< Housing Court Decisions December 2000

Housing Court Decisions December 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 December 25-29, 2000 (4 cases)


Case Caption:
Linden Plaza Associates v. Starks
Issues/Legal Principles:
Landlord cannot commence and maintain an eviction proceeding against a deceased tenant even if tenant's daughter appears in court; an agreement made between the landlord and the tenant must be vacated.
Keywords:
non-payment; deceased tenant
Court:
Civil Housing Court, Kings County
Judge:
Hon. Adams
Date:
December 27, 2000
Citation:
NYLJ, page 26, col 6
Referred Statutes:
RPAPL 711(2)
Summary:
Tenant moves to vacate the judgment and warrant of eviction and for an order vacating and setting aside the stipulations between the parties. Additionally tenant seeks an opportunity to interpose an amended answer and for the matter to be restored to the trial calendar. The central issue is whether the court has jurisdiction over the non-payment proceeding when the court so-ordered a stipulation signed by the landlord and tenant's daughter when the tenant died prior to the commencement of the proceeding.

The court file establishes that the demand for rent, notice of petition and petition were all served on Alese Starks, who had predeceased the commencement of the summary proceeding by several months. (She died on May 9, 1999 and the three-day demand was served on June 18, 1999 and the notice of petition and petition served on July 16, 1999). The tenant defaulted and judgment was entered against her on September 13, 1999. Toni Starks, the tenant's daughter brought three pro-se orders to show cause and on her third application the court so- ordered a stipulation dated February 22, 2000 which stayed the warrant of eviction for the payment of $8,873 and "amended (the petition) to name Toni Starks as respondent-occupant nunc pro tunc."

The stipulation was clear that the named tenant was deceased, however it was not evident that she had died five weeks prior to "service" of the rent demand and four months prior to judgment being entered on her default. The court held: "The law is clear that when a tenant dies prior to the expiration of the lease and rent is due, a summary proceeding cannot be commenced if no representative or person 'has taken possession of the premises and no administrator or executor has been appointed, the proceeding may be commenced after three months from the date of death of the tenant by joining the surviving spouse or if there is none, then one of the surviving issue or if there is none, then one of the distributees.'" (citing RPAPL  711(2).)

It has been held that the dead cannot be sued without a representative being served. Therefore, the landlord and its counsel may be held liable for sanctions when they seek a default judgment against a tenant that, "they know or should know is deceased." In this case, the tenant alleges that she submitted her mother's death certificate and requested consideration to succeed to the apartment two weeks after her mother's death. The landlord argues that RPAPL 711(2) does not apply to this case because there was no lease in effect. The court found this argument without merit and notes that the landlord alleged in its petition that there was a lease in effect.

The court noted that the landlord's responding papers did not contain an affirmative denial that the petitioner was not aware of the tenant's death or that upon a reasonable inquiry might not have obtained this information prior to proceeding to obtain a default judgment against the respondent-tenant. The landlord further argues that tenant's death and any other defenses of the movant-daughter have been waived by Toni Starks signing the so-ordered stipulation. The court concluded that Toni Starks could not, "step into the shoes of her mother" for purposes of signing a settlement agreement. Due to her mother's death, she could not be bound to the terms of a stipulation seeking to confer jurisdiction over her. The court held that the proceeding was void ab initio, that the judgment should never have been entered and the warrant never issued.

Notes:
If there is still a lease in effect, the landlord would have to name the tenant's estate as a party, since a lease is a proprietary interest that can be part of an estate. If there is no lease, such as a rent controlled apartment, then the landlord does not have to name the tenant's estate, but will just name as a party whoever is occupying the deceased tenant's apartment.


Case Caption:
Sadler v. Lynch
Issues/Legal Principles:
In tenant's overcharge claim the court overturned DHCR's "narrow" interpretation of "rent history" and allowed an examination of rent past the four year period in tenant's overcharge claim.
Keywords:
rent overcharge; statute of limitations; rent history
Court:
Supreme Court, Kings County
Hon. Schneier
Date:
December 27, 2000
Citation:
NYLJ, page 26, col 4
Referred Statutes:
Rent Regulation Reform Act (RRRA)
Summary:
Petitioner-Tenant moved into her apartment on March 15, 1987 as a rent-stabilized tenant at a monthly rent of $369.36. The previous tenant had renewed her lease on October 14, 1986 which included a rent guidelines increase of 6 percent which raised the rent from $263.76 to $294.59. The lease given to petitioner contained a second 6 percent increase which was unauthorized because it was within the same Rent Guidelines year as the first increase. Adding a second increase is known as "piggybacking."

Tenant filed a rent overcharge complaint with the DHCR on February 26, 1991. In its decision dated July 17, 1996 the DHCR found that "piggybacking" had occurred and found that landlord had overcharged petitioner-tenant since she moved in on March 15, 1987 - July 14, 1996. On August 12, 1996 the tenant filed a PAR, and on September 9, 1997 while the PAR was pending the Rent Regulation Reform Act of 1997 (RRRA) became effective. On October 20, 1999 the Administrator of DHCR determined that the RRRA was applicable, granted the PAR and dissolved the finding of an overcharge against landlord.

