42nd & 10th Associates, LLC v. Ikezi

Court:	Civil Court of the City of New York, New York County
Docket #:	85736/2014
Citation:	2015 NY Slip Op 50124(U)
Plaintiff:	42nd & 10th Associates, LLC
Defendant:	Henry P. Ikezi

Facts: Plaintiff, the landlord, is seeking possession of an apartment unit by pursuing a holdover proceeding against the Defendant, a rent-stabilized tenant. The grounds for the proceeding is that the Defendant has been using the apartment that is subject to Rent Stabilization Law, for hotel purposes and profiteering. In support of the Plaintiff’s proceeding, Plaintiff has introduced evidence of the Defendant’s apartment being advertised on the internet platform, Airbnb, which connects individuals offering accommodations to individuals wishing to book accommodations. The Defendant is denying the allegation that he posted the advertisement of the apartment unit and is additionally raising in his defense that the Plaintiff did not serve the Defendant a notice to cure.

Holding: The Court found that the Defendant engaged in profiteering by using the apartment as a hotel, undermining the purpose of the Rent Stabilization code, justifying an incurable grounds for eviction. The Court drew a strong inference based on opposing evidence against the Defendant, who according to the Court, evaded answers on direct testimony by withholding information. Critical testimony evidence against the Defendant included the Plaintiff’s employees who work at the building where the apartment is located. The employee testified that she had spoken to a person who claimed to have rented the apartment on Airbnb. Furthermore, Plaintiff’s employee had previously denied access to a person – other than Defendant’s wife and child – whom the Defendant had attempted to grant access to the building’s amenities. In his testimony, the Defendant denied  familiarity with the advertisement or its contents. The Defendant further testified that he  was unable to remember or know if he had charged anyone to sleep in the apartment. The Court was not convinced with the Defendant’s testimony, finding it to be cleverly evasive and consistent with a pattern of profiteering.

Submitted: Nicholas M. Moccia, Esq www.nmlawny.com

Precis: Faisal Sheikh

 

342 E. 67 Realty, LLC v. Bernard Jacobs

Court:	Appellate Division, First Department
Index #:	85736/2014
Citation:	106 A.D.3d 610, 966 N.Y.S.2d 46 (1st Dept., 2013)

Facts: Plaintiff, the landlord, commenced a summary proceeding based upon the alleged nonpayment of rent by the tenant, Bernard Jacobs. After the landlord entered a default judgment based upon the tenant's failure to answer the Petition, the tenant moved to vacate the default judgment entered against him, claiming he had never received the court papers. The tenant further claimed he was the victim of identity theft, since he was not the tenant of the premises and that he never lived at the address claimed by the landlord.

The New York County Civil Court initially granted the tenant's motion to vacate the default judgment based upon lack of personal jurisdiction, since the tenant was improperly served with the court papers. The Appellate Term of the First Department then reversed the Civil Court's ruling, finding that the tenant did not present a meritorious defense (one of the two prongs necessary to vacate a default judgment) to the landlord's underlying nonpayment claim.

Holding: The Appellate Division, First Department reversed the Appellate Term and remanded the matter back to the Civil Court to conduct a hearing regarding the validity of the service on the tenant to establish personal jurisdiction over the tenant and the validity of signatures on the lease and the stipulations. During the pendency of the proceedings, the landlord claimed that the tenant signed a stipulation resolving the nonpayment proceedings. The tenant denied signing the stipulation and claimed he was the victim of a forgery by his son. Had the tenant signed the stipulation, he would have consented to the Court's jurisdiction and his motion would have failed. The Appellate Division concluded there were too many issues that required a factual hearing to determine the validity before a default can be entered or vacated, and it was an error to decide the issues without such a hearing.

Editor's Note: Without first obtaining both subject matter and personal jurisdiction over a defendant/respondent in ANY proceeding, a court ruling is invalid and subject to attack. This case has also been cited repeatedly by Appellate Courts since its decision for the proposition of jurisdictional defenses.

