Opinion
12376/08.
Decided on October 23, 2008.
Mimi Rosenberg, Esq., Legal Aid Society, Brooklyn NY, Defendant. Alaba Rufai, Esq. Jamaica NY.
Plaintiffs KAREN WRIGHT, GAIL TURNER, ROSHKEIMA BOWMAN, VERLEEN GRADDICK, RACHEL GOLDEN and DEBBIE ACQUAYE are indigent and disabled female tenants, who occupy six separate living units at 637 Decatur Street, Brooklyn, New York, and commenced the instant action in April 2008 for, inter alia: declaratory relief that their apartments are subject to the Rent Stabilization Law [RSL] of 1969, the Rent Stabilization Code [RSC] and the Emergency Tenant Protection Act [ETPA] of 1974, and defendants' actions against them violate these laws; declaratory relief that defendants fraudulently induced plaintiffs to execute adhesion contracts, which should be voided, for possession of their apartments; injunctive relief to permanently enjoin defendants from evicting plaintiffs pursuant to a February 14, 2008 judgment of possession in a Civil Court, Kings County, Housing Part "so-ordered" stipulation of settlement [exhibit B of order to show cause]; and, injunctive relief to enjoin defendants and their officers, employees and agents from engaging in any conduct that interferes with plaintiffs' use and occupancy of their housing accommodations at 637 Decatur Street.
Plaintiffs allege that defendant PATTERSON MANAGEMENT GROUP, INC. (PATTERSON) is an illusory prime tenant at 637 Decatur Street, and defendant DOUGLAS LEWIS (LEWIS) conspired with PATTERSON to create PATTERSON's illusory prime tenancy to circumvent the ETPA, the RSL, and the RSC. Further, plaintiffs allege that, in the summer of 2007, they were solicited and fraudulently induced to leave homeless shelters and/or substance abuse programs by PATTERSON, and its Assistant Director, Chandra Lewis (CHANDRA), the sister of LEWIS, and then move to 637 Decatur Street.
Plaintiffs move by order to show cause for a preliminary injunction, pursuant to CPLR § 6301, to prevent their eviction from the premises during the pendency of their action, and to grant requested declaratory relief. Defendants oppose the instant order to show cause, and move for: this Court's recusal, alleging bias toward plaintiffs; dismissal of plaintiffs' complaint, pursuant to CPLR § 3211 (a) (7), for failure to state a cause of action; and, sanctions against plaintiffs' attorney and her employer, The Legal Aid Society, for engaging in alleged "frivolous conduct," in violation of 22 NYCRR § 130-1.1
After conducting a hearing, on April 25, 2008, I granted plaintiffs a temporary restraining order (TRO), pursuant to CPLR § 6301, and explained my reasons in a written decision and order. I found that plaintiffs had demonstrated to the Court that a TRO was necessary to prevent plaintiffs suffering irreparable injury; that the equities were balanced in their favor; and they have a likelihood of success on the merits, citing CPLR § 6301, Moody v Filipowski, 146 AD2d 675 [2d Dept 1989], and McLaughlin, Piven, Vogel, Inc. v W. J. Nolan Co., Inc., 114 AD2d 165 [2d Dept 1986].
My April 25, 2008 order [exhibit G of defendants' motion] granted plaintiffs the following relief: defendants were enjoined from evicting plaintiffs pursuant to an April 7, 2008 warrant of eviction [exhibits C, D, and E of order to show cause] issued in Civil Court, Kings County Housing Part C ( Douglas Lewis v Patterson Management Group. Inc. and John Doe No. 1 — 10 and Jane Doe # 1-10, L T Index Number 055233/08), based upon the February 14, 2008 "so-ordered" stipulation of settlement; defendants were enjoined from interfering with tenants' interest in the premises at 637 Decatur Street; the Civil Court proceeding was removed to Supreme Court and consolidated with the instant action; I directed that utility services are maintained for plaintiffs at the subject premises; I directed plaintiffs during the pendency of the action to deposit rent and utility payments in an escrow account maintained by the Legal Aid Society; and, I adjourned the case to July 18, 2000 for a hearing on the issuance of a preliminary injunction. The hearing was subsequently adjourned to September 12, 2008 and conducted on that day.
In this matter, there is no valid reason for my recusal. Further, plaintiffs stated a cause of action and defendants' motion for dismissal is denied. Plaintiffs' counsel has not engaged in
"frivolous conduct." Defendants' motion for sanctions is denied. Lastly, plaintiffs demonstrated the need for a preliminary injunction. Therefore, plaintiffs shall post a nominal undertaking.
Recusal denied
Before reaching the merits of plaintiffs' order to show cause and defendants' motion, the Court must first address the issue of whether it must recuse itself for alleged bias toward plaintiffs. The papers and arguments of defendants' counsel, Alaba Rufai, Esq., demonstrate that the Court's alleged bias is nothing more than counsel's disagreement with my April 25, 2008 decision and order. Mr. Rufai, for reasons unknown to this Court, did not move to renew or reargue this order, or to appeal it. Instead, Mr. Rufai subjects this Court to his invective and rancor by rehashing the arguments that failed to prevail in the April 25, 2008 hearing and order. For example, in ¶ 24 (a) of his affirmation, he refers to the Court's granting of a TRO without an undertaking as "downright disingenuous and tantamount to an abuse of due process." This statement is preposterous. Mr. Rufai does not explain how my decision abuses due process, constitutional or otherwise. Counsel is reminded that a TRO does not require an undertaking, while a preliminary injunction does. Further, in ¶ 24 (d), I am accused of not taking into "consideration that the plaintiffs [sic] claim was frivolous and totally bogus." Once more, Mr. Rufai does not demonstrate why plaintiffs' claims are "frivolous and bogus." As noted above, Mr. Rufai did not elect to appeal my granting of the TRO. Once the Court gets past Mr. Rufai's belligerent, vacuous and conclusory complaints, it is clear that Mr. Rufai failed to present any fact of bias. That portion of defendants' motion seeking this Court's recusal is nothing more than an assortment of bald assertions, distortions and bombastic rants.
