DD 11th Ave. LLC v Sans

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[*1] DD 11th Ave. LLC v Sans 2018 NY Slip Op 50121(U) Decided on January 29, 2018 Civil Court Of The City Of New York, New York County Stoller, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 January 29, 2018
Civil Court of the City of New York, New York County

DD 11th Avenue LLC,, Petitioner,


David Sans, Respondents.

Jack Stoller, J.

Recitation, as required by CPLR §2219(a), of the papers considered in the review of this motion.


Notice of Motion and Supplemental Affirmation and Affidavit Annexed 1, 2, 3

Notice of Cross Motion and Supplemental Affidavits and Affirmation Annexed 4, 5, 6

Affirmation and Affidavit in Opposition and Reply 7, 8

Reply Affidavit 9

Upon the foregoing cited papers, the Decision and Order on this Motion are as follows:

DD 11th Avenue LLC, the petitioner in this proceeding ("Petitioner"), commenced this holdover proceeding against David Sans ("Respondent"), a respondent in this proceeding, and Catherine Berge ("Co-Respondent"), another respondent in this proceeding (collectively, "Respondents"), seeking possession of 312 11th Avenue, No.9L, New York, New York ("the subject premises"), on the ground that Respondent committed fraud in reporting his income and household composition to Petitioner and that Co-Respondent's occupancy is derivative of Respondent's. Respondent interposed an answer with a general denial. Co-Respondent has not answered or appeared. Respondent now moves for leave to obtain discovery. Petitioner cross-moves for summary judgment in its favor. The Court consolidates both motions for resolution herein.

As a summary judgment motion would stay discovery, CPLR §3414(b), Rinaldi v. Viking Penguin, Inc., 52 NY2d 422, 431 n.3 (1981), Jeffers v. American Univ. of Antigua, 125 AD3d 440, 442 (1st Dept. 2015), the Court first considers Petitioner's cross-motion for summary judgment. Petitioner shows on the record on this motion practice that it is the proper party to commence this proceeding; that the subject premises is subject both to the Rent Stabilization [*2]Law and to regulations pursuant to tax credits that require tenants to report their incomes and household compositions, including tax credits pursuant to 26 U.S.C. §42 and RPTL §421-a;[FN1] that the parties are in a landlord/tenant relationship with one another pursuant to a lease; and that Petitioner effectuated timely service of a termination notice prior to the commencement of this proceeding. Petitioner also shows by a rider annexed to Respondent's initial lease that, at the time Respondent first moved into the subject premises in May of 2012, Respondent's eligibility to live in the subject premises relied upon his income falling below a certain level.[FN2] Respondent's lease also provides that misrepresenting income or household composition is a ground for termination.

Petitioner annexes to its motion Respondent's sworn statement dated May 1, 2012, which Respondent does not dispute executing, that avers that Respondent's income that year was a certain amount the Court will call "x."[FN3] Petitioner also annexed to its motion papers, which Respondent does not dispute, Respondent's income tax return filed for 2012, which showed that Respondent's income in 2012 was actually 8.02899 times greater than "x."

As the state and federal tax credits designed to make the subject premises affordable require that the residents thereof be of low income, 26 U.S.C. §42(g)(1), RPTL §§421-a(2)(a)(ii) (C), 421-a(2)(a)(iii)(D)(b), and 421-a(2)(a)(iv)(A)(b), Respondent's sizable under-reporting of his income implicates his eligibility to be a tenant in the subject premises and constitutes a material misrepresentation triggering the default provision of Respondent's lease. Petitioner has thus demonstrated a prima facie entitlement to summary judgment terminating Respondent's tenancy. The burden thus shifts to Respondent to produce evidence in admissible form to demonstrate the existence of a disputed material issue of fact sufficient to require a trial. Gonzalez v. 98 Mag Leasing Corp., 95 NY2d 124, 129 (2000), Ceron v. Yeshiva Univ., 126 AD3d 630, 632 (1st Dept. 2015).

