The issue before the court was whether it was appropriate for the Housing Court to stay a post-foreclosure holdover proceeding pending an Appellate Division appeal wherein the granting of the foreclosure on jurisdictional grounds is challenged.

The judge looked at CPLR 5519(c) and determined that the tenant should ask for a stay from either the Supreme Court which issued the foreclosure order or from the Appellate Division. On the other hand CPLR 2201 permits a court where an action is pending to grant a stay for just cause "except where otherwise prescribed by law." The court, however, disagreed that this provision imbues the court with such broad authority to stay orders of another court but did agree that it has jurisdiction to stay the holdover upon just grounds. The court also acknowledged that a stay of up to six months is permitted under RPAPL 753 (which might not be enough stay time before the appeal is decided). Nonetheless, the court declined to exercise its authority to grant a stay because the tenants delayed in perfecting the appeal (according to the judge) and were behind in rental payments. The court characterized the tenants' position as having "unclean hands."

The petition however was dismissed by the court for a number of reasons, including the fact that the petition fails to state that the termination notice was served on the tenant, or how it was served. Also, the lease terminated in April, but the tenant remained thereafter as a month to month tenant. The petition states, incorrectly, that the tenancy terminated in April when in fact it did not terminate until October.

The DHCR appealed and the Appellate Division reversed. The Court opined that the DHCR did consider the rent ledgers and rent registration, but this was not a part of the relevant rental history because that was the rent paid by the previous tenants who had vacated the apartment in January 1985 more than four years prior to the filing of the complaint. At the time of the base date and for about a year thereafter, no rent was allegedly charged as the apartment was vacant. The Court held: "Rental history that falls outside the four-year period does not become reviewable simply because it is listed in a registration statement filed within the four- year period." Based on this holding, the Appellate Division further held that it was rational for the DHCR to exclude the rent registration statement of 1986 listing the registered rent as $1,849 rent.

As an alternative argument the tenants argued that the DHCR waited over ten years to decide this case and in the interim the law changed against the tenants. Given DHCR's delay, the DHCR should be estopped from applying the 1997 law with its four year rule. The Appellate Division agreed that DHCR was wrong to create such a hardship for parties by its excessive delay, but refused to penalize the agency or estop them from the hardship created on this particular tenant.

The Appellate Term reversed and remanded for a new trial. The Court looked at the Multiple Dwelling Law's definition of a dwelling as being three or more families living apart from each other. In such instances the owner must register the building as a multiple dwelling, as opposed to a commercial space. The purpose of the registration requirements enable tenants and government authorities to readily contact owners and other responsible persons. The spirit and letter of the law would require that this building be registered if landlord knew of and acquiesced in the residential use. The lower court erred in failing to examine the extent of landlord's knowledge.

The court reviewed the past case law on this issue and cited well settled law that a landlord cannot utilize a Golub Notice that previously formed the basis of a prior proceeding which was dismissed. The exception to this rule occurs when the second proceeding is commenced before the first proceeding is dismissed or terminated, in other words, while the first proceeding is still pending. In these circumstances the Golub Notice can be used in the second proceeding.

In this case the stipulation of discontinuance on the first proceeding was dated August 9, 2001 but not filed with the court until September 6, 2001. The discontinuance was effective as of the date that the parties executed it. The second proceeding was commenced October 16, 2001, long after the first proceeding was over. Thus, the court dismissed the petition and set the matter down for a hearing on attorney's fees to be awarded the tenant as the prevailing party.

Tenant had a serious nervous breakdown in the fall of 2000 and testified that he could not remember the condition of the apartment the last time he was there. The landlord served the nonpayment petition at a time when the landlord had also obtained an ex parte order of protection against the tenant in criminal court with a charge of reckless endangerment. The order directing the tenant to stay away from the apartment is dated November 13, 2000 and in the box indicating service was written "defendant in hospital." The nonpayment petition was served by conspicuous place service on November 25, but defects in the papers prevented the landlord from getting a warrant of eviction at an inquest until months later, and the eviction not occurring until March 9, 2001. There is no evidence that tenant ever knew about the eviction proceeding.

The marshal's inventory indicated vacant apartment and no inventory was taken. The landlord claimed that nothing was in the apartment when the eviction occurred. The court credited the landlord's testimony since it is corroborated by the marshal's inventory statement. Additionally, the tenant had no recollection of what his apartment looked like when photographs were presented. The court did not doubt that tenant at one time possessed the items, and expressed being uncomfortable that there is no explanation for their whereabouts. However, the court held that "speculation, rather than inference, would be required for a conclusion that the property was taken by the landlord." The court ruled that tenant did not prove that it was more likely than not that the landlord took his property.

