Opinion
81693/15
04-10-2019
IA2 SERVICE, LLP, Petitioner, v. Fabian QUINIPANTA, John Doe and Jane Doe, Respondent(s). IA2 Service, LLP, Petitioner, Victor Chulco, John Doe and Jane Doe IA2 Service, LLP, Petitioner, Blanca Isabel Moposita, John Doe and Jane Doe IA2 Service, LLP, Petitioner, Angel Yanez, John Doe and Jane Doe. and Jane Doe 2 IA2 Service, LLP, Petitioner, Angel Yanez, John Doe and Jane Doe.
Petitioner's Atty: Schiller Law Group, PC, 675 Third Avenue, Suite #2400, New York, NY 10017 Respondent's Atty: Make the Road New York, 301 Grove Street, Brooklyn, NY 11237
Petitioner's Atty: Schiller Law Group, PC, 675 Third Avenue, Suite #2400, New York, NY 10017
Respondent's Atty: Make the Road New York, 301 Grove Street, Brooklyn, NY 11237
Kimberley S. Slade, J.
This matter was tried on various dates following petitioners' service upon respondents of termination notices seeking to terminate their monthly tenancies. Respondents answered and following the conclusion of motion practice the matter was tried. The main thrust of respondents' defense is that the property acquired de facto rent stabilization status as it was used in contravention of its certificate of occupancy.
The testimony commenced with Jorge David Fernandez, who was called out of order by respondents. Fernandez testified that he has lived in the vicinity of the subject premises and used to be the super and handyman for 219 Irving Avenue. He is consequently familiar with the store at 221 Irving Avenue. When he first arrived it was a 99-cent store but subsequently became a bodega. He knew both owners of the bodega, first was Ricardo Bonilla and then later, Juan Sanchez. Initially, Fernandez indicated he did not know where Sanchez lived, but later saw that he lived in the basement of 221 Irving Avenue from about the spring of 2013 until, or through, the summer of 2014. Fernandez was a customer of the store and often had conversations with Sanchez on a variety of topics.
Fernandez saw construction materials going to the basement that included sheetrock, screws, tape and other materials. He also saw Sanchez, his wife, a little girl and a white dog coming and going from the premises. He saw this up until around bedtime, which he described as 10 to 10:30 PM. As he picked up bread from the bodega in the morning he observed Sanchez in different clothing than he had been in the previous night. He also observed Sanchez's wife (variously described as wife or partner) and baby getting breakfast while he was there in the morning to purchase coffee. He saw this a minimum of three days a week and a maximum of five. He saw this frequently in the course of taking out the trash, which is one of his duties. In addition, he observed that a door at the sidewalk led to access in the basement. When Sanchez went to the basement he left one of the doors open and the other two were fully closed. Subsequent witnesses described similar observations. On cross-examination, Fernandez acknowledged he had not seen the actual construction work when the materials were taken to the basement.
Virgil Chong testified on petitioner's prima facie case and testified that he is an owner of the premises. He testified that the premises consist of five residential units and one that is commercial. He testified that Sanchez moved from the premises while in arrears in the summer of 2014 and that he did so while there were a number of years that remained on his lease. He acknowledged observing Sanchez's white dog.
The store sold food, tacos, beverages and had a bathroom at the store level as well as several refrigerators. In the basement there were sections and some doors. Sanchez asked if he could add another section in the basement and was told he could put up a wall. He testified that during the fall and winter he visited the building two times per month to flush out the boiler. He observed a bathroom with a sink in the bodega and testified that when Sanchez was there it contained a sink and toilet only.
Jose Pesantez and his daughter Jennifer testified. He is the current store proprietor. His lease commenced in August 2014. He described the basement as had petitioner. Ms. Pesantez acknowledged that there were rooms in the basement and that a mattress had to be thrown away. Benjamin Miller, an insurance inspector for petitioner also testified. His testimony was credible, but he lacked detailed recollections of what he saw and was unable to answer many questions with specificity. His responses were what might be expected of a witness who once saw the premises for a limited purpose years earlier and who has since seen many more buildings in the course of his professional duties.
