Catco Assoc., L.P. v Goodwin

[*1] Catco Assoc., L.P. v Goodwin 2005 NY Slip Op 50679(U) Decided on May 5, 2005 Suffolk District Court Hackeling, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 May 5, 2005
Suffolk District Court

Catco Associates, L.P., Petitioner,

against

Lisa Goodwin, Defendant.



HULT 509/04

C. Stephen Hackeling, J.

By nonpayment petition dated December 15, 2004, Catco Associates, the above captioned landlord/petitioner (hereafter " Catco") seeks a money judgment, judgment of possession and warrant of eviction to recover the premises located at 19 Juanita Avenue, Huntington, New York from the tenant/respondent Lisa Goodwin. Ms. Goodwin interposed an answer dated January 20, 2005 and asserted the affirmative defenses of breach of the warranty of habitability, laches, waiver of claims via an election of remedies, res judicata and waiver of money claim via acceptance of federal subsidy payments. At trial the Court granted Catco's application to amend its complaint to withdraw its claim for attorney's fees, reduce its claim for December 2004 rent from $2,103.00 to $246.00 and to include a claim for rent for the period of January 2005 through April 2005 at $246.00 per month. This resulted in an amended rent demand of $4,148.00 through April, 2005.

This Court conducted a trial of the issues joined for disposition on February 3, 2005, February 16, 2005, March 24, 2005, and April 7, 2005. After taking the testimony of multiple witnesses and reviewing of all the documents submitted into evidence, the Court makes the following Findings of Fact and Conclusions of Law:

Facts

The undisputed relevant facts in this matter are as follows:

1) The parties entered into a federally subsidized housing Section 8 lease agreement dated August 15, 1997, which required the tenant to contribute $ 216.00 per month through December 2003 and $246.00 per month thereafter. The Town of Huntington Housing Authority is current on its monthly $1,857.00 subsidy payments to Catco.

1.

2) Catco commenced a nonpayment eviction proceeding against Ms. Goodwin in February 2004. She interposed an alleged breach of the "warranty of habitability" affirmative defense. On the trial date of this matter, Catco withdrew its petition. Ms. Goodwin neither consented to or opposed this withdrawal.

3) In May 2004 Catco commenced a summary "holdover" eviction proceeding against Ms. [*2]Goodwin, which also sought to recover a money judgment for back rent and for use and occupancy. This request for a money judgment was withdrawn prior to the trial of the "holdover" eviction component of the petition. By decision dated August 19, 2004, the Court sustained the tenant's claim of "retaliatory eviction" and denied Catco's request to regain possession of subject premises. The Court's decision expressly determined that Catco was not barred by its decision from seeking to recover the back rent.

4) Catco commenced the instant "nonpayment" proceeding by petition dated December 15, 2004.

Ms. Goodwin has not made her contribution under her lease arrangement dating back to September 2003.

Issues Presented

Issue Preclusion

A. Was Catco's non consensual withdrawal of it's February 2004 nonpayment petition, after joinder of issue, a bar to its seeking to recover outstanding rent in this petition?

The tenant has expansively plead and argued a multitude of equitable affirmative defenses which this Court will synthesize into one issue sounding in "issue preclusion".Catco's withdrawal of its first (non payment) petition prior to trial in December 2003 was not expressely stated as "with prejudice". The respondent's contention is that her affirmative consent or a Court order are neccessary prerequisites to a "without prejudice" withdrawal. CPLR 3217 ( c) provides that "unless otherwise stated in the notice, stipulation or [Court] order of discontinuance, the discontinuance is without prejudice..." In permitting petitioner's withdrawal of the petition, thereby granting discontinuance of the action, the Court in no way stated or inferred that said discontinuance was "with prejudice". To the contrary, the Court stated in the holdover action that Catco was not barred from seeking recovery of back rent allegedly due it. While actions that are discontinued with prejudice have res judicata effect [Nottenberg v. Walber, 160 AD2d 574 (NYAD 1st Dept. 1990); Forte v. Kaneka. America Corp., 110 AD2d 81,(NYAD 2nd Dept. 1985); McKinney's Cons. Laws of NY CPLR 3217:15], actions discontinued without prejudice obviously do not. A landlord who terminates a prior proceeding by withdrawal without prejudice is not prohibited from commencing a second proceeding upon the same theory. See Colavolpe v. Williams, 77 Misc 2d 430 (NY Civ. Ct. 1974).

2.

Under this scenario the petitioner is not barred from recovering outstanding rent due him. The doctrine of res judicata cannot be invoked by reason of Catco's withdrawal of its December 2002 petition, as no judgment issued as a result of the initial petition's withdrawl. Similarly, res judicata is not invoked where, as here, the second petition (holdover theory) and the third petition (non payment theory) involve different causes of action. The general rule is that "a judgment of a court of competent jurisdiction is final and conclusive upon the parties, not only as to issues actually determined, but as to every other question which the parties might or ought to have litigated..." Stokes v. Stokes, 172 NY 327, 344-345 (NY 1902 ). The party desiring to avail itself of the judgment as conclusive evidence of some particular fact, must show affirmatively that it went on that fact... Lewis v. Ocean Nav & Pier Co., 125 NY 341, 348 ( NY 1891). Ms. Goodwin has not met this burden of proof. The Court notes that the issue of rent due clearly was not determined in the prior proceeding. Inasmuch as Catco withdrew its claim for a money judgment, the issue of rent was never adjudicated. [*3]

This Court, taking note of the issues decided by it in the prior proceeding on the holdover petition (which resulted in dismissal of said petition and a finding that the petitioner's eviction was retaliatory in nature) finds that there is no attempt here by petitioner to reintroduce any of those same issues. As such, collateral estoppel is also not implicated as a potential bar to petitioner's recovery of rent herein. A judgment in one action is not conclusive, when the two causes of action involved are different. The estoppel is limited in such circumstances to the point actually determined. Schuylkill Fuel Corp. v. B & C Nieberg Realty Corp., 250 NY 304, 306-307 ( NY 1929).

