Culhane v Patterson

[*1] Culhane v Patterson 2016 NY Slip Op 26328 Decided on September 27, 2016 Appellate Term, Second Department Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and subject to revision before publication in the printed Miscellaneous Reports.

Decided on September 27, 2016
SUPREME COURT, APPELLATE TERM, SECOND DEPARTMENT, 2d, 11th and 13th JUDICIAL DISTRICTS
PRESENT: : WESTON, J.P., ALIOTTA and ELLIOT, JJ.
2015-578 K C

David Stephen King Culhane, Appellant,

against

William M. Patterson and ROBERT SYKES, Respondents, -and- "JOHN DOE" and "JANE DOE", Undertenants.

Appeal from an order of the Civil Court of the City of New York, Kings County (Gary Franklin Marton, J.), dated March 3, 2015. The order granted tenants' motion to dismiss the petition in a holdover summary proceeding.

ORDERED that the order is reversed, without costs, and tenants' motion to dismiss the petition is denied.

The issue on this appeal is whether an owner's use nonrenewal notice was rendered stale by the stipulated discontinuance, without prejudice, of a prior holdover

proceeding brought following the expiration of the lease. We hold that, in the circumstances presented, the notice was not rendered stale.

On July 10, 2014, landlord served upon tenants, pursuant to Rent Stabilization Code (RSC) (9 NYCRR) § 2524.2 (c) (3), a notice of intention not to renew the lease when it expired on October 31, 2014, on the ground that landlord sought possession for his own personal use as his primary residence and for the use of his wife and five children (see RSC § 2524.4 [a]). Following the expiration of the lease, landlord promptly commenced, or believed that it had commenced, a holdover summary proceeding on November 3, 2014. On the petition's return date, November 17, 2014, pursuant to a so-ordered two-attorney stipulation, the prior proceeding was discontinued without prejudice, after tenants had argued that the notice of petition had not been issued and no proceeding had been commenced because the clerk had neglected to affix the clerk's signature stamp on the original notice of petition. Two days later, on November 19, 2014, landlord commenced the instant holdover proceeding. Tenants moved to dismiss the instant proceeding, arguing that the notice of nonrenewal had been rendered stale by the discontinuance of the prior proceeding. By order entered March 3, 2015, the Civil Court, citing, among other cases, Matter of Nicolaides v State of New York Div. of Hous. & Community Renewal (231 AD2d 723, 724 [1996]), granted tenants' motion. We reverse and deny tenants' motion.

In Nicolaides, the Appellate Division, Second Department, stated that "[i]t is well settled [*2]that a notice of nonrenewal of a rent stabilized lease does not survive the dismissal of the first holdover action and cannot serve as the predicate for a second proceeding" (see also Kaycee W. 113th St. Corp. v Diakoff, 160 AD2d 573 [1990]). The Court did not expressly provide a rationale for the rule, but cited cases which reasoned that, upon the dismissal, withdrawal or discontinuance of a holdover proceeding, a tenant is entitled to "a certain peace of mind that an eviction is no longer pending" (Walsam Fifth Ave. Dev. Co. v Lions Gate Capital Corp., 163 Misc 2d 1071, 1073 [Civ Ct, NY County 1995] [internal quotation marks and citation omitted]; see also Colavolpe v Williams, 77 Misc 2d 430, 431 [Civ Ct, Kings County 1974] [a predicate notice should not be allowed to "hang like the sword of Damocles over the head of the tenant, to be used at some future date, at the whim of the landlord"]).

In our view, there is a substantial question as to the continued validity of the Nicolaides ruling, given the recent decision of the Appellate Division, Second Department, in Matter of Georgetown Unsold Shares, LLC v Ledet (130 AD3d 99, 104 [2015]). In Ledet, the Court held that a landlord's acceptance of unsolicited rent checks from a tenant after the expiration of the lease for a rent-stabilized apartment did not vitiate the landlord's nonrenewal notice, as it did not "unmistakably manifest . . . [an] intent to relinquish [the landlord's] rights to pursue a . . . holdover claim." It stands to reason that if a landlord's acceptance of unsolicited rent checks does not render a nonrenewal notice stale, a stipulated discontinuance, without prejudice, of a prior holdover proceeding should similarly not render such a notice stale, where a new proceeding is immediately commenced.

