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NYLJ: Motion to Dismiss Holdover Proceeding Is Denied; Sanctions Are Also Imposed

Posted by nyhawk on June 06, 2001 at 22:44:40:

FEDERAL NATIONAL MORTGAGE ASSOCIATION v. WILLIAMS

New York Law Journal
June 6, 2001

CIVIL COURT

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Housing Part g

Judge Gonzalez

Procedural Background

The underlying holdover proceeding is premised upon the foreclosure of the subject premises located at 720 East 227 Street in Bronx County. The petitioner purchased the premises at a public auction on 8/17/00. The respondent is the defaulting mortgagor and lives on the second floor of the premises.

This matter was first heard in Part G on 11/29/00 and adjourned to 12/14/00 after the respondent indicated that he had filed for bankruptcy and was entitled to a statutory stay of the Housing Court proceeding. On 12/14/00, the respondent appeared with counsel and produced proof that he filed a Chapter 7 bankruptcy petition on 8/5/00. Counsel for the petitioner questioned whether the bankruptcy proceeding was filed in derogation of a court order, but lacked documentary proof. Counsel for the respondent argued that the petitioner should seek vacatur of the automatic stay in Bankruptcy Court or a dismissal of that proceeding. This Court determined that a bankruptcy stay was indeed in effect and marked the holdover proceeding off-calendar.

At the beginning of the New Year, the petitioner filed a motion pursuant to CPLR 5015(a)(3) to restore this proceeding to the court calendar on the ground that the respondent had deliberately misrepresented the facts and law pertaining to his bankruptcy filing. On 1/22/01, the petitioner's motion was adjourned to 2/13/01. On the return date, counsel for the petitioner produced a copy of the 4/27/00 order of Bankruptcy Judge Cornelius Blackshear that had dismissed the respondent's Chapter 13 petition with prejudice for 180 days. Counsel for the respondent, in response, asked that the holdover proceeding be dismissed on the ground that the subject premises is a de facto multiple dwelling lacking a multiple dwelling registration. Both sides seek sanctions. The parties were given an opportunity to submit opposition papers, and the Court reserved decision.

The Bankruptcy Filing

By Order dated 4/27/00, Bankruptcy Court Judge Cornelius Blackshear dismissed the respondent's Chapter 13 bankruptcy petition, with prejudice, for 180 days pursuant to Section 109(g) of the Bankruptcy Code. The Code states, in pertinent part, that:

Notwithstanding any other provision of this section, no individual or family farmer may be a debtor under this title who has been a debtor in a case pending under this title at any time in the preceding 180 days if the case was dismissed by the court for willful failure of the debtor to abide by orders of the court, or to appear before the court in proper prosecution of the case.

11 USC 109(g) (emphasis added).

Specifically, Judge Blackshear found that the respondent violated a Standing Order by failing to: a) appear and be examined at a meeting of creditors; b) timely file a plan and schedules; c) commence proposed plan payments to the trustee, and d) file required documentation, including copies of income tax returns, copies of payroll stubs, a real estate or automobile appraisal, if applicable. The Bankruptcy Judge determined that the respondent additionally disobeyed a Court Order dated 2/16/00 that "explicitly directed" him to file a completed petition or request an extension of time by 2/25/00. In re Roydel Williams, Case No. 00-10498 CB (Bankruptcy Ct SDNY 4/27/00).

Notwithstanding the gravity of the six month sanction, the respondent filed a Chapter 7 bankruptcy petition on 8/15/2000, only 105 days after Judge Blackshear's Order issued.

Two days later, the subject premises was sold at public auction to the petitioner on 8/17/00. On 1/30/01, Bankruptcy Judge Robert E. Gerber annulled the automatic stay nunc pro tunc to the date of the 8/15/00 bankruptcy filing. The Bankruptcy Judge specifically ruled that the filing of the respondent's Chapter 7 bankruptcy petition neither invalidated nor affected the foreclosure sale of the subject premises or subsequent eviction proceedings. In re Roydel Williams, Case No. 00-41973-reg (Bankruptcy Ct SDNY 1/17/01).

Multiple Dwelling Status

The Multiple Dwelling Law defines a multiple dwelling as "the residence or home of three or more families living independently of each other." MDL 7. Each owner of a multiple dwelling must file with the NYC Department of Housing Preservation & Development ("HPD") a multiple dwelling registration statement (MDR) that identifies the owner; describes the premises, and contains the name, address and telephone number of a managing agent who is responsible for handling repairs and emergencies. MDL 325(1).

The respondent, the former owner of the premises, alleges that the premises is a three family illegal multiple dwelling. The respondent argues that the underlying holdover proceeding should be dismissed because the subject premises lacks a multiple dwelling registration pursuant to the strictures of MDL 325(1). In support of his contention, the respondent references a NYC Environmental Control Board ("ECB") decision that found him guilty of violating a recycling regulation, as follows:

Respondent appeared Pro Se. He testified that the premises is a two family house and moved to dismiss based on the fact that it would not be covered by the cited area of the Administrative Code. A check of TRW records indicates that the property is in fact classified as a three family building. The motion is denied. I find respondent in violation as charged.