Waiver of Contributions via Acceptance of HUD Funds

B. Does the acceptance of a governmental subsidy check result in the landlord's waiver of the tenant's contribution payments which came due prior to the HUD payment?

Ms. Goodwin's fifth affirmative defense asserts that the landlord's acceptance of the Town of Huntington's HUD subsidy for December 2004 results in the landlord's waiver of any rent sums due directly from the tenant prior to said date. Such an argument is inapplicable. Ms. Goodwin's counsel has cobbled together the unrelated holdings of the Ioppolo and Kew Realty Co. cases in support of this defense. Ioppolo v.Haerle, 2001 NY Slip Op. 40518U (NY Appellete Term 9th and 10th J.D. 2001) holds that HUD payments are de jure earmarked for the months issued. Kew Realty Co. v. Charles, NYLJ pg 27 col. 2 6-3-98 NYLJ 27 (Appel. Term 2d and 11th J.D. 1998) holds that the acceptance of an earmarked rent check waives the landlord's right to seek possession for prior months outstanding rent. No HUD subsidy was involved in the Kew Realty Case. Practically speaking, if the Court was to adopt this contention, all Section 8 landlords would waive the right to seek non payment possession of real property with every acceptance of a monthly HUD check. In essence, a Section 8 tenant could unilaterally compel a landlord to waive his contractual entitlement by simply withholding his contribution until the HUD check arrives.

3.



At this point the landlord must make a monthly decision to either waive the tenant contribution or bring a dispossess proceeding for a diminimus sum. Such a situation would have a broad public policy impact, which should be legislatively created. The tenant's advocation of an "implied waiver" is outside of any judicially crafted doctrines which derive from equity.

Warranty of Habitability

C. Has the landlord violated the tenant's warranty of habitability ? Does Federal Law pre-empt New York State law concerning the RPL Sec. 235 (b) "warranty of habitability", and establish its own habitability standard?

In this instance the Town of Huntington Housing Authority regulates the subject tenancy in conformance with Federal Law. The bulk of the testimony indicates that the premises were regularly inspected and that there were many violations of federally established standards. However, none were sufficient to induce the Housing Authority to determine that the Federal Housing contract and subsidy be terminated. In fact, the top Housing Authority official testified he was awaiting this Court's termination on habitability prior to making a subsidy termination decision.

At trial, the tenant and the HUD Housing Administrator often cited to Federal Housing [*4]Regulations. It is the policy of the Federal Government to provide safe and decent housing to low income families. See 42 USC §1437. Generally, when Congress acts in a manner to mainifest and exercise its authority, the regulatory power of the state is preempted. See Adams Express Co. v. Croninger, 226 US 491 (1913); Smith v. United Parcel Service, 296 F.3d 1244 (11th Cir. Ala. 2002). However, Federal Courts have limited the doctrine of " complete preemption" to only those instances where Federal Statute replaces the State Law claim with a Federal Cause of Action which is expressly enforceable in a Federal Court. See Hoskins v. Bekins Van Lines, 343 F.3d 769 (5th Cir.Tex. 2003). As the Court is unaware of an express grant of landlord/tenant jurisdiction to the Federal Courts, it must conclude that New York Real Property Law and the provisions of RPL Sec. 235 (b) are not preempted and are applicable.

The subject HUD contract does contain a provision requiring that Catco warrant that the subject premises meet habitability standards detailed in the HUD handbook. However, the Second Department has reconciled the differences between the HUD contract standards and NY RPL Sec. 235(b) in holding that "Sec. 235(b) does not imply the warranty of habitability into a contract between HUD and the landlord as such a contract is not a "lease or rental agreement". See Committed Community Assocs. v. Croswell, 659 NYS 2d 691 (NY App. Term, 2nd Dept. 1997). In an action to recover possession of real property the standard to apply is set by RPL Sec. 235(b) regardless of whether HUD has a contractual claim for breach of higher standards contained in their agreement.

Additionally, the Court concludes that the HUD standards testified about are contained in its "handbook"and are not codified via Federal Regulations. The HUD Handbook is not a formal Federal Regulation, as it was never formally promulgated. As such, it is merely an internal policy which is not conclusive upon a State Court, but which may be relied upon as persuasive authority. See Allied Manor Road LLC v. Grube NYLJ 4-20-05, p.21

4.

The proof presented as to uninhabitable conditions consist of the HUD inspection report which specifically details numerous problems. See Exhibit H. Of the approximate 50 problem conditions noted; the HUD inspector ascribed responsibility for same to the tenant for 34. The tenant supplemented this report with testimony about a single rat which was killed outside the house; insufficient heat in the bathroom and the unhooking of a washing machine in the basement. The record justifies a finding that Catco did undertake corrective measures when notified of problems for all items which HUD indicated were its responsibility.

In assessing the totality of the house's habitability conditions; the long term nature of the tenancy and the fact that HUD appears to have acted as an honest arbitrator of rights of the parties; the Court concludes that Ms. Goodwin's warranty of habitability was not violated. Accordingly, the Court finds that the tenant owes the petitioner $4,148.00 pursuant to her lease agreement, that said sum has been duly demanded and is not subject to waiver, abatement or offset. The Court awards a judgment for $4, 148.00 and will execute a judgment of possession and a warrant of eviction if said sum is not paid prior to May 18, 2005.

Submit Judgment and Warrant with Affidavit of Non Payment.

_______________________________ [*5]

Dated: May 5, 2005 J.D.C.

5.