Housing Court Decisions December 1999
Editors: Colleen F. McGuire, Esq., Chief Editor
Linda Rzesniowiecki, Esq. and Robert E. Sokolski, Esq.
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New York Law Journal, decisions for the week of December 27-31, 1999
(4 cases)
- Case Caption:
- Lichtenberger v. Schussheim
- Issues/Legal Principles:
- Guarantor is not responsible for the subtenant's performance during the third year of the subtenancy because guarantor did not sign the lease rider and therefore did not know that the one-year sublease could be extended for a third year.
- Keywords
- guarantor; waste
- Court:
- City Court, Nassau County
- Judge:
- Hon. Judge Smolkin
- Date:
- December 29, 1999
- Citation:
- NYLJ, page 32, col 1
- Referred Statutes:
- none cited
- Summary:
- Prime tenant (Lichtenberger) and subtenant (Schussheim) entered into a sublease for the period June 1, 1992 through May 31, 1993. The parties then entered into several oral agreements to extend the subtenancy. Subtenant vacated in early August of 1996. Prime tenant then sued subtenant and subtenant's guarantor for waste committed in the apartment during subtenant's occupancy. Waste is defined as "any alteration which materially injures the landlord's reversionary interest, or materially changes the nature and character of the demised premises." After trial, the court found that the subtenant had damaged the wood floor, cracked some kitchen floor tiles and left the apartment in a filthy kitchen. The court awarded the prime tenant $1,100.00 to correct these damages plus the sum of $675.00 to cover lost rental income during the time the repairs were being made. However the court held that the guarantor was not responsible for the damages. The 1992-1993 sublease consisted of a form lease and a rider. The rider included the following clause in the form lease: "I guaranty the full performance of the sublease by the undertenant. This guaranty is absolute and without any condition. It includes, but is not limited to, the payment of rent and other money charges." The form lease mentions an option to renew for a period of one year (through May 31, 1994). The rider to the lease specifies the rent for the second year and includes an option to renew for a third year at a rent to be determined by the owner. The guarantor signed the form lease but not the rider. Therefore, there is no proof that the guarantor ever saw the rider or knew that there was an option to renew for a third year. Under these circumstances, the guarantor cannot be held responsible for the subtenant's performance after May 31, 1994, the end of the second year of the sublease.
- Case Caption:
- Becker v. Atwell
- Issues/Legal Principles:
- Nonpayment proceeding dismissed because landlord knew subtenant's name but failed to name and serve subtenant as party respondent.
- Keywords:
- subtenants
- Court:
- Housing Part of the Civil Court, Kings County
- Judge:
- Hon. Judge Marton
- Date:
- December 29, 1999
- Citation:
- NYLJ, page 31, col 2
- Referred Statutes:
- CPLR Section 1024
- Summary:
- Landlord commenced a nonpayment proceeding against prime tenant (Atwell) but failed to name and serve the subtenant (Courtney). On May 17, 1999, prime tenant and landlord entered into a stipulation whereby tenant agreed to pay certain sums by certain dates. When the prime tenant defaulted on the stipulation, the landlord made a motion asking the court to issue a warrant and a judgment of possession. The motion was granted on default. (Atwell did not appear in court on the date the motion was heard). The subtenant (Courtney) promptly made a motion seeking to vacate the default judgment, stating that she paid the rent to the prime tenant and that she was not a party to the stipulation. Subtenant's motion was resolved by a stipulation entered into between the prime tenant and the landlord. Oddly enough, the subtenant was not a party to this stipulation although the subtenant had made the motion. The June 29, 1999 stipulation provided that the petition should be amended to reflect John Doe and Jane Doe as respondents and that the prime tenant should vacate by August 5, 1999. One month later, the subtenant moved to stay execution of the warrant, stating that (1) she paid the rent to the prime tenant but prime tenant did not, in turn, pay the landlord and (2) the landlord had promised her a lease after the expiration of the prime tenancy but did not honor this promise. At oral argument of the motion, the subtenant also alleged that she had spent several thousand dollars improving the apartment with the understanding that the landlord would offer her a lease. The judge sympathized with the subtenant and implied that the landlord may be estopped from denying that Courtney is a tenant because she relied to her detriment on landlord's promise by spending money on improvements to the apartment. The judge dismissed the nonpayment proceeding because (1) the landlord knew Courtney's name but failed to name Courtney as a party respondent and (2) Courtney was not made a party to the June 29, 1999 stipulation. The court relied on various holdover proceedings that were dismissed because the landlord failed to name and serve a known subtenant.
- Case Caption:
- Prince v. Grace
- Issues/Legal Principles:
- Under the circumstances of this case, the court refuses to immediately evict a tenant who has an application for Jiggetts relief pending with the Department of Social Services ("DSS").
- Keywords:
- stipulations; Jiggetts
- Court:
- Housing Part of the Civil Court, Bronx County
- Judge:
- Hon. Judge Gonzalez
- Date:
- December 29, 1999
- Citation:
- NYLJ, page 23, col 3
- Referred Statutes:
- RPAPL Sections 741(3) and 747A; MDL Section 4(7); CPLR Sections 2104 and 2215
- Summary:
- Landlord brought a nonpayment proceeding against tenant. Landlord identified tenant's apartment as apartment 4 instead of apartment 2 but tenant opted to waive this defect, even though the defect would have resulted in a dismissal without prejudice of the nonpayment proceeding. Landlord and tenant entered into a stipulation on September 30, 1999 stating as follows: "landlord is entitled to a final judgment of $3,375.00 with a stay of issuance and execution pending tenants application to DSS for Jiggetts payment or rent to November 30, 1999. 747A waived." The landlord forgot to include the end date of the stay (November 30, 1999) but, when the Court reviewed the stipulation, the Court reminded landlord to include a date, so that the stay would not be perpetual. When the tenant applied to DSS for Jiggetts relief, DSS asked the tenant to provide a copy of tenant's current lease. Tenant provided a copy of her expired lease, but DSS said this was not sufficient. Tenant then made a motion asking the court to direct the landlord to provide her with a renewal lease, so that her DSS application may be processed. The Court denied the motion, stating that it cannot, under these circumstances, force the landlord to give tenant a renewal lease. On the other hand, the Court refused, upon landlord's request, to order the immediate execution of the warrant. So long as tenant has an application for Jiggetts relief pending with DSS, the issuance of the warrant is stayed until November 30, 1999 in accordance with the terms of the parties' stipulation.
- Case Caption:
- 85-87 Mercer Street Associates v. Lusker
- Issues/Legal Principles:
- Court refuses to dismiss nonpayment proceeding against loft landlord where landlord has taken "all necessary and reasonable action" to obtain a certificate of occupancy.
- Keywords:
- certificate of occupancy; nonpayment; all necessary and reasonable steps
- Court:
- Appellate Term, First Department
- Judge:
- lower court judge: Hon. Howard Malatzky
- Date:
- December 30, 1999
- Citation:
- NYLJ, page 24, col 6
- Referred Statutes:
- MDL Section 284
- Summary:
- Petitioner is a cooperative corporation which owns an interim multiple dwelling ("IMD") as defined by MDL Section 281 (the "Loft Law"). In 1989 the Board of the cooperative corporation imposed a charge of $110 per share. The shareholders paid this additional charge without complaint until recently. When the shareholders stopped paying this additional charge, the cooperative corporation brought a nonpayment proceeding against the defaulting shareholders. In defense to the nonpayment proceeding, the shareholders raised the defense that rent need not be paid because the building did not have a residential Certificate of Occupancy. The trial court rejected this defense because the landlord had taken "all necessary and reasonable steps" to obtain a residential Certificate of Occupancy. The landlord had filed alteration plans, obtained a permit, hired architects, completed some of the work and taken steps to obtain financing. The trial court also determined that the nonpayment of the $110 per share charge was the proper subject of a nonpayment proceeding. The appellate court affirmed the trial court's decision in all respects.
New York Law Journal, decisions for the week of December 20-24, 1999 (6 cases)
- Case Caption:
- Dworman v. New York State Division of Housing and Community Renewal
- Issues/Legal Principles:
- The Court of Appeals has ruled that DHCR has the authority to accept late responses from rent-stabilized tenants certifying that their income is below the statutory threshold and thus not subject to luxury decontrol, upon good cause shown.
- Keywords:
- income certification form; luxury deregulation; untimely response; late response
- Court:
- Court of Appeals
- Judge:
- Hon. Judith S. Kaye, Chief Judge
- Date:
- December 22, 1999
- Citation:
- NYLJ, page 26, col 1
- Referred Statutes:
- Administrative Code of the City of NY 26-504.3; RPAPL 732(3); 9 NYCRR 2527.5(d); 9 NYCRR 2507.5(d); 9 NYCRR 2210.1; 9 NYCRR 2529.8
- Summary:
- In three consolidated cases, the New York State Court of Appeals held that the New York State Division of Housing and Community Renewal ("DHCR") has the authority to accept untimely information provided by rent-stabilized tenants certifying their income pursuant to the Rent Regulation Reform Act of 1993 ("1993 RRRA"), Administrative Code of the City of New York 26-504.3. This part of the 1993 RRRA ended rent stabilization for New York City apartments renting for $2,000 or more, if the occupants' combined annual adjusted gross income exceeded $250,000 (Note: In 1997, the law was amended to lower the income threshold to $175,000. The cases before the Court of Appeals arose before the effective date of the 1997 amendment.)
