Opinion
LT–901008/17
03-06-2018
2185 WHITE PLAINS ROAD LLC, Petitioner–Landlord, v. G & G PELHAM FOOD CORP., Respondent–Tenant, "XYZ CORP.", Respondent–Undertenant
JUDITH BRENER, ESQ, BY: KIM H. LY, ESQ., 1185 Sixth Avenue, 10th Floor, New York, New York 10036, 212.265.2171, Attorney for Petitioner STEVEN SCHAFFER, ESQ, 70 Hamilton Avenue, Brooklyn, New York 11231, 917.331.7111, Attorney for Respondent CORAN OBER, P.C., By: STEVEN T. BEARD, Esq., 25–02 Francis Lewis Blvd, Flushing, New York 11358, 718.767.1177, Attorneys for CT
JUDITH BRENER, ESQ, BY: KIM H. LY, ESQ., 1185 Sixth Avenue, 10th Floor, New York, New York 10036, 212.265.2171, Attorney for Petitioner
STEVEN SCHAFFER, ESQ, 70 Hamilton Avenue, Brooklyn, New York 11231, 917.331.7111, Attorney for Respondent
CORAN OBER, P.C., By: STEVEN T. BEARD, Esq., 25–02 Francis Lewis Blvd, Flushing, New York 11358, 718.767.1177, Attorneys for CT
Sabrina B. Kraus, J.
BACKGROUND
This commercial summary nonpayment proceeding was commenced by 2185 WHITE PLAINS ROAD LLC (Petitioner) seeking to recover possession of the commercial space at 640 Pelham Parkway, Bronx, New York 10462 (Subject Premises), based on the allegation that G & G PELHAM FOOD CORP. (Respondent) is the tenant of record and failed to make payments due under the parties' lease agreement.
PROCEDURAL HISTORY
Petitioner issued s three day demand dated May 17, 2017, which was served by delivery to Radames Gonzales (Gonzales), alleged to be an individual who resided at the Subject Premises. The Petition was filed on June 26, 2017, and alleged $15,464.36 in rent arrears for a period through May 2017 at a monthly rent of $14,490.92. Proof of service was filed July 7, 2017 and again asserts delivery to Gonzales, this time asserting that Gonzales was employed at the Subject Premises.
Respondent failed to answer or appear. Petitioner submitted a request for a default, on or about July 31, 2017, but the warrant application was rejected on September 8, 2017. After resubmission, the warrant issued on October 16, 2017.
On November 20, 2017, Respondent appeared by counsel and moved for an order vacating the judgment and related relief. Respondent alleged that service was improper and that Respondent was in the "midst of a refinance" imminently scheduled to close and requiring Petitioner to "sign a collateral assignment of rent" and that Petitioner's representatives had assured counsel for Respondent that they would not proceed with the eviction and would accept rents from Respondent upon the closing.
The motion was granted on November 20, 2017, pursuant to a stipulation between the parties which vacated the default judgment and allowed for entry of a new judgment of money and possession as against Respondent in the amount of $147,025.01. The stipulation provided for forthwith issuance of the warrant of eviction, and stayed execution for Respondent to pay $14,490.92 by November 30, 2017, and $132,534.09 by December 30, 2017, along with December rent.
A new warrant of eviction issued on January 11, 2018.
THE PENDING MOTIONS
On February 20, 2018, Respondent moved by order to show cause for an order "vacating and setting aside the default judgment."
On March 5, 2018, C.T. Stores, Inc. (CT) appeared by counsel and move for an order dismissing the proceeding and related relief.
On March 5, 2017, all parties appeared by counsel, the court heard brief oral argument on both motions, and the court reserved decision. The two motions are consolidated herein for determination.
RESPONDENT'S ORDER TO SHOW CAUSE IS DENIED
The relief sought by Respondent in its order to show cause is improper. There is no default judgment in effect, as noted above, entry of the judgment and warrant was pursuant to a stipulation entered in open court by Respondent's counsel and so-ordered by the court. To the extent that Respondent intended to move for a stay on execution of the warrant, based on its representation that it will soon have the funds to satisfy the stipulation, Respondent has failed to establish a basis for a further stay or a basis to vacate or modify the underlying stipulation of settlement.