Tenant commenced this Article 78 proceeding and this court remitted that case to DHCR for reconsideration. By order dated April 19, 2000 the DHCR upheld its revocation of the rent overcharge order stating that while they found that landlord had overcharged tenant, they were barred from recognizing the overcharge pursuant to the Rent Regulation Reform Act of 1997. The RRRA of 1997 amended the statute of limitation provisions of the Administrative Code of the City of New York to, "preclude examination of the rental history of the housing accommodation prior to the four year period proceeding the filing of a complaint pursuant to this subdivision."

The court held that it could not examine the rental history of the apartment prior to February 26, 1987, since this action was commenced on February 26, 1991. Resolution of the case relies on the interpretation of the term "rental history." In the DHCR proceeding the DHCR interpreted the preclusion of the "rental period" to prevent consideration of any "rental event" that took place prior to the four year period. Thus, the DHCR Deputy Commissioner excluded evidence of the first rent increase, because it occurred prior to the four year period, and found that there was no evidence of an overcharge. The court held that the DHCR Deputy Commissioner gave the term "rental history" an "unreasonably narrow construction."

The court stated, "the rental history, as it existed on February 26, 1991, includes not only the rent on that date, but all of the information contained in the lease. To hold otherwise would allow the lease to be used for one purpose, to determine the rent on the base date, but not for another, to determine whether the rent guidelines increase was taken. Because the lease, by its own terms, was in effect on the base date, it was within the four year history period which may be considered." The court concluded that the DHCR's finding was in error of law and remanded the case to DHCR for further consideration.

Notes:
Tenants should know that with the new DHCR Amendments to the Rent Stabilization Code, effective December 20, 2000, landlords are now allowed to "piggyback" the rent. The amendment to RSC 2522.5(f) allows for multiple vacancy increases within the same guidelines period by stating that, for leases entered into after June 15, 1997, "[t]he length of occupancy by the tenant vacating prior to the expiration of the lease term shall have no bearing on the availability of lawful rent increases." Since the minimum vacancy increase is 20% for a two- year lease, eliminating the ban on multiple vacancy increases within the same guidelines period offers landlords a powerful incentive to manufacture fraudulent vacancy leases with illusory or fake tenants.


Case Caption:
Carmine Ltd. v. Duggan
Issues/Legal Principles:
Tenant with multiple properties, including extended time in Guatemala, is found to maintain her primary residence at her New York City rent controlled apartment.
Keywords:
evidence of primary residence
Court:
Appellate Term, First Department
Judge:
lower court: Hon. Jerald R. Klein
Date:
December 27, 2000
Citation:
NYLJ, page 22, col 2
Referred Statutes:
none cited
Summary:
By order entered May 7, 1999 the lower court determined that tenant's primary residence is in fact the rent controlled apartment at issue. Tenant is a college professor in Manhattan until her recent retirement. She maintained utility accounts at the subject address, listed the apartment as her address on her driver's license, voted in New York City, served as a juror in New York County and paid New York City taxes. This court held that despite time away from New York City for charitable and leisure purposes, the trial court was correct in determining that the subject apartment is her primary residence, where all her furniture and personal belongings are located. Tenant has traveled to Guatemala to do volunteer work but there exists no evidence that she ever intended to make Guatemala her permanent home. The court also concluded that evidence of a summer home upstate as well as investment properties in Long Island and Wisconsin did not alter the determination of the subject premises as tenant's primary residence.


Case Caption:
Jordan v. McCauley
Issues/Legal Principles:
Landlord failed to establish, by a preponderance of the evidence, his good faith intention to recover apartment for the personal use of his son.
Keywords:
owner occupancy; good faith
Court:
Appellate Term, First Department
Judge:
lower court: Hon. Timmie Erin Elsner
Date:
December 28, 2000
Citation:
NYLJ, page 22, col 1
Referred Statutes:
NYCRR 2524.4
Summary:
The Housing Court judge found that landlord failed to establish his good faith intention to recover the subject apartment for the personal use of his son. The Appellate Term upheld and found that the trial court could reasonably reject as `less than credible' the landlord's testimony as to the medical necessity for his son's residence in the subject apartment (located above landlord's own apartment), where no evidence of the medical condition was presented at trial and the son already resided `in close proximity.' Further, the lower court was also entitled to draw an adverse inference because of the son's failure to testify.


New York Law Journal,
decisions for the week of December 18-22, 2000 (3 cases)


Case Caption:
Har Holding Co. v. Lynch
Issues/Legal Principles:
Tenant preserved his right to a Fair Market Rent Appeal in a Housing Court settlement.
Keywords:
fair market rent appeal
Court:
Appellate Division, First Department
Judge:
lower court: Hon. Robert Lippmann
Date:
December 18, 2000
Citation:
NYLJ, page 25, col 3
Referred Statutes:
none cited
Summary:
DHCR denied landlord's application to annul DHCR's determination which established tenant's fair market rent appeal, rolled back the rent, and refunded the tenant the excess rent paid. Landlord appealed in an Article 78 and then to the Appellate Division. The Court held that the DHCR properly established the fair market rent for the apartment based solely upon applicable special rent guideline orders where the landlord failed to submit qualifying comparable rents. A Housing Court settlement indicated that tenant preserved his right to establish the fair market rent. Landlord interpreted the stipulation that tenant waived his right to challenge the initial rent stabilized rent. The DHCR and each appellate court agreed with the tenant that he in fact had preserved his right to challenge the initial rent.


