot remain silent as a party in one action while he is a party in a second action, seeking relief inconsistent with the judgment of the first action under a different legal theory." The court therefore dismissed the FDCPA claim on grounds of res judicata.

Notes:
This is a remarkable decision that, if appealed by the tenant, must be reversed. How can a tenant make a counterclaim in Housing Court against his/her landlord's attorneys when the attorneys are not parties to the Housing Court nonpayment proceeding??? The only parties to a Housing Court nonpayment proceeding are the landlord and the tenant. Only in very rare instances would a landlord be liable to a tenant on FDCPA grounds. More problematic is the fact that the landlord's attorneys are not parties to a nonpayment proceeding. They would have to be impleaded (brought in by the housing judge's consent) and then they most likely wouldn't represent their client since they would become parties, too, and new counsel would have to be brought in . . . making for an unnecessary morass. Further, Housing Court is a forum of limited jurisdiction, contrary to this federal judge's belief. For example, if a tenant's ceiling crashed and the carpet and rug were destroyed, tenant could not seek money damages in Housing Court as a counterclaim to a nonpayment proceeding. For similar reasons, a tenant could not recover damages in Housing Court from an FDCPA violation. In reading between the lines of this case, one cannot help but conclude that this judge was quite irritated by this tenant-attorney who sued 12 distinct defendants, including several Gutman, Mintz lawyers individually. The tenant also threw in a "kitchen sink" of other claims which the judge dispensed with by removing to state court. Regardless of the judge's obvious displeasure with this lawsuit, his poorly reasoned ground for dismissal of the FDCPA claim is not only completely wrong legally, but his position (i.e., suing landlord attorneys in Housing Court) makes a mockery of genuine FDCPA claims in federal court and, if followed, would create utter havoc in Housing Court■the last thing tenants in that forum need.


Case Caption:
9554 NY Apartment Associates v. Hennessy
Issues/Legal Principles:
Tenant■s uninterrupted usage of two apartments on the same floor for 30 years is deemed to constitute a single residence and landlord■s nonprimary residence action against one of the apartments thereby fails.
Keywords:
nonprimary residence; waiver; missing witness charge; contiguous apartments
Court:
Civil Housing Court, New York County
Judge:
Hon. Peter Wendt
Date:
April 19, 2000
Citation:
NYLJ, page 27, column 4
Referred Statutes:
none cited
Summary:
The landlord brought a holdover proceeding against the tenant on grounds that the tenant does not occupy his apartment, 5S, but rather resides elsewhere, to wit: Apartment 5N in the same building and on the same floor. The tenant argues that prior landlords acquiesced to his usage of both apartments as his singular residence for 17 years. The landlord■s agent testified that he had been the agent since 1995 and had seen both apartments multiple times and that the tenant used 5S as an artist■s studio to paint and store his art supplies and paintings because 5S lacked a kitchen and bathroom. The court, however, did not find him to be a credible witness. For one, he testified previously at a deposition that he had only been at the apartment on one occasion. The owner also called a ConEdison employee to testify as to the utility usage at the apartment. The usage in 5S was minimal, but the court believed the tenant■s testimony that he paints using natural light and does not use much electricity during the day. It appears that the landlord had no more proof or testimony. The tenant on the other hand had ample proof of his uninterrupted actual usage of both apartments. The tenant is an abstract artist who has continually painted in 5N since 1961. Apartment 5S was in the name of another tenant and the two of them shared both apartments and used the kitchen area of 5S as their bedroom after the stove was removed from the apartment. The tenant■s roommate moved out in 1983. The landlord offered the tenant the lease to 5S but he couldn■t afford it, although 5 months later he took it and became its first rent stabilized tenant. In consideration for receiving a lease to 5S, the tenant agreed that the landlord did not have to bring the apartment up to Code standards. The tenant testified at length as to how he utilizes both apartments on a daily basis as his single primary residence.