City of New York v. Roydel Williams, ECBViolation #111-977-480 (2/14/00).

It is ironic that the respondent, who testified under oath at the ECB hearing that the premises is a two family house, now cites the ECB decision that discredited his testimony precisely in this regard. This Court declines to rely on the administrative finding that the premises is a three family dwelling since that determination is based on TRW, not municipal, records.

While it is well-established that a current multiple dwelling registration is a prerequisite in bringing a nonpayment proceeding, no similar requirement is applicable to holdover proceedings commenced pursuant to RPAPL 713 where there is no prior landlord-tenant relationship. See MDL 325. In Green Point Savings Bank v. Fusco, an analogous Second Department holdover proceeding grounded in foreclosure, the former owner of the premises there, as here, sought dismissal of that proceeding on the ground that the premises lacked a current MDR. In denying the respondent's application, the Court reasoned that:

The intent of (22 NYCRR 208.42 and the Multiple Dwelling Law) would not be furthered by extending the registration requirements to proceedings where there is no existing landlord-tenant relationship. For example, in the within proceeding, the respondent is the former landlord of the premises who defaulted in the mortgage payments resulting in the foreclosure sale and acquisition of the deed by petitioner, the mortgagor. To bar petitioner from bringing the within action until it registered itself with the building dept. as "landlord" or "managing agent" responsible for maintenance of the premises so that respondent would be readily able to contact petitioner in event of emergency is well beyond the intent of the statutes.

Green Point Savings Bank v. Fusco, 1/4/95 NYLJ 31:2 (Civ Ct Kings County).

The first prong of the respondent's motion to dismiss is denied on the ground that MDL 325 registration requirements are inapplicable in a RPAPL 713(5) holdover proceeding such as this.

The second prong of the respondent's motion to dismiss alleges that the petition fails to comply with RPAPL 741 by inaccurately describing the premises as a two family dwelling. Section 741 of the Real Property Actions and Proceedings Law requires both holdover and nonpayment petitions to accurately describe the premises from which removal is sought. The petitioner proffers a report dated 9/6/00 provided by Abstractor's Information Service, Inc. The abstract references Certificate of Occupancy #NB1297 and describes the premises as a two family dwelling.

In light of the respondent's prior sworn testimony that the premises is a two family house, this Court deems that the respondent waived his objection to the petitioner's comparable description of the premises. The second prong of the respondent's motion is denied. The factual determination of whether the premises is a two family house or a three family dwelling is preserved for trial, although this issue may be immaterial.

Sanctions

Conduct is deemed frivolous where it is undertaken primarily to delay or prolong the resolution of a litigation. 22 NYCRR 130.-1.1(c)(2). Each party seeks sanctions for frivolous conduct pursuant to 22 NYCRR 130.-1.1. That section provides, in pertinent part, that:

The court, in its discretion, may award to any party or attorney in any civil action or proceeding before the court, except where prohibited by law, costs in the form of reimbursement for actual expenses reasonably incurred and reasonable attorney's fees, resulting from frivolous conduct as defined in this Part. In addition to or in lieu of awarding costs, the court, in its discretion may impose financial sanctions upon any party or attorney in a civil action or proceeding who engages in frivolous conduct as defined in this Part, which shall be payable as provided in section 130-1.3 of this Part.

22 NYCRR 130.-1.1(a).

The parties herein are represented by competent counsel. Although oral argument was heard on several occasions and opposition papers were submitted by both sides, the respondent has never explained or excused his premature bankruptcy filing in derogation of Judge Blackshear's Order. This Court determines that the respondent deliberately misled the Housing Court and unnecessarily delayed this proceeding by obtaining a bankruptcy stay to which he was not entitled. As a result, considerable time and energy has been wasted not only by the petitioner in this litigation, but also by this Court. See Gruen v. Krellenstein, 244 AD2d 234 (1st Dept 1997).

The respondent has resided rent-free at the premises thanks to his dilatory tactics. The petitioner seeks use and occupancy for the premises in the amount of $1200 per month, the undisputed rental value of the subject premises as set forth in the petition herein. This Court hereby sanctions the respondent to the extent that the respondent is directed to make the petitioner whole for the unnecessary delay by paying use and occupancy at the rate of $1200 per month from November 2000, when this proceeding first commenced, to date. A monetary judgment in the amount of $8400 is entered in the petitioner's favor.

The respondent's motion for sanctions against the petitioner is denied on the ground that no wrongdoing by the petitioner has been demonstrated. In all other respects, the motions are denied.

The parties are hereby directed to appear in Part G, Room 590, on May 30th at 9:30 a.m. for trial or settlement. This constitutes the decision and order of the Court.

So Ordered.

Date Received: June 05, 2001

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