Farrell v E.G.A. Assoc., Inc.
Annotate this CaseDecided on October 4, 2005
Civil Court of the City of New York, New York County
Thelma Farrell, Petitioner,
against
E.G.A. Associates, Inc., EDWARD GIAIMO, JR., DONNA KAMALI, and DEPARTMENT OF HOUSING PRESERVATION AND DEVELOPMENT OF THE CITY OF NEW YORK, Respondents
6180/05
Cornicello & Tendler LLP (Rita J. Tartaglia of counsel), New York City, for petitioner.
Kucker & Bruh LLP (Jason S. Garber of counsel), New York City, for respondents E.G.A. Associates, Edward Giaimo, Jr., and Donna Kamali.
Housing Litigation Division (Valentine J. Moretti of counsel), New York City, for co-respondent Department of Housing Preservation and Development (DHPD).
Gerald Lebovits, J.
On May 19, 2005, the court, after a trial in this Housing Part (HP) proceeding, issued an order compelling respondents to correct violations of record that inspectors from the Department of Housing Preservation and Development (DHPD) placed against the subject premises and to correct all conditions listed in and underlying the Department of Buildings' (DOB) partial preemptory vacate order number 34/2004, issued on August 3, 2004, so as to cause the DOB to rescind that vacate order.
On July 23 and 24, 2005, the court granted respondents' motion for leave to reargue the order to correct and, on reargument, directed that a new trial take place. A trial was held over a period of nine days. Testifying for petitioner on her prima facie case were three witnesses: [*2]Petitioner, respondent Edward Giamo, and a social worker, Susan Sirota. Three witnesses testified for respondents: Giamo, architect John Daniel Nekrosis, and real-estate appraiser Joan Marlow. On her rebuttal case, respondent called Harold Weinberg, an engineer, Raymond Buyrne from ConEdison, and Edward Mungen, DOB's Assistant Chief Inspector.
The court finds that all the witnesses but Giamo and Nekrosis were credible; Giamo's and Nekrosis's testimony about how much time and money it will take to make the building habitable were problematic. The court believes either that Giamo's experts have seriously misled him, perhaps inadvertently, or that he is hiding the real reason he has not arranged to rescind the vacate order. As explained below, according to Mungen, the DOB would have rescinded the vacate order six months ago, after a DOB reinspection, had respondents filed with DOB an engineer's report confirming what the DOB had already concluded: that the building is stable.
The court also finds that Nekrosis is wrong on all his key assumptions in believing that restoring the building to habitation would take perhaps a million dollars ($550,000 to shore up and rehabilitate the building, and the remainder to complete extra building-wide work and to repair the apartments).
One of Nekrosis's incorrect assumptions is that DOB will rescind the vacate order only if the building and its apartments are fully habitable. For DOB to rescind its vacate order, Mungen explained, the building must be stable, not habitable in the broad sense of that word.
Additionally, Mungen, who corroborated Weinberg, flatly contradicted Nekrosis about what it would take to rescind the vacate order. Nekrosis stated that a wall might have to be taken down and rebuilt, that it would take months to make the building habitable, and that the entire building should be subject to a vacate order. Mungen, on the other hand, stated that he performed tests concluding that no wall need be taken down and rebuilt, that he found the building stable last March, and that only the rear of the building had to be vacated.
Weinberg, who corroborated Mungen, disputed persuasively that any wall should be rebuilt and also deducted several hundred thousand dollars from Nekrosis's estimate of what it will cost to make the building habitable.
Further affecting Nekrosis's testimony is his opinion that DOB underestimated how to make the building safe for habitation. Nekrosis testified that DOB should place a vacate order against the entire building. That opinion is contradicted not only by Mungen and Weinberg but also by Justice Harold B. Beeler. This court learned in the final moments of the trial that respondents had moved in Supreme Court, Civil Term, New York County, for an order to compel DOB to place a vacate order against the entire building, in that way extending DOB's vacate order from the current partial order against the apartments in the rear of the building. Neither petitioner nor DHPD had a copy of Justice Beeler's order to give to this court, and respondents did not show his order to this court, but Giamo testified that Justice Beeler, in denying respondents' motion, declined to compel DOB to expand its vacate order as Nekrosis thought [*3]necessary.
