Kee Yip Realty Corp. v Wolinsky
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Kee Yip Realty Corp. v Wolinsky 2004 NY Slip Op 30347(U) September 13, 2004 Supreme Court, New York County Docket Number: 0112985/2003 Judge: Walter B. Tolub Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. [* 1] MOTlONlCASE IS RESPECTFULLY REFERRED TO JUSTICE FOR THE FOLLOWING REASONIS): .. 5 - *z I D 3 $ 2 - 3 - I .z z P P 3 [* 2] SUPREME COURT OF THE STATE O F NEW YORK COUNTY OF NEW YORK: I A S PART 15 X KEE YIP REALTY CORP., Index No. 112985/03 Plaintiff, -againstSARAH WOLINSKY, "JOHN DOE" and "JANE DOE", Defendants. KEE YIP REALTY C O R P . , Plaintiff I Index No. 112986/03 -againstBEN REDDY, JAMES HOLLIS a/k/a JAMES DAWSON-HOLLIS, " J O H N DOE" and "JANE DOE", Defendants. X KEE YIP REALTY CORP., Plaintiff, Index No. 112987/03 -against- ' CQiQ~;-;.' "Q . : f I* KEE Y I P REALTY CORP., i t I *% Plaintiff, -againstMARIO M. FLORES, JOHN SANTIAGO, BRIAN CUNNINGHAM, "JOHN DOE" and "JANE DOE", Defendants. ~ Index No. ' '%%988/0S [* 3] WALTER B. TOLUB, J.: Motions under Index Nos , 112985/03 ("Action One"), 112986/03 ("Action Two"), 112987/03 "Action Three"), and 1 1 2 9 8 8 / 0 3 ("Action Four"), are consolidated f o r disposition. Plaintiff Kee Yip Realty Corp., ("Kee Yip") moves for an order, pursuant to CPLR 3215 [a], granting default judgment on t h e first cause o f action in Action One through Action Four, seeking award of possession of the defendants' lofts, building 135 Grand Street, New Y o r k , New Y o r k including all possession, and forthwith. persons a writ or entities claiming located in its (the "Premises"), under them any of execution or warrant of eviction In addition, Kee Yip seeks an order compelling defendants to refile their motions s e e k i n g dismissal of Kee Y i p ' s second and third causes of action or alternatively, to interpose an answer to the second and third causes of action. Defendants S a r a h Wolinsky, Ben Reddy, Steve L e e and Mario Flores (collectively "tenants-defendants") cross-move f o r an order restoring their p r i o r motions to dismiss the second and third causes of action, pursuant to CPLR 3211 [a] [ 5 ] , on the ground they are barred by res judicata/collateral estoppel. BACKGROUND The salient f a c t s giving rise to the four separate actions - consolidated herein f o r disposition of their identical motions - are set out in the p r i o r order of this C o u r t , and the affirmance by the Appellate Division, First Department and the New 2 [* 4] I York Court of Appeals AD2d (m,Wolinsky et al., v Kee Y i p Realty, 302 327, 756 NYS2d 515, a f f i r m e d 2 N Y 3 d 487, 7 7 9 NYS2d 812). In brief, the tenants-defendants entered into commercial leases between J u l y 1997 and June 1998 for the rental of raw loft space on the second through seventh f l o o r s of the Premises. leases provided The for monthly rental payments of approximately $1,700.00. The tenants-defendants renovated their rentals at their expense and converted the loft space for personal residential use. As noted in the record there is no residential certificate of occupancy for the building and Kee Yip made no attempt to obtain a variance or other relief from the zoning r e s t r i c t i o n . With the expiration of their commercial leases approaching, the tenants-defendants collectively commenced a p r i o r declaratory action ( u n s k v v Kee Yip Realty , Index No., 1 3 5 2 3 1 / 2 0 0 0 ) seeking injunctive relief and a declaration that they were protected by the Rent Stabilization Law and Rent Stabilization Code through the ETPA. Kee Yip Realty moved for summary judgment. On or about July 9, 2002, this Court granted summary judgment to Kee Yip and dismissed the proceeding on the ground that ETPA was inapplicable and that the ETPA did not provide a mechanism for converting commercially-zoned property to residential use and the tenants-defendants could not legalize their conversions. Judgment was entered on July 16, 2002. On or about February 27, 2003, the Supreme Court, Appellate Division, First Department affirmed and held that the tenants-defendants did not qualify 3 for rent stabilization [* 5] protection as the premises did not have a residential certificate of occupancy and were located in a zoning district permitting use o n l y for light manufacturing and joint living-work quarters for artists (d., AD2d 327, 756 NYS2d 515). The Appellate 302 Division a l s o declared that the