All of the named respondents testified. They have lived at the premises for anywhere from 10 to 18 years. Each testified that commencing in about May of 2013 until August of 2014 the basement was converted to and used as a residence by the store proprietor, Sanchez. Many saw construction materials being taken to the basement and later saw the rooms that were constructed. A number of the witnesses testified to a white room with a finished floor. They testified variously and credibly that there was a free standing sink at some point, towels, a small refrigerator and electric hot plate type of stove. Additionally, there was testimony from each that there was a mattress, night table, pillows, a dresser, clothing, a hole cut into the wall for an air conditioner, a walker for the baby, toys, soap, towels and water.
The witnesses also testified credibly to the existence and frequent barking of a "little white dog" that they asserted belonged to and lived with the Sanchez family. They also consistently testified that upon the family's vacatur of the store and basement the dog's barking was no longer heard. The same testimony was offered related to the crying of the baby. Apparently, the dog's barking often caused the baby's crying.
The witnesses offered anecdotes concerning their unique observations of the Sanchez's use of the basement as a dwelling unit. Quinipanta understood the Sanchezes to live in the basement from about May 2013 through August 2014. He saw Sanchez's wife in the basement with the baby and saw or heard the Sanchezes in the basement after the store closed, and did not see them again until the next morning. He personally observed the wife and the baby in the basement and heard both the baby and the dog at all hours of the night. Some of his observations were made when he visited the basement related to an electrical outage.
Chulco also saw the baby and partner of Sanchez in the basement. He saw the ongoing construction and had occasion to visit the basement to locate some of his possessions which he learned Sanchez had thrown away. He heard fights coming from the basement in addition to hearing the baby crying and the dog barking. These sounds were no longer heard after August 2014.
Chasi saw the construction materials around May 2013. He heard construction and also, from the basement, conversations, barking and crying. The dog's barking disturbed his sleep.
Moposito saw the construction materials and, while she was in the basement to arrange storage of her air conditioners, she also saw painted rooms and finished floors. She also heard the conversations, ubiquitous baby crying and dog barking. This sometimes woke her up. She also no longer heard the sounds after the family vacated in August 2014. She also saw the partner of Sanchez walking the dog and saw Sanchez taking bread deliveries in his pajamas in the early mornings.
Yanez was also at the basement approximately four times, saw and heard much of what his neighbors saw and heard and was told by Sanchez that he was no longer permitted in the basement. By the fourth trip to the basement "he was sure Sanchez lived there." He also observed Sanchez accept bread deliveries in his pajamas at about 4:30 to 5:00 AM.
Erica Chulco, the then-teenage daughter of Chulco, described sneaking out of the building after 11 PM to see her boyfriend or friends. She explained that she learned to remove her shoes to avoid waking the dog, who would then bark and wake the baby and lead to her potentially being caught leaving late, without her parents' permission. She made similar observations and had similar concerns upon returning during the early morning hours.
On rebuttal, Virgil Chung testified that he gave Sanchez permission to build a storage area or room and never permitted him to reside in the basement.
Ryan Napoli, one of the attorneys for respondents, testified to lay a foundation for the introduction into evidence, over petitioner's objection, of an audio recording he made of Sanchez in which Sanchez acknowledges having lived or slept in the basement but also appears to indicate that the owner neither knew nor acquiesced in his use of the basement for sleeping or living purposes.
Sanchez was subpoenaed to testify by respondents. He failed to appear, was the subject of a contempt order and, thereafter, of an arrest warrant which he evaded. He previously provided an affidavit on behalf of petitioner related to the pretrial motions in this matter. At trial and over petitioner's objection the audio tape was accepted into evidence. The audio recording was objected to on the ground that it was hearsay, that the witness was unavailable for cross-examination and that it was not a statement made under oath.
Respondents argue that they have established their burden of proving that the basement was used residentially and that the building is thus rent stabilized and the petitions should be dismissed with prejudice.
