Housing Court Decisions May 2001
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 May 28 and June 1, 2001 (7 cases)


Case Caption:
Cecilia v. Irizarry
Issues/Legal Principles:
Prior tenants' agreement in court settlement that building is deregulated on grounds of substantial rehabilitation is rejected by Appellate Term because no evidentiary determination was ever had proving system-wide renovations were actually made; Tenant's overcharge claim is not based on amount of rent paid four years prior to filing complaint, as the amended Code provisions inconsistently require, but rather Appellate Term holds that the legal regulated rent must be based on the rent registered four years prior to the last registered rent.
Keywords:
substantial rehabilitation; rent registration; overcharges; collateral estoppel
Court:
Appellate Term, 2nd and 11th Districts
Judge:
lower Court: Hon. G. Wright
Date:
May 24, 2001
Citation:
NYLJ, page 22, col 4
Referred Statutes:
Emergency Tenant Protection Act of 1974; Emergency Housing Rent Control Law 8584(4)(a); Administrative Code of the City of New York 26-504.3(b), 26-403; RSL 26- 511(c)(6), 26-512(e), 26-517(e), 26-516(g); RSC 2520.13; 1997 Rent Regulation Reform Act; CPLR 213-a
Summary:
In 1985 a prior landlord brought holdover proceedings against all the tenants in the building alleging that the building was exempt from rent stabilization on grounds of substantial rehabilitation. The proceedings were settled by stipulation wherein the prior landlord agreed to forego several months rent and give all the tenants four year leases at rent below the legal registered rents in return for a waiver by all the tenants of their claims to rent stabilized status and their acknowledgement that the building was decontrolled. In 1986, a new landlord purchased the building. At the end of the tenants' lease terms in 1990, the landlord brought holdover proceedings against these tenants. The tenants sought to set aside the prior settlement stipulations, but the Housing Court denied their application holding that the stipulations constituted a valid waiver of their rights. In the interim, a new tenant moved into the building and in July, 1989 applied to the DHCR to compel the landlord to give her a lease. The landlord opposed her complaint on grounds that the building was substantially rehabilitated and therefore the landlord was not obliged to give a renewal lease to a non-rent stabilized tenant. The DHCR held for the landlord by order dated 1995 on grounds that the 1985 court stipulation exempted the building from DHCR jurisdiction.

The instant action involves another tenant who has sued the current landlord and the prior landlord who purchased in 1986. The complaint alleges that the registered rent in 1984 was $260 per month, that no further registrations have been filed, that the tenant is subject to rent stabilization and that the landlord has engaged in overcharging the tenant. The landlord responded that the tenant is not entitled to rent stabilization coverage by virtue of the 1985 court stipulation wherein those tenants agreed to decontrol status, the 1990 Housing Court decision which denied tenants' efforts to vacate the 1985 stipulation, and the 1995 DHCR order. The lower court granted the landlord summary judgment, but the Appellate Term reversed.

The Appellate Term held that at no time was there ever an evidentiary determination that the building had indeed undergone a substantial rehabilitation which would otherwise decontrol the rent stabilized units. Simply because the tenants in 1985 agreed to be destabilized did not by itself deregulate the building. In fact, the current tenant's lawsuit included affidavits from the prior tenants which indicated that very little rehabilitation work was undertaken. A new certificate of occupancy was issued but this was only because a store in the building had been converted into a residential unit. Otherwise, there was no evidence that the prior landlord had replaced at least 75% of the building's systems (in accord with a DHCR policy statement). The court held that the current tenant cannot be bound by a mere stipulation binding prior tenants who conceded deregulated status. The current tenant was not a party to that stipulation. Had there been an actual DHCR determination based on an inspection and evidence, then the current tenant would of course be bound by such a ruling (as would all subsequent tenants). But in the absence of any finding of fact by a court or the DHCR, and particularly where the evidence seems to indicate to the contrary of any substantial rehabilitation undertaken, the landlord cannot claim that the issue has already been litigated. In fact, the Appellate Term held that the 1985 stipulation was a "sham" in its representation that the premises were substantially rehabilitated. Further, the single tenant's complaint to the DHCR cannot be binding on other tenants since no building-wide order of exemption was ever made, nor again was their any evidentiary proof of substantial rehabilitation.

With respect to the tenant's overcharge claim, the Appellate Term rejected the landlords' argument that the claim was time barred by a four-year statute of limitations. After this litigation was commenced, the owner belatedly filed rent registration statements for the years 1996 to 1999. The Court held that "for owners who fail to register, the legal regulated rent must and can only be calculated as it would ordinarily be calculated, i.e., based on the last properly registered rent and these owners must continue to maintain and produce rental records dating from before the four-year period. The late filing of the registrations for the four years from 1996 to 1999 cannot operate to give [the landlords] the benefit of a legal regulated rent that is based on the rent indicated in the annual registration statement filed four years prior to the most recent registration statement."

The Court noted that the DHCR's amendment to the Rent Stabilization Code changed the Code's definition of the term "legal regulated rent,"to be defined as the "rent charged on the base date set forth in subdivision f of this section, plus any subsequent lawful increases and adjustments [RSC 2520.6(e)]," and defines the "base date" as the "date four years prior to the date of the filing of the complaint." The Court held that the amended Code definition is "completely inconsistent" with the definition of "legal regulated rent"" which the Legislature has provided in the Rent Stabilization Law, which is "the rent indicated in the annual registration statement filed four years prior to the most recent registration statement . . .plus in each case any subsequent lawful increases and adjustments." The Court noted that it is not fair to define the legal regulated rent as whatever it may have been four years prior to when the tenant files an overcharge complaint. Rather, it should be based on the filed registration statements. Otherwise, observed the Court, owners who did not duly register are given benefits greater than or equal to those given to duly registered owners (i.e., higher rents, unregistered).

The Court held that "it has been a cardinal rule of rent stabilization that the legal regulated rent must be based on the registered rent, not on the charged rent." The Rent Stabilization Law's definition of a legal regulated rent for the purposes of overcharge is based on a registration scheme. In contrast, the drafters of the amended Code, in framing a definition of legal regulated rent that is based on the charged rent, have clearly departed from the statutory scheme. The Code provision is in such disharmony with the statute that it is designed to implement that it cannot be followed. Thus, the Appellate Term ruled that it must continue to hold that the legal regulated rent for owners of units that are not duly registered must be calculated based on the last properly registered rent.

Notes:
This is a very significant case because the Appellate Term has declared that the new Code amendments regarding "legal regulated rent" promulgated in December, 2000 by the DHCR are "inconsistent" with the Rent Stabilization Law. This ruling provides fuel to the lawsuit filed by legal aid lawyers challenging the legality of those amendments. Most of the 2000 amendments were disastrous to tenants' rights. Tenant advocates welcome this decision which firmly rejects the position that whatever the rent was four years prior to the tenant's complaint must be deemed the lawful rent, particularly if, as happened in this case, the rent was never registered in the past four years and even longer (i.e., here, after 1984).


