Opinion
80067/04.
Decided February 24, 2005.
In this commercial holdover proceeding, Respondent, The New Eagle, Inc., moved to stay the proceeding "pending the adjudication and determination" of a proceeding instituted by Petitioner, H.R. Neumann Associates, in Supreme Court, Kings County (Index No. 21027/04, the "Confirmation Proceeding"), seeking confirmation of two arbitration awards made by Beth Din Zedek of America-Ein Moshe (the "Beth Din Awards"). Petitioner then cross-moved for dismissal of Respondent's pleaded affirmative defenses and for summary judgment of possession, based primarily upon a ruling by Supreme Court, Kings County in an action instituted by Respondent in that court (Index no. 4694/04, the "Yellowstone Action"), seeking an injunction pursuant to First National Stores, Inc. v. Yellowstone Shopping Center, Inc. ( 21 NY2d 630.)
After a number of adjournments, the two motions were argued to this Court on January 4, 2005. By that date, the Hon. Yvonne Lewis had ruled in the Confirmation Proceeding, and confirmed the Beth Din Awards. ( See Memorandum, H.R. Neumann Associates Inc. and Heshy Beigeleisen v. The New Eagle, Inc. and Nandor Moskovits, Supreme Court, Kings County, Index No. 21027/04, Civil Term Part 32, December 13, 2004.) Because its original motion had been rendered moot by Justice Lewis's ruling, Respondent moved orally for a stay pending appeal of the ruling to the Appellate Division, Second Department. Petitioner opposed.
The Court reserved decision on both motions, requesting that the parties keep the Court informed of any further activity in the Confirmation Proceeding, in particular any stay that the Second Department might issue. Respondent moved by Order to Show Cause dated January 17, 2005 in the Appellate Division, Second Department to "stay an eviction proceeding pending in the Civil Court, Kings County, pending hearing and determination of an appeal" from Justice Lewis's December 13, 2004 order. By Decision Order on Motion dated January 25, 2005, the Appellate Division denied Respondent's motion. The Court has not been advised of any further activity by Respondent in prosecution of an appeal in the Confirmation Proceeding. The Court also notes that, although confirmation of the Beth Din Awards is certainly significant to the dispute between the parties, particularly as Respondent sees it, Petitioner's motion is based upon Supreme Court's ruling in the Yellowstone Action, also made by the Hon. Yvonne Lewis, which was not appealed by Respondent.
Petitioner and Respondent are parties to a Lease Agreement dated August 4, 1999, as amended by a Lease Modification Agreement dated November 1999, with respect to premises located at 5003-5005 13th Avenue, Brooklyn. The stated term of the Lease is from August 1, 1999 through July 31, 2019. A dispute arose between Heshy Beigeleisen and Nandor Moskovits, the sole shareholders of Respondent, which was presented to the Beth Din in accordance with a Memorandum of Understanding dated June 1999 between Messrs. Beigeleisen and Moskovits and an Agreement to Submit to Arbitration dated January 21, 2001 (replaced on December 24, 2002) signed by them and an authorized representative of Petitioner.
The Beth Din Awards are dated, respectively, July 13 and November 25, 2003. Among other things, and as characterized by Justice Lewis in her ruling in the Yellowstone Action, "the Rabbinical Court decreed that the Lease was canceled retroactively as of July 16, 2003." ( See New Eagle Inc. v. H.R. Neumann Associates, Inc., 4 Misc 3d 1005[A], 2004 NY Slip Op 50724[U], *2 [Sup Ct, Kings County].)
With a Thirty (30) Day Notice of Termination dated January 9, 2004, Petitioner notified Respondent that, "pursuant to Real Property Law § 232-a", it was "elect[ing] to terminate, as of February 16, 2004, your tenancy of the Premises, which you are currently occupying as a month-to-month tenant." Respondent commenced the Yellowstone Action with a Summons and Verified Complaint dated February 12, 2004, and moved by Order to Show Cause dated February 13, 2004 for an order "staying and tolling the termination date set forth in the Thirty (30) Day Notice of Termination dated January 9, 2004", and "enjoining and restraining" Petitioner "from taking any action to terminate or cancel the written lease agreement . . . and from commencing summary proceeding to evict" Respondent.
The February 13, 2004 Order to Show Cause imposed an interim stay, pending the hearing of the motion, which was returnable on February 20. The papers submitted to this Court on these motions do not indicate whether further stays were ordered, but, in any event, Petitioner did not file its Petition/Holdover Commercial until July 6, 2004, after Justice Lewis had ruled on July 1.
