45-55 Realty LLC v Covin

[*1] 45-55 Realty LLC v Covin 2006 NY Slip Op 51234(U) [12 Misc 3d 1175(A)] Decided on June 21, 2006 Civil Court, Kings County Heymann, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 June 21, 2006
Civil Court, Kings County

45-55 REALTY LLC, Petitioner,

against

Marie Covin, Respondent.



53390/06

George M. Heymann, J.

Petitioner commenced this non-payment proceeding on 1/3/06 with the service of a Petition and Notice of Petition. A written demand for rent had previously been served on 12/30/05.

This matter first appeared on the Court's calendar on 3/1/06. It was thereafter adjourned to 3/24/06 and again to 4/19/06. On 4/19/06 that matter was adjourned to 5/3/06 and a post card was sent to the respondent who failed to appear on said adjourned date, whereupon a default judgment was entered. Respondent thereafter obtained the instant Order to Show Cause returnable on 6/16/06 and the matter was then adjourned to today, 6/21/06.

After an extensive argument on the record, it appears that there was a miscommunication between the parties and the Court regarding the 5/3/06 adjourned date and petitioner consented to the vacatur of the default judgment and warrant.

Although there is no longer a judgment in this matter, the allegation of outstanding rent arrears remains, which is further compounded by the respondent's refusal to sign her latest renewal lease which would have commenced on 8/1/05.

QUESTION PRESENTED

The issue, of which the parties are at loggerheads, is whether pursuant to a written stipulation the petitioner is required to offer ongoing renewal leases with a preferential rent throughout the duration of the respondent' tenancy.

FACTUAL BACKGROUND

At the inception of this tenancy, on 3/1/93, the respondent's initial rent was $600 per month with no preferential rent being given. Subsequent thereto the petitioner started offering renewal leases with a preferential rent. On 3/28/05, prior to the 7/31/05 expiration of the then current renewal lease in effect, the petitioner offered a new renewal lease which contained an MCI increase and no preferential rent. The respondent refused to sign that renewal lease and remains steadfast in her position that she is entitled to an ongoing preferential rent.

In 1998, the petitioner commenced a prior non-payment proceeding (Index # [*2]

L&T 10228/98) which resulted in the a "so ordered" stipulation on 3/15/00.[FN1] The stipulation provided, in relevant part, as follows: Parties to sign a new lease effective 8/99 - 2 years [FN2] T's rent will be at a preferential amount of $580 per mo. All T's increases will be taken off that amount LL may include legal rent + register at that amt.

DISCUSSION AND ANALYSIS

Petitioner contends that there is no language in the stipulation which specifically states that petitioner must give a preferential rent beyond the two year lease that the parties entered into as a result of said stipulation and that recent amendments to the Rent Stabilization Law (See, L2003, ch.82, §6) permits an owner to discontinue a preferential rent and to resume charging the legal regulated rent upon a renewal lease.

Respondent argues that the petitioner continued to give her a preferential rent in every renewal lease from 1999 through 2005 and failed to do so when he offered the current renewal lease for the period 8/1/05 through either 7/31/06 (1 year) or 7/31/07 (2 year). As a result the respondent refused to sign the renewal lease. On 11/28/05, the respondent filed a "Tenant's Complaint of Owner's Failure to Renew Lease..." with the Division of Housing and Community Renewal (DHCR) on the ground that the petitioner refused to offer "a renewal lease on the same terms and conditions as were contained in my expiring lease." To date, DHCR has not made any determination on this complaint.

The entire issue of the whether a preferential rent must be included in the current and future lease renewal between the parties hinges on the interpretation of the four sentences of the 3/15/00 stipulation, as set forth above.

Although at first blush it would appear that the petitioner is correct that there is no specific language that states that a preferential rent will continue in perpetuity, the phrase "All T's increases will be taken off that amount [preferential rent]" (emphasis added) must be given its natural meaning and, if there is any ambiguity, it must be resolved in favor of the respondent who did not draft the agreement. Clearly, the words "all" and "increases", which refer to the plural, cannot be limited to the one lease renewal that the parties agreed to enter into after the stipulation was signed in open court. If that was the intent of petitioner's substitute counsel then his or her vagueness in the draftsmanship, of not specifically stating that such preferential rent is for that lease only, must be construed to the contrary, especially with the inclusion of the words "all" and "increases" in reference to the preferential rent.

