Sharabi v Morales

[*1] Sharabi v Morales 2005 NY Slip Op 50580(U) Decided on April 19, 2005 Supreme Court, Kings County Rivera, J. 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 April 19, 2005
Supreme Court, Kings County

Sigalit Sharabi, Plaintiff, -

against

Lorraine Morales, EUGENE DEGENNARO and ANTOINETTE DEGENNARO, Defendants.



10214/04

Francois A. Rivera, J.

On July 19, 2004, defendant Lorraine Morales (Morales) moved by order to show cause for an order vacating her default in answering plaintiff's summons and verified complaint and deeming her proposed answer served. Rather than opposing Morales' motion, plaintiff cross-moved pursuant to CPLR § 3212 for summary judgment against Morales on the first, second and third cause of action and for past use and occupancy. Morales opposed plaintiff's cross motion and requested summary judgment in her favor.

On March 30, 2004, plaintiff commenced an action against the defendants by filing a summons and verified complaint with the Kings County Clerk's Office. Plaintiff's first, second and third causes of action seek declaratory relief. The first cause of action seeks an order declaring that the apartment in which defendant Morales resides is not subject to rent control or rent stabilization. The second and third cause of action seeks a declaratory judgment that any agreement between the defendants is void as against the plaintiff. The basis of the second cause of action is the defendants' failure to abide by the provisions of Real Property Law § 291 and the basis of the third cause of action is defendants' failure to register Morales' apartment in accordance with the Rent Stabilization Code Section 2528.1 and also on public policy grounds. Plaintiff's fourth and fifth cause of action are against the Degennaro defendants and are not part of the instant motions.

The following facts are established by undisputed documentary evidence submitted with the parties' motion papers. On October 9, 2002, plaintiff acquired title to the real property located at 315 56th Street, Brooklyn, New York by deed from Eugene Degennaro and his wife, Antoinette Degennaro. On December 27, 2001, the Degennaros acquired title to the property by bargain and sale deed from Humberto Vences (Vences).

Morales' affidavits and annexed exhibits to her instant order to show cause and to her [*2]opposition papers to plaintiff's motion sets forth the following allegations of fact. Since 1996, she has resided on the third floor of the 315 56th Street, Brooklyn, New York. On June 23, 1998, Vences brought a holdover proceeding against her in the Kings County Civil Court Housing Part under index number 78835/98. By decision and order dated November 18, 1998, Judge Jose Rodriguez granted Morales' order to show cause vacating her stipulation of settlement with the petitioner and dismissed the petition.

In October of 1999, Vences brought a non-payment proceeding against Morales in the Kings County Civil Court Housing Part F under index number 96842/99. By decision and order dated May 19, 2000, Judge Gary H. Marton granted Morales' motion to dismiss the proceeding.

By summons and verified complaint dated September 11, 2000, Vences brought an ejectment action against Morales in the Kings County Civil Court under index number 56527/00. On December 7, 2001, the parties executed a written stipulation of settlement ending the proceeding and submitted it for Judge Geoffrey Wright's signature. Judge Wright so ordered the stipulation. The order contained the following terms. The issue of whether Morales' apartment was subject to rent stabilization was not resolved by the court. Vences would give Morales a two year lease beginning January 1, 2002 and ending December 31, 2004. By February 14, 2002, Morales would give Vences seven thousand dollars ($7,000.00) for all rent due and owing from January 1, 1994 to December 31, 2001. Morales would give Vences access to inspect and repair certain violations listed in HPD's inspection report of November 29, 2001. Only Morales and her children, and Vences and his successors were bound by the rent stabilization code. Neither Vences nor his sucessors were required to register with the New York State Division of Housing and Community Renewal (DHCR).

By notice of discontinuance dated October 1, 2003, plaintiff terminated the holdover action brought against Morales in the Kings County Civil Court Housing Part under index number 087644/03.

Plaintiff's cross motion contends that the aforementioned stipulation of settlement under index number 56527/00 which purported to treat Morales as a rent stabilized tenant should not be binding on him. The primary issue here is whether Morales is a rent stabilized tenant. If she is, plaintiff's contentions regarding Vences' agreement with Morales are irrelevant. If she is not, then the issue regarding the effect of the agreement by Vences to treat Morales as a rent stabilized tenant arises.