Moreover, the Nicolaides case—involving a dismissal of the first proceeding, not a stipulated discontinuance without prejudice—is distinguishable, and its implicit rationale—that a tenant is entitled to peace of mind—is inapplicable to the facts herein. A finding that a predicate notice has been rendered stale is warranted where a landlord fails to act with reasonable diligence and the tenant is prejudiced thereby (see Raffone v Schreiber, 18 Misc 3d 925 [Civ Ct, NY County 2015]; cf. Dwyer v Mazzola, 171 AD2d 726 [2d Dept 1991] [the basic elements of laches include delay in asserting a claim and prejudice]). Here, since the prior proceeding was discontinued without prejudice based on a defect in the notice of petition, tenants could properly have had no reasonable basis to believe that landlord would not pursue his owner's use claim. Since a new proceeding was commenced within two days and tenants showed no prejudice, a finding of staleness is not warranted (see Bresciani v Corsino, 32 Misc 3d 463 [Civ Ct, Kings County 2011]).

In any event, since tenants successfully argued that the first proceeding was a nullity,[FN1] they cannot now be heard to assert the existence of that proceeding to bar the maintenance of the instant proceeding (see Arol Dev. Corp. v Goodie Brand Packing Corp., 52 AD2d 538 [1976], affg on op below 84 Misc 2d 493 [App Term, 1st Dept 1975]; see also Dicara v Cecere, NYLJ, Apr. 18, 1979, p 13, col 5 [App Term, 2d Dept, 2d & 11th Jud Dists 1979] [where a second proceeding was commenced the day after the first proceeding had been dismissed based on an unverified petition, a new 30-day notice was not required, as the first proceeding was a nullity]).

Accordingly, the order is reversed and tenants' motion to dismiss the petition based on staleness is denied.

Weston, J.P., and Aliotta, J., concur.

Elliot, J., concurs in a separate memorandum.

Elliot, J., concurs in the following memorandum:

I concur in so much of the majority opinion as holds that tenants are judicially estopped [*3]from asserting the existence of the prior proceeding as a bar to the maintenance of the instant proceeding. However, I disagree with the remainder of the majority's reasoning.

Though the ad hoc approach taken by the majority would remedy an unfairness emanating from what is presumed to be an error by the clerk in the issuance of a notice of petition in the prior summary proceeding,[FN2]

I believe that we are constrained by the holdings in, inter alia, Matter of Nicolaides v State of New York Div. of Hous. & Community Renewal (231 AD2d 723 [2d Dept 1996]) and Kaycee W. 113th St. Corp. v Diakoff (160 AD2d 573 [1st Dept 1990]) and would leave it to those courts to determine if they wish to depart from their holdings. Nicolaides indeed holds that "a notice of nonrenewal of a rent stabilized lease does not survive the dismissal of the first holdover action and cannot serve as the predicate for a second proceeding in a new forum" (Nicolaides, 231 AD2d at 724). While a strict reading of that sentence might lead one to conclude that there is a distinct rule limited to dismissed proceedings only, I believe that, by specifically citing to, inter alia, Walsam Fifth Ave. Dev. Co. v Lions Gate Capital Corp. (163 Misc 2d 1071 [Civ Ct, NY County 1995]) and Weinberger v Driscoll (89 Misc 2d 675 [Civ Ct, NY County 1977]) in support of its holding, the Second Department did not intend that the rule be restricted to first proceedings which have been dismissed (as opposed to having been disposed of in some other manner). A review of the cases cited by Nicolaides supports this position. The Weinberger court determined that the same notice to vacate served upon tenants in a prior holdover proceeding could not be used again in a subsequent holdover proceeding commenced five days later, when the prior holdover proceeding was withdrawn without prejudice prior to the commencement of the second proceeding. Further, the Walsam court distinguished the case before it—which was a summary proceeding for nonpayment of rent—with a holdover summary proceeding (the case sub judice), the latter of which requires that a new predicate notice be served when the prior proceeding is "dismissed or discontinued" (id. at 1073).[FN3]