In the instant action I have no interest or relationship with any of the parties or their counsel. "Absent a legal disqualification under Judiciary Law § 14, a Trial Judge is the sole arbiter of recusal." ( People v Moreno, 70 NY2d 403, 405). The Appellate Division, Second Department, in Schwartzberg v Kingsbridge Heights Care Center, Inc., 28 AD2d 465, 466 (2d Dept 2006), held that "[i]n the absence of a legal disqualification under Judiciary Law § 14, a trial judge is the sole arbiter of the need for recusal, and his or her decision is a matter of discretion and personal conscience ( see People v Moreno, 70 NY2d 403, 405)." In Poli v Gara, 117 AD2d 786, 788-789 (2d Dept 1986), the Court stated that "[t]he question of whether a Judge should recuse himself to avoid an appearance of impropriety is a matter left to the personal conscience of the court ( e.g., Matter of Johnson v. Hornblass, 93 AD2d 732 [1d Dept 1983]; Casterella v. Casterella, 65 AD2d 614 [2d Dept 1978]). ( See Kupersmith v Winged Foot Gold Club, Inc. ,38 AD3d 847 [2d Dept 2007]; Montesdeoca v Montesdeoca , 38 AD3d 666 [2d Dept 2006]; Tornheim v Tornheim , 28 AD3d 534 [2d Dept 2006]; People ex rel. Smulczeski, ex rel. Smulczeski v Smulczeski ,18 AD3d 785 [2d Dept 2005]; In re Jimmy H., 274 AD2d 430 [2d Dept 2000]; Warm v State, 265 AD2d 546 [2d Dept 1999]; People v Gallagher, 158 AD2d 469 [2d Dept 1990]; People v Fischer, 143 AD2d 1036 [2d Dept 1988]).
Furthermore, in the absence of any proof of bias on my part I will not recuse myself. Recusal would be a violation of my oath of office, reward Mr. Rufai for his baseless accusations, and allow him to engage in forum shopping. It is clear that Mr. Rufai has "failed to set forth demonstrable proof of bias sufficient to warrant the conclusion that the Supreme Court Justice's refusal to recuse . . . was an improvident exercise of discretion" ( Imre v Johnson , 54 AD3d 427 [2d Dept 2008]). ( See In re Greenfield, 53 AD3d 488 [2d Dept 2008]; People v Weekes, 46 AD3d 583 [2d Dept 2007]; Modica v Modica, 15 AD3d 365 [2d Dept 2005]).
Denial of dismissal of plaintiffs' complaint for res judicata and collateral estoppel
In determining whether to dismiss plaintiffs' complaint for failure to state a cause of action, the Court must liberally construe the pleadings and accept the facts as alleged in the complaint as true, in determining if the alleged facts fit into any cognizable legal theory. ( Leon v Martinez, 84 NY2d 83, 87; Morone v Morone, 50 NY2d 481, 484; Guggenheimer v Ginzberg, 43 NY2d 268, 275; Doria v Masucci, 230 AD2d 764, 765 [2d Dept 1996]).
In doing so, the Court finds that PATTERSON, as noted previously, solicited plaintiffs and rented accommodations to them at the Decatur Street property. Then, in late 2007, defendants attempted to get plaintiffs to vacate the premises. When plaintiffs didn't vacate and sought assistance from the Legal Aid Society, defendant LEWIS, as landlord, brought the previously referred to nonpayment proceeding in the Housing Part of Civil Court against PATTERSON, as tenant. I stated in my April 25, 2008 order:
it appears that defendant Patterson is an illusory tenant. Further, it appears that there might be a conflict in that: Lewis's address in the July 12, 2006 Deed for the conveyance of 637 Decatur Street, Brooklyn, New York from Marva Riggin to Douglas Lewis, Jr. is 539 East 42nd Street. Brooklyn, New York, and the corporate address for Patterson Management Group, Inc. is also 539 East 42nd Street, Brooklyn, New York; and, that Alaba Rufai, Esq., attorney for Douglas Lewis in the Civil Court action and the instant action is either an officer, employee or agent of Patterson Management Group, Inc.
Putting that aside, the Civil Court action was for nonpayment of rent by Patterson. It appears that plaintiffs, who were known to Lewis and Patterson, were never served in the Civil Court action. In the February 14, 2008 stipulation of settlement of the Civil Court case, Patterson states in ¶ 4, "Respondent represents that it is authorized to bind its employees and clients that can possible be deemed "Jane Doe" and "John Doe " and to that extent all "Jane Does"" and "John Does" are bound by this agreement [ Emphasis added ]." Defendant Lewis has failed in his opposition papers and in oral argument by his counsel to: demonstrate to the Court that plaintiffs in the instant action were served in the Civil Court action; and, by what authority Patterson was authorized to "bind" plaintiffs to the conversion of a non payment action to a holdover action and to have plaintiffs vacate the premises.
Defendant Lewis argues in ¶ 25 of his affidavit in opposition, by a bald assertion with no documentation, that plaintiffs are "by their own confession troubled and need help, but they have since turned subject premises into a haven for negative behavior for which they need rehabilitation." The Court, during oral argument, observed all plaintiffs to act in a positive and civil behavior, interacting with their counsel in support of their order to show cause.
According to the process server's affidavits of service [exhibit B of defendants' motion] for the notice of petition and petition in the Housing Court action ( Douglas Lewis v Patterson Management Group. Inc. and John Doe # 1 — 10 and Jane Doe # 1-10) — one to "John Doe" and the other to "Jane Doe" — the notice of petition and petition were allegedly delivered to an unnamed person of suitable age and discretion, on February 1, 2008, 6:30 P.M., at 637 Decatur Street. This mysterious recipient was described as female, black skin, black hair, 36-50 years, 5'4"-5'8", and 131-160 lbs. Since LEWIS knew the names of the residents at 637 Decatur Street, the Court is at a loss to understand why LEWIS didn't serve plaintiffs by papers in which they were specifically named. However, assuming that the mystery woman accepted service of both sets of paper, the preprinted sections of the affidavits of services with respect to the mailing of the papers to the last known residence of the recipient are blank. Therefore, LEWIS never obtained jurisdiction in the Housing Court action over the plaintiffs, even if they are the "Jane Does." Thus, plaintiffs in the instant action are not bound by the February 14, 2008 Housing Court "so-ordered" stipulation of settlement.