The code describes a procedure in which the landlord may demand an income certification form ("ICF") from the tenant on or before May 1 of the calendar year, which the rent-stabilized tenant must complete and return within thirty (30) days. If the tenant fails to return the form, or if the landlord disputes the income amount reflected on the completed form, the landlord may then petition DHCR to verify the tenant's income. Within twenty (20) days of receiving the landlord's petition, the Act requires DHCR to send the tenant a notice of the proceeding, and requiring the tenant to provide 'such information as the division and the department of taxation and finance shall require to verify whether the total annual income exceeds [the threshold amount].' The code requires such information to be provided by the tenant within sixty (60) days of service.
In all three cases considered by the Court of Appeals, the tenants did not timely provide the requested information to DHCR. In Dworman v. DHCR, the tenants sent the verification form back to DHCR in 71 days (11 days late) due to their vacation in Europe at the time the notice was served. In Sudarsky v. DHCR, the tenant mistakenly returned the information requested by DHCR to his landlord, and at the time the notice was served by DHCR, the tenant was suffering from clinical depression while his wife, a concert pianist, had been away on tour. In Seymour v. DHCR, the tenant simply neglected to mail a response to the DHCR's request for information.
In all three cases, the DHCR issued orders of deregulation, and in Dworman v. DHCR and Sudarsky v. DHCR, the DHCR ruled that the sixty (60) day time limit in which to respond to DHCR's request was statutory in nature and that it was outside the purview of the DHCR to change the statutory time limit. In Seymour v. DHCR, the DHCR added that the inadvertent neglect cited by the tenant did not excuse the tenant's failure to file an Answer. All three cases resulted in denials of the tenants' respective Petitions for Administrative Review ("PAR"), and mixed results in the tenants' Article 78 Petitions in the Supreme Court and subsequent appeals before the Appellate Division. The Court of Appeals granted leave to appeal and considered the three consolidated cases.
Chief Judge Kaye, interpreting the 1993 RRRA, found that the plain meaning of the statute did not require DHCR to blindly follow the sixty (60) day time limit to respond. Rather, the Court noted that the statute's subdivision (c)(3) required DHCR to issue an order of deregulation "if the tenant or tenants fail to provide the information," with the clear implication that an order must be issued only if the tenant fails to respond at all, and not necessarily within the sixty (60) day time limit. Moreover, the Court found that the statute's legislative history supports the DHCR's discretion to review a case on the merits despite justifiable tenant tardiness, as the Introducer's Memorandum in Support of the Act states that the "Division of Taxation and Finance is required by this bill to verify whether the income threshold . . . is exceeded and to advise DHCR of its finding," even where a tenant fails to return the ICF to the landlord. Thus, the Court found that the Legislature intended for deregulation proceedings to be decided on the merits.
The Court further noted that although DHCR was mandated by the same statute to: a) notify tenants within 20 days after the landlord filed a petition for deregulation, and b) enter deregulation orders on default by December 1st of that calendar year, that DHCR showed little regard for their own deadlines imposed by the statutes, as DHCR was months late in complying with both of their statutory deadlines. Thus, the Court did not exactly appreciate DHCR's argument that according to the statute, the tenant's date to provide the information was absolute, but DHCR was free to ignore its own deadlines to notify tenants and enter deregulation orders.
The Court further opined that the DHCR was free to consider a slight delay (11 days) as "so minimal as to be considered to be excusable . . .." The Court concluded by holding that where a tenant demonstrates good cause for failing to submit the required information within sixty (60) days, the DHCR may accept the late filing.
- Notes:
- While Dworman v. DHCR helps tenants who can demonstrate good cause for their failure to file timely responses with DHCR in deregulation proceedings, this case clearly does not support a wholesale disregard for the sixty (60) day time limit or a tenant's simple neglect to comply. In fact, the Court of Appeals remanded only Dworman v. DHCR and Sudarsky v. DHCR for consideration of the tenants' reasons for late filing, but reversed and dismissed the Article 78 proceeding in Seymour v. DHCR, holding that DHCR's finding, that Seymour's "inadvertent neglect" did not excuse the tenant's delay, was not an abuse of discretion. Thus, tenants should take care to provide the information required by the DHCR in a luxury deregulation proceeding within sixty (60) days, reserving the DHCR's discretion to accept a late filing for instances where the tenant's failure to timely file is clearly for "good cause." This is particularly true where, as here, the DHCR's ability to accept a late filing is discretionary, and the DHCR's finding of whether an excuse meets the "good cause" standard is a question of fact, which may only be reversed if the DHCR "abused its discretion."
- Case Caption:
- Elkin v. Roldan, as Deputy Commissioner of the Division of Housing and Community Renewal
- Issues/Legal Principles:
- DHCR has the authority to accept late responses from rent-stabilized tenants certifying that their income is below the statutory threshold and thus not subject to luxury decontrol, two cases, involving three (3) day and ten (10) day delays, to be remanded to DHCR.
- Keywords:
- income certification form; luxury deregulation; untimely response; late response
- Court:
- Court of Appeals
- Judge:
- Memorandum Decision
- Date:
- December 22, 1999
- Citation:
- NYLJ, page 29, col 1
- Referred Statutes:
- Administrative Code of the City of NY 26-504.3; 9 NYCRR 2527.5(d); 9 NYCRR 2507.5(d)
- Summary:
- The New York State Court of Appeals, citing Dworman v. New York State Division of Housing and Community Renewal, which was decided on the same day, remitted two cases back to Supreme Court with directions that they be remanded to the DHCR for reconsideration of the tenants' claims that their replies to DHCR's requests for income verification were either timely submitted and/or that the tenants demonstrated good cause for their delays in responding. In both cases, the tenants appeared to have completed the information forms timely, but inadvertently mailed their responses late. As in Dworman, the Court of Appeals again suggested that the DHCR might consider whether the tenants' three (3) and ten (10) day delays were "so minimal as to be excusable under the maxim of de minimis non curat lex."
- Case Caption:
- Matter of HSC Management Corp. v. State of New York Division of Housing and Community Renewal
- Issues/Legal Principles:
- Landlord's failure to file a Petition for Administrative Review to challenge DHCR's unfavorable decision rendered in 1999 mandates dismissal of Landlord's Article 78 proceeding seeking issuance of a rent restoration order based upon a prior favorable decision rendered in 1992.
- Keywords:
- rent restoration order; mandamus; prior DHCR order; subsequent DHCR order
- Court:
- Supreme Court, Bronx County
- Judge:
- Hon. Suarez
- Date:
- December 22, 1999
- Citation:
- NYLJ, page 30, col 5
- Referred Statutes:
- 9 NYCRR 2529.11; 9 NYCRR 2530.1; 9 NYCRR 2529.2; 9 NYCRR 2527.11; RSL 26-516(h)
- Summary:
- In 1990, a prior tenant applied for, and was granted, a rent reduction order based upon a water damaged bedroom floor in her apartment resulting from a bedroom radiator leak. In December, 1992, the landlord allegedly corrected the defects and sought restoration of the rent. DHCR consequently interviewed the tenant, who confirmed that the defects had been corrected, but the DHCR took no further action to restore the rent. Instead of seeking to effectuate the favorable 1992 investigation, the landlord waited almost six years and commenced a new, separate proceeding in 1998 to restore the rent in the subject unit, triggering a new investigation by DHCR. Upon interviewing the tenant, the DHCR discovered that while the major cause of the water leakage was initially repaired, the major cause of the damage and diminished services continued, as the bedroom radiator began to leak again. An inspection conducted on February 18, 1999 revealed the leaking bedroom radiator, and resulted in DHCR's denial of the Landlord's application to restore rent on March 23, 1999. The landlord did not file a Petition for Administrative Review ("PAR") on its subsequent application and March 23, 1999 denial. Rather, the landlord sought to compel DHCR to restore the rent based upon the DHCR's 1992 favorable investigation.
The court found that six years was an unreasonable time for the landlord to move to compel DHCR to render a determination based upon the 1992 favorable investigation, and that the landlord abandoned its 1992 rent restoration application by filing a subsequent application to restore the rent in 1998. Moreover, the landlord's time to file a PAR on the March 23, 1999 denial of the subsequent application had expired. Thus, the landlord's failure to file a PAR on the March 23, 1999 denial of the subsequent application deprived the court of jurisdiction over the Article 78 proceeding on the issue, which the court dismissed as the landlord failed to exhaust DHCR's administrative remedies pursuant to RSL 26-516(h).
- Case Caption:
- Vandeveer Estates Holding LLC v. Holmes
- Issues/Legal Principles:
- Landlord's failure to file Multiple Dwelling Registration results in dismissal of Nonpayment Summary Proceeding and in the Second Department, loss of rents for the period of noncompliance.
- Keywords:
- Multiple dwelling registration; noncompliance; loss of rents; nonpayment summary proceeding
- Court:
- Housing Court, Kings County
- Judge:
- Hon. Sikowitz
- Date:
- December 22, 1999
- Citation:
- NYLJ, page 34, col 1
- Referred Statutes:
- Multiple Dwelling Law 325(1); Multiple Dwelling Law 325(2); New York Administrative Code, Housing Maintenance Code, Section 27-2099 a.,b.
