Opinion
L & T 56048/19
01-15-2020
SURFAIR EQUITIES, INC., Petitioner, v. Alberto MARIN, John Doe and Jane Doe, Respondents.
Regina M. Marotti, P.C., 532 East Olive Street, Long Beach, NY 11561, Attn: Regina M. Marotti, Esq., Attorneys for Petitioner The Law Offices of Ari Mor, Esq., P.C., 111 John Street, Suite 1805, New York, NY 10038, Attn: Ari Mor, Esq., Attorneys for Respondent
Regina M. Marotti, P.C., 532 East Olive Street, Long Beach, NY 11561, Attn: Regina M. Marotti, Esq., Attorneys for Petitioner
The Law Offices of Ari Mor, Esq., P.C., 111 John Street, Suite 1805, New York, NY 10038, Attn: Ari Mor, Esq., Attorneys for Respondent
Julie Poley, J.
Recitation, as required by CPLR 2219(a)
Notice of Motion and Affidavits Annexed 1
Order to Show Cause and Affidavits Annexed 0
Answering Affidavits 2
Replying Affidavits. 3
Exhibits 4
Stipulations 0
Other 0
Petitioner, a cooperative housing corporation ("co-op") appearing by counsel, commenced this objectionable conduct holdover proceeding to recover possession of Apt. 3A located at 35-30 73rd Street, Jackson Heights, NY 11435 ("premises"). Respondent Alberto Marin is the shareholder of Apt. 3A pursuant to a proprietary lease is also represented by counsel. The premises, a cooperative unit are exempt from rent control and rent stabilization pursuant to General Business Law § 352-eeee. Petitioner alleges that after approximately 20 years of objectionable conduct, and repeated written notices, the Board of Directors held a Special Meeting to discuss whether Respondent's tenancy should be terminated for objectionable conduct pursuant to Paragraph 31(f) of Respondent's proprietary lease. After deliberations Respondent's proprietary lease was duly terminated by a unanimous vote by the Board of Directors. Respondent failed to vacate and this summary holdover proceeding ensued.
Pending Motions :
At this juncture, two motions are before the Court. Petitioner moves for summary judgment pursuant to CPLR § 3212 granting Petitioner a final judgment of possession and dismissing Respondent's defenses and counterclaims, including striking Respondent's jury demand. Petitioner contends that the co-op acted within its authority and in good faith, properly terminating Respondent's tenancy, and therefore the Court should defer to the Board vote and issue a warrant of eviction to recover the premises from Respondent. Petitioner also asks the Court to schedule a hearing to determine attorneys' fees and costs to be awarded.
Respondent opposes, and cross-moves for summary judgment pursuant to CPLR § 3212 to dismiss the proceeding and for dismissal pursuant to CPLR § 3211(a)(7) for failure to state a cause of action. Respondent's argument is threefold: (1) That the co-op acted outside the scope of its authority by not precisely following the procedure prescribed by the co-op for sending notices; (2) That the co-op acted in bad faith by deliberating "off the record" at the Special Meeting and by failing to state the factual basis in support of its decision to terminate Respondent's tenancy based on objectionable conduct; and (3) That the Notice of Termination fails to state a cause of action because it is factually deficient. Respondent also seeks an award for attorneys' fees and costs. Both motions are fully briefed and are consolidated for disposition herein.
Background: Co-op Board Votes to Terminate Proprietary Lease :
Petitioner submits that Respondent engaged in objectionable conduct throughout his tenancy which began in 1994. Petitioner alleges that for more than 20 years Respondent has been making excessive noise in the building and behaves in a manner that is objectionable and interferes with the quite enjoyment of other shareholders and tenants' properties. Some of this behavior includes but is not limited to: repeatedly banging and knocking on the floors, walls and ceilings of his apartment at all hours of the day and night; violently pounding and kicking the doors of other apartments; continuously buzzing and banging on the door to Apartment 4A; speaking to building residents in an abusive, threatening and rude manner; playing his radio loudly and incessantly; blaring his television volume at all hours of the day and night for weeks at a time causing the police to be called to the building as a result of the excessive noise; and he damaged the door and door frame to apartment 2A by beating it with a baseball bat.
