Opinion
L & T 63617/19
02-10-2020
GLEBOW REALTY ASSOCIATES, Petitioner-Landlord, v. Martina DIETRICH, Respondent-Tenant. "John Doe", "Jane Doe" and "XYZ Corp.", Respondents-Undertenants.
SILVERSMITH & ASSOCIATES LAW FIRM, PLLC By: Robert G. Silversmith, Esq & Jason Garber, Esq., 39 Broadway - Suite 910, New York, New York 10006, 212.922.9300, Attorneys for Petitioner DAVID E. FRAZER, ESQ., 15 Maiden Lane - Suite 1700, New York, New York 10038-4003, 212.285.1300, Attorney for Respondent
SILVERSMITH & ASSOCIATES LAW FIRM, PLLC By: Robert G. Silversmith, Esq & Jason Garber, Esq., 39 Broadway - Suite 910, New York, New York 10006, 212.922.9300, Attorneys for Petitioner
DAVID E. FRAZER, ESQ., 15 Maiden Lane - Suite 1700, New York, New York 10038-4003, 212.285.1300, Attorney for Respondent
Sabrina B. Kraus, J.
BACKGROUND
Petitioner commenced this summary holdover proceeding seeking to recover possession of the Second Floor Front Loft a/k/a Apartment 1C at 166 Allen Street a/k/a 161 Orchard Street, New York, New York 10002 (Subject Premises), based on the allegation that Respondent's lease had expired and that the Subject Premises is a commercial property.
Respondent appeared by counsel and filed an answer asserting four affirmative defenses, including that from the inception of her tenancy respondent has resided in the Subject Premises with petitioner's knowledge and consent, and the building contains six or more residential units and is a multiple dwelling governed by rent stabilization.
On January 21, 2020, this court issued an order in response to pending motions, and pursuant to CPLR § 409(b) ordering an immediate hearing on the central issue in dispute, namely whether petitioner knew of and acquiesced in respondent's residential use of the Subject Premises.
The hearing took place on February 5 and 6, 2020. At the conclusion of the hearing, the court reserved decision.
FINDINGS OF FACT
Respondent is the tenant of record of the Subject Premises pursuant to a Loft Lease dated March 25, 2016 (Ex 1-B). Petitioner is the lessor pursuant to said lease.
The subject building is a five story Class A multiple dwelling (Ex 1-D). The multiple dwelling registration indicates there are 11 apartments and that the registered managing agent is Byron Goldman (BG).
The certificate of occupancy for the building provides for storage in the cellar, 20 stores on the first floor, a store and apartments on the second floor, and apartments on the 3rd through fifth floors (Ex 6).
Respondent's first lease was for a term from May 15, 2016 through May 31, 2018, at an initial monthly rent of $3,250.00. Respondent submitted two checks in connection with the execution of the lease, check No. 4840 for two months security (Ex 1-H) and check # 4841 for the first months rent (Ex 1-I). On both checks, respondent's address was listed as 313 Church Street, Apt. 5, New York, New York 10013.
The lease also included a provision requiring respondent to pay a monthly charge for water and to pay a portion of the real estate taxes as additional rent. Respondent's residential address was left blank on the first page of the lease. Article 2 of the lease provides that respondent would use and occupy the Subject Premises for an "art couture studio".
Pursuant to the lease, petitioner agreed to install a kitchen sink and faucet, a stove and a refrigerator. Petitioner also installed a shower. The Subject Premises already had a toilet.
The parties executed a renewal lease dated April 4, 2018, for a one year term, from June 1, 2018 through May 31, 2019, at a monthly rent of $8,485.00 (Ex 1-C).
Respondent has lived in the Subject Premises since April 1, 2016. Prior to moving into the Subject Premises. Respondent had another live/work space at 313 Church Street. In late 2015, respondent saw a sign about a loft for rent and called BG. Respondent stated that she was looking for a live/work premises and BG said he had a space available. Respondent met BG at his office at 264 Canal Street. BG showed her a space at 264 Canal Street. The space was not finished and was approximately 2000 square feet. BG told respondent it could be used as a live/ work space, and that they would put in a kitchen for her. Respondent did not rent this space because it was too large and too expensive.