Case Caption:
Spaeda v. Bakirtjy
Issues/Legal Principles:
Tenant who obtained rent stabilized status one year after moving in due to landlord's participation in J51 tax abatement program retains rent stabilized status after tax period expires because landlord failed to notify tenant in each renewal lease the date of the expiration of the J51 tax abatements.
Keywords:
J51 tax abatements; renewal leases
Court:
Appellate Term, First Department
Judge:
lower Court: Hon. Lucy Billings
Date:
May 29, 2001
Citation:
NYLJ, page 24, col 5
Referred Statutes:
RSL 26-504(c)
Summary:
The lower court dismissed a holdover petition for failure to properly plead the rent stabilized status of the apartment, and the Appellate Term affirmed. The tenant moved into the apartment in 1980 and became rent stabilized in 1981 because the landlord received tax benefits under the J51 program. Although the tax benefit period expired in 1985, the tenant retains his stabilized status nonetheless. This is because the landlord was required to notify the tenant in each renewal lease the date the J51 benefits expire. Since the landlord did not include the proper notice in the renewal leases, the tenant retained stabilization status. The court rejected the landlord's argument that this provision of the law regarding renewal leases did not apply to this tenant because his tenancy began as a market rent tenant, not a stabilized tenant. The court held that once he became a stabilized tenant in 1981, he remained protected because the landlord neglected to notify him of the expiration dates in each renewal lease.


Case Caption:
14 Morningside Avenue v. Murray
Issues/Legal Principles:
Landlord should have been given a short adjournment by the trial judge to obtain a proper multiple dwelling registration statement, rather than dismiss the case.
Keywords:
multiple dwelling registration statement
Court:
Appellate Term, First Department
Judge:
lower Court: Hon. Timmie Elsner
Date:
May 31, 2001
Citation:
NYLJ, page 19, col 2
Referred Statutes:
22 NYCRR 208.42(g); NYC Administrative Code 27-2097(c)
Summary:
Landlord was required to prove that a currently effective registration statement was on file for the multiple dwelling premises. Since a new registration must be filed annually, it was not shown that the April 2, 1999 statement offered by landlord was "currently effective" on May 23, 2000, the date of trial. Rather than dismissing the proceeding without prejudice, as the lower court did, the Appellate Term held that the landlord should have been afforded a continuance of one half hour, as requested, to cure the defect by getting a proper registration statement. Apparently, someone was on the way from HDP with a copy of the correct statement.


Case Caption:
Missionary Sisters of the Sacred Heart, Ill. v. DHCR and Croseri
Issues/Legal Principles:
Tenant is not entitled to indefinite preferential rent where lease providing for a preferential rent limits this concession to the term of the lease.
Keywords:
preferential rent; contracts
Court:
Appellate Division, First Department
Judge:
lower Court: Hon. Sheila Abdus-Salaam
Date:
May 29, 2001
Citation:
NYLJ, page 22, col 1
Referred Statutes:
RSC 2521.2(b); RSC 2520.6[f]; RSC 2520.6[g]; RSC 2510; RSC 2507.9
Summary:
The landlord entered into a two year rent stabilized lease with the tenant. The legal rent was $1,448.14 but the tenant was given a preferential rent of $1,379.77. A rider to the lease indicated that the preferential rent was given only for the two-year term and that the reason stated was to do the "economically depressed market." At the end of the two years, the landlord gave a renewal lease, again at a legal rent, but with a lower preferential rent given to the tenant, and the parties executed an identical rider. A second renewal lease was tendered but it no longer contained a preferential rent. The tenant refused to execute the renewal lease without this rent concession. As a result the landlord commenced a DHCR proceeding seeking a determination of whether the tenant could be charged the legal regulated rent, and the tenant likewise sought a determination of what constituted the appropriate rent.

The DHCR ruled that the landlord cannot resume the legal rent until the tenant who has been given the preferential rent moves out. The landlord appealed, and lost on a PAR, and lost in an Article 78 appeal of the PAR. The Appellate Division, however, reversed and ruled that the landlord was not bound to keep the rent at a preferential rent for the duration of this tenant's tenancy. The Appellate Division interpreted the statute, Rent Stabilization Code 2521.2(b) as not specifying when or whether the landlord may start charging the legal rent and stop offering a preferential rent. The Court held that the statute was intended as guidance "in those situations where no written agreement controls and/or where the rent concession is open ended or where the tenant, and possibly the landlord also, are unaware the rent being charged is not the maximum allowable." It was not intended, held the Court, to apply in situations where the parties are aware that the rent charged could be higher but agree to a lower rent for a limited period of time.

The Appellate Division reasoned that one purpose of the rent laws was to avoid unjust and oppressive rents, and that an unlimited rent concession does not violate any public policy. The Court analyzed this situation based on typical contract law, what the parties agreed to. The Court held that it was very clear that the parties did not intend for an indefinite concession and that the concession was specifically tied to economic conditions prevailing at the time the lease was signed and the concession applied to that particular term of the lease. A dissenting judge pointed to a Code statute which requires that leases be renewed on the same terms and conditions as expiring leases. For this reason, the dissenting judge would have given the tenant continued concessions for the duration of his tenancy.


Case Caption:
Hirsch v. Borowik
Issues/Legal Principles:
Tenant who formerly owned the building and registered her apartment as permanently exempt on grounds of owner occupancy cannot now claim regulated status and overcharges.
Keywords:
overcharges, registration, owner occupancy
Court:
Civil Housing Court, New York County
Judge:
Hon. Hoffman
Date:
May 30, 2001
Citation:
NYLJ, page 18, col 6
Referred Statutes:
RPAPL 741; CPLR 406, 3211, 3212, 3025(b)
Summary:
In 1946 the current tenant bought the building and later moved into the apartment where she currently resides. In 1984, as owner, she registered the apartment with the DHCR as permanently exempt from rent regulation due to owner occupancy. The building was sold to the current owner and the tenant negotiated a lifetime lease at a rent of $3,000 per month with yearly increases in accord with rent stabilized increases. In 1998, the tenant commenced an action in Supreme Court seeking a judgment that the apartment is subject to rent stabilization, and made a claim of overcharges. The Supreme Court dismissed the complaint on grounds that there was no current controversy since the parties were performing in accordance with their rights and obligations under the contract of sale which established the tenant's lease terms. The overcharge claim was dismissed without prejudice pending a DHCR determination on the rent regulatory status of the apartment.

The landlord commenced a nonpayment proceeding against the tenant who had begun withholding rent. The tenant made a motion asking that the petition be dismissed for failure to "identify the state and local laws applicable to the subject premises." As such, the petition fails to comply with RPAPL 741 requiring the factual basis on which the proceeding is brought. Specifically, the tenant argues that the apartment is subject to rent stabilization.

The court ruled that the tenant herself registered the apartment as permanently exempt on owner occupancy grounds. She lived in the apartment for many years and negotiated the terms of her continued occupancy after the building was sold. In such instances, the court held that she cannot now claim that the petition fails to properly describe the rent regulatory status of the apartment. Second, under the terms of her life tenancy agreement, it was described as a "vacancy lease," and the rent in excess of $2,000 per month established as a "first rent" would deregulate the apartment under high rent vacancy decontrol laws. Third, the tenants seeks to challenge the rent more than four years beyond the date when it was initially established. Even if the apartment were subject to rent stabilization, the right to challenge the rent is not possible beyond a four year period. Since the petition pleads a lawful rent, the tenant's request to dismiss the petition was denied by the court.