Since 1998 building residents lodged complaints against Respondent on a regular basis. At times complaints were logged on a daily and monthly basis throughout most years of Respondent's tenancy. Petitioner alleges sending numerous warnings to Respondent asking him to conform his conduct to the proprietary lease and House Rules. Attached to the pleadings are 15 letters and notices to Respondent regarding his behavior. The letters include notices to cure, and in some years the notices resulted in mediation with a neighbor. Additionally, some letters included invoices for the alleged property damage.
Ultimately, Petitioner scheduled a Special Meeting of the Board of Directors ("Board") for January 10, 2019 for the specific purpose of deciding whether to terminate Respondent's proprietary lease due to objectionable conduct pursuant to Paragraph 31 of the proprietary lease. Paragraph 31 of the proprietary lease authorizes Petitioner to terminate the proprietary lease if Respondent engages in objectionable conduct. (See , P. Ex. C, pg. 23). Paragraph 31(f) of the proprietary lease provides in pertinent part:
Lessee's Objectionable Conduct
(f) If at any time the Lessor shall determine, upon the affirmative vote of two-thirds of its then Board of Directors, at a meeting duly called for that purpose, that because of objectionable conduct on the part of the Lessee, or of a person dwelling or visiting in the apartment, repeated after written notice from Lessor, the tenancy of the Lessee is undesirable; (it being understood, without limiting the generality of the foregoing, that repeatedly to violate or disregard the House Rules attached hereto or thereafter established in accordance with the provisions of this lease, or to permit or tolerate a person of dissolute, loose or immoral character to enter or remain in the building or the apartment, shall be deemed to be objectionable conduct); (See , P. Ex. C, pg. 25).
In advance of the Special Meeting, Petitioner sent Respondent a Notice of Special Meeting of the Board of Directors of Surfair Equities, Inc., dated December 14, 2018 ("Notice of Special Meeting"). The Notice of Special Meeting included the proposed resolution that the Board would be asked to vote on to terminate Respondent's proprietary lease. (See , Petition, Ex. B). Pursuant to the By Laws of Surfair Equities, Inc. ("By Laws"), Special Meetings of the Board shall be held at the co-op and may be called by the co-op President on two days' notice to each director, either personally or by mail or by telegram. (See , P. Ex. E, pg. 5 of By Laws). In accordance therewith, the Notice of Special Meeting was called by the President of the co-op, provided more than two days' notice, and designating the meeting place at the Basement Meeting Room of the co-op. (See , Petition, Ex. B). There is no dispute concerning the election or standing of the then President of the co-op.
Petitioner also sent Respondent a Notice of Opportunity to Attend Special Meeting of Board of Directors and the Cooperative, dated December 14, 2018 ("Notice of Opportunity to Attend Special Meeting"), which informed Respondent that he can attend the Special Meeting with or without an attorney, and that he has the opportunity to be heard prior to the Board vote. (See , Petition, Ex. B). The Notice of Opportunity to Attend Special Meeting also provided Respondent with the proposed resolution that the Board would be asked to vote on. In addition, the Notice of Opportunity to Attend Special Meeting contained 28 paragraphs alleging instances in which Respondent violated the proprietary lease and the House Rules from August 2017 through September 18, 2018. Copies of approximately 15 letters and notices previously sent to Respondent concerning alleged objectionable conduct are also annexed to the Notice of Opportunity to Attend Special Meeting.
Petitioner alleges that Respondent's conduct violates Paragraph 18(b) of the proprietary lease ["The Lessee shall not permit or suffer any unreasonable noise or anything which will interfere with the rights of other lessees or unreasonably annoy them or obstruct the public halls or stairways"]. (See , P. Ex. C, pg. 16.). Petitioner also alleges that Respondent's conduct violates Paragraph 24 of the proprietary lease entitled "cooperation," which provides that "The Lessee shall always in good faith endeavor to observe and promote the cooperative purposes for the accomplishment of which the Lessor is incorporated." (See , P. Ex. C, pg. 20). Paragraph 13 in the proprietary lease provides that the co-op has adopted House Rules and that shareholders covenant "to comply with all such House Rules and see that they are faithfully observed by the family, guests, employees and subtenants of the Lessee." (See , P. Ex C, pg. 8). The paragraph further provides that "Breach of a House Rule shall be a default under this lease." (See , P. Ex. C, pg. 8). The House Rules, dated September 20, 2013, are attached to the proprietary lease. House Rule 15 provides:
"No Lessee shall make or permit others including, but not limited to, their invitees, to make any disturbing noises in the building or do or permit anything to be done therein which will interfere with the rights, comfort or convenience of other Lessees or residents. No Lessee shall play upon or suffer to be played upon any musical instrument or permit to be operated a stereo system or a radio or television or computer or video game system loudspeaker in such Lessee's apartment between the hours of ten o'clock p.m. and the following eight o'clock a.m. if the same shall disturb or annoy other occupants of the building. No construction or repair work or other installation involving noise shall be conducted in any apartment except on weekdays (no including legal holidays) and only between the hours of eight o'clock a.m. and five o'clock p.m." (See , P. Ex. C, House Rule 15).