On November 13, 2015, BG showed respondent the Subject Premises. At that time, the Subject Premises was labeled Apartment 1C. The Subject Premises was an open empty space with a toilet. BG told her petitioner would install a shower, and there were already plug ins for a gas stove and a refrigerator. Respondent submitted in evidence photos of the Subject Premises as it appeared in late November 2015 (Ex C 1-7).
Respondent went back to the Subject Premises for a second look a few days later with her friend Avra Petrakos (Avra). Again DG agreed that the landlord would install a kitchen and shower so that the Subject Premises could be used as a live /work space.
Nothing further happened until February 2016, when respondent went back to see the Subject Premises a third time with another friend Diane Katz (Diane). DG was also present. DG and Respondent showed Diane where petitioner would install the shower and the items needed for the kitchen. After this visit, respondent was ready to sign the lease and she went back to DG's office on Canal Street. However, respondent was then told the Subject Premises was no longer available because the owner's son wanted to move in.
Respondent was disappointed but kept looking for another space. Six weeks later, DG's colleague, Lynn, called respondent and said the Subject Premises was available. The parties met and the lease was executed. Petitioner had installed the shower prior to the date Respondent moved in. A photo of the newly installed shower was submitted in evidence (Ex F-8).
The evening respondent moved in, Diane's son brought over a blow up bed that respondent used for the first six months she lived in the Subject Premises. A photograph of the bed in the Subject Premises was also submitted in evidence (Ex F-4). After six months the bed popped and respondent replaced it with a different bed, which she moved to a different location in the Subject Premises.
A few days after respondent moved in respondent had a leak in the Subject Premises. DG came into the Subject Premises to view the leak. Later that month, petitioner had delivered and installed a stove and a full size refrigerator for the Subject Premises. A photograph of the appliances was submitted in evidence (Ex H).
Respondent put in a sink and counter top with petitioner's knowledge and consent (Ex I). Although respondent paid for the purchase and installation of these items she was given a half month rent credit in consideration for same. Photos of the installation were submitted in evidence (Ex J).
Respondent submitted a diagram of the lay out of the space (Ex L) as well as some photos.
Respondent is a fashion designer of women's wear. Respondent designs couture one of a kind pieces for women, and has a line of mesh wear sold through boutiques. Respondent makes the clothes at the Subject Premises. Respondent also meets clients at the Subject Premises and holds intimate events there to sell and promote her line. Clients come to the Subject Premises by appointment. Respondent sees clients on average two to three times per week at the Subject Premises. Respondent also markets her mesh wear line through trade shows.
Respondent keeps two sewing machines, as well as work tables and shelves which are used for her business in the Subject Premises. Respondent also keeps material and patterns in the Subject Premises, along with clothing racks with her creations.
Respondent also keeps a dining room table, a bed, a TV and shelves for her living purposes in the Subject Premises. Respondent recently added a built in sofa.
Respondent has a website she uses for business purposes (See Exs 1J-K) and in October 2018 created a corporation for her business, Martina Dietrich Inc.(Ex 1-L).
Respondent submitted tax returns in evidence, which had been subpoenaed by petitioner (Exs 0-1, M-1, N-1). Respondent claimed a deduction for 70% of the rent for the Subject Premises. All of the returns list the Subject Premises as Respondent's home address.
Respondent has a Con Edison account at the Subject Premises. Bills for the account were submitted in evidence for a period covering November 2016 through January 2019 (Ex P). The bills show respondent's gas and electric usage at the Subject Premises. The rate charged on the bills indicates it is for residential use.
Respondent also has internet service at the Subject Premises. These bills were submitted as Ex Q in evidence. Respondent's banking record were also submitted in evidence (Ex R). These records had respondent's church street address on them through May 2016 and thereafter had the address of the Subject Premises on them.
Respondent testified that she deducts internet, con edison charges and telephone charges as a business expense on her tax returns.
Respondent credibly testified that BG has been in the Subject Premises approximately 20 times since she moved in. This is primarily due to a series of leaks that has occurred in the Subject Premises. In addition, the Super of the Subject Premises has been in on multiple occasions, including on a series of days to fix a leak by the area where respondent keeps her bed.
From November 2018 through March 2019, respondent denied petitioner access to fix the leaks. Respondent testified that this was because, petitioner's agents arrived unannounced and refused to comply with her request for 24 hours notice.