Case Caption:
Alphonse Hotel Corp. v. Fusco
Issues/Legal Principles:
Landlord, not tenant, has burden of proof to prove the rental value of a hotel unit in a case involving whether the hotel unit is subject to rent stabilization.
Keywords:
hotel; burden of proof
Court:
Appellate Term, First Department
Judge:
lower Court: Hon. Faviola Soto
Date:
May 30, 2001
Citation:
NYLJ, page 18, col 1
Referred Statutes:
22 NYCRR 130-1.1; RSL 26-506(a)
Summary:
Landlord brought a nonpayment proceeding and the issue at trial was whether tenant's hotel unit is subject to rent stabilization coverage. In presenting the issue to the jury, the trial court framed the inquiry as whether the "rent charged"' for the unit was less than $350 per month or $88 per week on May 31, 1968. The Appellate Term, however, ruled that this was a misapprehension of the burden of proof regarding the coverage issue. The evidentiary burden did not rest with the tenant to establish the rental value of the hotel unit on May 31, 1968, the statutory base date. Yet, there was insufficient evidence to determine the rental value. The Appellate Term held that there must be a new trial. The Appellate Term held that it is the landlord who bears the burden of proof as to the rental value of the unit.


Case Caption:
Tursi v. Anderson
Issues/Legal Principles:
Prior DHCR proceeding involving wife's succession rights claim does not justify dismissal of landlord's nonprimary residence case against tenant where tenant's primary residence was not an issue before the DHCR.
Keywords:
collateral estoppel; nonprimary residence; waiver
Court:
Appellate Term, First Department
Judge:
lower Court: Hon. Peter M. Wendt
Date:
May 31, 2001
Citation:
NYLJ, page 19, col 4
Referred Statutes:
9 NYCRR 2504.4(d); 2524.4(c)
Summary:
Landlord commenced a nonprimary residence proceeding against tenant in May, 2000. The lower court granted tenant's motion to dismiss the petition on the doctrine of collateral estoppel based on a prior DHCR order dated October, 1999 directing landlord to offer tenant's wife a renewal lease. The court also found that the landlord's acceptance of the rent check after the termination of the tenancy, but prior to the commencement of the proceeding, vitiated the termination notice. The Appellate Term reversed.

DHCR issued its order in response to a "lease violation complaint" in a proceeding commenced by tenant's (now former) wife asserting succession rights. The issue of tenant's nonprimary residence was not raised or decided and he conceded that he had surrendered the apartment. Since it was not demonstrated that nonprimary residence issues relating to tenant and/or his wife were litigated or necessarily decided at the DHCR, the Appellate Term held that the landlord had a full and fair opportunity to litigate those matters in Housing Court. Therefore, it was improper of the lower court to dismiss the proceeding on collateral estoppel grounds. Further, the Court held that the landlord did not waive a right to maintain the holdover proceeding by an inadvertent "acceptance" of rent. Tenant sent a combined check for May and June, 2000 rent after the April 30, 2000 termination date and prior to the May, 2000 commencement of the proceeding, but the landlord returned the check uncashed, and relatively quickly (about three weeks later).

New York Law Journal,
decisions for the week of May 21-25, 2001 (6 cases)


Case Caption:
Lex 33 Associates v. Grasso
Issues/Legal Principles:
Housing Court lacks jurisdiction to declare a "sweetheart lease" a nullity.
Keywords:
sweetheart lease; jurisdiction
Court:
Appellate Division, First Department
Judge:
lower court: Hon. Lorraine Miller
Date:
May 21, 2001
Citation:
NYLJ, page 23, col 4
Referred Statutes:
CPLR 212-a, 3001
Summary:
The lower court granted the defendant-tenant's request to transfer this Supreme Court case to the Housing Court. Appellate Division reversed. The action involves landlord's lawsuit for a declaratory judgment nullifying the nine-year old "sweetheart lease" initially granted to the tenant in 1990 by the prior owner (who happened to be the tenant's father). The current owner refused to renew the rent stabilized lease when it expired, and instead brought this eviction proceeding in Supreme Court and sought fair market rent of the apartment from the inception of the tenancy. The Appellate Division held that although Civil Court is generally preferable for landlord-tenant disputes, it was inappropriate to do so here because Housing Court cannot declare the lease a nullity, only Supreme Court can do that. Therefore, the lower court's transfer order was reversed.


Case Caption:
In Re Application of Firstmark Development Co. v. DHCR
Issues/Legal Principles:
DHCR is required to investigate circumstances of agreement wherein tenant allegedly waived his overcharge rights.
Keywords:
stipulation; waiver; overcharges
Court:
Appellate Division, First Department
Judge:
lower court: Hon Emily Goodman
Date:
May 21, 2001
Citation:
NYLJ, page 24, col 1
Referred Statutes:
NYCRR 2526.1, 2520.13
Summary:
Tenant moved into a rent stabilized apartment in 1996 as a month to month tenant without a written lease, and the initial rent was $1700 per month. In 1997 the landlord raised the rent to $1900 per month. Tenant filed a rent overcharge complaint with the DHCR in February, 1998 which resulted in a DHCR order that tenant was overcharged by $2,200 and $6,600 as treble damages. The landlord filed an appeal known as a PAR and claimed that there was a stipulation between her and the tenant dated March 10, 1998 wherein he agreed to withdraw his DHCR complaint, and claiming that she never received the agency's requests to her to respond to the complaint. The tenant argued that the agreement never went into effect.

The agreement the parties signed provided that he would move out of his apartment, and move into Apartment 5A/5B, units which the landlord intended to combine, and which would be an unregulated apartment. The agreement provided that the tenant would withdraw his DHCR overcharge complaint with prejudice and would not commence any claim based on any DHCR order. In April, 1998, the tenant moved into the unit, signed a three-year lease whose rent was $2,200 per month. Tenant received the DHCR order and sought to off-set the award against rent due the landlord. DHCR ruled on the PAR that, pursuant to the Rent Stabilization Code, an agreement by the tenant to waive the benefit of any provision of the Code is void, unless DHCR or a court approved the settlement. Since the DHCR nor a court approved the settlement, then the tenant is entitled to withdraw the complaint despite signing an agreement to the contrary.

At some point a new owner purchased the building and appealed the DHCR order all the way to the Appellate Division, who reversed the order. The Court held that the agreement did go into effect, despite DHCR's finding to the contrary■a finding, noted by the Court, that DHCR made no effort to investigate. The Court held that it was not unreasonable of the prior owner to believe that the tenant would (a) withdraw his complaint after they had settled, and (b) file a copy of the settlement with the DHCR of his withdrawal. The Court also found that the landlord did not have a "reasonable opportunity to be heard" because she never received copies of DHCR notices requesting information from her on the overcharge complaint. The record indicates that she was traveling in Italy during these times and the tenant was picking up her mail. The Court ruled that since she did not receive the notices, she should be given an opportunity to refute them at the DHCR.