Petitioner argues that respondents have not sustained their burden of proving a sixth residential unit. Petitioner characterizes the testimony of respondents as inconsistent and the witnesses incredible. Petitioner contrasts that unfavorably with the testimony of its own witness which is characterized as "extremely credible, internally consistent and consistent when taken as a whole." (Petitioner's post-trial memorandum at p. 5.) Petitioner minimizes the recollections of the respondent witnesses based primarily upon inconsistencies with time lines given during their testimony that conflicted with dates given in earlier affidavits. Petitioner further characterizes the witnesses' testimony as self-serving, interested and speculative. This is a characterization that can be attributed to most of the witnesses in this proceeding — virtually all of the witnesses were interested parties.
It is also observed that petitioner repeatedly characterizes the refrigerator and stove in the basement as not "standard" and otherwise exudes a disbelief that people can live in a manner that is not predicated upon a preconceived or universal idea of what constitutes a residence.There was no testimony offered on this issue and it is not a basis upon which this decision is based. The legal issues and facts upon which the questions are answered are unchanged. This is simply an observation that people make due with less than what might be desirable due to unavailability of space, cultural differences, economic circumstances and need.
Petitioner argues alternatively that even if a residence or dwelling unit is proven to have existed in the basement that, as petitioner neither knew or acquiesced in this arrangement, he should not suffer the penalty or consequence caused by the acts of another. He argues that to allow this would place a tenant in a position of being able to unilaterally alter the nature, usage and value of a building. While this is a fair point, the contrary is true as well: a landlord can disregard or ignore his or her property, take neither action nor steps to ascertain what occurs in a building and subsequently disavow responsibility, asserting a lack of knowledge or acquiescence. Like many things, it is a two-way street.
The respondents who testified did so credibly. They were believable. The inconsistencies that petitioner argues makes the witnesses unreliable or incredible does not. Their testimony concerning observations of events tied to time lines that occurred four to six years ago of events that were presumably mundane at the time was overall consistent as to general themes and broad time lines. There were moderate or relatively meaningless inconsistencies regarding some of the dates and times, but the broad thrust of the allegations is not impacted by this and in fact it would be less credible if, after five years, each witness precisely remembered the specific date of an event or activity that, at the time, would not be intrinsically noteworthy. It is unlikely that most people would observe the movement of sheetrock into a building and think it worth the effort to note the exact date or to recall that dates many years later.
The testimony of petitioner's witness was borderline evasive and at times as noncommital as possible when asked relatively innocuous questions. This is not to find Chung incredible, he was credible to a large degree. However, while ultimately the questions asked were answered, it is difficult to fathom why he would hesitate to answer questions related to his other property holdings or his interest or relationship to other buildings in the same area. The asserted lack of awareness related to the rents currently charged as opposed to what they might be following a renovation and re-renting is easily and readily ascertainable via the internet. It borders on the disingenuous for petitioner to assert an unawareness of this as a new owner who seeks to empty a building. Presumably, profit is the sole or primary motive for these proceedings and it is unlikely that this is misunderstood by anyone involved in this proceeding or any other of its ilk. Hence, the reluctance to answer some of these questions is curious.
Respondents argue that petitioner's failure to provide photographs of the portions of the basement that he asserts are used for his storage should be construed against him, and that his failure to provide an alternative address for, or to subpoena Sanchez, should also be construed in a negative light against him.
Petitioner objected on hearsay grounds to the introduction into evidence of the audio recording made by Napoli of Sanchez. The recording was allowed over objection. Petitioner now argues that the recording should be disregarded and given no weight as the witness was unavailable to be cross-examined and that the recording was not a statement made under oath. During the course of this proceeding, in opposition to respondents' motion for summary judgment, petitioner was able to obtain an affidavit from Sanchez that unambiguously and comprehensively asserted he was solely a commercial tenant, that he used no part of the building as a residence, that the basement was used purely for commercial purposes including storage, that there was neither kitchen, bath, nor shower in the basement and that he never undertook construction in the basement for living purposes. The motion was decided in favor of petitioner.
In the audio recording, confusing and incomprehensible in part, Sanchez states in substance that he would "stay a couple of hours," that "maybe he would stay a night," that he "won't say he had a bed," and indicated that he lied to the owner who never knew he had a bed downstairs and indicated he had been lucky in not having to open the basement door when inspectors were at the premises. He also indicated that the owner told him he would have problems if he had a bed. The affidavit was dated in 2015, the audio recording in 2017. The semi garbled and conflicting statements in the audio recording directly contradict the statements made in the earlier affidavit.