In determining whether two nonadjacent apartments constitute a single residence, the court noted that several factors are examined, including the tenant■s intent ■which is manifested in the tenant■s usage of the apartment.■ Another factor is landlord■s knowledge and acquiescence in the arrangement. Courts have held that a landlord in these situations takes the premises subject to any waiver of rights made by a predecessor owner. In this case, the court concluded that the tenant proved that he used both apartments as his primary residence for over 30 years, except for the 5-month period he didn■t have possession of 5S. The court also acknowledged prior landlords■ knowledge and acquiescence in the arrangement, as testified to by the tenant. Further, the tenant■s unique home was featured in House and Garden magazine in 1983 and that the tenant gave a copy of the magazine to each landlord, including the current landlord. The court dismissed the landlord■s argument regarding the tenant■s tax deductions for 5S as a possible over-deduction, but not determinative of the primary residence issue. Tenant raised the missing witness charge, which holds a negative inference if a person who should be a witness is not called. In this case, the super of the building has held his position since the late 1960s, yet the landlord did not call him to the witness stand. The permissible inference is that the super could not rebut the tenant■s testimony and that his testimony would not have been favorable to the landlord. For all these reasons, the court found for the tenant that 5N and 5S constitute his single home and he did not engage in nonprimary residence activity.


Case Caption:
Spaeda v. Bakirtjy
Issues/Legal Principles:
Landlord cannot deregulate stabilized apartment based on expiration of J-51 tax abatements if notice of approximate expiration date of said benefits was not contained in each renewal lease.
Keywords:
J-51 tax abatements; renewal leases
Court:
Civil Court, New York County
Judge:
Hon. Lucy Billings
Date:
April 19, 2000
Citation:
NYLJ, page 27, column 6
Referred Statutes:
CPLR 2104; 9 NYCRR 2522.5, 2524.2; NYC Administrative Code 11-243, 244, 26- 504(c); 28 RCNY 5-03(f)(1)
Summary:
The landlord brought a holdover proceeding against the tenant on grounds that the tenant's lease expired, but the tenant claimed rent stabilization protections. The landlord claimed that J-51 tax abatements expired and that therefore the premises are no longer rent regulated. Tenant first took possession of the apartment at a time when the apartment was not subject to rent stabilization. During the period the apartment received tax benefits, his tenancy was covered by rent stabilization. Upon expiration of the tax benefits, the landlord maintains the tenancy reverted to the unregulated status in effect before the tax benefit period. The relevant law provides that upon expiration of the J-51 status (i.e., the tax exemptions or abatement benefits to the landlord), the apartment remains rent stabilized throughout a tenant's tenancy unless each renewal lease he entered during the tax benefit period included a notice explaining the premises' rent stabilized status and giving an approximate date when the benefits were scheduled to expire. In this instance the initial lease would not have had a provision relating to tax benefits because the landlord had not applied for them at that time, and therefore the original lease was not required to give notice that the unit would become destabilized upon expiration of the benefits.

The landlord also never gave the specified notice in each of the tenant's renewal leases during the tax benefit period. The landlord argued that it could not provide such a notice because by doing so the landlord would vary the terms of the initial lease and this is not permitted under the Rent Stabilization Code, section 2522.5. The court, however, noted that section 2522.5 contains an exception at paragraph (g), which requires a change to the original lease "to comply with a specific requirement of law or regulation" relating to Rent Stabilized housing. As noted, various laws required that notification language be included in each renewal lease. The court also noted that the notice warns and alerts tenants that their stabilization status expires at the end of the renewal lease, and therefore, such a notice is for the purpose of protecting tenants and its inclusion would be permissible even if section 2522.5 did not explicitly authorize such language. Since the statute prohibits destabilization unless specific steps are taken, such as the notice provisions in the renewal leases, and since the landlord failed to take those steps, the landlord cannot deregulate the apartment and the tenant remains protected by the rent stabilization laws.