Case Caption:
Armed Realty Co. v. Lomonaco
Issues/Legal Principles:
Landlord failed to establish unlawful sublet case against tenant, as court found that additional occupant was tenant's roommate.
Keywords:
sublets; roommates
Court:
Appellate Term, First Department
Judge:
lower court: Hon. Jerald Klein
Date:
May 22, 2001
Citation:
NYLJ, page 18, col 1
Referred Statutes:
RPL 235-f
Summary:
The landlord lost an alleged unlawful sublet proceeding brought against the tenant and appealed to the Appellate Term. The appellate court upheld the decision, stating that the landlord failed to establish by preponderant evidence that tenant unlawfully sublet the apartment without landlord's consent. The proof at trial included evidence of rent sharing and tenant's prior written notice to landlord that he had accepted the roommate. Building personnel testified as to tenant's diminished presence in the premises, but this merely raised issues of fact for the trial court to resolve. The trial court expressly credited the testimony of the tenant and the roommate as to their occupancy agreement and the appellate court refused to substitute its judgment for the lower court's findings of fact.


Case Caption:
Korean American Association of Greater New York v. Katsukawa
Issues/Legal Principles:
Landlord who is aware of and permitted tenant to convert the premises located in a loft building from a commercial to residential apartment must give tenant a rent stabilized lease.
Keywords:
rent stabilization status, commercial usage
Court:
Civil Court, New York County
Judge:
Hon. Saralee Evans
Date:
May 23, 2001
Citation:
NYLJ, page 20, col 2
Referred Statutes:
CPLR 3211(a)(7)
Summary:
The landlord brought a commercial holdover proceeding on grounds that tenant's written lease had expired and she was a mere month to month tenant. The building in which she resides is a loft building and the tenant argues that she is subject to the rent stabilization laws. The landlord recognized that part of the building, but not tenant's apartment, is subject to the Loft Law, and that tenant's unit was not used residentially during the Loft Law window period. The parties acknowledge that tenant employs a mixed usage of the apartment (commercial and residential).

In 1995 the tenant and a co-tenant leased the space as an art studio for one year and the lease specified that living in the premises was not allowed. In 1999, the tenant in this case signed a separate one year lease for her portion of the loft which was partitioned after she and the other co-tenant signed the original lease. The words pertaining to exclusive commercial use did not appear on her own lease. The two tenants made numerous renovations of a residential nature to the space which the tenants claim the landlords observed on various occasions. They testified that before the initial lease was signed they told the landlord that they intended to live in the loft and he responded by asking them not to reveal their intention to his lawyer when they signed the lease, a claim the landlord denied. The landlords testified that the space did not look lived-in. Although the landlord acknowledged visiting the premises to take Japanese language lessons from the tenant, he did not recall seeing a couch or kitchen, nor was he aware any sleeping took place in the premises. Photographs in evidence indicate that the tenant clearly lives in the space.

The issue before the court was whether the landlord was aware of and permitted the residential use. The evidence boiled down to whose testimony was more credible. The court sided with the tenant, enumerating all the evidence, including the landlord's response to tenant's letter regarding tenant's installation of a washing machine. Unrebutted testimony also indicates that the tenant requested permission to use the elevator to move her bed in and the elevator was provided for this purpose. Since the testimony and evidence indicates that this landlord was aware that the tenant intended to use and did in fact convert the premises from commercial to residential usage, the landlord is obligated to provide the tenant a rent stabilized lease. The court granted the tenant attorney's fees as the prevailing party.


Case Caption:
Skeeter v. Clark
Issues/Legal Principles:
Landlord who has knowledge of prime tenant's unlawful sublet and overcharging the subtenant is deemed complicit in an illusory prime tenancy scheme, even though landlord does not benefit off the scheme.
Keywords:
sublet; illusory prime tenant; overcharges
Court:
Civil Housing Court
Judge:
Hon. Lawrence Schachner
Date:
May 23, 2001
Citation:
NYLJ, page 20, col 3
Referred Statutes:
none cited
Summary:
Landlord brought a licensee proceeding against the occupant of the apartment who responded that she was not a licensee, but rather was the real tenant of record. She argued that the prime tenants were illusory tenants. The court held a trial wherein it was determined that the prime tenant did not occupy the apartment as her primary residence and she charged the so- called subtenant an excess rent above the lawful rent. The judge held that the credible evidence indicated that the landlord was well aware of the sublet and the overcharge. The subtenant told the landlord of all this and the mailbox label was changed to the subtenant's name. Despite all this knowledge, the landlord failed to bring an illegal sublet action against the prime tenant. Even though the landlord did not benefit from the sublease arrangement (i.e., receive any of the excess rent), this is not a requirement to a finding of an illusory tenancy.


Case Caption:
Hampares v. DHCR
Issues/Legal Principles:
Tenant did not waiver overcharge claim pending before DHCR in settling Housing Court litigation.
Keywords:
overcharges; stipulation
Court:
Appellate Division, First Department
Judge:
lower court: Hon. William McCooe
Date:
May 24, 2001
Citation:
NYLJ, page 20, col 4
Referred Statutes:
none cited
Summary:
The landlord appealed the DHCR's award of overcharges to the tenant all the way to the Appellate Division. The Appellate Division affirmed the DHCR's decision. The landlord and tenant entered into a stipulation of settlement in Housing Court. The stipulation did not state that the tenant would withdraw her pending DHCR complaint. There was no indication in the stipulation that the rent was being set pursuant to the Rent Stabilization Code. The stipulation provided that the tenant was granted an offset of rent based on an alleged overcharge and this provision, the Appellate Division ruled, cannot be construed as a judicial finding that the rent set in the stipulation was the legal rent. Instead, the DHCR's order set the legal rent.

New York Law Journal,
decisions for the week of May 14-18, 2001 (10 cases)


Case Caption:
Norotsky v. Katz
Issues/Legal Principles:
One owner of a joint ownership was not permitted to terminate tenancy when other owner gave tenants a lease.
Keywords:
tenants in common
Court:
Appellate Term, 2nd & 11th Judicial Districts
Judge:
lower court: Hon. Ronni Birnbaum
Date:
May 15, 2001
Citation:
NYLJ, page 20, col 2
Referred Statutes:
none cited
Summary:
Landlord brought a holdover proceeding to recover the upstairs apartment in a building owned by the petitioners as tenants in common (a form of joint ownership). The 30 day notice of termination and petition were signed by one of the owners purportedly on behalf of all three tenants in common. After service of the notice, another one of the owners served a notice "revoking" the 30-day notice of termination and instead he executed a two-year lease with the tenants who are this owner's father and uncle. The Housing Court ruled that the owner who signed the 30 day notice was not entitled to oust the tenants and take sole possession. The Appellate Term upheld.