In March 2019, BG was again in the Subject Premises, to have respondent execute an estoppel certificate (Ex 1-A) and to address the leaks.
On May 1, 2019, petitioner sent respondent written notice that her lease for the Subject Premises would not be renewed (Ex 1-F). Respondent advised petitioner that she would not be vacating the Subject Premises.
In late May 2019, respondent again granted access to fix the last leak, after a written request from petitioner (Ex 1-G).
There are a total of three units on the floor where the Subject Premises is located, the other two units are used exclusively as residences.
DISCUSSION
After the hearing, the court finds that respondent established by a preponderance of credible evidence that petitioner knew of and acquiesced to respondent's residing in the Subject Premises.
Respondent's credible testimony was also supported by the testimony of Diane and Avra, both of whom the court found to be credible witnesses.
DG was the only witness for the landlord. The court does not give the testimony of DG great weight. DG either was not testifying truthfully, or was confused about the facts surrounding respondent's tenancy. For example, DG through his direct testimony implied that respondent and her friends lied when they stated there was no shower in the Subject Premises when they viewed the Subject Premises prior to the lease being executed. DG testified that petitioner had installed a shower in 1989 and that said shower was the one in place when respondent's lease began. However, on cross-examination DG conceded that the pictures of the shower showed it was a new installation.
DG did not seem to recall with specificity the time he went into the Subject Premises or what he saw. His testimony on this issue seemed rehearsed as he just kept repeating that he saw clothing racks and shelves.
DG testified that respondent showed him a 50 page portfolio of her work when they first met. Respondent credibly testified there was no such portfolio.
DG denied that Respondent told him her Church Street address was a live/work situation and testified that Respondent told him when they first met that she had no office and her business was all through the internet. Respondent credibly testified that her website was not set up until a later date.
Additionally, the court notes that petitioner did not call the Super as a witness, although it was uncontested that the Super was in the Subject Premises on a number of occasions to address leaks in the Subject Premises in an area near where respondent kept her bed.
As Petitioner Knew of and Acquiesced to Respondent's Residence in the Subject Premises, the Proceeding Should Have Been Brought in Housing Court
It is well settled that a mixed use premises, ie an apartment that a tenant uses both commercially and residentially may be subject to rent stabilization ( Golfinos v. 400 Co-op. Corp. , 110 AD2d 522, 523 ), and as such summary holdover proceedings to recover possession of such premises must be brought in Housing Court.
The petition in this case alleges in paragraph 6 that the Subject Premises ".. is a mixed use commercial property." The petition also incorrectly asserts that the Subject Building is not a multiple dwelling, but in fact it is a multiple dwelling. The court takes judicial notice that petitioner has registered the building as a multiple dwelling with HPD and asserts there are 11 Class units in the building and no Class B units (a copy of the MDR was also annexed to respondent's motion to dismiss).
NY City Civ. Ct. Act § 110 (a) provides in pertinent part:
A part of the court shall be devoted to actions and proceedings involving the enforcement of state and local laws for the establishment and maintenance of housing standards, including, but not limited to, the multiple dwelling law and the housing maintenance code, building code and health code of the administrative code of the city of New York, as follows:
....
(5) Actions and proceedings under article seven-A of the real property actions and proceedings law, and all summary proceedings to recover possession of residential premises to remove tenants therefrom , and to render judgment for rent due, including without limitation those cases in which a tenant alleges a defense under section seven hundred fifty-five of the real property actions and proceedings law, relating to stay or proceedings or action for rent upon failure to make repairs, section three hundred two-a of the multiple dwelling law, relating to the abatement of rent in case of certain violations of section D26-41.21 of such housing maintenance code. (Emphasis added)(see also 22 NYCRR 208.42(a) which provides "...proceedings involving residential property shall be commenced in the housing part").