Some discussion of the law pertaining to rent stabilization and rent control is necessary to clarify the factors controlling this issue. The Emergency Tenant Protection Act (ETPA) of 1974 was enacted to address a serious public emergency in housing. Its enactment was found to be necessary "to prevent 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"(McKinney's Unconsolidated Laws §8622). In order for the ETPA to apply to New York City housing, however, it was necessary for the New York City Council to declare a housing emergency in its jurisdiction. The City Council so acted in June 1974 (KSLM-Columbus Apartments v. New York State Division of Housing and Community Renewal, 6 AD3d 28-32 [1st Dept 2004]). In LaGuardia v. Cavanaugh, 53 NY2d 67 [1981], the Court of Appeals described the ETPA "not [as] a rent and eviction regulating law ...," but as "an enabling act, which empowered New York City ... to extend rent [*3]stabilization."

Where a locality has declared a housing emergency, the Act applies to regulate residential rents "of all housing accommodations which it does not expressly except, including previously unregulated accommodations" (Wolinsky v. Kee Yip Realty Corp., 2 NY3d 487-491[2004]). ETPA, which extended rent stabilization protection, covers "all housing accommodations which it does not expressly except, including previously unregulated accommodations" (Matter of Salvati v Eimicke, 72 NY2d 784, 791 [1988]. The ETPA exempts from its regulations 'housing accommodations in a building containing fewer than six dwelling units' (Unconsolidated Laws § 8625, subd a [4][a] ).

At the outset, it is noted that in order for the subject unit to be covered by rent stabilization, the building need not have contained six or more units when the law was enacted in 1974. Thus, the existence of six or more residential units at any time after the passage of the ETPA in 1974 is sufficient to make the premise stabilized (Wilson v One Ten Duane St. Rlty, 123 AD2d 198 [1987]; Gandler v Rosado, 138 Misc 2d 740 [1988]; Fleur v. Croy, 137 Misc 2d 628 [NY Civ Ct 1987]). Furthermore, a reduction in the number of apartments to fewer than six units after passage of the ETPA does not automatically remove the building from rent stabilization (Ki Wai Leung v. Division of Housing and Community Renewal, 266 AD2d 545 [2nd Dept 1999]; Zandieh v. Division of Housing and Community Renewal, 249 AD2d 553 [2nd Dept 1998]). The New York City Rent Stabilization Law (RSL) is administered by the New York State Division of Housing and Community Renewal (DHCR). The RSL is a modification and successor regulatory scheme to rent control. For an apartment to be under rent control, the tenant must have been living in that apartment continuously since before July 1, 1971.

Plaintiff's contends that the agreement with Vences to treat Morales as a rent stabilized tenant should not be binding upon him. In fact, this agreement does not create a stabilized tenancy or give Morales renewal rights under the Rent Stabilization Code. Rent stabilization is a matter of statutory right and cannot be created by agreement (546 West 156th Street HDFC v Lenise Smalls, 1 Misc 3d 906 [NY Civ. Ct. 2003]). Nor can it be created by waiver or estoppel (Ruiz v. Chwatt Associates, 247 AD2d 308; see also 1262 Realty Corp. v. Scapula, 2 Misc 3d 132(A)[NY Sup App. Term 2004]). Therefore, the stipulation, while it may have been enforceable as against Vences with respect to its terms, did not confer statutory rent stabilization rights upon Morales or any successors to the apartment.

Inasmuch as a rent stabilized tenancy was not, and indeed, may not be created by agreement or by contract, the issue then becomes whether Morales' apartment unit is rent stabilized by operation of law. This issue turns on whether the number of apartments in the premises has ever consisted of six or more residential units since passage of the ETPA in 1974.

Plaintiff claims Morales' apartment is neither rent controlled nor rent stabilized and seeks a declaratory judgment stating same. In order for the plaintiff to prevail on the motion for summary judgment on this issue he must make a prima facie showing that he is entitled to judgment as a matter of law (Alvarez v. Prospect Hospital, 68 NY2d 320 [1986]; see also Zarr v. Riccio, 180 AD2d 734 [2nd Dept 1992]). He must demonstrate that the building falls within the aforementioned exception, namely, that it has fewer than six residential units. According to [*4]documentary evidence submitted by the plaintiff which include, a certificate of occupancy issued on April 13, 1971, a title report, and a recent report from an inspector of the department of buildings, the premises is a legal three family, three apartment house. Based on the foregoing submissions, plaintiff has met his burden of establishing, as a matter of law, that the building falls into the "fewer than six dwelling units" exception of rent stabilization.