Case Caption:
Board of Managers of the Low and Mid Rise Section of the Lincoln Square Condominium v. Errico
Issues/Legal Principles:
Condominium board is not allowed to initiate summary proceeding against tenant on behalf of the unit owner where power of attorney from unit owner does not specify that board may initiate summary proceeding on behalf of the owner.
Keywords:
pets; condominiums; power of attorney
Court:
Civil Housing Court, New York County
Judge:
Hon. Maria Milin
Date:
May 16, 2001
Citation:
NYLJ, page 18, col 5
Referred Statutes:
CPLR 3211(a)(3); RPAPL 721
Summary:
The board of managers of a condominium acting on behalf of the unit's owner brought a holdover proceeding against tenant on grounds that tenant is harboring a dog in violation of the lease. The tenant argued that RPAPL 721 does not allow a condo board to commence a summary proceeding. The board, however, argues that the unit owner authorized it to bring the proceeding and the by-laws also authorize such a proceeding. Further, the unit owners gave the board a power of attorney. The court reviewed prior case law on this and found that a prior judge did not allow the condo board to proceed against the tenant in lieu of the unit owner. The landlord, however, said the difference here is that a power of attorney was signed. The court, however, pointed out that this power of attorney from the unit owner to the condo board does not specify that the board may initiate summary proceedings. Hence the court dismissed the proceeding.


Case Caption:
Rosen v. Chavis
Issues/Legal Principles:
Tenant who failed to show reasonable excuse for why she failed to appear for trial is not permitted to vacate the default judgment
Keywords:
default judgment; reasonable excuse
Court:
Civil Housing Court, Richmond County
Judge:
Hon. Kenneth Bedford
Date:
May 16, 2001
Citation:
NYLJ, page 21, col 4
Referred Statutes:
CPLR 5015(a)(2) & 317
Summary:
In this nonpayment proceeding, a traverse was held and the tenant lost. (A traverse is a hearing where the tenant challenges service of the legal papers. The court set the matter down for a trial date and the trial was adjourned on tenant's request. On the adjourned date the tenant failed to appear and the landlord was given a default judgment. Tenant then sought an order to show cause to vacate the judgment. In order to vacate a default judgment, the party must show a reasonable excuse and a meritorious defense. The reasonable excuse alleged by this tenant was that she was at the Appellate Term waiting for a decision (presumably to appeal the denial of the traverse) when the default was entered. The court, however, did not find it reasonable that the tenant chose to go to the Appellate Term rather than appear for trial. The court concluded that she "willfully caused her own default." Further, the court noted that the tenant waited 22 days before applying for an order to show cause. Absent a reasonable excuse, the court refused to grant the tenant's motion to vacate the default.


Case Caption:
Pickman Realty Corp. v. DHCR
Issues/Legal Principles:
Landlord will not receive an MCI rent increase if windows are defectively installed.
Keywords:
MCI
Court:
Supreme Court, Queens County
Judge:
Hon. Polizzi
Date:
May 16, 2001
Citation:
NYLJ, page 20, col 6
Referred Statutes:
9 NYCRR 2522.4(a)(2)
Summary:
There are 73 rent stabilized tenants in this 98-unit building which went co-op. The managing agent filed an MCI application with the DHCR based upon installation of 1,337 windows at a cost of $505,951. 51 tenants responded to the application, as well as the tenants association. The Rent Administrator granted an MCI increase of $4.72 per room. Due to a 12 year real property tax abatement, the actual amount of the rent increase was limited to $3.72 per room for the life of the abatement. A DHCR inspector found that 11 windows were defective and therefore exempt from the rent increase until such time as the owner corrected these problems. Three tenants filed an appeal (PAR), as well as a tenant on behalf of the tenant's association, but the Commissioner denied their appeals. In an Article 78 proceeding, the Supreme Court judge remanded the matter back to the DHCR finding that the agency had conducted too small a sampling of apartments in its window inspection.

The DHCR then scheduled inspections of 64 apartments, 20 of which were not inspected as no access was obtained. Of the 43 units inspected, 37 windows had some kind of defect. The landlord argued that it was not fair that the second inspection occurred roughly 6-7 years after the windows were installed. The Commissioner revoked the Rent Administrator's prior order which had granted the MCI increase basically on grounds that the work was not done in a workmanlike manner. This prompted the landlord to appeal in an Article 78 to the Supreme Court, but the court found that a substantial portion of the new windows were defectively installed and therefore their installation did not constitute an improvement to the building to justify an MCI rent increase.


Case Caption:
81-41 Pasqua Realty LLC v. Ervolino
Issues/Legal Principles:
Occupant who remains in possession pursuant to a settlement agreement which incorporates the overlease remains bound to the terms of the overlease even after the settlement period expires, so that the jury waiver clause of the overlease remains in effect.
Keywords:
tenancy; jury waiver clause
Court:
Civil Court, New York County
Judge:
Hon. Rakower
Date:
May 16, 2001
Citation:
NYLJ, page 18, col 5
Referred Statutes:
CPLR 2219(a); RPL 232-c
Summary:
The current resident of the apartment used to be the undertenant. He obtained a right to reside in the apartment as a result of a stipulation of settlement between the landlord, the overtenant and himself, the undertenant. The settlement agreement apparently incorporated the terms of the overlease which contained a jury waiver clause. For reasons not clear, the landlord has now brought the former undertenant to court to evict him. The undertenant, however, claims that he was not a signatory nor party to the lease so he should not be bound by the jury waiver clause, and that the stipulation only bound him to the terms of the overlease prior to December 31, 1999, not thereafter. The court disagreed, finding that the terms of the lease continued after the stipulation expired because no other agreement was entered into between the landlord and the undertenant; hence their relationship continued on the same terms and conditions as during the stipulation■which is to say, subject to the lease and its jury waiver clause.


Case Caption:
United Tenants Association, Mutual Housing Association HDFC v. Price
Issues/Legal Principles:
Remaining family member of tenant in an HDFC building must apply directly to the city Department of Housing Preservation and Development (DHPD) for succession rights claim within thirty days, as Housing Court does not have primary jurisdiction over such a claim.
Keywords:
succession rights
Court:
Appellate Term, First Department
Judge:
lower court: Hon. Arlene Hahn
Date:
May 18, 2001
Citation:
NYLJ, page 18, col 1
Referred Statutes:
CPLR 2221(e); 28 RCNY 24-07 & 24-09
Summary:
The occupant made a belated succession rights claim, but this is a building subject to the supervision of the Department of Housing Preservation and Development (DHPD). In that regard the occupant must apply to DHPD within 30 days after the tenant of record permanently vacates since DHPD has primary jurisdiction on a succession rights application, not the Housing Court. (This building appears to be either a TIL building or a low-income cooperative already converted).


Case Caption:
Mickenberg v. Gabriellini
Issues/Legal Principles:
Tenant's request to sublet on grounds that he was going to graduate school for two years in Florida was unreasonably withheld by landlord, and tenant's removal of some household furnishings was not an indicator that tenant did not intend to return at the expiration of the sublease.
Keywords:
sublet; overcharge
Court:
Appellate Term, First Department
Judge:
lower court: Hon. Peter Wendt
Date:
May 18, 2001
Citation:
NYLJ, page 18, col 1
Referred Statutes:
RPL 226-b; RSC 2525.6(b)
Summary:
Tenant sought to sublease the apartment on grounds that he was attending a two-year graduate study program at a Florida university and he intended to return to New York City to continue his studies at the Albert Ellis Institute. At that time tenant had resided in the apartment for 12 years. Landlord denied tenant's sublet request on grounds that "the move isn't really transitory or temporary in nature." The lower court found the landlord's denial reasonable, but the Appellate Term reversed, holding that the lower court's ruling was against the weight of the evidence and in derogation of the sublet statute's remedial purpose to permit bona fide sublets of apartments when they are not in use during a period of housing shortage.

