Bonham Strand LLC v Paredes

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[*1] Bonham Strand LLC v Paredes 2017 NY Slip Op 27413 Decided on December 14, 2017 Justice Court Of The Town Of Greenburgh, Westchester County Orden, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and subject to revision before publication in the printed Official Reports.

Decided on December 14, 2017
Justice Court of the Town of Greenburgh, Westchester County

Bonham Strand LLC, Petitioner-Landlord,

against

Richard Paredes/LEONOR HILDA CARVAJAL (AKA) HILDA CARVAJAL, Respondents-Tenants.



17090685
Bonnie L. Orden, J.

On September 22, 2017, Petitioner-Landlord, the owner of a rent-stabilized apartment building, located at 2 Main Street, Dobbs Ferry, Town of Greenburgh, NY 10522, brought the instant holdover proceeding against Respondent-Tenants because respondents failed to sign a renewal lease before the termination of the current lease, which ostensibly ended on August 31, 2017. Respondents sought dismissal of the action due to landlord's failure to furnish respondents with a lawful renewal lease pursuant to the Rent Stabilization Code (RSC) and the rules and regulations promulgated thereunder.

The question presented here is whether landlord's renewal lease furnished to the rent-stabilized tenants was legal when, prior to tenants being permitted to renew their lease, landlord's lease required the advance payment of monies, which were the subject of a pending non-payment proceeding before the same Court. This Court holds that the furnished renewal lease was illegal, and, as such, the instant holdover proceeding is dismissed.

On November 1, 2017, this Court issued its decision on the Summary Judgment Motion in the non-payment proceeding between the same parties and that case was dismissed Bonham Strand LLC v Paredes, 2017 NY Slip OP 51532 (U) [Just Ct, Greenburgh, Westchester County, Nov. 1, 2017, Orden, J.]. Although there were numerous grounds upon which this Court ruled in favor of respondent-tenants, the salient rulings as they might pertain to the instant matter included: no rent was due petitioner; clauses of landlord's lease and riders were struck down as void due to unconscionability, such as late fees; lease rule violation damages were non-recoverable in a non-payment proceeding; and claims were erroneously classified as added rent, such as parking fees allegedly owed pursuant to a separate contract.

The instant holdover proceeding was heard by the Court on November 9, 2017, and respondents argued that based on this Court's ruling on the summary non-payment proceeding, Bonham, 2017 NY Slip OP 51532 (U), the holdover proceeding was moot. Petitioner argued that this Court has only limited jurisdiction and, as such, landlord did not have to provide a renewal lease to tenants without the upfront demand for payment, and that the Court was powerless to order the landlord to provide a lawful lease pursuant to RSC, the Emergency Tenant Protection Act (ETPA), [*2]the Division of Housing and Community Renewal (DHCR), and the rules and regulations promulgated thereunder.

After a review of the documents submitted and brief oral arguments by the parties, on November 9, 2017, this Court dismissed the instant holdover proceeding.

FACTS AND PROCEDURAL BACKGROUND

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According to the Notice of Petition in the case at bar, petitioner claimed that the respondents owed landlord $18,306.58 for rent, late fees, lease rule violations, and other fines and fees. When the instant action was filed, respondents' Motion for Summary Judgment on the summary non-payment proceeding included the same substantive claims, but had yet to be decided by the Court. These claims have since been decided. Bonham, 2017 NY Slip OP 51532 (U).

During the pendency of the non-payment proceeding, specifically, on July 13, 2017, after learning from the landlord that he intended to bring a holdover action if respondents failed to sign the renewal lease with the mandatory upfront payment requirement built into the lease, the Court instructed petitioner to submit a lawful renewal lease to respondents, consistent with tenant's rights under the Rent Stabilization Code. Petitioner was specifically directed to eliminate the requirement in the renewal lease that the tenants first pay landlord all monies that he believed he was entitled to since the legitimacy of the amounts claimed was the subject of the pending non-payment proceeding.[FN1] Further, the Court indicated that tenants did not have to sign the unlawful renewal lease as submitted, and until such time as a lawful renewal lease was submitted to respondents, the time period within which respondents had to sign a renewal lease would be tolled. See discussion of 9 NYCRR §§2523.5 (c) (1), infra at 3. During the non-payment proceeding, landlord misrepresented to the Court that the building was not subject to rent stabilization laws and regulations.[FN2] Landlord's counsel in this holdover proceeding concedes that landlord's building is a rent-stabilized building.

