Opinion
Index No. CV-3880-20/HU
07-16-2021
OMEGA MELVILLE, LC, Petitioners v. FUSION MANAGEMENT, INC., XYZ Corp., Respondents
The Law Offices of Scott D. Gross, Esq., Attorneys for Petitioner, 400 Post Avenue, Suite 400B, Westbury, New York 11590 Burke & Burke, Esqs., PC, Attorneys for Defendant, 500 Bi-County Blvd., Suite 108, Farmingdale, New York 11735
The Law Offices of Scott D. Gross, Esq., Attorneys for Petitioner, 400 Post Avenue, Suite 400B, Westbury, New York 11590
Burke & Burke, Esqs., PC, Attorneys for Defendant, 500 Bi-County Blvd., Suite 108, Farmingdale, New York 11735
C. Stephen Hackeling, J. The Decision/Order on the motion is as follows:
The petitioner moves by application dated June 23, 2021 seeking to strike affirmative defenses and counterclaims detailed in the respondent's answer. The respondent cross moves seeking summary judgment dismissing the subject petitioner and asserts that, at a minimum, the Court is statutorily required to stay all matters until September 1, 2021.
The Emergency Moratorium Automatic Stay
The threshold issue advanced for disposition is whether the respondent's May 17, 2021 filing of a "Commercial Tenant Hardship Declaration" serves to unilaterally and automatically stay this summary eviction proceeding until after September 1, 2021.
The respondent argues that the "COVID-19 Emergency Protection Small Business Act", Chapter 381 laws of 2020; Chapter 73 of the laws of 2021 (hereafter "COVID Moratorium") as implemented by the Memorandum Order of the Chief Administrative Judge, dated May 24, 2021, requires no additional documentary proof to trigger its (moratorium) protection from eviction. The language of the statute provides "the submission of a declaration ... shall act as a temporary stay applicable to all entities". The Chief Judge's memorandum advises that "those who submitted a Hardship Declaration ... such proceedings are now stayed until August 31, 2021." The statute and Order also provide that the Hardship Declaration shall serve as prima facie evidence establishing a rebuttable presumption that a commercial tenant is experiencing financial hardship ... due to COVID-19.
The Court will limit its discussion to the COVID-19 statute as it was previously opined that an Administrative Order can not enhance or limit the parameters of a legislative or executive mandate . See , Anthi New Neocronon Corp. v. Coalition of Landlords, et al., 68 Misc. 3d 813, 128 N.Y.S.3d 795 (Suf. Co. 2020).
At first blush it appears that the creation of a "rebuttable presumption" implies that the petitioner/landlord will be given an opportunity to rebut the declaration of hardship. The respondent's counter argument is that this hearing can only occur after the stay period has expired. See OCA Memorandum of Chief Judge dated May 24, 2021 at ¶ 2(d). Such a conclusion, which grants the respondent the ability to unilaterally obtain a stay without an adversary's ability to challenge same violates "the fundamental requisite of due process of law (which requires) the opportunity to be heard". Mullane v. Central Hanover Bank Trust Co., 339 U.S. 306, 70 S.Ct. 652, 94 L.Ed. 865 (1950).
This situation begs the question of what was the scope of the State Legislature's intent in bending the Constitution's 14th Amendment requirement and temporarily denying landlords an opportunity to be heard. A reading of the COVID statute and its proscribed Notice reveals that it is meant to protect "tenants", "tenancies" and "leaseholders", who are person(s) responsible for paying rent"; not the entire universe of non-owner persons occupying real property. Specifically excluded from this protected class are "licensees" such as non rent paying family members, "occupants at sufferance" such as post foreclosure holdovers, live-in home health care assistants as well as assorted classes of squatters What redress do landlord's have if these classes of occupants wrongfully and unilaterally declare hardship?
It is a universal principle in the interpretation of New York's statutes that the specific mention of one person or thing implies the exclusion of other persons or things. New York Statutes, Sec. 240. See gen., In re Bonnaffe , 23 N.Y. 169 (N.Y. 1861) ; P.B. v. L.B., 19 Misc. 3d 186, 855 N.Y.S.2d 836 (Sp. Ct. Richmond Co., 2008). Utilizing this logic, the legislature would have used the wording "all" occupants, and not designated a sub-class "tenants" if it intended an automatic stay of all summary proceedings to deal with the COVID pandemic. Inferentially, it had to be the legislature's intent to provide hearings for landlords to raise "standing issues" and that the moratorium is not automatic. Utilizing a similar argument, New York law requires this Court to construe its statutes in such a manner so as to avoid Constitutional impairment. See generally, People v. Liberta, 64 N.Y.2d 152, 485 N.Y.S.2d 207, 474 N.E.2d 567 (N.Y. 1984) ; See also, Collado v. Boklari, 27 Misc. 3d 161, 892 N.Y.S.2d 731 (Suf. Co. Dist. Ct., 2009). The Court notes that the COVID-19 statute expressly provides for a hearing for "nuisance" tenants, for residential hardship cases. By simply construing the statute to allow for all "standing" challenges to all hardship declarations; the COVID statute avoids any constitutional due process invalidity.
The Court notes that several Courts have declined to follow the administrative policy of automatically adjourning cases where a Hardship Declaration is filed. A Westchester Court found that a landlord, in a residential eviction proceeding is entitled to a hearing to challenge an occupant's claim of financial hardship but is precluded from a hearing if the occupant asserts a "significant health risk". Piscionere v. Gori, 2021 WL 189636, 2021 N.Y. Slip Op. 30096 (U) (N.Y. Civ. CT. 2021) sitting in Westchester County). The Supreme Court in Ulster County determined in a commercial foreclosure proceeding that the companion language in the COVID Moritorium statute which pertains to foreclosures, allows for a standing hearing to challenge the merit of a Hardship Declaration. Southern Acquisition Co., LLC v. TNT, LLC, 71 Misc. 3d 1002, 147 N.Y.S.3d 342, 2021 N.Y. Slip Op. 21084 (Sp. Ct. Ulster Co., 2021)
In the case at bar, the landlord has raised a challenge to the existence of financial hardship and also asserts the undisputed fact that the occupant is a tenant who New York State no longer recognizes as being in existence. A corporation's legal existence terminates upon dissolution, and as such, is prohibited from carrying on new business ... 20 B Carmody Wait 2d 121:157 citing to NY Bus. Corp. L. Secs. 1005 - 1006 ; Calabrese Bakeries, Inc. v. Rockland Bakery, Inc., 102 A.D.3d 1033, 960 N.Y.S.2d 514 (N.Y. A.D. 3d Dept. 2013).This is by virtue of the fact that the corporation was dissolved by the Secretary of State on August 31, 2016, which was its condition on the eviction petition date on August 20, 2020. The COVID Moratorium statute and its predicate Declaration of Hardship expressly make the declarant state "my business is a resident of New York State ..." Clearly, this is a false statement as New York does not recognize its existence. These facts constitute a sufficient basis to conduct a COVID Moratorium "standing" hearing, which will be held August 5, 2021 at 10:30 a.m. before this Court. Upon a finding of a lack of standing to assert the COVID Moratorium; the Court will immediately proceed to trial for disposition of the within petition and answer.