Justice Beeler evidently did not find DOB's actions arbitrary and capricious, and that makes this court wonder why respondents have sought in this proceeding and in the action before Justice Beeler to argue that the conditions in the subject building are more dangerous than they are. This court cannot conclude from respondents' efforts that respondents are more safety-conscious than DOB. If anyone were to err on the side of safety and impose bureaucratic impediments, it would be a New York City agency that has a vested interest, not in restoring a tenant to possession, but in protecting occupants and passers-by from conditions it suspects might be immediately hazardous. Rather, the court concludes that respondents seek to erect roadblocks to prevent petitioner and other rent-regulated tenants from returning to their homes. This court evaluates Nekrosis's and Giamo's testimony in that light.
Petitioner agrees that respondents cured all the violations pending when this proceeding began except for the Housing Maintenance Code class "C" violation that DHPD issued for respondents' not supplying gas to petitioner's kitchen and for the conditions listed in and underlying the partial preemptory vacate order. As to the gas, Buyrne testified that respondents must contact ConEdison to restore the gas, and respondents are directed to do so and thus to restore gas within 24 hours of serving this decision and order with notice of entry. The unresolved issue, therefore, is whether the court should direct respondents to correct the conditions that underlie the vacate order and to cause DOB to rescind its vacate order. To that issue the court answers affirmatively.
Respondents at trial raise two defenses not to be subjected to an order to correct that would force them to cause the vacate order to be rescinded. First, they contend that petitioner has no standing to secure an order to correct. This defense has no merit. Respondent, an 81-year-old long-term rent-stabilized tenant, left her home on August 3, 2004, only after the police, firefighters, and Emergency Medical Technicians removed her forcibly to Lenox Hill Hospital while she was in her wheelchair after the part of the building in which she lived suffered cracks in the north and west walls. These cracks resulted, perhaps, from construction to an adjacent building, and they led the DOB to issue its partial vacate order requiring the tenants who lived in the rear of the building—petitioner included—to leave their homes.
Petitioner has standing because she has maintained her tenancy. Respondents concede that they have not sought a demolition permit or her eviction and that, instead, petitioner, now living in a nursing home, applied to the Division of Housing and Community Renewal (DHCR) to pay $1.00 to keep her tenancy and that the DHCR has granted that application. Respondents also concede that petitioner has tried to pay rent but that they rejected it—all while they have been accepting SCRIE payments on her behalf. In any event, even if a tenant does not pay $1.00 to maintain the tenancy, even if a tenant does not try to tender rent, and even if a landlord does not cash SCRIE checks, a tenant forced to quit because of a vacate order has standing to pursue an HP proceeding. (Carrasquillo v 197 Columbia Realty Corp., NYLJ, Dec. 2, 1992, at 25, col 2 [Hous Part Civ Ct Kings County] ["As a person aggrieved by the enforcement of the vacate [*4]order, the tenant clearly has standing to bring this proceeding seeking the removal of those conditions in order to permit her to return to her home."].) As the Carrasquillo court explained, "To suggest that this Court is powerless to order a landlord to make repairs once a vacate order has been issued would make a mockery of the mission of the housing part to maintain housing standards." (Id.; accord Civ Ct Act § 110 [a]; Schanzer v Vendome, 9 Misc 3d 1105[A],
2005 NY Slip Op 50658[U], at *2, 2005 WL 1035584, at *2, 2005 NY Misc. LEXIS 866, at *2 [Hous Part, Civ Ct, NY County] [noting that HP's jurisdiction includes Building Code violations].)
Respondents also defend on the ground of economic infeasibility. (See generally DHPD v Mill River Realty, Inc., 169 AD2d 665 [1st Dept 1991]; Eyedent v Vickers Mgmt., 150 AD2d 202 [1st Dept 1989, mem]; Buchanan v Toa Constr. Corp., NYLJ, May 31, 1989, at 21, col 1 [App Term 1st Dept, per curiam]; DHPD v St. Thomas Equities Corp., 128 Misc 2d 645 [App Term 2d Dept, 2d & 11th Dists 1985, mem]; City of NY v Cordero, NYLJ, Apr. 14, 1999, at 29, col 4 [Hous Part Civ Ct Kings County]; Cirillo v 2166 Second Ave., Inc., 146 Misc 2d 802 [Hous Part, Civ Ct, NY County 1990]; Chan v 60 Eldridge Corp., 129 Misc 2d 787 [Hous Part, Civ Ct, NY County 1985].)
