Opinion
HP 1481/2018
04-15-2019
Omar ELLOUZI, Petitioner, v. Christophe SHERMAN et al., Respondent.
Recitation, as required by CPLR § 2219(a), of the papers considered in the review of this motion.
Papers Numbered
Notice of Motion and Supplemental Affirmation and Affidavit Annexed. 1, 2, 3
Notice of Cross-Motion and Supplemental Affirmation Annexed 4, 5
Affirmation In Opposition 6
Upon the foregoing cited papers, the Decision and Order on this Motion are as follows:
Omar Ellouzi, the petitioner in this proceeding ("Petitioner"), commenced this proceeding (the "HP proceeding," i.e., Housing Part proceeding) against Christophe Sherman, the respondent in this proceeding ("Respondent"), and the Department of Housing Preservation and Development of the City of New York ("HPD"), seeking an order to correct violations of the New York City Housing Maintenance Code ("the Code") at 368 8th Avenue, New York, New York ("the subject premises"). On Respondent's default, the Court awarded HPD a judgment ("the judgment") in the form of a lien taken on the block and lot on which the subject premises is located ("the lien"). The owner of the subject premises ("the landlord"), who had not been a party to this proceeding, now moves to vacate so much of the judgment as entered the lien. HPD cross-moves to join the landlord as a party to this proceeding. The Court consolidates these motions for resolution herein.
For the purposes of the motion, the Court assumes arguendo the truth of the landlord's factual recitation. The landlord actually consists of five corporate entities as tenants in common. The landlord entered into a net lease with Respondent, according to which Respondent contracted to hold the landlord harmless against liabilities like the judgment the Court awarded in this proceeding. The net lease also conferred upon Respondent the responsibility for maintaining the subject premises in good repair and free from violations of the Code. An ejectment action that the landlord commenced against Respondent by a complaint dated May 2, 2018 is currently pending.
The multiple dwelling registration ("MDR") applicable to the subject premises, pursuant to MDL § 325, annexed to HPD's opposition, identifies Respondent as the "managing agent" of the subject premises and also lists Respondent's name and address in connection with one of the corporate entities that Petitioner consists of.
The MDR lists "368 Associates LLC" as one of the organizations affiliated with ownership of the subject premises, the same name as one of the grantees in a deed the landlord annexes to its motion, and the same name one of the lessors in the net lease the landlord annexes to its motion. Respondent's name and address appear on three different rows on the MDR, including on one row that "368 Associates LLC" appears on.
The Code provides for the entry of a judgment "which shall constitute a lien" which "may be enforced against the premises" when HPD obtains a determination in an HP proceeding against an "owner." N.Y.C. Admin. Code § 27-2116(d). The landlord argues that the Court could not have placed a lien on the subject premises as the landlord is the "owner" of the subject premises and as no party ever named or served the landlord.
However, the Code defines the term "owner" expansively to include, inter alia , a "lesser estate therein," including a "lessee, agent, or any other person, firm or corporation, directly or indirectly in control of a dwelling," N.Y.C. Admin. Code § 27-2004(a)(45), a definition which even encompasses an individual who is involved with the operations of the building. Dept. of Hous. Pres. & Dev. v. Livingston , 169 Misc 2d 660, 661 (App. Term 1st Dept. 1996). Respondents have been net lessees and, by the landlord's admission, are the parties directly in control of the subject premises. Accordingly, the judgment was against an "owner" as defined by the Code and, by the terms of N.Y.C. Admin. Code § 27-2116(d), the Court therefore properly entered a judgment constituting a lien on the subject premises.
The multiple dwelling law defines "owner" in the same way. MDL § 4(44), Matter of 49 Bleecker, Inc. v. Gatien , 157 AD3d 619, 619-20 (1st Dept. 2018).
The landlord further argues that it enjoys the protection of N.Y.C. Admin. Code § 27-2115(k)(3)(iv), which provides a defense to civil penalties when "another not in the employ or subject to the direction of the owner" caused the violation at issue. The landlord's argument again trips up against the Code's definition of "owner," which includes Respondents (as net lessees). By that definition, the "owner" itself, i.e., Respondents, caused the violations, rendering N.Y.C. Admin. Code § 27-2115(k)(3)(iv) inapplicable as a defense for the landlord.