- Summary:
- Landlord commenced a nonpayment summary proceeding against tenant, seeking rent owed to itself and to a prior owner from December, 1997 through March, 1999. Tenant moved to dismiss a substantial portion of the rent claim, citing the landlord's failure to produce an adequate assignment of rent from the prior owner for the period prior to June 1, 1998 (when the current landlord took title), and the landlord's failure to file a Multiple Dwelling Registration ("MDR") for the period June 1, 1998 through and including October 31, 1998. The landlord submitted a purported assignment, but failed to produce any deed to the premises. The landlord also argued that the Appellate Division, First Department held that after filing a MDR, a landlord is entitled to retroactively collect rent for the period in which the building was not registered.
The Housing Court severed the landlord's rent claim for the period prior to June 1, 1998, finding that the purported assignment, which was illegibly signed and uncorroborated by a deed to the premises, was inadequate. The Housing Court also dismissed, with prejudice, the landlord's claim for rent from June 1, 1998 through October 1, 1998, citing the Appellate Division, Second Department in David v. Priddie, NYLJ, March 25, 1980, p. 11, col. 1, which held that a landlord could not collect rent for the period of noncompliance with Multiple Dwelling Law 325(1), which in conjunction with the New York Administrative Code, Housing Maintenance Code, Section 27-2099 a.,b., requires a new owner to file a MDR within five (5) days from the date of taking title. The Court further ordered the landlord to comply with certain items requested in the tenant's Demand for Verified Bill of Particulars, or be precluded from the items sought therein.
- Case Caption:
- 210 Realty Associates v. O'Connor
- Issues/Legal Principles:
- Tenant's inadvertent failure to sign rent-stabilized renewal lease for dwelling outside of the City of New York held to be curable breach.
- Keywords:
- curable; renewal lease
- Court:
- City Court, White Plains
- Judge:
- Hon. Leak
- Date:
- December 22, 1999
- Citation:
- NYLJ, page 36, col 3
- Referred Statutes:
- 9 NYCRR 2504.2(f); RPAPL 749(3); 9 NYCRR 2503.5(a); 9 NYCRR 2504.2(a); 9 NYCRR 2504.2(d)(1); RPAPL 753(4); 9 NYCRR 2504.1(d)(1)(i)
- Summary:
- Landlord commenced summary holdover proceeding for possession after tenant failed to sign renewal lease. Tenant, who lived in the subject rent-stabilized apartment in White Plains for twenty five years, stated that she inadvertently lost the certified mail slip sent to notify her to pick up certified mail from the post office, she did not know that the certified mail was a renewal lease, and she was unable to retrieve the renewal lease without the certified mail slip. The tenant also immediately contacted the landlord to sign her renewal lease within the ten (10) day cure period stated in the landlord's Notice of Termination.
The Court vacated the Judgment of Possession and Warrant of Eviction, subject to the tenant executing a renewal lease within twenty days from the order. In doing so, the Court found that the tenant's failure to sign the rent-stabilized renewal lease was a curable violation of her lease, and that she reacted swiftly and with diligence in an effort to execute the lease renewal upon receiving the Notice of Termination.
- Case Caption:
- Ace Fenimore Realty Corp. v. Weeks
- Issues/Legal Principles:
- Court denies landlord's motion to vacate stipulations, finding no mutual mistake or misrepresentation by tenant's counsel.
- Keywords:
- vacate; stipulation; mutual mistake; misrepresentation
- Court:
- Housing Court, Kings County
- Judge:
- Hon. Pinckney
- Date:
- December 22, 1999
- Citation:
- NYLJ, page 34, col 3
- Referred Statutes:
- none cited
- Summary:
- Landlord and tenant signed two stipulations in nonpayment summary proceeding in November, 1998, acknowledging the legal rent at $529.73, and the tenant received Jiggetts relief, making full payment of the arrears. During settlement negotiations, tenant's counsel exhibited an order from DHCR which denied the landlord's application for a Major Capital Improvement ("MCI") increase for the installation of windows as to the subject unit, based upon defective installation in the tenant's apartment, which created drafts in the apartment. The agreed upon legal rent was based in part upon the DHCR's conditional denial of the landlord's MCI application.
Nearly one year later, the landlord moved to vacate the stipulations, claiming that the parties committed mutual mistake as to the condition of the windows, or that tenant's counsel misrepresented the defective condition of said windows, which the landlord claimed were repaired in November, 1997.
The Court found that the work slip signed by the tenant merely stated that air was coming into the apartment through the air conditioner and electrical outlets, but did not state that air was not coming into the apartment though the windows. Moreover, the Court noted that the landlord merely inspected, but did not repair, the windows, and that the landlord would have to either challenge the DHCR finding that the windows were defective or make the repairs required by the DHCR, in order to receive the MCI increase. Thus, the Court refused to vacate the stipulations, finding no mutual mistake or misrepresentation by tenant's counsel.
New York Law Journal, decisions for the week of December 13-17, 1999 (7
cases)
- Case Caption:
- Missionary Sisters of Sacred Heart Inc. v. Dowling
- Issues/Legal Principles:
- Landlord's attorneys who sign nonpayment petition do not trigger the Fair Debt
Collection Practices Act for purposes of dismissal of a housing court proceeding.
- Keywords:
- arrears; debt collection; debtor/creditor; preemption
- Court:
- Civil Housing Court, New York County
- Judge:
- Hon. Shlomo Hagler
- Date:
- December 15, 1999
- Citation:
- NYLJ, page 27, col 5
- Referred Statutes:
- 15 USC 1692 et seq; RPAPL 711(2), 735
- Summary:
- The tenants' rent was $1902.45 per month and the landlord commenced a proceeding
to recover 2 months rent for June and July, 1999. The landlord's treasurer allegedly signed the
three-day rent demand. On the left side of the demand below her signature is a reference stating
"Case Code: 6418-097." The petition, verified by the landlord's attorney on July 15, 1999,
contained a reference number "6418-104." The tenants vacated the apartment on July 26, 1999
and submitted a pro se answer on July 29, 1999 seeking unspecified counterclaims. Later upon
retaining counsel, the tenants argued that the rent demand and the petition violate the Fair Debt
Collection Practices Act ("FDCPA"). The court went through an analysis of the FDCPA, noting
that the federal law was passed by Congress to eliminate "the use of abusive, deceptive and
unfair debt collection practices by debt collectors." One of the FDCPA requirements is that a
debt collector must give the debtor 30 days to dispute the debt, known as the "validation notice."
The FDCPA specifies certain penalties if the debt collector fails to comply with any one of the
FDCPA requirements, including the recovery of actual damages sustained, and additional
damages not exceeding $1,000 and the costs of the action, together with reasonable attorney's
fees. In 1997, the case of Romea v. Heiberger & Associates ruled that a landlord's attorney
who signed a three-day rent demand violated the FDCPA for failure to give a 30 day debt
validation notice. The federal court affirmatively held that rent is a debt, that the three-day rent
demand was a "communication" as defined by the FDCPA and the landlord's attorney's were
debt collectors.
Tenants argued that the recent case of Goldstein v. Hutton, Ingram, Yuzek, Gainen,
Carrol & Bertoloti, 39 F. Supp. 2d 394 (S.D.N.Y. 1999) supports their argument that this rent
demand violates the FDCPA even though the demand was not signed by the landlord's attorney.
In Goldstein, the rent demand was signed by the managing agent but it was printed on the law
firm's letterhead and the firm's name and address appeared on the mailing envelope and the
certified mailing receipt. The federal court held that this amounted to a "sending" of the rent
demand and therefore the attorneys were in violation of the FDCPA because the rent demand
did not comply with a number of the FDCPA requirements. The court distinguished Goldstein
from this case by observing that the Case Code reference numbers on the rent demand and the
petition were different, and in any event a "least sophisticated consumer [tenants]" would not
be led to believe that the landlord's attorney was the one collecting the debt since the attorney's
firm name appears nowhere on the demand. The court also rejected the tenant's fall back
position that the rent demand was probably drafted by the landlord's counsel. The court held
that a landlord may seek the advice of counsel and counsel may assist a client to draft a demand
without being in violation of the FDCPA, so long as counsel does not "send" the demand.
Thus, the court held that this rent demand does not trigger the FDCPA since it was apparently
signed and allegedly sent by the creditor [the landlord] (not the landlord's attorney's) which thus
exempts it from FDCPA requirements.
