Malta v Brown

[*1] Malta v Brown 2006 NY Slip Op 51028(U) [12 Misc 3d 1164(A)] Decided on May 31, 2006 Civil Court, New York County Lebovits, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 31, 2006
Civil Court, New York County

Robert Malta, Petitioner,

against

Ancil Brown, Respondent, and "JOHN DOE" and/or "JANE DOE" Respondents-Undertenants.



Robert Malta, Petitioner, against Fernandez, Respondent, and "JOHN DOE" and/or "JANE DOE" Respondents-Undertenants.

Robert Malta, Petitioner, against Hunt, Respondent, and "JOHN DOE" and/or "JANE DOE" Respondents-Undertenants.

Robert Malta, Petitioner, against

against

Santos Aranda, Respondent, and "JOHN DOE" and/or "JANE DOE" Respondents-Undertenants.







L&T 99827/05



Law Offices of Santo Golino, New York City (Santo Golino and Hollis B. DeLeonardo), for petitioner. Goldberg, Scudieri, Lindenberg & Block, PC, New York City (David G. Scudieri of counsel), for respondent.

Gerald Lebovits, J.

In these four owners' use holdover proceedings, petitioner, Robert Malta, seeks to recover, allegedly for his family, four rent-stabilized apartments in a building that contains eight units. Respondents' motion to dismiss under CPLR 3211 (a) (7) raises two issues. The first is whether petitioner should have sought approval from the New York State Division of Housing and Community Renewal (DHCR) before he refused on the ground of owner's use to renew respondents' leases and before he brought these proceedings in the Civil Court, Housing Part. The second is whether any limit exists on petitioner's recovery for family use half the apartments in a building.

The motion to dismiss is denied. The Rent Stabilization Code (RSC) requires the Housing Part to hear owner's use proceedings without an owner's being compelled to secure DHCR approval before bringing proceedings. Without DHCR's approval, moreover, the Housing Part has the jurisdiction to decide whether an owner may recover for personal or family use one or more apartments if the owner can satisfy strict requirements at trial. These two holdings, mandated by law, are consistent not only with clear statutory interpretation and legislative intent but also with good public policy. Were the law otherwise, owners, tenants, and the public will be deprived of their rights in an owner's use proceeding to have the Housing Part hear their cases.

This court respectfully declines to follow two recent opinions that addressed the two issues in this proceeding. (See Pultz v Economakis, 2005 NY Slip Op 51238 [U], *1, 2005 WL 1845635, at *1, 2005 NY Misc LEXIS 1624, at *1 [Sup Ct, NY County, June 20, 2005, Feinman, J.] [Pultz I]; Pultz v Economakis, NYLJ, Mar. 21, 2006, at 19, col 3 [Sup Ct, NY County, Soto, J.] [Pultz II].) Pultz I holds in part that given the RSC's intent to provide tenants with affordable and stable housing, a landlord may not evict all the tenants in an entire building. Along the same lines, Pultz II holds in part that only DHCR and not a court of record may permit or forbid an owner to recover an entire building for personal or family use. Pultz I and Pultz II are thorough and well-reasoned opinions. But this court reaches a different conclusion.

This court does not suggest that owners who want to recover for themselves or their families may ever succeed in dispossessing more than one tenant in more than one apartment, let alone every tenant in an entire building. The court suggests only that owners who seek to recover an apartment, or more than one apartment, are entitled to prove at trial whether they have a good-faith basis to do so.

These proceedings are adjourned for trial. To prevail at trial, petitioner, in proving his prima facie case, will have the burden to prove that he has, among other things, a good-faith intention to regain each apartment for his family, not an intention to re-let an apartment at a higher rent to someone else or to warehouse each apartment empty for reconfiguration at some indefinite time.

I. Background [*2]

Petitioner is a co-owner, landlord, and managing agent of premises 202 Eighth Avenue, a multiple dwelling with eight apartments in New York County. Respondent Ancil Brown is the rent-stabilized tenant of apartment 2B; respondent Anthony Fernandez is the rent-stabilized tenant of apartment 3A; respondent John Hunt is the rent-stabilized tenant of apartment 4A; and respondent Santos Aranda is the rent-stabilized tenant of apartment 1B.

On July 28, 2005, petitioner served all four respondents with nonrenewal notices informing them that their leases would expire on October 31, 2005, and that he will not renew their leases when they expire. The nonrenewal notices also informed respondents that petitioner intends to withdraw all four apartments from the rental market and to use them for his family. In particular, the nonrenewal notices allege that petitioner seeks to convert apartments 1B and 2B into a duplex apartment for Michael Malta, his minor son, and Amber Debord, his son's mother, and to convert apartments 3A and 4A into a duplex apartment for Joseph Malta, his brother.

Petitioner began these holdover proceedings when respondents' leases expired. On February 10, 2006, respondents moved to dismiss each proceeding on the ground that petitioner failed to state a cause of action. (See CPLR 3211 [a] [7].) Each motion to dismiss is identical, as is each opposition. The parties consented to consolidate the motions for disposition.

In evaluating respondents' motion to dismiss, the court must accept the allegations in the petitions as true and give petitioner all favorable inferences. The question is whether the petitions' allegations fit within a cognizable legal theory. (E.g. Leon v Martinez, 84 NY2d 83, 88 [1994].)

II. DHCR Preapproval

Petitioner did not need DHCR preapproval to recover possession of four apartments for his family's use before he began these holdover proceedings. Respondents argue that Rent Stabilization Code [9 NYCRR] § 2524.5 governs this owner's use case because petitioner seeks to remove four apartments from the rental market. (See Respondents' Notice of Motion, Feb. 7, 2006, at ¶ 4.) Respondents argue that under RSC § 2524.5, petitioner must secure DHCR preapproval before bringing these holdover cases in the Housing Part. Petitioner argues that a different section of the RSC governs—RSC § 2524.4—and that under this section petitioner does not need DHCR preapproval.