Notwithstanding the language of RSL §26-511(c)(14) which enables a landlord to renew a lease without a preferential rent, exceptions have been carved out in those instances [*3]where the parties have negotiated an agreement that allows for a preferential rent to " endure beyond the terms of the lease into renewal periods' (Aijaz v. Hillside Place, LLC , 8 Misc 3d 73, 76 [2005])." Colonnade Management, LLC v. Warner, 2006 NY SlipOp 26055 (AT 1). See, also, Matter of Century Operating Corp.v. Popolizio, 60 NY2d 483; Matter of Missionary Sisters of Sacred Heart Ill v. DHCR, 283 AD2d 284, 724 NYS2d 742 (AD 1st Dept., 2001); 782 PPS Corp. v. Rodriguez, NYLJ, 6/1/01, p.22, col.4 (Civ. Ct., Bronx, Heymann, J.); 448 W 54th St. Corp v. Doig-Marx, 5 Misc 3d 405, 784 NYS2d 292, aff'd 11 Misc 3d 126A (AT1, 2006).

While it is the opinion of this Court that the question of the perpetual preferential rent in the case at bar should be favorably disposed towards the respondent based on the contents of the 3/15/00 stipulation, since this matter is currently pending before the DHCR, the forum chosen by the respondent prior to the commencement of the instant proceeding, the Court will not render any formal decision in this regard and will defer to the DHCR in determining whether the petitioner must continue to provide a preferential rent to the respondent and for what period of time, i.e.: for the duration of the respondent's tenancy, and to determine the Legal Regulated Rent (LLR).

In the interim, pending a DHCR determination, the respondent is directed to continue paying her rent, without prejudice, in the amount of $707.13 per month. That amount is based on the prior renewal leases in effect since the 3/15/00 stipulation, calculated as follows:

On 3/16/00, the parties entered into a renewal lease for a 2 year period from 8/1/99 - 7/31/01. The lease provided for a LLR of $642.72 with a 4% increase of $25.71 for a total of $668.43 with a preferential rent in the amount of $580 "as per court stip".

On 1/3/02, the respondent signed a 2 year renewal lease for the term 8/1/01 - 7/31/03. The LRR was $668.43 with a 6% increase to $708.53 less an adjustment of $93.73 for a preferential rent of $614.80

On 7/31/03, the respondent signed another 2 year lease expiring on 7/31/05. This was the last renewal lease that the respondent entered into with the petitioner. The LRR was $708.53 with a 4% increase for a total of $736.87 less an adjustment of $93.73 for a preferential rent of $643.14.

On 3/28/05, the respondent was sent a new renewal lease for the period 8/1/05 - 7/31/06 or 7/31/07 at respondent's option. This renewal did not contain any rent adjustment and the respondent has since refused to sign it. The unexecuted renewal lease provides for a LRR of $751.99 (which is comprised of the expiring LRR of $736.87 plus an additional Major Capital Improvement (MCI) charge of $15.12 as per a DHCR order dated 10/28/04 [Docket #

SH 230094 OM] plus a 6.50% increase for a new LRR of $800.86.

For the purposes of this proceeding, pending the outcome of respondent's complaint with DHCR, the Court, in it's discretion, is subtracting the amount of $93.73, as previously given to the respondent in the last executed renewal lease, which results in the amount of $707.13

Accordingly, the respondent's motion is granted to the extent of vacating the default judgment and warrant and directing the respondent to pay her monthly rent in the amount of $707.13 commencing 7/1/06 and continuing until such time as the DHCR renders its decision pertaining to the issue of preferential rent and establishing a new LRR if different from that calculated herein.

The respondent is further directed to provide a copy of this Decision / Order to the [*4]DHCR and to request an expedited hearing / adjudication on her complaint.

The Court respectfully requests the DHCR to conduct an expedited hearing /adjudication of this matter upon receipt of this Decision / Order.

This proceeding is hereby marked "off calendar" pending restoration by either side, if necessary, after a final determination by the DHCR.

This constitutes the decision and order of the Court.

Dated: June 21, 2006 GEORGE M. HEYMANN, JHC

Footnotes

Footnote 1: On 3/15/00, the attorney of record for the petitioner was not present in court as she was giving birth that day to her first born child and another attorney who was standing in for her drafted the stipulation on the petitioner's behalf.

Footnote 2: As a result of this stipulation, the commencement and expiration dates of respondent's tenancy were changed to 8/1 and 7/31, respectively, for all subsequent renewal leases.