Freeman St. Props., L.L.C. v Thelian

[*1] Freeman St. Props., L.L.C. v Thelian 2004 NY Slip Op 51684(U) Decided on December 22, 2004 Appellate Term, Second Department Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on December 22, 2004
SUPREME COURT OF THE STATE OF NEW YORK
APPELLATE TERM: 2nd and 11th JUDICIAL DISTRICTS
PRESENT: December 22, 2004 SUPREME COURT OF THE STATE OF NEW YORK APPELLATE TERM : 2nd and 11th JUDICIAL DISTRICTS PRESENT : ARONIN, J.P., PATTERSON and RIOS, JJ.
2003-1306 K C NO.2003-1306 K C

FREEMAN STREET PROPERTIES, L.L.C., Respondent,

against

JOHN THELIAN, Appellant, -and- GLEN GOLLRAD, Tenant, -and- "JOHN DOE" and "JANE DOE", Undertenants.

Appeals by tenant John Thelian from (1) a decision after trial, dated April 3, 2003, and (2) a final judgment, entered September 29, 2003, of the Civil Court, Kings County (A. Fisher Rubin, J.), awarding possession to landlord.

Appeal from decision unanimously dismissed as no appeal lies therefrom.

Final judgment reversed with $30 costs and petition dismissed. [*2]

In this commercial holdover proceeding, landlord alleges that tenant-appellant's five-year lease for a specified portion of the premises at 48 Eagle Street, Brooklyn, N.Y. expired on July 31, 2000 and that the building is not a multiple dwelling and not subject to rent regulation. Appellant defends on the grounds, inter alia, that he timely exercised a renewal option in his lease; that a holdover proceeding cannot be maintained because the building is an unregistered de facto multiple dwelling; and that the building contains more than six residential units and is thus subject to the Emergency Tenant Protection Act of 1974. Appellant also counterclaimed for damages for rent overcharge and attorney's fees. After a lengthy trial, the Civil Court found that the testimony of appellant's witnesses was not credible and that appellant's extensive proof did not adequately rebut landlord's proof of lack of knowledge and acquiescence; that appellant was not protected by rent stabilization because he had profiteered; and that, even if appellant had timely exercised the renewal option, a finding the court declined to make, he could not validly do so because he was not in compliance with the lease requirement to use the premises solely for commercial purposes.

In our view, the Civil Court's findings are not supported by the record. The record establishes that there are "A.I.R." (artist in residence) signs posted over two of the entrances to the building and a third over the door to the second floor; that the Fire Department required that these signs be posted; that these signs have been posted since 1999; and that landlord purchased the building on September 29, 2000. Although landlord's managing agent, Anthony Argento, who is the son and brother of landlord's principals, testified that he did not recall seeing the "A.I.R." signs prior to landlord's purchase of the building, this testimony is less than credible in view of Argento's admission that he inspected the building before landlord purchased it. Moreover, Argento admitted that landlord did a title search and that such search would have revealed any violations of record. Violations had been placed on the building in March and April 1998, inter alia, one for 15 residential units in violation of the certificate of occupancy and one for 14 class "A" apartments in violation of the certificate of occupancy, and again in December 1999 for 12 illegal apartments. Many of the violations remained open at the time that landlord purchased the building, although some had been paid. Landlord's property manager, Neil Dolgin, who was also property manager for landlord's predecessor, testified that he did not remember if he was aware of the residential use prior to the sale of the building to landlord and that he could not remember seeing the "A.I.R." signs. This claim too can hardly be credited given the fact that the signs were posted while he was property manager and in response to the Fire Department's demand. Moreover, Dolgin did not explain why landlord's predecessor had paid an $800 fine for an April 1998 violation based on the conversion of the second floor to residential use. In any event, landlord and its predecessor are charged with knowledge of these violations (Multiple Dwelling Law §§ 327, 328; Housing and Dev. Admin. of the City of N.Y. v Bryant Westchester Realty Corp., 81 Misc 2d 944 [1975]). Under the circumstances, we find that landlord and its predecessor had both actual and constructive notice of the residential use of the premises and acquiesced therein.

