Opinion
Index No. LT-311494-22/KI
11-03-2023
Congregation Ohel Yizchock, Petitioner, v. Mike Leitman and BELLA LEITMAN, Respondents
Law Offices of Stuart I. Jacobs, Esq. Attorneys for Petitioner Legal Aid Society-Brooklyn Office for the Aging Attorneys for Respondent
Law Offices of Stuart I. Jacobs, Esq. Attorneys for Petitioner
Legal Aid Society-Brooklyn Office for the Aging Attorneys for Respondent
Shantonu J. Basu, J.
Recitation, as required by CPLR § 2219(a), of the papers considered in the review of motion sequence 1.
PAPERS NUMBERED
Notice of Motion, Affirmation, Affidavit & Exhibits 1, NYSCEF No. 14-20
Affirmation in Opposition 2, NYSCEF # 25-26
PROCEDURAL AND FACTUAL BACKGROUND
Petitioner brought the instant nonpayment proceeding on May 29, 2022. Petitioner has alleged that the apartment is unregulated.
Respondent has moved for summary judgment and Petitioner has opposed this motion.
Respondent's affidavit states that the last lease expired on February 28, 2022. Respondent argues that he is entitled to summary judgment because there was no lease in effect on May 29, 2022.
Petitioner does not dispute that the last lease expired prior to the commencement of this case. Instead, Petitioner asserts that there was an implied agreement to pay rent when the case began. Petitioner submits proof that Respondent received ERAP benefits in December of 2021. Therefore, Petitioner argues, there was an implied agreement between the parties commencing in December 2021 and ending a year later, thus covering the period when the case started.
The court finds that Respondent's motion must be denied, as is set forth below.
LEGAL ANALYSIS
The question before the court is whether Petitioner can bring a nonpayment proceeding pursuant to RPAPL § 711(2) when there was no express rental agreement in effect between the parties at the time the case was commenced.
A nonpayment proceeding must be predicated on a rental agreement that is in effect at the time the proceeding is commenced. This has long been the rule (265 Realty, LLC v. Trec, 39 Misc.3d 150[A], 2013 NY Slip Op 50974[U] [App Term 2d Dept 2013]).
Although there was once some confusion over its applicability, the Appellate Term in the Second Department has dispelled all doubt (Fairfield Beach 9th, LLC v Shepard-Neely, 77 Misc.3d 136 [A], [App Term 2d Dept 2022]).
For a history of this rule, including the former split between the First and Second Department's approach, please see the Honorable Weisberg's decision in ZB Prospect Realty v. Olenick, 79 Misc.3d 592, 594 (Civ Ct Kings County 2023).
In Shepard-Neely the Appellate Term held that "a nonpayment proceeding lies only where a tenant has defaulted in the payment of rent, pursuant to the agreement under which the premises are held or, in other words, there must be a rental agreement in effect at the time the proceeding is commenced pursuant to which rent is due and owing. Thus, [where this is not the case a] nonpayment proceeding does not lie" (Shepard-Neely, 2022 NY Slip Op 51351[U], *4 [citations and quotation marks omitted]).
Normally, an agreement to pay rent will be in the form of a written lease signed by both parties. But this is not always the case.
While courts typically articulate the rule as requiring that there must be an agreement to pay rent when a nonpayment case commences, courts have also noted that an agreement to pay rent can be either express or implied (see e.g., 6 W. 20th St. Tenants Corp. v Dezertzov, 75 Misc.3d 135 [A], 2022 NY Slip Op 50529[U], *1 [App Term 1st Dept 2022] ["A nonpayment proceeding may only be maintained to collect rent owed pursuant to an agreement between the parties, express or implied, and here petitioner failed to meet its burden to establish the existence of an agreement with respondents to pay the rent and other charges demanded in the petition."]; Tilden Towers Hous. Co., Inc. v Edwards, 78 Misc.3d 1205 [A], 2023 NY Slip Op 50160[U], *2 [Civ Ct Bronx County 2023] ["Where there is no agreement to pay rent, either express or implied, a non-payment proceeding pursuant to RPAPL § 711(2) cannot be maintained."] [Ibrahim, J.]; Inwood Ventura II LLC v Jackson, 63 Misc.3d 1223 [A], 2019 NY Slip Op 50660[U], *2 [Civ Ct NY County 2019] ["While Petitioner's motion to amend its claim to include rent due through April 2019 at trial was granted, Petitioner failed to prove an agreement to pay rent, either express or implied, for any period after August 2018."] [Kraus, J.]).