In her ruling in the Yellowstone Action, Justice Lewis stated, "The question for this court is, does the Beth Din award control as to whether there is a lease." ( Id., at *3.) Justice Lewis expressly agreed with Petitioner's contention that, "[b]ased upon the termination of the lease by the Rabbinical Court", Respondent became a month-to-month tenant as of July 17, 2003. Justice Lewis stated further that the "tenancy was properly noticed for termination by the Landlord's 30 day notice, if the Beth Din award stands." ( Id.)
Implicitly rejecting Respondent's contentions to the contrary, Justice Lewis held, among other things, that "a Rabbinical Court award need not be judicially confirmed in order to have binding res judicata and/or collateral estoppel effect upon the courts." ( Id., at *4 [emphasis in original). Further, "[s]ince the Rabbinical Award stands, there has been no Lease since July 16, 2003", Respondent "cannot cure a thirty day notice", and there was, therefore "simply no 'cure' period for [Supreme] Court to toll or to stay." ( Id.)
A Beth Din is "a religious tribunal that adjudicates disputes according to Jewish law and custom." ( Meisels v. Uhr, 79 NY2d 526, 531.) Confirmation and vacatur of a Beth Din award are governed generally by CPLR Article 75 ( see id., at 526), but there may be limits to review by a secular court arising from the First Amendment ( see Sieger v. Union of Orthodox Rabbis of United States and Canada, Inc.,1 AD3d 180 [1st Dept 2003]; see also Fried, Comment: The Collision of Church and State: A Primer to Beth Din Arbitration and the New York Secular Courts, 31 Fordham Urb L J 633 [2004]).
"It is settled that the doctrine of res judicata is applicable to arbitration awards and may serve to bar the subsequent relitigation of a single issue or an entire claim . . . 'Claim preclusion' refers to the bar against relitigating a claim or a cause of action . . . 'Issue preclusion' is more limited, barring only the relitigation of a discrete factual or legal issue." ( In the Matter of Ranni, 58 NY2d 715, 717; see also Simpson v. County of Westchester, 5 AD3d 780, 781 [2nd Dept 2004]; Waverly Mews Corp. v. Waverly Stores Associates, 294 AD2d 130, 132 [1st Dept 2002].)
"The question of whether to accord preclusive effect to a prior determination depends generally on a number of factors that we shall consider, including the identity of issues, the fullness and fairness of the parties' opportunity to litigate the issue at bar, the realities of the arbitral proceedings, including the incentive to proceed to arbitration, and actual scope of the arbitration, as well as the presence and participation of counsel, the foreseeability of future litigation, the extent to which a matter was necessarily or implicitly decided in the arbitral forum (even if not actually litigated), the likelihood of inconsistent results, and the opportunity to present evidence and cross-examine witnesses . . . By its very nature, however, an arbitration hearing is not conducted with the formalities and records of legal proceedings."( Altamore v. Friedman, 193 AD2d 240, 245, 246 [2nd Dept 1993].)
Petitioner is not asking that this Court give preclusive effect in this proceeding to the Beth Din Awards. Rather, Petitioner is asking that this Court give preclusive effect to Justice Lewis's ruling in the Yellowstone Action, which gave preclusive effect to the Beth Din Awards. Justice Lewis's determinations that Respondent's tenancy under the Lease Agreement had ended on July 16, 2003, that its tenancy was therefore month-to-month, and that termination was "properly noticed" by Petitioner's Thirty (30) Day Notice all rest on the "Rabbinical Court decree that the Lease was canceled retroactively as of July 16, 2003." ( See New Eagle Inc. v. H.R. Neumann Associates, Inc., 2004 NY Slip Op 50724[U], at *3.)
Justice Lewis does not expressly address the factors that would lead a court to give preclusive effect to an arbitration award, except to reject a requirement of judicial confirmation for binding effect. ( See id., at *4.) It does not appear, however, that, except for contending for the requirement of judicial confirmation, Respondent challenged the preclusive effect of the Beth Din Awards. Specifically, although Respondent disputed the authority of the Beth Din to make the awards that it did, it does not appear from Justice Lewis's opinion that Respondent pointed to any manner in which the Beth Din adjudication failed to comply with Article 75. (Neither party provided this Court with copies of the papers filed in the Yellowstone Action, except for the February 13, 2004 Order to Show Cause.)