Submitted: David A. Kaminsky, Esq.  http://www.davidakaminsky.com

Precis: Joel Grossbarth

 

Koppelman v. Barrett

Court:	New York State Supreme Court, Appellate Term Second Department
Citation:	___Misc. 3d ___, 2015 NY Slip Op. 25252 (App. Term, 2nd Dept., 2015)

Overview:Interesting decision as to whether a holdover proceeding may be maintained after the expiration of a lease when the occupants entered into an agreement to purchase the premises.

Facts:Paul J. Poutouves, as landlord, and Reginald C. Barrett, Jr. and Maria E. Barrett (occupants) entered into a written lease agreement, commencing on February 1, 2008, and ending on January 31, 2009. The lease contained a provision whereby occupants "shall at all times during the term of the lease have the option to purchase the premises for the price of $2,500,000 upon thirty (30) days written notice to landlord." In June 2009, after Poutouves' death and the expiration of the one-year lease term, Melissa Koppelman, as trustee of the Paul J. Poutouves revocable trust (petitioner), entered into a contract to sell the premises to occupants by short sale, conditioned upon the mortgage lender's approval, at a purchase price of $790,000. Occupants paid a $5,000 down payment to petitioner's attorney, which was deposited into his escrow account. Occupants had ceased paying rent during the term of the lease, and, even though there was no closing, have remained in possession of the premises without paying rent. Petitioner commenced this holdover proceeding, seeking possession and a monetary award.

Occupants moved to dismiss the proceeding on the ground that there was no landlord-tenant relationship between the parties, as it had ceased to exist when they had exercised their option to purchase the premises and had become vendees in possession. Petitioner opposed the motion, contending that there was no intent to merge the landlord-tenant relationship into the vendor-vendee relationship. After a hearing, the Justice Court granted the motion to dismiss the petition on the ground that the landlord-tenant relationship had merged into the vendor-vendee relationship based upon the terms of the lease and execution of the contract of sale.

Holding: The Appellate Term affirmed the ruling of the Justice Court, but on slightly different grounds. Where a tenant exercises an option to purchase contained in a lease, the relationship of landlord and tenant ceases and, absent an intent to the contrary, the tenant is a vendee in possession against whom the landlord cannot maintain a holdover proceeding. However, an option to purchase contained in a lease is, unless expressly reaffirmed in a subsequent lease or extension thereof, only valid during the term of the original lease. Here, occupants did not exercise the option to purchase the premises during the term of the lease. Thus, the option did not survive the lease's expiration./p>

Once the term of the lease expired on January 31, 2009 and there was no rent paid thereafter by occupants, the landlord-tenant relationship ceased to exist. A holdover tenancy is not created by a tenant's continued occupancy of the premises after the termination of a lease, where the tenant does not offer, and the landlord does not accept, any rental payments following the expiration of the lease. When the parties executed the contract of sale, occupants, who were in possession of the premises, became vendees in possession. Since there was no landlord-tenant relationship between the parties while occupants were in possession of the premises following the expiration of the lease, at the time they entered into the purchase agreement and, thereafter, pending the closing of title, petitioner was barred from commencing a holdover proceeding./p>

A summary proceeding could not have been maintained under RPAPL 713 (9), since the contract of sale, by its terms, was not one that was necessarily to be performed within 90 days.

Precis: Joel Grossbarth

 

MTC Commons, LLC v. Millbrook Training Center & Spa, Ltd. et al.

Court:	New York State Supreme Court, Appellate Term Second Department
Citation:	___ AD3d ___ , 2015 Slip Op. 50048  (App. Term, Sec. Dept., 2016).

