Lambert Houses Redevelopment Co. v Huff

[*1] Lambert Houses Redevelopment Co. v Huff 2012 NY Slip Op 50709(U) Decided on April 10, 2012 Civil Court Ot The City Of New York, Bronx County Lehrer, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 10, 2012
Civil Court ot the City of New York, Bronx County

Lambert Houses Redevelopment Company, Petitioner (Landlord),

against

Gregory Huff, Respondent (Tenant), "JOHN DOE" and "JANE DOE", Respondent (Occupants).



64956/11

Andrew Lehrer, J.

Petitioner Lambert Houses Redevelopment Company commenced this holdover proceeding against respondent-tenant Gregory Huff and respondent-occupants "John Doe" and "Jane Doe" in November 2011. The petition, which incorporates a notice to terminate dated October 11, 2011, alleges, among other things, that the subject apartment is not subject to Rent Control or Rent Stabilization because it is subject to the Section 8 regulations of the Department of Housing and Urban Development ("HUD") governing the Substantial Rehabilitation program, and that Mr. Huff has violated a substantial obligation of his tenancy, constituting material noncompliance with his lease, by maintaining an alternative residence in another apartment, which is subsidized by the New York City Housing Authority, and by failing to recertify and timely supply information pertaining to his household income, household composition, and other eligibility requirements for the years 2010 and 2011 "in that [he has] failed to disclose that [he] maintain[s] another residence."

In his answer, Mr. Huff, who is not represented by counsel, asserts a general denial and further alleges that he and his children live in the subject apartment.

The subject apartment is located in Lambert Houses East ("Lambert Houses"), a project-based Section 8 housing development.[FN1] Before moving into that apartment in August 2010 Mr. Huff and his daughter, who was seven years old at the time, resided in an apartment located in a subsidized public housing project operated by the New York City Housing Authority [*2]("NYCHA"). At the trial of this proceeding, petitioner's witnesses provided convincing evidence that through the date of trial, Mr. Huff had failed to surrender his tenancy at the NYCHA apartment and, in fact, had signed an "Occupant's Affidavit of Income" for that apartment on March 1, 2011; that he had continued to pay rent for the NYCHA apartment through June 2011; and that the lease he signed for his Lambert Houses apartment in July 2010 expressly states that that apartment must be his only place of residence. In addition, a Lambert Houses Occupancy Specialist testified that at the time Mr. Huff signed his lease she informed him that he could not have two apartments and that if he had another one, he had to move. Petitioner presented no evidence regarding the amount of time Mr. Huff spent in his Lambert Houses and NYCHA apartments or whether one or the other was his primary residence.

Mr. Huff did not deny that he had failed to surrender his tenancy at the NYCHA apartment. Rather, he testified that after his application for Lambert Houses was accepted he signed "stacks of paper" but never read them; that he was not aware from any of the documents he signed that he was not allowed to have two apartments; that no one at Lambert Houses ever told him that he was not allowed to have two apartments; that he is a single father with custody of his daughter and is in the process of adopting two more children; that he left his NYCHA apartment because it had only one bedroom (while his apartment at Lambert Houses has two); that all he has left in the NYCHA apartment is a bed; and that he was not given an opportunity to "correct the situation" before petitioner terminated his tenancy. In his closing argument, Mr. Huff admitted that it was wrong to have two subsidized apartments and asked for the chance to give up the NYCHA apartment.

With respect to Mr. Huff's alleged failure to recertify, petitioner offered into evidence a series of notices, which HUD requires owners to provide to tenants before they may be penalized for failing to comply with Lambert Houses' recertification requirements. One of petitioner's witnesses testified that an initial notice was provided to Mr. Huff on or about August 16, 2010. Another witness testified that a first reminder notice, dated April 1, 2011, was mailed to Mr. Huff on the following business day (which was April 4, 2011); that a second reminder notice, dated May 1, 2011, was mailed to him; and that a "Third Reminder Notice / Notice of Termination," dated June 1, 2011, was mailed to him by certified mail, return receipt requested. The third notice, however, was unclaimed by Mr. Huff and was returned to petitioner. The envelope containing that notice, which petitioner also offered into evidence, is postmarked June 7, 2011. The envelope contained a copy of the June 1st reminder notice and copies of the first and second reminder notices as well.