It is undisputed that Respondent failed to attend the Special Meeting on January 10, 2019. Petitioner contends that there are 5 members of the Board. Pursuant to the By Laws of Surfair Equities, Inc., the Board must consist of at least 3 and not more than 7 directors. (See , P. Ex. E, pg. 4 of By Laws). There is no dispute concerning the number, election or standing of the then existing Board of Directors. All 5 members of the Board attended the Special Meeting and voted unanimously in favor of the resolution to terminate Respondent's proprietary lease for objectionable conduct. Thereafter, Respondent's proprietary lease was terminated on February 28, 2019 pursuant to the Notice of Termination of Proprietary Lease ("Notice of Termination") annexed to the Petition as Exhibit A. The Notice of Termination included the stenographer's official transcript from the January 10, 2019 Special Meeting in which the Board unanimously adopted the resolution to terminate Respondent's proprietary lease.
Standard of Review: Business Judgment Deference for Board Votes
To obtain summary judgment, the moving party has the burden of establishing its cause of action or defense sufficiently to justify judgment in its favor as a matter of law. (See , CPLR § 3212(b) ; Friends of Animals, Inc. V. Associated Fur Mfrs. Inc. ,390 N.E.2d 298 [1979] ). If there is any doubt as to the existence of a triable issue, summary judgment should not be granted. ( Glick & Dolleck, Inc. V. Tri-Pk Export Corp. , 239 N.E.2d 725 [1968] ). As summary judgment is a drastic remedy, "the facts must be viewed in the light most favorable to the non-moving party." ( Vega v. Restani Construction Corp. , 18 NY3d 499, 503 [2012] ). "To grant summary judgment it must clearly appear that no material and triable issue of fact is presented." ( Sillman v. Twentieth Century-Fox Film Corp. , 3 NY2d 395, 404 [1957] ; citing, Di Menna & Sons v. City of New York , 301 NY 118 [1950] ).
The proponent of summary judgment is required to "make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of material fact." ( Alvarez v. Prospect Hosp. , 68 NY2d 320, 324 [1986] ). Only upon making of this showing does the burden then "shift to the party opposing the motion for summary judgment to produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact which require a trial of the action." (Id. )
Both parties agree that when a co-op elects to terminate a shareholder's proprietary lease for objectionable conduct the decision rendered by the Court of Appeals in 40 West 57th Street Corp. v. Pullman ("Pullman") provides the applicable legal framework for analysis. (See, 40 W. 57th Street Corp v. Pullman, 100 NY2d 147 [2003] ). Pullman is an extension of In Matter of Levandusky v. One Fifth Ave. Apt. Corp., which established that the business judgment rule is the proper standard of review when evaluating a decision rendered by a co-op. (See , In Matter of Levandusky v. One Fifth Ave. Apt. Corp. , 75 NY2d 530 [1990] ) .
"In the context of cooperative dwellings, the business judgment rule provides that a court should defer to a cooperative board's determination ‘[s]o long as the board acts for the purposes of the cooperative, within the scope of its authority and in good faith." (40 W. 57th Street Corp v. Pullman , 100 NY2d 147, 153 [2003] quoting, In Matter of Levandusky v. One Fifth Ave. Apt. Corp. , 75 NY2d 530, 538 [1990] ).