Since neither landlord nor its predecessor served appellant with a notice to cure or otherwise objected to the residential use prior to the expiration of the renewal option, and since they continued to accept rent with knowledge of such use, landlord cannot rely on appellant's violation of the use clause of the lease as a basis for rejecting his exercise of the renewal option [*3](Souslian Wholesale Beer & Soda v 380-4 Union Ave. Realty Corp., 166 AD2d 435, 437 [1990] [plaintiff-tenant was entitled to renewal where, inter alia, "the defendant did not serve any notice in writing to the plaintiff of any violations of law or of the lease prior to the termination date for renewal of the option"]; Restoration Realty Corp. v Robero, 87 AD2d 301, 305 [1982] [a renewal option was validly exercised, despite the defendant-tenant's failure to get a building permit for renovations, where the plaintiff-landlord "and his predecessor were unquestionably aware of the extensive renovations being performed ... . The acceptance of rent throughout this period and the failure by the owners to take any action constitutes a clear waiver"]; see Atkins Waste Materials v May, 34 NY2d 422 [1974] [finding a waiver existed where landlord had knowledge of the violations and did not promptly reject the renewal notice]; cf. Jefpaul Garage Corp. v Presbyterian Hosp. in City of New York, 61 NY2d 442 [1984] [no waiver where the landlord promptly rejects the tenant's attempt to renew and serves it with a notice to cure defaults]; TSS-Seedman's v Nicholas, 143 AD2d 223 [1988] [no waiver where landlord was unaware of the violations prior to last date upon which option could be exercised]). Unlike the Civil Court, we expressly find, based on appellant's testimony, his notarized letter of April 20, 2000, the envelope postmarked April 21, 2000 and the proof of mailing, as well as appellant's subsequent letter to landlord's predecessor enclosing a copy of the proof of mailing, that appellant timely exercised the renewal option. Under these circumstances, the petition must be dismissed.

In view of our determination that dismissal is required because appellant timely exercised his renewal option, we do not reach the issue whether the premises is a de facto multiple dwelling. We note that appellant's demand on appeal for the refund of use and occupancy paid pursuant to the October 29, 2001 order of the Civil Court directing such payment is not properly before this court because the appeal from the final judgment brings up for review only orders which "necessarily affect" the final judgment (CPLR 5501; see Siegel Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR C5501:4).

Appellant's contention that he is protected by rent stabilization is without merit because rent stabilization protection cannot attach where, as here, the building is located in an area in which municipal zoning requirements do not permit residential use (Wolinsky v Kee Yip Realty Corp., 2 NY3d 487 [2004]). Thus, while the court below failed to dispose of tenant's counterclaim for rent overcharge, said counterclaim is without merit and should have been dismissed. No contention has been raised on appeal with respect to the trial court's failure to dispose of tenant's counterclaim for attorney's fees.

Aronin, J.P., and Rios, J., concur.

Patterson, J., dissents in part and concurs in part in a separate memorandum. [*4]
SUPREME COURT OF THE STATE OF NEW YORK
APPELLATE TERM : 2nd and 11th JUDICIAL DISTRICTS
PRESENT : ARONIN, J.P., PATTERSON and RIOS, JJ.
FREEMAN STREET PROPERTIES, L.L.C.,

Respondent,

-against-
JOHN THELIAN,

Appellant,

-and-
GLEN GOLLRAD,

Tenant,

-and-
"JOHN DOE" and "JANE DOE",

Undertenants.

Patterson, J., dissents in part and concurs in part and votes to affirm the final judgment and to dismiss the appeal from the decision in the following memorandum:While I am in agreement with the dismissal of the appeal from the decision, I disagree with the majority's reversal of the final judgment and believe that the court improperly substitutes its own credibility determinations for those of the trial judge. The judge below expressly rejected tenant-appellant's testimony as incredible and credited the testimony of the landlord. Because the judge, as factfinder, had the opportunity to observe the witnesses and their demeanor, her credibility determinations should not be disturbed.

The resolution of issues of credibility, as well as the weight to be accorded the evidence presented, is primarily to be decided by the trier of fact, which had the opportunity to see and hear the witnesses (see People v Gaimari, 176 NY 84, 94 [1903]). Intermediate appellate courts must be careful not to substitute themselves for the trier of fact. "Great deference is accorded to [*5]the fact-finder's opportunity to view the witnesses, hear the testimony and observe demeanor" (People v Bleakley, 69 NY2d 490, 495 [1987]; see Cohen v Cohen, 279 AD2d 599 [2001]). The determination of the trier of fact should be accorded great weight on appeal, and should not be disturbed unless clearly unsupported by the record (see People v Garafolo, 44 AD2d 86, 88 [1974]).

Here, the trial judge's determination was not unsupported by the record. She rejected appellant's testimony that landlord was aware of the misuse of the premises and concluded that such misuse invalidated any option to renew. The court noted that appellant and the other tenants in the building who testified, charged their subtenants more than the legal rent, failed to report the income, and concealed their misuse by tipping the superintendent. Since the trial court's determination finds adequate support in the record, it should be sustained.
Decision Date: December 22, 2004