The phrase "express or implied" means that a rental agreement does not have to take the form of a written lease. Rather, a rental agreement can be implied from the actions of the parties.
In other words, if at the time a landlord brings a nonpayment proceeding the express agreement had expired, but there was an implied agreement to pay rent, then the rule in Shepard-Neely is not violated.
a. Does a tenant's ERAP application and landlord's acceptance of an ERAP funds create an implied agreement to pay rent?
Petitioner urges this court to rule that a tenant's efforts to obtain to ERAP benefits, coupled with a landlord's acceptance of such funds, creates an implied agreement to pay rent that lasts for one year following the acceptance of ERAP monies.
At least two decisions from Kings county have addressed this issue post- Shepard-Neely. Both decisions followed the Honorable Stoller's reasoning in JBS Properties v Yershov, 77 Misc.3d 235 (Civ Ct NY County 2022). Therefore it is appropriate to start the discussion there.
i. JBS Properties v Yershov
In JBS Properties v Yershov the respondent was an unregulated tenant whose lease had expired. The respondent applied for ERAP and was approved. The landlord accepted the ERAP funds.
Then the landlord brought a nonpayment case in housing court seeking to collect the monies not covered by ERAP. The respondent moved to dismiss on the basis that he did not have a lease in effect. Judge Stoller found that "[n]ormally, if a tenant remains in possession after a lease expires with no new agreement as to a rental amount, a landlord's remedy is to obtain possession via a holdover proceeding.... However, a successful ERAP application precludes that remedy" (JBS Properties v Yershov, 77 Misc.3d 235, 241 [Civ Ct NY County 2022]).
Yershov stands for the proposition that a landlord who is required to house an ERAP recipient for one year should have recourse to a summary nonpayment proceeding during that year. Judge Stoller determined that, since a landlord cannot bring a holdover for one year after accepting ERAP funds, it would be unfair to "deprive a landlord of a remedy if a tenant without a written lease does not pay rent in the year after a landlord's acceptance of ERAP benefits" (JBS Properties v Yershov, 77 Misc.3d at 241).
Thus, the court in Yershov ruled that the landlord could avail itself of a summary nonpayment proceeding despite the absence of an express agreement to pay rent. Although, Shepard-Neely cast some doubt on the continued viability of Yershov, at least two cases have agreed with the logic of Yershov after the Appellate Term handed down Shepard-Neely.
ii. 1614 Midwood Holdings LLC v Tiliaeva
In 1614 Midwood Holdings LLC v Tiliaeva, there was no dispute that the respondent did not have a lease when the nonpayment proceeding started in November of 2022. However, the petitioner argued that there was an implied agreement to pay rent. Under these circumstances, the Honorable Golden found that:
"[T]he Respondent actively and intentionally took steps to ensure that the landlord-tenant relationship would continue post expiration of the lease. The ERAP application was approved and paid out in December 2022, two years after the end of the last renewal lease. For an ERAP application to be approved, a tenant must apply. The tenant must submit documentation including proof that they live in the subject premises (proof of residency and occupancy) and they must attest to the fact that arrears are outstanding for an apartment that they have an obligation to pay rent (proof of rental amount). OTDA, the managing and reviewing agency, may follow up with additional questions and may require further documentation before issuing a final determination. The Respondent is not a passive party who simply gains the benefit of another party's contract. Instead, they are active participants in the process, specifically they initiate it with the hope and understanding that an approval will further extend their tenancy upon acceptance of payment by the landlord, a tenancy that is predicated on an agreement to pay rent" (1614 Midwood Holdings LLC v Tiliaeva, 80 Misc.3d 626, 630 [Civ Ct Kings County 2023]).
