1412 Broadway LLC v Great White Bear, LLC

[*1] 1412 Broadway LLC v Great White Bear, LLC 2007 NY Slip Op 52525(U) [18 Misc 3d 1121(A)] Decided on November 21, 2007 Civil Court Of The City Of New York, New York County Jaffe, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 November 21, 2007
Civil Court of the City of New York, New York County

1412 Broadway LLC, Petitioner-Landlord,

against

Great White Bear, LLC, Respondent-Tenant,



85993/07



For petitioner:

Cathy O'Donnell, Esq.

Calabro & Associates, P.C.

1412 Broadway, Suite 1504

New York, NY 10018

646-688-6095

For respondents:

Matthew W. Greenblatt, Esq.

Greenblatt & Agulnick, P.C.

1 Barstow Road, Suite P20

Great Neck, NY 11021

718-352-4800

Barbara Jaffe, J.

By pre-answer notice of motion dated September 26, 2007, respondents move pursuant to CPLR 3211(a)(7) for an order dismissing the instant commercial holdover petition upon the ground that it fails to state a cause of action. By notice of cross-motion dated October 5, 2007, petitioner opposes the motion and moves pursuant to NYCRR 130-1.1 for an order awarding it sanctions as against respondents and their counsel.

I. BACKGROUND

On August 20, 2007, petitioner served respondents with a three-day notice of cancellation of the lease and notice to quit by August 31, 2007 based on respondents' allegedly chronic failure [*2]to pay rent and additional rent between July 2006 and April 2007 pursuant to the governing lease, a stipulation dated March 14, 2007, and a court order dated April 25, 2007. On September 7, 2007, petitioner commenced the instant proceeding by serving on respondents a notice of petition and petition alleging that respondents held over after petitioner terminated their tenancy pursuant to the termination notice.

II. MOTION TO DISMISS

A. Facts

Respondents' principals went to the office of petitioner's counsel on August 30, 2007 and tendered a check for September 2007 rent, which she rejected as petitioner had already served respondents with the three-day notice. (Affirmation of Cathy O'Donnell, Esq., dated Oct. 5, 2007 [O'Donnell Aff.]). Respondents nevertheless, and without petitioner's knowledge, sent their check to what they knew was petitioner's lockbox. (Id.). The check was delivered to the lockbox on September 3, 2007, and on September 5, 2007, petitioner's bank deposited it without endorsement. (Affirmation of Matthew W. Greenblatt, Esq., dated Sept. 26, 2007 [Greenblatt Aff.], Exhs. B, C, D). Checks sent to the lockbox are neither forwarded nor picked up by petitioner, but are taken by the bank. (Affidavit of Navin Balraj, dated Oct. 5, 2007). Petitioner's agent denies having known of the check before September 6, 2007.(Id.).

Rather than return the check to respondents, petitioner applied it to August 2007 rent arrears, and by letter dated October 2, 2007, petitioner notified respondents that it had done so. (Id., Exhs. B, C).

B. AnalysisRespondents argue that the pleadings fail to state a cause of action, as petitioner vitiated the termination notice by accepting respondents' check after the date set forth in the termination notice and before it commenced its holdover proceeding. (Greenblatt Aff.). Petitioner denies having vitiated the notice of termination as it unknowingly received respondents' check through its lockbox, and asserts that, in any event, the check was credited to rent arrears accruing before service of the termination notice. (O'Donnell Aff.).

Although respondents concede that a landlord's acceptance of rent through a lockbox may not, in and of itself, vitiate a notice of termination, here, they claim that petitioner failed to establish that it promptly returned the check or explained its retention to them until a month after the deposit, thereby vitiating the notice. (Reply Affirmation of Matthew W. Greenblatt, Esq., dated Oct. 24, 2007 [Greenblatt Reply]).

Pursuant to CPLR 3211(a)(7), a party may move for an order dismissing one or more causes of action asserted against it on the grounds that the pleading fails to state a cause of action. On a motion to dismiss, the court must liberally construe the pleading, accept the facts as true as alleged, and accord the non-moving party the benefit of every possible favorable inference. (Leon v Martinez, 84 NY2d 83, 87 [1994]). Moreover, in analyzing whether the pleading states a cause of action, the court needs only to determine whether the facts as alleged fit within any cognizable legal theory. (Id.). When documentary evidence "flatly contradicts" the factual claims set forth in a cause of action, the presumption of truth of such claims and any favorable inferences arising therefrom are rebutted. (Scott v Bell Atlantic Corp., 282 AD2d 180, 183 [1st Dept 2001]).

Section 711(1) of the Real Property Actions and Proceedings Law (RPAPL) permits a petitioner to accept rent from a respondent after the commencement of a holdover proceeding. [*3]However, the petitioner's acceptance of rent during the period after service of a notice of termination and before the commencement of the proceeding (the window period) vitiates the predicate notices and nullifies the proceeding.(Gramercy Realty Co. v Smith, NYLJ, March 24, 1981, at 6, col 1 [App Term, 1st Dept]; Guy v Furman, 4 Misc 2d 564 [App Term, 1st Dept 1956]). The rationale for deeming the predicate notices vitiated in these circumstances is that "the acceptance of rent for a period after expiration of the notice sends the tenant a message contrary to that contained in the notice." (Assoc. Realties v Brown, 146 Misc 2d 1069, 1070-1071 [Civ Ct, New York County 1990]).