The business judgment rule prevents judicial interference and second-guessing of corporate decisions made in good faith and in furtherance of the corporate purpose. ( London Terrace Towers, Inc. v. Davis , 6 Misc 3d 600 [Civ Ct, New York County 2004] citing, In Matter of Levandsusky v. One Fifth Ave. Apt. Corp. , 75 NY2d 530 [1990] ). "If the business judgment rule applies, the court must grant summary judgment to the cooperative corporation if the cooperative moves for it, and, otherwise, must grant a final possessory judgment after trial without requiring the cooperative corporation to prove whether the shareholder-tenant is innocent or guilty of the purported objectionable conduct. It is the shareholder-tenant's burden to show that the board vote is not entitled to deference." ( London Terrace Towers, Inc. v. Davis , 6 Misc 3d 600, 610 [Civ Ct, New York County 2004] ); citing , 40 W. 57th Street Corp v. Pullman, 100 NY2d at 155 ; 13315 Owners Corp. v. Kennedy , 4 Misc 3d 931, 938 [Hous Part, Civ Ct, New York County 2004] ).
Under this deferential standard, if the business judgment rule applies, Courts defer to a decision rendered by a co-op as "competent evidence" that a shareholder's conduct is objectionable under RPAPL § 711(1). (See, 40 W. 57th Street Corp v. Pullman, 100 NY2d 147 [2003] ). The Court affords the same level of deference to a Board vote as a shareholder vote. ( London Terrace Towers, Inc. v. Davis , 6 Misc 3d 600 [Civ Ct, New York County 2004] ). "To trigger further judicial scrutiny, an aggrieved shareholder-tenant must make a showing that the board acted (1) outside the scope of its authority, (2) in a way that did not legitimately further the corporate purpose or (3) in bad faith." ( 40 W. 57th Street Corp v. Pullman, 100 NY2d 147,155 [2003] ). As such, it is Respondent's burden to persuade the Court why it should not apply the business judgment rule and defer to the co-op's decision to terminate Respondent's proprietary lease for objectionable conduct. If the shareholder satisfies its burden, only then will the Court conduct "an independent evaluation, from competent, admissible evidence, of whether the shareholder committed objectionable conduct." ( London Terrace Towers, Inc. v. Davis , 6 Misc 3d 600 [Civ Ct, New York County 2004] ); citing , 13315 Owners Corp. v. Kennedy , 4 Misc 3d 931, 938 [Hous Part, Civ Ct, New York County 2004] ).
Findings of Fact and Conclusions of Law :
As a preliminary matter, Respondent's jury demand is stricken. Paragraph 41 in the proprietary lease contains a jury waiver for any proceeding or counterclaim brought by either party in connection with the lease. (See , P. Ex. C, pg. 32).
Turning to Respondent's first argument, Paragraph 27 in the proprietary lease provides that any notice by or demand from either party shall be sent in writing by certified or registered mail, return receipt requested. (See , P. Ex. C, pg. 21). Respondent alleges that the co-op acted outside the scope of its authority by not precisely following the procedure prescribed by the co-op for sending notices. Contrary to Respondent's assertion, upon review, the Notice of Termination, the Notice of Special Meeting, and the Notice of Opportunity to Attend Special Meeting were all sent to Respondent by Certified Mail, Return Receipt Requested and by First Class Mail in accordance with Paragraph 27 of the proprietary lease. (See , Petition, Ex. A and B). Paragraph 31 in the proprietary lease provides the Notice of Termination from "the Lessor shall give to the Lessee a notice stating that the term thereof will expire on a date at least five days thereafter" (See , P. Ex. C, pg. 23). The Notice of Termination, which is dated February 11, 2019, and which was mailed to Respondent on February 11, 2019 by Certified Mail, Return Receipt Requested and by First Class Mail, notifies Respondent that the term of his proprietary lease will expire on February 28, 2019. Even when adding 5 days for mailing, Petitioner provided Respondent with the requisite 5 days notice pursuant to Paragraph 31 in the proprietary lease. (See , Petition, Ex. A). Concerning the Special Meeting, the By Laws require that a Special Meeting called by the President of the co-op provide at least 2 days' notice to each director. (See , P. Ex. E, pg. 5 of By Laws). The Notice of Special Meeting, dated and sent on December 14, 2018, provides the requisite 2 days' notice as the Special Meeting took place on January 10, 2019. (See , Petition, Ex. B). All 5 members of the Board attended the Special Meeting. Therefore, Respondent has failed to raise an issue of fact concerning service of the subject notices, and on this issue, has not persuaded the Court that the Board acted outside the scope of its authority.