Mr. Huff did not dispute petitioner's claim that he failed to recertify in 2011 and did not say whether or not he received the initial notice in August 2010. However, he denied receiving the first, second, and third reminder notices and, during his cross-examination of one of petitioner's witnesses, pointed out that each of those notices was addressed to him at apartment 330.3N, not 3N.[FN2]

Discussion

[*3]Termination of Tenancy for Having a Second Place of Residence

Termination of tenancies in project-based Section 8 developments is governed by 24 CFR Part 247;[FN3] chapter 8, paragraphs 8-11 through 8-16, of HUD Handbook 4350.3 REV-1, entitled "Occupancy Requirements of Subsidized Multifamily Housing Programs ("HUD Handbook"); and the lease between the owner and tenant.

24 CFR § 247.3(a) provides that an owner may terminate a tenancy for (1) material noncompliance with the rental agreement; (2) material failure to carry out obligations under any state landlord and tenant act; (3) criminal activity or alcohol abuse by certain persons; and (4) other good cause. (See HUD Handbook Figure 8-2). "Material noncompliance" includes, among other things, "[o]ne or more substantial violations of the rental agreement." (24 CFR § 247.3[c][1]).

Paragraph 23 of Mr. Huff's lease describes the circumstances under which petitioner may terminate his tenancy. It includes "material noncompliance with the terms of this Agreement" as one of the grounds for termination, and its definition of "material noncompliance" includes "one or more substantial violations of the Lease."

At least one court has held that for buildings with project-based subsidies, an owner who seeks to evict a tenant for a substantial lease violation also must demonstrate that the violation "was a significant one — i.e., not a technical or a de minimis violation." (Greene Ave. Assoc. v. Cardwell, 191 Misc 2d 775, 786 [Civ Ct, Kings County 2002], quoting Matter of Park W. Vil. v. Lewis, 62 NY2d 431, 437 [1984]). Although Park West Village involved a Rent Stabilized apartment, and the Court of Appeals' determination that a significant violation be shown was based on "the legislative recognition of the plight of residential tenants residing in New York City," (62 NY2d at 436), given Congress' similar concerns regarding "the acute shortage of decent and safe dwellings for low-income families" (42 USC § 1437[a][1][A]), this court holds that to prevail in this proceeding petitioner must demonstrate that Mr. Huff's lease violation was a significant one.

Paragraph 13 of the Mr. Huff's lease provides that he "must live in the unit and the unit must be [his] only place of residence." By failing to surrender possession of his NYCHA apartment Mr. Huff maintained another residence and therefore has violated that lease provision. The Court now must consider whether that violation was a significant one.

Guidance for determining whether Mr. Huff's lease violation is sufficient to merit termination of his tenancy is found in the HUD Handbook. In a section dealing with program eligibility,[FN4] the Handbook provides that in order to be eligible for occupancy and housing assistance, "[t]he unit for which the family is applying must be the family's only residence." [*4](HUD Handbook, ch 3, ¶ 3-5[D]).[FN5] Given HUD's position that having only one residence is a key requirement for occupancy of a subsidized apartment, the Court finds that Mr. Huff's failure to surrender possession of his NYCHA apartment and his maintenance of a second residence there constitutes a significant violation of, and material noncompliance with, his lease.

Termination of Tenancy for Failing to Recertify

It is unclear whether petitioner also seeks to terminate Mr. Huff's tenancy for failing to recertify at all or only to the extent that he failed to disclose his other residence.[FN6] In either case, however, assuming that failure to recertify may be a ground for termination of tenancy in project-based Section 8 housing,[FN7] under the circumstances of this case, it may not be a ground for terminating Mr. Huff's tenancy.