Case Caption:
Park Property Development v. Santos
Issues/Legal Principles:
Section 8 rents are owed by New York City Housing Authority to landlord since NYCHA signed the lease and made payments consistently with the lease.
Keywords:
Section 8; money judgment; rent arrears; estoppel
Court:
Civil Housing Court, Kings County
Judge:
Hon. Chin
Date:
December 19, 2000
Citation:
NYLJ, page 29, col 2
Referred Statutes:
42 USC 1437f
Summary:
The landlord brought a nonpayment proceeding against the rent stabilized tenant, as well as New York City Housing Authority (NYCHA) who provides a Section 8 rent subsidy to the tenant. The tenant had not paid her portion of the rent for two years. She lost her Section 8 subsidy due to her failure to recertify, although she later complied with certification. A NYCHA manager testified that the tenant's subsidy was terminated as of December 1996 and was later reinstated after the apartment passed inspection and the leases were signed. The Deputy Director approved the lease thereafter. The NYCHA manager testified that a Section 8 lease is not valid unless there is also a signed HAP contract "Housing Assistance Payment" which obligates NYCHA to pay a subsidy portion of the rent directly to the landlord. In this case the HAP contract was signed by the landlord, but not by NYCHA. However, NYCHA resumed the Section 8 subsidy payments for the lease, thereby performing on the lease. Thus, NYCHA cannot say that the lease is invalid which was its argument. The only issue before the court is whether NYCHA is responsible for payment of a portion of the rent under the lease agreement and whether the tenant owes rent for the period alleged in the petition. NYCHA claimed that its agent had no authority to sign the lease agreement. The court, however, held that even if the agent had no authority to sign the lease, the Deputy Director approved it, and thereby ratified it. The court also rejected NYCHA's argument that it did not sign the HAP agreement. The court however held that NYCHA started to make payments consistent with the terms of the lease and they must be estopped from now attempting to deny their acts which recognized their role in the payment of the tenant's rent. The court held: "If NYCHA is allowed to invalidate a properly executed and approved Section 8 lease agreement, then that would undermine the purpose of the program and deter landlords from participating." The court ordered NYCHA to pay its subsidy portion of the rental arrears.


Case Caption:
Katz 737 Corp. v. Shapiro
Issues/Legal Principles:
Supreme Court declines to accept landlord's lawsuit which attempts to circumvent the DHCR's jurisdiction to determine which occupants are included in a household for purposes of calculating household income in luxury deregulation case.
Keywords:
luxury deregulation; exhaustion of remedies
Court:
Supreme Court, New York County
Judge:
Hon. Lorraine Miller
Date:
December 20, 2000
Citation:
NYLJ, page 29, col 6
Referred Statutes:
RSL 26-504.3, 26-516-f; RSC 2530.1; CPLR 3211(a)(2)&(7); New York Constitution 7(a)
Summary:
The rent stabilized tenant who initially moved into the apartment in 1974 notified the landlord in December, 1999 that he and his wife were vacating the apartment and his daughter was succeeding to the lease. In January, 2000 the daughter tendered rent to the landlord, but the landlord rejected and returned the check. Thereafter, the landlord agreed to accept the daughter's rent without prejudice pending the owner's application to the DHCR to deregulate the apartment on grounds that the rent exceeded $2,000 and the household income exceeded $175,000 per year. While the DHCR proceeding was pending, the owner brought a declaratory judgment action in Supreme Court seeking a declaration that the parents were the tenants of record in occupancy during the years 1998 and 1999 so that their income will be included in the calculation of the household income for determining the owner's luxury deregulation petition.

The tenants (parents and daughter) cross-move for dismissal of the declaratory judgment action on grounds that judicial review cannot be sought under Article 78 while a proceeding is pending with the DHCR, that the owner has to wait for the outcome of the DHCR decision. The court noted that the DHCR has exclusive jurisdiction to determined luxury deregulation cases, and a court of law must wait the outcome of the agency's decision before the court may review that decision. The owner, however, claims that the DHCR's Operational Bulletin would require the exclusion of the parent's income from the total household income for purposes of the year 2000 filing period and therefore seeking administrative remedies would be futile.

The court observed that while concurrent jurisdiction does exist between the court and the DHCR, where there is an administrative agency with the expertise to dispose of the issue, a court of law should exercise its discretion and defer to the agency. Exhaustion of remedies is not necessary, however, if the administrative remedies are futile; the standard for futility is high or "narrow" to use the court's term. The court held that in this case the owner was simply seeking to circumvent the DHCR. The owner is merely predicting what DHCR will do by the owner's interpretation of the DHCR operational bulletin. The operational bulletin provides that the operative date for determining who is a tenant, co-tenant or occupant whose income will be included in the total annual income will be the date that the income verification document is served at the apartment. In this case, the parents were apparently not living in the apartment on the date of service. The court held that the DHCR should be allowed to make a ruling on this issue in this case rather than the landlord presuming that the DHCR will automatically exclude the parents since there is no history of the DHCR's interpretation of this provision in the operational bulletin.