To assess the validity of these arguments, RSC §§ 2524.4 and 2524.5 must be read together. When read together, these sections explain when DHCR preapproval is unnecessary (see RSC § 2524.4) and when DHCR preapproval is necessary (see RSC § 2524.5). The court finds that RSC § 2524.4 (a), not § 2524.5 (a), governs owner's use cases for owners seeking to recover one, more than one, or all rent-stabilized apartments for personal or family use.

A. RSC § 2524.4 (a) [*3]

Petitioner complied with RSC § 2524.4 (a) because he sent all four respondents nonrenewal and termination notices and commenced these holdover proceedings in the Housing Part based on family use.

Rent Stabilization Code § 2524.4 (a) is clear and unambiguous. This court must give effect to its plain meaning. (See e.g. Malta Town Centre I, Ltd. v Town of Malta Bd. of Assessment Review, 3 NY3d 563, 568 [2004]; Matter of Tall Trees Constr. Corp. v Zoning Bd. of Appeals of Town of Huntington, 97 NY2d 86, 91 [2001]; Majewski v Broadalbin-Perth Cent. Sch. Dist., 91 NY2d 577, 583 [1998].)

An owner complies with the Code by serving a tenant with a nonrenewal and a termination notice. Under RSC § 2524.4 (a), an owner may refuse to renew a tenant's lease once it expires if the owner serves the tenant with a nonrenewal notice. The owner must also serve the tenant with a termination notice. (RSC § 2524.4 [a] [4].) An owner may also send a tenant a combined termination and nonrenewal notice. (Trojan v Wisniewska, 8 Misc 3d 382, 390-391 [Hous Part, Civ Ct, Kings County 2005.) Once a termination notice is served on a tenant, the owner may, without filing an application with DHCR to obtain approval, begin a holdover proceeding or action in a court of competent jurisdiction to reposses a housing accommodation. (RSC § 2524.4.)

Only after the owner complies with the statute by serving the tenant with a nonrenewal and termination notice does the owner have the right to commence a case to recover possession. (See DHCR Fact Sheet No. 10 [DHCR, Eviction from an Apartment Based on Owner Occupancy, last updated Dec. 20, 2000].) An owner may commence a case, without DHCR preapproval, on one or more grounds: (a) an owner seeks to recover possession either for personal or family use; (b) a not-for-profit corporation seeks to recover possession; or (c) an owner seeks to recover possession of premises a tenant does not use as a primary residence. (Id. § 2524.4 [a]; accord Rent Stabilization Law of 1969 [Administrative Code of City of NY] § 26-511 [c] [9] [b].)

RSC § 2524.4 (a) (1) provides the following: "Section 2524.4. Grounds for refusal to renew lease, or in hotels, discontinuing a hotel tenancy, without order of the DHCR."The owner shall not be required to offer a renewal lease to a tenant, or in hotels, to continue a hotel tenancy, and may commence an action or proceeding to recover possession in a court of competent jurisdiction, upon the expiration of the existing lease term, if any, after serving the tenant with a notice as required pursuant to section 2524.2 of this Part, only on one or more of the following grounds: (a) Occupancy by owner or member of owner's immediate family."(1) An owner who seeks to recover possession of a housing accommodation for such owner's personal use and occupancy as his or her primary residence in the City of New York and/or for the use and occupancy of a member of his or her immediate family as his [*4]or her primary residence in the City of New York . . . ."

In the current procedural posture of this case, this court must assume as true that petitioner intends to use the four apartments for his family. (E.g. Foxell v NY City Human Resources Admin., 167 AD2d 126, 127 [1st Dept 1990, mem] [noting that court must accept petition's factual allegations as true on CPLR 3211 [a] [7] motion to dismiss ].) Petitioner seeks to convert apartments 1B and 2B into a duplex apartment for his minor son and his son's mother and to convert apartments 3A and 4A into a duplex apartment for his brother. Petitioner complied with RSC § 2524.4 because he gave all four respondents nonrenewal and termination notices before bringing these holdover proceedings. And petitioner has alleged that he seeks the premises for his family. Given these facts and allegations, petitioner did not need to seek DHCR preapproval.

Respondents argue that RSC § 2524.4 (a) is inapplicable because petitioner does not want the apartments for his immediate family. (See Respondents' Memorandum of Law, Apr. 7, 2006, at Point I.) But this court, at this phase of a motion to dismiss, must accept as true petitioner's allegation that he intends to use the apartments for members of his immediate family. Determining the identity and relationship status of the individuals who might or might not occupy the apartments is unnecessary and premature at this stage. That issue must be resolved at trial: "Whether the premises are to be occupied by a family member as their primary residence is a question of credibility to be determined by the trier of fact." (Wiertciak v Krol, 2003 NY Slip Op 50807[U], *2, 2003 WL 21015232, at *1, 2003 NY Misc LEXIS 458, at *1 [App Term, 2d Dept, 2d & 11th Jud Dists, Feb. 23, 2003, mem].) In any event, RSC § 2520.6 defines immediate family as "[a] husband, wife, son, daughter, stepson, stepdaughter, father, mother, stepfather, stepmother, brother, sister, grandfather, grandmother, grandson or granddaughter, father-in-law, mother-in-law, son-in-law or daughter-in-law of the owner." Petitioner's son and brother qualify as "immediate family" members under the Code, and thus § 2524.4 (a) applies. The question, then, is whether the mother of petitioner's son, Amber Debord, who might also occupy the apartment, qualifies as "immediate family." But the Code does not mandate that all individuals who will use and occupy the recovered apartment be the owner's immediate family. Petitioner's son may have a roommate: his mother. The trier of fact will address and resolve this issue.