The Court now turns to Respondent's second argument, that the co-op acted in bad faith by deliberating "off the record" at the Special Meeting and by failing to state the factual basis in support of its decision to terminate Respondent's tenancy based on objectionable conduct. In support, Respondent relies on 320 Owners Corp. v. Harvey ("Harvey") , in which a trial court, interpreting Pullman, dismissed an ejectment proceeding commenced by a co-op board against shareholders for objectionable conduct by their teenage son. (See, 320 Owners Corp. v. Harvey , 2008 NY Misc. LEXIS 10450 [Sup Ct, New York County 2008]).
In Harvey , the co-op sent the shareholders a letter detailing objectionable conduct by their teenage son. Approximately 9 months later, the co-op sent the shareholders Notice of a Special Meeting of the Board of Directors, which informed the shareholders of their right to "appear at the meeting with your attorney to respond to the charges of objectionable conduct that will be presented to the Board at the meeting [internal citations omitted]." (Id. ) The shareholders attended the Special Meeting with their attorney and their son, at which time charges were presented to the Board and the shareholders and their son addressed the Board in proceedings that were transcribed. After the shareholders left the meeting, the Board conducted deliberations that were not transcribed and voted to terminate the shareholders' tenancy. There is no indication in the record that the Board made a written resolution at the Special Meeting. In dismissing the ejectment proceeding, the Court in Harvey noted that the Board did not produce a written resolution, and that the notice of termination did not set forth any specific factual findings made by the Board in support of its conclusion that the conduct by the shareholders' son was objectionable. As such, the Board failed to identify the charges that it found to be sustained, thus depriving the shareholders the opportunity to assess whether the decision was made in good faith. (Id. ).
The case at bar is distinguishable from Harvey in several key respects. In Harvey the shareholders, their son, and their attorney all appeared at the Special Meeting. They pled their case and made arguments on the record in support of why their proprietary lease should not be terminated. Akin to a decision rendered after a contested trial, the Court in Harvey determined that the Board had a duty to address the arguments presented by the shareholders, their son, and their attorney at the Special Meeting, and that the Board, when rendering their decision, needed to set forth the specific factual findings to identify the charges that it found to be sustained. By contrast, the Respondent herein failed to appear at the Special Meeting. As such, the allegations against Respondent were undisputed at the Special Meeting. Whereas the Special Meeting in Harvey is analogous to a contested trial, the Special Meeting herein is akin to an uncontested inquest. "By not appearing or presenting any evidence personally or by counsel, defendant failed to challenge the findings and has not otherwise satisfied us that the Board has in any way acted ultra vires." (See, 40 W. 57th Street Corp v. Pullman, 100 NY2d 147, 156 [2003] ). In fact, Respondent admits that he chose not to attend the meeting as he thought it would be futile.
The fact pattern is also distinguishable from Harvey in that here, the proposed resolution to terminate Respondent's proprietary lease for objectionable conduct was sent to the Board and to Respondent in advance of the Special Meeting, and the resolution was passed unanimously at the Special Meeting. That resolution, read in conjunction with the Notice of Opportunity to Attend Special Meeting, which contained 28 paragraphs of alleged objectionable conduct and copies of approximately 15 letters and notices previously sent to Respondent concerning alleged objectionable conduct, clearly frame the issue presented at the Special Meeting. In the case at bar, all parties were aware that the proposed resolution would be voted on at the Special Meeting, which Respondent admittedly did not attend. The proposed resolution was circulated, the issue was clearly framed, and the Board took reasonable steps to make sure that Respondent was apprised as to what was at stake at the Special Meeting.