CPLR § 308 (2) allows for personal service on a natural person "by delivering the summons within the state to a person of suitable age and discretion at the . . . dwelling place or usual abode of the person to be served and by either mailing the summons to the person to be served at his or her last known residence or by mailing the summons . . . at his or her actual place of business." This is a two-step procedure. "It is, of course true that jurisdiction is not acquired pursuant to CPLR 308 (subd. 2), unless both the delivery' and mailing' requirements have been strictly complied with ( see Feinstein v Bergner, 48 NY2d 234; Glikman v Horowitz, 66 AD2d 814 [2d Dept 1978])." ( Brownell v Feingold, 82 AD2d 844 [2d Dept 1981]).
Further, the proponent of CPLR § 308 (2) personal service has "the burden of proving, by a preponderance of the credible evidence that service was properly effected ( see McCray v Petrani, 212 AD2d 676 [2d Dept 1995])." ( Kearney v Nerosurgeons of New York, 31 AD3d 390 [2d Dept 2006]). Defendant LEWIS, in the instant action, is not able to prove that "by a preponderance of the credible evidence that service was properly effected" upon the plaintiffs, as the "Jane Does" in the Lewis v Patterson Housing Court case. ( See Roberts v Anka ,45 AD3d 752 [2d Dept 2007]; Munoz v Reyes , 40 AD3d 1059 [2d Dept 2007]; Ludmer v Hasan , 33 AD3d 594 [2d Dept 2006]; U.S. Bank Nat. A'ssn v Vanvliet 24 AD3d 906 [3d Dept 2005]; Bankers Trust Co. of California, N.A. v Hasan, 303 AD2d 343 [2d Dept 2003]).
Plaintiff Karen Wright, in ¶'s 29 — 34 of her affidavit in support of a preliminary injunction and in opposition to defendants' motion, clearly states plaintiffs' contentions:
29. During the entire time that I lived at Decatur Street there was never any litigation commenced for any alleged breach of any rules, regulations, or obligations of my, or any of the other women's tenancies, regardless of the inflammatory comments . . . insidiously woven into the affirmation of Alaba Rubai to defame us.
30. There was never any service of any legal papers upon myself, or any of the other women at Decatur Street, whom I have regular opportunity to inquire of. The first I became aware that there had been litigation involving the subject premises was after the fact. Indeed, we deliberately weren't made aware of the lawsuit, which was a matter of convenience for Douglas Lewis and Patterson Management's Chandra Lewis, to bind the tenants to a possessory judgment and remove them from the premises.
31. Douglas Lewis, who was represented by Alaba Rufai in the civil court proceeding and Chandra Lewis acting for Patterson Management Group Inc., certainly do not appear to have commenced an "adversarial" proceeding. Rather, it is our belief they collaborated to bring a nonpayment in the commercial part of the civil court, with the intent of converting it to a holdover solely for the purpose of removing the tenants . . .
32. I became aware of the civil court proceeding weeks after Douglas Lewis and Chandra Lewis entered into a stipulation waiving any arrears alleged and converting the proceeding from a nonpayment into a holdover. It certainly appeared to the tenants that the lawsuit was merely a thinly veiled plan between Douglas Lewis and Chandra Lewis, and Alaba Rufai to oust all tenants from Decatur Street, absent their knowledge and of course without their consent.
33. I suggest the lawsuit was nothing more than a manipulation of legal process to evict the tenants, against whom there was no actual cause of action. First, the tenants were in fact paying their rent to Patterson Management Group, Inc., who had a cooperative working relationship with Douglas Lewis. Douglas Lewis knew who lived at Decatur Street . . . And, for some of the tenants on public assistance, their rent payments were sent direct vendor to Patterson Management Group Inc., at the address that Douglas Lewis lists as his address.
34. Then . . . the litigation ensued subsequent to attempts to illegally evict all the residents, . . . which had to be halted by the police . . . The efforts to lock us out were accompanied by threats and a turn off of heat, hot water and cooking gas.
Further, Ms. Wright notes, in ¶ 36, that LEWIS, represented by Mr. Rufai, and PATTERSON, represented by CHANDRA, converted the Housing Court action, on February 14, 2008, the first appearance date, to a holdover case from a nonpayment case. The "so-ordered" stipulation of settlement states, in ¶ 3, that "Respondent [PATTERSON] gives final judgment of possession to petitioner [LEWIS]."
As previously observed, plaintiffs in the instant action are not bound by the Housing Court stipulation of settlement. LEWIS' defective service of process upon plaintiffs, as "Jane Doe" defendants in Lewis v Patterson, violated CPLR § 308 (2). Therefore, defendants can not argue that plaintiffs are precluded from going forward with the instant action because they are bound to the Housing Court judgment by res judicata and collateral estoppel. These doctrines of claim and issue preclusion are designed to put an end to a matter that has been decided. Plaintiffs were not parties in the Civil Court action and have not yet had their day in Court.
Professor David Siegel in NY Prac, 4th ed. § 442, explains that:
The doctrine of res judicata is designed to put an end to a matter once duly decided. It forbids relitigation of the matter as an unjustifiable duplication, an unwarranted burden on the courts as well as on opposing parties. Its main predicate is that the party against whom it is being invoked has already had a day in court, and, if it was not satisfactory, the proper course was to appeal the unsatisfactory result rather than ignore it and attempt its relitigation in a separate action.
Judge Cardozo, for a unanimous Court of Appeals, in Schuylkill Fuel Corp. v B C Nieberg RealtyCorp., ( 250 NY 304, 306-307) instructed that "[a] judgment in one action is conclusive in a later one not only as to any matters actually litigated therein, but also as to any that might have been so litigated, when the two causes of action have such a measure of identity that a different judgment in the second would destroy or impair rights or interests established by the first . . ." In O'Brien v City of Syracuse ( 54 NY2d 353, 357, 1981), Chief Judge Cooke, also for a unanimous Court of Appeals, noted that "once a claim is brought to a final conclusion, all other claims arising out of the same transaction or series of transactions are barred, even if based upon different theories or if seeking a different remedy . . ." ( See Coliseum Towers Associates v County of Nassau, 217AD2d 387 [2d Dept 1996]; Yerg v Board of Educ. of Nyack Union Free School District, 141 AD2d 537 [2d Dept 1988]).