New York Law Journal,
decisions for the week of December 11-15, 2000 (10 cases)


Case Caption:
Rose v. Montt Assets, Inc.
Issues/Legal Principles:
Tenant who refused to discontinue overcharge claim after new statute passed which rendered her claim moot is not liable for attorneys fees even though landlord was the clear prevailing party.
Keywords:
attorneys fees; prevailing party
Court:
Appellate Term, First Department
Judge:
lower courts: Hon. Faviola Soto and Hon. Michael Stallman
Date:
December 12, 2000
Citation:
NYLJ, page 26, col 1
Referred Statutes:
RSL 26-516(a); Rent Regulation Reform Act of 1997; Domestic Relations Law 237; CPLR 8601, 8101; RPL 235(c)
Summary:
Tenant surrendered the rent stabilized apartment in September, 1995 then commenced an action in February 1996 to recover her alleged rent overcharges for the period January 1987 through September 1995. The claim was based on landlord's failure to comply with an order of harassment and failure to serve an initial rent registration when the apartment became subject to rent stabilization. The trial judge dismissed the complaint in its entirety pursuant to the Rent Regulation Reform Act of 1997 (RRRA). The trial judge (Hon. Faviola Soto) found that the tenant had failed to challenge the amount of rent set forth in annual rent registrations statements and that the inquiry into the rental history prior the four year period before filing the complaint was precluded based on the RRRA.

The landlord sought attorney's fees as the prevailing party in the litigation in reliance upon a lease provision for the payment of fees in situations where the owner defends a lawsuit brought against owner because of the tenant's action. The lower court (Hon. Michael Stallman) concluded that this provision applies only to actions brought by third parties against the landlord as a result of the tenant's actions. The Appellate Term found that this was too narrow an interpretation of the lease provision. The Court concluded that there is no valid reason to decline to enforce the attorneys fees clause in circumstances where a tenant's own actions in prosecuting a claim caused the landlord to incur legal expenses.

Notwithstanding that analysis, the Appellate Court affirmed the lower court's denial of legal fees on grounds that the RRRA, enacted while the case was pending, was made applicable to actions or proceedings pending in any court. The statute "completely altered the landscape of the law of rent overcharge" in New York, and that "assumptions of the parties when the litigation began were revocably altered by a change in the law." In these circumstances, the Appellate Term ruled that where tenant's action "was properly commenced under existing law, but was dismissed because of a change in the law affecting pending rent overcharge cases, we deem it appropriate that each side bear its own legal costs." The Court acknowledged the dissent's position that fees are a contractual right, the majority stated that "a court's authority to withhold fees in a particular case is not so closely confined and may turn upon equitable factors or other considerations fact-specific to the litigation."

Justice McCooe offered a long and vigorous dissent, starting by his distinguishing of the Appellate Division case upon which the majority relied. In Wells v. East 10th Street Associates, the law had changed after a trial and judgment, in other words, before the party had an opportunity to change their position. In this case, the law had changed far earlier in the course of litigation at the trial stage. Moreover landlord's attorney wrote tenant's attorney a letter suggesting that tenant discontinue her case based on a change in the law unfavorable, indeed fatal, to her case. Justice McCooe argued that the contract between the parties should dictate who is awarded legal fees as opposed to the Appellate Division's position which holds: "a court should invoke its discretion to deny fees . . . where bad faith is established on the part of the successful party or where unfairness is manifest." Justice McCooe's disagreement with the Appellate Division's reasoning is that "bad faith" or "manifest unfairness" are concepts not grounded in any principle of contract law (which is the basis of awarding fees to begin with). Justice McCooe argued that "reliance on traditional contract defenses promotes uniformity of result. It eliminates judicial determinations on an ad hoc basis depending upon each judge's discretionary view of the correctness of the result in the underlying case."

Notes:
Justice McCooe's position is very articulate and convincing from a strict legal perspective, but the problem is reliance solely on a contract fails to take into consideration the specifics or uniqueness of each case's circumstances. It is somewhat analogous to the way federal judge's discretionary power to sentence defendants was taken away by Congress and the judges were reduced to rote reliance on statutory sentencing guidelines. The judges are increasingly vocalizing their dissent about their inability to address unique or mitigating circumstances. Taking away a judge's discretion to award attorney's fees in landlord-tenant matters constrains a judge's ability to judge a case in a big-picture context.


Case Caption:
Commuter Housing Company Inc. v. Saunders 221 West 16th Realty LLC v. DHCR
Issues/Legal Principles:
Tenant's late surrender notice to landlord made her liable for rent from time she vacated until such time as landlord found a new tenant.
Keywords:
lease cancellation; mitigation of damages
Court:
Appellate Term, 9th & 10th Judicial Districts
Judge:
lower court: Hon. P. Grella
Date:
December 12, 2000
Citation:
NYLJ, page 35, col 3
Referred Statutes:
none cited
Summary:
The rider to the lease states that the tenant could cancel the lease by August 31, 1997 by advising landlord by registered mail 45 days beforehand of the cancellation. Instead, tenant wrote landlord on September 27, 1997 that she had vacated as of August 31, 1997. The court ruled this was insufficient notice under the lease and therefore the tenant was responsible for rent until the landlord was able to find another tenant. Landlord had no duty to mitigate damages in this instance.
Notes:
The case did not state whether the tenant was rent regulated or not. In any event, usually if a tenant wants to get out of the lease before it terminates, the tenant must provide the landlord notice and landlord must begin to immediately start finding a new tenant to mitigate its damages. If the landlord does not make reasonable efforts to look for a new tenant at the time the notice is served, landlord cannot complain if the premises go unrented for several months after tenant vacates.


