Opinion
81956/2017
09-24-2018
554-558 W. 181 STREET LLC, Petitioner, v. Hope COCHRANE, Respondent.
554-558 W. 181 Street, LLC, the petitioner in this proceeding ("Petitioner") commenced this summary proceeding against Hope Cochrane, the respondent in this proceeding ("Respondent") seeking a money judgment and possession of 554 West 181st Street, Basement Apartment ("the subject premises") on the basis of nonpayment of rent. Respondent interposed an answer. The Court held a trial of this matter on August 27, 2018 and adjourned the matter to September 7, 2018 for post-trial submissions. The Court then granted Respondent's motion to submit a late post-trial memo on September 21, 2018.
The subject premises is subject to the Rent Stabilization Law. A history of registrations of the subject premises with the New York State Division of Housing and Community Renewal ("DHCR") pursuant to 9 N.Y.C.R.R. § 2528.3 purports to show a legal regulated rent for the subject premises of $2,500.00. The petition pleads that the rent for the subject premises is $1,915.00. The rent demand seeks payment of arrears based on a rent of $1,915.00. A lease in evidence between Petitioner, Respondent, and another tenant commencing January 30, 2017 and expiring May 30, 2018 shows a monthly rent of $3,000.00 a month ("the lease with the higher rent").
Petitioner's director of leasing ("the leasing director") testified that Respondent needed assistance paying rent and wanted a lease with a lower rent so that the New York City Human Resources Administration ("HRA") would pay her rent. A two-year lease in evidence between Petitioner and Respondent commenced on December 1, 2017 with a monthly rent of $1,213.00 ("the lease with the lower rent"). At some point, Petitioner received $800.00 a month from HRA through a program known as the Special Exit Prevention Supplement ("SEPS"). Respondent testified that she had the understanding that SEPS would pay $1,213.00 a month, which is what she requested from Petitioner. This testimony is consistent with the testimony of the leasing director, except that the leasing director testified that her understanding was that Respondent would not be the only tenant of the subject premises.
In order to obtain SEPS, a tenant must, inter alia , present to HRA a lease with a rent that does not exceed $1,213.00 for a household of one. 68 R.C.NY §§ 8-12(a)(1)(D)(i), 8-13(a)(1). The SEPS program seeks to house residents of homeless shelters. 68 R.C.NY § 8-12(a)(1)(A). The Court draws the inference that SEPS regulations require a lease in order to assure that payment of benefits pursuant to SEPS actually will maintain a beneficiary of the program in his or her home. Petitioner's pursuit of a judgment against Respondent for nonpayment of rent greater than the lease with the lower rent, in the best light, undermines this purpose and, in the worst light, constitutes fraud on HRA. See SSL § 145-b(1)(a) (defining welfare fraud as, inter alia , a deliberate concealment of any material fact to attempt to obtain payment from public funds for services). Either way, awarding Petitioner a judgment based upon a rent that is greater than the lease with the lower rent would effectively countenance such conduct.
As noted above, leasing director testified that she thought Respondent would not be the only tenant of the subject premises. The Court does not find that such testimony changes the analysis, given that the actual language of the lease with the lower rent identifies only Respondent as the tenant of the subject premises.
Instructively, when a landlord received rent payments from the New York City Department of Homeless Services ("DHS") pursuant to a prior program to subsidize rents, Housing Stability Plus, that landlord could not obtain a judgment against its tenant for nonpayment of a higher rent from another lease that the landlord entered into with the tenant that the landlord did not disclose to DHS. Assoc. v. CW , 24 Misc 3d 1225(A)(Civ. Ct. Bronx Co. 2009). Similarly, a landlord who enters into a Housing Assistance Payment contract with a local housing authority subsidizing a tenant's rent according pursuant to 42 U.S.C. § 1437f, commonly known as the Section 8 program, may not obtain a judgment based upon a subsequent lease for a higher amount. Crutchley v. Costa , 2001 NY Slip Op. 40475(U), ¶¶ 2-6 (Dist. Ct. Nassau Co.), citing Anthony v. Beamon , N.Y.L.J., April 18, 1990, at 25:5 (Dist. Ct. Nassau Co.), Zic v. Smith , 38 Misc 3d 439, 442-43 (Just. Ct. Town of Ossining 2012).
A cause of action for nonpayment of rent sounds in contract. Solow v. Wellner , 86 NY2d 582, 589-90 (1995), Rutland Rd. Assoc., L.P. v. Grier , 2017 NY Misc. LEXIS 1025, 2017 WL 1171484 (App. Term 2nd, 11th, and 13th Dists. 2017), Underhill Ave. Realty, LLC v. Ramos , 49 Misc 3d 155(A)(App. Term 2nd Dept. 2015), Fasal v. La Villa , 2 Misc 3d 137(A)(App. Term 1st Dept. 2004), Fucile v. LCR Dev., Ltd. , 2011 NY Slip Op. 32256(U)(Dist. Ct. Nassau Co.). The Court cannot enforce a contract intended to effectuate an unlawful purpose or a purpose contrary to public policy. Szerdahelyi v. Harris , 67 NY2d 42, 48 (1986), Lanza v. Carbone , 130 AD3d 689 (2nd Dept. 2015).