"[C]ollateral estoppel does not apply to a prior determination involving solely a question of law . . . The rule does, however, apply to a determination involving a mixed question of law and fact." ( McGrath v. Gold, 44 AD2d 609, 610 [2nd Dept 1974], aff'd 36 NY2d 406; see also Hauss v. City of New York, 222 AD2d 653, 654 [2nd Dept 1995]; People v. Federal Builders Home Modernization Corp., 65 Misc 2d 407, 409 [App Term, 2nd Dept 1971.) Here, Justice Lewis gave preclusive effect to the Beth Din Awards, without a full articulation of her reasons, and the question is whether such a ruling on preclusive effect should be a considered a question of law or a mixed question of law and fact for purposes of a subsequent determination as to preclusive effect. In short, may there be collateral estoppel on collateral estoppel, when the first ruling was made by an arbitrator rather than judicial process?
This Court need not resolve that question, because it considers that the law of the case doctrine provides a sufficient, and perhaps preferable, vehicle for determining the preclusive effect here of Justice Lewis's ruling in the Yellowstone Action. Generally, "law of the case" is "a concept regulating pre-judgment rulings made by courts of coordinate jurisdiction in a single litigation", and "is designed to eliminate the inefficiency and disorder that would follow if courts of coordinate jurisdiction were free to overrule one another in an ongoing case." ( People v. Evans, 94 NY2d 499, 503-04.)
Like res judicata (claim preclusion) and collateral estoppel (issue preclusion), "preclusion under the law of the case contemplates that the parties had a 'full and fair' opportunity to litigate the initial determination." ( Id., at 502 [ quoting Arizona v. California, 460 US 605, 619.) But unlike those other preclusion doctrines, which are "rigid rules of limitation", "law of the case is necessarily 'amorphous' in that it 'directs a court's discretion', but does not restrict its authority." ( Id., at 503 [ quoting Arizona v. California, 460 US at 618.)
In C N Camera Electronics, Inc. v. Farmore Realty, Inc. ( 178 AD2d 310 [1st Dept 1991]), the tenant sought a Yellowstone injunction to restrain the landlord from terminating its tenancy, and the landlord counterclaimed for a declaratory judgment that the lease was terminated and for a final judgment of possession and issuance of a warrant. The court denied tenant any injunctive relief, "finding that there was no showing that the notice to cure was either inadequate or improperly served." ( Id., at 310.) When the landlord then moved for summary judgment on its counterclaims, the "holding that the lease was terminated was not reviewable under the doctrine of law of the case", and, since the tenant "continued in possession pursuant to an illegal holdover", the landlord "was entitled to a final judgment of possession and issuance of a warrant of eviction." ( Id., at 310-11.)
The only apparent material difference between C N Camera and our case is that here Petitioner's motion for summary judgment is made in a holdover proceeding in Civil Court, which is appropriate procedure. ( See Metropolitan Life Ins. Co. v. Carroll, 43 Misc 2d 639, 642 [App Term, 1st Dept 1964].) It is said that "the doctrine of law of the case . . . applies to various stages of the same litigation and not to different litigations." ( See McGrath v. Gold, 36 NY2d 406, 413.) But, nonetheless, the doctrine was flexible enough to be applied in successive proceedings in the same court. ( See Dalmolen v. Elmira College, 279 AD2d 929, 932 [3rd Dept 2001]; Allcity Ins. Co. v. Eagle Ins. Co., 1 Misc 3d 41, 42-43 [App Term, 2d and 11th Jud Dists 2003]; Schwartz v. Compania Azucarera Vertientes-Camaguey De Cuba, 28 Misc 2d 355, 356 [Sup Ct, Kings County 1960]; see also Harmon v. Kern, 159 AD2d 502, 503 [2nd Dept 1990] [doctrine not applied when issues in prior action were "separate, distinct and unrelated" to question in subsequent action].) And it has been applied to successive proceedings in different courts when sufficiently related. ( See Salvatore v. Salvatore, 185 Misc 309, 311 [Family Ct, Queens County 1945]; see also Hotel Syracuse, Inc. v. City of Syracuse Industrial Development Agency, 155 BR 824, 835 [NDNY 1993] [doctrine not applied when there has not been a final determination on the merits in the prior action].)
In Davenport Trading Corp. v. 684 Owners Corp. ( 169 Misc 2d 421 [Civ Ct, NY County 1995]), "law of the case" was applied to give preclusive effect to findings made in a Yellowstone proceeding when a "right of redemption" proceeding pursuant to Real Property Actions and Proceedings Law 761 and 767 was determined in Civil Court ( see id., at 427-28.) In light of the genesis, nature and purpose of an action for a Yellowstone injunction, it is particularly appropriate that its determinations be applied in a summary holdover proceeding in Civil Court.
