City of New York v City Oases, LLC

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[*1] City of New York v City Oases, LLC 2015 NY Slip Op 51459(U) Decided on October 2, 2015 Supreme Court, New York County d'Auguste, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 October 2, 2015
Supreme Court, New York County

The City of New York, Plaintiff,


City Oases, LLC, et al., Defendants.


Appearances of Counsel *

Attorney for Plaintiff, City of New York:

Mayor's Office of Midtown Enforcement

Attn: Martin I. Nagel, Special Assistant Corporation Counsel

1 Centre Street

Room 1012N

New York, NY 10007

Attorney for Defendants Hamid Kermanshah a/k/a Abdolhamid Kermanshah, Abdolmajid Kermanshah a/k/a Majid Kermanshah, Wilshire Limited, and Rahman NY Inc.:

Schulte Roth & Zabel LLP

Attn: Barbara Reid, Esq.

919 Third Avenue

New York, NY 10022

*The remaining defendants are either pro se or unrepresented.
James E. d'Auguste, J.

Defendants Mina Guirguis and Szilvia Patkos have each filed a motion seeking dismissal of the instant action, and plaintiff The City of New York (the "City") has filed a cross-motion seeking a default judgment against defendant City Oases, LLC ("City Oases"). The motions to dismiss are denied and the City's cross-motion for a default judgment is granted.

In the motions to dismiss, the moving defendants challenge the legal sufficiency of the City's complaint, which factually sets forth in detail the illegal conversion of two separate building locations into illegal short-term hotels, along with advertisement of their availability as short-term rentals on over a dozen websites.[FN1] Not only has the City adequately stated a cause of [*2]action, but the Court has examined the various arguments raised by defendants and find them to be without merit. For instance, defendants take issue that the City imposes more stringent fire safety standards for transient dwellings than it requires for permanent residential dwellings. Such a requirement, however, is based upon a common sense approach that regular transients residing in dwellings will be less familiar with a particular building and the means to safely exit in the event of an emergency when compared with long term residents. In the end, it is not for individuals or companies that wish to provide lodging on a commercial basis to ignore local safety laws and regulations because they deem them to be a burden, but instead to follow them.

Indeed, this is the result previously reached in an analogous nuisance abatement proceeding before this Court. In that litigation, the Hon. Arthur F. Engoron stated the following in response to similar arguments as to those raised by the defendants in the within action:

According to an old legal adage, with many variations, "If the law is against you, pound the facts; if the facts are against you, pound the law; if they both are against you, pound the table." Here, plaintiff has defendants "dead to rights." In response to plaintiff's overwhelming avalanche of evidence that defendants' acts violate the Consumer Protection Law and constitute a public nuisance, defendants have opted to pound the table (they do not claim that they are not doing what plaintiff alleges, and they do no more than quibble with plaintiff's interpretation of the law). Their main contentions (this Court has considered all the others and found them unavailing) are (1) that some of their operations are actually legal; (2) that they are changing their ways, "laying the groundwork to be the future leader of the 30-day and over New York City apartment rental business"; (3) that plaintiff is using strong-arm, "Police-State," "stop-at-nothing" tactics . . . to "rid" New York City of Smart Apartments; (4) that they are not committing a "public" nuisance; (5) that defendant['s] acts are shielded by the corporate veil; (6) that only the Commissioner of Consumer Affairs can bring an action for a violation of the Consumer Protection Law; and (7) that plaintiff is engaged in "selective enforcement," inasmuch as an enterprise called "Airbnb" (probably denoting "air [travel] bed and breakfast") operates on a much larger scale and heretofore has not been targeted because New York City Mayor Michael Bloomberg owns 88% of Bloomberg LP, which "is a major financial investor in the venture capital fund Andreessen Horowitz, which, in turn, has an investment of approximately one hundred million dollars in Airbnb," and that "while Airbnb markets its vast inventory of illegal short term rentals, the Mayor's Office is using all of its power to try and bully Smart Apartments' occupants and completely eliminate it as a possible competitor."

City of New York v. Smart Apts. LLC, 39 Misc 3d 221, 227-28 (Sup. Ct., NY County 2013) (Engoron, J.). The Court finds Justice Engoron's analysis to be highly persuasive and adopts it as such. Accordingly, the motions to dismiss are denied.

In regard to the City's motion for a default judgment against City Oases, its application is granted. As a limited liability company, City Oases is required to be represented by counsel. It was originally represented by an attorney, but this attorney has previously been permitted to withdraw as counsel. At this juncture, as City Oases has neither served an answer nor has it served a valid motion to dismiss, as it is currently unrepresented by counsel. Since City Oases is in default and, upon a review of its submissions, the City has demonstrated an entitlement to a default judgment against this defendant, the cross-motion seeking a default judgment is granted. Accordingly, the Clerk is directed to enter a default judgment against City Oases, without costs.

This constitutes the decision and order of this Court.

Dated: October 2, 2015


A.J.S.C. Footnotes

Footnote 1:While irrelevant in deciding a motion to dismiss, the Court notes that the defendants admit, while attempting to minimize the number of instances, to having rented out rooms "for short term stays as well." Guirguis Aff., ¶ 4.