Opinion
Index No. LT-307948-24/NY
08-09-2024
Aldot Holding Corporation, Petitioner (Landlord), v. Ninth Avenue Organic Deli & Convenience Corp. d/b/a HERBAL HOUSE, Respondent-Tenant, XYZ CORP., ABC LLC, JOHN DOE and JANE DOE, Respondent-Undertenants.
Petitioner: Mark Friedlander, Esq. Defendant: Law Office of Marc Scolnick
Unpublished Opinion
Petitioner: Mark Friedlander, Esq.
Defendant: Law Office of Marc Scolnick
Ilana J. Marcus, J.
Recitation, as required by CPLR 2219(a), of the papers considered in the review of this motion:
Mot. Seq. 001
Respondent's Notice of Motion, Affidavit in Support, Memo of Law, Exhibits...............1
Petitioner's Affirmations in Opposition, Exhibits...............2
Respondent's Reply Affirmation...............3
Mot. Seq. 002 Petitioner's Notice of Cross Motion, Affirmations in Support, Exhibits ...............4
Respondent's Affirmation in Opposition ...............5
Petitioner's Reply Affirmations, Exhibits ...............6
Petitioner commenced this commercial holdover proceeding pursuant to RPL 231 and RPAPL 711(5), 715(1), seeking to recover possession of the premises located at 852 9th Avenue, north-ground floor and basement below it, New York, NY 10019 ("subject premises"), based on illegal use of the premises for the unlicensed retail sale of cannabis. The holdover petition is dated April 22, 2024. Respondent filed an answer with counterclaims on May 10, 2024.
In motion sequence 001, respondent moves for summary judgment and for dismissal of the petition. Petitioner opposes and respondent submits reply. In motion sequence 002, petitioner cross moves for summary judgment and for dismissal of respondent's affirmative defenses and counterclaims. Respondent opposes and petitioner submits reply. Petitioner's cross motion for summary judgment is granted to the following extent and respondent's motion is denied as follows:
The movant on a motion for summary judgment must make a prima facie showing of entitlement to judgment as a matter of law by tendering sufficient evidence to eliminate any material issues of fact from the case (see Winegrad v New York Univ. Med. Ctr., 64 N.Y.2d 851, 853 [1985]; Zuckerman v City of New York, 49 N.Y.2d 557, 562 [1980]). CPLR 3212(b) provides that a summary judgment motion must be supported by an affidavit of a person with knowledge of the facts, as well as other admissible evidence (see JMD Holding Corp. v Congress Fin. Corp., 4 N.Y.3d 373, 384-85 [2005]).
Once a movant makes a prima facie showing, "the burden shifts 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" (Alvarez v Prospect Hosp., 68 N.Y.2d 320, 324 [1986], citing Zuckerman v City of New York, 49 N.Y.2d at 562).
The court addresses petitioner's cross motion for summary judgment first as it is dispositive of the matter. Petitioner provides the court with the affidavit of Maxine Danowitz, petitioner's principal; the subject lease; a copy of the certified deed of the subject premises; information from the New York State Office of Cannabis Management Conditional Adult Use Retail Dispensary Provisional Contact Information; various pictures of the premises and the products sold at the premises; and other various exhibits. With these documents, petitioner makes a prima facie showing of entitlement to summary judgment in this illegal use holdover proceeding (see RPL 231; RPAPL 715[1]; RPAPL 711[5]).
Petitioner establishes that it is the owner and landlord of the premises; that the parties are in a landlord-tenant relationship pursuant to a written lease agreement dated November 14, 2023; that respondent is selling cannabis products without a New York State license to do so; that petitioner properly terminated respondent's lease pursuant to RPL 231 and RPAPL 715(1); and that respondent continues to holdover and occupy the subject premises without petitioner's permission.
The burden shifts to respondent to produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact which require a trial. Respondent fails to meet its burden.
In opposition, respondent fails to submit an affidavit of anyone with personal knowledge of the facts rebutting petitioner's prima facie showing. In support of its own motion for summary judgment, respondent submits the affidavit of its owner, Abrahim Kassim (see NYSCEF Doc. No. 16). In its discretion, the court will consider Mr. Kassim's affidavit as opposition to petitioner's motion for summary judgment. Mr. Kassim states he never received a notice of default, notice to cure, or a notice of termination; that he has never been approached by law enforcement or inspectors regarding any products sold at his store; that he never consented to the sale of any illicit substances at the store; and that the subject premises is not and has never been primarily used for the retail sale of unlicensed cannabis (see id.).