The court went on, however, to discuss the eviction process and the requirement that a guardian be appointed when necessary. Here the landlord was on notice that tenant was mentally unstable even before the nonpayment proceeding commenced. The court held that the Housing Court should have been advised of the tenant's condition. There were other irregularities that rendered the eviction illegal, according to the court. The landlord knew from the criminal proceedings that the tenant was not in the premises and thus service on the apartment where the tenant would not be found was unreasonable since there was no reasonable application of success. The order of protection stated that the tenant was in the hospital which placed upon the landlord a duty of inquiry as to where the tenant was at the time the nonpayment petition was served. The court also noted that a number of the affidavits of non-military service appeared to be forged.

Upon concluding that the eviction was illegal, the court queried whether damages are available. Even without proving actual damages a tenant wrongfully evicted is entitled to nominal damages. The measure of compensatory damages is the value of the unexpired term of the lease over and above the rent the tenant must pay under its terms. Further, punitive damages are available, as well as treble damages. The court held the landlord should be given an opportunity to explain his role (apart from his attorneys) in the eviction proceeding, and explain the irregularities in the proceeding, particularly since the landlord does face some sort of damages arising from the illegal eviction.

About a month after mailing the renewal lease the landlord sent a notice of termination stating the apartment would be recovered on grounds of overcrowding if the problem was not cured. The son called the landlord and expressed his desire to remain in the apartment, even agreeing to pay an 18% vacancy increase. During this period the time to sign the renewal lease expired, unbeknownst to the son.

The court examined other cases as to when a tenant is allowed to cure the failure to sign a renewal lease. The court also examined amendments to the relevant statute. A recent case interpreted the new statutes to mean that "a default occasioned by tenant's failure to timely renew a lease can be effectively cured where the tenant remains in occupancy and continues to pay the applicable rent." The new amendments (effective 12-20-00) allow the landlord to either deem the lease as having been renewed at the new increased rent and to bill and collect that rent, or to treat the lease as having been terminated and to seek to evict the tenant in a holdover proceeding and wait for a delayed period until collecting rent in the court proceeding at the lower old rate.

In the case here, the tenant put forth sufficient evidence to rebut the presumption of receipt of mailing, and he spoke with the landlord who remained silent about the unsigned lease. In such circumstances the tenant met all the conditions for his default to be excused and for the tenant to be entitled to a permanent "stay" of any judgment and warrant for purpose of executing a renewal lease. Furthermore, the court looked at the son's circumstances and concluded that he was entitled to a renewal lease in his own name as a successor tenant. The court directed that a lease be tendered to the son with all rent increases to be paid retroactively to the lease's commencement date.

The court analyzed the instances in which a Section 8 tenancy may be terminated. The notice of termination alleges material noncompliance. None of the examples of material noncompliance applied to the circumstances here except Paragraph 13 of the lease which requires the owner's prior written approval before someone else may take occupancy. The mother occupied the apartment for only a couple of months before the son sought permission from the owner. The court analyzed the HUD regulations and observed that numerous opportunities are available for tenants to cure alleged breaches or defaults. Further, the public policy underlining the Section 8 scheme encourages such cures.

The court ruled that the son's failure to seek permission for just a couple of months before his mother took occupancy is only a de minimus breach of the lease. Further permission was sought before the landlord even commenced litigation. The court ruled that no material noncompliance occurred and that the minor breach has been cured (by the subsequent request for permission). The sole grievance by the landlord is that the mother moved in a couple of months before permission was formally requested. The court noted that the landlord did not otherwise find the mother ineligible for occupancy or that her presence would render the other members of the household ineligible for continued occupancy. Therefore, the court dismissed the petition.

The landlord relied on an Appellate Term case, Adam's Tower Limited Partnership v. Richter 186 Misc.2d 620 (2000) which held that even if a lease or statute provides time for a cure period "does not necessarily imply that a means or method to cure must exist in every case" and the tenant's conduct was "incapable of cure" especially within a ten day period (the standard cure time period).