Respondent argues in opposition that he did not misreport his income in May of 2012 because the form he executed, which Petitioner provided, states that the income he reports is "anticipated" income. Respondent, however, does not explain the eightfold gulf between the income he "anticipated" in May of 2012 when he executed the certification and the income he eventually reaped that year, nor provide any detail as to how any good-faith "anticipation" of Respondent's income at "x" level in May of 2012 when he was trying to obtain a below-market-rent apartment intended for low-income individuals coincidentally and [*3]unforeseeably rose to "8x" by the end of 2012. Respondent merely assigns the word "anticipated" an unsustainable weight and leaves it at that. By itself, such a bald, conclusory assertion that Respondent under-reported his income by a factor of eight because he erroneously "anticipated" such a shortfall amounts to "a shadowy semblance of an issue" insufficient to defeat summary judgment. Stonehill Capital Mgmt. LLC v. Bank of the W., 28 NY3d 439, 448 (2016), Fein v. Cook, 153 AD3d 1168 (1st Dept. 2017). Rather, Respondent must lay bare and reveal his proofs in order to show real issues of fact that he is capable of establishing at trial in order to defeat Petitioner's summary judgment motion. Rodriguez v. City of NY, 142 AD3d 778, 788 (1st Dept. 2016). Mere conclusions, expressions of hope, or unsubstantiated allegations or assertions are insufficient to defeat summary judgment. Justinian Capital SPC v. WestLB AG, NY Branch, 28 NY3d 160, 168 (2016).

Respondent further asserts in his affidavit that the income that he reported in May of 2012 was his income from 2011. This assertion contradicts Respondent's prior position that the income he reported in May of 2012 was the income he "anticipated" to earn and is inconsistent with the language of the form, which seeks a statement of "current anticipated annual income." As noted above, Respondent's burden in opposition to a summary judgment motion is to demonstrate an issue of material fact by laying bare his proof. Rodriguez, supra, 142 AD3d at 788. Respondent does not show that, despite the request of the form to provide "current" income, he provided income from a prior year by, say, a corroborating tax return for 2011.

Respondent next argues that Petitioner's failure to serve him with a notice to cure bars the relief Petitioner seeks from the Court. As noted above, Respondent procured a low-income unit by significantly under-reporting his income, rendering him ineligible for this tenancy ab initio. If Respondent were given an opportunity to "cure" and did so by properly reporting his 2012 income, he would not be eligible to be a tenant at the subject premises. Accordingly, to the extent that Respondent interprets Petitioner's cause of action to sound in breach of a lease, a breach of the nature of the conduct set forth here is incapable of a cure. Petitioner need not serve a futile and useless notice to cure. Strata Realty Corp. v. Pena, 57 Misc 3d 156(A) (App. Term 1st Dept. 2017), Herald Towers, LLC v. Perry, 2003 NY Slip Op. 50564(U) (App. Term 1st Dept.), Adam's Tower Ltd. Pshp. v. Richter, 186 Misc 2d 620, 622 (App. Term 1st Dept. 2000).

Moreover, Petitioner did not predicate this proceeding on the section of the Rent Stabilization Code concerning a breach of an obligation of the tenancy, but on 9 N.Y.C.R.R. §2524.3(c), which permits a landlord to terminate a tenancy that is illegal because of the requirements of law, thus subjecting a landlord to, inter alia, civil penalties, or when a tenancy is in violation of contracts with governmental agencies. A landlord not in compliance with program requirements for low-income housing tax credits indeed risks losing said tax credits, 26 U.S.C. §42(j), thus indicating Petitioner's liability for failing to take action against Respondent for false reporting of income. Thus, the subsection of the Rent Stabilization Code applicable herein does not require service of a notice to cure.

Respondent argues that Petitioner discontinued a prior holdover proceeding it had commenced against Respondent. However, a voluntary discontinuance is not a decision on the merits, and does not bar a party from maintaining another proceeding for the same claim unless the order of discontinuance or stipulation discontinuing the matter recites that the claim was discontinued or settled on the merits, Maurischat v County of Nassau, 81 AD3d 793, 794 (2nd [*4]Dept. 2011), or that the discontinuance was with prejudice. CPLR §3217(c), Matter of AutoOne Ins. Co. v. Valentine, 72 AD3d 953, 955 (2nd Dept. 2010), Kret v. Gergely, 64 AD2d 692, 693 (2nd Dept. 1978), aff'd, 47 NY2d 990, 991 (1979). Respondent does not annex to his opposition a notice of discontinuance, an order, or a stipulation, so Respondent does not meet his burden of proving the preclusive effect of Petitioner's prior discontinuance.