Notes:
In cases where J-51 tax benefits have expired, once the rent stabilized tenant vacates the apartment, then the apartment is subject to a market rent with any new tenant. It would not be surprising if rent stabilized tenants residing in "J-51 apartments" are subject to more harassment than other rent stabilized tenants in an effort to induce them to leave so that the landlord can jack up the rent to whatever the market will bear.


New York Law Journal,
decisions for the week of April 10-14, 2000 (4 cases)


Case Caption:
Fuentes v. Morningside Twin Co.
Issues/Legal Principles:
Stabilized tenant who relocated to alleged non-regulated unit owned by co-operative sponsor does not forfeit stabilization rights where her relocation did not constitute a knowing waiver of her rights.
Keywords:
rent stabilization rights; Martin Act; waiver
Court:
Supreme Court, New York County
Judge:
Justice Schlesinger
Date:
April 12, 2000
Citation:
NYLJ< page 29, col.2
Referred Statutes:
General Business Law 352-eeee
Summary:
In 1978 plaintiff Fuentes moved into a basement apartment with her then husband. She eventually had two children there. In 1985, Morningside, as sponsor, filed an offering plan with the Attorney General to convert the building into a cooperative. The plan was rejected on several grounds, including the fact that Morningside failed to disclose that purchasers may not be entitled to personal income tax deductions based on the Fuentes' occupancy of the basement apartment. Apparently, it was illegal to have minor children occupying the basement apartment. Morningside sought to rectify the situation by serving a notice to cure and notice to terminate in 1985, but Fuentes didn't move at that time. The plan was declared effective in 1986. It was a non-eviction offering plan and gave the tenants 90 days to purchase the shares to their apartments. Those tenants who did not purchase remained rent stabilized tenants.

Morningside's then attorney, Marcia P. Hirsch, wrote to a pro bono attorney who had been representing Fuentes' husband regarding the basement apartment. The attorney suggested that Ms. Hirsch contact the Legal Aid Society. Instead, in 1990 Ms. Hirsch wrote to the husband directly and offered to relocate him and his family to a larger apartment. The husband had moved out and Fuentes responded by agreeing to relocate from the basement to the upstairs apartment pursuant to a "sublease" with the landlord Morningside. Morningside was designated as the "tenant" of the apartment. When Fuentes did not move at the end of the sublet, Morningside brought a holdover proceeding which was settled by an additional one-year sublease expiring on 1995. Legal Aid represented Fuentes in this matter, but none of the attorneys addressed the issue of whether Fuentes retained rent stabilization rights when she relocated from the basement apartment to Apartment 3.

In 1995, when Morningside bought a second holdover proceeding stating that the apartment was not rent stabilized, Fuentes went to Supreme Court for a declaration of her rights. Morningside claims that Fuentes knowingly waived her rights as a stabilized tenant when she relocated voluntarily in order to avoid being evicted from the illegal basement apartment. In other words, better something, even if not rent stabilized, than nothing. She also waived any stabilization rights when her attorneys agreed to extend the sub-lease. Before discussing waiver, the Court first discussed the issue that Fuentes remained in the apartment as a non-purchasing tenant under the Martin Act. At the time the plan was deemed effective in 1986, Fuentes was a rent-paying tenant entitled to possession in the basement apartment which would allow her to retain rent stabilization rights. In another matter, the Appellate Division recently ruled in Libani v. Concorde & CIE, that stabilized tenants who were relocated to another unit under an interim lease during a conversion, and who failed to purchase, could not be evicted and that they retained rent stabilized rights since the offering plan provided that a nonpurchasing tenant would not be evicted upon the expiration of the lease. The Court found that Fuentes had similar rights as in Libani, and that she may not be evicted based on her failure to purchase the shares or because the so-called sublease expired.

