About three months after the stipulation was signed, the appellant asked the court to vacate the stipulation on grounds that the stock shares to the apartment were transferred to him in December, 1998 (i.e., after the settlement), but he was not joined in the proceeding. He also alleged that the landlord accepted rent from him from June to August, 1999 which created a new tenancy. The Housing Court denied appellant's application to set aside the stipulation and the Appellate Term affirmed. The Court noted that the record reflects at the time the shares were transferred to appellant, he had full knowledge of the stipulation and its terms. Since the stipulation was not complied with, appellant's possessory interest, if any, terminated and the warrant could be executed after the six month deadline. The Court also rejected the notion that a landlord-tenant relationship was created with the appellant, since all parties knew "or should have known" that acceptance of the rent was without prejudice and was not intended to create a tenancy.

Apparently, after the tenant moved in LICH never did register the apartment or tenancy as rent controlled. Landlord tried to argue that because LICH did not register the premises with DHCR and because tenant did not insist that LICH so register, tenant waived her right to claim controlled status. The court held that LICH's failure to register has no bearing upon the determination of whether or not the tenant is protected by rent control laws. DHCR forms are not determinative of this, but rather the "fact of occupancy." The court recited the standard case law that where rent control tenants relocate "at the request and for the convenience" of the landlord, they retain the protections of rent control laws. For this reason, plus the fact that the landlord takes the property subject to the obligations of its predecessor, the court dismissed the petition. The court noted that the landlord could bring a proceeding based on the fact that the tenant might be occupying two apartments in violation of the certificate of occupancy.

The tenants moved to reargue on new evidence and the court held another hearing at which time the landlord testified that the prior owner's children lived there, but while she owned the building no one had lived there. The tenants alleged that the owner's goddaughter lived in the basement, but the owner testified that the goddaughter lived elsewhere and only came to the basement to babysit the owner's grandchildren. The tenant, however, testified that she had procured a piece of mail (a weekly cable tv paper) addressed to the goddaughter at the basement apartment, that she had seen it in the owner's mail, made a copy, and returned the original to the owner's mail. The owner did not call her goddaughter to the witness stand. The tenants offered no other evidence for occupancy of the basement, such as utility or phone bills.

The court recognized that it had incorrectly ruled that the building was not a multiple dwelling simply because no one occupied the basement. Rather, the correct analysis is whether or not there are three or more units that are "arranged or designed to be occupied" residentially. Since that is the case here, the court concluded that the building is a de facto multiple dwelling. Once the building is deemed a multiple dwelling, since it is not registered the court is obliged to dismiss the nonpayment proceeding since rent cannot be collected from a tenant in a multiple dwelling which has not been registered according to the Multiple Dwelling Laws. The court noted that the Multiple Dwelling Laws were enacted to promote the health and safety of residents of multiple dwellings. The court observed that had the tenants raised this issue in the very beginning as the reason why they withheld rent, the court would have granted the relief they requested which is to dismiss the petition and not permit owner to collect any rent until the premises are registered as a multiple dwelling. However, in this case, the tenants entered into two prior agreements to pay the rent and defaulted both times. The court concluded that the tenants "relinquished" their Multiple Dwelling Law defense and further there was no good cause to reinstate the tenancy or vacate the stipulation. The court concluded that the health and safety purposes of the law would not be served by allowing the tenants to remain in the apartment and not pay rent. Rather, tenants would enrich themselves and impoverish the landlord and landlord would not be able to pay real estate taxes, make mortgage payments, provide heat and hot water, and landlord would come perilously close to bankruptcy. The court ordered that the tenants' eviction could go forward.

In February, 1996, the landlord commenced a nonpayment proceeding against the tenant for rent owed from September, 1995 to February, 1996. Service was made by conspicuous place service (attached to the apartment door) and a postcard from the court was sent to the tenant. The tenant did not appear in court and the landlord obtained a judgment of possession against her on default on April 15, 1996. She was served a 72 hour notice of eviction (nowadays marshals serve 6 business days notices). Two days later she obtained an order to show cause staying the proceedings. On May 5, 1996, the parties entered into a stipulation which provided for a schedule of repairs to be made and periodic rent payments as the repairs progressed. In June, the landlord moved for a final judgment on grounds that the rent wasn't paid. The motion was served by mail, but tenant did not appear on the return date of the motion, and thereupon the landlord was awarded a possessory judgment with a five day stay of the issuance of the warrant of eviction. No further warrant was obtained.