The court noted that the law handles chronic nonpayments differently if they are brought under a nuisance theory as opposed to a theory based on breach of a substantial obligation of the lease. Under a nuisance theory, the landlord must show that the tenant's chronic nonpayment was ""willful, unjustified, without explanation, or accompanied by an intent to harass the landlord." Whereas a substantial breach theory has a less stringent hurdle: the landlord must show that it has been "repeatedly forced to institute nonpayment proceeding and to serve rent demands on respondent to collect chronically late rental payments." If a case is brought under a nuisance theory, the tenant has no right to cure the conduct. However, a breach of a substantial obligation proceeding generally allows for a cure. The landlord, however, argued that the Appellate Term's decision in Adams vitiates the right of a cure even in a substantial breach proceeding.

The judge looked at the provisions of the tenant's lease and found that they not only provide a cure period for defaults capable of cure within ten days, but also for defaults that by their nature cannot be cured within a ten day period, that is for a cure period where the tenant is beginning to make the cure. The court held: "The fact that a tenant whose lease does not contain such provisions may not have a similar right to cure does not vitiate the provisions of respondent's lease." The court was presumably distinguishing this tenant's lease with the Adam's tenant's lease which seemingly did not allow the tenant a period to begin to cure breaches.

The landlord filed a petition for administrative review (PAR) arguing that the Rent Administrator failed to give sufficient time to submit the comparability date and failed to take into account various expenditures for maintenance and improvements. In June, 1997 the law changed so that an examination of rent history on overcharges was limited to four years from the filing of the complaint. In June, 1999 the DHCR finally offered the landlord an opportunity to submit its comparability data which the landlord did within three weeks. The tenant argued that the time to do so had passed; that the landlord should have submitted such data at the initial stage of the proceeding, not at the PAR stage which is an administrative appeal. The PAR Commissioner partially granted the landlord's appeal based on some of the comparables and some of the documented improvement expenditures. As a result PAR decision dated May 16, 1999 established the initial stabilized rent at $1754.64 as of May, 1990.

Tenant brought an Article 78 appeal challenging the PAR on grounds that the Commissioner's acceptance of the landlord's comparability data was late. The Supreme Court agreed with the tenant on grounds that the "extreme nature of the delay" resulted in "gross and unfair prejudice" to the tenant. The court further concluded that the DHCR was negligent in handling this matter in such a protracted matter. The Appellate Division reversed, finding that the DHCR was not negligent. The Court found that DHCR's delay was due to a heavy case load and the landlord was diligent in moving the proceeding along at every stage. The result of the Appellate Division's decision is that the tenant is now liable for almost $50,000 in rent.

Two of the five Appellate Division judges dissented from this opinion (making it likely to go up to the highest court in New York State, The Court of Appeals). Justice Rubin wrote the dissenting opinion. He phrased the issue on appeal as "whether a landlord should be permitted to cure its default in submitting evidence to an administrative agency by offering the material for the first time on administrative appeal." No statute or regulatory provision allows receipt of new evidence nearly five years after the decision appealed from issued. Justice Rubin held that the DHCR improperly made a de novo determination upon the merits of the tenant's original petition based on newly submitted evidence, and there is no justification for such belatedly considered evidence. Justice Rubin found that such consideration "offends both well- settled principles of procedural due process" as well as DHCR's procedural rules.

The DHCR initially erred in treating the FMRA as an overcharge complaint, but that doesn't excuse the landlord from not responding until the DHCR (via tenant's mandamus) finally addressed the complaint as an FMRA. Justice Rubin found that the landlord failed to submit comparability data to the Rent Administrator after the mandamus. The landlord's PAR failed to state any reason why the necessary data was not supplied to the DHCR in a timely manner, nor did the landlord submit such data at the time it filed the PAR. This was not a case of a new owner seeking the old owner's records. This landlord possessed the building for some time before the complaint was filed. Where information submitted on a PAR is not shown to have been previously unobtainable, it cannot be the basis for vacating the initial DHCR decision.

In order for the comparability material to have been submitted, because it is new evidence at the PAR stage, the landlord had to submit it with the PAR petition plus "affirmatively establish that the evidence was unavailable at the time the original determination was made." DHCR attempted to excuse its departure from the rules governing administrative appeal by invoking the Rent Regulation Reform Act of 1997, arguing disingenuously that the statute limits consideration of comparability data to four years before the complaint is filed, and thus the Commissioner was allowed to provide the owner an opportunity on administrative review to do so. But Justice Rubin pointed out that this statute was never an issue in this matter, nor does the statute address the real issue here: belated submissions at the appellate stage. In this case, the landlord defaulted and the tenant sought timely resolution of the proceedings by her resort to the extraordinary remedy of mandamus. Justice Rubin labels DHCR's act a "mysterious solicitation" which allowed the landlord to benefit from its default without any explanation for why such documents were not submitted earlier. Justice Rubin and Justice Mazzarelli who joined him in the dissent would not have reversed the Article 78 decision in tenant's favor.