Collateral estoppel or "issue preclusion," as observed by Prof. Siegel, in NY Prac § 443, at 748-749, [4th ed], "scans the first action and takes note of each issue decided in it. Then if the second action, although based on a different cause of action, attempts to reintroduce the same issue, collateral estoppel intervenes to preclude its relitigation and to bind the party, against whom the doctrine is being invoked, to the way the issue was decided in the first action." In Ryan v New York Telephone Company ( 62 NY2d 494, 500), the Court of Appeals, held that "[t]he doctrine of collateral estoppel, a narrower species of res judicata, precludes a party from relitigating in a subsequent action or proceeding an issue clearly raised in a prior action or proceeding and decided against that party or those in privity, whether or not the tribunals or causes of action are the same." Two prerequisites must be met before collateral estoppel can be raised. The Court of Appeals, in Buechel v Bain ( 97 NY2d 295, cert denied 535 US 1096), instructed at 303-304, that:
There must be an identity of issue which has necessarily been decided in the prior action and is decisive of the present action, and there must have been a full and fair opportunity to contest the decision now said to be controlling ( see, Gilberg v Barnieri, 53 NY2d 285, 291 [1981]). The litigant seeking the benefit of collateral estoppel must demonstrate that the decisive issue was necessarily decided in the prior action against a party, or one in privity with a party ( see, id.). The party to be precluded from relitigating the issue bears the burden of demonstrating the absence of a full and fair opportunity to contest the prior determination
( See D'Arata v New York Cent. Mut. Fire Ins. Co., 76 NY2d 659, 664; Gramatan Home Investors Corp. v Lopez, 46 NY2d 481, 485; Luscher ex. rel Luscher v Arrua, 21 AD3d 1005 [2d Dept 2005]; David v American Bio Medica Corp., 299 AD2d 390 [2d Dept 2002]).
It is clear that the instant action deals with matters that have not been litigated by plaintiffs in Civil Court. They were not properly served and were not present at the February 14, 2008-court session in Lewis v Patterson. Both res judicata and collateral estoppel are inapplicable to them.
Denial of dismissal of plaintiffs' complaint for failure to state a cause of action
Plaintiffs' verified complaint states valid causes of action that fit into cognizable legal theories, by which plaintiffs allege that defendants acted in concert and concocted a scheme in which they used a legal two-family dwelling to circumvent the ETPA, the RSL and the RSC. According to plaintiffs' verified complaint, LEWIS rented 637 Decatur Street to PATTERSON, which sublet the premises to as many women as possible, who were then living in homeless shelters or in residential substance abuse programs where their stay was about to expire. Plaintiffs verified complaint, in ¶ 27, states:
[D]efendants acting in concert intentionally converted the nature of the building and circumvented the rent regulatory laws. This scheme enabled them to collect far more rent than the rental units in the building would have generated otherwise while leaving the women without leases or the protection of the rent regulatory laws. At one point, thirteen (13) women lived in the building and paid rent to defendant Patterson. The number of beds installed . . . make clear that . . . [PATTERSON] intended to rent to far more than thirteen (13) people.
¶'s 28 — 36 of the plaintiffs' verified complaint explains how defendants preyed upon the desperate plaintiffs and "enticed them to move into the subject premises through high pressure tactics and deceptive practices." (¶ 30 verified complaint).
Plaintiffs, as "clients" of PATTERSON, were required, as a condition to rent at the premises, to sign a document, Rider to Rules Regulations of Patterson Management Group [exhibit E of order to show cause], which states, in § 3:
At the "program," the "client" is not a tenant of a room/ Apartment/SRO/house/dwelling/hotel, et al., but is, in fact, a "client" of a sober/recovery/residence/program/institution, and as therefore excluded from Landlord-Tenants' rights and Landlord-Tenant Law . . . Therefore, the resident must leave if asked per the rules and regulations of said "program."
Plaintiffs' verified complaint in, ¶ 34, refers to the Rider to Rules Regulations of Patterson Management Group as an "adhesion contract." Further, in ¶ 35, the verified complaint states "[t]he agreement contained material misrepresentations and omissions, both as to the nature of plaintiffs' tenancies and the services they would be provided. The agreement took advantage of the disparity in bargaining power, was fraudulent, unconscionable, against public policy and was void or voidable."
Then, ¶ 37 of the verified compliant states:
After payment of a month's rent and security plaintiffs moved into their new homes, a two-family house that was converted to a multiple dwelling. The property was subdivided and made into a single room occupancy. On the first floor of the building, there are two separate rooms, occupied by two women, a bathroom and a collective kitchen. On the second floor, there are two rooms, and a bathroom. On the third floor there are four individual rooms and a bathroom. All told, there are eight separate rooms, the collective kitchen and three bathrooms.
Plaintiffs' verified complaint further alleges, in ¶'s 39 — 40, that CHANDRA, on January 4, 2008, posted a letter advising plaintiffs that they had to vacate by January 21, 2008. When they didn't vacate, CHANDRA showed up on January 23, 2008 with new locks. Plaintiffs called the police who advised CHANDRA that self help is against the law. ¶ 41 alleges that "Ms. Lewis, vexed and annoyed at the police intervention turned off the heat and hot water in the building. Plaintiffs called the police again; however, defendants left plaintiffs without essential services for more than ten (10) days. Finally, the Department of Housing Preservation and Development responded to numerous complaints filed by plaintiffs and it restored the services." Then, plaintiffs allege, in ¶ 42, that CHANDRA came to the building on January 31, 2008 with a man she called "Abdul." Abdul, at CHANDRA's request and direction, broke the entrance door, kicked in room doors and verbally threatened plaintiffs. Plaintiffs called the police, who then arrested Abdul.