Case Caption:
348 Realty LLC v. Hardy
Issues/Legal Principles:
Tenant cannot get discovery to ascertain landlord's warehousing scheme in a nonprimary residence proceeding because the discovery is not related to the basis of landlord's eviction action.
Keywords:
nonprimary residence; waiver; discovery; warehousing
Court:
Civil Housing Court, New York County
Judge:
Hon. Douglas Hoffman
Date:
December 13, 2000
Citation:
NYLJ, page 27, col 2
Referred Statutes:
RPAPL 711(1)
Summary:
Landlord brought a nonprimary residence proceeding and tenant moved to dismissed. Tenant argued that the lease expired in April, but landlord continued to send rent bills for May and June to which tenant paid the monthly rent. In mid-June, however, the landlord returned the rent checks, yet landlord continued to send rent bills for July and August. Tenant argues that landlord's retention of the rent checks for 1 months and the continual sending of rent bills vitiates the termination notice and reinstates the tenancy. Therefore the petition must be dismissed. Landlord argues that the rent bills were computer generated and that the rent was promptly returned. The court ruled that where a landlord received the rent during the window period (after termination of the tenancy, but prior to the commencement of the proceeding), but promptly returned the rent uncashed due to a clerical error, in such circumstances the tenancy is not terminated.

Tenant also requested to do discovery on the landlord (ask the landlord questions under oath) because tenant claims that the landlord is warehousing apartments. Landlord argues that this claim is entirely unrelated to the nonprimary residence issue and tenants are not allowed unrelated discovery. The tenant's position is that the landlord should not proceed forward on any eviction proceeding due to "unclean hands," but the court noted that there is no legal authority for this position. Thus, the court denied tenant's motion.


Case Caption:
Meserole Avenue LLC v. Lyght
Issues/Legal Principles:
Occupant who did not enter apartment as superintendent is deemed tenant at will entitled to a 30 day notice of termination.
Keywords:
superintendents; tenant at will
Court:
Appellate Term, 2nd & 11th Judicial District
Judge:
lower court: Hon. Callendar
Date:
December 11, 2000
Citation:
NYLJ, page 34, col 5
Referred Statutes:
RPL 228; RPAPL 713(11)
Summary:
Occupant was a superintendent of the apartment. His assertions were not adequately rebutted by the landlord so they are deemed admitted. He asserted that he moved into the unit before the previous super had quit and the former owner asked him to be superintendent. In these circumstances, it is clear that he was given a tenancy in consideration for his construction, repair and management work and that he did not reside in the building either as an incident of his subsequent employment as superintendent or for the benefit of the former owner. Therefore, he was at least a tenant at will entitled to a 30 day notice to vacate. Since the landlord failed to serve such notice, the petition was dismissed and the court ruled that the landlord had to start the eviction proceeding all over again by first serving such a notice.


Case Caption:
Monique Concool Mendelson v. Empire Associates Realty Co. Assn.
Issues/Legal Principles:
Tenant who wins Fair Market Rent Appeal is not entitled to an award of treble damages since the Rent Stabilization Code does not authorize such an award.
Keywords:
treble damages; Fair Market Rent Appeal; overcharge claim
Court:
Appellate Division, First Department
Judge:
lower court: Hon. Sheila Abdus-Salaam
Date:
December 11, 2000
Citation:
NYLJ, page 23, col 6
Referred Statutes:
RSC 26-516, 512(b)(2), 513(b)
Summary:
Plaintiff-tenant was the first rent stabilized tenant of the apartment after the prior rent controlled tenant left. She filed a complaint with the DHCR alleging that her initial rent exceeded the apartment's fair market rental value. DHCR ruled that the initial rent was excessive but that the landlord's subsequently applied increases were not excessive and awarded tenant $16,722.84. Tenant then commenced an action to enforce DHCR's award and she won the $16,722.84, as well as attorney's fees, costs and treble damages. The treble damages portion of the award was vacated and tenant has now appealed the vacatur of the treble damage award. The Appellate Division affirmed the denial of treble damages because, although treble damages may be awarded in overcharge cases, tenant's complaint was technically not for overcharges but rather one challenging the intial rent stabilized rent (known as a Fair Market Rent Appeal). The Code statute governing Fair Market Rent Appeals does not provide for an award of treble damages.


Case Caption:
Windemere Chateau, Inc. v. Nisar
Issues/Legal Principles:
Tenant's usage of two nonadjacent apartments as single living space does not constitute an illegal sublet.
Keywords:
nonprimary residence,
Court:
Appellate Term, First Department
Judge:
lower court: Hon. Debra Samuels
Date:
December 12, 2000
Citation:
NYLJ, page 27, col 1
Referred Statutes:
none cited
Summary:
The Appellate Term affirmed the trial court's decision that tenant has used two nonadjacent apartments for combined family living space for ten years with the landlord's knowledge and consent and that he has not illegally "sublet" the smaller unit. The studio apartment which does not have a kitchen, has been actually utilized as a bedroom for various family members. The use of the apartments as a de facto single residential unit, as well as landlord's acquiescence in this arrangement, dictates the dismissal of the petition.