The tenants then presented a novel issue which has never been raised in any forum as yet:
that the nonpayment petition (a formal pleading) is the "initial communication" subject to the
FDCPA, and since it was signed by the landlord's attorneys without providing a 30 day
validation period, it is a violation of the FDCPA rendering the petition subject to dismissal in
Housing Court. The FDCPA exempts formal pleadings (e.g., nonpayment petitions) for certain
communications, such as the statutory-required disclosure (Section 1692(e)(11)) by the debt
collector that he or she is attempting to collect a debt and that any information obtained will be
used for that purpose. The court noted that this requirement "appears to encompass initial and
subsequent communications." Section 1692c(c) involves the requirement that the debt collector
cease communications with a debtor who refuses to pay, except that the debt collector can state
that he or she "may invoke" or "intends to invoke a specified remedy" such as pursuing legal
remedies and notifying the debtor of such specific remedies, like filing a lawsuit. This section
likewise specifically exempts formal pleadings. On the other hand, the 30 day validation notice
(Section 1642(g)) does not contain a specific exemption of formal pleadings. The tenants argue
that the petition signed by the landlord's attorney constitutes the initial communication, and since
it does not provide the 30 day debt validation notice, the petition violates the FDCPA since the
FDCPA contains no exemption of formal pleadings where the debt collector fails to comply with
the 30 day debt validation requirement in an initial communication.
The court clearly was not prone to deeming a nonpayment petition as subject to FDCPA
requirements. In that regard, the court pointed to the case of Travieso v. Gutman, Mintz, Baker
& Sonnenfeldt Lexis 17804, WL 704778 (E.D.N.Y. 1995) where the federal court opined that
the FDCPA is intended to protect persons from abusive debt collection at the earliest stage.
"Once the dispute reaches the courts, the purposes behind the FDCPA are moot." The court
noted that once a case is in court the tenant-debtor "is naturally protected and safeguarded when
he or she comes within the sphere of the court's influence. If any abusive debt collection
practices occur, the debtor may seek appropriate relief from the court." Yet, the court misses
the point and indeed begs the question given that the tenants' federal consumer rights were
violated by the very pleading which failed to provide the tenants the federally mandated 30 day
validation notice. This court, however, would not even explicitly acknowledge that a
nonpayment proceeding constitutes a "communication" as defined by the FDCPA. The court
noted that the FDCPA generally prohibits third-party communications with the collection of any
debt, but exempts from that prohibition any communication undertaken with "the express
permission of a court of competent jurisdiction." The court applied this exemption (Section
1692c(b) to the filing and prosecution of the nonpayment petition (if the petition constitutes a
communication).
Finally the court reached the issue of whether an FDCPA violation is a defense to a
summary proceeding, and answered this question in the negative. It deferred to the recent
Appellate Term, Second Department case in Brooklyn, Wilson Han Assoc. v. Arthur (briefed
in Housing Court Decisions for the week of July 6, 1999). That decision found that the FDCPA
did not render a three-day notice defective for purposes of dismissing a nonpayment petition in
Housing Court. That case, however, approached the issue from a subject matter jurisdiction
angle, rather than the concept of "preemption" (discussed below). The court also relied on
Gerontis v. Schwartz, New York Law Journal, October 28, 1998, an Appellate Term, First
Department decision which also rejected the FDCPA's applicability in Housing Court. In that
case, though, the one-year statute of limitations had already passed. The tenant there also
appealed a Bankruptcy Court decision which held that there was no precedent to support the
application of the FDCPA as a defense in an eviction proceeding. The court looked at an
excerpt from the District Court's decision in Romea, and another case, to conclude that
Congress did not intend for the FDCPA to be used a shield to avoid the underlying debt (i.e.,
the rent owed).
The issue of preemption involves federal law trumping state law when in conflict, i.e.,
the FDCPA requires a debt collector to serve a 30 day validation notice while New York state
courts requires the service of a 3 day rent demand. The court examined the elements that must
be present to determine if a state law should be preempted by a federal law: (1) the scheme of
federal legislation is so complete and pervasive that no room is left for the state to supplement
it, (2) the federal interest is so dominant that state laws on the same subject must yield or (3)
the enforcement of the state statute presents a substantial conflict with the administration of the
federal program. The court noted that the state legislation survives any conflict with federal
laws if it is indirectly and not wholly repugnant to the federal statutes so that in the end the two
are reconciled. The court noted that the Second Circuit in Romea explicitly stated that there was
no conflict between New York's 3 day notice (RPAPL 711(2)) and the FDCPA. The Second
Circuit, however, meant that there is no conflict because the landlord's attorney can readily
serve a 30 day rent demand and still comply with both New York and federal law. The court
conceded that if there was a conflict, state law would have to yield to federal law. The court
also conceded that there may be a possible conflict when a landlord's attorney "sends" the rent
demand without regard to the FDCPA, but for reasons unexplained the court held that such a
notice would "indirectly conflict with federal law `but not [be] wholly repugnant . . so that in
the end the two are reconciled.'" The court concluded by stating that since the Supreme Court
hesitates to construe a state law in conflict with a federal law, the court chose to resolve any
"perceived conflict" between state law and the FDCPA in favor of consistency and propriety.
Thus, the court held that the FDCPA does not preempt state law.
- Notes:
- Disclosure: Tenants' attorney who made FDCPA motion to dismiss is Robert Sokolski,
Esq., co-counsel in Romea v. Heiberger & Associates and a recent co-editor to Housing Court
Reporter.
- The court went to great efforts to repudiate the tenant's argument. Landlord attorneys
are complying with Romea and are no longer signing three day rent demands because 30 days
is required for an initial communication. Thus, if the landlord signs the three-day notice, the
initial communication from the attorney to collect the debt becomes the nonpayment petition
which state law requires the attorneys to sign. So landlord attorney's are in the same boat if it
is accepted that a nonpayment petition is not exempt. The tenants argued that a pleading
(nonpayment petition) is not exempt because pleadings are only exempt from initial
communications, not follow-up communications. The petition will eventually get thrown out of
court if it is the initial communication from the debt collector, it's just a matter of time until the
Dowling decision (or similar ones) are overturned. What's the solution? Landlords' attorneys
should sign rent demands giving tenants 30 days to pay the rent and this would be the initial
communication. Then the attorneys could readily bring a nonpayment petition in 5 days (as New
York law permits) since the petition would then be a follow-up communication which would
place it outside the 30-day validation period. One way or another landlord attorneys are
eventually going to forced to comply with federal consumer law since it is clear that rent
payments are subject to the FDCPA and tenants are consumers under the statute.
- Case Caption:
- 18-62 Realty Corp. v. Levy
- Issues/Legal Principles:
- Appellate Court refuses to stay tenant's eviction where history of case indicates that
tenant is incapable or unwilling to clean apartment during nuisance holdover proceeding.
- Keywords:
- nuisance; post-judgment cure; stay
- Court:
- Appellate Term, First Department
- Judge:
- lower court: Jerald Klein
- Date:
- December 14, 1999
- Citation:
- NYLJ, page 26, col 1
- Referred Statutes:
- 9 NYCRR 2204.2(a)(2)
- Summary:
- In this nuisance holdover the trial court made an inspection of the apartment and
determined that the tenant had accumulated excessive refuse, furniture, and newspapers in the
apartment and extending into the common hallway (usually referred to as a "Collier" situation).
The conditions seriously impeded the landlord's access to the apartment and prevented the
landlord from effectuating needed repairs. As a result the court awarded the landlord possession
of the apartment. The lower court afforded the tenant a post-judgment ten-day cure period, but
apparently the tenant still did not remedy the situation. The Appellate Term rejected the tenant's
appeal holding that "the history of this proceeding leads to no other conclusion than that the
tenant is unwilling or unable to address the problem of access to the premises. Under such
circumstances, a further stay of the warrant is not justified." Thus, the tenant will be evicted.
No information was given as to how long this tenant had resided in the apartment.
- Case Caption:
- Crystal World Realty Corp. v. Sze
- Issues/Legal Principles:
- Tenant's primary residence is found to be the apartment where her children and her
"estranged" husband live, rather than the apartment in her name which is in the adjacent building
where she has had subtenants.
- Keywords:
- nonprimary residence, loft
- Court:
- Appellate Term, First Department
- Judge:
- lower court: Hon. Dianne Renwick
- Date:
- December 14, 1999 (re-published on December 17, 1999)
- Citation:
- NYLJ, page 26, col 1
- Referred Statutes:
- RPL 235-f
- Summary:
- Landlord brought a holdover proceeding against the loft tenant on grounds of illegal
subletting and nonprimary residence. The loft's address is 210 Centre Street. Tenant's husband
resides with their children at 208 Centre Street. Tenant claimed that she is estranged from her
husband, but the Appellate Term held that the weight of the evidence indicates that tenant spends
the majority of her time at the family apartment at 208 Centre and actually worked as a super
in that building. The Appellate Term noted that the only disinterested witness at trial, a tenant
of 210 Centre, stated that she had not seen the tenant in this small building for a number of
years. Further requests for repairs were made by the subtenants, not the tenant. The Appellate
Term reversed the lower court which had dismissed the petition. The Appellate Term found that
the record woefully lacked the customary indicia of continuous residence by tenant at the subject
apartment.
- Case Caption:
- Brown v. Sabree
- Issues/Legal Principles:
- Failure by executor of estate of deceased landlord to get permission or Letters to act
from Surrogates Court to commence a holdover proceeding is not fatal to the petition where
tenant engaged in vigorous litigation and never before raised the issue.