Tenant moved out certain readily movable household furnishings from the apartment and the landlord argued that this indicated he did not intend to return to the apartment. But the Appellate Term held that this was "hardly inconsistent with an intent to reoccupy at the expiration of the sublease." Nor, the Court ruled, was tenant's so-called failure to provide "documentary proof" that the relocation to Florida "is in any way temporary" a valid reason for rejection where no request for such documentation had been made in the additional information (questionnaire) sought by the landlord. At trial tenant confirmed that he spent most of his life in the apartment and considered New York City his home. Landlord suggested that the proposed subtenant would permanently remain in the apartment, but the Appellate Term found this a mere speculation and lacking an objective basis.

The Appellate Term held that the "intent to return" requirement of a sublet request should not be "construed so closely that it all but swallows up the right to sublet liberally granted to tenants by the statute." The Court further held that the proposed rent of the sublease, $536.52 per month, in excess of the legal rent $510.98, is not violative of the Rent Stabilization Code's overcharging provision in these circumstances, and particularly where the landlord made no reference or objection to the sublease rent when he rejected tenant's request. In short, the Appellate Term concluded that permission to sublet was unreasonably withheld by the landlord, and the petition was dismissed.


Case Caption:
The Jewish Theological Seminary of American v. Roy
Issues/Legal Principles:
Charitable or educational institution must renew tenant's lease where tenant commenced occupancy at a time when the institution did not own the building.
Keywords:
not-for-profit; piercing corporate veil; renewal notice
Court:
Appellate Term, First Department
Judge:
lower court: Hon. Laurie Lau
Date:
May 18, 2001
Citation:
NYLJ, page 18, col 1
Referred Statutes:
RSL 26-511(c)(9)(c)(i)
Summary:
The rent law allows a charitable or educational institution to not renew a tenant's rent stabilized lease if the tenant initial tenancy commenced after the owner acquired the property. In other words, if the tenant is already living in a building that is later bought by a not-for-profit institution, the owner cannot then seek to evict the such a tenant. The law specifies the ownership of the building, not the land per se. In this case, the landlord Seminary was trying to argue that since it owned the land, although not the building, before the tenant move in, the Seminary was justified in refusing to renew the tenant's lease. The Seminary sold the building to a for-profit stock corporation which transferred title back to the Seminary in 1982. Tenant moved in when the premises were owned by the for-profit owner. The lower court and the Appellate Term rejected the Seminary's attempt to characterize itself as the true owner of the building all along on the doctrine known as piercing the corporate veil. Such a legal theory is an equitable claim typically employed by a third party where abuse of the corporate form has resulted in a wrong or fraud requiring the intervention of the court. The for-profit owner, however, is an independent entity and in any event, the Seminary's attempt to unite its ownership with the for-profit's ownership of the building constitutes an unwarranted application of the piercing doctrine.


Case Caption:
Katz 737 Corp. v. Bernstein
Issues/Legal Principles:
Landlord who agrees to deregulate apartment on terms where tenant is given renewal options consistent with rent stabilization guidelines increases cannot thereafter attempt to make the tenant pay $8,000.00 in rent (far in excess of guidelines increases).
Keywords:
luxury deregulation; stipulations
Court:
Appellate Term, First Department
Judge:
lower court: Hon. Jean Schneider
Date:
May 18, 2001
Citation:
NYLJ, page 18, col 2
Referred Statutes:
RSC 2520.11(n), 2520.13, 2525.3(b)
Summary:
In a previous Supreme Court action in or about 1987, the apartment became exempt "by virtue of the fact that the apartment is not and will not be occupied by [tenant] as his primary residence." It is not disputed that tenant lived outside the city, rented the apartment for professional purposes only, and agreed to a market rent of $2,600. The agreement, however, allowed the tenant to sign renewal leases at tenant's option on terms whose rent increases mirrored rent stabilization guidelines increases.

Despite such Supreme Court action, the landlord obtained an order from the DHCR in 1998 deregulating the apartment based on luxury deregulation (i.e., the rent exceeds $2,000 per month and tenant earns in excess of $175,000). Thereafter, landlord brought a holdover proceeding based on the order of deregulation and tenant's refusal to execute a renewal lease at the "fair market" rent of $8,000 per month. The Housing Court dismissed the petition since the rights of the parties are governed by the arms-length transaction and lease they freely negotiated in 1987. The apartment was exempted at that time upon its rental for professional purpose. Hence there was no basis for landlord to apply to DHCR for an order of "deregulation" predicated upon this tenant's income. The deregulation order is not entitled to preclusive effect in this proceeding since it is clear that DHCR did not make any substantive determination as to coverage; rather the default order, by its boilerplate terms, presumed that the tenant was protected by rent stabilization in circumstances where it is clear that the agency was not cognizant of the specific lease arrangement governing the use of the premises. Landlord is bound, not by the DHCR order, but rather by the 1987 lease whose terms allowed rent increases to mirror rent stabilization guidelines. Therefore, the landlord was unjustified in seeking an $8,000 per month rent.


Case Caption:
223 Chelsea Associates LLC v. Dobler
Issues/Legal Principles:
Building which ceases to be regulated by federal HUD rules returns to local rent regulation status.
Keywords:
HUD leases; substantial rehabilitation; legal fees
Court:
Appellate Term, First Department
Judge:
lower court: Hon. Maria Milin
Date:
May 18, 2001
Citation:
NYLJ, page 18, col 2
Referred Statutes:
RSC 2520.11(c); RPL 234
Summary:
The holdover proceedings were erroneously brought against the tenants on grounds that the apartments became exempt from regulation upon satisfaction of the federal mortgage and termination of tenants' HUD leases. The building was substantially rehabilitated in 1967 with the assistance of federal funds conditioned upon the former owner's participation in a low- income housing program. The adjoining building underwent the same rehabilitation and was placed under rent stabilization upon the termination of federal regulation. Likewise in this case, once the federal regulation ceased, the building returned to local rent regulation. The provision in the HUD leases carries over into the existing statutory tenancy. Since the tenants prevailed in these proceedings, they are entitled to legal fees.

New York Law Journal,
decisions for the week of May 7-11, 2001 (6 cases)


Case Caption:
Parchester Preservation Co. LP v. Siegel
Issues/Legal Principles:
An agent may not sign a termination notice terminating a rent controlled tenancy; only the landlord may sign such notice.
Keywords:
termination notice; agent
Court:
Civil Housing Court, Bronx County
Judge:
Hon. Pierre Turner
Date:
May 9, 2001
Citation:
NYLJ, page 21, col 6
Referred Statutes:
RPL 232-a; 9 NYCRR 2204.3(a)
Summary:
The landlord commenced a holdover proceeding against the rent controlled tenant, and the tenant argued that the notice terminating the tenancy was defective. The notice was signed by the vice-president of the corporate owner. The rent control laws state that the landlord must sign the termination notice. The court ruled that since only the landlord is authorized to sign a notice terminating a rent controlled tenant, the case must be dismissed because the landlord's agent (the vice-president of the corporate owner) signed the notice.