Case Caption:
Blair House Associates v. Sanders
Issues/Legal Principles:
Tenant's claim that the apartment was reduced in size just shortly before she moved in cannot be credited in light of her payment of rent for over five years and signing of four renewal leases before raising the issue.
Keywords:
actual partial eviction
Court:
Appellate Term, First Department
Judge:
lower court: Hon. Arlene Hahn
Date:
December 12, 2000
Citation:
NYLJ, page 27, col 1
Referred Statutes:
none cited
Summary:
The Housing Court judge struck tenant's affirmative defense of actual partial eviction in this nonpayment proceeding. The apartment was rented "as is" with no specific representation as to square footage. Tenant asserts that after inspecting the unit but before she moved in, landlord partitioned off a section of the bedroom which space was ultimately added to an adjoining apartment. Although she suspected the apartment had been reduced in size, the court noted that she failed to disaffirm the lease or make meaningful protest other than an oral complaint to the super. She paid rent from 1993 to 1998 and executed four renewal leases before withholding the rent which is the subject of this nonpayment proceeding. On these facts, the court ruled, and the Appellate Term affirmed, that no partial eviction occurred which would otherwise permit the tenant to suspend rent payments while she was still in occupancy. The Appellate Term held that this was not a case where it can be said that the tenant was evicted from a portion of the space conveyed to her.


Case Caption:
Fisher Avenue Realty Partners v. Hausch
Issues/Legal Principles:
Landlord's mere offer of a renewal lease to month to month tenant did not vitiate the notice of termination.
Keywords:
month to month tenant; renewal lease; use and occupancy
Court:
Appellate Term, 9th & 10th Judicial Districts
Judge:
lower court: Hon. Porco
Date:
December 12, 2000
Citation:
NYLJ, page 30, col 6
Referred Statutes:
CPLR 404(a), 409(b); UJCA 201(b)
Summary:
Landlord brought a holdover proceeding against the tenant and was awarded summary judgment. Tenant admitted that she was a month to month tenant and that the 30 day notice was served upon her, so there were no issues for trial with respect to the holdover proceeding. The Appellate Term ruled that the lower court did not err in declining to allow tenant to answer based on her admissions. Tenant contended that landlord's renewal of its offer of a lease vitiated the notice of termination, but the lower court and the appellate court disagreed, holding that "the offer of a lease did not contradict the notice of termination, particularly because it was at all relevant times clear that landlord would not accede to tenant's remaining possession on a month to month basis." The Appellate Term ruled, however, that the lower court erred in awarding landlord use and occupancy at the rate of $832 per month since the petition only sought $820.00 per month.


Case Caption:
45th Street Associates v. Reyes
Issues/Legal Principles:
Tenant cannot receive attorneys fees if there is no relevant lease clause even though landlord asks for fees in the its petition.
Keywords:
legal fees
Court:
Appellate Term, First Department
Judge:
lower court: Hon. Karen Smith
Date:
December 15, 2000
Citation:
NYLJ, page 28, col 1
Referred Statutes:
RPL 234
Summary:
Tenant's application for attorney's fees was denied by the trial court and the Appellate Term upheld the denial. There was no lease produced containing a provision for the recovery of litigation costs. Only if the lease contained a clause awarding legal fees to the landlord would a reciprocal right to fees for tenant be triggered by Real Property Law 234. Simply because the landlord's petition made a demand for legal fees is not a legal basis, without more, for awarding fees to the tenant.


Case Caption:
Roxborough Apartments v. Becker
Issues/Legal Principles:
Tenant with four-bedroom apartment is not allowed three roommates since the lease term supposedly restricts it via a clause in the lease pertaining to the roommate law (Real Property Law, 235-f).
Keywords:
roommates
Court:
Appellate Term, First Department
Judge:
lower court: Hon. Lucy Billings
Date:
December 12, 2000
Citation:
NYLJ, page 26, col 5
Referred Statutes:
RPL 235-f
Summary:
The lower court dismissed landlord's proceeding for failure to state a cause of action, but the Appellate Term reversed. The proceeding was premised upon tenant's breach of a lease provision which provided that "the apartment may be occupied by the tenant or tenants named above and by the immediate family of the tenant or tenants and by occupants as defined in and only in accordance with Real Property Law Section 235-f [a/k/a the roommate law]." Tenant admitted that he had three roommates in a four bedroom apartment. The lower court found no lease violation since the lease does not contain any express occupancy limitation and the statute RPL 235-f is permissive and does not restrict existing rights of tenants and occupants. The court cited to a case called Capital Holding Co. v. Stavrolakes (242 AD2d 240).

The Appellate Term distinguished Capital Holding Co. because that proceeding was premised upon a breach of the parties' own lease, not the statutory provisions of section 235-f. In fact, the court there held that its ruling " . . . will not restrict landlords from setting reasonable occupancy limitations in leases, or prevent them from enforcing such lease provisions, so long as they do not violate the minimum protections afforded tenants and occupants under section 235-f." In this case, the court held that contracting parties are not precluded from referencing section 235-f in their lease or setting "reasonable" limitations. The Appellate Term reinstated the petition and remanded it back to Housing Court.

Justice Parness dissented on grounds that Section 235-f does not create "an affirmative right of action for landlords to enforce occupancy limitations," citing Capital Holding v. Stavrolakes. Thus, merely stating in the lease that the unit may be occupied only in accordance with RPL 235-f, and then accusing the tenant of violating the lease provision, adds nothing since the statute is permissive, according to Stavrolakes, not restrictive. In other words, the majority's interpretation of the this case contradicts the Appellate Division's holding in Stavrolakes. Justice Parness declared that there is nothing unreasonable for a tenant of a four- bedroom apartment to have three roommates.