During the course of the proceeding, at various junctures, respondents sought by every possible legal vehicle to compel the appearance of Sanchez to the extent that an arrest warrant was issued, although not executed as he was unable to be located.
Having admitted into evidence the audio recording over petitioner's objection the question then is the weight to accord these statements in light also of the witnesses' having earlier provided an affidavit of facts on a substantive motion that was disposed of in petitioner's favor and in light of the additional fact that petitioner did not in fact call or seek to call Sanchez as a witness. The problem of the conflicting statements is compounded by the fact that the first statement is in the form of an affidavit and the second is unsworn.
In New York the remedy most appropriate to the situation before this court would be to draw a negative inference from petitioner's failure to call Sanchez as a witness. The basic elements for when this remedy is available is delineated in Placencia v. Torres, 194 Misc 2d 623 (Civ. Ct. 2003) where a four-prong analysis is employed: is the witness under the control of the party who failed to call the witness, does the witness have information of a material issue, would the witness's testimony be cumulative, is there a reasonable explanation for not having called the witness. In 318 East 93, LLC v. Ward , 276 AD2d 277 (1st Dep't 2000), the court noted that "[a] court's refusal to draw a negative inference based upon respondent tenant's failure to call her daughter at trial was a proper exercise of discretion. The inference that a trier of fact draws from a missing witness charge is not mandatory, but merely permissive...[I]t was in the province of the court, sitting as fact-finder, to determine whether to draw a negative inference from respondent tenant's failure to produce her daughter as a witness." Ward at 278.
In light of the patently inconsistent statements in the affidavit that conflict with those in the audio recording the statements are given little weight. Neither can be considered reliable.However, as petitioner formerly benefitted from and relied upon the affidavit, and during trial petitioner failed to call or seek to call Sanchez as a witness, this court will draw a negative inference based upon the failure to seek to do so. There has been no direct showing of control over the witness, but the ability to do so, or the failure to make the attempt, will be negatively imputed as petitioner was previously able to locate Sanchez and obtain his affidavit and later failed to call him as a witness, either on direct or on rebuttal, where his testimony would otherwise be relevant to a material issue and as the individual with the most intimate knowledge of the facts, not cumulative.However, the negative inference is not dispositive of this proceeding. This portion of the decision is rendered to remedy an imbalance and to offset any prospective prejudice from petitioner having obtaining the earlier benefit of the proffered affidavit and not subsequently seeking to affirm this testimony where is most valuable and where it is subject to challenge and the witnesses' demeanor to observation.
The Appellate Term, Second Department has visited and revisited the issue of whether, when and under what circumstances a building used in contravention of its certificate of occupancy, that leads to residential usage of six or more units, will cause it to become subject to the rent stabilization rules. In Rashid v. Cancel , 9 Misc 3d 130(A) (App. Term, 2d Dep't 2005) the court determined that the use of a basement apartment over many years afforded the tenants ETPA protections. Despite the landlord's claim that he was unaware of the usage when he purchased the building the court stated that "landlord's alleged lack of knowledge does not give rise to an exemption from rent stabilization since landlord acquired the building ‘subject to those rights and protections enjoyed by the building's tenants at the time of acquisition.’ " Rashid at 130(A).
In Benroal Realty Assoc., LP v. Lowe, 9 Misc 3d 4 (App. Term, 2d Dep't 2005) the tenants were in possession of commercial space in a lobby pursuant to a commercial lease. Following expiration of the tenant's lease the landlord sought possession. The tenants argued that they were covered by the ETPA as the landlord knew of and acquiesced in their residential use of the space. The court held "notwithstanding the commercial nature of a lease, where a landlord ‘knew of or acquiesced in...tenant's residential use of [a premises]’...said premises ‘must be deemed’ subject to the relevant rent regulatory scheme." Benroal at 6 (citing A Real Good Plumber , 59 AD3d 424 [2d Dep't 2009], amongst others). The court went on to assert "[t]hus, a landlord cannot rent premises under a commercial lease with full knowledge that the tenant intends to convert the premises to solely residential use as his primary residence...and thereafter avoid the protections afforded to residential tenants under the...[ETPA]." Id.
