Opinion
L & T 53787/19
01-27-2020
ST. JOSEPH'S IMMIGRANT HOME, INC., Petitioner/Landlord, v. Cynthia Ann WEIDNER, Respondents, John Doe and Jane Doe, Respondents/Undertenants.
Respondent's counsel, Goddard Riverside Community Center Law Project, Aaron Kratzat, Esq., Joshua Komarovsky, Esq., 51 West 109th Street, New York, NY 10025, (212) 799-9638 Petitioner's counsel, Golino Law Group, PLLC, Santo Golino, Esq., 46 Trinity Place, 3rd floor, New York, NY 10006, (212) 344-9300
Respondent's counsel, Goddard Riverside Community Center Law Project, Aaron Kratzat, Esq., Joshua Komarovsky, Esq., 51 West 109th Street, New York, NY 10025, (212) 799-9638
Petitioner's counsel, Golino Law Group, PLLC, Santo Golino, Esq., 46 Trinity Place, 3rd floor, New York, NY 10006, (212) 344-9300
Frances A. Ortiz, J.
Recitation as required by CPLR 2219(a), of the papers considered in the review of the respondent's motion for discovery and petitioner's cross motion for use and occupancy.
Papers Numbered
Notice of Motion, Affirmation & Affidavit 1
Notice of Cross Motion, Affidavits, Affirmation & Memorandum of Law 2
Affirmation in Reply & Opposition 3
Affirmation in Reply 4
This is a holdover proceeding based on an expired lease of an unregulated unit. According to the petition, the subject premises is not subject to rent stabilization or rent control pursuant to RSC § 2520.11 (f) because the dwelling is owned by an institution which operates for charitable purposes on a non-profit basis.
Under RSC § 2520.11 certain housing accommodations are exempt from rent stabilization. Specifically, RSC § 2520.11 (f), exempts from rent stabilization "... housing accommodations owned, operated, or leased or rented pursuant to governmental funding, by a hospital, convent, monastery, asylum, public institution, or college or school dormitory or any institution operated exclusively for charitable or educational purposes on a nonprofit basis, and occupied by a tenant whose initial occupancy is contingent upon an affiliation with such institution; however, a housing accommodation occupied by a nonaffiliated tenant shall be subject to the RSL and this Code."
THE PARTIES
Petitioner is St. Joseph's Immigrant Home, Inc. ("St. Joseph's"). It provides affordable housing to woman in the heart of New York City's theatre district. According to St. Joseph's website,
Saint Joseph's Home is a short term residence for woman who are working in New York City and/or attending school or internship programs ... We are a ministry of the Daughters of Mary of the Immaculate Conception and we are open to women of all faiths and national origins. With approximately 80 women who now reside at Saint Joseph's, these women represent all countries, cultures and religious beliefs. Saint Joseph's offers a wonderful and safe living space for a transitional period ... http://www.saintjosephsimmigranthome.com.
According to respondent, she moved into the subject premises in January 2017 pursuant to a written lease. Thereafter, she signed renewal leases every six months. (Weidner Aff'd ¶ 3). Respondent claims that after she moved into the subject premises, around 2017 she started to "... notice people passing in and out of ... the building more frequently..." (Weidner Aff'd ¶ 5). Based on this observation, respondent concludes that petitioner was renting units in the building on short-term rental sites such as Airbnb. Also, she claims to have found online advertisements for rental of St. Joseph's unit(s) on Airbnb. The nightly rent was as high as $141 per person. (Id.) . She affirms that the online reviews she saw are specific to St. Joseph's because she compared the photos of the available unit(s) with rental listings on St. Joseph's website. Several of the photos of the unit(s) and common spaces are identical to those found in the Airbnb listing and St. Joseph's own website. (Id.) . She also noticed that the name of the Airbnb listing contact person was "Joanne."
THE SUPPORTING ARGUMENTS AND OPPOSITION TO MOTION IN CHIEF
In sum, respondent contends that it is her belief the petitioner is running the subject building as would a private landlord. Also, she claims that based on petitioner's publicly available tax documents, petitioner makes its money from rentals. Lastly, she states that her attorney sets out in his affirmation that petitioner is inextricably linked to a much larger non-profit, Saint Agnes. According to publicly available tax documents, St. Agnes has over $5,000,000 in both net and total assets. (Weidner Aff'd ¶ 7). Accordingly, she seeks discovery to enable her to put forth her defense that she is rent stabilized because the subject premises and building is being operated for profit.
Respondent moves for discovery claiming that she has ample need for the items sought in the Notice of Production and Demand for Documents. She claims that based on her observations in the building, the advertisements of short term rentals on websites and publicly available tax records for petitioner, she has reason to believe petitioner does not qualify for the charitable purposes exemption. According to respondent, the documents sought are exclusively in petitioner's control necessitating discovery.