Although ERAP was approved after the proceeding commenced, given the process required by ERAP, the Tiliaeva court found that both sides had the intention of reinstating the landlord-tenant relationship. Thus, Judge Golden ruled that acceptance of ERAP creates an implied agreement "that sets a definitive time frame and set rental amount" and went on to state that where a respondent "applies for ERAP after the expiration of their lease and is awarded ERAP payments, a nonpayment may be brought pursuant to RPAPL § 711(2) during the 12-month period after ERAP acceptance" (1614 Midwood Holdings LLC v Tiliaeva, 80 Misc.3d at 632).
It is important to note that in Tiliaeva at the time the proceeding commenced-November 29, 2022-ERAP funds had not yet been issued. The instant decision returns to this issue in point vi below.
iii. Gentles v Day
The second post- Shepard-Neely case to address this issue in Kings County is Gentles v Day. In that case the petitioner started the nonpayment proceeding on August 16, 2021 (Gentles v Day, - N.Y.S.3d -, 2023 NY Slip Op 23286, *1 [Civ Ct Kings County 2023]).
In Gentles v Day, ERAP was approved on January 4, 2023 (Gentles v Day, 2023 NY Slip Op 23286, *2).
Although the respondent argued that the last lease expired in 2019, the Honorable Cohen found that the respondent's voluntarily application for ERAP in 2021 resulted in respondent "affirm[ing] a landlord tenant relationship with the petitioner and [affirming respondent's] rental arrears obligations" (Gentles v Day, 2023 NY Slip Op 23286, *3-4).
Judge Cohen reasoned that "an occupant's voluntary ERAP application and the one year requirement of maintaining that tenancy constitutes an intentional effort by the legislature to bind landlords and to treat accepted ERAP applicants as a tenant for one year, an act consistent with an intention to continue a landlord/tenant relationship" (Gentles v Day, 2023 NY Slip Op 23286, *3. On this basis, the court denied the respondent's motion for summary judgment.
As with Tiliaeva, at the time the proceeding in Gentles v Day commenced-ERAP funds had not yet been issued.
iv. Is there an implied agreement to pay rent in the instant case?
The facts in the instant proceeding provide Petitioner with a stronger argument for an implied agreement than was the situation in either Tiliaeva or Gentle. In those cases, ERAP was approved after the case commenced.
While this court does not opine on what should be the ultimate outcome in cases like that, this court notes that it is more difficult to find an implied agreement where the order of events is: (a) lease expiration; then (b) commencement of the nonpayment case; and then (c) approval of ERAP. This is because at the time the case started ERAP would not have been approved and might still be denied.
The instant case is simpler. In the case at bar, the order of events was: (a) lease expiration; then (b) approval of ERAP; and then (c) commencement of the nonpayment case. In more detail, the order in the instant case was as follows: (a) the lease expired on February 28, 2022; then (b) Respondent received ERAP benefits on December 22, 2021, and then (c) the nonpayment case commenced on May 29, 2022.
Thus, even though there was no express agreement in effect on May 29, 2022, there was an implied agreement to pay rent. The implied agreement started on December 22, 2021 and did not expire until some point in December of 2022. Since Petitioner commenced the nonpayment proceeding during that one-year period, the rule in Shepard-Neely is not offended. Rather the reasoning of JBS Properties v Yershov applies.
Having voluntarily applied for ERAP benefits, and having received those benefits in December of 2021, it is of no moment that Respondent's express agreement to pay rent ended prior to May 29, 2022. That is because there was an implied agreement to pay rent that was still in effect when Petitioner started the instant proceeding.
CONCLUSION
For the reasons stated above, Respondent's motion for summary judgment is denied. The proceeding is adjourned to November 28, 2023 at 9:30 am for settlement or trial.
This constitutes the decision and order of this court.