The court further stated, "[w]hile not dispositive of the issue, the instant lease's restrictions on the premises' use to an exclusively commercial purpose is a ‘factor to be considered in determining [such] issue[ ]’ ". Id. In noting that the building manager in this matter testified that he never consented to the unit's usage for residential purposes, and had not been aware that the premises were used in contravention of the commercial lease, and where the tenants acknowledged that the premises were not equipped for residential usage the court stated, "where a lease ‘unambiguously stated that the premises were to be used solely for commercial purposes...[even if] the [tenant] resided in a portion of the premises, this did not mean that the plaintiff leased a ‘housing accommodation’ subject to rent control’ ". Id.
In Benroal the court cited Mesiti v Upam Realty Corp. , 185 AD2d 336 (2d Dep't 1992), and observed that the landlord had not consented to the residential use of the property, noting that the space was not equipped for residential usage and observed that it did not appear that the tenants actually lived at the premises for a variety of reasons, although this does not appear to have been a significant component of the court's reasoning or determinative of the outcome.
In Robrish v. Watson , 48 Misc 3d 143(A) (App. Term, 2d Dep't 2015) the landlord sought possession of a top floor apartment of what was acknowledged to have long been a rooming house containing ten separate rooms. Despite the fact that respondent was the only occupant in possession at the time of trial the court held that the ten separate tenancies subjected the building to rent stabilization coverage as it was a "housing accommodation ...built before January 1, 1974 containing more than six units..." and went on to reiterate that "[t]he RSC defines a housing accommodation as '[t]hat part of any building or structure, occupied or intended to be occupied by one or more individuals as a residence, home, dwelling unit or apartment." Robrish at 143(A). Under these circumstances, the court determined that the petition should be dismissed as the governing definition of a rent stabilized dwelling unit included the subject premises. The court additionally noted that it was of no legal consequence that the illegal usage was discontinued.
Following Robrish, the court decided 124 Meserole, LLC v. Recko , 55 Misc 3d 146(A) (App. Term, 2d Dep't 2017) where the building contained four residential units and had once contained a fifth unit within one of the stores. The sixth unit existed "behind the store on the right side of the first floor of the building, which area was used as a residence by the former proprietor of that store (store proprietor)." 124 Meserole at 146(A). The court noted that it is petitioner's burden to demonstrate that the property is exempt from rent stabilization.
The court framed the issue as "whether, as tenants allege, two rooms behind a store in the ground-floor right side of the building were used by the store's proprietor as a residence with the knowledge of the prior landlords in 1974 or at any time thereafter...and whether these rooms constituted a ‘housing accommodation’ within the meaning of RSC § 2520.6." Id. The testimony of various tenants and the introduction into evidence of documentary evidence by the tenants established the usage of the premises as tenants alleged. The store proprietor had a living room and a kitchen behind the store. There was a "full array of furniture, kitchen appliances and decorations, including fresh produce and toiletries." Id.
The lower court determined that the space was not a housing accommodation because the two rooms were not a separate space, were separated only by a curtain and that there were neither gas nor water connections in the area. The Appellate Term, citing to Matter of Gracecor Realty Co. v. Hargrove , 90 NY2d 350, 355, 660 NYS2d 704, 683 NE2d 326 (1997) and Joe Lebnan , infra , reiterated and emphasized the portion of the definition of housing accommodation in the Rent Stabilization Code that states "that part of any building, structure" and held that "the weight of the evidence established that the store proprietor had occupied the rooms as her home over a period of years with the knowledge of the prior landlords." Id. Thus, the rear two rooms constituted a housing accommodation and knowledge of this usage was charged or imputed to the former owner and, consequently, the current owner's lack of knowledge is imputed as well and any professed lack of actual knowledge is an irrelevant component of the inquiry. In Joe Lebnan, LLC v. Oliva , 39 Misc 3d 31 (App. Term, 2d Dep't 2013) the owner commenced holdover proceedings to recover possession of two apartments in the same building. The building certificate of occupancy contained five residential units and a dentist's office. At trial respondents asserted that the building actually contained eight residential units. Numerous witnesses testified to this illegal usage. Moreover, photographic, documentary evidence and a building department violation report supporting the tenants' assertions as to the number of residential units were introduced. The housing court dismissed the petitions finding that the apartments were rent stabilized and the Appellate Term affirmed.