The majority appears to distinguish the instant case by citing the fact that the prior [*4]proceeding was discontinued without prejudice based on a defect in the notice of petition and, thus, tenants could not have expected that a new proceeding would not be commenced. I respectfully disagree for the following reasons. First, the Walsam court, as noted above, did not distinguish between a dismissed and a discontinued proceeding, and the Weinberger court specifically dealt with a second proceeding which followed one which had been withdrawn without prejudice. Second, while it is true that tenants could have expected the commencement of a new proceeding based upon the circumstances with which landlord was faced, namely, the alleged defect in the notice of petition, there is no reason why they should have expected that such a defect would obviate the requirements as set forth in the applicable statutes, codes, and case law mandating the service of a new predicate notice. While this result appears unfair to landlord, based upon what is apparently agreed to be an omission of the clerk's stamp on the notice of petition, there are a number of different approaches landlord could have taken to protect his interests, either by stipulation or submission for judicial determination.

Finally, that the new proceeding was commenced within two days should not provide a basis for reversal of the lower court's finding given the holding in Weinberger,cited to by Nicolaides. The ad hoc approach adopted by, inter alia, Bresciani v Corsino (32 Misc 3d 463 [Civ Ct, Kings County 2011]), cited by the majority, appears to be inconsistent with controlling Appellate Division precedent and, as a practical matter, may muddy the waters for both landlords and tenants alike as to what they may be required to do and what they should expect, respectively, in relation to summary holdover proceedings and predicate notices. Further, and to that end, pending such a determination by a court, neither landlord nor tenant would know their status with respect to the other. Nor do I believe that Matter of Georgetown Unsold Shares, LLC v Ledet (130 AD3d 99 [2d Dept 2015]) supports reversal in this instance. Although the case at bar and Ledet are similar in that they both present a lack of intent on the landlord's part to vitiate a Golub notice, the unintended acceptance by a landlord of unsolicited rental payments (see id.) is not akin to the affirmative act of a landlord stipulating to discontinue a legal proceeding.

Therefore, for the above reasons, I respectfully concur only in so much of the majority opinion as holds that tenants are judicially estopped from asserting the existence of the prior proceeding as a bar to the maintenance of the instant proceeding.

Decision Date: September 27, 2016

Footnotes

Footnote 1: We note that the so-ordered stipulation settling the first proceeding satisfies the prior-success element necessary for judicial estoppel (see Manhattan Ave. Dev. Corp. v Meit, 224 AD2d 191 [1996]; Ennismore Apts., Inc. v Gruet, 29 Misc 3d 48 [App Term, 1st Dept 2010]).

Footnote 2:Although the parties appear to agree that the omission was due to the clerk's error, it is noteworthy that, upon submission of the notice of petition and petition to the clerk, the original, stamped notice of petition is immediately returned to the attorney or process server, as the case may be, and the original is then to be resubmitted to the clerk together with the affidavit of service (see NY R HOUS HD Doc. 1).

Footnote 3:The Walsam court explained that, unlike a holdover summary proceeding, when a summary proceeding for the nonpayment of rent is discontinued without prejudice (particularly if it was discontinued after a second nonpayment proceeding had already been commenced), and the rent is still not paid, the tenant is not surprised since it "knows the rent is still due" (id.). As such, any subsequent proceeding may properly be predicated on the same written demand notice which was the predicate for the first proceeding. Upon the dismissal or discontinuance of a holdover proceeding, however, the tenant "is entitled to a certain peace of mind that an eviction is no longer pending" (id., quoting Mau v Stapleton (136 Misc 2d 793 [Civ Ct, Kings County 1987]) and, thus, a new notice must be served.