Opinion
No. 2023-51358 Index No. LT-315472-23/NY
12-01-2023
Afghan House, Inc., Petitioner-Landlord, v. Inshandbags Inc. (d/b/a INS HANDBAGS INC.), Respondent-Tenant and "XYZ CORP.", Respondents-Undertenants.
Rosenberg & Estis, P.C. (Moshe Nachum, of counsel), New York City, for petitioner.
Unpublished Opinion
Rosenberg & Estis, P.C. (Moshe Nachum, of counsel), New York City, for petitioner.
Richard Tsai, J.
On August 4, 2023, petitioner Afghan House, Inc. commenced this holdover summary proceeding against respondents Inshandbags Inc. d/b/a Ins Handbags Inc. (tenant) and XYZ Corp., seeking to recover possession of commercial premises described as "All rooms, Store #2 in the building known as and located at 124 West 30th Street, New York, New York 10001." Issued was joined as to tenant on September 29, 2023 (NYSCEF Doc. No 9).
At a court appearance on September 14, 2023, petitioner's counsel and tenant's counsel scheduled this matter for trial in Part 52 on November 14, 2023 at 2:15 p.m.
On November 14, 2023, petitioner appeared and announced ready for trial, but tenant did not appear. This court took tenant's default on the stenographic record (Francine Sky, court reporter), and this court then proceeded with an inquest immediately due to tenant's default (see Uniform Civil Rules for the NYC Civil Court [22 NYCRR] § 208.14 [b] [1]). Although tenant had appeared in this action, this court dispensed with the requirement of notice of the inquest because the matter was scheduled for trial and tenant had failed to proceed (see CPLR 3215 [g] [1]).
On behalf of petitioner, Tyrone Lofton was sworn and testified at the inquest. Petitioner submitted 11 exhibits that were accepted into evidence, marked as Petitioner's Exhibits A-K. This court also took judicial notice of the documents e-filed in this case, NYSCEF Docs. Nos. 1-5.
FINDINGS OF FACT
Recitation, as required by CPLR 4213 (b), of the findings of essential facts relied upon by the court:
Petitioner Afghan House, Inc. is an active, New York corporation which was founded on May 11, 1945 (Petitioner's Exhibit B).
Based on a certified copy of an indenture between the City of New York and petitioner, made July 6, 1945 and recorded July 17, 1945, petitioner is the owner of a parcel (with the buildings and improvements thereon) known as 122-126 West 30th Street in Manhattan (Petitioner's Exhibit A).
The court found Tyrone Lofton credible.
Lofton testified that, since April 15, 1993, he has worked for Bernstein Real Estate, and that he is currently the senior collections director. His responsibilities as collections director entail tenant monetary and non-monetary compliance; coordination with accounting and building staff; and leasing and putting together leases in the portfolio of Bernstein Real Estate. According to Lofton, Bernstein Real Estate is the property manager for petitioner for property located at 124 West 30th Street in Manhattan. Lofton testified that 124 West 30th Street is a four-story commercial building with retail stores on the ground floor, and no residential units.
Based on Lofton's testimony, a written lease, amendments thereto, and a written assignment, Store #2 at 124 West 30th Street in Manhattan was leased to non-party Just Fantastic, Inc., and the lease was then assigned to tenant.
By a written lease made in December 2006, petitioner leased Store #2 to non-party Just Fantastic, Inc., for a five-year term from February 1, 2007 until January 31, 2012 (Petitioner's Exhibit C). The president of Just Fantastic, Inc., Deng Juhui, executed the lease on behalf of Just Fantastic, Inc. According to Lofton, Deng Juhui is also known as Jutao Deng. Pursuant to an amendment to the lease, the lease was extended through January 31, 2014 (Petitioner's Exhibit D). Pursuant to an undated assignment, Just Fantastic, Inc. assigned the lease to tenant (Petitioner's Exhibit E). Jutao Deng executed the assignment on behalf of both Just Fantastic, Inc. and tenant.
On January 31, 2014, petitioner and tenant agreed to extend the lease for another three years through January 31, 2017 (Petitioner's Exhibit F). Pursuant to two more amendments, the lease was extended with tenant through January 31, 2021 (Petitioner's Exhibits G and H). Under the fourth amendment to the lease, tenant's monthly rent was $10,000. According to Lofton, there were also recurring additional rent charges for water charges and sprinkler charges in the amount of $50.00 each, and charges for real estate taxes (see also Petitioner's Exhibit C, paragraphs 28 [water charges] and 29 [sprinklers], and paragraph R7 [real property tax]).