Many of the decisions cited have involved a balancing of various factors in light of an explicit public policy that seeks to preserve affordable residential housing. Courts have considered the intent of the parties, the language of their lease, the usage to which a space is primarily put, the knowledge of the parties or their predecessors and, implicitly, whether knowledge should be imputed. Also, courts may look at the acquiescence of an owner, patently improper usage of a space in violation of its certificate of occupancy, and the configuration of the space. Each scenario has some aspects of a sui generis investigation and there is no formula that has or can be applied in any particular instance and there are various factors, some quantifiable and some nuanced, that courts have looked at to discern whether a space is a housing accommodation within the meaning of rent stabilization.
In the matter currently pending before this court the questions are whether a basement area or room was used as a residence or dwelling unit, if there was such usage did it create a sixth unit at the premises, does the lack of direct knowledge by petitioner impact the treatment of the premises, and whether and when knowledge of the usage may be imputed to petitioner.
As already noted, respondents' testimony is fully credited. Petitioner is not found incredible, but less than forthcoming in some areas and that, in conjunction with the failure to call Sanchez, or make any efforts to have him replicate the statements made in the earlier affidavit while testifying and subject to cross-examination does not enhance his case.
Respondents' testimony was sufficient to establish the use of the basement as a dwelling unit, the sixth such unit at the premises. The rent stabilization's definition of "housing accommodation" is "[t]hat part of any building or structure, occupied or intended to be occupied by one or more individuals as a residence, home, dwelling unit or apartment, and all services, privileges, furnishings, furniture and facilities supplied in connection with the occupations thereof." 9 NYCRR § 2520.6(a). In Gracecor the Court stated that "[t]his functional definition is not limited by any physical or structural requirements, such as square footage." Gracecor at 355.
Under the specific facts of this case the intent component is demonstrated by the testimony of the tenants who testified. Their testimony established the residential usage by Sanchez and his family and the intent is manifested by the actual use and occupation of the basement for residential purposes. Despite the affidavit filed by Sanchez, and despite his often inchoate statements and apparent dissembling in the audio recording, he and his family are established to have resided in the basement as alleged.
Under the facts of this case, and the law as articulated in Rashid v. Cancel , 9 Misc 3d 130(A) (App. Term, 2d Dep't 2005), Robrish v. Watson , 48 Misc 3d 143(A) (App. Term, 2d Dep't 2015), and 124 Meserole, LLC v. Recko , 55 Misc 3d 146(A) (App. Term, 2d Dep't 2017) the knowledge of the landlord is not a necessary component of the analysis and to the extent that it is, it is imputed. There has been no showing that the landlord actively knew that the basement was being used residentially, but there is likewise no showing that he undertook any steps to learn, limit or otherwise investigate the status or use to which the basement was being put. Petitioner confirmed having seen respondent's white dog, he was aware that Sanchez was performing some form of construction in the basement. Petitioner's testimony established that he spent a minimal amount of time at the building. While he testified that he was in the basement to tend to the boiler, that does not necessarily conflict with the testimony of respondents who consistently and credibly established the occupancy of the basement through various observations that occurred on a regular and repeated basis. The occupancy was not apparently surreptitious — it involved a crying baby, a barking dog, construction, early morning deliveries received while in pajamas, walking a dog, disagreements with neighbors, encounters with neighbors in the basement, and other indicators of residential activity. Although all of this stopped with the vacatur from the basement of Sanchez, it does not negate the fact that the basement was used residentially and, under the circumstances presented in this case, knowledge of this is imputed to petitioner.
Consequently, the petitions are dismissed with prejudice for the reasons stated herein and for failure of Petitioner to correctly plead the rent regulatory status of the subject premises.
This constitutes the decision and order of the court.
Dated: April 10, 2019