Addressing respondent's predicate notice argument, "a termination notice is not generally required to maintain an illegal use proceeding, since such a proceeding is founded upon statutory authority and not the termination of a lease," unless there exists "a governing regulatory scheme [that] requires preeviction notice" (New York City Hous. Auth. v Harvell, 189 Misc.2d 295, 296 [App Term, 1st Dept 2001]). Respondent fails to put forth a governing regulatory scheme that requires petitioner to serve a predicate notice prior to commencing this illegal use proceeding. Therefore, respondent's defective predicate notice argument is without merit.
Respondent argues that petitioner failed to properly serve respondent with the notice of petition and petition. Mr. Kassim does not state in his affidavit that petitioner improperly served respondent. Respondent's argument in its opposition is made upon information and belief by respondent's counsel. Petitioner filed prima facie proof of proper service upon respondent pursuant to RPAPL 735 (see NYSCEF Doc. No. 9). Respondent fails to provide a "sworn nonconclusory denial of service" that "dispute[s] the veracity or content of the affidavit" (NYCTL 1998-1 Trust & Bank of NY v Rabinowitz, 7 A.D.3d 459, 460 [1st Dept 2004]). Consequently, respondent's defective service argument is also without merit.
Respondent further argues that petitioner waived any default in the lease by accepting rent from respondent after the alleged default. However, Mr. Kassim fails to allege in his affidavit that petitioner accepted rent from respondent after the termination of the lease. Furthermore, Ms. Danowitz states that the only rent paid by respondent and accepted by petitioner was for March 2024, the first month due, in the amount of $17,000.00 (see NYSCEF Doc. No. 25, ¶21). She states that nothing was paid or accepted by petitioner since then (see id.). Even still, as held by the Appellate Term, First Department, a landlord cannot waive the illegal use of the premise by accepting rent (see Murphy v Relaxation Plus Commodore, Ltd., 83 Misc.2d 838 [App Term, 1st Dept 1975]). Consequently, respondent's estoppel argument is rejected.
Respondent argues that there exist questions of fact regarding whether the product claimed to be cannabis, and bought at respondent's store is, in fact, cannabis. Respondent also questions whether the alleged cannabis was purchased at respondent's store. Ms. Danowitz, in her affidavit, states that on or about April 14, 2024, and again on April 16, 2024, she personally entered the subject premises and bought the products depicted in Exhibits A through E attached to the petition (see NYSCEF Doc. No. 25, ¶¶12-16; NYSCEF Doc. Nos. 3-7).
Exhibit A is a picture of container labeled "cannabis-infused gummies and CBG" with "5 MG THC | 10 MG CBG per serving" and "100 MG THC / 200 MG CBG per package" (see NYSCEF Doc. No. 3). The unambiguous packaging of this product states that it is a cannabis product containing THC. Exhibit B is a picture of a display case with several products, at least two of which are labeled with the California Department of Cannabis Control Universal Symbol for cannabis goods (see NYSCEF Doc. No. 4; California Department of Cannabis Control, https://cannabis.ca.gov/2023/10/universal-symbol/ [last accessed July 30, 2024]). Exhibit C is a picture of a preroll marijuana cigarette container indicating the product contains cannabis and is "made with hash oil top shelf flower covered in keif" (see NSYCEF Doc. No. 5). The packaging of this product states it is a cannabis product. Exhibit E is a picture of a sign displayed at respondent's store stating respondent is selling various types of marijuana, including indica, hybrid/sativa, and sativa (see NYSCEF Doc. No. 7). Respondent, through its attorney, concedes that sativa is a cannabis product (see NYSCEF Doc. No. 46, ¶¶39-40).
Kief, or kif or kef, is defined as "a powdery, crystallized substance extracted from the resin glands on the flower buds of the cannabis plant: more potent than marijuana due to a high concentration of cannabinoids and terpenes" (Kief [ https://www.dictionary.com/browse/kief ] [last accessed ]).
Hash, short for hashish, is defined as "the concentrated resin from the flowering tops of female hemp plants (Cannabis sativa or C. indica) that is smoked, chewed, or drunk for its intoxicating effect" (Hashish, Merriam-Webster Dictionary [ https://www.merriam-webster.com/dictionary/hashish ] [last accessed ]).
Cannabis Indica is defined as "a low-growing densely branched species [of cannabis] used especially for cultivated varieties having high levels of THC" (Cannabis, Merriam-Webster Dictionary [ https://www.merriam-webster.com/dictionary/cannabis ][last accessed ]).
Cannabis Sativa is defined as "a tall Asian herb (Cannabis sativa of the family Cannabaceae, the hemp family) that has a tough fiber and is often separated into a tall loosely branched species" (id.).