Respondent did not plead that the lease with a rent higher than $1,213.00 was illegal. However, illegality may bar recovery even though Respondent did not plead the defense. Spiegel v. 1065 Park Ave. Corp. , 305 AD2d 204, 205 (1st Dept. 2003). See Also American Stevedoring, Inc. v. Red Hook Container Term., LLC , 145 AD3d 570, 571 (1st Dept. 2016). For what it's worth, Respondent did broach these issues in her post-trial memorandum of law.
--------
Be that as it may, unlike cases where a landlord entered into a lease with a tenant for a higher rent after representing that the tenant had a lower rent to a government agency, Petitioner in this case executed the lease with the higher rent before the lease with the lower rent. At the time the parties entered into the lease with the higher rent, no evidence in the record shows any attempt to mislead a government agency. The Court will not presume that an agreement is void as illegal or against public policy when the Court can conceivably construe the agreement to be valid. W. Union Tel. Co. v. Am. Commc'ns Ass'n, C. I. O. , 299 NY 177, 188 (1949), Heit v. Preston , 4 AD2d 1014, 1014 (1st Dept. 1957).
However, even if the Court construes the lease with the higher rent to be legal, the existence of two leases for the same apartment with different rents for overlapping periods affects Petitioner's burden to prove the existence of a contract between itself and Respondent to pay the rent demanded. 402 Nostrand Ave. Corp. v. Smith , 19 Misc 3d 44, 46 (App. Term 2nd Dept. 2008). To establish the existence of an enforceable agreement, Petitioner must establish, inter alia , a meeting of the minds on all essential terms. Bazak Intern. Co. v. Mast Industries , 73 NY2d 113, 122 (1989), Kowalchuk v. Stroup , 61 AD3d 118, 121 (1st Dept. 2009). See Also Express Indus. & Terminal Corp. v. New York State DOT , 93 NY2d 584, 589 (1999) (to create a binding contract, there must be a manifestation of mutual assent sufficiently definite to assure that the parties are truly in agreement with respect to all material terms). Absent a meeting of the minds, no agreement exists regarding the monthly rental rate, rendering a proceeding predicated on a default of an "agreement" as per RPAPL § 711(2) to be without legal basis. Jaroslow v. Lehigh Valley R. Co. , 23 NY2d 991, 993 (1969), Krantz & Phillips, LLP v. Sedaghati , 2003 NY Slip Op. 50032(U), 2-3 (App. Term 1st Dept. 2003), 506 W. 150th St., LLC v. Prier , 36 Misc 3d 1201(A)(Civ. Ct. NY Co. 2012), Eshaghian v. Adames , 28 Misc 3d 1215(A)(Civ. Ct. NY Co. 2010), 1400 Broadway Assocs. v. Henry Lee & Co. , 161 Misc 2d 497, 499-500 (Civ. Ct. NY Co. 1994).
Moreover, the problems associated with plural leases with different rents for the same apartment in overlapping times further manifest regarding rent registration. The Rent Stabilization Code requires Petitioner to register with DHCR, inter alia , the "current rent" for the subject premises. 9 N.Y.C.R.R. § 2528.3. As noted above, Petitioner registered a rent of $2,500.00, a rent that bears no relation to either of the leases in evidence. In order to obtain a judgment against a rent-stabilized tenant in a nonpayment proceeding, a landlord must not only plead compliance with the Rent Stabilization Code, Villas of Forest Hills Co. v. Lumberger , 128 AD2d 701, 702 (2nd Dept. 1987), Homestead Equities v. Washington , 176 Misc 2d 459, 462 (Civ. Ct. Kings Co. 1998) (Acosta, J,), 251 East 119th Street Tenants Assoc. v. Torres , 125 Misc 2d 279, 280 (Civ. Ct. NY Co. 1984), but actually comply therewith. Caceres v. Golden , 1991 NY Misc. LEXIS 856 (App. Term 2nd Dept. 1991).
Petitioner's inability to prove a meeting of the minds as to the monthly rental for the subject premises, an indispensable element of its prima facie case, and Petitioner's failure to prove that it registered the "current rent" with DHCR pursuant to 9 N.Y.C.R.R. § 2528.3, by themselves constitute independent grounds upon which to dismiss this proceeding, compounding the effect of Petitioner's prayer for a judgment based upon the lease with the higher rent on public policy or the possibility of welfare fraud. Accordingly, the Court dismisses this proceeding, without prejudice to a cause of action based upon the lease with the lower rent and a proper registration of the same with DHCR, and without prejudice to Respondent's defenses thereto.
The parties are directed to pick up their exhibits within thirty days or they will either be sent to the parties or destroyed at the Court's discretion in compliance with DRP-185.
This constitutes the decision and order of this Court.