Opinion
LT-301815-20/KI
08-31-2021
FANG REALTY CORP., Petitioner, v. PRIME SIX INC., Respondent.
Attorney for Plaintiff: Meryl Lisa Wenig, Wenig Saltiel, LLP, 26 Court Street, Suite 1200, Brooklyn, NY 11242 Attorney for Defendant: Alfred Joseph Amadio, Clark & Amadio, P.C., 230 Hilton Avenue, Suite 201, Hempstead, NY 11550
Attorney for Plaintiff: Meryl Lisa Wenig, Wenig Saltiel, LLP, 26 Court Street, Suite 1200, Brooklyn, NY 11242
Attorney for Defendant: Alfred Joseph Amadio, Clark & Amadio, P.C., 230 Hilton Avenue, Suite 201, Hempstead, NY 11550
Consuelo Mallafre Melendez, J.
The court's Decision and Order is based upon consideration of the following papers:
CPLR 2219(a) Recitation
ORDER TO SHOW CAUSE & AFFIDAVITS ANNEXED 1
OPPOSITION/CROSS-MOTION 2
REPLY/OPPOSITION TO CROSS-MOTION
SUR REPLY
In this commercial holdover proceeding, Petitioner was awarded judgment and a warrant of eviction on May 25, 2021, on default. The judgment indicates that Respondent was served with a copy of a Hardship Notice between April 15th and 16th of 2021, but no Hardship Declaration was filed. Respondent now moves by order to show cause seeking to vacate the default and permit Respondent to file an Answer, or in the alternative, to dismiss the petition for lack of personal jurisdiction and to restore Respondent to possession of the premises. On July 15, 2021, Petitioner entered into a new lease agreement for the subject premises with a new tenant. Petitioner opposes the order to show cause.
In its opposition, Petitioner states that on July 26, 2021, prior to the filing of this motion, it advised Respondent's attorney of the new tenant in possession, but Respondent failed to join the new tenant as a party to this action. As a result, Petitioner asserts that Respondent's motion must be denied in its entirety. Petitioner argues a new tenant in possession must be joined when a former tenant seeks to be restored to possession ( Guoco Hempstead Prop., LLC v. Eltaiar , 66 Misc 3d 145[A] [App Term, 2d Dept, 11th & 13th Jud. Dists 2020]). Indeed, courts cannot rule on a motion to be restored to possession absent joinder of the new tenant in possession. However, Petitioner incorrectly argues that this court is precluded from adjudicating the other issues raised in Respondent's motion. In similar cases, including those cited by Petitioner, courts have declined to rule on the restoration matter until proper joinder but have consistently ruled on the other issues raised in such motions ( Knickerbocker, LLC v. Molly's Milk Truck Sweet & Savory, LLC , 71 Misc 3d 135[A] App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2021; Adelphi Assoc., LLC v Gardner , 18 Misc 3d 132 [A] [App Term, 2d Dept, 2d & 11th Jud Dists 2008]; Hegeman Asset LLC v. Smith , 5 Misc 3d 8 [2d Dept. 2004] ; Chester Mamaroneck Gardens v Riggsbee , 189 Misc 2d 439 [App Term, 2d Dept, 9th & 10th Jud Dists 2001]). Due to its misunderstanding of the law, Petitioner declined to oppose the issues raised in Respondent's order to show cause, including service of process. Regardless, the court will discuss the issues raised in Respondent's order to show cause below.
The court finds that Respondent has presented a reasonable excuse for its default. In his affidavit, president of Respondent-commercial tenant Akiva Ofshtein avers that he operated his business on the premises for approximately ten years before he shut it down on March 27, 2020 due to the COVID-19 pandemic. Approximately two months later, on May 20, 2020, Mr. Ofshtein acknowledges that he received a copy of the 90-day notice of termination. However, Mr. Ofshtein avers that he assumed Petitioner would be precluded from litigating the matter due to the various eviction stays in place as a result of the pandemic. In support of its motion, Respondent also attaches a copy of the lease which shows that it had been renewed on February 18, 2015, for a term set to expire on April 25, 2025. Mr. Ofshtein states that the extended lease constitutes a meritorious defense to this action. Mr. Ofshtein further avers that the lease was a valuable asset which he sought to sell and that during this entire period, he and Petitioner-landlord had been negotiating the assignment of the lease to a potential buyer. Mr. Ofshtein concludes that had he been notified of this action, he would have defended this action on the merits. The court finds Mr. Ofshtein offers a reasonable excuse and a meritorious defense under the circumstances. Further, by moving to vacate the default judgment and restore the case to the calendar, Respondent has demonstrated its willingness to submit to the court's jurisdiction.