The case law holds that where a premises is used by a tenant for living purposes, even a commercial premises, and the landlord is aware of said use, any eviction proceeding against the tenant must be brought in Housing Court. For example. In 32-05 Newton Ave. Associates, LLC v. Caguana 22 NYS3d 139, the Appellate Term, Second Department reversed a trial judge who awarded possession of a commercial premises to the landlord after trial, where the landlord was aware that the tenant was living in the premises. The court held in pertinent part:
In light of the Civil Court's findings as to the nature of the occupancy, the misrepresentation thereof in the petition, and the strong legislative policy that all summary proceedings to recover premises that are occupied residentially be commenced in the Housing Part (CCA 110 [a] [5]; see L 1972, ch 982, § 1, as amended by L 1978, ch 310, § 4; Uniform Rules for NY City Civ Ct [22 NYCRR] § 208.42 [a] ), the Civil Court should have dismissed the petition (see U.B.O. Realty Corp. v. Mollica, 257 AD2d 460 [1999] ; Artykova v. Avramenko, 36 Misc 3d 42 [App Term, 2d, 11th & 13th Jud Dists 2012]). In view of the foregoing, we do not reach the issue of whether the subject apartment is rent stabilized 32-05 Newtown Ave. Assocs., LLC v. Caguana , 48 Misc 3d 141(A)(NY App. Term. 2015) (emphasis added); see also Bayview Loan Servicing, LLC v. Lyn-Jay, Inc. , 54 Misc 3d 140(A) (NY App. Term. 2017) (holding under these circumstances, the commercial landlord-tenant part could not entertain the proceeding, inasmuch as it sought, in part, the recovery of a residential premises ).; Freeman Street Properties v. Coirolo 17 Misc 3d 137(A) (holding where premises was used for residential purposes with landlord's knowledge and acquiescence proceeding must be brought in Housing Part ).
The holdings are the same in the First Department. In UBO Realty Corp v. Molica 175 Misc 2d 897, the Appellate Term, First Department affirmed the Civil Court's dismissal of a holdover proceeding for a mixed use premises. The court held in pertinent part:
Evidence at trial established that tenant has resided in the storefront premises of the multiple dwelling since 1979. The premises were equipped with a loft bed, kitchen and bathroom facilities when he commenced occupancy. Tenant originally lived in the entire space for three years and then began to utilize the front half for his copy shop business. While tenant signed a series of commercial leases limiting use of the premises "for printing and photo copiers", the phrase "and for no other purpose" was deleted and initialed in the last lease. Landlord failed to produce a witness with personal knowledge to contest the duration and character of tenant's occupancy.
We have previously held in similar cases that a landlord's acquiescence in a long-term mixed use of living/working space implicates the protections of the Emergency Tenant Protection Act of 1974 (Ten Be Or Not Ten Be, Inc. v. Dibbs , NYLJ, June 12, 1985 at 11, affd. 117 AD2d 1028, 499 N.Y.S.2d 567 ; West Side Equities v. Cerigo , NYLJ, June 17, 1993, at 24, col 4; cf. 129 East 56th St. Corp. v. Harrison , 122 Misc 2d 799, 473 N.Y.S.2d 910 ; see generally, Matter of Zeitlin v. N.Y.C. Conciliation and Appeals Board , 46 NY2d 992, 416 N.Y.S.2d 233, 389 N.E.2d 828 ). Accordingly, the holdover petition based solely upon allegations of commercial use was properly dismissed. U.B.O. Realty Corp. v. Mollica , 175 Misc 2d 897, 898 (App. Term 1997), aff'd, 257 AD2d 460 (1999). The Appellate Division in affirming this ruling held:
Despite the commercial nature of the leases, the finding that petitioner landlord knew of or acquiesced in respondent tenant's residential use of these store front premises has sufficient support in the record and, accordingly, the petition was properly dismissed (see, Ten Be Or Not Ten Be v. Dibbs , NYLJ, June 12, 1985, at 11, col 4, affd 117 AD2d 1028 ; West Side Equities v. Cerigo , NYLJ, June 17, 1993, at 24, col 1). We note the premises were already equipped for residential use when respondent moved in .... U.B.O. Realty Corp. v. Mollica , 257 AD2d 460 (1999) [see also Zada Assocs. v. Seven NYLJ Feb 1, 2001, p.28, col. 3(App Term, 1st Dept)(holding where premises is knowingly used for residential purposes, holdover petition brought in a non-housing part must be dismissed); 7-9 E. 32nd St. Assoc v. Tighe, NYLJ Feb. 6, 1996 (App Term, 1st Dept) ].
Based on the foregoing, the court need not reach any other issue, including whether the Subject Premises is covered by Rent Stabilization. The petition is dismissed for failure to state a cause of action, without prejudice to commencement of a summary proceeding in Housing Court, and the pending motions are denied as moot.