The marshal obtained legal possession on July 9th and on July 15th the tenant obtained an order to show cause. The housing court judge ruled that the tenant was evicted illegally because a new warrant was never issued for the second judgment, and ordered the tenant restored to possession. The court noted that the landlord was offered an opportunity to implead or call the marshal as a witness on an adjourned date, but the landlord twice declined to do so. The tenant stated that by the time of her second order to show cause the apartment had proceeded to the point where it had been gutted or "destroyed and all their belongings were gone." No application was ever made by the law firm for a new warrant on the second judgment. The law firm's secretary believed she had mailed a copy of the stipulation vacating the first judgment and warrant to the marshal but offered no documentary proof. The law firm sent the marshal a letter dated August 23, 1996 with a notation "good warrant 8-26-96." It is not clear what the letter was intended to accomplish.

The Appellate Division held that whether the eviction was deliberate or inadvertent, "there is no question that neither the landlord nor its attorneys can evade responsibility of the wrongful eviction." Generally a landlord is not responsible for the manner in which a marshal executes a warrant of eviction. The marshal only becomes the landlord's agent for legal purposes when the process is irregular or unauthorized. When the housing judge ruled that the tenant was illegally evicted based on a void warrant, the landlord was provided an opportunity to litigate the full issue in Housing Court, but the landlord did not dispute its liability in Housing Court. Therefore, the landlord is liable to the tenant for any damages sustained in the unlawful eviction. The landlord is therefore estopped from now denying its liability. Likewise the law firm may be chargeable with the misuse of process by agents employed to further the course of litigation, even if the law firm's liability is only vicarious.

The Court concluded that the clients are relegated to relief against their former attorney for any damages which the attorney's conduct may have caused the client where the liability arises from some misconduct on the part of the attorney. As between the law firm and the marshal, the Court ruled that the law firm was in control of the litigation and had superior knowledge of the course of the litigation. Therefore, the firm bore the responsiblity to keep the marshal informed as to the status of the warrant and its validity. The Court ruled that the tenants are entitled to summary judgment as against the landlord and its attorneys, that the landlord is entitled to summary judgment against the law firm for legal malpractice and the marshal is entitled to summary judgment dismissing the complaint as against her. In a wrongful eviction action, the Court noted that a plaintiff is permitted recovery of property damages and damages for negligent infliction of emotional distress, in addition to traditional damages measured by the loss of the value of the leasehold. In this case it appeared as if this plaintiff tenant did not make a cognizable claim for damages against any of the parties as the tenant did not recite causes of action in a proper form.

On August 8, 2000, the DHCR issued an order directing the landlord to commence a proceeding within 30 days in a court of competent jurisdiction and such additional time as may be required by law for service of various notices. The DHCR ruled that if the owner failed to commence a proceeding within the prescribed time period, the owner must tender the tenant a renewal lease. On September 22nd, the owner served tenant the holdover petition. The tenant argued that the landlord failed to comply with the 30 day period set by the DHCR, in that the petition was not served by September 7th. Landlord argued that it timely served the nonrenewal notice.

The court rejected tenant's argument based on the doctrine of primary jurisdiction, since a landlord can proceed to evict a regulated tenant in Housing Court without first obtaining permission from the DHCR. The rent laws require an owner to serve a Golub Notice 90 to 120 days before the lease expires, plus a 30 day notice of intent to commence a proceeding, and the two notices may be combined. The court found that in this case the landlord had complied with both notice requirements, and therefore the landlord's holdover proceeding in Housing Court was proper.

A second issue addressed by the court involved the landlord's acceptance of rent on September 14th, which was after the termination date but prior to the commencement of the proceeding. The rent check was from someone other than the tenant (seemingly the tenant's daughter). The court, however, declined to dismiss the petition on the ground that the landlord had recognized this person as the new tenant. In this case, the landlord's agent immediately caught the error and refunded the check the very day it was deposited. This fact was not disputed. The court concluded that in these circumstances it cannot be said that the landlord intended to accept this person as a tenant.

The final issue involved landlord's request to conduct discovery on the tenant and her daughter. The court ruled that discovery of the tenant was permissible, but not of her daughter because the daughter "adamantly denies that an issue of succession will be raised" or that she has any interest in the apartment. Since the daughter purports to have zero claim to the apartment, the court ruled that discovery from her was inappropriate.