- Keywords:
- standing; waiver; executor; subject matter jurisdiction
- Court:
- Civil Housing Court, Kings County
- Judge:
- Hon. Rodriguez
- Date:
- December 15, 1999
- Citation:
- NYLJ, page 30, col 3
- Referred Statutes:
- EPTL 13-3.5
- Summary:
- After a trial and two orders to show cause (both of which were denied), tenant brought
a third order to show cause to be restored to possession on grounds that landlord is the executor
of an estate appointed by a New Jersey Court and that the landlord failed to either request or
obtain Letters Ancillary or to seek permission from the Surrogate's Court to commence a
summary proceeding in Housing Court. Tenant argued this failure to seek permission deprived
the Housing Court of subject matter jurisdiction over the underlying action and accordingly the
judgment of possession should be vacated and the petition dismissed. The landlord argued that
its aforementioned failure to obtain letters or seek permission to commence the instant
proceeding did not deprive the Housing Court of subject matter jurisdiction, rather it was an
objection as to the landlord's standing to sue. The landlord further argued that the tenant waived
this objection by appearing in and vigorously litigating the action. The court agreed with the
landlord's analysis holding that the objection by tenant was not jurisdictional in nature, rather
it addressed the owner's capacity to sue. The court stressed that the tenant had appeared by
counsel and fully litigated same against the landlord without ever preserving or raising the issue.
Moreover, the court noted that the tenant had previously litigated against the landlord without
raising the issue. Accordingly, the court held that the tenant's silence constituted a waiver of
its objections to the landlord's capacity to sue.
- Case Caption:
- Caniglia v. Perez
- Issues/Legal Principles:
- Tenant's sublet request is properly denied when mailed by regular mail (and other
imperfections) and fails to prove her sister's terminal illness is reason for subletting.
- Keywords:
- unlawful sublet; medical exception
- Court:
- Civil Housing Court, Queens County
- Judge:
- Hon. Jackman Brown
- Date:
- December 15, 1999
- Citation:
- NYLJ, page 31, col 1
- Referred Statutes:
- RPL 226-b;
- Summary:
- The tenant sublet her rent stabilized apartment for roughly eleven years. She recently
approached the landlord and orally requested to sublet the apartment on grounds that she needed
to care for her terminally ill sister. The landlord told her permission would be given provided
she made a formal request in writing which complied with the DHCR provisions regarding
sublets. Nine days later the tenant vacated the premises and the subtenants took occupancy with
a two-year lease shortly thereafter. A week or so after the subtenants moved in, the tenant made
a formal request of her intent to sublet but said nothing about her sister. The landlord
investigated the situation and found out that the tenant had bought a condo in Rockland County
and was living there. This caused the landlord to reject the sublet request.
The sublet was not done in compliance with the requirements of Real Property Law 226-
b, nor with the DHCR Fact Sheet on Subletting. The tenant argued that the landlord orally
consented to the sublet, to the effect that the landlord waived any objections to it. But the court
noted that the landlord said it had to be one pursuant to DHCR requirements and these were
clearly not met by the tenant, therefore there was no consent. For example, the application to
sublet is supposed to be sent by certified mail, not regular mail. The court noted that even if
the sublet were properly made, the tenant had unclean hands because she represented that she
would be with her terminally ill sister and made no mention of buying and living in a condo.
The tenant claimed that she bought the condo because her sister could not climb the stairs in the
tenant's apartment building, that she wanted to share the caring with her mother, that her sister
was in and out of intensive care, and that she wanted to spare her sister embarrassment. Yet,
the court noted that the tenant's mother is currently in Spain, the tenant's apartment is only ten
minutes from her present employment, and no mention was made of which hospital the sister
visits regularly. The court concluded that the tenant was using her sister's illness as a pretext
to keep the apartment while living upstate. The court gave the tenant ten days to cure the illegal
sublease.
- Case Caption:
- 142 South Realty Corp. v. Maldonado
- Issues/Legal Principles:
- Tenant fails to prove two of three criteria to a Spiegel Defense which, if proven, would
provide a 100% rent abatement where hazardous conditions exist in a building where the tenant
is on public assistance.
- Keywords:
- Spiegal defense; violations; warranty of habitability
- Court:
- Civil Housing Court, Kings County
- Judge:
- Hon. Marton
- Date:
- December 15, 1999
- Citation:
- NYLJ, page 30, col 1
- Referred Statutes:
- Social Service Law 143-b; Administrative Code of City of New York 27-2115; CPLR
3212
- Summary:
- Landlord brought a nonpayment proceeding in April, 1999 to collect rent at $465 per
month with 6 months owed. The tenant requested that the court dismiss the petition because she
had a Spiegel Law defense. The Spiegel Law was enacted in 1962 as a weapon in the fight
against slum housing. It provides for a complete abatement of rent for the period in question
if 3 conditions are met: (1) the tenant receives public assistant, (2) the tenant lives in a building
that has one or more housing code violations that are hazardous to life or health, and (3) the
violations were reported to the Department of Housing Preservation and Development ("HPD")
and to Department of Social Services ("DSS").
The court found that the first condition was met since the tenant had been on public
assistance for a number of months. The second and third conditions, however, were not present
in the tenant's written request for dismissal of the nonpayment petition. The tenant argued that
a letter dated October 14, 1997 from HPD to Human Resources Administration ("HRA")
constituted notice (the third condition). The court disagreed because the letter did not refer to
any particular violations at any particular building; it was just a general letter that HPD will
advise the HRA on an ongoing basis of HPD-issued violations in New York City multiple
dwellings. Also, the letter cannot be used to address violations which arose after the letter
issued. Thus, the court ruled that a trial was needed to determine if the tenant satisfied the third
Speigel criteria of notification.
With respect to the second condition, hazardous violations of record, the evidence
presented involved violations occurring at a point in time after the period in question in this
nonpayment proceeding. The court, however, held that the tenant should be allowed a trial to
prove that violations existed during the six months she withheld rent. Tenant's motion papers
alone failed to prove this because the computer print-outs she attached from HPD data base do
not on their face correspond to portions of the HPD inspection report. The landlord argues that
the court should reject the Spiegel Law defense, and not allow tenant an opportunity at trial to
prove the defense because the violations were allegedly corrected as soon as they were reported
to the landlord by the tenant. The landlord also argued that the electrical violations were caused
by tenant's use of a commercial sewing machine. Finally, the landlord argued that the tenant
deprived the landlord of access to the apartment to make the repairs. The court held that the
landlord could raise all these grounds at trial.
- Case Caption:
- HKAL 34th Street v. O'Dea
- Issues/Legal Principles:
- Daughter who was a minor (one month shy of 18th birthday) when mother permanently
vacated the apartment was entitled to succession rights because the daughter consistently
maintained an ongoing nexus with the apartment as her primary residence.
- Keywords:
- succession rights; nonprimary residence; minors
- Court:
- Civil Court, New York County
- Judge:
- Hon. Karen Smith
- Date:
- December 15, 1999
- Citation:
- NYLJ, page 28, col 3
- Referred Statutes:
- CPLR 3211; 9 NYCRR 2523.5
- Summary:
- The landlord brought a holdover proceeding against the tenant on grounds of
nonprimary residency and the undertenant asserted a succession rights claim and won. The
undertenant claimed that less than three months after she was born in 1976 her parents moved
into the apartment. They divorced in 1984 and she and her mother stayed in the apartment. In
1991 her mother remarried and in 1995 relocated to Texas. With the exception of the period
1994-1998 when she was enrolled in college, the daughter represented that she resided in the
apartment since the inception of the tenancy. The daughter presented a flood of documents and
affidavits as proof of her claim. The landlord did not dispute that she resided in the apartment
until she left for college. The landlord did, however, dispute that the apartment was her primary
residence on the grounds that as a minor her primary residence followed that of her mother's
who had moved to Texas in 1995. Further, the landlord alleges that the mother vacated the
apartment in 1993, not 1995, based on a 1993 Virginia deed bearing the mother's and her
second husband's name and representations on documents thereto that they occupy the Virginia
premises as their primary residence. The daughter, however, produced proof that her mother
did not live in Virginia but rather worked at Bergdorf Goodman. A vice president of Human
Resources of the store submitted an affidavit corroborating the mother's employment from
Monday through Friday from 1984 to 1995.
For purposes of a motion to dismiss the court relied on the facts as presented by the
party against whom the relief is sought, the landlord. Thus, the court looked at 1993 as date
that the mother permanently vacated the apartment. The court noted that a child who has resided
in the apartment since the inception of the lease is entitled to be substituted as a party to a
renewal lease when the prime tenant permanently vacates. Further, the child's absence due to
enrollment as a full-time student does not interrupt any residency requirements. In a case relied
upon by the landlord involving an infant (Quiala v. Laufer, 180 AD2d 31, First Dept. 1992),
it was held that there exists "an established presumption that the residence of the child is the
residence of the parents," and that the child's primary residency "is tied to the individual adult
under whose parental authority and control they are raised." The presumption, however, may
be overcome and rebutted "by proof that the parties have surrendered parental control and that
such control is being exercised by some other person with whom the child lives." In Quiala,
where the infant lived with his guardian out of state at the time the lease expired, the infant was
not entitled to succession rights. The controlling facts look to the residence of the infant at the
time the succession right is asserted. There was a case, however (Doubledown Realty Corp. v.
Harris) where the court allowed a 15 year old grandson to succeed to the lease even though his
mother only lived in the apartment sporadically.
