Opinion
Decided April 23, 2004.
Mandel Resnik Kaiser Moskowitz Greenstein, P.C., New York City (Jerry Montag of counsel), for petitioner.
Gary J. Wachtel, New York City, for respondent.
Petitioner brings this holdover proceeding to evict respondents Evelyn Cass and Steven Cass, her son, on the ground that Ms. Cass does not live in the subject cooperative studio apartment with Mr. Cass, as Paragraph 14 of Ms. Cass's proprietary lease requires. ( See e.g. 445/86 Owners Corp. v. Haydon, 300 AD2d 87, 88 [1st Dept 2002, mem].) Respondents argue that petitioner has waived the cohabitation requirements of Paragraph 14 and thus move for summary judgment. Petitioner opposes that motion and cross-moves for use and occupancy pendente lite. Respondents' motion is granted. Petitioner's motion is denied as academic.
No fact is in dispute. Ms. Cass has been the proprietary lessee and the owner of the shares appurtenant to the apartment since 1981. She has never lived in the apartment. Rather, she has lived in Cedarhurst, New York, since 1981. From 1981 until 1993, she sublet the apartment and paid all subletting fees. In November 1993, her son, Mr. Cass, moved into the apartment with the knowledge and permission of the building's then-managing agent and then-Board of Directors and, until now, each succeeding managing agent and Board of Directors. Since 1993, Mr. Cass has been the apartment's sole occupant. From November 1993 forward, or for more than 11 years, Ms. Cass has paid, and petitioner has accepted, monthly maintenance, all while knowing that Ms. Cass lives in Cedarhurst, not contemporaneously with her son in the apartment, and all while approving of that arrangement. ( See e.g. Letters of Managing Agents of October 18, 1993, January 3, 2001, to Ms. Cass in Cedarhurst, in Respondents' Notice of Motion of Feb. 9, 2004, at Exhibits G H.)
While not disputing respondents' assertions of fact, petitioner counters that the business-judgment rule insulates its decision to revoke its permission to allow non-coterminous occupancy. In the alternative, petitioner counters that the no-waiver clause in Paragraph 26 of the proprietary lease insulated its waiver. Neither argument is availing.
The business-judgment rule does not apply here. Petitioner did not terminate Ms. Cass's tenancy under 40 West 67th St. v. Pullman ( 100 NY2d 147). The resolution of this proceeding hinges not on business judgment but instead, given Paragraph 26 of the proprietary lease, on whether petitioner waived a right it otherwise had under Paragraph 14.
Paragraph 26 provides that "the receipt by the Lessor of rent, with knowledge of the breach of any covenant hereof, shall not be deemed a waiver of such breach, and no waiver by the Lessor of any provision hereof shall be deemed to have been made unless in writing expressly approved by the Directors." On this basis, petitioner argues that its acceptance of rent, or maintenance, for more than 11 years while consenting to Ms. Cass's living in Cedarhurst is irrelevant. According to petitioner, it never accepted rent from Mr. Cass, and the Board of Directors never consented in writing.
For waiver to apply, petitioner need not have accepted rent from Mr. Cass. Ms. Cass is the tenant. Mr. Cass is her licensee. This case is not about Mr. Cass's becoming a shareholder or lessee in his own right. Acceptance of rent from Ms. Cass is therefore determinative. And the Board of Directors did consent in writing. As far back as October 18, 1993, petitioner's then-managing agent, the William B. May Management Corporation, answered Ms. Cass's inquiry about whether her son could occupy the apartment. In a letter addressed to Ms. Cass at her Cedarhurst home, the managing agent approved of the non-coterminous occupancy on the Board of Directors' behalf. As the agent wrote, "You are, of course, free to anytime to permit your son to occupy your apartment [ sic]" without even paying a sublet fee. That consent, never revoked until petitioner began this eviction proceeding, was given by an agent who had the clear, apparent authority to bind the Board of Directors.
Because the Board of Directors' agent consented to Mr. Cass's occupancy in writing, petitioner may not avail itself of the proprietary lease's no-waiver clause. Because petitioner accepted rent for more than 11 years, moreover, petitioner waived its right to terminate Ms. Cass's tenancy for not living with Mr. Cass in the subject studio apartment. ( See e.g. Hadden v. Consolidated Edison Co. of N.Y., 45 NY2d 466, 469 [noting that "[w]aiver, the intentional relinquishment of a known right, may be accomplished by express agreement or by such conduct or failure to act as to evince an intent not to claim the purported advantage."] [citation omitted].) Accordingly, petitioner waived Paragraph 26, the no-waiver clause, both by express agreement and by accepting rent for 11 years while knowing about Ms. Cass non-coterminous occupancy with her son.