DHCR preapproval is not required, not only because RSC § 2524.4 (a) says so, but also because RSC §§ 2524.5 (a) (1), 2524.5 (a) (2), and 2524.5 (a) (3), inapplicable here, limit the circumstances when preapproval is required.

B. RSC § 2524.5 (a)

DHCR preapproval is required only under RSC §§ 2524.5 (a) (1), 2524.5 (a) (2) or 2524.5 (a) (3). None of these sections applies in this case. First, petitioner does not seek to withdraw any or all the apartments or any part of the land or structure from the rental market (i) for a business purpose or (ii) because agencies have imposed substantial code violations on the premises based on fire hazards or conditions dangerous or detrimental to the life or health of the tenants. (See RSC § 2524.5 [a] [1].) Second, petitioner does not seek to demolish the premises. (See RSC § 2524.5 [a] [2].) Third, petitioner does not seek to eliminate inadequate, unsafe, or [*5]unsanitary conditions and demolish or rehabilitate the premises. (See RSC § 2524.5 [a] [3].)

To trigger the requirement that an owner seek DHCR preapproval under RSC § 2524.5 (a) (1), either subparagraph (i) or (ii) must apply. DHCR preapproval is necessary when an owner seeks to remove an apartment from the rental market for business purposes or because agencies have imposed code violations on the premises:

"Section 2524.5. Grounds for refusal to renew lease or discontinue hotel tenancy and evict which require approval of the DHCR . . . .

"(1) Withdrawal from the rental market. The owner has established to the satisfaction of the DHCR after a hearing, that he or she seeks in good faith to withdraw any or all housing accommodations from both the housing and nonhousing rental market without any intent to rent or sell all or any part of the land or structure and:

"(i) that he or she requires all or part of the housing accommodations or the land for his or her own use in connection with a business which he or she owns and operates; or

"(ii) that substantial violations which constitute fire hazards or conditions dangerous or detrimental to the life or health of the tenants have been filed against the structure containing the housing accommodations by governmental agencies having jurisdiction over such matters, and that the cost of removing such violations would substantially equal or exceed the assessed valuation of the structure." (RSC § 2524.5 [a] [1] [emphasis added].)



Petitioner plans to remove four apartments from the rental market. That triggers the first part of RSC § 2524.5 (a). But the inquiry must continue. One cannot ignore the coordinating conjunctions "and" and "or." To be compelled to secure DHCR preapproval, petitioner must intend to remove the four apartments from the rental apartment and do so for a business purpose. Or petitioner must intend to remove the four apartments from the rental apartment and do so because governmental agencies have imposed code violations on the premises such that the cost of removing the violations would be greater than or equal to the value of the structure. Any other reading contradicts the statute's plain language.

Petitioner has not alleged that he seeks to remove the four apartments in connection with a business he owns or operates. Nor has petitioner alleged that governmental agencies have imposed violations on the premises such that the cost of removing them would substantially equal or exceed the structure's value. Nor have respondents alleged that petitioner seeks to remove the apartments in connection with a business petitioner owns or operates or that governmental agencies have imposed violations on the premises. Given the allegations petitioner presents at this stage, RSC § 2524.5 (a) (1) does not apply.

RSC § 2524.5 (a) (2) similarly does not apply. Section 2524.5 (a) (2) provides that DHCR preapproval is necessary if an owner "seeks to demolish the building." DHCR, which has [*6]exclusive original jurisdiction over demolition cases (Sohn v Calderon, 78 NY2d 755, 761 [1991]), will not allow an owner to demolish a building "[u]ntil the owner has submitted proof of its financial ability to complete such undertaking to the DHCR, and plans for the undertaking have been approved by the appropriate City agency." (Id. § 2524.5 [a] [2] [i].) Petitioner does not, however, seek to demolish the building. Immediately apparent from petitioner's nonrenewal notice is that it pertains to an owner's use case and that it differs from a demolition notice under RSC § 2524.2 (e). Nor have respondents alleged that petitioner seeks to demolish the building or that petitioner's proposed conversion of the four apartments into two duplexes would amount to demolishing the building. Even if petitioner will conduct major renovations to the apartments to convert the apartments into two duplexes, a gut renovation is different from demolishing a building. (Robbins v Herman, 11 NY2d 670, 671-672 [1962, per curiam] [holding that landlord's attempt to convert a 26-apartment building into a 43-apartment building, installing air-conditioning unit and incinerator, and changing wiring, gas, and plumbing lines does not amount to demolition].)

RSC § 2524.5 (a) (3) is also inapplicable. It provides that DHCR preapproval is necessary if the owner seeks to "eliminate inadequate, unsafe or unsanitary conditions and demolish or rehabilitate the dwelling unit pursuant to the provisions of . . . the PHFL [New York State's Private Housing Finance Law, known as Mitchell-Lama Law], the Housing New York Program Act, or . . . [the] National Housing Act . . . ." (RSC § 2524.5 [a] [3].) Petitioner has not alleged that he seeks to eliminate unsafe conditions and demolish or rehabilitate the premises. Nor have respondents alleged in their motions to dismiss that petitioner is seeking to eliminate unsafe conditions and demolish or rehabilitate the premises.

Thus, none of the three sections that trigger DHCR preapproval applies here.