In analyzing the waiver argument, the Court relied on a Court of Appeals case for the principle that waiver of rent regulated status might not hold if the exchange was not wholly voluntary if it benefitted the landlord. Fuentes' move to Apartment 3 benefitted the sponsor because the super moved to Fuentes' former basement apartment, freeing up the super's apartment to be sold as a condo unit. Further, Fuentes' move out of the basement cured the illegality of the basement unit with children in it. Although Fuentes may have benefitted by getting a larger apartment, she might not have made the move had she known she would lose her stabilization rights. The initial sublease from attorney Hirsch failed to advise Fuentes of such a loss. The Court acknowledged that Fuentes' pro se attorney acted "improvidently" in extending the sublease by one year, but the Court noted that Fuentes had already moved and that the stipulation contained no explicitly reference to waiver of the Rent Stabilization Law. Thus, the Court refused to infer that Fuentes had knowingly waived her right to rent stabilized protection, as "such a finding would violate this state's public policy against waiver of rent protection." The court rendered an order declaring Fuentes the rent stabilized tenant.


Case Caption:
Matter of Commissioner of the Department of Housing Preservation and Development
Issues/Legal Principles:
Where a receiver had previously been appointed to oversee a building, a 7-A proceeding cannot be commenced unless the appointing court approves of the 7-A proceeding.
Keywords:
7-A proceeding; receivers
Court:
Civil Housing Court, Bronx County
Judge:
Judge Rashford
Date:
April 12, 2000
Citation:
NYLJ, page 31, col. 6
Referred Statutes:
RPAPL 778(5)
Summary:
Department of Housing Preservation and Development (HPD) attempted to bring a 7-A proceeding in Housing Court. A 7-A proceeding occurs when the landlord has neglected its property to the detriment of the tenants and the property is temporarily taken away and placed in the hands of a 7-A administrator who uses the rent money specifically to make needed repairs. However, previous to HPD's proceeding, a receiver had already been appointed in Supreme Court. (It is not known where the actual owner was). The receiver opposed HPD's attempt to have a 7-A administrator appointed because HPD did not seek permission from the Supreme Court before commencing a 7-A proceeding. HPD argues that the 7-A matter is not against the receiver as a party, that permission to sue a receiver is not required in a 7-A proceeding, and the law does not preclude a building from having a 7A administrator simultaneous with a receiver.

The court held that the receiver was appointed before the 7A proceeding commenced and in fact has been registered with HPD as an "owner." Under these circumstances, the 7A proceeding should be stayed pending an application by HPD to the Supreme Court for permission to continue with the 7-A. In reaching this result, the court relied on another case which held that the 7-A proceeding "would directly affect the res [i.e., property] which the receiver is bound to protect." The court gave HPD 30 days to seek the Supreme Court's permission to maintain the 7-A action.


Case Caption:
Laura McCarthy v. The Board of Managers of the Bromley Condominium
Issues/Legal Principles:
Subtenant of condo owner cannot maintain a warranty of habitability claim against condo corporation.
Keywords:
warranty of habitability; subtenant
Court:
Appellate Division, First Department
Judge:
lower court: Edward Lehner, J.
Date:
April 10, 2000
Citation:
NYLJ, page 24, col. 1
Referred Statutes:
none cited
Summary:
Plaintiff is the resident subtenant of a condominium unit and apparently had problems in her apartment. She sued the condominium corporation in that regard and the lower court upheld her warranty of habitability claim. The Appellate Division reversed, holding that this claim against the condo corporation "should have been dismissed since it is clear that defendant condominium did not extent a warranty of habitability to the individually owned unit in question." The Court further held that the corporation "would have made no such warranty to plaintiff subtenant, with whom it had neither a contractual agreement nor landlord-tenant relationship."