The court noted that in December, 1993, the daughter was one month shy of turning 18,
a fact which standing alone may not be enough to rebut the presumption "not to be lightly case
aside" that her primary residence followed her mother. Although she was still a minor, she
maintained the apartment as her primary residence because the totality of the circumstances
indicate so. She lacked parental control or control exercised by some other person with whom
she lived. The affidavits from her doctor and grammar and high school headmistress together
with her affidavit and other credible documentation indicate that she in fact resided in the
apartment until September 1994 when she left to attend college full-time. Proving her ongoing
nexus to the apartment as her primary residence, the court held that she was entitled to
succession rights. The court noted the vast array of documents indicating her return to the
apartment after college. The court directed the landlord to tender the daughter a rent stabilized
lease in her name in thirty days.
New York Law Journal, decisions for the week of December 6-10, 1999
(8 cases)
- Case Caption:
- Partnership 92 West, LLP v. Woods
- Issues/Legal Principles:
- Court stays second holdover proceeding against tenant because landlord failed to pay tenant's attorney's fees and expenses after first holdover proceeding was dismissed.
- Keywords
- stays; attorney's fees
- Court:
- Housing Part of the Civil Court, * County
- Judge:
- Hon. Judge Billings
- Date:
- December 6, 1999
- Citation:
- NYLJ, page 25, col 3
- Referred Statutes:
- CPLR Sections 2201, 5519, 8101, 8201, 8202, 8203, 8301, 8401-8403, 8601, 8602; RPL Section 234
- Summary:
- Landlord brought a nonprimary residence proceeding against tenant. Tenant brought a motion to dismiss, on the grounds that the notice of termination (the predicate notice) did not set forth the necessary facts to establish the nonprimary residence claim. The court granted the motion to dismiss. There was a clause in the lease which entitled landlord to collect attorney's fees from tenant if landlord succeeds in litigation against tenant. In accordance with RPL Section 234, this clause entitles tenant to collect attorney's fees from landlord if tenant is successful in litigation against landlord. Tenant therefore made a motion seeking attorney's fees. The trial court granted respondent $6,500 in fees and $400 in disbursements. The landlord did not pay this amount to tenant. Instead, the landlord brought another nonprimary residence holdover proceeding against tenant. Tenant moved to stay (delay) the second nonprimary residence proceeding until landlord pays all costs awarded to tenant in the first proceeding. The tenant relies on CPLR Section 2201 and an Appellate Division, First Department case from 1981 called Prudential Oil Corp. v. Phillips Petroleum Co. CPLR Section 2201 reads as follows: "Except where otherwise prescribed by law, the court in which an action is pending may grant a stay of proceedings in a proper case, upon such terms as may be just." The court in Prudential Oil Corp. decided that "nonpayment of costs in an action entitles a defendant in whose favor they are awarded to stay all proceedings in a subsequent action brought by the same plaintiff upon the same cause of action." The court then discussed the meaning of the word "costs" and decided that costs means both attorneys fees awarded pursuant to RPL Section 234 and expenses. (The landlord unsuccessfully argued that costs only meant expenses). The court granted tenant's motion for a stay of the second nonprimary residence proceeding until landlord pays tenant $6,900 in costs (attorney's fees and disbursements). The court said that the policy behind requiring payment of the costs of the first defective action before a second action is brought "acts as security that if the plaintiff sues again, the suit will be more worthwhile than the first."
- Case Caption:
- Bragston Realty Corp. v. Sylvia Dixon
- Issues/Legal Principles:
- A rent overcharge does not occur when a registration is filed or late-filed - it occurs when an owner collects "an overcharge above the rent authorized" for a particular apartment.
- Keywords:
- rent overcharge
- Court:
- Appellate Division, Second Department
- Judge:
- lower court judge: Hon. Bruce Kramer
- Date:
- December 6, 1999
- Citation:
- NYLJ, page 32, col 5
- Referred Statutes:
- none cited
- Summary:
- The trial court decided, on July 28, 1998, that a rent overcharge does not occur when a registration is filed or late-filed. It occurs when an owner collects "an overcharge above the rent authorized" for a particular apartment. The Appellate Term, Second Department affirmed the trial court's decision. (A summary of this decision can be found in decisions for the month of July 1999). The Appellate Division, Second Department affirmed both the trial court's and the Appellate Term's decisions.
- Case Caption:
- Matter of Ki Wai Leung v. Division of Housing and Community Renewal
- Issues/Legal Principles:
- Building with six residential units on base date remains subject to rent stabilization notwithstanding its later conversion to a building with less than six units.
- Keywords:
- rent stabilization; six units
- Court:
- Appellate Division, Second Department
- Judge:
- lower court judge: Hon. Justice Dowd
- Date:
- December 6, 1999
- Citation:
- NYLJ, page 30, col 1
- Referred Statutes:
- CPLR Article 78; RSC Section 2520.11[d]
- Summary:
- The DHCR determined that a certain building was subject to rent stabilization notwithstanding its conversion to a building with less than six units. Landlord brought an Article 78 proceeding to challenge the DHCR's ruling before the Supreme Court, Kings County. The Supreme Court dismissed the Article 78 proceeding, finding that the DHCR's ruling was neither arbitrary nor capricious. The Appellate Division, Second Department affirmed the Supreme Court's ruling.
- Case Caption:
- Jadam Equities Ltd. v. Stupp
- Issues/Legal Principles:
- It is the landlord's responsibility to take reasonable steps to determine whether a tenant has been certified as eligible for SCRIE benefits prior to claiming any tax abatements; SCRIE is not responsible for informing landlord that tenant has not been recertified.
- Keywords:
- SCRIE
- Court:
- Supreme Court, * County
- Judge:
- Hon. Stallman
- Date:
- December 8, 1999
- Citation:
- NYLJ, page 26, col 4
- Referred Statutes:
- CPLR Article 78
- Summary:
- This case is about the Senior Citizen Rent Increase Exemption Program ("SCRIE"). Senior citizens of rent regulated apartments may apply to the Department for the Aging of the City of New York ("DFTA") for orders exempting them from the payment of rent increases. If their income is low enough, they qualify for an exemption. They then must apply for recertification every year. The landlord of a senior citizen who receives a rent increase exemption order is entitled to an abatement of real property taxes in an amount equal to the rent increase which the landlord would otherwise have received from the tenant. In this case, tenant Robert Lang was granted an exemption order. He applied for recertification every year through 1984. From 1985 through 1990, Lang did not apply for recertification. However, Lang's landlord did not ask Lang to pay rent increases during this fourteen-year period. Lang's landlord continued to pay reduced real property taxes during this period. The Department of Finance ("DOF") therefore issued a determination that the landlord overclaimed a tax abatement from 1985 through 1999, a period of fourteen (14) years. The amount of the overclaimed tax abatement was $22,263.57, and the DOF sought to collect this sum from the landlord. Landlord brought an Article 78 proceeding in the Supreme Court to challenge the determination of the DOF. The Supreme Court rejected all of the landlord's arguments and affirmed the DOF's determination. Landlord argued that the DOF waited too long (fourteen years) to review the tax abatement status of Lang's apartment. DOF's delay prejudiced the landlord because it was now too late to sue Lang for the rent increases that Lang should have been paying to the landlord for fourteen years. (The statute of limitations on a contract, such as a lease, is six years). The court rejected this argument, citing to a case that says that the defense of laches (unreasonable delay resulting in prejudice) cannot be used against the government except in the rarest cases. Landlord also argued that the DFTA should have informed landlord that Lang had not applied for recertification of his SCRIE benefits. The Court rejected this argument, stating that it was the landlord's responsibility to "take reasonable steps to determine whether a tenant has been certified as eligible for SCRIE benefits prior to claiming any tax abatements."
- Case Caption:
- Mater of Cosmopolitan Broadcasting Corp. v. DHCR
- Issues/Legal Principles:
- It is landlord's burden to rebut the presumption that the rent overcharge was willful.
- Keywords:
- rent overcharge; DHCR enforcement proceeding
- Court:
- Supreme Court, New York County
- Judge:
- Hon. Justice E. Goodman
- Date:
- December 8, 1999
- Citation:
- NYLJ, page 27, col 1
- Referred Statutes:
- RSL Sections 26-510, 512(s), 511(c)(2), 516(a), 517(e); RSC Sections 2522.1, 2525, 2528.4
- Summary:
- DHCR brought an enforcement proceeding against landlord. (The nature of the enforcement proceeding is not specified in the Court's opinion. Apparently the landlord had been filing false registration statements and had not fixed a broken elevator, among other things). The landlord and DHCR entered into a stipulation of settlement on February 20, 1992, providing that the rents were frozen until the landlord filed true and correct registration statements. (The landlord did not file true and correct registration statements until 1993). The stipulation stated that "nothing in this agreement is to be interpreted to negatively affect currently pending tenant overcharge complaints or to prevent tenant from filing overcharge complaints for the past overcharges. Any such pending or future complaints will be determined by DHCR's overcharge unit." An overcharge proceeding brought by tenant Buckley (an SRO tenant) was pending at the time the enforcement proceeding was settled. Since Buckley's claim was a pending at the time the enforcement stipulation was signed, by the very language of the enforcement stipulation, the landlord cannot claim that the enforcement stipulation in any way affects Buckley's overcharge claim. Buckley claimed rent overcharges from the inception of the stabilized tenancy in 1988 to the present. The District Rent Administrator found a rent overcharge but no willfulness; the Deputy Commissioner affirmed the finding of rent overcharge and also found that the overcharge was willful. The landlord brought an Article 78 proceeding and the Supreme Court upheld the willfulness determination of the Deputy Commissioner. The landlord could have rebutted the presumption of willfulness by, for example, tendering the full amount of the overcharge plus interest as soon as landlord became aware of the overcharge. Landlord conceded that he did not do this because he did not have the money to repay tenant. It is the landlord's burden to rebut the presumption of willfulness and the landlord failed to do so in this case.