Notwithstanding the above, the court denies Respondent's request to dismiss the action based on its claims Petitioner failed to properly serve the Petition and Notice of Petition. Respondent claims that Petitioner failed to use due diligence when it availed itself of conspicuous "nail and mail" service under CPLR 308(4) after only two attempts at personal service. Contrary to Respondent's argument, the Petitioner was not required to use the due diligence standard for service, but the less stringent "reasonable application" standard under RPAPL 735(1) ( 159 West 23rd LLC v. Spa Ciel De NY Corp. , 66 Misc 3d 139[A] [1st Dept. 2020] ; Eight Assoc. v. Hynes , 102 AD2d 746 [1984], affd 65 NY2d 739 [1985] ; Brooklyn Heights Realty Co. v. Gliwa , 92 AD2d 602 [1983] ). Courts have found conspicuous service of a notice of petition and petition on a commercial tenant to be properly effectuated under RPAPL 735(1) after two prior attempts at personal service on two different dates at two different hours ( 159 West 23rd LLC v. Spa Ciel De NY Corp. , 66 Misc 3d 139[A] ). Here, the affidavit of service shows that personal service was attempted on September 16, 2020 at 1:17 p.m. and again on September 22, 2020 at 9:43 a.m. Therefore, the affidavit of service constitutes prima facie evidence of proper service ( Marmon Realty Group, LLC v. Khalil , 72 Misc 3d 136[A] [App Term, 2d Dept, 2d, 11th & 13th Jud. Dists 2021]; Deutsche Bank Natl. Trust Co. v Quinones , 114 AD3d 719 [2d Dept. 2014] ["A process server's affidavit of service constitutes prima facie evidence of proper service"]). Personal service in a holdover proceeding is not required for service to be valid under the RPAPL or CPLR.
Respondent also fails to establish that Petitioner's use of conspicuous service was invalid as a result of its closure during the pandemic. Prior to March of 2020, Respondent had been operating its business on the premises for ten years. Based on Respondent's moving papers and supporting affidavit, it is clear that Respondent maintained some presence on the premises throughout this time period as it negotiated with Petitioner to sell its lease. Mr. Ofshtein himself states that during this time period, either he or one of his former managers would periodically check mail on behalf of Prime Six. Respondent offers no substantial reason to indicate that it abandoned the premises which could cause conspicuous service to be invalid. Therefore, it was not unreasonable for Petitioner to resort to conspicuous service in a reasonable attempt to effectuate service.
Further, the lease agreement, attached by Respondent as an exhibit to its order to show cause, supports a finding of proper service. Under the Notices provision, the lease provides that in the event of a default, the parties agreed upon service of the Petition and Notice of Petition in a holdover proceeding to be effectuated in the manner executed by Petitioner herein. The provision states the following:
"Tenant hereby appoints as its agent to receive the service of all dispossessory or distraint proceedings and notices thereunder the person in charge of or occupying the Premises, and if no person shall be in charge of or occupying the same, then such service may be made by attaching the same to the main entrance of the Premises " (R 1, Exh. A, p. 35).
The court notes that the words "main entrance" and "Premises" are emphasized in bold print in the lease. There is no evidence that an agent was appointed by Respondent.
Contrary to Respondent's arguments and pursuant to this provision, Petitioner was not obligated to serve the Notice of Petition and Petition on Respondent at any other address. In fact, the provision specifies that Petitioner is only obligated to send copies of "all default notices," which would include the 90-day termination notice, to "Ofshtein Law, P.C. 1723 East 12th Street 4th Street [sic] Brooklyn, NY 11229" (R. 1, Exh. A, p. 28). According to the Affidavit of Mailing, the 90-day termination notice was in fact mailed to Ofshtein Law, P.C., 1723 East 12th Street 4th Floor Brooklyn, NY 11229 as well as Ofshtein Law, P.C., 15 Bay 29th Street, Brooklyn, NY 11214, where Respondent acknowledges receipt.
