Opinion
Index No. L&T 301645/21
11-29-2023
Department of Housing Preservation and Development of the City of New York, Petitioner, v. Daniel Ohebshalom A/K/A Dan Shalom, Robin Ignico, Gustavo Santana, Highpoint Associates VI, LLC, Respondents.
Michael Paul Gdanski, Esq., of counsel Martha Ann Weithman, Esq. Attorneys for petitioner Simon W. Reiff, Esq. Harwood Reiff LLC Attorneys for respondents
Unpublished Opinion
Michael Paul Gdanski, Esq., of counsel Martha Ann Weithman, Esq. Attorneys for petitioner
Simon W. Reiff, Esq. Harwood Reiff LLC Attorneys for respondents
CLINTON J. GUTHRIE, J.H.C.
Recitation, as required by CPLR § 2219(a), of the papers considered in the review of petitioner's order to show cause for civil and criminal contempt and for other remedies (Seq. 3):
Papers Numbered
Order to Show Cause & Affirmation/Exhibits Annexed 1 (NYSCEF #23-37)
Affirmation in Opposition & Affidavit/Exhibits Annexed 2 (NYSCEF #49-54)
Upon the foregoing cited papers, the decision and order on petitioner's order to show cause for civil and criminal contempt and for other relief (Seq. 3) is as follows.
PROCEDURAL HISTORY AND INSTANT MOTION
This HP proceeding brought by petitioner, the Department of Housing Preservation and Development of the City of New York (hereinafter "DHPD"), for an order to correct and civil penalties, against respondents Donald Ammons (hereinafter "Ammons") and Highpoint Associates VI, LLC (hereinafter "Highpoint"), was filed in April 2021. Petitioner and former counsel for respondents Ammons and Highpoint executed a Consent Order to correct certain violations placed by DHPD on May 21, 2021. The Consent Order was so-ordered by Judge Enedina Pilar Sanchez. Petitioner made a motion for civil contempt and for civil penalties in October 2021, alleging non-compliance with Judge Sanchez's order (hereinafter "First Contempt Motion"). A new attorney, Simon Reiff, Esq., substituted as counsel for respondents Ammons and Highpoint.
Petitioner and Mr. Reiff executed a second Consent Order on January 31, 2022, which effectively settled the First Contempt Motion. The second Consent Order, which was so-ordered by this court, discontinued the proceeding as against Donald Ammons, added Gustavo Santana as a respondent, provided for correction of open violations, and settled civil penalties.
Subsequently, petitioner moved for civil and criminal contempt and other relief, upon alleged non-compliance with the January 31, 2022 consent order (hereinafter "Second Contempt Motion"). The attorneys for petitioner and respondents executed an Interim Consent Order settling a portion of the Second Contempt Motion on December 5, 2022. The Interim Consent Order provided, among other provisions: (1) that respondents were to hire a superintendent and provided appropriate notices of the same by dates certain; (2) that respondents were to provide a scope of work to petitioner's attorney and conduct interim repairs, including an integrated pest management plan, by a date certain; (3) that respondents take steps to provide adequate security of the subject building by a date certain; (4) that respondents would file a multiple dwelling registration (MDR) by a date certain; (5) and that Daniel Ohebshalom a/k/a Dan Shalom and Robin Ignico were joined as respondents. The court heard argument on the Second Contempt Motion on January 19, 2023 and reserved decision.
This court so-ordered the Interim Consent Order on December 6, 2022.
Shortly thereafter, in early February 2023, petitioner moved for civil and criminal contempt and other relief, based on alleged noncompliance with the Interim Consent Order (hereinafter "Third Contempt Motion"). Following briefing, the court heard argument on the Third Contempt Motion on March 20, 2023 and reserved decision. The court will now address the Second Contempt Motion (Seq. 3) herein.
A separate Decision/Order will be rendered as to the Third Contempt Motion (Seq. 4).
I. Civil Contempt
Petitioner's Second Contempt Motion first seeks civil contempt for alleged noncompliance with the May 21, 2022 and January 31, 2022 Consent Orders. The court notes at the outset that the January 31, 2022 Consent Order contains language stating that it "supersedes the Consent Order dated May 21, 2022." Therefore, insofar as the earlier Consent Order was superseded by the January 31, 2022 Consent Order, the court will only consider contempt upon the latter order.