In the absence of such a broad definition of "owner," landlords could engage in many actions, such as net leases, to avoid the consequences of noncompliance with the Code. The Legislature's use of such a definition of "owner," for purposes of HP proceedings in particular, demonstrates the Legislature's intent to relieve the Housing Court from adjudicating disputes between parties in varying degrees of control over dwellings about their liabilities. The landlord may very well have a legitimate cause of action against Respondent, and the judgment of this Court and the determination of this motion is certainly without prejudice to the landlord's remedies against Respondent. But the landlord's pursuit of those remedies is relegated to a plenary action, and is not an occasion to divert the resources of the Housing Court away from its core mission of enforcement of the Code. New York City Civil Court Act § 110(c).
HPD raised its point about the Code's definition of "owner" in its opposition to the landlord's motion. The landlord's responsive paper to HPD's cross-motion argued that the imposition of a lien under circumstances presented herein implicated the landlord's property interest without due process of law. Although the landlord makes this argument in what it designates as its opposition to HPD's cross-motion, the argument is therefore actually in the nature of a reply. A litigant ordinarily may not raise a new argument in support of a motion on reply, Stang LLC v. Hudson Square Hotel, LLC , 158 AD3d 446, 447 (1st Dept. 2018), All State Flooring Distribs., L.P. v. MD Floors, LLC , 131 AD3d 834, 836 (1st Dept. 2015), although the Court exercises its discretion to consider the landlord's due process argument.
Under both the federal and state constitutions, the State may not deprive a person of property without due process of law, U.S. Const. 14th Amendment, NY Const., Art. I, § 6, which means notice that is reasonably calculated to apprise interested parties of the pendency of the action, thus affording them an opportunity to present their objections. Harner v. Cty. of Tioga , 5 NY3d 136, 140 (2005), citing Mullane v. Central Hanover Bank & Trust Co. , 339 U.S. 306, 314 (1950). Due process does not always require actual notice, as long as the notification procedures employed are reasonable in view of all the circumstances. Zaccaro v. Cahill , 100 NY2d 884, 891 (2003). Due process is a flexible concept, requiring a case-by-case analysis that measures the reasonableness of a municipality's actions in seeking to provide adequate notice. Harner , supra , 5 NY3d at 140. Balancing the interests of private owners against municipalities entails an evaluation of "the status and conduct of the owner in determining whether notice was reasonable." Id.
The Legislature drafted the Code to, inter alia , enforce minimum standards of health, safety, fire protection, light, ventilation, cleanliness, repair, and maintenance to protect the people of the city against the consequences of urban blight. N.Y.C. Admin. Code § 27-2002. An HP proceeding to enforce these housing standards is "so interlaced with strong public policy considerations" as to transcend disputes between the private parties involved. D'Agostino v. Forty-Three E. Equities Corp. , 16 Misc 3d 59, 60 (App. Term 1st Dept. 2007).
Counterposed against HPD's compelling interest in enforcing housing standards is an owner's interest in being notified of a proceeding which may result in penalties against it. In part for purposes of such notice, both MDL § 325 and N.Y.C. Admin. Code § 27-2097(a) require owners to provide contact information to HPD, i.e. to register with HPD. See New York City Civil Court Act § 110(m). Thus, registration affords owners with an opportunity to affirmatively designate an address for service that works best for them, so as to maximize the likelihood of receiving notice of an HP proceeding.
The landlord's net lease of the subject premises to Respondents not only did not deprive the landlord of its ability to register with HPD, but N.Y.C. Admin. Code § 27-2102(a) provides that when an entire multiple dwelling is leased, "both the owner and lessee of such entire multiple dwelling shall file registration statements in accordance with all the provisions of this article." As noted above, the MDR for the subject premises identifies Respondent as the "managing agent" of the subject premises and also lists Respondent's name and address in connection with one of the fine corporate entities that Petitioner consists of. The MDR does not indicate who filed the registration information with HPD. Either the landlord registered or the landlord didn't.
Assuming arguendo that the landlord did not file the registration information with HPD, the landlord is not in compliance with N.Y.C. Admin. Code § 27-2102(a) and did not provide HPD and Petitioner with an address upon which to serve pleadings. Such a failure to provide accurate registration information deprives a defaulting party in an HP proceeding from demonstrating the reasonable excuse needed to vacate a default judgment. Dep't of Hous. Pres. & Dev. of City of NY v. Barrett , 20 Misc 3d 135(A)(App. Term 1st Dept. 2008), Dep't of Hous. Pres. & Dev. City of NY v. 532-536 W. 143rd St. Realty Corp. , 8 Misc 3d 136(A)(App. Term 1st Dept. 2005), Dep't of Hous. Pres. & Dev. of City of NY v. 373 8th St. Realty , 35 Misc 3d 147(A)(App. Term 2nd Dept. 2012).
