Opinion
81115/2014
03-26-2015
Crossbay Equities LLC, Petitioner/Landlord, v. Todd Balzano, Respondents/Tenants.
Recitation, as required by CPLR §2219(a), of the papers considered in the review of this motion.
PapersNumbered
Notice of Motion and Supplemental Affirmation and Affidavit Annexed...1, 2, 3
Notice of Cross Motion and Supplemental Affirmation and Affidavit Annexed4, 5, 6
Affirmation In Reply and In Opposition to Cross-Motion7
Affirmation In Reply and in Further Opposition to Motion8
Affirmation In Sur-Reply9
Upon the foregoing cited papers, the Decision and Order on this Motion are as follows:
Crossbay Equities LLC, the petitioner in this proceeding ("Petitioner"), commenced this holdover proceeding against Todd Balzano, the respondent in this proceeding ("Respondent"), seeking possession of 206 West 95th Street, Room 3A5, New York, New York ("the subject premises"), on the ground that Respondent is a licensee whose license to occupy the subject premises has been terminated by a notice to quit served in accordance with RPAPL §713. Respondent answered, interposing as a defense, inter alia, that he is a rent-stabilized tenant of the subject premises, that Respondent has requested a lease, and that Petitioner failed and/or refused to offer Respondent a lease. Petitioner now moves for summary judgment in its favor. Respondent cross-moves for summary judgment in his favor. The Court consolidates both motions for resolution herein.
The managing member of Petitioner avers in support of Petitioner's motion that the New York City Human Resources Administration ("HRA") had entered into a Memorandum of Understanding ("MOU") with Petitioner's predecessor-in-interest ("the prior owner") to use rooms at the building in which the subject premises is located ("the Building") to provide temporary housing for HRA clients in need of emergency housing. The MOU, annexed to Petitioner's motion, provided that the prior owner shall set aside 102 of the rooms in the Building for occupancy by HRA clients and that the prior owner agreed to accept referrals from HRA of HRA's clients and to admit all those referred to occupy a dwelling unit at the Building. The MOU provided that HRA was to pay the prior owner on a daily basis depending on electronic swipes of benefit cards and/or sign-ins of the HRA clients residing at the Building and that the prior owner would submit monthly billing requests to HRA indicating the agreed-upon per diem rate of $52.00 a night. The MOU provided that HRA's clients had to "contribute" $359 per month to the prior owner. Article 2(M) of the MOU provided that the prior owner may evict occupants from the Building, albeit with HRA approval, but the MOU specifically provided that an HRA client who becomes a permanent tenant of the Building in accordance with 9 N.Y.C.R.R. §§2520.6(j) and 2522.5(a)(2) or who has resided in the facility for thirty consecutive days or longer shall only be removed or evicted pursuant to a warrant of eviction or other order of a Court as required by the relevant statute. The MOU provided that HRA is not guaranteed to fill all the rooms the prior owner set aside. The MOU provided that HRA reserved its rights pursuant to SSL §143-b(2) if the prior owner did not properly maintain the Building. The MOU provided that either party may terminate the MOU on 45 days' notice.
On this motion practice, there is no material dispute of fact between the parties as to the existence of the MOU or its content. Both parties annexed the MOU to their respective papers.
The managing member of Petitioner averred further in support of Petitioner's motion that Respondent occupied the subject premises according to this program as a licensee of HRA commencing on or about August 5, 2013; that the MOU with HRA expired on November 30, 2013; that Respondent has been the only occupant to remain in the Building; and that Respondent has never paid rent or use and occupancy. Petitioner also annexes to its motion proof that it is a proper party to commence this proceeding pursuant to RPAPL §721; that Petitioner is in compliance with the registration requirements of MDL §325; and that a notice to quit pursuant to RPAPL §713 was properly served.
Respondent annexes to his cross-motion a document of the New York State Division of Housing and Community Renewal ("DHCR") memorializing a registration pursuant to 9 N.Y.C.R.R. §2528.3 filed August 19, 2013 which shows Respondent registered as a rent-stabilized tenant of the subject premises with a weekly rent of $380.00. Respondent avers in support of his cross-motion that he has resided at the subject premises as his principal residence since August of 2013, and that the Building is a single-room occupancy ("SRO") building. Respondent annexes to his cross-motion a letter dated January 14, 2014 according to which he requested a lease for six months and avers in support of his motion that Petitioner never offered him a lease in response.