Respondent's argument concerning the Board's "off the record" deliberations is not persuasive. Respondent does not identify any requirement in the proprietary lease, the By Laws or the New York Business Corporation Law that the Board must conduct their deliberations on the record. Rather than acting in bad faith, the record indicates that the co-op gave Respondent numerous chances prior to seeking termination. The twenty years of letters, meetings, warnings and mediation is prima facie evidence that the Board acted in good faith. Respondent's allegations that the neighbors and the Board all conspired to terminate his tenancy is not supported by any of the evidence and is not persuasive. The number of letters sent to Respondent alleging numerous complaints some on a daily and monthly basis as well as numerous shareholder meetings dedicated to Respondent's alleged behavior over 20 years coupled with Respondent's admission that he decided to ignore notices and intentionally not attend the Special Meeting supports that the Board acted in good faith and in furtherance of the co-op's legitimate interests in adopting the resolution to terminate Respondent's tenancy. "Conclusory and speculative allegations of bad faith, self-dealing, and other wrongdoing" will not suffice to raise a triable issue of fact. ( Molander v. Pepperidge Lake Homeowners Assn. , 82 AD3d 1180, 1183 [2nd Dep't 2011] ; quoting , Bay Crest Assn., Inc. v. Paar , 72 AD3d 713, 714 [2nd Dep't 2010] ; see also , 40-50 Brighton First Rd. Apts. Corp. v. Kosolapov , 39 Misc 3d 27, 29 [App Term, 2nd Dep't 2013] ). A bona fide ground upon which a cooperative renders a determination against a shareholder prevails over an allegation of the shareholder that personal animosity was the real reason for the adverse determination. (See, Del Puerto v. Port Royal Owner's Corp. , 14 Misc 3d 1214(A) [Sup Ct, Kings County 2007] aff'd , 54 AD3d 977, 977-978 [2nd Dep't 2008] ). Therefore, Respondent failed to demonstrate that the co-op acted in bad faith when terminating Respondent's proprietary lease for objectionable conduct.
Respondent's third argument is that the proceeding should be dismissed because the Notice of Termination fails to state a cause of action because it is factually deficient. In evaluating the sufficiency of a predicate notice in a summary proceeding, "the appropriate test is one of reasonableness in view of the attendant circumstances." ( Oxford Towers Co. LLC v. Leites , 41 AD3d 144, 144-145 [1st Dep't 2007] ; citing , Hughes v. Lenox Hill Hosp. , 226 AD2d 4, 18 [1st Dep't 1996], lv denied 90 NY2d 829 [1997] ). Thus, a notice which provides "the necessary additional information to enable the tenant respondent to frame a defense ... was therefore adequate to meet the tests of reasonableness and due process." (See, The Jewish Theological Seminary of America v. Fitzer , 258 AD2d 337, 338 [1st Dep't 1999] ; see also, Rascoff/Zsyblat Org., Inc. v. Directors Guild of Am., Inc. , 297 AD2d 241, 242 [1st Dep't 2002] ).
Upon review, the Notice of Termination in this proceeding informs Respondent that his proprietary lease is being terminated pursuant to Paragraph 31 and Paragraph 31(f) of his proprietary lease for objectionable conduct. It explains that the Respondent continued to engage in objectionable conduct after receiving written notices, and that on December 14, 2018, the co-op sent Respondent the Notice of Opportunity to Attend Special Meeting, which was scheduled for January 10, 2019. The Notice of Termination further explains that Respondent failed to attend the Special Meeting, and that the Board voted and passed a resolution to terminate his proprietary lease at that Special Meeting. The resolution passed at the Special Meeting is included in the Notice of Termination, and a transcript from the Special Meeting is also attached. Based on the foregoing, the Notice of Termination provides Respondent with the necessary information to frame a defense and is reasonable in view of the attendant circumstances. In any event, as previously stated, the Board vote is competent evidence of Respondent's objectionable conduct. ( 40 W. 57th Street Corp v. Pullman, 100 NY2d 147, 156 [2003] ). "Whether allegations of objectionable conduct contained in and annexed to a termination notice are specific enough to enable a respondent to mount a defense to allegations of misconduct is relevant only if a board's vote is entitled to no deference [emphasis added]." ( London Terrace Towers, Inc. v. Davis , 6 Misc 3d 600, 614 [Civ Ct, New York County 2004] ). Therefore, as the Notice satisfies the reasonableness test and the Board's vote is entitled to deference, the Court rejects Respondent's argument that the Notice fails to state a cause of action.