Once a showing has been made, the burden shifts to the party opposing the motion to produce evidentiary proof, in admissible form, sufficient to establish the existence of material issues of fact which require a trial of the action (Romano v. St. Vincent's Medical Center of Richmond, 178 AD2d 467 [2nd Dept. 1991]). Defendant's evidence in opposition consists of her averment in an affidavit that the building has eleven units, and the aforementioned decision and order of Judge Gary H. Marton, issued on May 19, 2000, in a nonpayment proceeding. That decision contained in pertinent part the following language: "There is a certificate of occupancy that has been issued for the premises that fixes its status as a Class 'a' three-family multiple dwelling. Respondent asserts that there are at least six dwelling units at the premises; petitioner concedes that there are eleven dwelling units (petitioner's undated memorandum of law at page 3). Thus there is no question that the premises are being occupied in contravention of the certificate of occupancy."

Defendant's implicit argument is that this decision and order should be given collateral estoppel effect with respect to the number of units in the building. The equitable doctrine of collateral estoppel is grounded in the facts and realities of a particular litigation, rather than rigid rules. Collateral estoppel precludes a party from litigating again in a subsequent action or proceeding an issue raised in a prior action or proceeding and decided against that party or those in privity (Buechel v Bain, 97 NY2d 295, 303 [2001]). Two requirements must be met before collateral estoppel can be invoked. 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" (Buechel v Bain supra., 97 NY2d at 303-304). The doctrine, however, is a flexible one, and the enumeration of these elements is intended merely as a framework, not a substitute, for case-by-case analysis of the facts and realities. 'In the end, the fundamental inquiry is whether relitigation should be permitted in a particular case in light of ... fairness to the parties, conservation of the resources of the court and the litigants, and the societal interests in consistent and accurate results. No rigid rules are possible, because even these factors may vary in relative importance depending on the nature of the proceedings ...'" (Buechel v Bain, supra.).

In the context of collateral estoppel, privity does not have a single well-defined meaning (Matter of Juan C. v Cortines, 89 NY2d 659, 667 [1997]). Rather, privity is " 'an amorphous concept not easy of application' ... and ' includes those who are successors to a property interest, those who control an action although not formal parties to it, those whose interests are represented by a party to the action, and [those who are] co-parties to a prior action' " (Matter of Juan C. v Cortines, supra.). In addressing privity, courts must carefully analyze whether the party sought to be bound and the party against whom the litigated issue was decided have a relationship that would justify preclusion, and whether preclusion, with its severe consequences, would be fair under the particular circumstances. Doubts should be resolved against imposing [*5]preclusion to ensure that the party to be bound can be considered to have had a full and fair opportunity to litigate" (Matter of Juan C. v Cortines, supra).

Under the circumstances established by the pleadings and for the reason set forth below, it would be inappropriate to apply collateral estoppel to this prior decision. First, the decision states that the dismissal of the proceeding was based on the fact that the action could not be maintained due to a violation of the certificate of occupancy (Multiple Dwelling Law 302). Therefore, the issue of rent stabilization was not addressed. Moreover, the alleged concession pertaining to the number of apartments was based on an undated memorandum of law which was not reproduced in the instant motion. A memorandum of law is basically a legal brief written by attorneys to explain the law and its application to the facts and is not evidence. Furthermore, there is no indication that an affidavit or other sworn statement was executed by Vences, the former owner, with respect to the number of units.

Most importantly, while a successor to a property interest may be in privity with the former owner for collateral estoppel purposes, in this instance since plaintiff is accusing the former owner of fraudulent behavior, the former owner and plaintiff are essentially adverse parties and, therefore, do not have a relationship that would justify preclusion. Plaintiff and the former owner were strangers when the nonpayment proceeding in question was pending and thus plaintiff clearly did not have an opportunity to contest the prior decision.