- Case Caption:
- Matter of Dormitory Authority of the State of New York v. Davis
- Issues/Legal Principles:
- Rent stabilized tenant of condemned building is not entitled to compensation.
- Keywords:
- condemnation; eminent domain
- Court:
- Supreme Court, New York County
- Judge:
- Hon. Parness
- Date:
- December 8, 1999
- Citation:
- NYLJ, page 27, col 3
- Referred Statutes:
- CPLR Section 3212; Eminent Domain Proceedings Law Section 405[A]; RSC Section 2500.1 et. seq. (insert statutes here)
- Summary:
- The government brought an eminent domain proceeding to condemn the Gramercy Hotel, a single room occupancy residence. Davis was a rent-stabilized tenant of the hotel from 1986 until 1996, when he was removed pursuant to the eminent domain proceeding. He obtained housing elsewhere but his new home is half the size of his former home the Gramercy Hotel and more expensive. Davis calculated damages in the amount of almost $400,000.00 based on the increased cost and the smaller size of his new home and his life expectancy. The Court found that Davis was not entitled to compensation. The court held that Davis' rent stabilization rights do not create a life estate in the premises. The court further reasoned that the owner of the building subject to condemnation is awarded an amount based upon the unencumbered value of the premises. (Unencumbered means the value of the premises if it did not have any tenants). Any payments that the government may be required to pay to tenants would be deducted from the amount paid to the owner. If each tenant were entitled to compensation, there would be nothing left for the building's owner.
- Case Caption:
- Elston v. Dubois
- Issues/Legal Principles:
- Holdover proceeding is dismissed where petition did not properly and correctly state the facts upon which the proceeding is based.
- Keywords:
- motion to dismiss
- Court:
- Civil Court, New York County
- Judge:
- Hon. Millin
- Date:
- December 8, 1999
- Citation:
- NYLJ, page 29, col 1
- Referred Statutes:
- RPAPL Section 741(3) and (4)
- Summary:
- Elston (hereinafter "landlord") brought a holdover proceeding against six of his subtenants. Landlord described the premises (an interim multiple dwelling unit covered by the Loft Law) as "the subdivided south unit of Apt. 5R located at 425 Broome Street, NY, NY." In his holdover petition, the landlord alleged that each of the respondents-subtenants (including a subtenant named Dubois) entered into possession pursuant to a single monthly hiring agreement. Dubois made a motion to dismiss the holdover proceeding against her, alleging that (1) the petition does not properly describe the premises (according to Dubois, it consists of six separate units) and (2) the petition does not properly describe the sublease agreement (according to Dubois, there were six separate agreements, not just one agreement involving all six subtenants). Landlord's opposition papers to Dubois' motion to dismiss refutes Dubois' first contention but is silent on Dubois' second contention. The Court held that the landlord's silence would be taken as an admission that there were six separate agreements, rather than the one monthly hiring agreement referred to in landlord's petition. Landlord's petition is therefore incorrect. Landlord did not make a motion asking the court for leave to amend the petition. Landlord's petition does not contain a correct statement of facts upon which the proceeding is based, as required by RPAPL Section 741(4). Therefore, the Court granted Dubois' motion to dismiss the landlord's holdover proceeding.
- Case Caption:
- In Re Pedro Alvarado v. DHCR
- Issues/Legal Principles:
- The Supreme Court, in the context of an Article 78 proceeding, will not disturb the credibility findings of DHCR's hearing officer.
- Keywords:
- harassment; order terminating harassment finding
- Court:
- Supreme Court, Appellate Division, First Department
- Judge:
- lower court judge: Hon. Jane Solomon
- Date:
- December 9, 1999
- Citation:
- NYLJ, page 28, col 6
- Referred Statutes:
- RSC Section 2526.2[d]
- Summary:
- The DHCR made a finding of harassment against a certain building owner on March 14, 1988 because of the owner's failure to maintain certain services. (When DHCR finds harassment, DHCR orders a rent freeze). Many years later, the new owner of the building filed an application with the DHCR seeking to terminate the harassment finding, on the grounds that the services had been restored. Although there were some lapses in the new owner's maintenance of services in a few minor areas, the DHCR, after trial, granted the new owner's application on August 12, 1998 (ten years after the harassment finding had been made). The tenants then filed an Article 78 proceeding in the Supreme Court, New York County alleging that the DHCR's decision was arbitrary and capricious. The Supreme Court held that it would not disturb the DHCR's findings of credibility. (The DHCR probably found certain testimony offered on behalf of the tenants not credible, in order to resolve conflicting testimony offered by the parties). The Supreme Court's determination was upheld by the Appellate Division, First Department.
New York Law Journal, decisions for the week of November 29-December 3,
1999 (4 cases)
- Case Caption:
- Almonte v. Roberts
- Issues/Legal Principles:
- Termination of tenant's Section 8 benefits was reversed where HPD failed to comply
with federal requirements, including providing a written decision after a hearing.
- Keywords:
- Section 8; notice; due process
- Court:
- Supreme Court, Queens County
- Judge:
- Hon. Weiss
- Date:
- December 1, 1999
- Citation:
- NYLJ, page 34, col 2
- Referred Statutes:
- 24 CFR 982.555;
- Summary:
- The tenant's Section 8 benefits were terminated and she appealed the decision in an
Article 78 which sought to have the benefits restored and also sought a hearing. The eviction
proceeding in Housing Court was stayed while this Article 78 was pending. The tenant was
living in Apartment 4H and in 1997 she moved to Apartment 4C in the same building. The
tenant's Section 8 representative orally approved the transfer. The disburser of Section 8,
Housing Preservation and Development (HPD), however, refused to pay Section 8 subsidies to
the landlord for the 4C apartment on grounds that "30% of the adjusted combined family income
is greater than the apartment rent." HPD informed the tenant that she was responsible for the
entire rent in her new apartment. Apparently, the income provided to her representative was
never presented to HPD and the Section 8 representative was now dead. HPD notified the
tenant to appear at a conference with all her documents, which she did, but they never rendered
a written decision. Now the tenant is facing an eviction proceeding by her landlord who is not
receiving any of the subsidized rent from HPD.
The tenant seeks a judgment annulling HPD's decision that she is no longer eligible for
Section 8 housing assistance, and further she wants benefits retroactive to 1997 when HPD cut
off her subsidies. Alternatively, the tenant sought to have the matter remanded to HPD for a
new hearing. The tenant argued that HPD did not comply with federal notice provisions, that
the hearing never cured the notice defects and that she was entitled to receive benefits pending
the outcome of the hearing, and that HPD failed to issue a written determination following the
hearing which is required by the federal Section 8 rules. HPD argued to the court that the
Article 78 was barred by the statute of limitations because it should have been brought within
four months after the tenant received the letter terminating her Section 8 benefits. HPD also
argued that their decision was rational because the tenant failed to report her income and her
daughter's employment in violation of HUD rules and that she made false statements relating
to recertification of the benefits and that 30% of the adjusted family income was greater than
the apartment's rent so she should not be entitled to any benefits. Apparently, HPD didn't
address the issue of why they did not render a written decision following the hearing with the
tenant.
The court held that the statue of limitations was not applicable because the letter
terminating the tenant's benefits was not a final determination. The court also found that the
only hearing the tenant had was informal and likewise did not constitute a final determination
because HPD failed to issue a written decision thereafter as the law requires them to do. Since
no final determination was ever issued by HPD, the tenant's time to challenge her termination
of benefits never expired, thereby making her Article 78 timely. The court also found that
HPD's notice terminating her benefits was "woefully inadequate and failed to comport with the
[federal] notice requirements." The tenant received no notice of her right to a hearing, a right
to examine HPD's documents before a hearing, or her right to be represented at a hearing, all
of which are required notices under federal law. Further a written decision was necessary.
HPD was required to provide the tenant an opportunity for a hearing before it terminated
housing assistance payments. Since HPD failed to comply with federal law, the court annulled
the decision and restored the tenant's housing benefits. The court neglected to rule whether the
benefits were restored retroactively from the time they were terminated, or whether they would
be restored only as of the date of the decision.
- Case Caption:
- Matter of Hwang v. DHCR
- Issues/Legal Principles:
- Initial registration of illusory prime tenant is deemed null and genuine tenant is allowed
to file a Fair Market Rent Appeal.
