Opinion
Index No.: L&T 53281/2014
03-08-2016
68-74 THOMPSON REALTY LLC, Petitioner-Landlord v. CAROLYN HEARD a/k/a CAROLYN M. HEARD 72 Thompson Street, Apt No. 11 New York, New York 10012 Respondent-Tenant YVONNE Y. TSENG, EVA V. KALEA a/k/a EVA TSENG, VIVIAN KALEA a/k/a VIVIAN TSENG, "JOHN DOE" and "JANE DOE" Respondents-Undertenants
TO: ROSENBERG & ESTIS, P.C. Attorneys for Petitioner By: Deborah Riegel, Esq. 62 William Street, 8th Floor New York, New York 10005 212.965.8300 WILLIAM LEAVITT, ESQ. Attorney for Respondent 305 Broadway, Suite 900 New York, New York 10007 212.897.5852
DECISION & ORDER
BACKGROUND
This summary holdover proceeding was commenced by 68-74 THOMPSON REALTY LLC (Petitioner) against CAROLYN HEARD a/k/a CAROLYN M. HEARD (Tenant), the rent-stabilized tenant of record of 72 Thompson Street, Apt No. 11, New York, New York 10012 (Subject Premises), based on the allegation that Tenant was not maintaining the Subject Premises as her primary residence. YVONNE Y. TSENG (Respondent) is an occupant residing in the Subject Premises and has asserted an affirmative defense of illusory tenancy, which was the primary issue at trial.
PROCEDURAL HISTORY
Petitioner issued a notice of non-renewal dated September 25, 2013. The notice stated Tenant's lease would not be renewed after the December 31, 2013 expiration, because Tenant was not occupying the Subject Premises as her primary residence. The Notice stated that Petitioner believed that Tenant resided in Lugano Switzerland, was employed in Switzerland at The American School, and that Tenant maintained a profile on Facebook supporting these conclusions.
The Notice further asserted that Tenant had sublet the Subject Premises to Respondent without Petitioner's permission, and that Respondent maintained a telephone account from the Subject Premises.
The petition is dated January 31, 2014, and the proceeding was initially returnable on February 11, 2014. Tenant has never appeared herein. Respondent initially appeared by counsel and filed an answer dated February 18, 2014. Respondent's answer asserted inter alia that Respondent had filed a request with DHCR in December 2013 for a renewal lease to be issued in her name based on the fact that she had resided in the Subject Premises since 2006, had paid rent in her name, and that a fire took place in the building in 2011 displacing all tenants in the building, and that Petitioner had since refused to rent or allow occupancy of most of the 30 regulated units in the building. A number of affirmative defenses were also asserted.
On the initial court date, the proceeding was adjourned to March 19, 2014 pursuant to a stipulation, which provided Respondent would serve an answer by February 18, 2014, and would pay use and occupancy, pendente lite. An inquest date was set for March 19, 2014, as to Tenant.
On May 20, 2014, Petitioner moved for summary judgment as against Tenant and for an order dismissing the affirmative defenses and counterclaims asserted by Respondent and related relief. On June 17, 2014, Respondent cross-moved for summary judgment and a finding that Respondent was entitled to a renewal lease based on the claim that Tenant's tenancy was illusory.
On December 1, 2014, the court (Katz, J) granted the motions to the extent of awarding Petitioner a final judgment of possession as against Tenant, and all undertenants except Respondent. The court denied Respondent's cross-motion for summary judgment, and dismissed the second through seventh affirmative defenses, the ninth through eleventh affirmative defenses. The court further held "(t)he court also notes that although the respondent's papers discuss 'illusory tenancy' there is no claim as such in the Answer." The court restored the proceeding to the calendar on December 23, 2014 for all purposes.
On December 23, 2014 the proceeding was adjourned to January 26, 2015 for trial.
On January 15, 2015, Respondent moved for an order putting the trial over until April 2015 for completion of discovery. The motion was denied by the court (Katz, J) on the return date, pursuant to an order which provided in pertinent part "The prior order of this Court struck the illusory tenancy defense. Apparently the resp (sic) seeks discovery on that defense & to adjourn the trial. Since the defense is no longer part of this case discovery would be inappropriate."
Respondent moved for a stay of the trial at the Appellate Term. While an interim stay was granted, the Appellate Term denied Respondent's motion for relief pursuant to a decision dated March 3, 2015 [2015 NY Slip Op 65531(U)].
On April 2, 2015, Respondent moved for an order allowing amendment of her answer, seeking leave to conduct discovery, and seeking renewal of Judge Katz' denial of discovery based on the proposed amended pleading. The motion was denied by the court (Milin, J) on May 7, 2015. The order denying the motion for renewal did not address the request for leave to amend the answer, and set a trial date for May 19, 2015.