On the next day, February 1, 2008, the mysterious woman of "suitable age and discretion" was allegedly served on behalf of the "Jane Doe" defendants in the Lewis v Patterson Housing Court action. Thirteen days later, on February 14, 2008, LEWIS and PATTERSON entered into their "so-ordered" stipulation of settlement to evict plaintiffs. Plaintiffs allege that they occupy six individual rooms, paid rent to PATTERSON, are entitled to recognition as rent stabilized tenants, and LEWIS, the owner of the premises, should provide each one of them with a lease, since PATTERSON is an illusory prime tenant.
As noted earlier, the Court in analyzing a motion to dismiss must accept the facts as alleged in the complaint as true, and accord plaintiffs the benefit of every possible inference to determine if the alleged facts fit into any cognizable legal theory. The ETPA (L 1974, ch 576, as amended; McKinney's Unconsolidated Laws of NY § 8621, et seq.) is an enabling act which empowered the New York City Council to declare the existence of an emergency in the supply and condition of local housing and to extend rent regulation beyond what existed prior to the enactment of the ETPA. ( La Guardia v Cavanaugh, 53 NY2d 67; Zeitlin v New York City Conciliation and Appeals Board, 46 NY2d 992). The ETPA and the New York City Council's enabling resolution extends rent regulation by "providing for the regulation of all housing accommodations which it does not expressly except, including previously unregulated accommodations." ( Salvati v Eimicke, 72 NY2d 784, 791).
The RSC, at 9 NYCRR § 2520.6, 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, or apartment and all services, privileges, furnishings, furniture and facilities supplied in connection with occupation thereof." To determine if a space is a "housing accommodation" for rent-stabilization purposes the Court must determine whether a period of occupancy is accompanied by sufficient indicia of permanency. ( Gracecor Realty Co., Inc. v Hargrove 90 NY2d 350, 355). The indicia of permanency include: the length of time a landlord permits a person to continuously occupy the same space; whether the occupant has any other residence; any limitations upon the occupant's use and control of the premises that have been imposed by the landlord; the intent of the occupant; and, the landlord's conduct in relation to the occupant's use and of the premises. ( Gracecor Realty Co., Inc., at 355-356). In Gracecor Realty Co., Inc., the Court, held that a windowless lodging house cubicle rented for two years at $6.00 per night was a "housing accommodation," and instructed, at 355, that "[t]his functional definition is not limited by any physical or structural requirements, such as minimum square footage."
Plaintiffs have resided at the premises for more than one year. None of them have any other residences and they were solicited to live there and move from either homeless shelters or various residential substance abuse rehabilitation programs that were drawing to a conclusion. There are no restrictions on their sole and exclusive right to possession and control of their respective units. They consider 637 Decatur Street to be their home and primary residence. The subject premises, while designated as a two-family dwelling, has been configured by defendants to contain at least six separate and self-contained units and plaintiffs have displayed every indicia of permanency required under the RSC.
637 Decatur Street, with eight separate units, fits into the Multiple Dwelling Law (MDL) § 4 (9) definition of a Class B multiple dwelling, which is a multiple dwelling occupied on a more or less transient basis, including "rooming houses," defined in MDL § 4 (13) as a multiple dwelling, "other than a hotel, having less than thirty sleeping rooms and in which persons either individually or as families are housed for hire or otherwise with or without meals." Further, pursuant to 26 RCNY § 26-504 (b), the RSC now applies to Class B multiple dwellings. 637 Decatur Street, while initially a two-family dwelling has been configured by defendants to contain at least six dwelling units and falls under the ETPA, the RSL and the RSC. (EPTA, at McKinney's Unconsolidated Laws of NY § 8625 (a) (4) (a); RSC, at 9 NYCRR § 2520 (11) (d); Gracecor Realty Co., Inc., supra; Rosenberg v Gettes, 187 Misc 2d 790 [App Term, 1d Dept 2000]).
Further, PATTERSON's tenancy at 637 Decatur Street is an "illusory tenancy," which is defined "generally as a residential leasehold created in a person who does not occupy the premises for his or own residential use and subleases it for profit, not because of necessity or other legally cognizable reason." ( Badem Bldgs. v Abrams, 70 NY2d 45, 52-53). The Court in Badem Bldgs at 53, castigated illusory tenancies, such as PATTERSON's in the instant case, holding that:
such tenancies are condemned because they permit the unscrupulous to use the provisions of the rent stabilization laws for financial gain, at the expense of those entitled to the laws' protections to obtain living quarters at reasonable cost, and thereby frustrate the laws' purposes. Thus, both the courts and the administrative agencies charged with overseeing rent stabilization have readily formulated remedies to prevent the use of illusory tenancies to evade the provisions of the Rent Stabilization Code and to prevent illusory tenants from violating the rights of bona fide tenants occupying stabilized property.
Next, the Rider to Rules Regulations of Patterson Management Group, with the tenancy waivers signed by plaintiffs as a condition of renting their rooms, is an "adhesion contract" because it "contains terms that are unfair and nonnegotiable and arises from a disparity of bargaining power or oppressive tactics." ( Love M'Sheltering, Inc. v County of Suffolk , 33 AD3d 923, 924 [2d Dept 2006], appeal dismissed 8 NY3d 977, lv to appeal dismissed 9 NY3d 1028). Further, the Rider violates the ETPA and the RSC. It states in the regulations implementing the ETPA, at 9 NYCRR § 2500.12, that "[a]n agreement by the tenant to waive the benefit of any provision of the act or this Subchapter is void," and in implementing the RSC, at 9 NYCRR § 2520.13, it states that "[a]n agreement by the tenants to waive the benefit of any provision of the RSL of this Code is void." The provisions of ETPA and the RSC are construed broadly to effectuate the remedial purposes of the statutes. 9 NYCRR § 2500.13, "construction and implementation," states:
This Subchapter shall be construed so as to carry out the intent of the act to ensure that such statute shall not be subverted or rendered ineffective, directly or indirectly, and to prevent the exaction of unjust, unreasonable and oppressive rents and rental agreements, and to forestall profiteering, speculation and other disruptive practices tending to produce threats to the public health, safety and general welfare; and that the policy herein expressed shall be implemented with due regard for the preservation of regulated rental housing.