Under Judiciary Law § 753, a court of record has the power to punish, by fine and imprisonment, or either, "a neglect or violation of duty, or other misconduct, by which a right or remedy of a party to a civil action or special proceeding, pending in the court may be defeated, impaired, impeded, or prejudiced." See generally El-Dehdan v. El-Dehdan, 26 N.Y.3d 19, 28-29 [2015]. A civil contempt is "one where the rights of an individual have been harmed by the contemnor's failure to obey a court order." Dept. of Envtl. Protection v. Dept. of Envtl. Conservation, 70 N.Y.2d 233, 239 [1987]. For civil contempt to lie, "it must be established that the rights of a party to the litigation have been prejudiced." Id. at 239. Furthermore, "[t]o sustain a finding of civil or criminal contempt based on an alleged violation of a court order it is necessary to establish that a lawful order of the court clearly expressing an unequivocal mandate was in effect [and] appear with reasonable certainty that the order has been disobeyed." Id. at 240. Finally, "the party charged must have had knowledge of the court's order." Id. at 240. The elements of civil contempt must be demonstrated by clear and convincing evidence (see El-Dehdan, 26 N.Y.3d at 29).
The court finds that it is undisputed that the January 31, 2022 Consent Order clearly expressed an unequivocal mandate with regard to repair and registration deadlines. Respondents also had knowledge of the order via its attorney's execution of it and via service of a so-ordered copy upon its attorney via NYSCEF (see Dept. of Envtl. Protection, 70 N.Y.2d at 242).
As for whether the order was disobeyed with reasonable certainty, petitioner annexes the Violation Summary Report (hereinafter "VSR") and reinspection reports dated June 1, 2022, June 8, 2022, June 30, 2022, and September 28, 2022. The VSR shows over 300 open violations, which relate to specific apartments and common areas. Not including 73 "new violations" that were placed after the January 31, 2022 Consent Order, the open violations existing at the time that the Consent Order was executed are substantial in number. Petitioner's attorney also references the inspection reports, which indicate that 45 violations at issue in the January 31, 2022 Consent Order were marked "not complied" after the reinspections.
Respondents assert in opposition that although "mistakes have been made in the past" (Robin Ignico Aff. ¶ 4), they were trying to correct the violations. Ms. Ignico, the Tenant Relations Manager, refers in her affidavit to efforts "across all buildings facing contempt proceedings" to do the following: hiring live-in supers, arranging auto-fuel delivery for heat and/or hot water systems, pursuing the hiring of qualified Registered Managing Agents, providing materials for building staff to make repairs, obtaining and requesting proposals from third-party vendors for various work, adopting Integrated Pest Management plans, preparing detailed Scopes of Work for each building, and contacting a reputable expeditor to assist in the removal of violations (Ignico Aff., ¶ 4-5). Ms. Ignico also refers to the lack of a Registered Managing Agent as a complete impediment to filing a registration form and removing violations (Ignico Aff., ¶ 9).
It is well established that open DHPD violations that have not been certified as corrected constitute prima facie evidence that the underlying conditions affecting life, health, and/or safety exist (see Fiondella v. 345 W. 70th Tenants Corp., 217 A.D.3d 495, 496 [1st Dept 2023]; Dept. of Hous. Preserv. & Dev. v. Knoll, 120 Misc.2d 813, 814 [App Term, 2d Dept 1983]). Respondents voluntarily agreed to correct all outstanding violations within statutory timeframes in the January 31, 2022 Consent Order. Based on the VSR and the reinspection reports, as well as respondents' opposition mostly consisting of preliminary efforts to get violations corrected and certified and to get the registration filed, the court finds that it has been established on the motion record that respondents disobeyed the repair and registration obligations in the January 31, 2022 Consent Order with reasonable certainty (see El-Dehdan, 114 N.Y.3d 4, 17 [Holding that there is no willfulness requirement for civil contempt]; Dept. of Hous. Preserv. & Dev. v. Deka Realty Corp., 208 A.D.2d 37, 46 [2d Dept 1995] [Affirming trial court's holding that there was a presumption of the continuing existence of conditions underlying the violations "absent proof that each violation was corrected[.]"]; Castillo v. Banner Group LLC, 63 Misc.3d 1235 [A], 2019 NY Slip Op 50897[U], *2 [Civ Ct, NY County 2019]. Insofar as respondents' opposition amounts to assertions of good-faith efforts to correct the violations, such efforts are not a sufficient basis to defeat civil contempt (see McCain v. Dinkins, 84 N.Y.2d 216, 227 [1994]; Peters v. Sage Group Assocs., 238 A.D.2d 123, 123 [1st Dept 1997]).