Case Caption:
Bandler v. Battery Park Management Co.
Issues/Legal Principles:
Mere occupant not entitled to warranty of habitability defense with respect to off-set of payment of use and occupancy when off-set not requested during holdover proceeding.
Keywords:
warranty of habitability; harassment; roommates
Court:
Civil Court, New York County
Judge:
Hon. Rakower
Date:
April 12, 2000
Citation:
NYLJ, page 30, column 5
Referred Statutes:
RPL 235-b, 235-f(1), 235-d
Summary:
Plaintiff occupant sued the landlord for breach of the warranty of habitability, failure to make repairs and harassment for failure to remedy dangerous and hazardous conditions. Initially the tenant herself was also a plaintiff, but for reasons unstated she withdrew from the action, leaving plaintiff to sue. In a prior holdover proceeding, the plaintiff argued that he was the roommate of the tenant and also that he had not lived there after February, 1992. But Judge Hahn found that since the tenant did not occupy the apartment as her primary residence, she could not have had a "roommate." Apparently in another previous holdover action, the plaintiff had claimed that he was entitled to possession of the apartment (i.e., the de facto tenant), but abandoned that legal claim (and argued the roommate defense) in order to avoid Judge Hahn's order that he pay use and occupancy for his possession of the apartment.

The plaintiff brought this action to recover the use and occupancy he claims he should not have had to pay since the premises were not habitable. The landlord argued that the warranty of habitability does not extend to a mere roommate, but only to lease holders. The court noted that the plaintiff could have raised the issue of the habitability during the holdover proceeding to off-set the use and occupancy plaintiff was ordered to pay, but that there is nothing in the record to indicate that plaintiff made such a request to the judge. The court ruled that a mere occupant of an apartment does not have the same rights, such as a warranty of habitability, as a leaseholder has, finding that the obligation to pay rent is a "prerequisite" to the right to assert a claim pursuant to RPL 235-b, the warranty of habitability law.


New York Law Journal,
decisions for the week of April 3-7, (3 cases)


Case Caption:
Fulton Park Associates v. Adams
Issues/Legal Principles:
In a non-payment proceeding of a Section 8 tenant, Court has power to review whether management had grounds to terminate Section 8 subsidy; parties cannot agree to change notice requirements set forth in HUD handbook and such notice requirements are condition precedent to maintaining proceeding.
Keywords:
Section 8; HUD Handbook
Court:
Civil Court, Kings County
Judge:
Judge Thomas
Date:
April 5, 2000
Citation:
NYLJ, page 33, col 5
Referred Statutes:
Section 8
Summary:
Tenant received project based Section 8. Landlord, alleging that tenant had not complied with certification requirements for Section 8 subsidy, terminated the subsidy without notice. It then commenced a non-payment proceeding against tenant, seeking the rent at the contract rate. The parties settled the proceeding pursuant to an agreement that respondent would provide the project with additional information. Counsel for tenant thereafter gave the attorney for the landlord the tenantĺs notarized statement to verify income and family composition to complete certification process. The landlord, apparently contending that such documents were not adequate, commenced yet another non-payment proceeding seeking the contract-rate rent, without even advising the tenant that it did not find such additional documentation to be adequate. The landlord never gave the tenant notice that it terminated her Section 8 subsidy. The tenant moved for summary judgment or for an immediate trial on the issues. The landlord opposed the motion on four grounds: that the Court did not have the power to determine issues pertaining to federal law; the Court did not have the power to hear this matter pursuant to the doctrine of preemption; that the tenant had failed to give the landlord adequate information to certify income and family composition as required by the HUD Handbook for Section 8 subsidy; that the landlord was under no obligation to give the tenant notice before terminating the Section 8 subsidy. The Court rejected the landlordĺs arguments. It found that it had the power to determine issues pertaining to federal subsidies and that the doctrine of preemption was not relevant since both parties agreed that the Court should apply federal law, not state law, in determining questions of law regarding the Section 8 subsidy. Additionally, it found that there was merit to the tenantĺs claim that it had submitted adequate documents to verify income and family composition since the handbook allows a tenant to submit his or her notarized statement if other forms of verification are not available. Additionally, it held that the landlord must abide by the notice requirements set forth in the Handbook and that any agreement made in the prior non-payment proceeding would not vitiate any such requirement. Nevertheless, instead of granting tenantĺs motion for summary judgment, the Court set the matter for trial to determine if proper notice was given and whether the landlord had a ground to terminate the subsidy.