Case Caption:
New York City Housing Authority v. Woody
Issues/Legal Principles:
Public housing tenant who is found non-desirable based on her son's harboring drugs in the premises is not entitled to a permanent stay of the warrant even though the son no longer lives in the apartment.
Keywords:
illegal usage; non-desirability; post-judgment cure
Court:
Civil Housing Court, Kings County
Judge:
Hon Thomas
Date:
May 9, 2001
Citation:
NYLJ, page 24, col 6
Referred Statutes:
CPLR 3042(c), 2201, 7804(g); Civil Court Act 212; RPAPL 753(4), 747-a
Summary:
Tenant's apartment was raided by the police pursuant to a bench warrant, and the police found four ounces of cocaine wrapped up for sale. The tenant claimed it belonged to her son and she led the police to an apartment where her son was visiting and he was arrested, but ultimately not convicted. The Housing Authority brought non-desirability charges against the tenant on grounds of the narcotics, but she claimed that she was unaware that her son kept cocaine in the apartment and that he only stayed in the apartment a couple of nights a month. The hearing office disbelieved the tenant, and his decision to terminate her tenancy was upheld on appeal, all the way to the Court of Appeals.

Once the appeals process ended, the tenant was taken to Housing Court where the landlord sought a warrant of eviction. The tenant requested a permanent stay of eviction from the court on grounds that her son has not lived in the apartment all this time and that the event happened way back in 1994 with no further incidents or arrests associated with her apartment. In other words, she claims she cured the problem. The court looked to prior cases to rule that the tenant was not entitled to a permanent stay because proceedings for nondesireability brought by the New York City Housing Authority were not based on a claim that the tenant breached a provision of the lease, but rather were premised on a thirty day notice terminating the tenant's month to month tenancy. Since good cause existed to evict the tenant, there was no basis for allowing a permanent cure (which rent stabilized tenants with leases do receive under RPAPL 753(4) for breach of lease offenses).


Case Caption:
Damasco v. Berger
Issues/Legal Principles:
Landlord may not commence an owner occupancy proceeding against loft tenant during the initial term of a rent stabilized lease which is an abbreviated lease term.
Keywords:
owner occupancy; loft; rent stabilization; nonrenewal of lease
Court:
Civil Housing Court, New York County
Judge:
Hon. Maria Milin
Date:
May 9, 2001
Citation:
NYLJ, page 21, col 3
Referred Statutes:
RSC 2524.4, 2522.5(a)(1); 29 Rules of the City of New York 2-01(m)(3)(ii); Multiple Dwelling Law 286(3)
Summary:
The landlord brought a holdover proceeding against the tenant on grounds of owner occupancy. Initially the building was an Interim Multiple Dwelling covered by the Loft Law. The owner claims to have legalized it by obtaining a certificate of occupancy and the Loft Board issued a final rent order on December 13, 1999 which set the initial rent stabilized rent and directed the owner to offer the tenants leases. In January 2000, the landlord served the tenant with a notice of non-renewal of lease on grounds of owner occupancy.

The tenant defended on grounds that the apartment is a recently legalized loft and the first stabilized lease was only for five months from January to May, 2000. Although the Loft Board allows abbreviated leases for the initial term of Rent Stabilization, the regulations provide that "no notice or proceeding by the owner to recover the unit pursuant to Section 2524.4 of the Rent Stabilization Code may be commenced during this initial abbreviated lease term." Thus, the tenant argues that the owner occupancy proceeding must be dismissed because it occurred during the initial term of the abbreviated lease. The tenant cited to a number of Loft Board regulations in support of his position.

Landlord argued that once the Loft Board legalizes a unit, the apartment is no longer subject to any Loft Board Regulations, but rather comes under the rubric of the Rent Stabilization Law and Code. Further, the landlord argues that the tenant received the benefit of a full lease term, not an abbreviated lease term. This argument is based on the fact that the landlord notified tenant of an increase in rent, and this rent was set by the Loft Board and the tenant did not challenge it. Since the tenant did not respond, the Loft Board deemed the tenant to have elected a one year renewal lease term governed by the rent guidelines board increases for June, 1998 to May, 1999 and the landlord became entitled to a new increase from June, 1999 to May, 2000. The final Loft Board order, however (setting the stabilized rent), did not occur until December, 1999.

The issue before the court involved the standard for determining what qualifies as the initial lease term in cases where loft units are merged into the rent stabilization system. Tenant argues that there is no initial abbreviated lease term prior to the setting of the legal regulated rent, which did not occur here until December, 1999. Since the lease was not offered until January, 2000, this is the initial lease term. The guidelines rent increases are merely a benefit the landlord receives pending the declaration of full stabilized status by the Loft Board. Since tenants do not receive any rent stabilization benefits during this limbo period, it cannot be said that simply because guidelines rent increases are granted the owner, that this corresponds with an initial lease term.

The court sided with the tenant's argument, relying in particular on an Appellate Term case which held that an owner need not serve a 120-150 day nonrenewal notice to a loft tenant on nonprimary residency grounds if the notice is served before the unit has come into the rent stabilization system. The court held that the initial abbreviated lease term is from the date the initial regulated rent is set to the expiration of the initial rent stabilization lease. Since in this case, the initial regulated rent was set in December, 1999 and the initial lease expired in May, 2000, the tenant only had the benefit of a five-month lease term. The landlord cannot maintain a holdover proceeding during the abbreviated lease term, pursuant to Loft Law rules. Hence the court dismissed the owner occupancy proceeding.

Notes:
The court did not directly address the landlord's argument that once the loft unit comes into the rent stabilization system, that the Loft Laws no longer apply. Since it is the Loft Board Regulations, not the Rent Stabilization Code, which has the restriction against holdover proceedings during the abbreviated lease term period, the court indirectly held that both the Regulations and the Code apply.


Case Caption:
45th Street Associates v. Spence
Issues/Legal Principles:
Tenant who did not challenge landlord's entitlement to legal fees waives the right to challenge the issue on appeal.
Keywords:
attorneys fees; nonprimary residence; overcharges
Court:
Appellate Term, First Department
Judge:
lower court: Hon. Thomas Fitzpatrick
Date:
May 10, 2001
Citation:
NYLJ, page 20, col 3
Referred Statutes:
none cited
Summary:
The landlord was awarded legal fees and a hearing was held on this issue. The tenant failed to contest landlord's entitlement to recover attorneys fees at the hearing, hence the issue was waived, and tenant cannot raise the issue on appeal. Tenant did not occupy her apartment as her primary residence and thus landlord was entitled to legal fees. Landlord also sought legal fees for a prior appeal which involved the same proceeding. The tenant was precluded from raising a claim for interest on a 1989 overcharge order in this holdover proceeding. The lower court's decision in favor of the landlord on all issues was upheld by the Appellate Term.