Issuance of the warrant of eviction terminated the landlord-tenant relationship between the parties ( RPAPL § 749(3). Furthermore, pursuant to RPAPL § 747–a provides:
... in any non-payment summary proceeding in which the respondent has appeared and the petitioner has obtained a judgment pursuant to section seven hundred forty-seven of this article and more than five days has elapsed, the court shall not grant a stay of the issuance or execution of any warrant of eviction... unless the respondent shall have either established to the satisfaction of the court by a sworn statement and documentary proof that the judgment amount was paid to the petitioner prior to the execution of the warrant or the respondent has deposited the full amount of such judgment with the clerk of the court.
(Emphasis added). It is undisputed that Respondent has defaulted on the terms of the stipulation, and that Respondent lacks an immediate ability to pay the arrears due. Based on the foregoing, Respondent's motion is denied in its entirety.
CT IS NOT IN POSSESSION OF THE SUBJECT PREMISE AND HAS NO CLAIM TO POSSESSION OF THE SUBJECT PREMISES
The Subject Premises was leased by Petitioner to 640 Pelham Food Corp pursuant to a written lease dated June 19, 2012 for a term through May 32, 2027 (Ex B).
On March 21, 2017, 640 Pelham Food Corp. executed an assignment and assumption of lease in favor of Respondent (Ex C), and on the same date Petitioner, Respondent and 640 Pelham Food Corp. executed an amendment of lease which provided for an option to renew for an additional three years (Ex D).
CT further alleges that on March 7, 2017, two weeks prior to Respondent becoming the assignee of the lease, Respondent "assigned the Lease without assumption" to CT for "collateral security" purposes (Ex E), and that on that same date, CT subleased the premises to Respondent (Ex F).
CT argues that upon execution of the sublease, CT became the new tenant of record of the Subject Premises and Respondent is a "mere Sub-tenant". CT further argues that as a result it has asserted sufficient grounds to vacate the judgment and warrant and dismiss the proceeding.
CT moves to intervene in this proceeding pursuant to CPLR § 1013. Intervention in summary proceedings is pursuant to RPAPL § 743 which limits the right to submit an answer to the named respondent or "any person in possession or claiming possession of the premises."
It is undisputed that CT is not in possession of the Subject Premises, and CT has never paid rent to Petitioner, nor collected rent from Respondent. There is no privity of contract between Petitioner and CT.
Unlike the assignment and assumption of lease, pursuant to which Respondent became the tenant of record, the collateral assignment from Respondent to CT was only for security purposes to secure Respondent's loan obligations to CT. The Collateral Assignment notes that Assignee does not undertake responsibility for the performance of Respondent's obligations under the lease, and Petitioner only consented to the assignment "for security purposes" to the extent of agreeing that in the event of an uncured default by Respondent on its loan obligations to CT, CT would have the right to assign Respondent's lease provided that all rent due to Petitioner at that time has been paid, and Petitioner had consented to the new tenant to come in.
Based on the foregoing it is clear that the collateral assignment for security purposes gives CT no right to possession of the Subject Premises.
"A summary proceeding being a possessory remedy, lies only against the tenant in possession and those in possession under the tenant( Park Property Development v. Santos 1 Misc 3d 16 )." "... (T)he jurisdictional reach of Civil Court in summary non-payment proceedings extends only to matters in which the respondent retains a possessory interest subject to adjudication ( Dun–Donnelly Publishing Corp. v. Kenvic Associates 225 AD2d 373, 374 )."
The alleged sublease between CT and Respondent does not require a different result. Petitioner did not consent to any sublease. As of March 7, 2017, CT had no interest in the Subject Premises to sublet, as 640 Pelham Food Corp was the tenant of record through and including March 21, 2017. Additionally as noted above, the collateral assignment to CT created no right to possession in CT, only a conditional right to assign the lease in the event Respondent defaulted on its loan obligations to CT. There is in fact no claim in any of the motion papers that Respondent has defaulted on its loan obligations to CT or that CT has proposed an assignment to a new tenant, in accordance with terms of the collateral assignment.
The collateral assignment of a lease for security purposes generally will only create a lien not an assignment ( City of New York v. Hudes 29 NYS2d 274 ).
Finally Petitioner's failure to notify CT of Respondent's default under the lease, does not require a different result, and any remedy Ct may be entitled to as a result of same is beyond the scope of this summary nonpayment proceeding.
Based on the foregoing, the court finds that CT has no right to intervene as a party in this proceeding, and CT's motion is therefore denied in its entirety.
CONCLUSION
Respondent's motion and CT's motion are both denied. All stays are vacated. Warrant may execute on re-service of Marshal's notice by mail.
This constitutes the decision and order of this court.