Discovery permitted in illusory tenancy case

[NYHawk]

reported in the NYLJ on Jan. 7, 2004, page ___, col. ___

http://www4.law.com/ny/courts/search/CourtDocumentViewer.asp?view=Document&docID=44652

Goldman v. Richards

Civil Court Housing Part (New York County)

Housing Court Judge Milin

Subtenants May Depose Landlord's Employees As to Knowledge of Prime Tenant's Absence

Summary of case as it appeared in the NYLJ (not official)

Petitioner landlord's holdover action sought recovery of respondent tenant's apartment on the ground that it had been sublet without prior permission. The undertenants, raising an affirmative defense of illusory prime tenancy, moved for leave to conduct discovery. They contended that depositions from landlord's employees would establish an essential element of the illusory prime tenancy defense, namely that the landlord's employees knew, from the inception of the sublease, of the prime tenant's absence from and their occupancy of the premises. The court permitted the undertenants to serve notice of examination before trial. Referring to the decision in Primrose Management Co. v. Donahoe, the court noted that there was no restriction placed on which of the owner's employees had to be aware of the sublease. The court determined that, if the landlord's employees testify as the undertenants contend they will, their testimony will provide evidence corroborating the undertenants' defense.

The official decision (word for word) as published:

Petitioner commenced the within holdover proceeding to recover possession of Apartment 4A located at 145 West 55th Street, New York, NY ("the premises"). Petitioner alleges that respondent Thomas Richards, the rent stabilized tenant of record sublet the premises to respondents Craig Tassel and Victoria Waggoner ("undertenants) without the prior permission of the owner. The prime tenant has not appeared in the proceeding or served an answer to the petition. The undertenants, however, have served an answer which denied petitioner's allegations and interposed an affirmative defense of illusory prime tenancy, among other things. The undertenants now move for leave to conduct discovery and petitioner opposes the motion.

Discovery in a summary proceeding is appropriate where there is a showing of ample need and a statement of facts sufficient to constitute a cause of action or defense. New York University v. Farkas, 121 Misc 2d 643 (Civil Ct. N.Y. Co. 1983). The two essential elements of the illusory prime tenancy defense are: (1) some deprivation to the subtenant of rights under the rent stabilization law such as the right to pay only a regulated rent; and (2) actual or constructive notice of the subleasing arrangement on the part of the landlord. Primrose Management Co. v. Donahoe, 253 AD2d 404 (1st Dep't 1998). Here, the undertenants request permission to depose three of the landlord's employees: two elevator operators, and a member of maintenance personnel. The undertenants contend that the testimony of these individuals will help establish at least one of the above elements; specifically, that from the inception of the sublease the landlord's employees had actual knowledge of their occupancy of the premises and of the prime tenant's absence from the premises. The undertenants argue that the landlord's knowledge is discernible from the fact that the elevator operators see them every day and because maintenance personnel has been in the premises for purposes of effecting repairs on numerous occasions.

Petitioner argues that the undertenants' motion is nothing more than a fishing expedition because it is the superintendent who is charged with the responsibility for reporting irregularities with respect to occupancy to the owner, not these individuals.

In Primrose, supra, the knowledgeable employee was a former superintendent. There was no restriction placed on which of the owner's employees had to be aware of the sublease. Consequently, if these individuals testify as the undertenants contend, it will provide evidence to corroborate their defense. The issue of whether their testimony will be sufficient to impute knowledge to the landlord is best resolved after trial when all the relevant circumstances have been considered.

Accordingly, the motion is granted and respondents may serve a notice of examination before trial as submitted with these moving papers. All discovery must be completed within ninety days after service of a copy of this order with notice of entry ( unless otherwise agreed). No award of use and occupancy is necessary as the parties have agreed pursuant to a stipulation dated July 14, 2003.

This case is marked off calendar pending completion of discovery without prejudice to renewal by motion or stipulation.

The foregoing constitutes the decision and order of this court.

<small>[ January 21, 2004, 04:30 PM: Message edited by: NYHawk ]</small>

[Anna]

Hmmm: general discovery citations... no citations relating to discovery for subtenant in illusory prime tenancy. Here's a few, no appeals found but Shepardize them:

Discovery

The statute relating to summary proceedings was designed to provide the landlord with a simple, expeditious and inexpensive means of regaining possession of his premises in cases where the tenant refused upon demand to pay rent, or where he wrongfully held over without permission after the expiration of his term (Reich v. Cochran, 201 NY 450 [1911]) . To preserve the summary nature of special proceedings, leave of court is required to obtain disclosure (CPLR 408). It should be granted only when ample need is shown (Antillean Holding Co., Inc. v. Lindley, 76 Misc 2d 1044 [Civ Ct NY Co 1973]). Applications for discovery in summary proceedings based upon non-primary residence, however, are liberally reviewed (90th Realty Co. v. Winter, NYLJ July 28, 1994 p22 c1 [AT 1]). This approach has been expanded to other causes of actions in summary proceedings where ample need is demonstrated, including the assertion of the defense of illusory tenancy (125 Church St. Development Co. v. Grassfield, NYLJ September 18, 1996, p22 c 6 [Civ Ct NY Co.], Rubino v. Eberle, NYLJ January 18, 1990 p24 c1 [Civ Ct NY Co]) . The criteria used to determine whether discovery should be granted include whether a defense has been established, whether there is a need to determine information directly related to this defense, whether the request for disclosure is carefully tailored and will clarify disputed facts, whether prejudice will result, and if so, whether this prejudice can be alleviated by a court order (New York University v. Farkas, 121 Misc 2d 643 [Civ Ct NY Co 1983]).
In this case respondent has demonstrated a defense related to illusory tenancy, and that there is a need to determine information directly related to this defense. Respondent's application for discovery is granted to the following extent: ...

Jerulee Co. v. Ang, NYLJ September 10, 1997 pxx cxx [Civ Ct xx Co.], Judge Duckman, emphasis added

One was also published in Misc Reports: 125 Church St. Dev. Co. v. Grassfield, 170 Misc.2d 31, (Civ. Ct. NY Cty 1996).