The contours of the economic infeasibility defense are uncertain. (See Bernard v Scharf, 246 AD2d 171 [1st Dept 1998], revd as moot mem 93 NY2d 842 [1999]; Gerald Lebovits and Deborah E. Fisher, HP Proceedings: The Tenuous Nature of the Economic-Infeasibility Defense, Landlord-Tenant Prac. Rep. 1 [Oct. 2000].) Under the view most favorable to respondents, it is an affirmative defense to an order to correct if a building owner can prove that it would cost more to repair than the building is worth. (See 153-155 Essex St. Tenants Assn. v Kahan., 4 Misc 3d 1008[A], 2004 NY Slip Op 50769[U], *2, 2004 WL 1592813, *2, 2004 NY Misc LEXIS 1399 [Hous Part, Civ Ct, NY County 2004] [citing only First Department's opinion in Bernard, which favored owner's interpretation of economic-infeasibility defense, without noting that Court of Appeals reversed as academic that opinion as well as the Appellate Term's and Civil Court's opinions, which favored tenant's interpretation of that defense].) Even adopting the view of the defense that most favors owners, respondents have not proven economic infeasibility—and, more important, the court need not reach that issue.
According to Inspector Mungen, whose testimony was wholly credible, all the work necessary for DOB to rescind its vacate order was finished at the latest in March 2005, six months ago, when he found no movement, thus showing that the building had been stabilized, meaning not moving. The building became stable because the construction company working on the adjacent property used I- or H-beams to shore up the building's west wall. According to Mungen, who testified as an expert witness relying on a report from DOB's Chief Engineer, all that DOB required to rescind the vacate order was for the building to be stabilized, for respondents to submit an engineer's report attesting to the stabilization, and for DOB to reinspect the building. Given that Mungen and the Chief Engineer had found that the was building stable, and that Mungen believes that the building is still stable, Mungen is certain, he testified, that he have would recommended to the DOB's Borough Superintendent that she rescind the vacate [*5]order. All that was left for respondents to do was to submit an engineer's report, which they could have received from the construction company that did the work.
The court is astounded that respondents have yet to submit an engineer's report. Had they done so, the vacate order would have been rescinded at least six months ago. Mungen testified that stopping the building from moving would have taken a well-funded, sincere owner two days to a week and an underfunded, less-sincere owner three to four months, but here these time periods are irrelevant, because the construction company stabilized the building already, according to Mungen.
Thus, it does not matter, or had respondents filed the engineer's report it would not have mattered, how much money respondents must spend to stabilize the building. Respondents' economic-infeasibility defense, premised on the contention that it will cost more for them to rescind the vacate order than the building is worth, is academic.
Were the court to consider respondent's economic-infeasibility defense—and for the reasons stated above it need not do so—the court would reject that defense.
Respondents have failed to offer the documentary evidence necessary to support that defense. They offered only the building's annual rent roll through April 2005 ($285,542), a projection from Marlow how much the building might sell for ($2,150,000 if the building were sold for nine times its rent-roll value, $2,385,000 if the building were sold for 10 times its rent-roll value, and $2,625,000 if the building were sold for 11 times its rent-roll value), and Nekrosis's opinion that it will take about $1,000,000 to make the building and every apartment habitable. As in Gonzalez v Navarro (NYLJ, Aug. 10, 1994, at 25, col 2 [Hous Part Civ Ct Kings County]), fatally missing from respondents' proof are "any current offers for the property, the tax assessment of the building, and the financial operating statement of the premises."
In addition to missing proof is insufficient proof, even accepting respondents' best-case scenario. Nekrosis's estimate—that it might cost $1,000,000 to repair the building and make all the apartments habitable—does not satisfy the economic-infeasibility threshold. Assuming that Nekrosis's estimate is accurate and that the court accepted as realistic the lowest price Marlow said the building was worth as of April 2005 ($2,150,000 if the building were sold for only nine times its rent-roll value), the building and its land, after rehabilitation, will be worth more than a million dollars more than it will cost to rehabilitate it.