- Keywords:
- overcharges; illusory prime tenancy; Fair Market Rent Appeal; Article 78; rent
registration
- Court:
- Supreme Court, Queens County
- Judge:
- Hon. Polizzi
- Date:
- December 1, 1999
- Citation:
- NYLJ, page 34, col 4
- Referred Statutes:
- Administrative Code of the City of New York 26-516; 9 NYCRR 2526.1, 2528.4;
- Summary:
- The tenant filed a complaint with the DHCR requesting that the owner provide him a
lease. The tenant also filed an overcharge complaint. The owners responded by stating that the
prime tenant was a company known as St. Regis/Verden, apparently an importing company.
The tenant responded that an illusory prime tenancy situation existed because no one affiliated
with this company ever occupied the apartment and the owners of the building also owned
Verden imports. (An illusory prime tenancy is when the prime tenant is a straw man set up so
that the landlord can avoid installing a genuine prime tenant who would otherwise be afforded
all rent regulation protections.) The DHCR noted that there existed no sublease between Verden
and the tenant. The DCHR ruled in favor of the tenant directing the landlord to provide a lease
to the tenant. The landlord filed a PAR and lost and now has filed an Article 78 which is an
appeal of a PAR.
While the illusory prime tenancy case was pending, the DHCR continued to process the
overcharge complaint and demanded that the owner produce all leases back to April 1, 1980.
The owners replied that they only had leases back to 1983 for this apartment and they were all
with Verden. The DHCR thereafter informed the landlord that the tenant's complaint would be
treated as a timely challenge to the initial rent registration statement (i.e., a Fair Market Rent
Appeal, "FMRA"). The DHCR ruled that the overcharge, including treble damages, amounted
to over $62,000. A hearing took place as well and the DHCR also determined that Verden was
an illusory prime tenant and found that the rent registration information conflicted with the actual
leases. The DHCR froze the rent at its 1984 rate which was $182.03, in contrast to $425, the
amount of rent the tenant paid upon taking occupancy in June, 1984. The owner filed a PAR
on a multitude of grounds, including lack of notice or sufficient time to respond to papers, as
well as asserting that it was the agency's policy to make the illusory prime tenant, not the
landlord, liable for overcharges. Further, the landlord argued that the DHCR lack authority to
convert the overcharge case into a FMRA. The tenant argued that since Verden was illusory
it was as if no rent registrations had ever been filed and therefore an FMRA was appropriate.
The PAR Commissioner found that an illusory prime tenancy did exist and thus the
tenant, who filed his complaint in 1986, had a right to challenge the FMRA for the year 1984.
Since the complaint was filed in 1986, the owner was required to provide a rental history from
1982 onward (i.e., within four years of the filing of the complaint). The DHCR determined that
the owners were not exempt from producing the leases even though they only bought the
building in 1983 because they had a duty to obtain the rent history. The DHCR rejected
virtually all the owner's claims about lack of notice and due process. With some minor
modifications to the underlying order, the PAR basically upheld the overcharge and treble
damages. The owners appealed this decision in an Article 78 proceeding, although they did not
dispute the illusory prime tenancy finding. The owners argued that the DHCR should not have
gone back to 1982 to set the base rent, but rather only to 1984. The owners continued their
argument that they were denied due process.
The Supreme Court judge found that DHCR's decision was neither arbitrary or
capricious and is supported by the record. The court held that since Verden was an illusory
prime tenant, the DHCR had a right to convert the overcharge claim into a FMRA since no
proper initial rent registration had been filed. Thus, since any initial rent registration with an
illusory prime tenant would be null and void, a 1984 registration in Verden's name is of no
value and therefore the DHCR could go to 1982 to determine the initial rent. The penalties for
failure to initially register the rent provides for a bar to the collection of any rent increases. The
court also found that the owners were provided with due process. They and their attorney had
ample time (roughly 11 years) and notice to submit either the leases or the rental history and of
their own accord failed to do so. They should not be heard to complain now.
- Case Caption:
- 374 Eastern Parkway Owners Corp. v. Alexander
- Issues/Legal Principles:
- Judgment restoring tenant to possession after eviction is reversed due to evidence that
tenant did not pay the rent before eviction as she alleged and due to process server's credible
testimony indicating proper service of the legal papers.
- Keywords:
- unlawful eviction; traverse; warrant
- Court:
- Appellate Term, 2nd & 11th Judicial District
- Judge:
- lower court: Hon. Rodriguez
- Date:
- December 2, 1999
- Citation:
- NYLJ, page 36, col 1
- Referred Statutes:
- CPLR 5015(d), 5015(a)(1), 5102
- Summary:
- The landlord brought a nonpayment proceeding in August, 1996 to collect two months
worth of rent. The tenant was evicted on October 11, 1996 following a default judgment. The
very day she was evicted she obtained an order to show cause to be restored to possession of
her apartment. She claimed that she did not know why she was evicted because she was up to
date on her rent. At a hearing the tenant produced copies of money orders for rent from July
through October and claimed that she received no notices. The landlord's agent claimed that
they received no money orders from the tenant, that the tenant was not living in the apartment
and that her daughter occupied the apartment with her kids. The Housing Court judge found
that the tenant had established an adequate excuse for the default (lack of notice) and a
meritorious defense in that she had paid the rent. Later, the landlord made a motion to renew
to the judge asking the court to reconsider based on "overwhelming proof" that the tenant's
money orders were not purchased until October, long after the proceeding had been commenced,
and that some of the money orders were purchased after the eviction.
In light of the landlord's formidable evidence the court set the matter down for a traverse
hearing, which is a hearing to determine if the tenant was properly served. If the tenant had
received the nonpayment petition, she would have come to court and resolved the matter back
then. If, however, she was never served the papers then she was deprived an opportunity to
resolve the case before she was evicted. The process server testified that he made conspicuous
place service of the legal papers (on the door or under the door) after making prior attempts to
personally serve the tenant. Tenant's daughter and a neighbor testified that the process server
testified incorrectly with respect to the door, that it was in fact gray, not brown and not painted
gray until after the eviction (implying that the process server was only there recently and not in
August when the papers were supposed to have been served). The Appellate Term, however,
noted that the process server's affidavit of service for the three day notice indicated that the door
was brown while his affidavit of service for the petition indicated that it was grey, which leads
to "the almost inescapable conclusion" that the door had been painted in the interval between the
two services. They also disputed the process server's testimony that he rode up in the elevator
because they said the elevator had been broken for a year. The tenant did not testify.
The judge examined the process server's log book and found an overwhelming majority
of unsuccessful first attempts at service for other cases. He thereupon ruled that service in this
case was not proper. The judge vacated the judgment and restored the tenant to possession of
the apartment. After the tenant's eviction, the landlord had re-rented the apartment to a new
tenant, so the court ordered that the new tenant had to vacate. The tenant, however, was
unsuccessful in getting the marshal to evict the new tenant because the proceeding had been
marked dismissed. So the tenant had to return to the court for relief on this and further sought
sanctions against the landlord.
The Appellate Term reversed the lower court's determination and found that the tenant
failed to establish an excusable reason for defaulting and also did not have a meritorious defense
because her sworn assertion that rent was paid was shown by overwhelming proof to be false.
The Appellate Court found the process server credible and the weight of the evidence against
tenant, including her failure to testify. Thus, the tenant was not entitled to be restored to the
apartment. As an aside, the Appellate Court noted that the lower court was incorrect in
awarding the tenant a possessory judgment because only a party who commences a proceeding
can obtain a judgment of possession.
- Case Caption:
- Levy v. Carol Management Corp.
- Issues/Legal Principles:
- Subtenants who intentionally delayed case to stay in apartment, but had no rights of
occupancy, were sanctioned by the court for frivolous conduct.
- Keywords:
- sublease; attorneys fees; sanctions
- Court:
- Appellate Division, First Department
- Judge:
- Per Curiam [all justices in accord]
- Date:
- December 1, 1999
- Citation:
- NYLJ, page 25, col 3
- Referred Statutes:
- Real Property Law 234; 22 NYCRR 130-1.1
- Summary:
- This case lasted 14 years because the subtenant kept prolonging the matter with frivolous
litigation. The prime tenant leased her apartment to the subtenants, the Plaintiff, husband and
wife Levy. The husband signed the sublease for his wife on her behalf. The Levys found out
that the building may be undergoing a co-operative conversion and in that regard they tried to
take the apartment out from under the prime tenant with a host of bogus legal arguments. They
tried to say they were the prime tenants, but judge after judge rejected their position. The wife
switched gears at one point and tried to say that she didn't authorize her husband to sign the
sublease on her behalf in order to avoid having to pay attorney's fees, but that too was rejected
as a ruse. The Court recited the entire history of the Levys' shenanigans and what they put the
tenant of record through in order to explain the context of their current ruling. The issue
before the court was whether the Levys were required to pay attorneys fees. The Appellate
Division noted that the court spent three months working on the decision when the parties
abruptly settled the matter. Normally a case that is settled renders it moot and the appellate
courts would not review it further. The Court, however, decided to review the case in terms
of whether the Levy conduct was sanctionable. For this reason they traced the entire history of
the case and determined that the Levys' conduct was frivolous, reprehensible and designed to
break the financial back of the prime tenant. The Court determined that the instant appeal was
part of a continuing effort by the Levys to use the court system to harass the prime tenant. The
Court analyzed the criteria for sanctions and found sanctions appropriate in this case. The Levys
were ordered to pay $8,000 into the Lawyers Fund for Client Protection.
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