III. The Number of Apartments an Owner May Recover

The second issue is whether the law limits the number of apartments an owner may recover for personal or family use. Given statutory language, legislative intent, and appellate and Civil Court, Housing Part, authority, this court finds that no limit exists in an owner's use proceeding if the owner proves good faith. Owners who can prove their good faith may recover possession of one, more than one, or all apartments for personal or family use.

A. Statutory Language

The RSC foresees the possibility that an owner may regain as little as one apartment and as many as all apartments. The Code provides that an owner may seek to recover, for personal or family use, possession "of a housing accommodation." (RSC § 2524.4 [a] [emphasis added].) The Code also provides that "one of the individual owners of any building, whether such ownership is by joint tenancy, tenancy in common, or tenancy by the entirety [, shall be permitted] to recover possession of one or more dwelling units for personal use and occupancy." (Id. § 2524.4 [a] [3] [emphasis added].) [*7]

The Rent Stabilization Law [Administrative Code of City of NY] [RSL] § 26-511 (c) (9) (b), like the Rent Stabilization Code, also comes into play in owner's use cases. RSL § 26-511 (c) (9) (b) provides that an owner may seek "to recover possession of one or more dwelling units for his or her own personal use and occupancy as his or her primary residence in the city of New York and/or for the use and occupancy of a member of his or her immediate family as his or her primary residence in the city of New York." [Emphasis added.] Section 26-511 (c) (9) (b) "only permit[s] one of the individual owners of any building to recover possession of one or more dwelling units for his or her own personal use and/or for that of his or her immediate family." [Emphasis added.] RSL § 26-511 (c) (9) (b) allows one owner to recover one or more apartments for personal or family use.

The Rent Stabilization Law and the Rent Stabilization Code are consistent with one another. The phrase "one or more" apartments means a minimum of one and a maximum of all. The Legislature's use of "a" in RSC § 2524.4 (a) and "one or more" in RSC § 2524.4 (a) (3) and RSL § 26-511 (c) (9) (b) means that an owner who can prove good faith may take one, more than one, or all apartments.

The Legislature has not created a limit on the number of apartments an owner may recover for personal or family use. The Legislature has, however, created limitations in other situations. The law limits the number of apartments an owner may recover for a business purpose. An owner who plans to recover the premises for a business purpose may recover "any or all housing accommodations." (RSC § 2524.5 [a] [1] [i].) The law also limits the number of apartments an owner may recover if governmental agencies have imposed code violations on the premises and the cost of removing the violations would equal or exceed the value of the premises. In that event an owner may recover "any or all housing accommodations." (RSC § 2524.5 [a] [1] [ii].)

The Legislature has also created limitations on who may recover a housing accommodation and which classes of tenants may not be easily evicted. Before 1983, multiple owners had the right to regain property for personal use. The law now restricts to only one owner the right to take property for personal use. (Id. § 2524.4 [a] [3].) Since 1983, the Legislature has also protected tenants over the age of 62 and disabled tenants. (RSC § 2524.4 [a] [2].) These tenants may not be evicted unless the owner "offers to provide and, if requested, provides an equivalent or superior housing accommodation at the same or lower regulated rent in a closely proximate area." (Id.) These examples illustrate how the Legislature has sought to protect tenants in various situations. The Legislature has yet to cap, however, the number of apartments an owner may recover for personal or family use.

Until the Legislature limits the number of apartments or amount of space an owner may recover for personal or family use, this court must follow the law as it exists today.

B. Legislative Intent [*8]

The Legislature recently rejected a proposal to limit the number of apartments an owner may regain for personal or family use. This court need not consider legislative intent but will consider it to interpret statutory language. Although a statute's plain language is the best evidence of legislative intent, legislative history can help courts interpret statutory language. (E.g. Riley v County of Broome, 95 NY2d 455, 463-464 [2000].)

In February 2005, the New York State Assembly proposed to amend RSL §§ 26-408 (b) (1) and 26-511 (c) (9) (b). It proposed to allow an owner to recover "only one housing accommodation" for personal or family use. (2005 NY Assembly Bill A 03774.) It also proposed to allow an owner to recover "only one dwelling unit" for personal or family use. (Id.) These two proposals reflect that some Assembly Members sought to cap the number of apartments an owner may recover. But the Legislature never adopted these proposals to amend the Rent Stabilization Law to prohibit an owner to recover only one apartment for personal or family use. The Legislature's rejection of these proposals implies that the Legislature permits an owner to recover more than one, and even all apartments, for personal or family use.

C. Caselaw Authority

This court is bound to follow the authority from the Appellate Term, First Department, and to consider the persuasive authority from the Civil Court's Housing Part. These courts hold that an owner who proves good faith at trial may recover any and all apartments for personal or family use. No limitation as to space exists in an owner's use case.

1. Appellate Authority

Appellate authority provides in owner's use cases that no limitation exists on an owner who seeks to recover an apartment as long as the owner demonstrates good faith. This court must follow the appellate authority from the Appellate Term, First Department, in Sobel v Mauri (NYLJ, Dec. 12, 1984, at 10, col 1 [App Term, 1st Dept, per curiam]). The reason Sobel is binding is that this court must follow decisions from the Appellate Term, First Department—a court with the power to reverse New York County Housing Part decisions: "[A] lower court must follow a decision of an Appellate Term to which an appeal from the former lies." (Juniper Walk Condo. v Patriot Manag. Corp, 3 Misc 3d 748, 752 [White Plains City Ct 2004], citing 28 NY Jur 2d, Courts and Judges § 220.)