On May 15, 2015, Respondent submitted an order to show cause for an order modifying the court's May 7, 2015 order and for leave to reargue Respondent's prior motion to amend her answer. The Court (Milin, J) declined to sign the order to show cause.
On May 19, 2015 the proceeding was adjourned to May 27, 2015 for trial.
On May 27, 2015, the proceeding was transferred to the Expediter's Part for assignment to a trial judge.
Respondent appealed Judge Milin's May 7, 2015 decision and order, and again sought a stay of the trial pending appeal. On June 15, 2015, the Appellate Term granted the motion for a stay, conditioned on payment of use and occupancy and perfection of the appeal by the October 2015 term [2015 NY Slip Op 76224(U)].
On June 30, 2015, Respondent moved again for an order allowing an amended pleading and seeking reargument of the court's May 7, 2015 order and related relief. The parties stipulated that this motion was withdrawn.
Respondent's counsel moved for leave to withdraw both at the Appellate Term and in the resolution part. On July 30, 2015, the motion was denied by the Appellate Term, without prejudice to renewal before Housing Court [2015 NY Slip Op 80435(U)]. On August 4, 2015, a substitution of counsel was filed as Respondent had retained new counsel, and the court (Milin, J) granted the motion to withdraw pursuant to a decision and order dated August 5, 2015.
On September 9, 2015, Respondent filed an amended answer which asserted a general denial, a claim for illusory tenancy and for attorneys' fees, and Respondent moved for an order allowing discovery. The motion was granted pursuant to the parties' stipulation, which limited discovery to the production of certain documents, and set a trial date for October 30, 2015.
On October 30, 2015, the proceeding was again transferred to the Expediter's Part for assignment to a trial judge.
On November 23, 2015, the proceeding was assigned to Part R for trial and the trial commenced. The trial continued on December 8, 2015, and was adjourned to January 5, 2016 for continued trial. On January 5, 2016, it was adjourned on Petitioner's application to January 21, 2016. The trial concluded on January 21, 2016. The proceeding was adjourned through March 1, 2016 for the submission of post trial memoranda and on March 1, 2016 the court reserved decision.
FINDINGS OF FACT
On October 29, 2015, Respondent stipulated to Petitioner's prima facie case and pursuant to said stipulation agreed that the sole issue for trial was Respondent's illusory tenancy defense.
The first witness to testify was Respondent. Respondent is a dog walker. Respondent has lived at the Subject Premises for nine years. Respondent first moved into Subject Premises in August 2006.
Respondent first learned of Subject Premises being available for rent through a friend named Andrea that lived on Thompson Street and knew a person that had rented from Tenant. Andrea knew there was a court case regarding the Subject Premises, and that Respondent was living in Queens. Andrea and asked Tenant if she wanted to rent the Subject Premises. Respondent does not know Andrea's last name, but did provide the court with Andrea's phone number.
The keys for the Subject Premises were given to Respondent through a friend of Andrea named Ben. The Subject Premises was furnished when Respondent moved in. Ben lived in the Subject Premises prior to Respondent moving in.
Rent was not discussed with anyone when Respondent learned of Subject Premises being available for rent. Respondent does not know how long Ben moved there before she moved in. Ben gave Andrea the key, and Andrea gave Respondent the key. Respondent used the key to view the Subject Premises on her own.
Respondent did not speak with Tenant before she moved in, but Respondent's daughter exchanged emails with Tenant prior to moving in.
Respondent knew she could move in based on her agreement with Tenant, which included an agreement that Tenant would authorize Respondent to handle the pending nonpayment proceeding.
Respondent's testimony in this regard conflicted with the affidavits submitted in prior motions dated June 6, 2014 and April 24, 2015, wherein she stated that she met Tenant at the Subject Premises in September 2006 and entered into an agreement with Tenant at that time regarding her occupancy of the Subject Premises.
In a September 8, 2015 affidavit, Respondent again contradicts her trial testimony. In said affidavit, Respondent stated she moved into the Subject Premises in 2005, and that from 2005 to 2008, Tenant periodically returned to the Subject Premise to occupy them with Respondent.
In the beginning, Tenant was Respondent's roommate and Respondent testified Tenant came back periodically, a few times a year, for a week or so at a time.
Respondent has two daughters, Eva, who is 29, and Vivian, who is 23.
Tenant was last tenant of record for Subject Premises. Lease renewals executed by Tenant for the years 1988 through 2013 were submitted into evidence.