Case Caption:
Alexi v. 50 King Street Co.
Issues/Legal Principles:
Tenant not entitled to legal fees when proceeding is readily discontinued by landlord before the case is determined on its merits.
Keywords:
attorneys fees
Court:
Appellate Term, First Department
Judge:
lower court: Hon. Paul Feinman
Date:
May 10, 2001
Citation:
NYLJ, page 20, col 2
Referred Statutes:
none cited
Summary:
In the underlying proceeding there was no determination on the merits of landlord's holdover proceeding. The landlord discontinued the proceeding as of right (i.e., judge's permission not necessary) shortly after the proceeding was commenced and before tenant's attorney had appeared or served an answer. Thus, the tenant's Small Claims complaint for legal fees was premature because in general legal fees are appropriate in landlord-tenant matters only when a court's decision constitutes the ultimate outcome of the matter. Apparently, the landlord later brought another holdover proceeding and prevailed on the merits after trial. The case does not specify the allegations of the holdover proceeding.


Case Caption:
Fasan v. LaVilla
Issues/Legal Principles:
Tenant who elects not to pay ongoing rent during holdover proceeding cannot raise laches (i.e., stale rent) as a defense when the holdover is dismissed and landlord quickly brings a nonpayment proceeding to collect the rent arrears.
Keywords:
laches
Court:
Appellate Term, First Department
Judge:
lower court: Hon. Julia Rodriguez
Date:
May 10, 2001
Citation:
NYLJ, page 20, col 3
Referred Statutes:
none cited
Summary:
Tenant raised the defense of laches (i.e., stale rent) in this nonpayment proceeding. The rent sued for accumulated during the pendency of a prior holdover which was ultimately dismissed after trial. Tenant elected not to pay use and occupancy (i.e., rent) during the proceeding, except on those occasions she was ordered to do so by the court. Although the landlord had asked for use and occupancy during that proceeding, the lower court denied the requests, but this did not mean that the landlord was precluded from seeking payment of those arrears subsequent to the determination of the holdover. The nonpayment proceeding was commenced immediately after the holdover's dismissal and tenant failed to demonstrate legal prejudice from any delay that may have occurred. Thus, the lower court granted landlord's summary judgment motion seeking all arrears and this was affirmed on appeal.


New York Law Journal,
decisions for the week of April 30 to May 4, 2001 (3 cases)


Case Caption:
Sima Realty LLC v. Philips
Issues/Legal Principles:
Landlord cannot collect rent (use and occupancy) pending ejectment action where tenant claims that the premises are a multiple dwelling and no residential certificate of occupancy exists.
Keywords:
certificate of occupancy; multiple dwelling
Court:
Appellate Division, First Department
Judge:
lower court: Hon. Edward Lehner
Date:
April 30, 2001
Citation:
NYLJ, page 22, col 5
Referred Statutes:
Multiple Dwelling Law 2, 4(7), 302(1)(b)
Summary:
Landlord went to Supreme Court in an ejectment action to evict the tenants on grounds that the premises had no certificate of occupancy and is presumptively unsafe. The Multiple Dwelling Law was enacted to protect tenants of multiple dwellings against unsafe living conditions, not to provide a vehicle for landlords to evict tenants on the grounds that the premises are unsafe. The Appellate Division held that to the extent the policy underlying the Multiple Dwelling Law is at all pertinent, its tendency would be to compel the landlord's expeditious conversion of the premises to residential use. The Appellate Division upheld the lower court's denial of the landlord's request for unpaid rent because factual issues exist as to whether the landlord knowingly countenanced the tenant's residential usage, and whether the building is in fact a multiple dwelling (i.e., three or more residential units). If these facts be true, then the landlord may very well not be entitled to collect any rent in the absence of a residential certificate of occupancy, pursuant to Multiple Dwelling Law 302(1)(b). The lower court properly required the tenant to deposit the unpaid rent with the clerk of court.


Case Caption:
Chatsworth Realty Corp. v. Kaltinick
Issues/Legal Principles:
Tenant who replaced defective kitchen cabinets and sink is not found to be in violation of "no alterations" clause of lease.
Keywords:
illegal alterations
Court:
Appellate Term, First Department
Judge:
lower court: Hon. Laurie Lau
Date:
May 2, 2001
Citation:
NYLJ, page 21, col 3
Referred Statutes:
none cited
Summary:
Landlord brought a holdover proceeding against tenant on grounds that tenant had, without landlord's consent, made illegal alterations to the apartment, to wit: replacement of the defective kitchen cabinets and sink. The lower court, however, observed that landlord had refused a related request for repairs and held that the tenant did not breach the "no alterations" clause of the lease. The Appellate Term affirmed.
Notes:
Very few of the facts came out in this appellate decision, so it is hard to determine why the lower court held for the tenant. The decision seems to imply that since landlord refused tenant's "related request for repairs," this landlord would likewise have refused a direct request to replace the kitchen cabinets and sink. Tenants, however, are advised to be very careful in replacing any fixtures without landlord's consent or a documented history of requests.


Case Caption:
Weinreb Management v. DHCR
Issues/Legal Principles:
MCI application may not be granted if rent impairing conditions exist in the building at the time the application is filed, and rent impairing conditions are not necessarily confined to "immediately hazardous violations."
Keywords:
MCIs; reduction in services; violations
Court:
Supreme Court, New York County
Judge:
Hon. Richard Braun
Date:
May 2, 2001
Citation:
NYLJ, page 21, col 5
Referred Statutes:
9 NYCRR 2522.4(13); Administrative Code of the City of New York 27-2004(1), 27- 2115(d); Multiple Dwelling Law 4(3), 302(a)(2)
Summary:
Landlord filed an application to the DHCR for an MCI ("major capital improvements") increase in rent based on the installation of a new water tank and oil tank. The DHCR denied the application based on a building-wide reduction in services order pending. Landlord, however, asked for reconsideration on grounds that the order was not pending, and was in fact no longer in effect. DHCR denied reconsideration on grounds that a pending C violation existed for peeling lead paint in the premises. The landlord filed a PAR (appeal) stating that the peeling paint is not an immediately hazardous violation. A denial of an MCI based on violations, landlord argues, is intended only for rent impairing violations. Additionally, the physical condition which led to the violations had actually been corrected before the MCI application was filed, although the violations were not removed from city records. The DHCR Commissioner denied landlord's PAR and landlord filed an Article 78 in Supreme Court.

The Supreme Court judge rejected landlord's distinction that "immediately hazardous violations" are the only type of violations which are rent impairing and thus subject to preclusion of an MCI order. In fact, B violations may also be deemed "rent impairing" by Housing Preservation and Development (HPD) and HPD did in fact declare a B violation in this very building as rent impairing as it involved inadequate hot water in the building. The landlord argued that it applied to HPD to get the violation removed, but the court observed that this was not done until the PAR was filed, in other words long after the MCI application was filed. The court would not consider evidence about the removal of the violations because an Article 78 is limited to the record that was before the DHCR, and this would be new evidence not reviewed by the DHCR. The court rejected landlord's appeal of the denial of its MCI application.