Sez Holdings LLC v Jerome Ave. Car Wash & Lube Inc.
Annotate this CaseDecided on July 17, 2017
Civil Court of the City of New York, Bronx County
Sez Holdings LLC, Petitioner-Landlord
against
Jerome Avenue Car Wash and Lube Inc., Respondent-Tenant, JOSE REYES Individually and d/b/a JR FLAT TIRES, "John Doe" and "XYZ Corp" Respondent-Undertenant
LT - 900314/17
MARK S. FRIEDLANDER, Esq.
Attorney for Petitioner
15 Maiden Lane, Suite 2000
New York , New York 10038
212.962.2877
JOANNE PISANO, Esq.
Attorneys for Respondent
Jerome Car Wash and Lube Inc.
1250 Central Park Avenue
Yonkers, New York 10704
914.423.8912
EMMANUELLI & PILOTTI
By: Dean Emmanuelli, Esq.
Attorneys for Reyes/Undertenants
1188-A Grand Concourse
Bronx, New York 10456
718.992.8042 NOVICK EDELSTEIN ET AL
By. Gregory Bougopoulos, Esq.
Attorney for E & A (Courtesy Copy)
733 Yonkers Avenue
Yonkers, NY 10704
914.375.0100
Sabrina B. Kraus, J.
BACKGROUND
This summary holdover proceeding was commenced by SEZ HOLDINGS LLC (Petitioner) and seeks to recover possession of 1251 Jerome Avenue, Bronx, New York 10452 (Subject Premises), based on the allegation that JEROME AVENUE CAR WASH AND LUBE INC.(Respondent) the tenant of record is in breach of numerous obligations under its lease. JOSE REYES(Reyes) individually and d/b/a JR FLAT TIRES is an undertenant in occupancy of the Subject Premises.
PROCEDURAL HISTORY
The Petition is dated February 13, 2017, and proof of service was filed February 21, 2017. Respondent and Reyes have both appeared by counsel. Both Petitioner and Respondent have entered into a stipulation of settlement (Stipulation), dated February 28, 2017, wherein Respondent consented to the entry of a final judgment of possession, and forthwith issuance and execution of the warrant of eviction.
On or about April 4, 2017 Reyes appeared herein by counsel and asserted an answer denying allegations in the petition, and asserting ten affirmative defenses including lack of subject matter jurisdiction, failure to name a necessary party and related claims.
On April 4, 2017, E & A Holdings Inc, a third party alleging the right to occupy the Subject Premises, made a motion seeking to dismiss for failure to name a necessary party, for a stay of this proceeding pending the disposition in Sez Holdings LLC v Magic Quick Lube, Inc. Under Index Number 26479/2015 in Bronx County Supreme Court, and for leave to intervene as a respondent in this proceeding (Motion Seq. 1).
On April 19, 2017, Petitioner moved for an order directing Reyes to pay past and prospective use and occupancy (Motion Seq. 2).
On May 25, 2017, the parties appeared before Judge Rivera, who adjourned the motions to June 7, 2017, and issued on order on Petitioner's application for interim use and occupancy, directing Reyes to pay $18,000.00 in use and occupancy by May 30, 2017, without prejudice to the claims of either side.
On June 7, 2017, both pending motions (Seq. 1 & 2) were submitted to Judge Dominguez, who reserved decision.
Pursuant to a decision and order dated June 22, 2017, the court (Dominguez, J) stayed both motions, as well as the parties' request to so-order the Stipulation, pending the disposition of [*2]the Bronx Supreme Court Case.
On June 29, 2017, the Bronx Supreme Court issued a decision and order on pending motions holding in relevant part that E & A Holdings Inc has "no present possessory interest in leases to 145 and 1251 Jerome Avenue...".
THE PENDING MOTION
On June 7, 2017, Petitioner moved for an order striking Reyes' pleading pursuant to CPLR § 3126, based on the allegation that Reyes had submitted a falsified document in connection with the use and occupancy motion submitted to Judge Dominguez.
On July 11, 2017, the parties appeared before this Court to argue the motion. At that time, no decisions had been issued by Judge Dominguez on the other two pending motions. At the suggestion of Judge Dominguez, this motion was referred to her for determination.
On July 13, 2017, Judge Dominguez issued an order providing that "E & A's motion to intervene in this proceeding is denied."
On July 14, 2017, Judge Dominguez elected, upon further reflection, not to accept the referral of the pending motion and referred it back to this Court for determination. This Court reserved decision on the motion effective July 14, 2017.
For the reasons stated below, Petitioner's motion to strike Reyes' answer is denied.