Respondent had no written agreement with Tenant. The terms of their oral agreement were that when Tenant comes to New York she would stay with Respondent in the Subject Premises at the same rent. Generally, Respondent paid rent to the Petitioner. In the beginning, Respondent used Tenant's account to pay the rent, later Respondent and Tenant had a joint account and Respondent sent checks directly to the Petitioner. Respondent testified that Tenant has not paid any of the rent since Respondent moved in, but on cross-examination agreed that was incorrect. Copies of checks submitted by Respondent for rent on the joint account in 2013 and 2014 were entered into evidence (Ex 13). Ex 13- N contains an envelope that indicates it was submitted by Tenant not Respondent. Respondent testified she signed the check, and wrote in Tenant's name on the return address of the envelope because the lease was in the name of Tenant.
Subpoenaed records from the joint bank account of Respondent and Tenant were submitted into evidence (Ex F). Included in these records are payments made by Respondent to Tenant, such as Check number 1122 dated December 8, 2011 for one thousand dollars. Respondent testified that every two years she paid Tenant one or two thousand dollars, around the time of the lease renewals, by personally delivering the payment to Tenant. Respondent later referred to these payments as her "gifts" to Tenant. Respondent testified that most of the payments were made in cash and would be given to Tenant on her return stays in the Subject Premises, and that she paid Tenant a total or $5000 to $6000 in this manner. Respondent testified that she made these payments to Tenant, even though Tenant never requested any such payments, because Respondent is Chinese and it is part of her culture to show appreciation to Tenant. The court did not find Respondent's testimony regarding the nature and extent of her payments to Tenant credible.
In 2006 that there was a pending nonpayment proceeding (Ex A). Respondent received the petition in the mail, and opened it. Tenant had authorized Respondent to open mail addressed to Tenant and to look at "important" documents. The arrears accrued for a period prior to when Respondent was living in Subject Premises. Respondent had a discussion with Tenant after receiving the petition about paying the arrears. At the time Tenant was in Switzerland. Respondent has a key to the mailbox of Subject Premises. Respondent got the key before she moved in. Respondent appeared in court and on September 12, 2006, entered a stipulation of settlement on behalf of Tenant providing for payment of arrears and repairs (Ex B). Respondent made a check payable to Tenant to cover the arrears (Ex G-2). A notorized letter from Tenant was submitted to the Court and to Petitioner affirming that Tenant was the lease holder of the Subject Premises and resided in the Subject Premises with Respondent as roommates (Ex 2).
When Respondent came to court in 2006, she saw Jake Demonsthenous (JD). JD yelled at Respondent and told her she didn't have the right to live in the Subject Premises. Respondent was crying. Respondent told JD she owed no money and wanted to live in the Subject Premises. Respondent had a discussion with the Judge about why she wanted to live in the Subject Premises and pay the arrears, even though she was not the tenant. Respondent told the court that her daughter was attending a local high school and that Respondent's job as a dog walker was close to the Subject Premises.
Respondent testified that Tenant has been to the Subject Premises two or three times since Respondent moved in. This testimony was not credible and was contradicted by Respondent's own evidence. Respondent acknowledged there have been three periods since Respondent took occupancy where Tenant came to the Subject Premises to stay for a week or two at a time. Respondent also testified, at different points, that Tenant came to the Subject Premises at least once a year and a few times a year. When Tenant slept in the Subject Premises she slept in her own bedroom.
Throughout much of her testimony Respondent referred to Tenant as her roommate. Respondent testified this is because she lives in Tenant's space.
Tenant executed the renewal leases for the Subject Premises . If Tenant was at the Subject Premises, Tenant would execute the renewals in New York, if not Respondent would mail the renewals to Switzerland for Tenant to sign. Respondent testified that the last time she saw Tenant was late 2013.
In 2007, Petitioner brought a holdover proceeding against Tenant and Respondent under Index Number 53136/2007 (Ex C). The holdover was based on Petitioner's claim that Tenant's permission to sublet had expired on December 31, 2011, and that Tenant continued to remain absent from the Subject Premises and had sublet to others after this period, including to Respondent.
That proceeding was settled pursuant to a stipulation entered into between attorneys for Petitioner and Respondent. Tenant did not execute the stipulation. The stipulation (Ex D-7), dated May 5, 2007, provided for a judgment of possession against Respondent and forthwith issuance of the warrant of eviction. Execution of the warrant was stayed through June 30, 2007 for Tenant to return to the Subject Premises and resume occupancy. Conditioned upon said return, the stipulation then provided for a one year probationary period during which Petitioner could inspect the Subject Premises to verify that Tenant continued to reside in the Subject Premises.