Respondent argues that despite its own unambiguous packaging, petitioner must submit a laboratory report or testimony from law enforcement personnel to confirm that the substances offered for sale contain cannabis in order for petitioner to establish its prima facie case.
Ms. Danowitz's affidavit, along with the pictures of the packaging of the products at issue, sufficiently establish petitioner's prima facie case in this summary proceeding. A laboratory report or testimony from law enforcement personnel is not absolutely necessary in examining a landlord's right to recover possession in an illegal use holdover proceeding (see Midcenter Equities Associates v Nghiem My Quack Tran, 10 Misc.3d 141 (A) [App Term, 1st Dept 2006][court did not require landlord to submit proof sufficient to support a criminal conviction in an illegal use proceeding where it was otherwise "firmly established"]).
This assessment is also guided by the standards in a criminal context. In evaluating the necessity of a laboratory report of a controlled substance, the Court of Appeals rejected the necessity of a chemical test to establish the facial sufficiency of a criminal misdemeanor information charging a defendant with possession of a controlled substance (see People v Kalin, 12 N.Y.3d 225 [2009]). "Rather, [petitioner's] factual allegations must establish the basis of the [deponent's] belief that the substance seized was" cannabis, such as statements that the deponent "relied on the packaging of the substance that [s]he determined to be" cannabis (id. at 231).
Furthermore, respondent presents no documentary evidence to rebut petitioner's prima facie showing (see id.). Therefore, the argument that petitioner fails to prima facie establish that the products sold at respondent's store are cannabis products is without merit.
Respondent further argues that petitioner fails to establish that respondent conducted an illegal trade or an illegal business at the subject premises, or that such illegal business was known and consented to by respondent.
RPL 231(1) states:
Whenever the lessee or occupant other than the owner of any building or premises, shall use or occupy the same, or any part thereof, for any illegal trade, manufacture or other business, the lease or agreement for the letting or occupancy of such building or premises, or any part thereof shall thereupon become void, and the landlord of such lessee or occupant may enter upon the premises so let or occupied.(RPL 231[1]). Likewise, RPAPL 711(5) permits a landlord to commence a summary proceeding against a tenant when "[t]he premises, or any part thereof, are used or occupied... for any illegal trade or manufacture, or other illegal business" (RPAPL 711[5]). "To warrant eviction based on use of premises for illegal activity, use implies doing of something customarily or habitually upon the premises" (855-79 LLC v Salas, 40 A.D.3d 553 [1st Dept 2007] [citations omitted]).
To say that a building is "used" for a specified purpose means in substance that it is kept or maintained for such a purpose... There must be a showing that the tenant has departed from the legitimate or legal use for which the premises were hired, by some measurable degree of continuity of acts of vice related to the occupancy of the premises or to the method of conducting the business therein.(Solow Bldg. Co., II v Banc of Am. Sec., LLC., 13 Misc.3d 55 [App Term, 1st Dept 2006] [citations omitted]). Regarding tenant's knowledge and consent to the illegal use, "[i]t is not necessary that the tenant actually participate in the illegal activity; it is sufficient that the acts and conduct complained of warrant the inference of acquiescence" (88-09 Realty, LLC v Hill, 305 A.D.2d 409 [2d Dept 2003]).
Here, Ms. Danowitz affirms that on two occasions, she entered the subject premises and purchased cannabis products (see NYSCEF Doc. Nos. 3-7, 25). She states that on "both of these visits that the shelves of the store were filled with all types of cannabis products and marijuana products" (see NYSCEF Doc. No. 25, ¶15). Pictures of the interior of the subject premise corroborate Ms. Danowitz's statements (see NYSCEF Doc. No. 4, 6). Additionally, petitioner submits a picture of the storefront window of premises that includes two neon-light signs of a marijuana leaves, along with an advertisement for "STIIIZY FREE PREROLL" in large print (see NYSCEF Doc. No. 36; STIIIZY, Inc., https://www.stiiizy.com/pages/company-vision [California-based cannabis company][last accessed ]). Petitioner also submits a picture of a sign displayed at respondent's store stating respondent is selling various types of marijuana, including indica, hybrid/sativa, and sativa (see NYSCEF Doc. No. 7). Ms. Danowitz's affidavit along with the aforementioned exhibits establish prima facie proof of respondent's illegal use of the premise and its acquiescence thereto.
Respondent also argues that petitioner fails to provide any evidence of criminal or illegal activity at the premises. As previously stated, petitioner established respondent's open use of the premise for the sale of cannabis products. RPAPL 715-a(4) states "[t]he use or occupancy of premises customarily or habitually for the unlicensed retail sale of cannabis or products marketed or labeled as such shall constitute an illegal trade, manufacture, or other business for the purposes of [RPL 231]" (RPAPL 715-a[4]).