Respondent argues that that the New York State Housing Finance Agency ("HFA") conducted a review of Respondent's tenancy and concluded that no consequences should follow. Respondent annexes the pages from HFA's review to his opposition, a review HFA apparently undertook in response to a report of the New York State Comptroller criticizing HFA for allowing people with high incomes to live in apartments designated for people with low incomes. To the extent that Respondent argues that a review by HFA precludes Petitioner's action, the only discernible theory upon which a determination by an administrative agency has such an effect is collateral estoppel. The doctrine of collateral estoppel prevents a party from relitigating an identical issue decided against that party in a prior adjudication, ABN AMRO Bank, N.V. v. MBIA Inc., 17 NY3d 208, 226 (2011), when the party had a full and fair opportunity to litigate the issue. Matter of Dunn, 24 NY3d 699, 704 (2015). Factors that courts take into consideration to determine whether a "full and fair opportunity" to litigate an issue for purposes of collateral estoppel are instructive in this regard: the nature of the forum and the importance of the claim in the prior litigation, the incentive and initiative to litigate and the actual extent of litigation, the competence and expertise of counsel, the availability of new evidence, the differences in the applicable law and the foreseeability of future litigation. Clemens v. Apple, 65 NY2d 746, 748 (1985). Preclusion thus applies to issues that were actually litigated, squarely addressed and specifically decided. Liddle, Robinson & Shoemaker v. Shoemaker, 309 AD2d 688, 691 (1st Dept. 2003).

Respondent does not meet his burden of proving that HFA adjudicated Petitioner's cause of action in a litigation setting as opposed to merely reviewing the case. Moreover, the review states that HFA closed its file on Respondent's case because HFA was satisfied with Petitioner's response to the situation, in part because of Petitioner's commencement of a holdover proceeding against Respondent. Accordingly, the HFA review does not raise an issue of material fact precluding summary judgment.[FN4]

The Court therefore finds that Petitioner has met its burden of proving an entitlement to summary judgment against Respondent based upon Respondent's misreporting of income in 2012. The Court does not reach the remainder of Petitioner's causes of action against Respondent. The Court denies Respondent's motion for leave to obtain discovery as moot, as contemplated by the proposition of law, cited above, that a summary judgment motion stays discovery.

Petitioner also seeks a default judgment pursuant to CPLR §3215 against Co-Respondent, who never appeared or answered herein. However, CPLR §3215 does not apply to summary proceedings. Bldg. Mgmt. Co. v. Vision Quest, 1 Misc 3d 681, 683 (Civ. Ct. Kings Co. 2003). Instead, the Court rules require the Court to take an inquest against a non-appearing party in a [*5]summary proceeding. 22 N.Y.C.R.R. §208.43(f). An inquest may be in writing. See, e.g., Glasser v. American Homes of Clifton Park Div. of American Homes, Inc., 144 AD2d 890 (3rd Dept. 1988), 22 N.Y.C.R.R. §208.32(b). Petitioner indeed proves every element of its prima facie case against Co-Respondent on this motion practice, except that Petitioner has not proven Co-Respondent's military status. 50 U.S.C. §521(b), HSBC Bank USA, N.A. v. Farmer, 2012 NY Misc. LEXIS 3023, 5-6 (S. Ct. Queens Co. 2012), New York City Housing Authority v. Smithson, 119 Misc 2d 721 (Civ. Co. NY Co. 1983). Accordingly, the Court adjourns this motion to February 8, 2018 at 9:30 a.m. in part H, to be held in Room 819 of the Courthouse located at 111 Centre Street, for submission of an affidavit regarding Co-Respondent's military status. Upon submission of a satisfactory affidavit as such, Petitioner shall be entitled to a final judgment against Respondents.

This constitutes the decision and order of this Court.

Dated: January 29, 2018

New York, New York





Footnote 1:A recorded regulatory agreement appurtenant to the building in which the subject premises is located states as much.

Footnote 2: Specifically, the rider to the lease states that Respondent's household income at the commencement of his tenancy "must be at or below the Initial Qualifying Housing Income," which the rider defines as either below fifty or forty percent below the area gross median income.

Footnote 3: The motion papers filed with the Court are redacted for, inter alia, Respondent's income information as it appears on the affidavits referenced above and Respondent's income tax returns. Petitioner presented, under separate cover, to the Court the relevant documents that revealed Respondent's income information.

Footnote 4: For this reason, the Court gives no weight to Petitioner's response to Respondent's argument regarding HFA in Petitioner's reply and Respondent's attempt to interpose a sur-reply.