9 NYCRR § 2520.3, entitled "Waiver of benefit void," states that "[a]n agreement by the tenant to waive the benefit of any provision of this act or this Subchapter is void."
Thus, it is clear that plaintiffs have alleged cognizable claims to be considered rent stabilized tenants under the ETPA, the RSL and the RSC. Plaintiffs live in a Class B multiple dwelling and they cannot waive their rights as tenants in an adhesion contract. Therefore, defendants' motion to dismiss plaintiffs' claims for failure to state a cause of action is denied.
Denial of sanctions
22 NYCRR § 130-1.1 gives the Court, in its discretion, the authority to award costs
"in the form of reimbursement for actual expenses reasonably incurred and reasonable attorney's fees" and/or the imposition of financial sanctions upon a party or attorney who engages in frivolous conduct.' 22 NYCRR § 130-1.1 © states that:
conduct is frivolous if:
(1) it is completely without merit in law and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law;
(2) it is undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another; or
(3) it asserts material factual statements that are false.
Conduct is frivolous and can be sanctioned under the above court rule if "it is completely without merit . . . and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law." ( Gordon v Marrone, 202 AD2d 104, 110 [2d Dept 1994] lv denied 84 NY2d 813). ( See Glenn v Annunziata , 53 AD3d 565 [2d Dept 2008]; Miller v Dugan , 27 AD3d 429 [2d Dept 2006]; Greene v Doral Conference Center Associates, 18 AD3d 429 [2d Dept 2005]; Ofman v Campos , 12 AD3d 581 [2d Dept 2006]; Tyree Bros. Environmental Services, Inc. v Ferguson Propeller, Inc., 247 AD2d 376 [2d Dept 1998].
In determining if sanctions are appropriate, the Court must look at the broad pattern of conduct by the offending attorneys or parties ( Levy v Carol Management Corporation ( 260 AD2d 27, 33 [1st Dept 1999]). The Levy Court, at 33, held that, " 22 NYCRR 130-1.1 allows us to exercise our discretion to impose costs and sanctions on an errant party under circumstances particularly applicable here. The relief may include, inter alia, sanctions against the offending party or its attorney ( 22 NYCRR 130-1.1) in an amount to be determined by us, which we would make payable to the Lawyers' Fund for Client Protection ( 22 NYCRR 130-1.3)." Further, the Levy Court instructed, at 34, that "[s]anctions are retributive, in that they punish past conduct. They also are goal oriented, in that they are useful in deterring future frivolous conduct not only by the particular parties, but also by the Bar at large." The Court, in Kernisan, M.D. v Taylor ( 171 AD2d 869 [2d Dept 1991]), noted that the intent of the Part 130 Rules "is to prevent the waste of judicial resources and to deter vexatious litigation and dilatory or malicious litigation tactics (cf. Minister, Elders Deacons of Refm. Prot. Church of City of New York v 198 Broadway , 76 NY2d 411; see Steiner v Bonhamer, 146 Misc 2d 10) [ Emphasis added ]."
In the instant case, plaintiffs' counsel and her employer, the Legal Aid Society, have pursued valid causes of action on behalf of plaintiffs and have not engaged in any frivolous conduct. Therefore, that branch of defendants' motion, seeking sanctions against plaintiffs' counsel and the Legal Aid Society, is denied.
On the other hand, it can be argued that Mr. Rufai, defendants' counsel, has engaged in frivolous conduct in those branches of his motion seeking sanctions and the Court's recusal. It certainly is valid to question if Mr. Rufai has engaged in motion practice "to harass or maliciously injure another," by his baseless assertions about plaintiffs, their counsel and the Court. Mr. Rufai is put on notice that, as noted in Kernisan, M.D., Part 130 rules are intended "to deter . . . malicious litigation tactics."
Granting of preliminary injunction
CPLR § 6301 states the grounds for a preliminary injunction. A preliminary injunction, pursuant to CPLR § 6301, "may be granted . . . when the party seeking such relief demonstrates: (1) a likelihood of ultimate success on the merits; (2) the prospect of irreparable injury if the provisional relief is withheld; and (3) a balance of equities tipping in the moving party's favor ( Grant Co. v Srogi, 52 NY2d 496, 517)." ( Doe v Axelrod, 73 NY2d 748, 750). ( See Nobu Next Door, LLC v Fine Arts Housing, Inc. , 4 NY3d 839; Aetna Ins. Co. v Capasso, 75 NY2d 860, 862; Kelly v Garuda, 36 AD3d 593 [2d Dept 2007]; Cedar Graphics Inc. v Long Island Power Authority ,35 AD3d 337 [2d Dept 2006]; Lattingtown Harbor Property Owners Ass'n. Inc. v Agostino, 34 AD3d 356 [2d Dept 2006]; McNeil v Mohammed ,32 AD3d 829 [2d Dept 2006]; Coinmach Corp. v Alley Pond Owners Corp. ,25 AD3d 642 [2d Dept 2006]; Ying Fung Moy v Hohi Umeki , 10 AD3d 604 [2d Dept 2004]; Milbrandt Co., Inc. v Griffin , 1 AD3d 327 [2d Dept 2003]).
In Related Properties, Inc. v Town Bd. of Town/Village of Harrison ( 22 AD3d 587 , 590 [2d Dept 2005], the Court instructed that:
Since a preliminary injunction prevents litigants from taking actions that they would otherwise be legally entitled to take in advance of an adjudication on the merits, it is considered a drastic remedy which should be issued cautiously ( see Uniformed Firefighters Assn. of Greater NY v City of New York, 79 NY2d 236, 241; Gagnon Bus Co. Inc. v Vallo Transp. Ltd. , 13 AD3d 334; Bonnieview Holdings v Allinger, 263 AD2d 933). [ Emphasis added ]
Because injunctive relief is drastic, the Court in Gagnon Bus Co. Inc., at 335, held that the party seeking "a preliminary injunction must establish a clear right to that relief under the law and the undisputed facts upon the moving papers ( see William M. Blake Agency, Inc. v Leon, 283 AD2d 423 [2d Dept 2001])." ( See Peterson v Corbin, 275 AD2d 35 [2d Dept 2000]; Brand v Bartlett, 52 AD2d 272 [3d Dept 1976]).