"A Yellowstone injunction maintains the status quo so that a commercial tenant, when confronted by a threat of termination of its lease, may protect its investment in the leasehold by obtaining a stay tolling the cure period so that upon an adverse determination on the merits the tenant may cure the default and avoid a forfeiture."( Graubard Mollen Horowitz Pomeranz Shapiro v. 600 Third Ave. Associates, 93 NY2d 508, 514.) The remedy is sought in Supreme Court "[b]ecause Civil Court does not have jurisdiction to grant injunctive relief" ( Post v. 120 East End Avenue Corp., 62 NY2d 19, 25), as it "lacks authority to issue a declaratory judgment declaring the rights of the parties to the lease as well as the power to grant specific performance or to direct reformation where the subject matter involves a sum in excess of" $25,000.00 ( see Wilen v. Harridge House Associates, 94 AD2d 123, 125 [1st Dept 1983]; see also CCA § 213.)
In sanctioning the Yellowstone injunction, which has become "commonplace" ( see Post v. 120 East End Avenue Corp., 62 NY2d at 24), the Court of Appeals envisioned that preclusive effect would be given to Supreme Court's determinations if the parties appeared in Civil Court: "Once the merits had been decided by Supreme Court the stay terminated. If the tenant prevailed he had no further need for a stay. If he lost, he either cured the default during whatever part of the cure period remained or the lease expired and he was subject to removal by summary proceeding" ( see id., at 25).
For purposes of "the doctrine of law of the case", the action in Supreme Court for a Yellowstone injunction and the summary proceeding in Civil Court for possession are, in effect, "various stages of the same litigation" and not "different litigations". ( See McGrath v. Gold, 36 NY2d at 413.) To the extent that "concern [is] expressed . . . in some of the . . . cases about the traffic between the Civil Court and the Supreme Court" ( see Wilen v. Harridge House Associates, 94 AD2d at 130), and to the extent that " Yellowstone injunctions have impaired the effectiveness of summary proceedings . . . by enabling tenants to go into Supreme Court where delay may be encountered because of crowded calendars and the pretrial proceedings available in plenary actions" ( see Post v. 120 East End Avenue Corp., 62 NY2d at 28), application of the law of the case doctrine should provide some amelioration.
Although not necessary to its determination, the Court notes that, in Supreme Court's December 13, 2004 decision confirming the Beth Din Awards, the court found "no credible ground to vacate, reconsider or modify its earlier July 1, 2004 ruling" in the Yellowstone Action. ( See Memorandum, H.R. Neumann Associates Inc. and Heshy Beigeleisen v. The New Eagle, Inc. and Nandor Moskovits, December 13, 2004, at 7.)
Respondent has not otherwise disputed any element of Petitioner's prima facie showing, and so Petitioner is entitled to judgment unless there is a triable issue as to one of Respondent's pleaded Affirmative Defenses. Respondent pleads eight Affirmative Defenses, four of which (the Fifth, Six, Seventh and Eighth) are determined by this Court's holding that Justice Lewis's determination of the Yellowstone Action is the law of the case in this proceeding. The First Affirmative Defense must be dismissed because "[a]n affirmative defense of failure to state a cause of action cannot be interposed in an answer." ( See Iannarone v. Gramer, 256 AD2d 443, 445 [2nd Dept 1998].) The Second Affirmative Defense is dismissed, because any failure of the Petition to comply with CPLR 3015(b) is a "minor pleading defect" that, in the absence of any allegation of prejudice to Respondent, will be "disregarded". ( See Etkin Co., Inc. v. Play It Again Apparel, Inc., 235 AD2d 264, 264 [1st Dept 1997]; see also Board of Managers of Ocean Terrace Towne House Condominium v. Lent, 148 AD2d 408, 409 [2nd Dept 1989].)
In its Third and Fourth Affirmative Defenses, Respondent challenges the effectiveness of service of the Petition and Notice of Petition. The Fourth Affirmative Defense relies on CPLR 311, which is inapplicable in this RPAPL Article 7 proceeding, and is, therefore, dismissed. "RPAPL 735 created a complete regime for the service of process, unrelated to service provisions of the CPLR or any other statute." ( City of New York v. Wall Street Racquet Club, Inc., 136 Misc 2d 405, 407 [Civ Ct, NY County 1987].) Specifically, in the case of a corporate respondent "service under RPAPL alone is sufficient without reference to CPLR 311." ( Id.; see also Top Value Homes, Inc. v. Continental Petroleum Corp., 2 Misc 3d 1007[A], 2004 NY Slip Op 50169[U], *2 [Dist Ct, Nassau County].)
