Opinion
L T: 95113/2006.
Decided June 10, 2008.
Attorney for Petitioner: Eliezer B. Krauss, Esq.
Attorney for Respondent: Jordan T. Schiller, Esq./Lindenbaum Young.
Petitioner commenced this holdover summary proceeding seeking possession of Apartment No. 3L located at 90 Eagle Street, Brooklyn, New York, upon the ground that she intends to utilize the apartment as her primary residence and for the use and occupancy of her daughter and for business related purposes. Petitioner now resides in Tuxedo Park, New York.
Salient Facts
Petitioner is the owner of the subject premises located at 90 Eagle Street, Brooklyn, New York along with approximately eight (8) other buildings in Brooklyn. While 90 Eagle Street was formerly owned in partnership with a corporation, the remaining buildings were co-owned with her husband, Kevin. At trial petitioner acknowledged that she is currently separated from her husband, has been for a number of years and is in the process of obtaining a divorce. The subject premises was owned by petitioner and Red Petel Corp. by deed dated October 7, 2005. Sometime during the month of April, 2006, Red Petel conveyed their one-half interest in the property to petitioner, Malina Nealis, who allegedly became the sole owner of the property. Upon advice of her accountant and/or divorce attorney petitioner did not record the 2006 deed. Petitioner testified that she seeks recovery of Apartment 3L which is currently occupied by the respondent for her own use and occupancy and that of her daughter. She set forth in detail her plans to convert respondent's apartment into a duplex with another apartment for herself and her three (3) children. The Court admitted into evidence alleged architectural plans which showed a full conversion plan of the apartment which she intends to submit to the Buildings Department for approval. She states that her present financial condition prevents her from moving forward due to an alleged bitter divorce proceeding with her husband and that she is awaiting the outcome of the instant lawsuit before proceeding forward.
Ms. Nealis further testified that she had been involved in four (4) prior holdover proceedings involving other premises on similar grounds. One proceeding was dismissed for non-appearance of petitioner and the other was dismissed after a traverse hearing. The remaining two (2) proceedings were settled by stipulations, both based on buy-out agreements. In two (2) of the proceedings, petitioner held a twenty-five percent (25%) interest in the property. In the other two she held a fifty percent (50%) interest.
Applicable Law
It is well settled that under the Rent Stabilization Code ("RSC"), an owner may recover possession of a rent stabilized unit for the landlord's personal use or for the personal use of a member of the landlord's immediate family. Pultz v. Economakis, 8 Misc 3d 1022(A), 803 NYS2d 20, 2005 WL 1845634 quoting RSC § 2524.4(a). The intent to occupy the subject premises must be genuine and not a subterfuge to remove rent regulated tenants from the premises, Pultz v. Economakis, supra . The legislative purpose in establishing the Rent Stabilization Code, as it relates to owner occupancy proceedings, was to prevent "manipulation" and "schemes" aimed at circumventing the balance between an owner's good faith intent to obtain living accommodations and the tenant's right to remain in their rent regulated apartments. Samuel v. Ortiz, N.Y.L.J. 6/7/95, 30:2 (Civ Kings, Callendar) citing to Bedford v. De Rosa, 488 NYS2d 959 {128 Misc 2d 181} (Civ. Queens, 1985).
In an owner occupancy proceeding, the primary issue is whether the landlord has an honest, good faith intent to use and occupy the subject apartment. Axelrod v. Duffin, 154 Misc 2d 310, 594 NYS2d 518 (AT 1st Dept. 1992). The landlord must demonstrate to the Court, by a preponderance of the evidence, that he has a good faith intent to occupy the premises or that his family member will occupy the premises, Nestor v. Britt, 213 AD2d 255, 624 NYS2d 14 (1st Dept. 1995). Nowhere in the RSC is "good faith" named as a requirement. However, the case law interpreting RSC § 2524 (a)(1) requires such a demonstration. When determining this issue, the Court must review the totality of facts that weigh on the landlord's credibility. See Basic Holding Corp. v. Gabel, 21 AD2d 874, 875, 251 NYS2d 367 (1st Dept. 1964); Tauber v. Ruscica, N.Y.L.J. 10/14/87, 14:3 (Civ.Ct. NY Co.); Minick v. Park, N.Y.L.J. 2/25/99, 29:2 (AT 1st Dept.). While Courts look at a number of factors, the burden of proof rests with the landlord to establish her own credibility regarding the intended use of the subject premises in order to prevail in the proceeding. Garner v. Berger, 2002 WL 31015649 (NY Civ. Ct.); Delavan v. Spirounias, N.Y.L.J. 3/14/01, 19:5 (Civ.Ct. NY Co.).
There is, with limited exceptions, no limit to the number of apartments or amount of space that can be recovered by a landlord. Naturally, this assumes the good faith intent to use the premises for living purposes can be established. See, Wong v. Rypass, N.Y.L.J. 12/2/98, 29:2 (Civ.Ct. NY Co.); Sobel v. Mauri, N.Y.L.J. 12/12/84, 10:4 (AT, 1st Dept.); but see Pultz v. Economakis, supra .