Finally, as to the prejudice factor, in an HP proceeding brought by DHPD, "it [is] the tenants, not the [DHPD] or its representatives" who may be prejudiced by respondents' failure to correct the violations at issue. Deka Realty Corp., 208 A.D.2d at 44. Nonetheless, courts have frequently held that the failure to make ordered repairs of open violations "necessarily" impairs tenants' rights (see Various Tenants of 446-448 W. 167th St. v. New York City Dept. of Hous. Preserv. & Dev., 153 Misc.2d 221, 222 [App Term, 1st Dept 1992], affd 194 A.D.2d 311 [1st Dept 1993]; Dept. of Hous. Preserv. & Dev. of the City of NY v. Jones, 2022 NY Slip Op 33589[U], *3 [Civ Ct, Kings County 2022]; Dept. of Hous. Preserv. & Dev. v. Stark, 2022 NY Slip Op 33590[U], *2 [Civ Ct, Kings County 2022]; Reid v. 590 Maple Ventures LLC, 2021 NY Slip Op 32255[U], *7 [Civ Ct, Kings County 2021]; Brown v. 315 E. 69 St. Owners Corp., 11 Misc.3d 1069 [A], 2006 NY Slip Op 50434[U], *2 [Civ Ct, NY County 2006]).
Consequently, the court finds that petitioner has established that respondents Highpoint Associates VI, LLC and Gustavo Santana are in civil contempt of the January 31, 2022 Consent Order by clear and convincing evidence (see El-Dehdan, 26 N.Y.3d at 29). As respondents have not raised a factual dispute as to the elements of civil contempt or a viable defense, a hearing is not required for the civil contempt finding to be made (see El-Dehdan, 26 N.Y.3d at 17; Mollah v. Mollah, 136 A.D.3d 992, 993 [2d Dept 2016]). The court declines to impose civil contempt individually on subsequently-joined respondents Robin Ignico and Daniel Ohebshalom a/k/a Dan Shalom, as they were not parties to the January 31, 2022 Consent Order and petitioner has not adequately demonstrated that they were intended to be bound by the order in their individual capacities (cf. Citibank, N.A. v. Anthony Lincoln-Mercury, Inc., 86 A.D.2d 828, 829 [1st Dept 1982] [Finding "sole stockholder and president" of corporate defendant to be liable for contempt where he was found to be in possession of automobiles subject to a restraining order]).
The court notes that only Highpoint Associates VI, LLC and Gustavo Santana amongst the respondents were parties to the January 31, 2022 Consent Order.
Having found respondents Highpoint Associates VI, LLC and Gustavo Santana in civil contempt of the January 31, 2022 Consent Order, an appropriate civil contempt penalty must be imposed. See Judiciary Law § 753. A civil contempt penalty must be "designed not to punish but, rather, to compensate the injured private party or to coerce compliance with the court's mandate or both." Dept. of Envtl. Protection, 70 N.Y.2d at 239; see also Deka Realty Corp., 208 A.D.2d at 44. The court refrains from imposing imprisonment on this record, although the court can consider further penalties in the event of continued disobedience. See Wenig Saltiel & Johnson, LLP v. Yeshiva Ktana of Bensonhurst, 55 Misc.3d 126 [A], 2017 NY Slip Op 50336[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2017].
In lieu of imprisonment, the court will impose a fine. Judiciary Law § 773 sets out the fines to be imposed upon a contempt finding. If "actual loss or injury" is proven, the fine will be in the amount of said loss or injury. "Where it is not shown that an actual loss or injury has been caused, a fine may be imposed, not exceeding the amount of the complainant's costs and expenses, and two hundred fifty dollars in addition thereto, and must be collected and paid, in like manner." On a contempt application brought by DHPD to enforce Housing Maintenance Code standards, "[i]t must necessarily be [the tenants'] damages which constitute the basis for any civil contempt fines." Deka Realty Corp., 208 A.D.2d at 44. To that end, the Appellate Division, Second Department has held that statutory fines levied for each open violation are impermissible civil contempt penalties, since they are "punitive rather than... compensatory[.]" Id. at 45. Since petitioner did not present any evidence of tenant damages or request the same in its motion, the court will impose the $250.00 statutory amount, in addition to petitioner's attorney's fees, which constitute "costs and expenses," as the civil contempt fine (see Matter of Ferrante v. Stanford, 172 A.D.3d 31, 39 [2d Dept 2019]; Matter of Barclays Bank, PLC v. Hughes, 306 A.D.2d 406, 407 [2d Dept 2003]). The court will schedule a hearing on petitioner's attorney's fees related to the instant civil contempt motion on December 18, 2023 at 2:15 PM, Part O, Room 202. Upon a determination after the hearing or by agreement of the parties, a fine in the total amount $250.00 plus reasonable legal fees will be imposed by separate order.