The MOU, annexed to Petitioner's motion for summary judgment, also provides that the Building is a commercial SRO facility.
When presented with the same facts as presented herein, the Appellate Division held that an occupant of an SRO for more than six months is a permanent tenant, as defined in 9 N.Y.C.R.R. §2520.6(j), and therefore is not subject to eviction on the ground that the occupant is a licensee. Branic International Realty Corp. v. Pitt, 106 AD3d 178 (1st Dept. 2013), reversed, 24 NY3d 1005 (2014). The Court of Appeals reversed this decision and remitted the matter to the Appellate Division with directions to dismiss the petition solely on the ground of mootness and the certified question not answered as unnecessary. Branic International Realty Corp. v. Pitt, 24 NY3d 1005, 1007 (2014). A reversal and remittur with directions to dismiss solely on the ground of mootness has the effect of preventing a judgment which is unreviewable as moot from spawning any legal consequences or precedent. Hearst Corp. v. Clyne, 50 NY2d 707, 718 (1980).
Even though the holding of Branic, supra, then, is not binding on this Court, the reasoning of the ruling still informs the Court on the instant matter, which essentially comes down to statutory interpretation. Although 9 N.Y.C.R.R. §2520.6(j) is a regulation, regulations are generally subject to same canons of construction as statutes. ATM One, LLC v. Landaverde, 2 NY3d 472, 477 (2004). The starting point in any case of statutory interpretation must always be the language itself, giving effect to the plain meaning thereof. Raynor v. Landmark Chrysler, 18 NY3d 48, 56 (2011).
For housing accommodations located in hotels, a "permanent tenant" is an individual who has continuously resided in the same building as a principal residence for a period of at least six months. 9 N.Y.C.R.R. § 2520.6(j). A straightforward application of this language to the instant matter demonstrates that Respondent is an individual who has resided in a hotel for more than six months and is therefore a permanent tenant. Kanti-Savita v. Santiago, 18 Misc 3d 74 (App. Term 2nd Dept. 2007), Smiley v. Williams, 26 Misc 3d 170, 174 (Civ. Ct. NY Co. 2009).
Petitioner raises several arguments against this proposition. Petitioner cites 1234 Broadway LLC v. Chen, 32 Misc 3d 142(A) (App. Term 1st Dept. 2011), in support of its argument to the contrary. However, the four corners of the decision in 1234 Broadway LLC, supra, do not address Respondent's argument made herein that continuous residency for more than six months at the subject premises affords him rights pursuant to 9 N.Y.C.R.R. §2520.6(j), but rather whether the occupant in that proceeding was known by the owner or employees of the owner.
Petitioner argues that Respondent is not entitled to a lease because he never "rented" the subject premises, citing 9 N.Y.C.R.R. §2522.5(a)(2). However, 9 N.Y.C.R.R. §2520.6(j) identifies the procedure of 9 N.Y.C.R.R. §2522.5(a)(2) as one of two non-exclusive ways by which a hotel occupant may become a permanent tenant "[i]n addition" to continuous residency for six months. Assuming arguendo that Respondent did not meet the criteria set forth in 9 N.Y.C.R.R. §2522.5(a)(2), Respondent's failure to meet such criteria does not otherwise preclude Respondent from being deemed a permanent tenant according to 9 N.Y.C.R.R. §2520.6(j).
Petitioner argues that the subject premises is exempt from Rent Stabilization on the ground that a municipality leased it, an exception pursuant to 9 N.Y.C.R.R. §2520.11(b), raising the question of whether the MOU amounts to a lease. The critical question in determining the existence of a lease establishing a landlord-tenant relationship is whether exclusive control of the premises has passed to the tenant. Women's Interart Ctr., Inc. v. New York City Economic Dev. Corp., 97 AD3d 17, 21 (1st Dept. 2012), leave to appeal dismissed, 20 NY3d 1034 (2013). Crucial to any determination that there is a lease is a finding that the municipality's occupancy of the land is the functional equivalent of a landowner's, lacking only the actual transfer of title. Ferrer v. Dinkins, 218 AD2d 89, 93-94 (1st Dept.), leave to appeal denied, 88 NY2d 801 (1996), Matter of Chelsea Bus. & Prop. Owners'Assoc., LLC v. City of New York, 2011 NY Misc. LEXIS 4840 (S. Ct. NY Co. 2011). Given that the MOU provides that the prior owner was to actually receive the HRA clients at the Building, set the HRA clients up in their rooms upon referral by HRA, administer the actions the HRA clients took to effectuate payment from HRA, and could commence eviction proceedings directly against the HRA clients, HRA clearly does not have much control of the Building or the subject premises, much less exclusive control. Instructively, an agreement is not a lease when a city agency contracts with another party to acquire, renovate, and operate a transitional residence for the homeless, as such a contract does not constitute the surrender of absolute possession and control of property to another for an agreed-upon rent. Plaza v. City of New York, 305 AD2d 604, 605-606 (2nd Dept. 2003).