Respondent also contends that petitioner's exemption status is factually dubious. Respondent highlights the language in RSC § 2520.11 (j) which exempts from rent stabilization housing accommodations in buildings operated exclusively for charitable purposes on a nonprofit basis. She indicates that whether the charitable exemption applies is determined by looking at whether or not the building is being used for charitable purposes. Specifically, she claims that there are two factors suggesting the building's usage is not within the charitable purposes exception. First, the public tax documents for the building in Form 990 for Tax Year 2015 show petitioner's total revenue was $543,698 and out of this amount $543,675 was derived from program service and $23 from investment income. (Exhibit H). Second, respondent claims that petitioner's use of "short term rental sites belies" petitioner's stated charitable purposes exception. (Kratzat Affirm. ¶28).
Petitioner in opposition, first, argues that the facts claimed are contrary to respondent's "theory for discovery" and do not warrant discovery. Second, petitioner asserts that the appellate authority is contrary to respondent's theories for discovery. Third, petitioner contends that respondent's discovery request is a fishing expedition.
In support of the assertion that the facts raised are contrary to respondent's theory for discovery, petitioner submits an affidavit from a former employee, Joanne Huang. Ms. Huang states that she was the former on site property manager of St. Joseph's. She also resided at the subject building. (Huang Aff'd ¶ 1). She indicates that without petitioner's consent she took it upon herself to list her unit at the subject building on Airbnb for her own use. The listing was for a single room on the first floor. (Huang Aff'd ¶ 4). She avers that petitioner was not aware of nor consented to the listing. She also confirms that she listed herself on the Airbnb website as the host which is precisely what respondent depicted in her affidavit. (Huang Aff'd ¶ 4). In order for her to create the listing, she copied photos from St. Joseph's website and pasted it to the Airbnb website. (Huang Aff'd ¶ 5). She personally received the proceeds of the listing, and petitioner did not receive nor collect any money from the short term rentals. (Huang Aff'd ¶ 6). After petitioner's managing agent, Marc Roos, in May 2019 confronted her on the Airbnb listing, she denied it and removed the listing. (Huang Aff'd ¶ 7). However, she ultimately admitted on September 10, 2019 that she was the one advertising the listing. (Huang Aff'd ¶ 8).
DISCUSSION
In summary proceedings leave to conduct discovery may be granted where the movant demonstrates a meritorious claim, ample need, that the discovery sought is tailored to the facts of the case, and no prejudice to the opposing party. New York University v. Farkas , 121 Misc 2d 643 (Civ. Ct. NY Cty 1983). Here, respondents have not facially shown a meritorious claim nor ample need for the discovery sought. The "facts" established as the basis for respondent wanting discovery are her claim that there are " people passing in and out of the building more frequently " The "people" are renting advertised units for short-terms on Airbnb from petitioner, and thereby relinquishing the building's charitable purpose status. (Weidner Aff'd ¶ 5). A party "will not be allowed to use pretrial discovery as a fishing expedition when they cannot set forth a reliable factual basis for what amounts to, at best, mere suspicions ." Devore v. Pfizer Inc. , 58 AD3d 138, 144 (1st Dep't; 2008). Respondent's unreliable suspicions, conclusory and vague facts are not sufficient to warrant this Court to order petitioner to produce the discovery sought. Respondent has not asserted compelling reasons for such discovery sought. Actually, respondent is attempting to formulate a defense with a fishing expedition and such an expedition should never be permitted especially in a summary proceeding .
Respondent's counsel in his reply papers even uses the following words: "suspect that the building is being utilized for non-charitable purposes, which provides ample justification for discovery ..." (Komarovsky Reply Affirm. ¶ 13).
Moreover, respondent's factual claims are credibly refuted in the affidavit of Joanne Huang. Ms. Huang admits that she took it upon herself to list her residential unit on Airbnb without petitioner's knowledge. (Huang Aff'd ¶ 4). This is further supported by respondent's own Exhibits B & C which show that "Joanne" is listed as the only host of the unit. These exhibits show Airbnb listings only with the name "Joanne" as the host.