An injunction is a provisional remedy to maintain the status quo until a full hearing can be held on the merits of an action. As such "[t]he decision to grant or deny a preliminary injunction rests on the sound discretion of the Supreme Court." ( Ruiz v Meloney , 26 AD3d 485 [2d Dept 2006]). ( See Pouncy v Dudley , 27 AD3d 633 [2d Dept 2006]; Coinmach Corp. v Alley Pond Owners Corp., supra; First Franklin Square Associates, LLC v Franklin Square Property Account, 15 AD3d 529 [2d Dept 2005]; Ying Fung Moy v Hohi Umeki, supra;).
The movant for injunctive relief "must demonstrate a clear right to relief which is plain from the undisputed facts." ( Blueberries Gourmet v Aris Realty Corp., 255 AD2d 348, 350 [2d Dept 1998], citing Family Haircutters v Detling, 110 AD2d 745, 747 [2d Dept 1985]). ( See Dental Health Associates v Zangeneh, 267 AD2d 421 [2d Dept 1999]).
The claims of a plaintiff that harm is imminent and irreparable must be clearly demonstrated to the Court. When claims "are wholly speculative and conclusory," they "are insufficient to satisfy the burden of demonstrating irreparable injury." ( Khan v State University of New York Health Science Center at Brooklyn, 271 AD2d 656 [2d Dept 2000]). "The irreparable harm must be shown by the moving party to be imminent, not remote or speculative." ( Golden v Steam Heat, Inc., 216 AD2d 440 442 [2d Dept 1995]). ( See Village/Town of Mount Kisco v Rene Dubos Center for Human Environments, Inc. , 12 AD3d 501 [2d Dept 2004]; Neos v Lacey, 291 AD2d 434 [2d Dept 2002]).
Plaintiffs have established a clear right to injunctive relief. They will likely succeed on the merits and have demonstrated that they are protected by the rent regulatory system, under the ETPA, the RSC, and the RSL. The agreements they signed with defendant PATTERSON in the Rider to Rules Regulations of Patterson Management Group are adhesion contracts, and their waiving of any rights to tenancy are void as against public policy. ( See 9 NYCRR § 2500.12, 9 NYCRR § 2500.13, 9 NYCRR § 2520.3, and 9 NYCRR § 2520.12; Love M'Sheltering, Inc. v County of Suffolk, supra).
Plaintiffs' claims of immediate and irreparable injury are not speculative nor remote. If they are evicted they will suffer irreparable harm. ( See Jiggetts v Perales, 202 AD2d 341, 342 [1d Dept 1994]; Recalde v Bae Cleaners, Inc. , 20 Misc 3d 827 , 831 [Sup Ct, New York County 2008]). "The threat of eviction and the realistic prospect of homelessness constitute a threat of irreparable injury." ( McNeill v New York City Housing Authority, 719 F Supp 233, 254 [SD NY 1989]).
The equities balance in plaintiffs' favor. The shortage of apartments for renters at or below poverty guidelines is acute. The possibility that plaintiffs may lose their housing accommodations because they had the misfortune to have been solicited to reside at 637 Decatur Street, in a building owned and managed by defendants, who operate in disregard of the law, balances the equities in favor of granting injunctive relief to plaintiffs. Plaintiffs relied on the promises of PATTERSON, paid their rent to PATTERSON, and are attempting to rebuild their lives. Defendants, when thwarted in their illegal attempts to oust plaintiffs from their rooms, conspired to deprive plaintiffs of their tenancy rights by obtaining warrants of eviction in the Lewis v Patterson Housing Court action. Allowing defendants to execute on the warrants of eviction during the pendency of the instant action would reward defendants for bad acts.
Plaintiffs to post a nominal undertaking
With respect to the amount of the undertaking in the instant action, "the purpose and function of an undertaking given by a plaintiff pursuant to the provisions of CPLR 6312 (subd [b]), prior to the granting of a preliminary injunction, is to reimburse the defendant for damages sustained if it is later finally determined that the preliminary injunction was erroneously granted." ( Margolies v Encounter, Inc., 42 NY2d 475, 477). CPLR Rule 6312 (b) gives discretion to the court in fixing the amount of the undertaking. The Court's determination of the undertaking "will not be disturbed absent an improvident exercise of that discretion." ( Blueberries Gourmet, supra, at 351). Further, "the amount of an appropriate undertaking to be posted, are matters within the sound discretion of the Supreme Court ( see Ying Fung Moy v Hohi Umeki , 10 AD3d 604, 605)." ( Pouncey v Dudley, supra, at 635). ( See Griffin v 70 Portman Road Realty, Inc. , 47 AD3d 883 [2d Dept 2008]; Glorious Temple Church of God in Christ v Dean Holding , 35 AD3d 806 [2d Dept 2006]). "The amount of undertaking is rationally related to the amount of the defendant's potential damages . . . in the event it is determined that the plaintiff was not entitled to the preliminary injunction." ( Clover Street Associates v Nillson, 244 AD2d 312 [2d Dept 1997]).
Plaintiffs, pursuant to the April 25, 2008 TRO, are depositing their rent and utility payments with the Legal Aid Society, which is holding these deposits in escrow. This will be continued to preserve the status quo and insure that defendants will receive plaintiffs' outstanding rent and utility payments at the conclusion of the instant action. The indigent plaintiffs, who derive their income from government benefits and face homelessness if evicted, will not be evicted during the pendency of the action. Meanwhile, defendants will ultimately receive plaintiffs' rent and utility payments, and thus any potential damages that defendants can suffer will be nominal. Therefore, to allow plaintiffs, individuals without sufficient financial resources to obtain judicial redress, the Court, in exercising its discretion, will set a nominal undertaking.