In Sobel, the landlord sought to recover one room in a five-story brownstone to create a sewing room. (See NYLJ, Dec. 12, 1984, at 10, col 1.) The landlord testified at trial that her ultimate goal was to recover the entire brownstone for herself. The Civil Court, Housing Part, ruled for the tenant after finding that the landlord was motivated by bad faith. The Housing Part found that the landlord sent mixed signals about her intentions for the brownstone's upper two floors. The landlord had originally intended to create a duplex on the upper two floors. The landlord abandoned her plan to create a duplex. At trial, the landlord testified that she did not intend to rent the upper two floor to any tenants and, instead, that she sought to occupy the entire [*9]brownstone for herself. The Housing Part also found that ample space existed elsewhere in the brownstone for the landlord to create a suitable sewing room. The tenant had testified at trial that another room on the fourth floor was larger, brighter, and more suitable for sewing than his six-foot-nine-inch by fourteen-foot room. The Housing Part further found that the landlord "ha[d] not sewn anything in a long time."

The Appellate Term reversed and found that the landlord acted in good faith. The Appellate Term explained that good faith is an " honest intention and desire' to gain possession of premises for one's own use." The owner's intent, the Appellate Term explained, "must be actual and genuine and not a subterfuge to remove occupant tenants, only to replace the premises on the market a short time thereafter." The Appellate Term noted that, in determining good faith, a court must look at the totality of facts.

The Appellate Term disagreed with the Housing Part's determination that the landlord's reason to seek possession of the apartment was insufficient to evict. The Appellate Term found that the landlord had no retaliatory motive. The Appellate Term found no evidence that the landlord sought "the tenant's ouster so she may replace him with another tenant who will pay a higher rent."

In formulating its holding, the Appellate Term wrote that it is

"not the province of the court to pass judgment upon the propriety of the use to which the recovered space will be put . . . . The Legislature has as yet placed no limitation upon the amount of space a given owner may regain for personal use . . . . The landlord should be permitted to occupy the space of her choosing as long as she can demonstrate that she is honestly intentioned. The facts here, in their totality, mitigate against the conclusion that the landlord is improperly motivated in refusing to continue the tenant's occupancy."

The Appellate Term's "no limitation" language in Sobel was central to its holding. The Appellate Term used the "no limitation" language to contradict the basis for the Housing Part's bad-faith determination. The Sobel court's "no limitation" language means that a landlord may choose to recover any and all apartments, on any floor or series of floors, regardless whether the apartment is the smallest or the largest in the building. As long as petitioner proves good faith at trial, therefore, he may recover four of the eight apartments for his family's use.

This court must follow the "no limitation" language from Sobel—binding appellate authority. Only two cases, Pultz I and II, discussed below, have interpreted Sobel's "no limitation" language as dictum. (See Pultz I, 2005 NY Slip Op 51238 [U], *6 n 8 , 2005 WL 1845635, at *11 n 8, 2005 NY Misc LEXIS 1624, at *6 n 8; Pultz II, NYLJ, Mar. 21, 2006, at 19, col 3.)

In Pultz I, Supreme Court noted that the holding in Sobel is that "a landlord may occupy the space of her choosing, even when for specialized purposes, as long as there is demonstrated [*10]an honest intention." (2005 NY Slip Op 51238 [U], *6 n 8, 2005 WL 1845635, at *11 n 8, 2005 NY Misc LEXIS 1624, at *6 n 8.) The Pultz I court found that the "no limitation" language was the Appellate Term's "observation," not a holding. (Id.) The Pultz I court noted that Sobel "suggest[ed] that piecemeal repossession was required under the statute." (Id. at *6, 2005 WL 1845635, at *4, 2005 NY Misc LEXIS 1624, at *6.) In Pultz II, Supreme Court agreed with Pultz I and reiterated that Sobel's "no limitation" language is dictum. (See Pultz, NYLJ, Mar. 21, 2006, at 20, col 2.)

This court respectfully disagrees. The Sobel court's "no limitation" language is its holding, not dictum. Dictum is "[a]ny statement, explanation, rationale, or observation not directly related or necessary to the outcome of the particular dispute before a court is not binding precedent." (London Terrace Towers, Inc. v Davis, 6 Misc 3d 600, 612 [Hous Part, Civ Court, NY County 2004].) Holdings are necessary to a decision and are binding. Dicta are not. As one judge articulated it concisely, "Holdings—what is necessary to a decision—are binding. Dicta—no matter how strong or how characterized—are not." (United States v Garcia, 413 F3d 201, 232 n 2 [2d Cir 2005, Calabresi, J., concurring]. The Appellate Term used the "no limitation" language to dispute the Housing Part's determination that the landlord was "improperly motivated." The "no limitation" language was central to the Appellate Term's determination, in reversing the Housing Part, that good faith motivated the landlord.

This court must follow Sobel. The Pultz II court noted that it was not constrained to follow the Appellate Term's Sobel opinion, even if Housing Court judges had repeatedly relied on the "no limitation" language. The Pultz II court noted that "[t]o the extent that any of the Housing court judges relied on the language in Sobel to find that defendants were entitled to recover possession of rent stabilized apartment units in the building for their personal use pursuant to Unconsol. Law 2524.4, this court is not constrained thereby." (NYLJ, Mar. 21, 2006, at 20, col 2.) This court agrees that the Pultz II court was not "constrained" to follow Sobel, an Appellate Term decision. The trial term of Supreme Court is equal to the Appellate Term of Supreme Court; neither may dictate to the other. (See e.g. 500 W. E. Ave. Owners, L.P. v NY St. Div. of Hous. & Community Renewal, 185 Misc 2d 179, 183 [Sup Ct, NY County 2000] [declining to follow Appellate Term].) On a question of New York law, Supreme Court must follow only Appellate Division and Court of Appeals decisions. Unlike Supreme Court, however, the Civil Court's Housing Part must follow the Appellate Term's authority. Courts must follow decisions from which their appeals lie, and Housing Part decisions are appealed to the Appellate Term. Pultz 11 properly declined to adhere to Sobel. This court has no similar prerogative.