Case Caption:
1762-1764 First Avenue Realty Co. v. Alam
Issues/Legal Principles:
Landlordĺs termination notice is without effect where, prior to the time that the landlord issued the notice, the court had issued a warrant of eviction against the tenant in a different proceeding. Courtĺs subsequent vacatur of the warrant does not reinstate tenancy retroactively for purpose of determining validity of notice.
Keywords:
warrant of eviction; notice of termination
Court:
Civil Court, Non-Housing Part, New York County
Judge:
Hon. Debra James
Date:
April 5, 2000
Citation:
NYLJ, page 31, col 1
Referred Statutes:
R.P.A.P.L. Section 749(3)
Summary:
Landlord commenced non-payment proceeding against tenant. Landlord and tenant entered into agreement. Pursuant to terms of agreement, the Court entered a monetary judgment entered the tenant, issued a warrant, but stayed the execution of the warrant, on condition that tenant made periodic payments toward the judgment. On October 4, Court entered order, finding that tenant had satisfied the judgment and vacated the warrant. Prior to the vacatur of the warrant, however, the landlord had served a notice to cure on the tenant for an unrelated alleged breach of the tenantĺs lease and thereafter terminated the tenancy as of September 9. The tenant moved to dismiss the proceeding on the ground that the notice was a nullity since there was no lease in effect at the time of the notice of termination. The Court dismissed the proceeding, finding that there was no tenancy to terminate on September 9 since the warrant acted to terminate the tenancy, and the warrant was in effect at the time that the notice issued. The Court found that the subsequent vacatur of the warrant did not act to render the notice valid.


Case Caption:
Christos v. Papastefanou
Issues/Legal Principles:
Court held that landlord, who owned an illegal, de facto multiple dwelling, but had removed illegal third unit, could collect back rent that had accrued during time period that building was not in compliance with its certificate of occupancy once it came into compliance.
Keywords:
de facto multiple dwelling; registration requirements; non-payment proceeding
Court:
Civil Court, Housing Part, New York County
Judge:
Hon. Doherty
Date:
April 5, 2000
Citation:
NYLJ, page 31, col 4
Referred Statutes:
Multiple Dwelling Law Section 325; 22 NYCRR Section 208.42; NYC Administrative Code Section 27-2107(b)
Summary:
Landlord had commenced two prior non-payment proceedings against tenant. The Appellate Term had found, in the first case, that the landlord could not collect rent from tenant because the building was a de facto multiple dwelling, but was only approved for residential occupancy by two families. Because of the landlordĺs failure to comply with registration requirements, the Appellate Term dismissed the proceeding, without prejudice, pursuant to Multiple Dwelling Law, Section 325. The trial court dismissed the second non-payment proceeding on the same ground. The landlord then commenced a third non-payment proceeding. The parties in this third proceeding agreed that the landlord had removed the illegal third unit. Accordingly, the building was now in compliance with its certificate of occupancy, and the landlord was no longer required to register the premises. At issue was the landlordĺs right to collect rent that had accrued during the period of time that the building was not in compliance with the law. Court held that landlord had a right to collect rent that accrued during time that building not in compliance. The Court relied, in part, on the Appellate Term decision, which had dismissed the proceeding" without prejudice" and also upon legislative purpose of the statute and regulations. Based upon its analysis, the Court found that the purpose of precluding a landlord from collecting rent where it had failed to comply with the requirement to register under the Multiple Dwelling Law is not punitive in nature, but aimed at securing compliance for health and safety reasons.