The Third Affirmative Defense challenges the sufficiency of service under RPAPL 735(1), which provides, as applicable here, that service may be made "by delivering to and leaving personally with a person of suitable age and discretion who . . . is employed at the property sought to be recovered . . . if upon reasonable application admittance can be obtained and such person found who will receive it . . . and in addition, within one day after such delivering to such suitable person . . ., by mailing to the respondent both by registered or certified mail and by regular first class mail." (RPAPL 735 [emphasis added].) As will appear, the viability of Respondent's Third Affirmative Defenses depends upon the meaning to be ascribed to the clause "who will receive it".
The Affidavits of Service attest to delivery of the Petition and Notice of Petition on July 8, 2004 to "Mr. Heim", who was "employed at [the] premises", and to mailing on the same day by certified mail and regular mail. The Affidavits are sufficient to establish prima facie the sufficiency of service. ( See Verille v. Kopic, 304 AD2d 823, 823 [2nd Dept 2003].) In an Affidavit of Chaim Klein in Opposition to Petitioner's Motion for Summary Judgment, Mr. Klein states that he is employed by Respondent "as a part-time salesperson working behind the counter in the store" ( see Affidavit, ¶ 1); that on the day of delivery of the papers, "neither the owner nor any of the managers were on the premises", and that he told the individual with the papers that he "was not allowed to accept legal papers" ( see id., ¶ 8); that the individual "then asked if he could leave the legal papers on the display counter, and I told him that I did not see how I could stop him" ( see id., ¶ 9); and that the individual "then placed a stack of papers, open and not in an envelope, on the display counter and exited the store" ( see id., ¶ 10.)
It is clear, first, that the naming in the Affidavits of Service of Claim Klein as "Mr. Heim" is not a defect sufficient to vitiate service. Despite his part-time employment status, Mr. Klein was a "person of suitable age and discretion" (RPAPL 735) for purposes of service upon Respondent. His job involved the performance of responsible functions, including dealing directly with customers, and he was permitted to perform his functions when the owners and manager were absent. ( See Top Value Homes, Inc. v. Continental Petroleum, Corp., 2 Misc 3d 1007[A], 2004 NY Slip Op 50169[U], at *2; Manhattan Embassy Co. v. Embassy Parking Corp., 164 Misc 2d 977, 981 [Civ Ct, NY County 1995].)
The manner of service, as described in Mr. Klein's Affidavit, would have been sufficient for "suitable person" service on an individual pursuant to CPLR 308(2). ( See Bossuk v. Steinberg, 58 NY2d 916, 918.) But, unlike RPAPL 735(1), CPLR 308(2) does not specify delivery to a "person . . . who will receive it". The court in Manhattan Embassy Co. v. Embassy Parking Corp. ( 164 Misc 2d 977) stated that "the terms 'will receive' and 'willing to receive' are not equivalents, and only the latter clearly expresses consent" ( id., at 982) (although "willing to receive" does not appear elsewhere in RPAPL 735 or CPLR 308), and then held that "refusal to accept service cannot vitiate a substitute service under the less rigorous RPAPL 735", relying on caselaw under CPLR 308(2) ( see id.; see also First Avenue Owners Corp. v. Riverwalk Garage Corp., 6 Misc 3d 439, ___ [Civ Ct, NY County 2004].) The net effect, it seems, is to read out of RPAPL 735(1) the descriptive clause "who will receive it".
This Court finds, in any event, that the service here was sufficient. The process server asked Mr. Klein if the papers could be left on the display counter, and Mr. Klein acquiesced. As described in Mr. Klein's Affidavit, the manner of service was "reasonably calculated, under all of the circumstances to apprise [the] interested [party] of the pendency of the action." ( See Bossuk v. Steinberg, 58 NY2d at 918-19 [ quoting Mullane v. Central Hanover Bank Trust Co., 339 US 306, 314.) Respondent, therefore, has not raised a triable issue with respect to its Third Affirmative Defense.
The Petition seeks, in addition to possession, use and occupancy "in an amount to be determined by the Court, from February 17, 2004 through the date Petitioner obtains possession", and "attorneys' fees incurred in bringing and prosecuting this proceeding, in a sum to be determined by the Court", but makes no showing on this motion in support of these claims.
Respondent's motion for a stay of these proceedings is denied, and Petitioner's cross-motion for summary judgment is granted to the extent provided below.
Petitioner is awarded judgment of possession of the premises and a warrant of eviction shall issue forthwith, with execution stayed ten days. The parties shall appear for trial on the remaining claims in the Petition on March 14, 2005, 11:00 AM, Part 52, Room 506.