In order to impose penalties on a tenant for failing to recertify, an owner must provide him with a number of very specific notices by very specific deadlines. (Cf. Diego Beekman M.H.A. v. Torres, NYLJ, Jan. 27, 2011, 1202479408447, at * 2 [Civ Ct, Bronx County][nonpayment proceeding involving termination of project-based Section 8 subsidy]). The failure to comply with those notice requirements renders termination invalid. (Cf. Starrett City, Inc. v. Brownlee, 22 Misc 3d 38 [App Term, 2d and 11th Jud Dists 2008][failure to comply with HUD Handbook notice requirements invalidates termination of Section 8 subsidy for failure to recertify]; Diego Beekman M.H.A. v. Torres, supra [failure to comply with HUD Handbook [*5]notice requirements bars collection of contract rent from tenant in project-based Section 8 apartment]; Clinton Towers Housing Co. v. Ryan, 26 Misc 3d 1229[A], 2010 NY Slip Op 50305[U][Civ Ct, New York County 2010][failure to comply with HUD Handbook notice requirements bars collection of market rent from tenant in project-based Section 236 apartment).Although the Court credits the testimony of petitioner's witnesses that all of the required notices were provided to Mr. Huff, it finds that three of those notices failed to include some of the information required by the HUD Handbook and that two of the notices were not sent in timely fashion. All three reminder notices fail to state the name of the staff person at the property to contact about scheduling a recertification interview, the contact information for that person, and how the contact should be made, and do not give the location, days, and office hours that staff will be available for recertification interviews, as required by HUD Handbook, ch 7, ¶¶ 7-7 (B)(2)(b)(2) and (3), 7-7(B)(3)(b), and 7-7(B)(4)(b)(1). Instead, the first two reminder notices instruct Mr. Huff to mail all required documents to Lambert Houses at a specified address and inform him that management office staff will contact him to arrange an appointment, while the third reminder notice instructs him to mail the documents to the same address but does not state that anyone will contact him to arrange an appointment. In addition, the first reminder notice was required to be provided to Mr. Huff "at least 120 days prior to the recertification anniversary date" (HUD Handbook, ch 7, ¶ 7-7[B][2][a]) and the third reminder notice was required to be provided "no later than 60 days prior to the anniversary date." (Id., ¶[B][4][a]). According to the 2010 "Owner's Certification of Compliance with HUD's Tenant Eligibility and Rent Procedures," the next recertification date thereafter was August 1, 2011. Therefore, the first reminder notice had to be provided no later than April 3, 2011 (which was a Sunday) and the third reminder notice had to be provided by June 2, 2011 (a Thursday). Here, petitioner's witness testified that she mailed the first reminder notice on the first business day after April 1, 2011, which was Monday, April 4th, one day past the deadline, and the envelope in which the third reminder notice was mailed is postmarked June 7, 2011, five days past the deadline. Because petitioner's notices failed to comply with HUD's requirements, neither Mr. Huff's tenancy nor his Section 8 subsidy may be terminated because of his failure to recertify.[FN8]

Whether Mr. Huff is Entitled to an Opportunity to Correct the Breach of His Lease

Section 753(4) of the RPAPL provides that where a proceeding is based upon a claim that the tenant has breached a provision of his lease, "the court shall grant a ten day stay of issuance of the warrant, during which time the respondent may correct such breach." Although the stay provision appears to be mandatory (see Post v. 120 E. End Ave. Corp., 62 NY2d 19, 27 [1984]), as petitioner correctly points out it "is not to be rotely applied in all cases." (Continental Towers Ltd. Partnership v. Freuman, 128 Misc 2d 680, 681 [App Term 1st Dept 1985]). Thus, for example, courts have refused to grant Section 753(4) stays in cases involving chronic rent delinquency (see Adam's Tower Ltd. Partnership v. Richter, 186 Misc 2d 620 [App Term, 1st [*6]Dept 2000]); profiteering from subletting Rent Stabilized apartments (see Matter of 151-155 Atl. Ave. v. Pendry, 308 AD2d 543 [2d Dept 2003]; Continental Towers Ltd. Partnership v. Freuman, supra, 128 Misc 2d 680]); and illegal alterations that caused lasting or permanent injury to the premises (see 259 W. 12th, LLC v. Grossberg, 89 AD3d 585 [1st Dept 2011]).

Petitioner argues that Mr. Huff should not be given an opportunity to cure his lease violation because he has two subsidized apartments; his failure to surrender one or the other has deprived one of the families on the NYCHA or Lambert Houses waiting lists of the opportunity to secure an affordable place to live; and his failure to advise Lambert Houses about his NYCHA apartment constitutes fraud. In support of its argument, it cites Continental Towers Ltd. Partnership v. Freuman, supra, 128 Misc 2d 680, and Matter of 151-155 Atl. Ave. v. Pendry, supra, 308 AD2d 543. In both of those cases, the courts refused to permit the Rent Stabilized tenants a post-judgment opportunity to cure where they had profited by substantially overcharging their subtenants. As noted in Continental Towers,

The integrity of the rent stabilization scheme is obviously undermined

if tenants, who themselves are the beneficiaries of regulated rentals,

are free to sublease their apartments at market levels and thereby

collect the profits which are denied the main landlord . . . This practice,

which the Rent Stabilization Law was designed to prevent, is not to be

condoned by permitting the tenant to remain after the fraud has been

found out.