After the lease expired in January 2017, tenant continued as a month-to-month tenant, because a tenant ledger indicates that petitioner accepted monthly rent from tenant after expiration of the written lease (Petitioner's Exhibit I).
Lofton testified that tenant stopped paying rent in March 2020, during the beginning of COVID. Lofton stated that, after January 31, 2021, Bernstein Real Estate received six payments of $2,000 from tenant, for a total amount of $12,000 (see Petitioner's Exhibit J).
Lofton stated that he requested petitioner's counsel to serve a 30 day notice of termination upon tenant. By a notice of termination dated May 11, 2023, petitioner informed tenant that it elected to terminate tenant's month-to-month tenancy, effective June 30, 2023 (NYSCEF Doc. # 1). According to an affidavit of service, the notice of termination was served upon tenant on May 15, 2023 at 10:07 a.m. at the premises, by substituted service upon Desiree Li, an employee, with an additional mailing by first class and certified mail to the premises and to Juhui Deng and to Jutao Deng at an address in Flushing, New York (NYSCEF Doc. No. 1).
According to Lofton, tenant did not vacate and surrender possession of the premises after service of the notice of termination; neither did tenant pay any arrears.
On August 4, 2003, petitioner Afghan House, Inc. commenced this holdover summary proceeding against respondents. Lofton testified that, to date, tenant has still not moved out of the premises, returned the keys, or otherwise executed a surrender notice. A photograph of the leased premises which was annexed to the pleadings as part of the premises description depicts an awning that identified tenant as "Ins Handbags Inc." (see NYSCEF Doc. No. 1, Exhibit A). Respondent Inshandbags Inc. is therefore also doing business as Ins Handbags Inc.
According to the tenant ledger, tenant owes $474,967.39, which Lofton testified was then adjusted to $465,000, to remove any legal fees or additional "CAM" and "CapEx" charges. Lofton testified that, although the lease entitles petitioner to charge tenant use and occupancy at a holdover rate set at twice the monthly rent, petitioner opted to charge the same amount as the monthly rent.
CONCLUSIONS OF LAW
"[F]or relief to be granted to a petitioner in a holdover proceeding, the petition must demonstrate that the tenancy expired prior to the commencement of the proceeding" (see Parkview Apts. Corp. v Pryce, 58 Misc.3d 155 [A], 2018 NY Slip Op 50187[U] [App Term, 2d Dept, 9th & 10th Jud Dists 2018). For this court to have subject matter over a holdover proceeding, the tenant must be either in possession or exerting control over the property at the time the proceeding is commenced (see Daniel Finkelstein & Lucas A. Ferrara, Landlord and Tenant Practice in New York § 15:481 [West's NY Prac Series Vol G]).
As to the fictitiously named respondent XYZ Corp., petitioner did not meet its prima facie burden. There was no testimony or evidence as to the presence of any undertenant at the leased premises. Thus, the petition is dismissed as against respondent XYZ Corp.
However, based on the documentary evidence and the credible testimony of petitioner's witness at the inquest, petitioner met its prima facie burden for a judgment of possession against tenant.
The evidence at the inquest established that the written lease between petitioner and tenant, as amended, had expired by its own term, and that tenant continued as a month-to-month tenant. The evidence further established that the month-to-month tenancy was terminated effective June 30, 2023, pursuant to a validly served 30-day notice of termination. Tenant remained in possession after termination of the month-to-month tenancy, without petitioner's permission.
Therefore, petitioner is entitled to recover possession of the leased premises from tenant.
Petitioner is entitled to a monetary judgment against tenant for the rent arrears which accrued prior to termination of the tenancy, as well as use and occupancy, in the amount of $465,000, as testified to by Lofton.
"The reasonable value of use and occupancy is the fair market value of the premises after the expiration of the lease, and it is the landlord, not the tenant, who has the burden of proving reasonable value of use and occupancy" (Mushlam, Inc. v Nazor, 80 A.D.3d 471, 472 [1st Dept 2011]). "In determining the reasonable value of use and occupancy, the rent reserved under the lease, while not necessarily conclusive, is probative" (id.).
Here, the amount of use and occupancy that petitioner seeks was based on the amount of the monthly rent prior to the expiration of the lease.
Petitioner is entitled to prejudgment interest, as prayed for in the petition (see Solow v Bradley, 273 A.D.2d 75, 75-76 [1st Dept 2000]). Although petitioner makes no argument as to the applicable rate or the appropriate date for calculating prejudgment interest, this court awards prejudgment interest to petitioner at the statutory rate of nine percent per annum, pursuant to CPLR 5004 (see Music Sales Corp. v Mark Music Serv., Ltd., 194 A.D.2d 470, 471 [1st Dept 1993]).