The defendant owner took the position that the four buildings together constitute a horizontal multiple dwelling, two of which were constructed and received certificates of occupancy after 1974, and as one building it should be dissolved from the Mitchell-Lama program as one building. The landlord then filed an application to the DHCR seeking an order as to whether some or all of the units in the four buildings are subject to rent stabilization once they leave the Mitchell-Lama program. The tenants association agreed that the four buildings should be treated as one unit, but argued that the date of the earliest certificate of occupancy, issued prior to January 1, 1974 should be applied to all buildings so as to make them subject to rent stabilization.

While the DHCR proceeding was pending, the tenants commenced a Supreme Court action seeking a declaration on the very issue the DHCR was in the midst of deciding. The tenants asked the court to stay DHCR from issuing a ruling. The landlord asked the Supreme Court to dismiss the tenants' complaint on grounds that the DHCR has primary jurisdiction over the issue of whether the buildings are to be subject to rent stabilization. The court denied the defendants' request to dismiss the complaint and granted the tenants' request to stay DHCR from rendering a decision. The Appellate Division, however, reversed and dismissed the complaint, ruling that the DHCR has primary jurisdiction on this issue.

In the meantime, in August, 2000 the owner filed an application with Housing Preservation and Development (HPD) to dissolve the Mitchell-Lama on March 1, 2001. A Mitchell-Lama owner is required to serve the tenants notice of the dissolution and specify a date and location for a "public information meeting" to discuss the proposed dissolution and its effects on their rent stabilized right and obligations. The laws require HPD to issue a Letter of No Objection to the owner's filing of a Certificate of Dissolution with the New York State Secretary of State. In January, 2001, the tenants asked HPD to find that the owner's letter is defective because it referred to the possibility that some or all of their apartments may not be subject to rent stabilization after the dissolution. Further, the tenants argued that the letter fails to show that all apartments were registered with DHCR. HPD rejected tenants' position on grounds that HPD's rule regarding the public information meeting was enacted "before any Mitchell-Lama housing companies owning buildings completed after January 1, 1974 became eligible for voluntary dissolution" and thus did not "specifically address the post-dissolution rent stabilization status of post 1974 properties."

The tenants commenced a lawsuit seeking a declaration that the owners' notice of public information meeting was void and sought an injunction against the owners from taking any further steps to dissolve the housing company until all the apartment units were registered with the DHCR and to enjoin the owners from holding the information meeting. The tenants' requests to stay the information meeting was granted pending the outcome of this motion. In opposition, the owners argued that since HPD had not yet issued a Letter of No Objection, the tenants' lawsuit was premature as all the procedural steps had not been exhausted. The tenants argued that HPD's response to their January, 2001 request to reject the owner's notice clearly indicated that HPD would not side with them (implying that HPD was going to issue a Letter of No Objection). The court ruled that regardless of whether or not HPD had issued a final decision or not, the proper procedure was not a declaratory judgment action, but rather an Article 78 proceeding specifically naming HPD as a party. The tenants did not name HPD as a party in this current action.

The court held that the requirements of an information meeting and whether or not the units should be registered with the DHCR are issues which arise in the context of an administrative hearing. A party aggrieved by an administrative agency's decision(s) cannot seek a "second, superseding opinion in a plenary action" brought against the prevailing party in the administrative process, much less in an action where the administrative agency is not even named and thereby not given the opportunity to defend its decision. The exclusive remedy when a party is aggrieved by an administrative decision is to file an Article 78 proceeding. The court declined to add HPD as a party to the declaratory judgment action, finding it would be inappropriate as new pleadings would be needed and this would entail a fundamental transformation of the action.

In dicta, the court concluded that the tenants' motive was effectively to restrain the owners from satisfying the preconditions for dissolution required by law. The purpose of the lawsuit was to preserve the status quo until the DHCR rendered a decision. The court, however, declined to allow that to happen. The court also noted there is no prejudice to the tenants were the owners to go forward with the information meeting. The court dismissed the complaint without prejudice to the tenants' commencement of an Article 78 proceeding.