Respondent also claims that Petitioner failed to serve the correct address for the premises at issue, 242 Flatbush Avenue, Brooklyn, NY 11217. However, this claim is also unsupported by the lease agreement. Here, Petitioner mailed copies of the Notice of Petition and Petition to the premises at 242 Flatbush Avenue, Brooklyn, NY 11238. Pursuant to the lease's Notices provision, notices are to be sent to "Tenant at the Premises or the address for Tenant set out in the Basic Lease Information" (R. 1, Exh. A, p. 28). On the Basic Lease Information page, Tenant's address is listed as 242 Flatbush Avenue, Brooklyn, NY 11238 (R 1, Exh. A, p. 8). On the following page, next to "Tenant's Address for Notices" 242 Flatbush Avenue, Brooklyn, NY 11238 is the listed as the address (R. 1, Exh. A. p. 9). Further, courts have found that minor defects in the address, including an incorrect zip code, do not automatically render mailing of service of process void ( Donohue v. La Pierre , 99 AD2d 570 [3rd Dept. 1984] ["we do not believe that the mailing requirement of the statute is only satisfied by using the exact mailing address pursuant to the regulations and organization of the United States Postal Service."]; Rochdale Holding Corp., v. Neuendorf, 2 Misc 3d 133 [A] [1st Dept. 2004] ["The fact that the mail was addressed to zip code 10022, rather than zip code 10021, did not render service defective where the correct street address and county were set forth."]; Brownell v. Feingold , 82 AD2d 844, [2d Dept. 1981] ["However, we cannot agree with the defendant's suggestion that any mistake in the address to which the summons is mailed—no matter how minor—will render the service of process void."]). In the third department case, Donohue v. La Pierre , the court found that despite an error in address, service of the summons was valid because it was addressed to a "well-known street and town" ( Donohue v. La Pierre , 99 AD2d 570 ). In the instant case, the court finds it unlikely that mailings sent to Flatbush Avenue, Brooklyn, a major avenue in a major borough, would be unsuccessful due to an incorrect zip code, especially as the premises borders both zip codes. "Where, despite an error in the address, it is virtually certain that the summons will arrive at the defendant's last known residence, the ‘mailing’ requirement of ‘delivery and mail’ service should be considered satisfied" ( Brownell v. Feingold , 82 AD2d 844 ).
Here, service was effectuated under the terms set forth in the lease agreement, and the parties, as well as this court, are bound by those terms. "Unless a statute or policy dictate otherwise, a written agreement defines the rights and obligations of the parties, particularly in the context of real property transactions negotiated at arm's length between sophisticated, counseled parties" ( 11 Park Place LLC., v. ASAP Documents, Inc. , 63 Misc 3d 1204[A] [Civ Ct, New York County 2019] ; citing Anita Babikian, Inc. v. TMA Realty, LLC , 78 AD3d 1088, 1090 [2d Dept 2010] ). Respondent's claim that service was invalid for failure to mail copies to its claimed business address is not supported by the lease. Here, there is no other address for Respondent's principal office or place of business other than the premises. The Ofshtein Law, P.C. 1723 East 12th Street 4th Brooklyn, NY 11229 address is only designated for service of default notices (R. 1, Exh. A, p. 28). It is not designated as a principal office or place of business where an additional mailing of the Notice of Petition and Petition would be required under the statute.
Further, there is no valid basis for this court to disregard the methods of service and the address noted in the lease agreement. The lease's terms, which were in effect for ten years prior to this action, are not ambiguous, vague or one-sided. "[A] written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms" ( Greenfield v. Philles Records, Inc. , 98 NY2d 562, 569 [2002] ). "The fundamental, neutral precept of contract interpretation is that agreements are construed in accord with the parties’ intent," which is found in the contract's writing ( Greenfield v. Philles Records, Inc. , 98 NY2d 562, 569 ). The court further emphasizes the commercial nature of the lease which was entered into and signed by two sophisticated parties as part of a business transaction involving a commercial property. "Where parties-particularly sophisticated, counseled parties-exclude a term, courts must conclude that the omission was intentional" ( 11 Park Place LLC., v. ASAP Documents, Inc. , 63 Misc 3d 1204[A] citing Fundamental Long Term Care Holdings, LLC v. Cammeby's Funding LLC , 20 NY3d 438, 445 [2013] ).
