303 W. 122nd St. HDFC v Hussein
Annotate this CaseDecided on March 19, 2013
Civil Court of the City of New York, New York County
303 West 122nd Street HDFC, Petitioner/Landlord,
against
Lavord W. Hussein, Respondent/Tenant.
82515/2012
Jack Stoller, J.
303 West 122nd Street HDFC, the petitioner in this proceeding ("Petitioner"), commenced this holdover proceeding against Lavord W. Hussein, the respondent in this proceeding ("Respondent"), seeking possession of 303 West 122nd Street, No.67, New York, New York ("the subject premises"), on the ground that Respondent did not renew her lease. The Court held a trial in this matter on January 31, 2013.
At trial, Petitioner proved that it is a proper party to commence this proceeding and that the subject premises has been properly registered with the Department of Housing Preservation and Development of the City of New York ("HPD") as a multiple dwelling. Petitioner also proved, by a deed and by testimony, that it is a Housing Development Fund Corporation ("HDFC"), established pursuant to Article XI of the Private Housing Finance Law.
Petitioner proved, and it was not disputed, that Respondent has had a long-term tenancy at the subject premises. Respondent herself testified that she commenced occupancy of the subject premises in 1980, prior to the conversion of the building in which the subject premises is located to an HDFC. Respondent did not purchase shares in the HDFC, but remained a tenant therein.
Petitioner proved at trial, and Respondent did not dispute, that after residing at the subject premises for many years without a lease, and paying a monthly rent of $650.00, Petitioner offered Respondent a lease that would have commenced on August 1, 2012 with a monthly rent of $1,250.00. Evidence adduced from both parties demonstrates that Respondent did not execute the lease, objecting that the proposed monthly rent represented an excessive increase.
Petitioner's cause of action sounds in contract. The predicate notice to the petition alleges that Respondent's failure to execute the renewal lease breached a condition of her tenancy, and offered Respondent an opportunity to cure by executing the renewal lease. The nature of claim in which one party alleges a breach in a condition of a tenancy of the other party generally sounds in contract. Compare Solow v. Wellner 86 NY2d 582, 589-90 (1995), Fasal v. La Villa, 2 Misc 3d 137A (App. Term 1st Dept. 2004), Fucile v. LCR Dev., Ltd., 2011 NY Slip Op. 32256U (Dist. Ct. [*2]Nassau Co. 2011). Moreover, a tenant's failure to execute a renewal lease is curable. 210 Realty Assocs. v. O'Connor, 302 AD2d 396 (2nd Dept. 2003), 67 8th Ave. Associates v. Hochstadt, 88 AD2d 843 (1st Dept. 1982), Baja Realty, Inc. v. Karoussos, 120 Misc 2d 824, 825 (App. Term 1st Dept. 1983), 270-274 8th Ave., LLC v. Bakal, 34 Misc 3d 158A (App. Term 2nd Dept. 2012). An opportunity of an occupant of a dwelling to remain in the dwelling by curing a breach presupposes an extant landlord/tenant relationship. See RPAPL §753(4).
Unconscionable contractual provisions are not enforceable. An unconscionable contract is generally defined as one which is so grossly unreasonable as to be unenforceable according to its literal terms because of an absence of meaningful choice on the part of one of the parties ("procedural unconscionability") together with contract terms which are unreasonably favorable to the other party ("substantive unconscionability"). Lawrence v. Miller, 11 NY3d 588, 595 (2008). A condition of a landlord/tenant relationship that affords a landlord the sole discretion to set the rent in the exercise of an option to renew a lease is unenforceable as unconscionable when the rent increase is excessive in a commercial landlord/tenant context. Tai on Luck Corp. v. Cirota, 35 AD2d 380, 381 (1st Dept. 1970), leave to appeal dismissed, 29 NY2d 747 (1971).