Sobel is not the only binding opinion on point. In another decision, Proctor v Barns, the Appellate Term, First Department, affirmed a Housing Part decision involving landlords—husband and wife—who sought to occupy an entire building under RSC § 2524.4 (a). (2002 NY Slip Op 50215 [U], *2, 2002 WL 1291835, at *2, 2002 NY Misc LEXIS 622, at *2 [App Term 1st Dept, May 29, 2002, per curiam].) In allowing the landlords to evict, the Appellate Term found that they "genuinely intend[ed] to occupy the subject apartment as part of [*11]an overall, documented plan to utilize the brownstone building as a one-family residence." (Id.)

In light of Sobel v Mauri and Proctor v Barnes, petitioner may recover four of eight apartments if he proves at trial that he genuinely intends that his family occupy the apartments.

2. Civil Court Authority

Even if Sobel's "no limitation" language were dictum, and it is not, the language has been relied on in so many cases that it has become persuasive authority to which this court will defer. The Housing Part has found at least eight times that no limit exists on the amount of space an owner may recover if an owner has good faith. (See Economakis v Zambrano, Hous Part, Civ Ct, NY County, Oct. 26, 2005, Wendt, J., Index No. 67540/05, at 4; Economakis v Van Romaine, Hous Part, Civ Ct, NY County, Oct. 4, 2004, Lai, J., Index No. 61241/04, at 2; Economakis v Paddock, Hous Part, Civ Ct, NY County, Oct. 4, 2004, Lai, J., Index No. 61242/04, at 2; Economakis v Appleton, Hous Part, Civ Ct, NY County, Aug. 4, 2004, Lai, J., Index No. 108382/03, at 2; Delavan v Spirounias, NYLJ, March 14, 2001 at 19, col 5 [Hous Part, Civ Ct, NY County, Cavallo, J.]; Wong v Repass, NYLJ, Dec. 2, 1998, at 29, col 2 [Hous Part, Civ Ct, NY County, Hoffman, J.]; Canino v Fogel, NYLJ, Sept. 22, 1993 at 23, col 3 [Hous Part, Civ Ct, NY County, Wendt, J.], affd NYLJ, May 19, 1994, at 27, col 4 [App Term, 1st Dept, per curiam]; Tauber v Ruscica, NYLJ, Oct. 14, 1987, at 14, col 3 [Hous Part, Civ Ct, NY County, Tom, J.].) In these cases, discussed below in reverse chronological order, the Housing Part has consistently found that no limit exists on the amount of space an owner may recover for personal or family use. Not once has a Housing Part judge held otherwise.

In one opinion, the Housing Part noted that "[t]he Rent Stabilization Law and Code do not limit the number of units that may be recovered by an owner for personal use." (Zambrano, Index No. 67540/05, at 4.)

Other judges have cited and relied on Sobel's language to find that "[t]here is no limit on how much space a particular owner may regain for personal use." (Van Romaine, Index No. 61241/04, at 2; Paddock, Index No. 61242/04, at 2; Appleton, Index No. 108382/03, at 2; Delavan, NYLJ, March 14, 2001 at 19, col 5.) Citing and quoting Sobel, moreover, the Housing Part in Wong wrote that "[t]here is . . . no limitations as to the amount of space a given owner may regain for personal use." (NYLJ, Dec. 2, 1998, at 29, col 2 [permitting landlord to regain two apartments to create triplex for personal use].)

The Housing Part has also relied on Sobel in permitting owners to recover possession of apartments of their choice, even if it meant recovering the last remaining apartments in a building. In Canino v Fogel (NYLJ, Sept. 22, 1993 at 23, col 3, affd NYLJ, May 19, 1994, at 27, col 4 [App Term,1st Dept, per curiam]), the Housing Part allowed the owners to recover an apartment in their brownstone to create a "cohesive" home even though they already occupied a significant amount of space in the building. The Canino court quoted Sobel that "[t]he Legislature has as yet placed no limitation upon the amount of space a given owner may regain [*12]for personal use." (Id.) The Canino court found that "[h]ere, although petitioners already have a significant amount of space in their five story brownstone, they will not be able to use it effectively unless they recover respondents' apartment as well. This is certainly within their right." (Id.)

The Housing Part in Tauber v Ruscica permitted the owner to recover possession of the last two remaining apartments in a brownstone for personal use, after the owner recovered other apartments either through summary proceedings or by giving cash consideration to various tenants to leave. (See NYLJ, Oct. 14, 1987, at 14, col 3.) In rendering his decision, now-First Department Justice Tom wrote that "[t]he Rent Stabilization Law does not place a limitation upon the number of apartments an owner may recover for his or her personal use." (Id.)

Reliance on Sobel's "no limitation" language is appropriate, not merely because it is binding authority from the Appellate Term, but also because the judges of this court have unanimously relied on it.

D.Pultz v Economakis

Supreme Court in Pultz I and II has recently addressed the two issues raised in this proceeding. Supreme Court has required an owner to seek DHCR approval before bringing an owner's use case in the Housing Part and has limited the number of rent-stabilized apartments an owner may recover possession. Both parties argue whether Pultz I and II have any effect on this case.