II. Criminal Contempt
Turning to petitioner's request for criminal contempt in relation to the January 31, 2022 Consent Order, Judiciary Law § 750(a)(3) provides that a "court of record has power to punish for a criminal contempt, a person guilty of wilful disobedience to its lawful mandate." Unlike civil contempt, "the aim in a criminal contempt proceeding is solely to punish the contemnor for disobeying a court order, the penalty imposed being punitive rather than compensatory." Dept. of Envtl. Protection, 70 N.Y.2d at 239. To sustain a finding of criminal contempt, "there must be proof beyond a reasonable doubt that the contemnor willfully failed to obey an order of the court." Matter of Rubackin v. Rubackin, 62 A.D.3d 11, 16 [2d Dept 2009]; see also Rush v. Save My Home Corp., 145 A.D.3d 930, 931 [2d Dept 2016]; Deka Realty Corp., 208 A.D.2d at 45 ["[T]he gravamen of criminal contempt is willful disobedience of the court's lawful mandate."]. Additionally, personal service (CPLR § 308) of the order to show cause is required for criminal contempt to lie. See Gouiran Holdings, Inc. v. McCormick, 163 A.D.2d 44, 45 [1st Dept 1990].
As for service, respondents have waived all service defenses to the contempt motion, per the Interim Consent Order so-ordered on December 6, 2022. The court nonetheless notes that affidavits of purported personal service have been filed to NYSCEF. While petitioner's motion adequately established civil contempt under the relevant standard, the court finds that issues of fact exist as to whether respondents Highpoint Associates VI, LLC and Gustavo Santana "willfully disobeyed" the mandates included in the January 31, 2022 consent order beyond a reasonable doubt that require a hearing (see Matter of Rubackin, 62 A.D.3d at 17; Delijani v. Delijani, 107 A.D.3d 930, 931 [2d Dept 2013] [Finding, after a "hearing," that appellant's repeated violations of a stipulation demonstrated willfulness]; Deka Realty Corp., 208 A.D.2d at 40 [Affirming criminal contempt finding after "nonjury trial."]). Respondents' submissions in opposition to petitioner's motion have set forth a sufficient showing to prevent the court from making a finding of willful disobedience on the papers alone. For the same reasons that the court declined to consider civil contempt against Robin Ignico and Daniel Ohebshalom a/k/a Dan Shalom with regard to the January 31, 2022 Consent Order, it also declines to consider criminal contempt against them in their individual capacities in relation to the same Order. The criminal contempt hearing shall also be scheduled for December 18, 2023 at 2:15 PM, Part O, Room 202.
Nonetheless, petitioner's efforts to punish Highpoint Associates VI, LLC for criminal contempt may necessarily require the court to consider actions of individual agents taken on behalf of the corporation.
III. Remaining relief
Petitioner's motion seeks civil penalties for violations predating the January 31, 2022 Consent Order. Insofar as those were subject to a settlement and have been reduced to a judgment upon respondents' failure to comply with the terms of the settlement, the court will not impose further penalties for respondents' failure to correct the violations through January 31, 2022, without prejudice to petitioner's right to move for relief as to post-January 31, 2022 violations.
The court has considered the remainder of the relief requested by petitioner and denies it, insofar as it was subject to settlement in the Interim Consent Order and will be addressed upon the determination of the Third Contempt Motion.
CONCLUSION
Accordingly, for the reasons stated herein, petitioner's motion is granted to the extent of finding that respondents Highpoint Associates VI, LLC and Gustavo Santana are in civil contempt of the January 31, 2022 Consent Order, that the same respondents are subject to a civil contempt fine, which will be imposed after a hearing on petitioner's attorney's fees relevant to the Second Contempt Motion, and that a hearing shall be held upon petitioner's motion for criminal contempt. The remainder of the relief requested is denied. The combined attorney's fees hearing and criminal contempt hearing will be scheduled for December 18, 2023 at 2:15 PM in Part O, Room 202. Any pre-marked exhibits shall be emailed to the court on or before December 14, 2023 (qn-housing-202@nycourts.gov).