Respondent's argument that petitioner is not forthcoming regarding the transfer of the subject premises from Red Petel Corp. to petitioner is accurate. The fact that the deed has not been recorded does not adversely impact on the validity of the deed. However, the Court finds the facts surrounding the deed transfer to be questionable. Constructive notice is impaired since anyone checking the property records would find that the title to the property would still be in the name of both parties.
In Hart Realty v. Schneider, N.Y.L.J. May 25 1994, 28:3, Civil Court held that neither partnership nor corporation can avail itself [under § 2524.4 (3) (5) and (b)(3)] of the right to recover possession of the apartment for owner use occupancy. The Court investigated and searched through ACRIS the last deed owner of the premises. On April 1, 2008 Malina Nealis and Red Petel Corp. conveyed the subject premises by Bargain and Sale Deed to Red Petel Corp. The deed was recorded April 25, 2008. Thus it is evident that petitioner no longer owned the premises in question in her own name. Even though the petitioner testified that she is a partner of Red Petel Corp., she has no standing to recover the subject apartment. Again, it is well settled in case law that a partnership nor a corporation cannot occupy an apartment for personal use (see El Kam Realty Co. v. Kaytor, 99 Misc 2d 1080; Henrock Realty Corp. v. Tuck, 52 AD2d 871; Matter of Colin v. Altman, 39 AD2d 200).
In an owner-use proceeding the burden is on the landlord to establish a genuine intention to use the apartment for himself/herself or a member of his/her family as his/her primary residence (Rent Stabilization Code [ 9 NYCRR § 2524.4(a); Buffa v. Radoncic, N.Y.L.J., June 27, 2001, 20:6 [App. Term 2d 11th Judicial Districts]). A review of the trial testimony and exhibits evince petitioner's alleged intentions to occupy the premises along with her daughter. The fact that she has not sold the house in Tuxedo, NY where she currently resides is another reason for this Court to seriously question petitioner's intention. As previously stated, petitioner introduced construction plans for the renovation and reconfiguration of the apartment for a duplex apartment. On cross-examination her credibility came under scrutiny. The plans submitted into evidence conspicuously display a Department of Buildings bar code sticker bearing Job #
301929876. The Buildings Department sticker on these plans does not belong to the subject premises but is in fact a sticker representing approved plans for a different premises known as 70 Greenpoint Avenue. The inquiry that arises is: who attached the seal to the plans? The plans have to be prepared and submitted by an architect or engineer — in this case, Marek M. Kaczor, P.E., who is also President of Red Petel Corp. and therefore an owner of the subject apartment. The plans are dated November 1, 2006, conveniently, although not surprisingly a month after the petition in this proceeding was filed.
Respondent asserts that petitioner's trial testimony and Examination Before Trial ("EBT") are somewhat inconsistent. Petitioner testified at trial that she was the sole owner of the building. Yet at the EBT she stated that her partner in the subject building is Red Petel Corp. A review of the trial testimony suggests that petitioner never really intended to occupy the premises for her own use and occupancy. The trial concluded in mid-March and by April 1, 2008 Petitioner had transferred her interest in the property to Red Petel Corp. It is further evident that her partner in Red Petel Corp. was Marek M. Kaczor, P.E., presumably the preparer of the submitted plans. Another inconsistency was present between petitioner's trial testimony and her EBT. In her EBT petitioner stated that she submitted the plans to the Buildings Department (hence the Job # sticker prominently displayed thereon); at trial she stated that she was planning to submit same to the Buildings Department depending upon the outcome of this proceeding. A further review by the Court also disclosed that at present no plans for the subject building address have been filed with the Buildings Department. Petitioner's credibility is again called into question. Respondent's assertion that petitioner's trial testimony and oral deposition were inconsistent is accurate, and the inconsistency between the two (2) is significant.
Summary
After careful consideration and analysis of the facts and case law applicable herein, the Court finds that petitioner has not been forthright in her testimony nor in the evidence submitted. First, the four (4) prior proceedings commenced by petitioner clearly demonstrate that she had no genuine intention of ever residing in any of the apartments. In two (2) of proceedings she bought-out the tenants for an agreed upon figure. After the tenants moved out she proceeded to rehabilitate the apartments and increase the rents.
Second, what caused the Court great consternation and the casting of a great shadow over petitioner's testimony was the unrecorded deed that was marked into evidence. Petitioner's testimony that her accountant and/or divorce lawyer advised against recording the deed is unacceptable and not credible. It is apparent that the unrecorded deed was a subterfuge. Her only purpose in this transaction was to obtain possession of the apartment, and not for personal or family use. The Court finds the aforementioned alleged transaction of an unrecorded deed to be highly suspect. Finally, according to the most recent conveyance of the property, petitioner does not even own the subject property in her own name; therefore, she is unable to recover it for her personal use. The petitioner lacks the good faith necessary to prevail in this action ( Delavan v. Spirounias, N.Y.L.J. 3/14/2001, 19:5).
Conclusion
Based upon the foregoing discussion and a review of petitioner's testimony and exhibits, the Court awards respondent a final judgment dismissing the instant owner use holdover summary proceeding with prejudice. The attorneys are directed to select a mutually convenient date for a hearing on attorneys fees.
This constitutes the decision and order of the Court.