tenancies were not covered by the ETPA, holding that the statute did not extend to tenancies that [were] illegal and incapable of becoming legal (302 AD2d 327, 328, 756 NYS2d 515). In t h e interim, Kee Yip commenced holdover proceedings in the New York C i t y Civil Court/Commercial Landlord Tenant Part against the tenants-defendants. In their answers, the tenants- defendants interposed affirmative defenses, among them, that the proceedings were improper. Hon. Karen S. Smith of the New Y o r k City Civil Court ordered a hearing to determine if the New York City Civil Court/Commercial Landlord Tenant Part had jurisdiction to hear the i s s u e s . After reviewing the testimony and documentary evidence, Judge Smith determined that Kee Yip acquiesced in the tenants-defendants intent to reside on the subject premises, although the respective leases clearly provided that their uses were limited to mixed commercial and artists. Accordingly, Judge Smith dismissed the proceedings on jurisdictional grounds, finding that the h o l d o v e r proceedings could n o t be brought in the New York City C i v i l Court/Commercial Landlord Tenant Part where it was plainly evident that the s u b j e c t premises were used for residential purposes (citinq, UBO Realty Corp. v MoIlica, 175 Misc2d 897, 673 NYS2d 507, a f f d 257 AD2d 460, 683 NYS2d 5 3 2 ; Ten B e Or Not Ten Be, 4 [* 6] Inc., v Dibbs, NYLJ 6/12/85 p 11 col 4, a f f d 117 A D 2 d 1 0 2 8 4 9 9 NYS2d 5 6 7 ; Zada Assoc v Seven, NYLJ 2 / 1 / 0 1 , p 28 c o l 3 1 ) . In or about July 2003, K e e Yip commenced the above separate, but related four actions against the tenants-defendants and undertenants after termination of their respective leases. Kee Yip pleads four causes of action: (1) removal of the tenantsdefendants and immediate possession of the premises on the ground that they are not subject to rent control, rent stabilization or the EPTA; (2) use and occupancy of $1,800.00 a month to be measured from February 1, 2000 as to tenants-defendants in Action One; use and occupancy of $1,700.00 a month to be measured from February 1, 2000 as to tenants-defendants in Action Two; u s e and occupancy of $1,900.00 a month to be measured from January 1, 2000 exception to payment of $ 9 0 0 . 0 0 ) , (with as to tenants-defendants in Action Three; and use and occupancy of $1,900.00 a month to be measured from January 16, 2000 as to tenants-defendants in Action Four; (3) payment of a portion of water and sewer charges and real estate taxes; and (4) payment of costs, disbursements, including reasonable attorneys' fees incurred by Kee Yip in the four separate, but related actions. The complaints were served on the tenants-defendants in the four actions on or about July 21, 2003 Ex B ) . (see, Notices of Motion, However, on or about August 6, 2003, tenants-defendants' attorney confirmed in writing his agreement to waive any objections to personal jurisdiction and the plaintiff's agreement to consent to tenants-defendants' t i m e to answer the complaints. The time to 5 [* 7] answer was extended to September 2, 2003 (u., Ex C). On or about August 29, 2003, tenant-defendants served p l a i n t i f f with their motion for an order dismissing the plaintiff s second and third causes of action on the ground that they were barred by res judicata/collateral estoppel (u., x E D). By decision and order, dated March 15, 2004, this Court denied the motion without prejudice to renew pending disposition of the tenants-defendants appeal to the New York Court of Appeals. This Court specifically held that the action was stayed pending the issuance of a decision by the C o u r t of Appeals [Dec., & (a.,E Ex Ord., 03/15/04]). On or about June 8, 2004, the New York C o u r t of Appeals affirmed t h e Appellate Division and held that the tenants were not entitled to protect their conversions under the ETPA (2 NY3d 487, 779 NYS2d 812). The Court of Appeals concluded that ETPA protections are not available as the Premises are situated in an M1-5B zoning district and use was limited to light manufacturing and joint living-work space for artists. In view of the C o u r t of Appeals affirmance, Kee Yip now moves for default judgment on the first cause of action. tenants-defendants CEOSS The move to dismiss the second causes of action f o r use and occupancy and the third causes of action for water, sewage and real estate taxes. Plaintiff s motions for default judgment are denied. There