At trial the landlord's process server testified that he placed the petitions on the door on April 30 and then delivered the envelopes containing the rent demands to the post office at Camden Plaza in Brooklyn. There were four envelopes mailed to the four named tenants and two mailed to a John Doe and Jane Doe by regular mail postmarked May 2. At issue is whether the mailing requirement is satisifed when the envelope is delivered to the post office or when postmarked. If the latter, then the postmarks are dispositive, whether or not the process server delivered the mail to the post office the day before as he claims.

The court examined other statutes dealing with this issue and found that the service requirement is satisfied when the documents are deposited in the post office or mailbox. It would be too hard for the process server to determine if they were properly postmarked if the documents were dropped off in the mailbox. Thus, it makes sense that the mail requirement is satisfied when the documents are delivered to the post office or mailbox.

In the case at bar, since the papers were served at the premises on April 30, they should have been mailed on May 1. Yet, the postmarks are all dated May 2 and marked P.M. not A.M. which negates against a finding that the process server could have mailed them even on the evening of May 1st. The court then queried whether the statute could be extended by one day, and concluded that the defect in the mailing of the rent demands is material and substantial and may not be cured retroactively by extending the one day deadline that is a component of the strict statutory prescription. Since, the statutory requirements for proper service of legal papers was not complied with due to the late mailing date, the court dismissed the petition without prejudice (meaning the landlord can recommence the proceeding upon proper service of the papers).

The prior owner argues that the DHCR erred in not assessing the current owner with the overcharges. This is because, although the current owner submitted proof that it purchased the property at a foreclosure, it failed to show evidence that proper records were not provided at the foreclosure. Therefore, the current owner failed to show that it was exempt from the overcharge liability. The DHCR argues that the prior owner's arguments are without meaning since the DHCR order based its overcharge finding on falsified rent records. Therefore, even if the current owner produced any records from the prior owner, they would be the same falsified documents.

The court held that the DHCR's argument is misplaced and wrong. This matter involved an illusory prime tenancy claim by the so-called subtenant. DHCR determined the subtenant to be the lawful tenant, but the overcharge claims arose on rent increases charged subsequent to the base date, i.e., four years prior to the date the overcharge complaint was filed. Therefore the production of the prior owner's rent records at the foreclosure sale would have assisted the current owner in determining whether the prior owner had charged any illegal rents. Further, DHCR's argument was not invoked below and cannot be raised for the first time on appeal.

The DHCR based its ruling of exemption of the current owner solely on the basis that the property was purchased at a foreclosure. The DHCR did not purport to excuse the new owner's failure to show that it had not been provided with documents to establish the legal rent. Thus, the court concluded that the DHCR erred in failing to apply both prongs of a two-prong test in exempting a current owner from overcharge orders. Further, there was no indication in the record that the new owner did not receive any records. Since the DHCR did not follow the statutory requirements for exempting new owners from treble damages for overcharges that occurred prior to their purchase of a building at a foreclosure, the DHCR order was deemed arbitrary and irrational by the court. The court remanded the matter to the DHCR for a decision consistent with the court's legal conclusions.

Apartment 4N had previously been rent controlled and the last rent was $88 per month. Typically when a rent control apartment is decontrolled, the landlord may establish a market rent and then register the new rent stabilization rent with the DHCR and must also serve a copy of the initial apartment registration and notice of the initial legal registered rent to the tenant. Further landlords must serve annual apartment registrations. None of these actions were taken by this landlord when the premises became subject to the rent stabilization laws on April 3, 1998.

The court determined that it had the jurisdiction and authority to establish the appropriate rent since the landlord did not make any of the above mentioned filings. The former superintendent argues that the rent should remain at $88 per month. The landlord argued that he and the super could not come to an agreement on the rental amount although the rent was originally intended to equal the value of the super's labor. The landlord wants the rent to be set in accordance with the current market rates on similarly sized apartments in the building which range between $2100 and $2300 per month.

The court, however, noted that the apartments cited by the landlord were fully renovated prior to being leased while the super's apartment was only made habitable by his own work. A more appropriate standard would be the rents of similar rent stabilized units in the building. The former super submitted the rent stabilized rents of six units and their average rent amounts to $334.09. The judge then set the rent at $334.09 per month as of April 3, 1998. This means that the tenant must now come up with roughly $16,000 in arrears to keep the apartment.