Facts: Landlord MTC Commons, LLC commenced this commercial nonpayment summary proceeding, alleging that Millbrook Training Center & Spa, Ltd. (hereinafter referred to as “Millbrook”) was the tenant of the premises, having entered into possession under a written rental agreement with Landlord, and that Joseph Parrinello signed an unconditional guaranty of payment of the sums due from Millbrook. Landlord sought possession of the premises and payment of delinquent rents and additional rent, the latter consisting of insurance arrearage. Millbrook and Parrinello interposed an answer, in which they denied that MTC Commons, LLC was their landlord or that Millbrook had entered into possession of the premises under a written rental agreement. Additionally, they contended, among other things, that the rights and interests of the parties should be adjudicated in the United States Bankruptcy Court, Southern District of New York, where Landlord had filed for bankruptcy. When the matter came on for trial, the parties agreed to submit the case on a stipulated set of facts, and they entered into evidence the following documents: an operating agreement between Joseph Parrinello and Tower Properties, LLC pertaining to the operation of Landlord; an executed office lease between Landlord and Millbrook; a guaranty of payment executed by Parrinello pertaining to payment of Millbrook's rent; an affidavit, which was signed by Parrinello as managing member of Landlord, and submitted in Landlord's bankruptcy proceeding; and a three-page document, referred to as "monthly filings," from Landlord's bankruptcy proceeding. Thereafter, the Justice Court awarded Landlord possession and the principal sum of $71,592.06 as against Millbrook and Parrinello.

On appeal, Millbrook and Parrinello contended that the Justice Court lacked subject matter jurisdiction to hear this proceeding, since there is no conventional landlord-tenant relationship, and that Landlord should have been judicially estopped from commencing this proceeding, since its submissions in the bankruptcy proceeding regarding the payment of rent were inconsistent with the position that Landlord took in the instant proceeding.

Holding: Holding-The Appellate Term modified the Justice Court’s ruling.

The Appellate Term held that the Justice Court did not have subject matter jurisdiction of the nonpayment proceedings to adjudicate a claim for a debt owed to Landlord by Parrinello as guarantor of Millbrook's rent, since a landlord-tenant relationship was not established between him and Landlord, and money owed pursuant to a guaranty was not "rent" pursuant to Real Property Actions and Proceedings Law §741(5). Consequently, so much of the petition as is against Parrinello must be dismissed.

The contention that the Justice Court lacked subject matter jurisdiction to hear the remainder of this proceeding was without merit. Pursuant to RPAPL §701(1), a special proceeding to recover real property may be maintained in a Justice Court. Moreover, pursuant to RPAPL §741(5), the relief sought in a summary proceeding may include a judgment for rent due and/or for the fair use and occupancy of the premises. Furthermore, Uniform Justice Court Act §204 states that, in a summary proceeding, the Justice Court shall have the jurisdiction to render judgment for rent due "without regard to amount." Additionally, the executed office lease, which was entered into evidence, demonstrated the existence of a landlord-tenant relationship between MTC Commons, LLC and Millbrook. Thus, the Justice Court had subject matter jurisdiction over the remainder of this proceeding.

The doctrine of judicial estoppel barred a party from pursuing claims not listed in a bankruptcy proceeding that resulted in the party's discharge in bankruptcy did not apply in the absence of a final determination in the bankruptcy proceeding endorsing the party's inconsistent position concerning its assets. Here, Millbrook did not demonstrate that Landlord should be judicially estopped from claiming that it was owed rent from Millbrook since Millbrook failed to show that Landlord had obtained a discharge in the bankruptcy proceeding, based on an assertion that it was not owed rent or even that there was a final determination of Landlord's bankruptcy proceeding. In any event, based on the documentary evidence, Landlord did not take a position in the bankruptcy proceeding that was inconsistent with its posture in this proceeding, since the affidavit submitted by Parrinello, as managing member of Landlord, in Landlord's bankruptcy proceeding, which was entered into evidence in the instant proceeding, acknowledged that Millbrook had "failed to pay rent for a significant time period" and, further, that as a result thereof, Landlord "was unable to pay its debts as they became due." Thus, the doctrine of judicial estoppel cannot apply here.

Accordingly, the final judgment was modified by dismissing so much of the petition as is against Joseph Parrinello.

Precis: Joel Grossbarth

 

Ader v. Guzman & Corcoran Realty Group, LLC, et al.