128 Misc 2d at 681-682.

Although the Court strongly disapproves of Mr. Huff's failure to surrender his NYCHA apartment after securing a new one at Lambert Houses, it believes that his failure to do so does not undermine the integrity of the project-based Section 8 program at Lambert Houses and that, under the circumstances of this case, he is entitled to an opportunity to correct the breach of his lease. One of the examples of material noncompliance with the lease set forth in the HUD Handbook is "[e]xtended absence or abandonment of the unit . . ." (HUD Handbook, ch 8, ¶ 8-13[A][2]). While the Court finds that Mr. Huff's maintenance of a second apartment alone is sufficient grounds for terminating his tenancy, the above example suggests that the amount of time he spent in each apartment and his need for the apartment at Lambert Houses are factors to consider in determining whether to give him an opportunity to cure his lease violation.

Here, petitioner proved that Mr. Huff has retained his NYCHA apartment. However, it has not shown that it is his primary residence and that the Lambert Houses apartment is not, nor has it shown how much time Mr. Huff spends at either apartment. Given his unrebutted testimony that he has only a bed at the NYCHA apartment; that the apartment at Lambert Houses has two bedrooms while his NYCHA apartment has only one; and that, according to the Resident Ledger submitted in evidence by petitioner, he continued to pay his rent at Lambert Houses through December 2011 while, according to NYCHA's records, he last paid rent for the NYCHA apartment in June 2011, it is reasonable to assume that Mr. Huff and his now nine-year-old daughter primarily reside at Lambert Houses.

Additional reasons for giving Mr. Huff an opportunity to cure his lease violation by surrendering possession of his NYCHA apartment are that there is no evidence that he sublet [*7]either apartment for profit or otherwise; that petitioner has not shown that he is otherwise ineligible for his Lambert Houses apartment; and that NYCHA has referred his case for legal action based on his misrepresenting to it that he still resides in his NYCHA apartment.

Accordingly, the Court holds that Mr. Huff is entitled to a 10-day stay of issuance of the warrant of eviction pursuant to Section 753(4) of the RPAPL to afford him an opportunity to surrender possession of his NYCHA apartment.

Use and Occupancy

Petitioner seeks a final judgment in the amount of $7,000.00 for all use and occupancy due through February 2012. That amount reflects a rent of $863.00 per month, Mr. Huff's subsidized share, through July 2011 and a market rent of $1,143.00 per month from August 2011 through February 2012. According to petitioner, it is entitled to charge Mr. Huff market rent effective August 1, 2011 because of his failure to recertify by that date.

According to the Resident Ledger dated January 27, 2012, which reflects the market rent effective August 1, 2011, the rent due as of February 1, 2012 was $5,857.00, not $7,000.00. However, as noted above, petitioner is not entitled to charge the market rent because its recertification notices failed to comply with the requirements set forth in the HUD Handbook. See pages 6 - 8, supra. That being the case, assuming that Mr. Huff's rent remained at $863.00 per month, he owed $3,897.00 as of February 1, 2012.

Relief

For the reasons stated herein, the Court grants the petition to the extent of directing the Clerk of the Court to enter a final judgment of possession and money judgment in the amount of $3,897.00 in favor of petitioner and against Mr. Huff. However, issuance of the warrant shall be stayed for 10 days for Mr. Huff to pay the judgment amount and to correct his breach of the lease by surrendering possession of his NYCHA apartment. If Mr. Huff surrenders possession of that apartment, he shall promptly provide petitioner with proof that he has done so. In the event that Mr. Huff does not timely pay the judgment amount and surrender possession of the NYCHA apartment, the warrant may issue upon submission of an affidavit to that effect from petitioner, with proof of service on all respondents.

In addition, the Court directs the Clerk of the Court to enter a final judgment of possession in favor of petitioner and against respondents "John Doe" and "Jane Doe," subject to submission of non-military affidavits regarding them. If Mr. Huff timely pays the judgment amount and corrects his breach of the lease, issuance of the warrant shall be permanently stayed as to them. If he does not do so, the warrant against them may issue on or after the date that it issues against Mr. Huff.

This constitutes the decision and order of the Court.

Petitioner is requested to pick up its exhibits from Part T by April 27, 2011.