A history of the Economakis line of cases is necessary to understand whether Pultz I and II apply. Between 2003 and 2005, landlords Catherine and Alistair Economakis (the "landlords") began ten holdover proceedings in the Housing Part to recover for their personal use rent-stabilized apartments in their five-story fifteen-unit brownstone in New York County. Several tenants agreed to vacate the apartments voluntarily. By litigating the issues through motion practice and discovery, other tenants challenged the landlords from recovering possession of their apartments. The Honorable Peter M. Wendt and the Honorable Lydia C. Lai issued decisions finding that no limitation exists on the amount of space an owner may recover if the owner demonstrates good faith. (See Zambrano, Index No. 67540/05, at 4; Van Romaine, Index No. 61241/04, at 2; Paddock, Index No. 61242/04, at 2; Appleton, Index No. 108382/03, at 2.)

While many of these holdover cases were being litigated in Housing Court, five

other tenants who lived in the brownstone commenced an action against the landlords in Supreme Court on October 19, 2004, by order to show cause for a preliminary injunction tolling the nonrenewal notices they received, staying enforcement of the notices, and staying the commencement of any future summary proceedings that might be brought against them in the Housing Part. Two of the five tenants had received nonrenewal notices from the landlords. The remaining three tenants' leases had not yet expired. The tenants sought a declaratory judgment that the landlords' plan to convert the brownstone to a single residence for personal use violated [*13]the Rent Stabilization Law and Code, a permanent injunction, and attorney fees. The landlords cross-moved to dismiss. In Pultz I, Supreme Court found that for the tenants to prevail on a motion for injunctive relief, they must demonstrate a likelihood of success on the merits, that they will suffer irreparable injury if the relief is not granted, and that the equities favor them. (See 2005 NY Slip Op 51238 [U], *2, 2005 WL 1845635, at *2, 2005 NY Misc LEXIS 1624, at *2.)

The Pultz I court granted the preliminary injunction and denied the landlords' motion to dismiss. The Pultz I court recognized that preliminary injunctions in housing matters are disfavored and that the Civil Court's Housing Part is the proper forum to resolve residential landlord-tenant disputes. The Pultz I court noted that "[o]nly where Civil Court is without authority to grant the relief sought should the prosecution of a summary proceeding be stayed." (Id.)

In considering the proof for injunctive relief, the Pultz I court found that the landlords' plan to convert the entire building into a one-family home was incompatible with the Rent Stabilization Code's intent to provide New York City residents with affordable, stable housing. (See id. at *9, 2005 WL 1845635, at *6, 2005 NY Misc LEXIS 1624, at *9.) The court recognized that the Code allows an owner to recover an entire building for personal or family use but that the Code "cannot be read as permitting a tenement apartment building to be rid of an entire rent roll of tenants who, given today's rental market, will never be able to find comparable housing in Manhattan, and perhaps not in the City." (Id.) The court further noted that the Code "must be interpreted in a way that prevents potential abuses" [by landlords] to give a remedy to "punish greedy or unethical landlords." (Id.)

After the case was transferred to another judge, the landlords moved in Pultz II for summary judgment to dismiss the complaint, and the tenants then cross-moved for summary judgment on their first and second causes of action. The Pultz II court denied the landlords' summary-judgment motion but granted the tenants' summary-judgment motion. The Pultz II court found that the landlords "violated the Rent Stabilization Law and Code by unilaterally attempting to withdraw the entire building from the rental market without first obtaining permission from the DHCR." (NYLJ, Mar. 21, 2006, at 20, col 3.) The Pultz II court noted that it would not "usurp the role of the DHCR . . . upon submission of a proper application, whether a landlord under the circumstances that may be demonstrated might recover possession of an entire building." (Id. at 20, col 4.) The Pultz II court also found that rent stabilization is designed to address the critical housing shortage and supply affordable housing to tenants.

On these policy grounds, the Pultz II court chose to apply RSC § 2524.5 instead of RSC § 2524.4 because the landlords had intended to take all the apartments off the rental market. The Pultz II court found that if the landlords "fully execute their recovery plan, the building will contain no rent stabilized apartment units . . . . That loss . . . falls afoul of the directive in the Rent Stabilization Code . . . with due regard for the preservation of regulated rental housing." (Id. at 20, col 2.) The Pultz II court found unpersuasive the landlords' statutory-construction [*14]argument that RSC § 2524.4 applies. (Id.) The Pultz II court additionally found unpersuasive the landlords' argument that Sobel, along with later Housing Part cases, places no limit on how much space a landlord may recover. (Id.)

The Pultz II court granted the tenants a permanent injunction preventing the landlords from canceling or terminating the leases until the landlord proceeded to DHCR. (See id. at 20, col 4.) The Pultz II court noted that if the landlords obtained DHCR preapproval to "end one or more of plaintiffs' rent stabilized tenancies and/or to recover possession of the entire building and permanently remove it from the rental market," they could reapply to lift the injunction. (Id.)

The remaining Economakis cases pending in the Housing Part have been stayed since Pultz II.

Respondents argue that Pultz I and II apply to this case. (See Respondents' Memorandum of Law, Apr. 7, 2006, at Point I.) Using the same language from Pultz I, respondents argue that this court cannot permit the landlords "to be rid of an entire rent roll of tenants who given today's rental market will never be able to find comparable housing in Manhattan and perhaps not in the City. (Id.) Respondents argue that this court should apply RSC § 2524.5 (a) to determine that petitioner needed DHCR preapproval before bringing these proceeding in the Housing Part. (Id.) Conversely, petitioner asserts that the Pultz II court misread RSC § 2524.5 (a) (1) in applying it to an owner's use case. (See Petitioner's Memorandum of Law, Apr. 6, 2006, at 2.) The basis for the Pultz II court's decision, petitioner argues, was its reliance on the Rent Stabilization Law's purpose—to ameliorate the housing shortage—rather than the statute's plain meaning. Petitioner urges this court not to follow Pultz II.

