Opinion
Index No. LT-311592-22/NY
03-07-2023
2118 Group, LLC, Petitioner(s) v. Lior Group LLC; John Doe and Jane Doe, Respondent(s)
Gregory C. Soumas, Esq., Counsel for Petitioner Adam M. Bernstein, Esq., Counsel for Respondent
Unpublished Opinion
Gregory C. Soumas, Esq., Counsel for Petitioner
Adam M. Bernstein, Esq., Counsel for Respondent
Kim M. Parker, J.
Recitation, as required by CPLR 2219(a), of the papers considered in the review of this motion:
The following e-filed papers read herein: NYSCEF Doc Nos.
Petitioner's Notice of Motion/Order to Show Cause/
Petition/ and Affidavits (Affirmations) Annexed 10-22
Cross- Motion/Opposing Affidavits (Affirmations) 27-29
Reply Affidavits (Affirmations) 30-32; 33
Petitioner, 2118 Group, LLC, ("Petitioner") commenced this holdover proceeding in the commercial landlord-tenant part to recover possession of the premises located at 2118 3rd Avenue, New York, New York from Respondent, Lior Group LLC, ("Respondent") and for rent arrears and the fair value of use and occupancy.
It is undisputed that a Triple Net Lease was entered into between the parties on May 3, 2019. It is also undisputed that Respondent's sub-tenants utilized the premises for residential purposes. What is at dispute here is whether Respondent's usage of the premises as a tenant, is consider commercial use since Respondent's sole purpose of leasing the premise was to collect rents to make a profit.
Respondent moves by Notice of Motion (Mot.Seq.1) for an order granting summary judgment dismissing the proceeding against it based upon its' first affirmative defense that the Court lacks jurisdiction. Respondent also moves for an order awarding it reasonable attorney's fees, costs and expenses incurred in connection with this matter. Petitioner moves by Notice of Cross-Motion (Mot.Seq.2) for an order dismissing Respondent's first affirmative defense and counterclaim for attorney's fees.
Respondent states through its attorney affirmation that it is entitled to summary judgment based upon the fact that the subject premises is a residential building and is not utilized for commercial purposes. Respondent states that according to the New York City Department of Housing Preservation and Development ("DHPD"), the building is a five (5) story mixed-use building comprised of four (4) Class "A" multiple dwelling units and is registered with the DHPD as a multiple family dwelling. Defendant further states that the building comprises of a basement, a store on the first ground level with the apartment units on the remaining floors. Respondent claims that the lease expressly permits Respondent to utilize the four residential apartments and only for residential use. Chief Operating Officer of Respondent, Mendy Furmanski, in an affidavit attests to the fact that she is responsible for the oversight and day-to-day management of the Premises. Ms. Furmanski avers that the premises were utilized by sub-tenants for Residential purposes and that the lease agreement was agreed upon the fact that the premises could only be used for residential purposes. Respondent also claims that it is entitled to attorneys' fees, costs, and disbursements incurred in this summary proceeding. Respondent contends that pursuant to the RPL §234 and under the express terms of the lease there is a statutory right of reciprocity of a contract which establishes a residential tenant's right to attorneys' fees. Respondent further claims that Article 31 of the lease also establishes Petitioner's reciprocal, contractual and statutory obligations to pay such attorneys' fees, costs and expenses.
In response to Respondent's motion, Petitioner cross-moves and argues that the premises is used for a commercial purpose and therefore, belongs in the commercial landlord & tenant part. Petitioner contends that Respondent's first affirmative defense must be dismissed, and its motion denied. Petitioner states that Respondent is creating a straw man argument by misrepresenting the definition of the premises as four residential units. Petitioner emphasizes the fact that the lease actually provides for "the second, third, fourth, and fifth floors and the four (4) residential apartments in the building located at and known as 2118 Third Avenue, to be leased out to Respondent. Petitioner essentially argues that this shows that it is not just residential units that Respondent leased. Petitioner highlights the fact that the lease is a Triple Net Lease and not a residential lease. Petitioner maintains that Respondent unintentionally concedes to the fact that Respondent utilizes the premises for commercial use when it submitted Mr. Furmanski's affidavit where he stated that he was the Chief Operating Officer who is responsible for the oversight and day-to-day management of the premises for Respondent throughout the regular course of business. Petitioner also argues that Respondent's counterclaim for legal fees must be dismissed because the lease only provides for the landlord to recover legal fees.
In order to be entitled to summary judgement pursuant to CPLR §3212 a motion for summary judgment showing a prima facie entitlement to judgment as a matter of law should be made by the moving party, tendering sufficient evidence to demonstrate the absence of any material issues of fact (Alvarez v Prospect Hosp., 68 N.Y.2d 320, 324 [1986] citing Winegrad v New York Univ. Med. Center, 64 N.Y.2d 851, 853 [1985], Zuckerman v City of New York, 49 N.Y.2d 557, 562 [1980] and Sillman v Twentieth Century-Fox Film Corp., 3 N.Y.2d 395, 404 [1957]). Failure to make such prima facie showing requires denial of the motion, regardless of the sufficiency of the opposing papers (Winegrad v New York Univ. Med. Center, 64 N.Y.2d at 853). However, once the plaintiff has this showing, the burden shifts to the party opposing the motion for summary judgment to produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact which require a trial in the action (Zuckerman v City of New York, 49 at 562).