The remaining evidence consisting of the averment in Morales' affidavit was conclusory in nature and unsupported by documentary or other evidence. In particular, she did not proffer any other evidence with respect to the number of units in the building such as Department of Building reports, certificates of occupancy, affidavits of other tenants, or photographs of the building. She admitted to residing in the premises since 1996 and, therefore, is not rent controlled. Accordingly, she has failed to raise an issue of fact with respect to the number of residential units. Plaintiff's first cause of action for summary judgment declaring that Morales' apartment is not subject to the rent control and rent stabilization is granted.

Plaintiff's second cause of action seeks to invalidate the two-year lease which Vences offered Morales in a stipulation of settlement of the ejectment action brought in Kings County Civil Court under index number 56527/00. The stipulation of settlement was ordered by Judge Geoffrey Wright on December 7, 2001. Plaintiff contends the lease is invalid because it was not recorded in accordance with Real Property Law §291. Real Property Law §291 sets forth the requirement of recording conveyance of real property and the consequences of failing to do so. Real Property Law § 290, however, specifically excludes from its definition of real property, leases whose terms do not exceed three years. Plaintiff's second cause of action is based on a misinterpretation of law and is without merit. Therefore, the request for summary judgment declaring this lease invalid on that basis is denied. Morales' request for summary judgment dismissing this cause of action as against her is granted.

Plaintiff's third cause of action alleges that Lorraine Morales conspired with the former owner to conceal the alleged rent stabilized status of the apartment by not registering it with the DHCR.

The Rent Stabilization Code (9 NYCRR) Section 2528.1 provides: Each housing accommodation subject to the RSL on April 1, 1984 or thereafter, and not [*6]exempted from registration by the DHCR, shall be registered by the owner thereof with the DHCR within 90 days after such date.

By its terms, it is entirely the owner's obligation to register rent stabilized apartments (M.H.A. Realty Corp. v. Cole, 163 Misc 2d 300-302 [NY City Civ. Ct 1994]). Therefore, assuming arguendo that Morales agreed to Vences' decision not to register her unit with the DHCR, that agreement could not be a basis for any liability against her. In any event, since the court has granted summary judgment on plaintiff's first cause of action finding defendant's apartment not subject to rent stabilization or rent control, this issue is rendered moot. Morales' request for summary judgment dismissing this cause of action as against her is granted.

Plaintiff cross motion sets forth in the second paragraph of her attorney's affidavit, a request for an assessment of past use and occupancy against Morales. Plaintiff's affidavit alleges in paragraph twenty nine that Morales has not paid rent to the plaintiff from the date she owned the building. Within the same paragraph, plaintiff qualifies this claim stating that she received a "Jiggets" portion of the rent from the Department of Social Services. Morales responded to this contention by attaching a copy of a printout purporting to be a record of restricted payment of public assistance grants for her residence. Thus, plaintiff's allegation regarding Morales' alleged non payment of rent is ambiguous and inconsistent. The allegations do not set forth Morales' monthly rent, nor did it set forth the amount plaintiff received to pay Morales' rent which was described as a "Jiggets" payment. Nor does it establish what period of arrears this unstated amount was meant to cover or what amount or rent is claimed to be due and owing.

Real Property Law § 220 provides that the landlord may recover a reasonable compensation for the use and occupation of real property, by any person, under an agreement, not made by deed; and a parol lease or other agreement may be used as evidence of the amount to which he is entitled.

It has been held proper to order the payment of use and occupancy in a proceeding to foreclose a leasehold interest. This is consistent with the general judicial policy granting requests to set use and occupancy pendente lite when a leasehold interest is the subject of civil litigation other than summary proceedings (Davis v. Cole, 193 Misc 2d 380-383 [NY Sup 2002]. Use and occupancy may also be awarded in a summary proceeding, but only as part of the final judgment of possession or as a condition of an order granting a stay (K.N.W. v. Associates v. Parish, 5 Misc 3d 1019(a) [NY City Civ. Ct. 2004]; see Montague Street Realty Associates v Simpson, NYLJ, May 31, 1994, at 35, col 3 [App Term 2nd and 11th Dept]).

Plaintiff's causes of action against Morales were for declaratory relief and not to foreclose a leasehold interest nor for a judgment of possession. Consequently, plaintiff's cause of action does not support an application for use and occupancy and is denied.

The foregoing constitutes the decision and order of the court.

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J.S.C.