In its discretion, the court takes judicial notice of the list of dispensaries licensed by the New York State Office of Cannabis Management certified by petitioner's attorney on June 13, 2024 (see NYSCEF Doc. No. 40; see New York State Office of Cannabis Management, https://cannabis.ny.gov/dispensary-location-verification [last accessed ]). Respondent is absent from the list of licensed dispensaries (see id.). Respondent also fails to come forward with proof that it is licensed in response to petitioner's prima facie showing. Therefore, respondent's argument that petitioner fails to provide any evidence of criminal or illegal activity at the premises is rejected.
Respondent claims that petitioner fails to establish that it violated the lease between the parties. This argument is without merit. Paragraph 6 of the parties' lease states that tenant shall "comply with all present and future law, orders and regulations of all state, federal municipal and locate governments" (NYSCEF Doc. No. 27, ¶6; NYSCEF Doc. No. 30). Respondent's illegal use of the premise is in violation of paragraph 6 of the lease.
For the reasons stated above, respondent fails to submit proof in admissible form sufficient to establish the existence of material issues of fact that require a trial. Thus, petitioner's cross motion for summary judgment is granted to the extent of awarding petitioner a final judgment of possession of the subject premises, with the issuance of the warrant of eviction forthwith.
Regarding petitioner's request for a money judgment contained in Ms. Danowitz's affidavit, petitioner fails to submit any rent ledger, accounting, or invoices to substantiate its request. Therefore, petitioner's request for a money judgment and attorneys' fees is severed, preserved for a plenary action, and is dismissed without prejudice herein.
The branch of petitioner's motion seeking dismissal of respondent's affirmative defenses is denied as moot as this court grants summary judgment to petitioner.
Turning to respondent's counterclaims, petitioner argues that Article 25 of the parties' lease prohibits respondent from interposing any counterclaims against petitioner in this summary proceeding for possession of the subject premises (NYSCEF Doc. No. 27, ¶25; NYSCEF Doc. No. 30). Article 25 states that "in the event that Owner commence[ sic ] any proceeding or action for possession, including a summary proceeding for possession of the demised premises, Tenant will not interpose any counterclaim of whatever nature or description in any such proceeding, including counterclaims under Article 4, except for statutory mandatory counterclaims" (id.).
A lease provision that waives counterclaims is enforceable (see Amdar Co. v Hahalis, 145 Misc.2d 987 [App Term 1990]; Ring v Arts Intern., Inc., 7 Misc.3d 869 [Civ Ct, NY Cty 2004]). An exception to the rule exists for a counterclaim so "inextricably intertwined" with petitioner's claim that a resolution of the claim and counterclaim together will "expedite disposition of the entire controversy, avoid multiplicity of other lawsuits between the parties to accomplish the same result, do speedy justice for all and eliminate greater delay and expense" (see Ring v Arts Int'l, Inc., 7 Misc.3d 869 [Civ Ct, NY Cty 2004] quoting Haskell v Surita, 109 Misc.2d 409 [Civ Ct, NY Cty 1981]).
Here, in opposition to petitioner's motion, respondent does not argue that its counterclaims are inextricably intertwined with petitioner's claims. Instead, it claims that since petitioner voided the lease pursuant to RPL 231 based on respondent's illegal use, petitioner cannot rely on a provision in the same lease to preclude respondent's counterclaims. Respondent's argument is unavailing. Pursuant to the lease's express waiver provision, respondent's counterclaims are dismissed.
Finally, as petitioner's cross motion for summary judgment is granted to the extent of awarding petitioner a final judgment of possession of the subject premises, respondent's motion for summary judgment and dismissal of the action is denied.
Accordingly, it is hereby
ORDERED, that respondent's motion for summary judgment is denied; it is further
ORDERED, that petitioner's cross motion for summary judgment is granted to the extent that a final judgment of possession of the subject premises as against respondent NINTH AVENUE ORGANIC DELI & CONVENIENCE CORP. d/b/a HERBAL HOUSE is granted; issuance of the warrant of eviction is forthwith, the earliest execution date is August 19, 2024; it is further
ORDERED, that the branch of petitioner's cross motion to dismiss respondent's counterclaims is granted; it is further
ORDERED, that the branch of petitioner's cross motion to dismiss respondent's affirmative defenses is denied as moot; and it is further
ORDERED, petitioner's request for a money judgment is denied without prejudice and petitioner's claim for a money judgment and attorneys' fees is severed and preserved for a plenary action and is dismissed without prejudice herein.
This constitutes the decision and order of this court.