Notwithstanding the above, the court recognizes that no lease provision can modify, limit or undermine the statutory requirements for valid service under RPAPL 735 ( Lana Estates, Inc. v. National Energy Reduction Corp. , 123 Misc 2d 324 [Civ. Ct. Queens Cty. 1984] ). "Where a conflict exists between procedural contractual obligations in a lease, as to the manner of notice, and the requirements of RPAPL 735 such conflict or discrepancies must be resolved in favor of the statutory requirements that a lease provision cannot be used to circumvent" ( Lana Estates, Inc. v. National Energy Reduction Corp. , 123 Misc 2d 324, at 326 ). Here, the court finds no conflict between the statutory requirements under RPAPL 735(1)(b) and the lease provisions. " RPAPL 735(1)(b) precisely requires that ‘substituted’ or ‘conspicuous place’ service requires that a copy of the notice of petition and petition be sent to a corporate respondent addressed to the subject premises and also to the corporate tenant's last known principal office or principal place of business if this is ‘not located on the property sought to be recovered ’ " ( Lana Estates, Inc. v. National Energy Reduction Corp. , 123 Misc 2d 324, at 327 [emphasis added]).
The court finds the remainder of Respondent's arguments unavailing. Respondent asserts that because the lease was set to expire in April of 2025, Petitioner improperly commenced this matter as a holdover proceeding. However, pursuant to RPAPL 711, a holdover proceeding may be brought against a tenant for defaulting under the terms of a lease. The lease itself provides under the "Landlord's Remedies" provision "should Landlord lawfully terminate this Lease Tenant shall immediately become a Holdover Tenant and Landlord shall have all the rights and remedies of a landlord provided by the laws of the State of New York" (R 1, Exh. A, p. 28). While Respondent's assertion that the lease has been extended constitutes a meritorious defense, the validity of the lease extension remains an issue of fact to be determined on the merits.
Respondent's assertion that the Petition is defective because it is was verified by Petitioner's attorney who maintains an office in the same county as Petitioner is also unavailing. "It is well settled that a petition can be verified by an attorney pursuant to RPAPL 741" ( 1346 Park Place HDFC v. Wright , 52 Misc 3d 18, 21 [App. Term. 2d Dept, 2d, 11th & 13th Jud. Dists. 2016]). However, the verification rules under RPAPL 741 must still comply with CPLR 3021 which provides that if verification "is made by a person other than the party, he must set forth in the affidavit. the reason why it is not made by the party." Still, contrary to Respondent's arguments, such an omission is not a fatal defect. "[T]he failure to verify, or properly verify, a petition in a summary proceeding is not a jurisdictional defect" ( 1346 Park Place HDFC v. Wright , 52 Misc 3d 18, 21 ; Hablin Realty Corp. v. McCain , 123 Misc 2d 777, 778, [App Term 1st Dept. 1984] ["Thus, the court, rather than dismissing the petition with leave to begin again, could have simply afforded landlord the opportunity to amend the verification."]).
Respondent also argues that the Petition is invalid because Petitioner failed to attach the 90-day termination notice. This argument also fails. Respondent cannot bring forth claims as to what was or was not attached to a Notice of Petition and Petition it alleges to have never received. Further, Respondent includes the 90-day notice in its fifteen-page exhibit of the Notice of Petition and Petition and affidavits of service.
Based on the foregoing, Respondent's request to vacate the default and restore the case to the calendar is granted. Respondent's request to dismiss this action for invalid service is denied. The only remaining issue is Respondent's request to be restored to possession of the premises. As discussed above, the court declines to rule on this matter. Respondent shall file an Answer to this action within fourteen (14) days.
This constitutes the decision and order of this court.