Whether a given agreement is a lease or a license also depends upon the parties' intentions. Mirasola v. Advanced Capital Group, Inc., 73 AD3d 875, 876 (2nd Dept. 2010). The MOU explicitly contemplates the possibility that the HRA clients who take possession of rooms at the Building may be deemed to be permanent tenants pursuant to 9 N.Y.C.R.R. §2520.6(j). HRA could not have exclusive control of a room occupied by a permanent tenant. Accordingly, the inclusion of such a provision in the MOU is inconsistent with an intent of HRA to be a tenant of the subject premises and/or the Building pursuant to a lease with the prior owner.
The MOU also provides that HRA reserves its rights pursuant to SSL §143-b(2). SSL §143-b(2) authorizes HRA to withhold "such rent," referring to rent that HRA directly pays a landlord of a recipient of public assistance, SSL §143-b(1), on findings of violations of housing codes. HRA's withholding of rent pursuant to this statute would constitute a defense in a nonpayment proceeding that a landlord may commence against a welfare recipient. SSL §143-b(5). The inclusion of the reference to SSL §143-b in the MOU further evinces the intent of HRA to subsidize the rent for its clients as potential tenants (as nonpayment proceedings only lie against tenants, 402 Nostrand Ave. Corp. v. Smith, 19 Misc 3d 44, 46 (App. Term 2nd Dept. 2008)), which is again inconsistent with any implication that HRA intended to be a tenant of the Building or the subject premises itself pursuant to a lease.
Petitioner argues that an outcome like the now-mooted holding of Branic International Realty Corp., supra, 106 AD3d at 178, would discourage owners from participating in programs to shelter HRA clients and thus amount to bad policy. To the extent that Petitioner's argument makes intuitive sense, it is not readily apparent why it is the province of this Court to, in effect, overlook the language of the regulation in advancement of a particular policy. The Housing Court decision upon which the appeal in Brianic Inter Realty Corp., supra, was taken, addressed the competing policy at stake in 9 N.Y.C.R.R. §2520.6(j):
To protect historically vulnerable and marginalized SRO dwellers, the Legislature created a separate category for permanent hotel tenants and defined this group differently from tenants of other types of buildings ... [t]he Legislature determined that SRO dwellers need the extra protection . Brianic International Realty Corp. v. Pitt, 24 Misc 3d 940, 942-943 (Civ. Ct. NY Co. 2009), reversed, 30 Misc 3d 29 (App. Term 1st Dept. 2010), reversed, 106 AD3d 178 (1st Dept. 2013), reversed, 24 NY3d 1005 (2014).
Maybe the drafters of 9 N.Y.C.R.R. §2520.6(j) balanced these competing policy objectives correctly and maybe they didn't, but this determination is not a judicial one. Even to the extent that it is, Courts are to interpret laws regulating rents broadly to effectuate their intended, remedial purpose of amelioration of the dislocations and risk of widespread lack of suitable dwellings that accompany a housing crisis. Federal Home Loan Mortg. Corp. v. New York State Div. of Hous. & Community Renewal, 87 NY2d 325, 332 (1995). Accordingly, Petitioner's policy arguments, however well-grounded they may or may not turn out to be, do not compel the Court to discount the plain language of 9 N.Y.C.R.R. §2520.6(j).
Accordingly, the Court denies Petitioner's motion and grants Respondent's motion to dismiss this proceeding. The Court does not reach the issue raised in the motion practice as to whether Petitioner had to plead the rent-regulatory status in the petition of this matter.
This constitutes the decision and order of this Court.
Dated:March 26, 2015
New York, New York
________________________________
HON. Jack Stoller
J.H.C.