CPLR § 3126 provides that if a party "... willfully fails to disclose information which the court finds ought to have been disclosed ... the court may make such orders with regard to the failure ... as are just ..." including an order striking pleadings (CPLR § 3126(3)).
Generally, this is applied in the context of discovery disputes, but it has also been held applicable to situations in which a party commits conduct that constitutes a fraud on the court [CDR Creances S.A.S. v Cohen 23 NY3d 307 (2014)].
The nonoffending party must establish by clear and convincing evidence that the offending 'party has acted knowingly in an attempt to hinder the fact finder's fair adjudication of the case and his adversary's defense of the action' (McMunn, 191 F Supp 2d at 445, citing Skywark v Isaacson, 1999 WL 1489038, 1999 US Dist LEXIS 23184,[SD NY, Oct. 14, 1999, No. 96 Civ 2815 (JFK)], affd 2000 WL 145465, 2000 US Dist LEXIS 1171 [SD NY, Feb. 9, 2000]). A court must be persuaded that the fraudulent conduct, which may include proof of fabrication of evidence, perjury, and falsification of documents concerns "issues that are central to the truth-finding process" (McMunn, 191 F Supp 2d at 445). Essentially, fraud upon the court requires a showing'that a party has sentiently set in motion some unconscionable scheme calculated to interfere with the judicial system's ability impartially to adjudicate a matter by improperly influencing the trier or unfairly hampering the presentation of the opposing party's claim or defense' (McMunn, 191 F Supp 2d at 445, quoting Aoude, 892 F2d at 1118).CDR Creances S.A.S. v. Cohen at 320—21.
Striking a party's pleading on this basis has been held to be a severe sanction akin to "... civil procedure's version of the death penalty ... (Supplementary Practice Commentaries, 2015, Patrick Connors)" and an "extreme remedy" that should only be exercised with restraint (CDR Creances SAS v Cohen at 321).
In this case, Petitioner alleges that Reyes has falsified a sublease in order to prevent the court from appropriately determining the issues on the pending use and occupancy motion. Specifically, Petitioner alleges that the document was altered to reflect that Petitioner agreed to the alleged sublease by Respondent to Reyes (Ex E).
At the outset, the court notes that no finding has been made that the document is falsified and Petitioner asks this court to make that determination based on the motion papers. Given that this is a disputed issue of fact, said determination can not be made on motion papers, and would require a hearing in order to afford Reyes a full and fair opportunity to be heard prior to any such determination [Five Towns College v Citibank, N.A. 108 AD2d 420 (holding alleged forgery is an issue of fact not subject to determination by motion)].
Additionally, the issues regarding the alleged fraudulent determination were fully briefed in the use and occupancy motion that is sub judice before Judge Dominguez. Judge Dominguez can determine whether she feels any of the submissions to her are sanctionable.[FN1]
Moreover, a claim for interim use and occupancy against an undertenant in a summary holdover proceeding is not what this court would consider "central to the substantive issues in the case (CDR Creances SAS v Cohen at 321 citing Rezende v Citigroup Global Mkts 2011 WL 1584603 [SDNY])."
The main issue in this proceeding is whether Petitioner has a right to take back possession of the Subject Premises as against Respondent. Use and occupancy is only incidental to the underlying claim for possession. Moreover, in this case Reyes as a subtenant really has no independent claim to make as against Petitioner, particularly in light of the judgment of possession to which Respondent agreed in the underlying stipulation of settlement.
It is well settled that:
The rights of a person whose claim to possession derives from the lessee are subordinate and are extinguished by a judgment of possession in favor of lessor. Due process requires only that, for the warrant to be effective against a subtenant, licensee or occupant, he be made a party to the proceeding, either by naming him and serving him with the petition and notice of petition or by joining him as a party during the pendency of the proceeding.[170 West 85th Street Tenants Association v Cruz 173 AD2d 338, 339-40 (1st Dept., 1991)].
As Petitioner's claim for interim use and occupancy as against Reyes is ancillary to the central issue of Petitioner's claim of possession as against Respondent, which has already been resolved by the parties' Stipulation, the court does not find the alleged fraud is central to the issue to be determined in this proceeding.
Based on the foregoing, the motion to strike Reyes' answer pursuant to CPLR § 3126 is denied. The denial is without prejudice to any determinations made by Judge Dominquez on the motion pending before her, and without prejudice to any motion for sanctions pursuant to Part 130.
This constitutes the decision and order of this court.
Dated: July 17, 2017
Bronx, NY
_________________________
Hon. Sabrina B. Kraus
JCC Footnotes
Footnote 1:"Apart from CPLR 3126, a court has inherent power to address actions which are meant to undermine the truth seeking function of the judicial system and place in question the integrity of the courts and our system of justice (CDR Creances SAS v Cohen at 318)."
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