Waiver, inferred from accepting rent, cannot "frustrate the reasonable expectations of the parties embodied in a lease when they have expressly agreed otherwise." ( Jefpaul Garage Corp. v. Presbyterian Hosp. in the City of N.Y., 61 NY2d 442, 446.) Nevertheless, a no-waiver clause may be waived if a landlord accepts rent "with knowledge of particular conduct which is claimed to be a default." ( Atkin's Waste Materials, Inc. v. May, 34 NY2d 422, 427; accord TSS Seedman's, Inc. v. Elota Realty Co., 72 NY2d 1024, 1027 [accepting rent can waive nonwaiver clause].)
This proceeding is unlike River Rd. Assocs. v. Orenstein (NYLJ, Nov. 21, 1990, at 27, col 1 [App Term, 2nd Dept, 9th 10th Jud Dists, mem]) or Matter of Paulson Real Est. Grp. v. Grammick ( 244 AD2d 340 [2nd Dept 1997, mem], lv dismissed 91 NY2d 954), to which petitioner cites together with similar cases. The River Road court allowed a landlord to prosecute a holdover proceeding for a washing machine and applied the lease's no-waiver clause to excuse the landlord's accepting rent for 11 years, all while knowing about the washing machine. ( See NYLJ, Nov. 21, 1990, at 27, col 1].) The Paulson court applied the lease's no-waiver clause to excuse the landlord's accepting rent while knowing about the pet and allowed a landlord to evict for the tenant's violation of a no-pet provision. ( See 244 AD2d at 340.)
This case is not, however, about a washing machine or pet kept in violation of a lease. This case is about non-coterminous occupancy and is therefore akin to Sagson Co. v. Weiss ( 83 Misc 2d 806, 806 [App Term, 1st Dept 1975, per curiam]), in which the court enunciated the controlling rule: that a no-waiver clause "does not apply to a claim of waiver by open possession." The Sagson court found that the landlord's acceptance of rent by the tenant "constitutes a waiver of the right to terminate the tenancy for breach of the condition against . . . subletting." ( Id.; accord Schwartz v. Certified Mgt. Corp., 117 AD2d 521, 522-523 [1st Dept 1986, mem] [holding that landlord's accepting rent for 10 months operates to waive alleged illegal sublet], lv dismissed 68 NY2d 806.)
Similar, too, is Lee v. Wright ( 108 AD2d 678 [1st Dept 1985, mem].) In Lee, the First Department reversed Supreme Court's grant of summary judgment for the landlord in a plenary sublet action. The court found that despite a no-waiver clause in the lease, contested issues of fact concerning waiver required a trial. The contested issues in Lee were, in the landlord's favor, that the landlord averred that it accepted checks from the tenant inadvertently and, in the tenant's favor, that the subtenant paid rent for four years. ( See id. at 679-680.) Here the parties present no contested issues of fact. Petitioner does not suggest any inadvertent acceptance of rent, and it accepted rent in excess of 11 years, not a mere four.
Petitioner argues, finally, that its managing agent's decision in 1993 to allow Ms. Cass to reside in Cedarhurst while Mr. Cass resides in the cooperative apartment cannot last in perpetuity — that its directors have the unfettered right and duty to reappraise at intervals Ms. Cass's tenancy and Mr. Cass's occupancy. For this argument petitioner cites 445/86 Owners Corp. v. Haydon, in which the First Department wrote, in a plenary action arising from non-coterminous occupancy in a cooperative, that there was no evidence before the motion court that the mother-in-law's "occupancy is by virtue of a right that cannot be revoked for a fixed period of time." ( 300 AD2d at 88.) Petitioner misunderstands the import of the First Department's language. The court did not state that a cooperative board may reconsider and then revoke at will its permission for relatives to reside non-coterminously. The court did not consider that issue at all. In 445/86 Owners, the board had never granted the permission that petitioner's then-managing agent did here. All that the court wrote in 445/86 Owners was that the occupant/mother-in-law was the shareholder-tenant's licensee and that because the shareholder-tenant could revoke his mother-in-law's license, Supreme Court erred in concluding that the mother-in-law's non-permitted occupancy was an illegal sublet. ( See id. at 88-89.)
This opinion does not suggest that a cooperative's board of directors may never revoke the right it gives an owner not to cohabitate with an occupant. All this opinion suggests is that it may not evict them without further ado after its agent grants permission in writing and after it accepts rent for more than 11 years knowing about the non-coterminous occupancy. Any other rule would allow cooperators to be misled by a cooperative board's conduct inconsistent with a proprietary lease.
Summary judgment is awarded to respondents. The petition is dismissed.
This opinion is the court's decision and order.