As a valid notice of termination is a condition precedent to the maintenance of a holdover proceeding (see 170 West 85th Street Tenants Assoc. v Cruz, 173 AD2d 338, 339 [1st Dept 1991]), its vitiation annuls the proceeding. (See Aaros Realty LLC v Clements, NYLJ, Feb. 18, 1998, at 28, col 5 [Civ Ct, New York County] [acceptance of rent after tenancy terminated and before commencement of holdover proceeding vitiated notice of termination and required dismissal of petition upon which proceeding based]).

The Appellate Term, First Department, has repeatedly ruled that a landlord's acceptance of rent through a lockbox does not prove that the landlord has knowingly and voluntarily accepted rent so as to waive its right to terminate the tenancy, especially when only one check is paid through the lockbox. (See 83rd St. Assocs. v Gourmet Wine & Spirits, Ltd., NYLJ, June 7, 1993, at 28, col 5 [App Term, 1st Dept]; Liant Record Co. v Newman, NYLJ, June 7, 1993, at 29, col 1 [App Term, 1st Dept]; Metropolitan Life Ins. Co. v Sucdad, NYLJ, Aug. 6, 1985, at 6, col 1 [App Term, 1st Dept]; Coronet Prop. Co. v Greenberg, NYLJ, Nov. 8, 1984, at 4, col 1 [App Term, 1st Dept]).

However, the landlord's retention of an inadvertently received rent check, even absent the lockbox, without immediately returning it or explaining the failure to return it immediately may be deemed an acceptance of the check and may result in the notice being deemed vitiated. (See 205 East 78th St. Assocs. v Cassidy, 192 AD2d 479 [1st Dept 1993], revg NYLJ, Sept. 27, 1991, at 21, col 4 [App Term, 1st Dept] [landlord's acceptance of rent check annulled termination notice where it neither explained inadvertent acceptance nor returned check]; Roxborough Apt. Corp. v Becker, 176 Misc 2d 503 [Civ Ct, New York County 1998] [landlord's receipt and retention of rent checks, and failure to return them or claim that receipt and retention was inadvertent, constituted acceptance sufficient to vitiate predicate notices]; Mannino v Figueroa, NYLJ, Nov. 22, 1995, at 31, col 1 [Civ Ct, Kings County] [petition dismissed where landlord put on notice and knowingly accepted rent checks and retained them for two weeks]).

Here, as the check was deposited on September 5, 2007, it was deposited during the window period. However, there was only one check and it was deposited through a lockbox, and given respondents' surreptitious attempt to gain a procedural advantage by mailing the check to the lockbox, I find that the check was never accepted by petitioner in such a manner as to negate its initial rejection. (See Berkeley Assocs. v Revere Garage Corp., NYLJ, Oct. 22, 1981, at 6, col 4 [App Term, 1st Dept] ["the creation of a landlord-tenant relationship should not be reduced to a matter of gamesmanship, seduction and artifice.").

Consequently, although petitioner waited a month before notifying respondents that it was applying the payment toward arrears, it did not waive its right to terminate the tenancy. (See [*4]eg See 83rd St. Assocs. v Gourmet Wine & Spirits, Ltd., NYLJ, June 7, 1993, at 28, col 5 [no waiver found where landlord tendered refund check within month after discovering error in accepting check through lockbox, and landlord had repeatedly advised tenant that it would not renew lease after it expired]; 170 East 77th 1 LLC v Berenson, 12 Misc 3d 1017 [Cit Ct, New York County 2006] [landlord's clear rejection of first rent check and ongoing dialogue about second check over period of few weeks did not constitute waiver]).That petitioner applied the payment to rent arrears does not change this result. (2 Dolan, Rasch's Landlord and Tenant - Summary Proceedings § 23:52 [4th ed] [after landlord gives notice of termination, it may accept rent for periods prior to termination without waiver of right to terminate]).

Based on these largely undisputed facts, I find that respondents have failed to establish that petitioner knowingly and willingly accepted respondents' September payment so as to vitiate the notice of termination.

III. MOTION FOR SANCTIONS

Pursuant to 22 NYCRR § 130 -1.1(c), a court may sanction a party for engaging in frivolous litigation, which includes conduct that is completely without merit in law, is undertaken primarily to delay or prolong the resolution of the litigation, or asserts material factual statements that are false.

As respondents set forth arguable and credible grounds for their motion and absent a factual basis for finding that the motion was filed primarily to harass petitioner or prolong the litigation, an award of sanctions to petitioner is inappropriate.

IV. CONCLUSION

Accordingly, respondents' motion to dismiss is denied. Petitioner's motion for an award of sanctions is also denied. The parties are directed to appear for trial on December 10, 2007, at 9:30 a.m., in Part 52, room 1166, 111 Centre Street, New York, New York.

This constitutes the decision and order of the court.

_______________________________

Barbara Jaffe, JCC

DATED:November 21, 2007

New York, New York