Meanwhile, landlord appealed the DHCR decision. But based on the court's denial of discovery, the PAR Commissioner mistakenly concluded that the court had reached a final disposition in the case, and therefore denied the appeal, and terminated the appeal in tenant's favor, which meant landlord was required to give tenant a lease. In April, 2000 (5 years after landlord's discovery motion), landlord moved to renew the motion for discovery, which the initial judge said it could do if it re-submitted proper papers. A subsequent judge, however, ruled that the landlord had effectively abandoned the proceeding. Instead of offering tenants a renewal lease, the landlord instead served a thirty day notice terminating the tenancy and intention to recover the premises on nonprimary residence grounds. No new Golub Notice was served (nor could one be served until the tenants received a new lease). The issue for the court to determine is whether the landlord could rely on the 1995 Golub Notice in bringing this second holdover proceeding.

Landlord argued that it was not required to serve a new Golub Notice because the DHCR's order effectively stayed all proceedings until a court of competent jurisdiction rendered a determination on the merits, and to date, the merits of the case had not been addressed. Hence, landlord is only required to serve a thirty day notice of termination under Real Property Law 232-a, in effect treating the tenants as month to month tenants for the past five years. The court pointed out that regulated tenancies are governed by statute which entitle a tenant to a renewal lease at the expiration of the lease term. If the landlord does not want to renew the lease, the landlord must sent a notice of nonrenewal in the window period (120 to 150 days prior to the lease's expiration, although as of December 20, 2000, the period is 90 to 150 days). If the landlord fails to serve this notice, known as a Golub Notice, landlord must wait until the next window period.

The court analyzed the history of case law as to whether a notice of termination survives dismissal of a proceeding. The general rule is that when a holdover proceeding is dismissed, a new termination notice is needed. A wealth of case law follows this precedent. The only exception is Arol Development Corp. v. Goodie Brand Packing Corp, 324 NYS2d 324, aff'd 378 NYS2d 231 (App. Term), aff'd 382 NYS2d 215 (App. Div., 1st Dept. 1976) which held that the case is not dismissed if the second proceeding is brought promptly and before the first proceeding is dismissed. This doctrine likewise applies to Golub Notices which do not terminate the tenancy per se, but rather the landlord declines to continue the tenancy by nonrenewal of the lease. In conclusion, the court held that the five year old Golub Notice cannot be used as the basis for the second nonprimary residency proceeding. Otherwise, the Golub could hang like a sword of Damocles over the tenants' heads for five years. The court ruled that the tenants are entitled to a "certain peace of mind." The court rejected the landlord's argument that Arol Development applied, because the second proceeding was not promptly brought. The Golub Notice was stale by the time the second proceeding was commenced. It would be prejudicial to allow the tenants to have to answer to a 1995 Golub Notice regarding their residential whereabouts for the years 1992-1995.

The court ruled that the landlords may very well have made some deal concerning the building, but they failed to meet their burden concerning the validity of the transfer and hence ownership. The court likened Rice to an illusory owner. He allegedly paid roughly $70,000 for a 49% interest in a 1.3 million dollar property. The court held this is an extraordinary deal if the transfer occurred. Further, the original mortgage naming the initial corporate owner is still in existence. The corporation is listed as the managing agent. In other words, Delavan in a corporate guise still manages the building. The DHCR filing lists Delavan alone as the owner. The court concluded that Rice's sole function as "owner" seems to be that of a petitioner in this case. The landlords argued that this is a case of technical errors. If Delavan had just conveyed the apartment to himself, they argued, he would have been lawfully able to recover the apartment for himself. The court, however, noted that had he done this and then installed Rice, a friend without any family ties, he would have been in direct violation of the Code because this is exactly the type of circumstance courts have found problematic: an owner who manipulates the rent laws to oust bona fide tenants in favor of persons who would not otherwise be entitled to possession under the owner occupancy laws.

The landlord argued that Delacruz, as a co-tenant, was jointly and severally liable for the rent unless she properly surrendered the apartment. The court, noted, however that the co- tenant did not sign renewal leases. More significantly, the landlord did not properly serve Delacruz to enable the court to render a money judgment against her. The court then analyzed how service of process was made. The nonpayment petition was served by substitute service on Marcus Doe, and copies were mailed to each tenant by regular and certified mail. But no receipt of the certified mailings was attached to the affidavit of service. While the service that took place here may be sufficient for a judgment of possession (since Felipe appeared), the court held it was insufficient for a money judgment against Delacruz. The court differentiated service of process in regular civil actions, as opposed to service in landlord-tenant cases. In order to obtain a monetary judgment against a tenant in Housing Court, personal service of the petition must be made if the tenant defaults or never appears. Substitute service is not acceptable to obtain a money judgment (although it is in a civil court action).