An argument can be made that Supreme Court in Pultz II had no jurisdiction essentially to reverse Judge Wendt, who decided in Zambrano (Index No. 67540/05, at 4) that no limitation exists on the amount of space an owner may recover possession for personal or family use—that only the Appellate Term may do so. (See e.g. Matter of Maddox v Milin, 2006 NY Slip Op 50814 [U], *3, 2006 WL 1222367, at *2, 2006 NY Misc LEXIS 1065, at *6 [Sup Ct, NY County, Apr. 28, 2006] ["The appropriate remedy to review any claimed error in a Civil Court order or judgment is through the appellate process."], citing NY Const Art. 6 § 8; 22 NYCRR §§ 640.1 and 730.1 [b]; McGuire v Spires, 214 AD2d 402 [1st Dept 1995].) Leaving aside that argument, this court respectfully disagrees on the merits with the reasoning behind Pultz I and Pultz II.

The Pultz I court feared that if landlords recover all apartments in a building, "greedy or unethical landlords" will abuse their rights under the statutes and tenants would have no remedies. But the Rent Stabilization Code already offers tenants safeguards from greedy and unethical landlords. Judges have the opportunity at trial to assess a landlord's credibility and demeanor to decide whether the landlord has a good-faith basis to recover an apartment for personal or family use. A landlord who proves good faith at trial but who fails to use the apartment for the purpose intended or to occupy the apartment for three years will forfeit the right to increase the legal regulated rent. (RSC §§ 2524.4 [a] [5] and 2524.4 [b] [2]. If an owner fails without good cause to use the apartment for the purpose intended, the former tenant may [*15]commence a case against the owner. (RSC § 2524.4 [b] [3].) The owner might then be responsible for treble damages, attorney fees, and costs. (Id.) The DHCR also has the authority to impose a fine, penalty, or assessment on any owner who violates any provision of the RSC and RSL. (RSC § 2526.2.) These protections, built into the Code, reduce the possibility that landlords will abuse tenants' rights, and they provide tenants with protective and remedial measures.

This court also respectfully disagrees with Pultz II. Supreme Court found that RSC § 2524.5 applies when a landlord seeks "to withdraw any or all housing accommodations" from the rental market, whereas RSC § 2524.4 applies when a landlord seeks to recover possession of "one or more dwelling units." (NYLJ, Mar. 21, 2006, at 20, col 1.) This reading contravenes the Code's plain language. DHCR preapproval is unnecessary under RSC § 2524.4 (a) in personal or family-use cases. The Code addresses when a landlord withdraws any or all apartments from the rental market and the withdrawal is for a business purpose or is because agencies have imposed code violations on the building. None of these circumstances existed in Pultz II. The landlord in Pultz II did not seek to withdraw the apartments from the rental market for a business purpose. Nor did the landlord in Pultz II seek to withdraw the apartments from the rental market because agencies had imposed code violations on the premises.

This court further disagrees with Pultz II's conclusion that if the landlords obtained DHCR approval, they could reapply to lift the injunction. Owners will rarely be able to satisfy DHCR requirements intended for cases other than owner-use proceeding. Owner's use cases are not about demolishing buildings or about eliminating inadequate, unsafe, or unsanitary conditions.

Were this court to accept that RSC § 2524.5 applies in owner's uses cases when an owner seeks to withdraw all apartments from the rental market, then owners would have to seek approval from DHCR before commencing every owner's use proceeding in the Housing Part. To accept that proposition would grant DHCR the exclusive pre-jurisdiction over owner's use cases. If this were the law, the parties involved in an owner's use proceeding would be deprived of their rights. For tenants, irrelevant will be the current requirements that owners timely serve nonrenewal and termination notices, that owners prove their good-faith intent to use the apartment for themselves or their families, that only human owners and not corporate entities can take over an apartment to live there, and that owners who promise to use the apartment for themselves or their families and then fail to do so will be penalized. The public will also forfeit the opportunity to have a court of record rather than an administrative agency hold a trial: Supreme Court in Article 78 proceedings will review only in limited fashion DHCR determinations, and the Housing Part will be compelled routinely to authorize and compel evictions, without questioning DHCR's orders, merely upon proof that the petition and notice of petition were properly served and that the paperwork is sufficient.

IV. Conclusion [*16]

This court need not look into petitioner's good-faith intentions now. Whether petitioner will use these four apartments for his family will be explored at trial. Petitioner at trial may recover the apartments if he establishes, among other things, a good-faith intent to occupy each apartment for his family's use. (See Mandell v Cummins, NYLJ, July 25, 2001, at 18, col 4 [Hous Part, Civ Ct, NY County], citing Nestor v Britt, 213 AD2d 255 [1st Dept 1995, mem] and Powers v Babic, 177 AD2d 432 [1st Dept 1991, mem].) An issue at trial will be whether petitioner's family has an "honest intention" to use and occupy the apartments. (Axelrod v Duffin, 154 Misc 2d 310, 313 [App Term, 1st Dept 1992, per curiam], quoting Rosenbluth v Finkelstein, 300 NY 402, 405 [1950].) Petitioner's intent must be genuine. (Asco Equities, Inc. v McGoldrick, 285 App Div 381, 385 [1st Dept], aff'd 309 NY 738 [1955]; Smilow v Ulrich, 11 Misc 3d 179, 186 [Hous Part, Civ Ct, NY County 2005].)

Respondents' motion to dismiss is denied. The proceeding is adjourned for all purposes to June 5, 2006.

This opinion is the court's decision and order.

Dated: May 31, 2006

J.H.C.