Courts, in exercising their discretion, have set nominal undertakings in cases in which the defendant's potential damages, if the defendant prevails, are minimal and/or the plaintiff lacks sufficient financial resources. In Daytop Village, Inc. v Consolidated Edison Co., of New York, Inc. ( 61 AD2d 933 [1d Dept 1978]), plaintiff, a nonprofit corporation that operates various drug rehabilitation programs had a dispute with defendant about the electricity bill for its administrative offices. Plaintiff, on July 21, 1977, appealed a $42,137.00 electricity bill to the Public Service Commission. Defendant utility responded, in a July 28, 1977-letter, threatening to discontinue electric service at plaintiff's administrative offices if payment was not received by August 8, 1977. Supreme Court, New York County granted plaintiff a preliminary injunction on condition that plaintiff file an undertaking of $25,000.00. Plaintiff appealed to the Appellate Division, First Department, which held, at 934 — 935:
An obvious difficulty with the undertaking required here is that there has been no showing whatever of damage that Consolidated Edison might suffer in the event it were determined that the injunction should not have been granted. The record is clear that Daytop Village is paying all current bills. The supposed damage that might be suffered by Consolidated Edison presumably is that they are being deprived of the right to coerce Daytop Village into making an immediate payment, obviously beyond the present capacity of that nonprofit institution to make, which obligation developed from the negligence of Consolidated Edison, and the correct amount of which is still to be determined by the responsible administrative agency
The very most by way of an undertaking that this record supports would be a nominal one designed to protect the defendant in connection with any costs that it may have assumed in connection with the preliminary injunction. For that purpose an undertaking in the sum of $1,000 is sufficient.
In Wuertz v Cowne ( 65 AD2d 528 [1d Dept 1978]), plaintiff-tenant brought a declaratory action against defendant-landlord, to stop the landlord from terminating her lease because she had a dog in her apartment. Supreme Court, New York County denied plaintiff a Yellowstone ( First National Stores, Inc. v Yellowstone Shopping Center, Inc., 21 NY2d 630) injunction to allow her an opportunity to cure her lease default. The Appellate Division, First Department reversed the Supreme Court, New York County and granted plaintiff a Yellowstone preliminary injunction, provided she post an undertaking of $100.00
In a case with rather unique circumstances and indigent plaintiffs, the Court granted plaintiffs a preliminary injunction and set the undertaking at $1.00. ( Brad H. v City of New York ( 185 Misc 2d 420 [Sup Ct, New York County 2000]). In this action, dealing with continuing mental health services to released prisoners, who received mental health services at New York City jails, plaintiffs were granted class action certification and a preliminary injunction requiring written discharge plans prior to their release.
Another example of a case with a nominal undertaking is Valdez v Northeast Brooklyn Housing Development Corp. ( 8 Misc 3d 1008 [A], 2005 NY Slip Op 50986 [U] [Sup Ct, Kings County 2005]). In Valdez, plaintiff-tenant sought a declaratory judgment and a preliminary injunction to prevent defendant-landlord from violating a relocation agreement and plaintiff's possessory rights to her apartment. The Court granted plaintiff a preliminary injunction, and held, at 5 — 6, "[g]iven that plaintiff appears to derive her income primarily from social security benefits and defendant has not demonstrated that it will suffer any undue hardship as a result of the injunctive relief granted by the court, the court finds that an undertaking in the amount of $100.00 shall be good and sufficient for purposes of CPLR 6312 (b)." Therefore, in exercising sound discretion, this Court sets the undertaking at the nominal amount of $60.00 ($10.00 per plaintiff), to be filed with the Kings County Clerk, as Clerk of the Supreme Court, Kings County (CPLR § 105 [e]), pursuant to CPLR § 2505, prior to the granting of a preliminary injunction. Plaintiffs shall serve a copy of the undertaking on defendants.
Conclusion
Accordingly, it is
ORDERED, that the order to show cause of plaintiffs KAREN WRIGHT, GAIL TURNER, ROSHKEIMA BOWMAN, VERLEEN GRADDICK, RACHEL GOLDEN and DEBBIE ACQUAYE, dated April 21, 2008, for a preliminary injunction is granted, pursuant to CPLR § 6301, provided that plaintiffs KAREN WRIGHT, GAIL TURNER, ROSHKEIMA BOWMAN, VERLEEN GRADDICK, RACHEL GOLDEN and DEBBIE ACQUAYE each file an undertaking of $10.00, for a total of $60.00, with the Office of the Kings County Clerk, and serve a copy of the undertaking upon defendants DOUGLAS LEWIS and PATTERSON MANAGEMENT GROUP, INC.; and it is further
ORDERED, that defendants DOUGLAS LEWIS and PATTERSON MANAGEMENT GROUP, INC., its principals, agents, employees, successors and assignees, and any Marshal of the City of New York or the Sheriff of the City of New York are enjoined from executing on the warrant of eviction issued pursuant to a judgment of possession judgment entered in the Civil Court of the City of New York, Kings County, in Douglas Lewis v Patterson Management Group. Inc. and John Doe # 1 — 10 and Jane Doe # 1-10, L T Index Number 055233/08, or interfering with or attempting to terminate any rights or interests of the individual plaintiffs in the premises known as 637 Decatur Street, Brooklyn New York; and it is further
ORDERED, that the Civil Court of the City of New York, Kings County action, Douglas Lewis v Patterson Management Group. Inc. and John Doe # 1 — 10 and Jane Doe # 1-10, L T Index Number 055233/08 is removed to this Court and consolidated with this action, Index Number 12376/08, because there are common issues of law and fact, and the Civil Court lacks jurisdiction to grant complete relief to the parties; and it is further
ORDERED, that defendant DOUGLAS LEWIS is enjoined from taking any action in the Civil Court of the City of New York, Kings County case, Douglas Lewis v Patterson Management Group. Inc. and John Doe # 1 — 10 and Jane Doe # 1-10, L T Index Number 055233/08 during the pendency of this Supreme Court action, Index # 12376/08; and it is further
ORDERED, that defendants DOUGLAS LEWIS and/or PATTERSON MANAGEMENT GROUP, INC. maintain electrical, gas and all other utility services to plaintiffs in the subject premises during the pendency of this action; and it if further
ORDERED, that during the pendency of this action and until directed otherwise by the Court, plaintiffs shall deposit their rent and utility payments with the Brooklyn Neighborhood Office of the Legal Aid Society, 111 Livingston Street, Brooklyn, New York, which shall hold these deposits in escrow.
This constitutes the Decision and Order of the Court.