In December 2007, Tenant again wrote to Petitioner to represent in writing that Respondent was her roommate and they occupied the Subject Premises together (Ex 4).
After the execution of the stipulation, Petitioner inspected the Subject Premises and confirmed that Tenant was residing in the Subject Premises. Tenant had been occupying the Subject Premises with Respondent during this period of time and prior to said inspection. Respondent testified that Tenant had been living in the Subject Premises for at least a week prior to the inspection, and left shortly after. Tenant did not have a fixed time to return to the Subject Premises, but Tenant did return as early as March 2008 and was present for a second inspection.
A letter from Tenant to Petitioner dated March 1, 2008 (Ex 7) appears to acknowledge a second request for inspection, and agree that Tenant would be at the Subject Premises on March 17 or 18, 2008 to confirm her occupancy. Checks for April May and June 2008 rent were drawn on the joint account but signed by Tenant not Respondent (Ex F).
In 2008 and 2009, Respondent tried to add her name to the renewal lease (Ex 14 C), but these attempts were rejected by Petitioner (Ex 5 & 10). Respondent wanted her name on the lease to secure her right to remain in occupancy of Subject Premises.
There were three different Supers for the building since 2008. Respondent testified she saw all of them on a regular basis.
Respondent confirmed on cross examination that over the years Tenant has stayed in Subject Premises on several occasions, and that her agreement with Tenant was that Tenant had the right to come and go from the Subject Premises, Respondent didn't have the right to question her about this. Respondent also testified that after 2008, Tenant only "visited" the Subject Premises but no longer lived there.
Respondent testified on redirect that she cannot recall the total number of times Tenant slept in the Subject Premises , and that early on it was a few weeks at a time, a few times a year.
The court did not find Respondent to be a credible witness. Respondent's defense in this case is based on her claim that she and Tenant repeatedly lied to the Court and Petitioner in the 2006 and 2007 proceedings and misrepresented the nature of their relationship and their occupancy of the Subject Premises. Whether Respondent was lying then or is lying now, it is undisputed that she will lie to the court and the landlord if she believes it will enable her to continue in occupancy of the Subject Premises. Respondent's testimony was inconsistent, contradictory and inherently unreliable.
The next witness for Respondent was Vivian Kalea (VK) the youngest daughter of Respondent. VK is employed as an events coordinator at a law project and lives in Astoria. VK lived in the Subject Premises full time from 2006 through 2010, and during breaks during college from 2010 to 2014.
VK met Tenant one or two times. It might have been in 2009 or 2010. VK saw Tenant in Subject Premises, Tenant was visiting for a few days. VK may also have see Tenant in Subject Premises on prior occasions. VK's testimony that Tenant stayed in the Subject Premises as late as 2010, contradicts Respondent's testimony that Tenant did not stay there after 2008. The court found VK to be a credible witness.
VK testified that the Subject Premises is a one bedroom, but that Respondent converted a small office area into a second bedroom, where Tenant kept her belongings. Tenant kept photos, clothing and mail in her bedroom. Tenant got mail addressed to her at Subject Premises.
Two of Respondent's clients Jeannne Michaels (JM) and M. Blake Otte (MBO) testified at trial. They both testified to seeing Respondent regularly in the neighborhood and neither had any first hand knowledge about who lived in the Subject Premises.
The next witness called by Respondent was Carlos Jordan (CJ). CJ has been employed at 72 Thompson Street since early 2010. As a super, CJ does minor repairs and maintenance for the building keeping the common areas clean and dealing with the garbage. CJ is at the building seven days per week for ten to twelve hours per day. CJ usually arrives at 5:30 or 6 am and leaves between 4 and 8 pm. CJ is familiar with the tenants in the building. There is no doorman in the subject building.
CJ is familiar with Respondent and sees her coming and going from the building. CJ has seen two young ladies coming in and out of the Subject Premises, CJ assumes they are Respondent's daughters. CJ has never seen other adults going into the Subject Premises.
CJ has been in the Subject Premises a total of 5-6 times, each time CJ was there for less than an hour.
The next witness called by Respondent was Jake Demosthenous (JD). JD has been the property manager for the subject building since 1993. JD has been a property manager for 25 years, and since 1993 has managed 1300 units, in 8-10 buildings.
In 2007, JD went to court for the prior holdover proceeding. JD understood that the case was resolved based on the representations of Respondent that she was Tenant's roommate and that Petitioner could inspect to make sure that Tenant was occupying the Subject Premises with Respondent. Petitioner commenced the 2007 holdover proceeding because in the 2006 nonpayment case, Tenant had sent a letter from Switzerland and that raised some questions about who was living in the Subject Premises.