New York Law Journal,
decisions for the week of December 4-8, 2000 (5 cases)


Case Caption:
4220 Broadway Associates v. Perez
Issues/Legal Principles:
Landlord cannot deduct legal fees from rent owed and try to evict for nonpayment of rent.
Keywords:
nonpayment proceeding, vacating warrant, arrears
Court:
Appellate Term, First Department
Judge:
lower Court: Hon. Larry S. Schachner
Date:
December 5, 2000
Citation:
NYLJ, page 26, col 1
Referred Statutes:
none cited
Summary:
The Housing Court judge vacated the final judgment and warrant in this non-payment proceeding following tenant's payment of all outstanding arrears. Landlord first applied tenant's payment toward the nonpossessory judgment for attorney's fees which then created a 'shortfall' in the amount of rent paid by tenant. The Court held that attorney's fees do not constitute additional rent in the context of rent regulated tenancies and may not serve as the predicate for an eviction. In other words, landlord cannot deduct the legal fees from the rent tenant paid, and then claim tenant owes rent, and then try to evict on the basis of alleged unpaid rent. The lower court's order vacating the warrant was unanimously affirmed by the Appellate Term.


Case Caption:
Grand Concourse 2075, LLC v. Rivera
Issues/Legal Principles:
Stipulation may be vacated where tenant presents a good cause showing of rent overcharges which the stipulation failed to address.
Keywords:
rent overcharge, stipulation
Court:
Appellate Term, First Department
lower court: Hon. Elizabeth J. Yalin Tao
Date:
December 5, 2000
Citation:
NYLJ, page 26, col 1
Referred Statutes:
none cited
Summary:
Pro se tenant in non-payment proceeding executed a so-ordered stipulation dated December 8, 1998 which prevented her from defending the non-payment petition on the merits. The lower court refused to vacate the so-ordered stipulation. This Appellate Term reversed the lower court's order stating that the tenant has an arguably meritorious claim of rent overcharge based upon the existence of two leases, each dated October 15, 1997 for the same period but for different rental amounts. The Court held that, "where a prima facie demonstration of rent overcharge has been made, ample good cause exists to set aside a stipulation and return the parties to their former position." Tenant's motion to vacate the stipulation of settlement is granted and the matter is remanded to the Housing Court for further proceedings.


Case Caption:
207 Realty Associates, LLC v. Hamel
Issues/Legal Principles:
Prime tenant who has not resided in the apartment for over 25 years and overcharges "subtenant" is found to have engaged in illusory prime tenancy scheme.
Keywords:
Illusory tenancy; overcharge
Court:
Appellate Term, First Department
Judge:
lower court: Hon. Ruben Andres Martino
Date:
December 6, 2000
Citation:
NYLJ, page 26, col 1
Referred Statutes:
none cited
Summary:
The Appellate Term held that the record of the trial court supports the finding of an illusory tenancy. It is undisputed that the respondent has resided in the premises since 1972 and that the prime tenant has not lived in the premises throughout this time period. Additionally, the prime tenant substantially overcharged the so-called subtenant. The trial court credited the testimony of the subtenant that while he began paying rent to the landlord's predecessors in the prime tenant's name, the subtenant properly identified himself to all prior owners and agents. In such instance, the court found an illusory prime tenancy existed.


Case Caption:
Kaplan v. Raab
Issues/Legal Principles:
Landlord's warehousing/leasing an illegal unit to collect unlawful rent may be used by tenant as evidence of bad faith on the part of landlord in an owner occupancy proceeding.
Keywords:
owner-use proceeding, rent guidelines board increase, loft board
Court:
Civil Housing Court, New York County
Judge:
lower court: Hon. Thomas Fitzpatrick
Date:
December 6, 2000
Citation:
NYLJ, page 27, col 6
Referred Statutes:
Multiple Dwelling Law, Article 78, 28RCNY 2-01(m), RSC 2522.5(a)(1), EPTL 7-6.20, 7-6.4
Summary:
Landlord commenced the holdover proceedings to recover possession of two loft spaces alleging they are necessary for his own personal use and the use of his immediate family. Tenants' answers denied landlord's allegations, interposed numerous affirmative defenses and two counterclaims. The case was marked "off calendar" pending discovery of landlord (i.e., tenants ask landlords questions under oath) which was held on April, 3, 2000. The tenants have now moved for summary judgment arguing that the proceedings are barred by the Rules and Regulations of the Loft Board.

On February 14, 1996 landlord's predecessor in interest, Sibelius Realty Co., obtained a final Certificate of Occupancy for the premises. Thereafter, on November 14, 1997 Sibelius filed a notice of Rent Guidelines Board Increase with the Loft Board and the tenants of the loft spaces. The tenants replied to the notices by confirming the rent levels for their respective loft spaces and by electing to have rent increases governed by Rent Guidelines Board increases applicable to two-year leases.

Pursuant to Loft Board Rule, 29 RCNY 2-01(m) the Board set the initial rent stabilized rent for tenants' loft spaces, and also set the term for their leases - a two-year period commencing December 1, 1997 ending November 30, 1999. In June, 1998 landlord purchased the building from Sibelius. Two months later landlord forwarded the tenants rent stabilized leases in compliance with the Loft Board's order. Tenants signed the leases and returned them to landlord with checks for the appropriate rent increases. In July, 1999 landlord served tenants with notices of intent not to renew the respective leases on owner occupancy grounds and when tenants failed to vacate, landlord commenced the within proceedings.