Court:	New York Supreme Court, Appellate Division Second Department
Citation:	___AD3d___, 2016 NY Slip Op. 00136 (2nd Dept., 2016).

Facts: The Defendant, Joe Guzman, was the owner of a residential property located in the Town of Southampton. On or about February 19, 2013, Guzman retained the Defendants Corcoran Realty Group, LLC, N.R.T., LLC, and Corcoran Group Real Estate (hereinafter collectively the “Corcoran-Defendants”) as his agent to negotiate a lease for the premises for the summer rental season. On or about February 28, 2013, the Plaintiffs entered into a lease agreement with Guzman to rent the premises from May 21, 2013 until September 5, 2013, for the sum of $180,000, $18,000 of which was forwarded to the Corcoran-Defendants as their commission. Prior to entering into the lease, the Plaintiffs and Guzman executed a New York State Disclosure Form for Landlord and Tenant (hereinafter the “disclosure form”), pursuant to which the Plaintiffs expressly acknowledged that the Corcoran-Defendants were acting as Guzman's agent. Shortly after the term of the lease commenced, the Plaintiffs learned that the premises lacked a valid rental permit as required by section 270-3 of the Town Code of the Town of Southampton.

In June 2013, the Plaintiffs commenced this action against Guzman and the Corcoran-Defendants. In their fourth cause of action, the Plaintiffs alleged that the Corcoran-Defendants negligently listed the premises for residential rental when the premises lacked a valid rental permit. The Plaintiffs additionally claimed that the Corcoran- Defendants, in their role as a landlord's agent in a landlord-tenant transaction, had violated the duty under Real Property Law § 443(4)(b) to deal with the Plaintiffs honestly, fairly, and in good faith, and to disclose all facts known to them that materially affected the value and desirability of the premises. In their fifth cause of action, the Plaintiffs alleged that the Corcoran-Defendants were also acting as their agent, and that in this role, the Corcoran-Defendants had breached their fiduciary duty by advising them that the premises were available for rent, notwithstanding that they lacked a rental permit. The Corcoran-Defendants subsequently moved pursuant to CPLR 3211(a)(1) and (7) to dismiss the complaint insofar as asserted against them. The Supreme Court granted the motion, and the Plaintiffs appealed.

Holding: The Appellate Division affirmed the ruling holding that the Supreme Court correctly granted that branch of the Corcoran-Defendants' motion which was to dismiss the fourth cause of action for failure to state a cause of action. Contrary to the Plaintiffs' contention, Real Property Law § 443(4)(b) did not impose a duty upon the Corcoran-Defendants, as a landlord's agent, to investigate whether the premises had a valid rental permit. Real Property Law § 443(4)(b), which sets forth the content of the disclosure form that must be provided in certain landlord-tenant transactions, does not "alter the application of the common law of agency with respect to residential real estate transactions” (Real Property Law § 443(6). Under the common law, New York adheres to the doctrine of caveat emptor and imposes no liability on the seller or the seller's agent to disclose any information concerning the premises when the parties deal at arm's length, unless there is some conduct on the part of the seller or the seller's agent which constitutes active concealment. Here, the complaint is devoid of any allegation that the Corcoran-Defendants engaged in any conduct constituting active concealment.

Further, the Supreme Court correctly granted that branch of the Corcoran-Defendants' motion which was to dismiss the fifth cause of action, which sought to recover damages for breach of fiduciary duty. "A real estate broker is a fiduciary with a duty of loyalty and an obligation to act in the best interests of the principal." Here, although the complaint alleged that the Corcoran-Defendants acted as the Plaintiffs' agent in connection with the subject transaction, the documentary evidence submitted by the Corcoran-Defendants in support of their motion utterly refuted this claim, thus conclusively establishing a defense to this cause of action as a matter of law.

Prevailing Attorney: Margolin & Pierce, LLP.

Precis: Joel Grossbarth

 

Regina Metro Co., LLC et al. v New York State Division of Housing and Community Renewal