The above legal authority does not squarely address the due process implications of a litigant's failure to provide an address for service, although a finding that such a litigant cannot show a reasonable excuse logically compels the finding that the process the litigant received was "due." Be that as it may, the Court finds instructive that property owners who do not provide addresses for notices cannot show a deprivation of property without due process when they do not receive notice of foreclosure actions arising out of tax delinquency. Harner , supra , 5 NY3d at 140, Matter of Roslyn Jane Holdings, LLC v. Jefferson , 144 AD3d 1041, 1043 (2nd Dept. 2016), City of NY v. United Rehab. Corp. (In Rem Tax Foreclosure Action No. 44) , 9 AD3d 266, 266-67 (1st Dept. 2004).
Despite its failure to comply with the registration requirements of MDL § 325 and N.Y.C. Admin. Code § 27-2102(a), the landlord argues that HPD, or perhaps Petitioner, or perhaps the Court, should have searched ACRIS, the online database of documents recorded concerning New York City properties, to ascertain the existence of the landlord as an owner and the landlord's address. However, recorded instruments affecting real property do not necessarily reflect up-to-date addresses of interested parties, Zaccaro , supra , 100 NY2d at 890, as opposed to MDR's, which must be updated annually. N.Y.C. Admin. Code § 27-2097(c). Accordingly, ACRIS can potentially be only the first step in a laborious process to determine an owner's address, a process burdensome enough to a municipality to outweigh the due process concerns of a property owner who does not simply register an address for service of notices. ISCA Enters. v. City of NY , 77 NY2d 688, 701 (1991), City of NY , supra , 9 AD3d at 266-67. The record on this motion practice actually illustrates the burden that the landlord's suggestion would impose on HPD or the Court or a tenant seeking relief from poor housing conditions. The deed showing the landlord as the grantee is dated November 1, 2012, which does not necessarily show the landlord's whereabouts at the commencement of this proceeding, approximately six years later. To the extent that the MDR contains addresses for the landlord besides Respondent's address, none of those addresses appear anywhere on the deed.
ACRIS is described in U.S. Bank Natl. Assn. v. Guy , 2013 NY Misc. LEXIS 4127 (S.Ct. NY Co. 2013) and Parrino v. Russo , 19 Misc 3d 1127(A)(Civ. Ct. Kings Co. 2008).
Assuming arguendo that the landlord did register, then the landlord would have not only affirmatively identified Respondent as a managing agent, but also registered Respondent's name and address in affiliation with the landlord. If the landlord affirmatively directed that service be made on Respondent as such, the landlord does not have a compelling argument that service on Respondent deprives the landlord notice as required by due process. Toure v. Harrison , 6 AD3d 270, 271 (1st Dept. 2004) (when a defaulting party provided an address on a driver's license and a police accident report, the party is estopped from contesting the validity of service made at that address). See Also Matter of Mujahid v. N.Y.C. Dep't of Hous. Pres. & Dev. , 2012 NY Slip Op. 30322(U), ¶¶ 15-16 (S.Ct. NY Co.)(an owner cannot meritoriously claim that HPD should have notified her of certain violations when she listed someone else as a managing agent).
If the landlord's argument prevailed, any owner wishing to avoid the consequences of failing to maintain housing standards would have a ready recipe to do so: net-lease its property and refrain from registration or register with an address that would not give an owner notice of the proceeding. Such a course of action would effectively foreclose an important remedy to enforce housing standards. Under these circumstances, HPD's compelling interest in upholding housing standards outweighs the interests of a landlord who did not take the legally-required and minimally burdensome step of registering with HPD. The landlord therefore does not prevail upon application of a flexible, case-by-case approach to the landlord's claim that the judgment or the lien deprived the landlord of property without due process. The Court therefore denies the landlord's motion.
As the landlord has shown that it is now seeking redress against Respondent, the landlord is in a position to remedy violations of the Code and is an appropriate party in the HP proceeding. Accordingly, the Court grants HPD's motion to join the landlord, to wit, Side Street Realty Corp., 386 Associates LLC, Ganga Realty LLC, JR Family II LLC, and SP American LLC, as respondents to this proceeding.
This constitutes the decision and order of this Court.