Petitioner argues that it is permitted to propose the rent increase that it did (which amounts to a 92% increase) because it is not subject to Rent Stabilization. Petitioner is correct that a nonprofit cooperative corporation organized under Article XI of the Private Housing Finance Law is statutorily exempt from Rent Stabilization. 546 W. 156th St. HDFC v. Smalls, 43 AD3d 7, 11 (1st Dept. 2007), 512 E. 11th St. HDFC v. Grimmet, 181 AD2d 488, 488-489 (1st Dept. 1992), appeal dismissed, 80 NY2d 892 (1992). The subject premises, however, is not like other unregulated tenancies, according to which a landlord may commence an eviction proceeding upon no cause other than the expiration of the tenancy. RPL §232-a. A government agency fixes the rentals of HDFC's, Private Housing Finance Law §576(1)(a); availability of units to occupants is assured within certain income guidelines, Private Housing Finance Law §576(1)(b); and the use of profits is restricted, Private Housing Finance Law §576(1)(c). These restrictions on the operation of the cooperative underscore a level of governmental involvement with the subject premises sufficient to trigger constitutional due process protections. 512 E. 11th St. HDFC, supra, 181 AD2d at 489. Accordingly, eviction of a tenant from such a cooperative "requires a cause other than mere expiration of the lease." Id., Volunteers of America-Greater New York, Inc. v. Almonte, 65 AD3d 1155, 1157 (2nd Dept. 2009), Hudsonview Terrace v. Maury, 100 Misc 2d 331, 332 (App. Term 1st Dept. 1979). These restrictions even apply to tenants who take possession after an HDFC has taken title to the property and they also apply when the City's approval for the commencement of a holdover proceeding is not required. 330 South 3rd St. HDFC v. Bitar, 28 Misc 3d 51, 54 (App. Term 2nd Dept. 2010).
Petitioner in this proceeding did state a cause other than mere expiration of the lease for the relief it seeks herein: Respondent's failure to execute a renewal lease Petitioner offered. Such conduct is a ground upon which to terminate tenancies subject to other regulations that require cause to evict tenants. See, e.g., 9 N.Y.C.R.R. §2524.3(f) (a failure to renew a rent-stabilized lease is a ground for the termination of a tenancy), 24 CFR §982.310(d)(1)(i), 1801 Weeks Ave. Inc. v. Crawford, 182 Misc 2d 251, 256 (Civ. Ct. Bronx Co. 1999) (a failure by a tenant to accept an offer of a new lease or revision constitutes good cause to terminate a tenancy with a federally-subsidized voucher pursuant to 42 USC §1437f, known as "Section 8").
[*3]
However, tenancies subject to both Rent Stabilization and Section 8 are regulated to insure that rent increases pursuant to renewal leases shall be affordable. See 9 N.Y.C.R.R. §2523.5(a) (rent-stabilized leases may be renewed at the legal regulated rent permitted for such renewal lease); 24 C.F.R. §5.628(a) (the share of a Section 8 tenant's rent is tracked to the tenant's income). A tenant's refusal to renew a lease so regulated can unjustifiably deprive a landlord of a reasonable increase in revenue while still maintaining an affordable dwelling for the tenant. The instant matter does not present such a situation. Respondent did not refuse to renew her lease out of pique or without justification, to Petitioner's detriment; she refused to renew the lease because it would have increased her rent by 92% in one fell swoop.
Permitting Petitioner to propose a rent increase such as the one it proposed to Respondent renders the proposition that it must have cause to terminate Respondent's tenancy meaningless. Any HDFC wishing to evade the requirement that it show cause to terminate a tenancy could effectively do so merely by offering a tenant a renewal lease with an extreme rent increase.
Moreover, an unconscionability doctrine broad enough to protect a commercial tenant from an excessive rent increase determined solely by a landlord upon the exercise of an option to renew a lease, Tai on Luck Corp., supra, 35 AD2d at 381, is also broad enough to protect a residential tenant of over thirty years from a provision of a landlord/tenant relationship that affords the landlord the discretion to raise the rent by 92%, particularly when the landlord could not otherwise terminate her tenancy upon mere expiration of her lease. No evidence was introduced at trial with regard to the reasonableness of the rent increase.
Accordingly, the Court dismisses the petition after trial.
The parties are directed to pick up their exhibits within 30 days or they will either be sent to the parties or destroyed at the Court's discretion and in compliance with DRP-185.
This constitutes the decision and order of this Court.
Dated:New York, New York
March 19, 2013
________________________________
HON. JACK STOLLER
J.H.C.
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