Dated:Bronx, New York

April 10, 2012

________________________________________ [*8]

Hon. Andrew Lehrer Footnotes

Footnote 1:Although the petition alleges that Lambert Houses is subject to the regulations governing the Section 8 Substantial Rehabilitation program, at trial petitioner presented no evidence regarding which project-based Section 8 program applied.

Footnote 2:Although Mr. Huff's lease and several other documents submitted in evidence by petitioner state that his apartment is 3N, the "Owner's Certification of Compliance with HUD's Tenant Eligibility and Rent Procedures" for 2010 refers to the unit number as 330 3N. The petition alleges that Mr. Huff's apartment is "3N a/k/a 330 3N."

Footnote 3:Part 247 is not applicable to certain project-based Section 8 developments, including those in the Substantial Rehabilitation program. (See 24 CFR § 247.2 [definition of "(s)ubsidized project"]). However, as noted above, petitioner failed to submit evidence with respect to what Section 8 program applies to Lambert Houses.

Footnote 4:Chapter 3 of the HUD Handbook is entitled "Eligibility for Assistance and Occupancy." Section 1 of that chapter discusses program eligibility and "describes the criteria by which the owner must determine whether a family is eligible to receive assistance." (HUD Handbook, ch 3, ¶ 3-1[B]). Section 2 of that chapter discusses project eligibility and "describes the criteria by which the owner must determine whether a family is eligible to reside in a specific property . . ." (Id.)

Footnote 5:With respect to a tenant's entitlement to assistance (as opposed to occupancy), the Handbook also provides that "[a]ssisted tenants must have only one residence and receive assistance only in that unit. This rule is meant to ensure that the government pays assistance on only one unit for a family and provides assistance to as many eligible families as possible with available funding." (HUD Handbook, ch 3, ¶ 3-10[A]). Although one court has held that the sole residence requirement set forth in the HUD Handbook pertains only to eligibility for assistance, and not for occupancy (see Turin Housing Development Fund Co. v. Maor, 1 Misc 3d 907[A], 2003 NY Slip Op 51554[U]

[Civ Ct, New York County 2003]), and that may be true with respect to paragraph 3-10(A), the first sentence of paragraph 3-5 of the Handbook expressly states that the key program eligibility requirements set forth therein, including the sole residence requirement contained in paragraph 3-5(D), apply to both "occupancy and housing assistance."

Footnote 6:As noted above, one of the grounds for terminating Mr. Huff's tenancy, as set forth in petitioner's notice to terminate, is that he failed to recertify and timely supply information pertaining to his household income, household composition and other eligibility requirements "in that [he has] failed to disclose that [he] maintain[s] another residence."

Footnote 7:Both Mr. Huff's lease and the HUD Handbook are unclear with respect to whether he may be evicted for failing to recertify. Paragraph 15(a) of the lease provides that if he does not timely submit the required recertification information, petitioner "may impose the following penalties . . . (1) [r]equire the Tenant to pay the higher, HUD-approved market rent for the unit [and] (2) [i]mplement any increase in rent resulting from the recertification processing without providing the 30-day notice otherwise required . . ." It does not state that eviction is a possible penalty. That being said, paragraph 23 of the lease provides that petitioner may terminate Mr. Huff's tenancy for material noncompliance, which includes "failure of the Tenant to timely supply all required information on the income and composition, or eligibility factors, of the Tenant household . . ." Similarly, although the termination of tenancy section of the HUD Handbook cites a tenant's failure to timely submit all required information on household income and composition as an example of material noncompliance with a lease, and therefore a ground for termination of tenancy (see HUD Handbook, ch 8, ¶ 8-13[A][1]), the recertification section of the Handbook indicates that only tenants residing in "Section 202 PRAC or Section 811 PRAC" projects may be evicted for failing to recertify. (See HUD Handbook, ch 7, ¶¶ 7-7 [B][2][b][7] and [B][4][b][3]).

Footnote 8:The content of the reminder notices provides an additional ground for finding that Mr. Huff's tenancy should not be terminated for his failure to recertify. Each of those notices states that if he fails to provide the required recertification information in timely fashion, his lease gives petitioner the right to terminate his assistance and charge him market rent; none provides that his tenancy may be terminated. Indeed, the third reminder notice states that if he does not timely provide the required information, his rent will increase and that his tenancy may be terminated "[i]f [he] fail[s] to pay the increased rent . . ."