The court further exercises its discretion to select November 16, 2021 as a "single reasonable intermediate date" for purposes of calculating prejudgment interest, pursuant to CPLR 5001 (b) (APF 286 MAD LLC v RIS Real Props., 43 Misc.3d 1203 [A], 2014 NY Slip Op 50485[U] [Civ Ct, NY County 2014]; see also Solow Mgt. Corp. v Tanger, 43 A.D.3d 691 [1st Dept 2007]). This date is halfway between the first default on March 1, 2020, as testified to by Lofton, and the date that the petition was filed on August 4, 2023 (see Rose Assoc. v Lenox Hill Hosp., 262 A.D.2d 68, 69 [1st Dept 1999] [midway point of entire holdover period constitutes a "single reasonable intermediate date"]).
As the prevailing party in this proceeding, petitioner is entitled to recover attorneys' fees, pursuant to paragraph R46 of the original lease (see Petitioner's Exhibit C, at 27). The issue of the amount of the attorneys' fees to be awarded is hereby severed for a hearing as to the reasonableness of the amount of attorneys' fees.
The court notes that the summary proceeding is terminated once the warrant of eviction is executed (Goldburd v Langer, 62 Misc.3d 140 [A], 2019 NY Slip Op 50060[U] [App Term, 2d Dept, 2d, 11th And 13th Jud Dists 2019]). In that event, this court would no longer have jurisdiction to entertain petitioner's claims for attorneys' fees (Steinmetz v Oyala, 71 Misc.3d 129 [A], 2021 NY Slip Op 50255[U] [App Term, 2d Dept, 2d, 11th And 13th Jud Dists 2021]).
Petitioner is also awarded costs and disbursements in the total amount of $50.00 (RPAPL 747; see also NY City Civ Ct Act § 1906-a).
Petitioner is directed to e-file all the exhibits that were accepted into evidence at the inquest, to the extent that they were not already e-filed (see CPLR 409 [a]), i.e., petitioners' Exhibits I, J, and K. Petitioner's counsel is directed to redact any confidential personal information from the exhibits that are filed with the Civil Court (see Uniform Rules for the New York City Civil Court [22 NYCRR] § 208.4 [b] [1], [2]).
Finally, petitioner's counsel should promptly retrieve the exhibits from the Part 52 courtroom (111 Centre Street, Room 772) within 35 days of entry of this decision. If the petitioner's counsel does not retrieve the exhibits before then, exhibits that are photocopies may be discarded by courtroom staff, in accordance with DRP-185 (see https://nycourts.gov/courts/nyc/SSI/directives/DRP/DRP185.pdf [last accessed ]). Petitioner's Exhibits A-H appear to be original documents, which would be returned by regular mail at the court's expense by court staff to petitioner's counsel if they are not timely retrieved (id).
VERDICT
As to tenant, the court finds in favor of petitioner. Petitioner is awarded judgment of possession for the premises, i.e., "All rooms, Store #2 in the building known as and located at 124 West 30th Street, New York, New York 10001", along with a money judgment against tenant in the amount of $465,000, with prejudgment interest as of November 16, 2021.
As to respondent XYZ Corp., the court finds in favor of the fictitiously named respondent.
ORDER
Accordingly, it is hereby ORDERED that, after inquest, the petition is severed and dismissed as against respondent XYZ Corp.; and it is further
ORDERED that the Clerk is directed to enter a final judgment granting the holdover petition and awarding possession of the premises-i.e., "All rooms, Store #2 in the building known as and located at 124 West 30th Street, New York, New York 10001" to petitioner Afghan House Inc. against respondent Inshandbags Inc. d/b/a Ins Handbags Inc., along with a money judgment in petitioner's favor and against respondent Inshandbags Inc. d/b/a Ins Handbags Inc., in the amount of $465,000, with prejudgment interest from the date of November 16, 2021, along with costs and disbursements in the amount of $50.00; and it is further
ORDERED that a warrant of eviction shall be issued forthwith, without stay. The earliest execution date of the warrant is December 4, 2023; and it is further
ORDERED that the amount of reasonable attorneys' fees that petitioner is entitled to recover from respondent Inshandbags Inc. d/b/a Ins Handbags Inc. is severed for an attorneys' fee hearing, which is scheduled for December 21, 2023 at 9:30 a.m. in Part 52, courtroom 772; and it is further
ORDERED that petitioner is directed to e-file all the exhibits that were accepted into evidence at the inquest that were not previously e-filed.
This constitutes the decision, verdict, and order of the court.