Additionally, appellate case law has set forth precedent on the issue of document production in matters involving Rent Stabilization Code § 2520.11 (j). The Appellate Division, First Department in Boiko v. Higgins , 195 AD2d 279 (1st Dep't 1993) leave to app denied 82 NY2d 664 (1994) decided an Article 78 appeal. The issue was whether or not there was a rational basis for the Division of Housing and Community Renewal's ("DHCR") determination that a building owned and operated by St. Mary's Home for Working Girls, which contains 152 rooms, some of which were occupied by the petitioners in that matter, comes within the Rent Stabilization Code § 2520.11 (j) exception as a charitable organization. In Higgins, supra ., the subject building was operated as non-profit organization by order of nuns who lived in the convent located on the second floor of the premises. The Court found that the undisputed facts established that the premises was operated for charitable purposes on a non-profit basis. One such undisputed fact was a showing by St. Mary's of its federal tax exempt status as an organization described in section 501 (c) (3) of the Internal Revenue Code (26 USC). Here, respondent's own Exhibit H shows that St. Joseph's files its tax status, under section 501 (c) (3) of the Internal Revenue Code (26 USC). Additionally, Petitioner's Exhibits F and G show that it is currently tax exempt from the New York City, Department of Finance due to charitable benefit and its New York State Corporate entity is "Domestic Not-for-Profit," since its initial filing date on September 22, 1926. The Higgins court also found that DHCR should not have been ordered to obtain documentation that all income from the subject rooms was used exclusively for charitable purposes and not, in part, for the religious functions of St. Mary's. Similarly, here, this Court will not order petitioner to provide respondent with documentation that its income derives from alleged short term rentals and not exclusively used for charitable purposes.
St. Mary's conclusively established to DHCR by its chief operating officer that its operation was a nonprofit. The facts that supported this was a showing of its Federal tax exempt status as an organization described in section 501 (c) (3) of the Internal Revenue Code (26 USC), its exemption from New York State sales and use tax as an organization described in section 1116 (a) (4) of the New York Tax Law, and that the premises are exempt from real property taxes under section 420-a of the New York Real Property Tax Law as owned and used for charitable purposes and operated on a non-profit basis. Boiko v. Higgins, supra.
Lastly, the Appellate Division, First Department in Candida v. Salvation Army, Inc ., 46 AD3d 294 (1st Dep't 2007) held that the leasing of some rooms in the Salvation Army residences to university students was incidental to the primarily charitable purpose of the residences, and thus, did not bar the application of the exemption from the Rent Stabilization Law. Likewise, here, even if St. Joseph's had rented a room as respondent claims, any leasing of such room does not bar exemption from the rent stabilization law. Candida v. Salvation Army, supra .
For all the reasons discussed above, respondent's motion for discovery is denied.
CROSS MOTION
Petitioner cross moves for use and occupancy. Respondent opposes the cross motion arguing that the timeliness of RPAPL § 745 has not been triggered and that the subject building's multiple dwelling registration ("MDR") with Department of Housing Preservation and Development ("HPD") has not been currently filed. First, the cross motion for use and occupancy was not made pursuant to RPAPL § 745 so that part of respondent's opposition is unavailing. Second, petitioner in reply supplied documentary proof showing the subject building is duly registered as a multiple dwelling with HPD until September 1, 2020. (Reply Exhibit B). Therefore, respondent's opposition relating to the MDR is also unavailing.
Courts have broad discretion in awarding use and occupancy pendente lite . Alphonse Hotel Corp. v. 76 Corp. , 273 AD2d 124 (1st Dep't 2000). Here, respondent has not paid the monthly $1,000 use and occupancy for the subject premises from February 2019 through December 2019 for a total $11,000 through December 31, 2019. (Golino Affirm. ¶18). Petitioner is entitled to an order requiring respondent to pay use and occupancy pending the determination of this proceeding. Levinson v. 390 W. End Assoc., L.L.C. , 22 AD3d 397, 403 (1st Dep't 2005). These payments are a condition to respondent remaining at the subject premises until her claim is resolved. The order would be without prejudice to either party's rights. Kingsley v. 300 W. 106th St. Corp. , 162 AD3d 420, 421 (1st Dep't. 2018), leave to appeal dismissed , 32 NY3d 1134 (2019), reargument denied , 33 NY3d 1008, (2019). Moreover, respondent even conceded to payment of use and occupancy without prejudice in a two attorney stipulation dated April 2, 2019.
Accordingly, petitioner's cross motion seeking use and occupancy is granted. Respondent to pay the outstanding $12,000 use and occupancy at $1,000 monthly for February 2019 through January 31, 2020 by February 28, 2020 without prejudice. Additionally, respondent to pay $1,000 monthly use and occupancy pendente lite effective February 2020 by the 10th day of the month without prejudice.
The matter is adjourned to February 27, 2020 in Part F, Room 830 at 9:30 a.m. for all purposes, including trial.
ORDERED: the respondent's motion for discovery is denied.
ORDERED: the petitioner's cross motion for use and occupancy is granted.