Nekrosis's estimate of the how much money it will take to rehabilitate the building is, moreover, tentative. His figure of $550,000 (plus much more for asbestos work, concrete foundation work, and work in each apartment), and his assessment that the work will not be finished for six months or longer, depends, he said, on a variety of possibilities, such as whether respondents will need to erect a new north wall, lay a new foundation, or construct a new rear half of the building. A defense of economic infeasibility may not be based on uncertainty. [*6]
Adding to Nekrosis's uncertainty based on what he might encounter after further study and renovation is that Mungen and Weinberg disagreed with him. They testified credibly that no new wall need be built. Mungen knows that because he performed a plumb-bob test, a test Nekrosis did not testify he performed. And Weinberg testified that erecting an unnecessary new wall will destabilize the building, not stabilize it.
Stabilization, not rehabilitation, is what DOB demands to rescind its vacate order. How much it will cost to make the building habitable for all the tenants is different, therefore, from how much it will cost to rescind the vacate order. In that sense, Nekrosis's testimony is irrelevant.
Were it relevant, Nekrosis's testimony about how much it will cost to make the building habitable is inflated. Weinberg contradicted Nekrosis by a few hundred thousand dollars about the price to render the building habitable. The court credits Weinberg's testimony for several reasons. Among them is that Nekrosis himself submitted to DOB his architectural plan to rehabilitate and stabilize the building, a plan he called "Building Rehabilitation." (DHPD 1 in evidence.) Of course, Mungen testified that the building is already stable and thus that no further work is necessary. But Nekrosis's cost estimate to DOB to implement his plan, which involves demolition, shoring, and more, was $130,000—not the $550,000 or million dollars to which he testified at trial. Nekrosis submitted that estimate to DOB but, surprisingly, not to this court. This court learned about the $130,000 estimate only from Mungen, who studied the DOB Web site. Respondents' failure to alert this court to that estimate, and the essential fact of the $130,000 estimate itself, renders Nekrosis's testimony unhelpful.
Not helpful to respondents' position, too, is that they have yet to seek DOB work permits under Nekrosis's plan to accomplish a task that DOB believes is unnecessary but which respondents contend is required. Their failure to secure permits would compel this court to reject the defense of economic infeasibility had respondents made it out. The defense must be rejected if an owner, like respondents here, comes to court with unclean hands. (See e.g. Reinbold v Gottlieb, NYLJ, May 31, 1989, at 21, col 2 [App Term 1st Dept, per curiam]; DHPD v 69 W. 38th St., NYLJ, Aug. 5, 1987, at 11, col 1 [App Term 1st Dept, per curiam]; Rodriguez v Cziment, NYLJ, Apr. 22, 1992, at 25, col 5 (Hous Part, Civ Ct, Kings County].)
The court deems the conditions listed in and underlying the vacate order a class "C" violation. Respondents must correct them and secure DOB's recision order within 24 hours of petitioner's serving this decision and order with notice of entry. The time to correct a class "C" violation is 24 hours, and the court may not, under the circumstances of this proceeding, extend that time to allow a further cure period. Doing so would be unfair to petitioner, who has been living in nursing homes since DOB issued its vacate order on August 3, 2004. It would also be unfair to the public, given that this proceeding first appeared on the court's HP calendar more than four months ago and that respondents could have arranged almost effortlessly six months ago to have DOB rescind its vacate order. [*7]
If the gas is not restored timely or if the conditions listed in and underlying the vacate order are not corrected and the vacate order not rescinded timely, petitioner may move for civil penalties and contempt.
Respondents replaced petitioner's lock after DOB issued its vacate order. They have not given petitioner a new key. Petitioner remains locked out of her apartment. If respondents do not restore petitioner to possession within 24 hours after serving this decision and order with notice of entry, petitioner may bring an illegal lock-out proceeding, if she deems it advisable to do so.
This opinion is the court's decision and order.
Dated: October 4, 2005
J.H.C.
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