JD testified that Petitioner conducted two inspections after the stipulation in the holdover proceeding to verify that Tenant was living in the Subject Premises. JD was not present for the inspections, which were done by his assistant manager Wayne Brown. Tenant was in the Subject Premises for each inspection conducted by Wayne.
A fire took place in 68 Thompson Street in 2011, it was after the fire that JD began to suspect that Tenant was not living in the Subject Premises. At this point, Petitioner installed video cameras in the hallways, to monitor some units where Petitioner suspected were being occupied by unauthorized individuals.
Immediately after fire, there were tenants that had to be relocated, and emergency construction to be done. It took some months before Petitioner was back to business as usual.
JD met Tenant when he first started managing the building in 1993 or 1994. At that time Tenant was living in the Subject Premises. JD now believes Tenant continued to live there through 2006.
JD testified that Petitioner has collected no money from Tenant beyond the rent and that Petitioner got no financial benefit from Tenant subletting. Neither Petitioner nor JD had any prior relationship with Tenant, who was the tenant of record for the Subject Premises when Petitioner purchased the building in 1993.
DISCUSSION
An illusory tenancy exists where the rent laws are violated in a way that allows the prime tenant tro profit by subleasing or otherwise deprives the subtenant of rights under the rent stabilization laws (Primrose Management Co v Donahoe 253 AD2d 404, 405). Respondent failed to establish the elements of an illusory tenancy in this case. Rather, Respondent and Tenant participated in a scheme to hide an alleged sublet from Petitioner. This is most dramatically established by the representations made both to the court and to Petitioner in the context of the 2007 subletting proceeding that Respondent was not Tenant's subtenant but was a roommate. Respondent and Tenant repeatedly made this assertion to Petitioner in writing, submitted to inspections and even went so far as to set up a joint bank account to support their claim that they both occupied the Subject Premises together. Where there is a scheme to conceal the subtenancy from Petitioner, Respondent cannot be heard to argue that Petitioner should have known she and the Tenant were lying and a finding of illusory tenancy does not lie [see eg Vesky v Antunez 191 Misc2d 246; Square Block Associates, Inc. v Fernandez 29 Misc3d 138(A)].
Moreover, it is undisputed that at least through 2008, there was no subletting, but in fact that Tenant returned to the Subject Premises and occupied it with Respondent periodically. Tenant maintained her own bedroom at the Subject Premises where she kept belongings including clothing and photographs. Tenant had her own key to the Subject Premises, signed leases for the Subject Premises, received her mail there and maintained dominion and control over the Subject Premises. Tenant made payments to Petitioner for the rent for April through July 2008 (Ex F check Numbers 1044, 1045, 1047).
Additionally, by Respondent's own testimony Tenant never charged her any sum above the legal regulated rent. There was no profiteering. Respondent did offer some vague and not credible testimony about cash "gifts" that were voluntarily given to Tenant, but this claim is not supported by Respondent's bank records which were submitted into evidence for 2006 forward (Ex F). There are a total of three checks payable from Respondent to Tenant. The first check is for $1000 and is dated December 8, 2011 with a note on the memo line that says "Thank you." The second check is the equivalent of one month's rent and is dated June 2012, and the last check is for $2000 and is dated October 2013. There is not way to determine what the two payments were for in 2011 and 2013, but a total of $3000 over six years is not the level of profiteering normally associated with an illusory tenancy which normally entails collection by the prime tenant of amounts well in excess of the regulated rent (Primrose Management Co v Donahoe supra at 405).
Based on the foregoing, the court finds that Petitioner is entitled to a final judgment of possession as against Respondent. The warrant of eviction may issue forthwith. Executions is stayed through May 31, 2016, conditioned on payment of ongoing use and occupancy at the last lease rate, to afford Respondent an opportunity to vacate.
CONCLUSION
This constitutes the decision and order of the Court.
Parties may pick up exhibits, within thirty days of the date of this decision, from Window 9 in the clerk's office on the second floor of the courthouse. After thirty days, the exhibits may be shredded, in accordance with administrative directives. --------
Dated: New York, New York
March 8, 2016
/s/_________
Sabrina B. Kraus, JHC
TO: ROSENBERG & ESTIS, P.C.
Attorneys for Petitioner
By: Deborah Riegel, Esq.
62 William Street, 8th Floor
New York, New York 10005
212.965.8300
WILLIAM LEAVITT, ESQ.
Attorney for Respondent
305 Broadway, Suite 900
New York, New York 10007
212.897.5852
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