Respondent's first counterclaim, seeking attorneys' fees and costs, will be addressed subsequently in this Decision/Order. Respondent's second counterclaim, for unlawful eviction pursuant to New York Administrative Code § 26-521, is dismissed. Under CPLR § 3211(b), "a party may move for judgment dismissing one or more defenses, on the ground that a defense is not stated or has no merit." Petitioner has the burden of demonstrating that the affirmative defense is "without merit as a matter of law." ( Bank of New York v. Penalver , 125 AD3d 796, 797 (2nd Dep't., 2015), lv to appl dism. 26 NY3d 1030 (2015), quoting Vita v. New York Waste Servs., LLC , 34 AD3d 559, 559 [2006] ). In this context, "the Court must liberally construe the pleadings in favor of the party asserting the defense and give that party the benefit of every possible inference." ( Fireman's Fund Ins. Co. V. Farrell , 57 AD3d 721, 723 [2008] ). Respondent's counterclaim fails to include any detail and is without merit. There is no dispute that Respondent is in possession of his unit. There is no indication that Petitioner threatened force or engaged in any of the conduct described in the applicable statute, nor has there been any interruption or discontinuance of essential services, nor has the co-op engaged in self-help to evict Respondent. Contrary to Respondent's assertion, Petitioner has demonstrated a good faith decision to terminate Respondent's proprietary lease. Therefore, for the reason's stated, Respondent's second counterclaim is dismissed.
Both parties move for attorneys' fees and costs, which Respondent also pleads as his first counterclaim. Paragraph 28 of the proprietary lease provides in pertinent part:
Reimbursement of Lessor's Expenses
28. If the Lessee shall at any time be in default hereunder and the Lessor shall incur any expense (whether paid or not) in performing acts which the Lessee is required to perform, or in instituting any action or proceeding based on such default, or defending, or asserting a counterclaim in any action or proceeding brought by the Lessee, the expense thereof to the Lessor, including reasonable attorney's fees and disbursements, shall be paid by the Lessee to the Lessor, on demand, as additional rent. (See , P. Ex. C, pg. 21).
On June 14, 2019, New York State enacted the Housing Stability and Tenant Protection Act of 2019 (L 2019, ch 36) ("HSTPA") which made many changes to rent laws throughout the state of New York, including the ability of parties to seek attorneys' fees in summary proceedings in Housing Court. The HSTPA amended RPAPL § 702 to provide that "No fees, charges or penalties other than rent may be sought in a summary proceeding pursuant to this article, notwithstanding any language to the contrary in any lease or rental agreement." (HSTPA, § 1, part M, § 11).The legislation directed that the statutory amendments contained in this subsection of part M "shall take effect immediately and shall apply to actions and proceedings commenced on or after such effective date". (HSTPA, § 1, part M, § 29). This holdover proceeding was commenced in March of 2019. Therefore, the changes concerning attorneys' fees and charges are inapplicable as that portion of the statute applies only to actions and proceedings commenced on or after June 14, 2019. (See , Palmer House Owners Corp. v. Duchesneau , 64 Misc 3d 146(A) [App Term, 2nd Dep't 2019] ; see also , Chery v. Richards , 64 Misc 3d 148(A) [App Term, 2nd Dep't 2019] ). As such, the prevailing party herein may still seek attorneys' fees and costs pursuant to Paragraph 28 of the proprietary lease.
Conclusion :
For the reasons stated, the Court finds that the co-op's decision to terminate Respondent's proprietary lease was authorized, made in good faith, and in furtherance of the co-op's legitimate interests. As such, applying the business judgment rule, the Court is required to defer to the good faith decision made by the Board. Therefore, Petitioner's motion for summary judgment is granted to the extent that Petitioner is awarded a final judgment of possession against all Respondents, warrant to issue forthwith, and execution is stayed to June 30, 2020 for Respondent to vacate the premises. The time allotted will allow time for a sale of his cooperative shares and to secure an alternate residence. Respondent's motion for summary judgment and dismissal is denied for the reasons stated. As the prevailing party, Petitioner is entitled to demand from Respondent reimbursement for reasonable attorneys' fees and disbursements incurred in litigating the within action pursuant to Paragraph 28 of the proprietary lease. If, after making such demand in writing pursuant to the proprietary lease, the parties are unable to agree upon a reasonable dollar amount, only then may Petitioner restore this proceeding by motion on notice for the sole purpose of seeking a judicial resolution as to attorneys' fees and costs to be awarded. If the proceeding is not restored by June 30, 2020 then Petitioner's claim for attorneys' fees and costs is severed for a plenary action.
This constitutes the Decision/Order of the Court.