can be no default in view of the p a r t i e s mutual agreement to 6 [* 8] extend the time to answer, coupled with the stay issued by this Court pending the decision by the Court of Appeals. In view of the disposition of that appeal, the stay is hereby lifted. The tenants-defendants are now on notice that they shall forthwith serve their respective answers to the complaint no later than seven (7) days of the service of a copy of this order. The decision to engage in the limited motion practice shall not entitle them to move on an alternative ground to dismiss, pursuant to CPLR 3211 [e], in order to delay the service of an answer (Ouyang v J e n g , 2 6 0 A D 2 d 6 1 8 , 6 8 9 NYS2d 1 7 5 [one motion rule permits a party to move to dismiss cause of action only once upon one or more of the grounds enumerated in rule governing such motions J ; Schwartzman v W e i n t r a u b , 5 6 AD2d 5 1 7 , 3 9 1 NYS2d 416). The tenants-defendants cross motions for an order dismissing the second and third causes of action on the ground of res judicata/collatesal estoppel are also denied. The tenants- defendants successfully demonstrated before Judge Smith that plaintiff improperly commenced the commercial proceeding because the Premises were being used by them as residences and not for commercial use. There is no dispute that a summary proceeding in the Civil Court Commercial Landlord-Tenant Part encompasses the recovery of possession of real property, removal of tenants, and rendering judgment for rents due (CCA 5 204; Subkoff v Broadway-13th ASSOCS., 139 Misc2d 176, 176, 527 NYS2d 1 4 7 , citinq P o s t v 1 2 0 E . End A v e . Corp., is well settled that 62 NY2d 19, 28, Court Civil 7 has 4 7 5 NYS2d 821 [ It jurisdiction over [* 9] landlord-tenant disputes encompassed in summary proceedings and that when it has the power to decide the dispute, it is desirable that it should do"]). Here, however, Judge Smith never entertained the issues of use a n d occupancy or water, sewage and real estate taxes. In fact, Judge Smith f o u n d no jurisdiction to determine the issues as it was plain the tenancies were not solely commercial. reasoning was that jurisdiction of the New Her York City Civil Court/Commercial Landlord Tenant part was limited to commercial tenancies. Thus, plaintiff did not have the opportunity to litigate the issues of use and occupancy and sewage, water and real estate tax before Judge Smith. Its claims were never brought to a final conclusion in the hearing before Judge Smith as she did not allow plaintiff to raise them nor did she address them ( b u t see, O ' B r i e n v C i t y of Syracuse, 5 4 N Y 2 d 353, 357, 445 NYS2d 687). Moreover, it is noted that the tenants-defendants have remained on the Premises, but have not paid rent for years. It is ironic that they continue to reside on the Premises in view of the prior order of this Court and the affirmance that followed, and not expect a demand for use and occupancy. The history of litigation between the parties demonstrates beyond cavil that the tenantsdefendants knew, or should have known, by the very terms of their leases as well as surrounding conditions that their occupancies were illegal (see, Kolodny 06/30/04 Opposition to Cross Motion, Ex E [Dec., ' 8 Affirm., & in Reply Ord., Smith, J.,]; and see [* 10] also, Lipkis v Pikus, 96 Misc2d 581, 409 NYS2d 598, affd., 99 Misc2d 518, 416 NYS2d 6 9 4 ; affd., 72 AD2d 697, 421 NYS2d 8 2 5 ; appeal d i s m . , 51 NY2d 874, 433 NYS2d 1 0 1 9 ) . Here, the parties were content with their arrangement until the plaintiff decided to terminate the leases. The tenants-defendants should not be permitted to reap benefits of occupancy and at the same time avoid payment of rent. The doctrine of res judicata/collateral estoppel does not apply. Plaintiff's motions are denied without prejudice to renew. The cross-motions are denied. Plaintiff shall forthwith serve a copy of this order upon tenants-defendants' attorney. In turn, the tenants-defendants shall serve their answer within seven (7) days of the service of a copy of this order. Counsel for the parties on all four cases shall a p p e a r for preliminary conferences at I.A. Part 15, Room 335, 60 Centre St., New Y o r k , NY on October 22, 2004 at 11:OO a.m. This memorandum opinion constitutes the decision and order of the Court. Dated: 9 /,J/ o y ,/ Ad A - \ HON. WALTER B. TOLUB, J . S . C . FSCED
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