In Artykova v Avramenk, the Appellate Term found that a tenant who was operating a daycare operation in a residential two-family home with the requirement that the operation of the daycare facility have someone reside in the premises charged the landlord with knowledge of the residential nature of the occupancy (see Artykova v Avramenko, 37 Misc.3d 42, 43-44 [App Term 2012])(holding that landlord, who sold tenant the daycare operation, has not denied knowing that the premises is in a residential two-family house and in light of the misrepresentation as to the nature of the occupancy and the strong legislative policy that all summary proceedings to recover residential premises be commenced in the Housing Part, the petition should have been dismissed).
Similar to Artykova v Avramenko, the premises here was net-leased to Respondent with the requirement that the Respondent could only sublease it to residential tenants. The operation of Respondent's "commercial business" on the premises requires that someone resides in the premises. Even though Respondent and/or its agents may not be utilizing the premises as their own residence it is however, being occupied by subtenants as a residence. Assuming arguendo that Petitioner's contention is true, then residential tenants who happen to lease a residential property as a corporate entity would be brought to summary proceedings in the commercial landlord & tenant part just based upon it being a corporate entity. That argument is unfounded especially since there are no restrictions on entities entering into residential lease agreements (see Matter of Koenig v Jewish Child Care Ass'n of New York, 67 N.Y.2d 955, 957 [1986])(finding that Respondent association occupies the subject apartment as a residential tenant as the lease, itself provides; that an entity can be a residential tenant..). Moreover, there are tenants that sublet their residential rentals for various reasons and one reason being is that they want to make a profit. Does that then make that premise a commercial one? The Court finds that it does not. The determining factor of whether a summary proceeding should be commenced in a housing part or commercial landlord tenant part is based on what the premises is being occupied as, the actual usage, of the premises itself.
In Multiple Dwelling § 4 it provides that a "dwelling" is any building or structure or portion thereof, which is occupied in whole or in part as the home, residence or sleeping place of one or more human beings (Multiple Dwelling Law § 4). Here, the Respondent does not have any offices on the premises where it engages in commercial business. Respondent is solely renting out the units to be used and occupied as residences. There are no arguments being made that any of Respondent's sub-tenants are occupying the premises for any other reason other than residential purposes.
In Multiple Residence Law § 4, it also provides that the terms "occupied" or "used", shall be construed as if followed by the words "or arranged, designed, or intended to be occupied or used. New York City Administrative Code § 301.1 (N.Y.C. Admin) provides that the provisions of this chapter shall control the classification of all buildings and structures, and spaces therein, as to use and occupancy. N.Y.C Admin Code § 27-253 provides that buildings and spaces shall be classified in the business occupancy group when they are occupied for transacting business; for rendering professional services; or for performing other commercial services that may incidentally involve the storage of limited quantities of stocks of goods for office use or purposes. NYC Admin Code § 27-263 provides that buildings and spaces shall be classified in the residential occupancy group when families or households dwell therein, or when sleeping accommodations, with or without dining facilities, are provided therein for individuals. Moreover, the case law holds that where a premises is used by a tenant for living purposes, even a commercial premises, and the landlord is aware of said use, any eviction proceeding against the tenant must be brought in Housing Court (Glebow Realty Assoc. v Dietrich, 66 Misc.3d 1221 (A) [Civ Ct 2020] citing 32-05 Newtown Ave. Assoc., LLC v Caguana, 48 Misc.3d 141 (A) [App Term 2015]).
Here, the portion of the premises that Petitioner seeks to recover is not being occupied for transacting business, for rendering professional services, or for performing any other commercial services therein. The premises sought to be recovered by Petitioner is being occupied as residential since families and households dwell therein. Furthermore, Respondent's claim for legal fees is without merit because there is no statutory authority for respondent to recover legal fees in a commercial holdover proceeding and the lease does not provide for recovery of fees. Pursuant to Real Property Law ("RPL") § 234, attorney's fees may be awarded, in appropriate circumstances, to a tenant who is a prevailing party in a controversy; however, RPL § 234 is applicable only in the residential setting and not in the commercial context (see 150 W. End Owners Corp. v Chestnut Holdings of NY Inc., 49 Misc.3d 1147, 1150 [Civ Ct 2015]).
Accordingly, that branch of Respondent's motion for summary judgment dismissing Petitioner's Petition is granted and Petitioner's cross motion is denied. All other contentions are either moot or without merit.
This constitutes the decision and order of the Court.