On September 22, 2017, landlord filed the instant holdover proceeding.[FN3]

With knowledge that a holdover proceeding had been filed, this Court in its November 1, 2017, Bonham decision wrote:

. . . by filing such holdover proceeding, Petitioner went against the explicit instructions of the undersigned; from the July 13, 2017 pre-trial conference, when Petitioner was instructed by this Court not to include the amounts subject to dispute in the summary proceeding as a condition precedent for Respondents to renew their lease. Clearly, Petitioner thought little, if anything, of this Court's directive to submit a new lawful lease to Respondents and until such was done, the time period within which Respondents had to sign a renewal lease would be tolled. Putting aside the applicable case law, why wouldn't any landlord of a rent-stabilized apartment who has a Landlord-Tenant dispute, merely wait for the time to renew [*3]and then require that the tenant pay all fees the landlord believes he is entitled to as a condition precedent to obtaining a renewal, in the hopes that the tenant might decide not renew their lease, regardless of the legitimacy of their defense(s) or their rights to a renewal under rent stabilization laws, thereby obviating the need for a Judge to determine the legitimacy of landlord's claims? It is clear that Petitioner was trying to . . . manipulate the legal system to further his own self-interest id. at 8.

CONCLUSIONS OF LAW

Sections 2522.5 (b) (1) and 2523.5 of the RSC, which are codified within the New York Codes, Rules, and Regulations (NYCRR), require an owner to offer a tenant, in writing, the option of a one- or two-year renewal lease. The law indicates that such offer shall be made not more than 150 days and not less than 90 days prior to the end of the tenant's lease term, and may be served on the tenant by mail or personal delivery. The tenant's acceptance of such offer must be returned to the owner, either by mail or personal delivery, within 60 days. Further, under §2523.5 of the RSC, a Landlord must offer to "renew the lease or rental agreement at the legal regulated rent permitted for such renewal lease and otherwise on the same terms and conditions as the expiring lease" (emphasis added). The law can only be read to mean that the renewal lease contains only those provisions of a prior lease that were lawful. 9 NYCRR §2523.5 (c) (1) states that: "Where the owner fails to timely offer a renewal lease or rental agreement in accordance with subdivision (a) of this section, the one- or two-year lease term selected by the tenant shall commence at the tenant's option, either (i) on the date a renewal lease would have commenced had a timely offer been made, or (ii) on the first rent payment date occurring no less than 90 days after the date that the owner does offer the lease to the tenant. . ." (emphasis added).

Further, "the failure to offer a renewal lease pursuant to this section shall not deprive the tenant of any protections or rights provided by the RSL and this Code and the tenant shall continue to have the same rights as if the expiring lease were still in effect" 9 NYCRR §2523.5 (e)(emphasis added).

Petitioner substantially changed the terms and conditions of the original lease by demanding upfront monies, which were subject to a summary proceeding before the court, prior to being willing to accept a signed renewal lease from respondents. DHCR, Fact Sheet No.4, indicates that "[r]enewal leases must keep the same terms and conditions as the expiring lease unless a change is necessary to comply with a specific law or regulation" (emphasis added). Also see Emergency Tenant Protection Act, NY; Uncons Law §§ 8621 to §§ 8634 (McKinney 2007); Rent Stabilization Code ("RSC"); 9 NYCRR § 2520.6 (a). Petitioners willfully failed to comply.

It is not lost on the Court that the language, such as "shall," and "must," used in all of the above applicable sections of the RSC or DHCR, and as codified under NYCRR, supra, is unambiguously mandatory, not permissive. Moreover, under the enforcement and procedures section of the RSC, (see § 26- 516), had landlord been 'lucky enough' to get tenants to sign such an illegal lease, landlord, in another forum, could have been held liable for treble damages.[FN4]

A landlord may not maintain a holdover proceeding based on a tenant's refusal to sign a lease if it contains an illegal rent. See Sixth Lenox Terrace Assocs. v. Schneider, 37 Misc 3d 796, [NY County 2012]. Landlord's demand that tenants pay him over $18,000.00 as a mandatory prerequisite [*4]of their right to a lawful lease renewal is unlawful. At best, the renewal lease contained an illegal rent and changed the terms and conditions of the original lease. At worst, landlord's condition precedent could be considered a shake-down.