Tenants argue that the petitions must be dismissed because landlord's collection of Rent Guidelines Board increases bars him from commencing an owner use proceeding pursuant to 29 RCNY 2-01(m)(ii) which provides, "If the owner has received any Rent Guidelines Board increase under 2-01(i)(1), then the initial term of such lease shall end upon the expiration of the last Rent Guidelines Board increase period as defined in 2-01(i)(1) prior to the setting of the initial legal regulated rent; provided, however, that no notice or proceeding by the owner to recover the unit pursuant to 2524.4 of the Rent Stabilization Code may be commenced during the pendency of this initial abbreviated lease term." The Court found the argument without merit. There was no initial abbreviated lease term prior to the setting of the legal regulated rent. Each of the tenants received a full two-year term pursuant to the Loft Board's direction, and the Rent Guidelines Board increases were collected during the term of the first rent stabilized lease, not prior thereto, as required by the statute.

Tenants also allege that the simple act of collecting the Rent Guidelines Board increases at anytime is sufficient to bar the commencement of these proceedings. The Court stated that the tenants' focus is misplaced. "The purpose of the statute is the preclusion of eviction proceedings based on owner use or nonprimary residence before the tenant has had the benefit of a full rent stabilized term. The appropriate focus of inquiry is the length of the term." In this case the tenants received the benefit of a one or two-year lease term as required by the Rent Stabilization Code. Therefore, the owner use proceedings are not barred.

The tenants also moved for leave to serve amended answers with two additional defenses. First, the proceedings are attempting to recover possession for the benefit of two owners rather than one owner. Landlord states the defense is without merit because landlord's sister for whom possession is sought is not an owner. She is however the custodian for her minor son is an additional owner. The Court stated that with the minor child's ownership interests in question, there exists at least some merit to tenants' defense, permitting an amendment to the pleadings.

Tenants also wish to amend their answer to include a defense that landlords are warehousing an illegal apartment, and attempting to increase income by leasing an illegal and unregistered apartment. Tenants showed some evidence of warehousing/leasing an illegal space and therefore provides an indication of a lack of good faith on the part of owners with regard to their owner use proceeding. Accordingly the Court granted the tenants leave to serve and file amended answers.


Case Caption:
1664 Sheepshead Bay Road Realty Corp. v. Dalton
Issues/Legal Principles:
Court determines that term "one or two family house" does not include a building which contains two residential units over a store, and therefore unit is subject to rent controlled laws.
Keywords:
two family dwelling, rent control, succession rights
Court:
Civil Housing Court, Kings County
Judge:
Hon. Marc Finkelstein
Date:
December 6, 2000
Citation:
NYLJ, page 29, col 4
Referred Statutes:
NYC Administrative Code 26-403, 9 NYCRR 2200.2
Summary:
Landlord commenced a holdover proceeding alleging that because the third floor apartment in question is in a two-family house and was vacated subsequent to April 30, 1953 it is not subject to rent control or rent stabilization. Therefore, since the apartment is unregulated and there is no current lease in effect between the parties, landlord asserts that it is entitled to possession. Tenants moved to dismiss alleging that their apartment is subject to rent control, claiming that due to the existence of a store in the building the apartment is not exempt from rent control as a one or two-family house.

Tenant alleges in 1961 as a child she moved with her family into the apartment below the subject apartment. In 1964 her grandparents moved into the subject apartment and in 1968 she moved in with her grandparents. She has continuously resided in this apartment ever since and paid rent to her grandparents while they were alive. In 1973, her grandfather died and her great aunt moved in with them. In 1974 her grandmother died and tenant continued sharing the apartment with the great aunt with whom she shared expenses (including the rent) which the aunt paid to the landlord. The great aunt died in 1990 and tenant has paid the rent directly to the landlord since then.

The first question is whether the apartment is subject to or exempt from rent control. it is conceded that the subject premises is a two-family house over a store. The earliest date of residence by tenant's family is 1964 when her grandparents moved in. Landlord asserts that the rent control law provides that rent control does not apply to any buildings with one or two residential units that became vacant after April 1, 1953 regardless of whether the building is also occupied by a commercial space. Tenant asserts that the April 1, 1953 vacancy date doesn't apply for decontrol of the subject apartment because the present interpretation of the term "one or two-family house" does not include a building which contains two residential units over a store. Rather the June 30, 1971 vacancy date applies and since tenant's family has continuously occupied the apartment since 1964 it is not decontrolled. The Court held that respondent's interpretation of the law seems correct. The term "one or two family houses" has been consistently interpreted to exclude buildings containing a commercial unit(s) and one or two residential units. The Housing Court addressed the law and circumstances involved here in Luis Eugenio Inc. v. Jennings, NYLJ, May 3, 1995, p.31 col.1 when it granted tenant's motion for summary judgment upon a finding that the two family subject building that also contained a commercial unit did not fall within the statutory exemption from rent control for two family houses. The Court in that case cited the consistent interpretations to this effect including the 1952 decisions of the Appellate Division (Matter of Present v. McGoldrick, 279 App.Did. 1010, (2nd Dept. 1952) and Matter of Wisotsky v. McGoldrick, 279 App.Did. 1011 (2nd Dept. 1952). Therefore, the apartment is subject to rent control.

The second question to address is whether tenant has succession rights. Tenant admits that she cannot present any documentary evidence to substantiate the facts she alleges. She does, however, submit eleven notarized letters of friends, neighbors and family supporting her claims. Because there is a legitimate dispute as to whether or not tenant has succession rights, the affirmative defense of succession rights is to be proven by her at trial.