Furthermore, there are restrictions on a landlord who attempts to evict a tenant in a rent-stabilized apartment unlawfully. See 9 N.Y.C.R.R. §2524 (1). The old lease provisions, including the rent that was in existence on August 31, 2017, (excluding the provisions now ruled as void and unenforceable in Bonham), remain in effect until a lawful renewal lease is offered to respondents at which time the tenant will have the options as proscribed by 9 NYCRR §2523.5 (e).

Additionally, this Court is bound by res judicata in this matter of issues presented in Bonham. "[New York] State has adopted the transactional analysis approach in deciding res judicata issues Matter of Reilly v Reid, 45 NY2d 24 [1978]. Under this address, once a claim is brought to a final conclusion, all other claims arising out of the same transaction or series of transactions are barred, even if based upon different theories or if seeking a different remedy. . . . [H]aving been brought to a final conclusion, no other claim may be predicated upon the same incidents" O'Brien v. Syracuse, 54 NY2d 353 at 357, (1981) (internal citations omitted). Further, the principals of collateral estoppel apply as well. Collateral estoppel proscribes the relitigation of issues finally [and necessarily] determined in a prior proceeding so long as the parties were afforded a full and fair opportunity to litigate those issues in the prior proceeding"[FN5] Matter of Hassig v New York State Dept. of Envtl. Conservation, 6 AD3d 1007, 1008, lv dismissed and denied 3 NY3d 736, 820, [2004].

The Uniform Justice Court Act specifically provides this Court with jurisdiction in summary non-payment and possession proceedings so that issues can be adjudicated in an expeditious manner. In the instant case, there is no merit to the claim proffered by petitioner that this Court is of limited jurisdiction to decide the non-payment and possession issues presented in this case. There are limitations to the Court's jurisdiction, such as resolving questions of title; however, those applicable exceptions do not exist here. Concededly, this Court has limited injunctive powers, which would limit its ability to take further actions due to landlord's failure to submit a lawful renewal lease to tenants. However, the ramifications of landlord's failure to do so are specifically codified in RSL and NYCRR, as cited, supra. Moreover, it is appropriate for this Court, even without specific injunctive powers to force any landlord to submit a new lawful lease to tenants, to follow all relevant laws, rules, and regulations to ensure that respondents herein are not taken advantage of by landlord and are able to continue to enjoy the property rights to which they are entitled.

Clearly, the lease or rental contract in this case was unconscionable and had it been executed, it would have been null and void as a contract of adhesion. "Any lease provision that subverts a protection afforded by the rent stabilization scheme is not merely voidable, but void (Rent Stabilization Code [9 NYCRR] § 2520.13), and this Court has uniformly thwarted attempts, whether by mutual consent or by contract of adhesion, to circumvent regulated rent maximums" (see Draper v Georgia Props., 94 NY2d 809, [1999]; Drucker v. Mauro, 30 AD3d 37, 39, [2006].

A Court's limited jurisdiction should not be equated with rendering a Court as ineffective or [*5]anemic. In short, the old lease that was in existence on August 31, 2017, excluding the clauses struck as void and unenforceable in Bonham will continue in effect and respondents will be put in no worse stead by landlord's failure to comply with the law.

Accordingly, for the reasons outlined above, it is hereby,

ORDERED: that the Holdover Proceeding is Dismissed.

This constitutes the Decision and Order of the Court.



Dated: December 14, 2017

White Plains, New York

SO ORDERED:

GREENBURGH TOWN JUSTICE Footnotes

Footnote 1:Petitioner appeared pro se during the summary non-payment proceeding and indicated to the Court on July 13, 2017, that he was not interested in renewing the Respondents' lease.

Footnote 2:The Court also noted other instances of gross misrepresentations made by Petitioner-Landlord to the Court.

Footnote 3:Landlord first filed a hold-over summary action on September 1, 2017, (the day after the current lease was set to expire), but the case was dismissed on procedural grounds by Justice Brathwaite.

Footnote 4:Of course, landlord could have attempted to show by the preponderance of the evidence that the overcharge was not willful.

Footnote 5:If, in the ensuing months, tenants have not paid additional lawful rent, as defined by this Court in Bonham, petitioner's remedy would have been to bring a new non-payment proceeding, if claims for lawful rent could have been established beyond the scope of the Court's Bonham decision.



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