Edison 1205 LLC v Brickhouse

[*1] Edison 1205 LLC v Brickhouse 2018 NY Slip Op 50308(U) Decided on February 26, 2018 Civil Court Of The City Of New York, Queens County Thermos, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 February 26, 2018
Civil Court of the City of New York, Queens County

Edison 1205 LLC, Petitioner,

against

James Brickhouse, HOWARD "DOE," OPHUA "DOE," DIALLO "DOE," "JOHN DOE" AND "JANE DOE," Respondents.



55743/17



Appearing for Petitioner: Nirav Y. Shah Esq., 65 Tenafly Drive, New Hyde Park, N.Y. 11040

Appearing for Respondents Afua Otemea Opare, Jerome Dixon, James Brickhouse, Mark Girard and Tommy Wyatt: The Legal Aid Society Queens Neighborhood Office, By: Yeein Jennifer Lee, Esq., 120 -46 Queens Blvd., 3rd Floor, Kew Gardens, N.Y. 11415
Kimon C. Thermos, J.

These two holdover proceedings brought to recover possession of two apartments in the subject two-family house were previously consolidated for trial, since they involved the same parties and issues. The parties also consented to substitution of the new owner as Petitioner and the pleadings were amended accordingly. The above caption reflects the amendment.

A trial was held over four days commencing November 14, 2017 and concluding January 11, 2018. Petitioner through the testimony of Arsen Yakubov, principal of Petitioner, established that Petitioner is the new owner of the premises by virtue of a bargain and sale deed dated May 12, 2017. Mr Yakubov testified that he did not collect any rent since purchasing the property. He was informed by the previous owner, Maria Doby, that none of the occupants had leases and that there were four authorized tenants, who rented rooms in the subject two-family house. He was not able to determine much more from either the former owner or upon his inquiry, after the transfer of ownership, as to the identity of the occupants and what if any relationship they had with the prior owner. Upon inspection, he found that most rooms had locks and that multiple families were residing therein.

The first witness to testify for Respondents was Respondent James Brickhouse. He testified that he has been residing at the subject premises, which has three floors, since 2009 in a [*2]room on the second floor. He found the room through an online advertiser called Room Finder. He was put in contact with Maria Doby, the former owner, with whom he entered into an agreement to lease the room on the second floor for $150.00 per week. He has resided in the same room continuously to date. He testified that, except for Respondent Afua Opare, who lives in a room on the first floor, the current occupants of the house all moved in after him. He stated that presently there are a total of 10 rooms in the subject house as well as a finished basement, where the former owner and members of her family previously resided. The basement is currently unoccupied. On the first floor, there are three locked rooms, one of which is occupied by Respondent Afua Opare and another is occupied by Respondent Mark Gerard. The third room is presently unoccupied. However, prior to 2014, it was occupied by the former owner and her family in conjunction with the basement. The first floor has its own kitchen and bathroom facilities. On the second floor, there are four locked rooms, three of which are occupied independently by him, Respondent Jerome Dixon and Respondent Tommy Wyatt and his spouse. The fourth room is occupied by two women and a child. He only knew the name of one of the women, Cathy Mendez-Sinclair. On the third floor, also referred to as the attic, there are three locked rooms, which are independently occupied by a man named Tyrone (who was later identified as Tyrone Harrell), Barry Simpson, and another individual whom he referred to as "the African" (who was later identified as Diallo Wouly Thierno). The residents of the attic use the bathroom and kitchen facilities on the second floor.

Respondent Brickhouse laid the foundation for several photographs, which depict the interior of the three floors of the subject premises, showing various doors and common living areas. He testified that the former owner moved out of New York sometime in 2014. While living in the house, she and her family, including foster children in her custody, occupied the entire basement as well as the presently unoccupied room on the first floor. Although there were some changes in occupancy since he first moved in, all the present tenants have been in occupancy for at least 3 years and all were placed in possession by the former owner while she maintained ownership. Except for Respondent Opare, the present tenants moved in sometime between 2009 and 2014. Respondent Brickhouse testified that he occasionally acted as an agent for the former owner, in that he would collect rent from certain tenants and deposit it into her bank account, when she was away. As far as he was aware, the tenants, including him, stopped paying rent to the former owner sometime in 2014, when she completely abandoned her interest in the premises, including upkeep of the property. Also introduced were subpoenaed records from the N.Y.C. Department of Buildings, indicating that the subject premises are considered a two-family dwelling constructed prior to July 1, 1969. In addition, subpoenaed records from the N.Y.C. Human Resources Administration ("HRA") were admitted, which pertain to shelter payments made on behalf of Respondents Brickhouse and Opare to Ms. Doby. (Only documents constituting HRA's business records were admitted. Extraneous hand-written letters included in the HRA records were not admitted).

Next, Tyrone Harrell, the tenant in the front room of the third-floor attic, testified. He met Ms. Doby, whom he also referred to as "Terry," when he was hired to make repairs at the subject premises. He took occupancy about six years ago and, thereupon, began paying rent on a weekly basis to Ms. Doby. Through his service as a handyman for Ms. Doby as well as his long occupancy at the subject premises, he has come to know the entire layout and the tenants residing therein. His testimony substantially corroborated Respondent Brickhouse's testimony regarding the layout and the people living there. He added that he paid rent to Respondent [*3]Brickhouse a couple of times when he could not get in touch with Ms. Doby.

Testimony was next taken from Barry Simpson, who also resides as a tenant in a room in the third-floor attic. He met and rented a room from Ms. Doby when he responded to a Craig's List ad in 2012. He had an agreement with her to pay rent weekly and, pursuant to her instruction, deposited the rent in her Bank of America account. Although he received the keys to the room from Respondent Brickhouse, he otherwise dealt only with Ms. Doby.

Diallo Wouly Thierno, the third occupant of the attic, testified that he first took occupancy when he responded to a Craig's List ad in 2014. He paid two months of rent up front, creating a month-to-month tenancy. In 2015, when Ms. Doby moved to Virginia, she requested that weekly deposits of rent be made into her Bank of America account. Thirty deposit receipts to the same Bank of America account during 2013 and 2014 were introduced into evidence. He testified that he continued to make deposits into this account through 2016, when he was told by Respondent Brickhouse to stop. He did so because he believed that Respondent Brickhouse and Ms. Doby had a relationship and Respondent Brickhouse appeared to oversee management of the premises. He testified that he confirmed every deposit made into the bank account with Ms. Doby directly via phone. He described the subject house as having 10 rented rooms, each occupied separately. Although some of his proof of payments predated 2014, the year that he testified his tenancy began, his testimony was, nevertheless, credible.

The next witness to testify was Tiesha Sinclair. She testified that she lives in a room on the second floor with her wife and daughter. She moved in with Ms. Doby's consent, when her brother, Roger Sinclair, moved out in June 2014. Their arrangement was that she would give the rent to her brother, who would then deposit it into Ms. Doby's bank account. This continued until the end of 2015, when she stopped paying rent because Ms. Doby stopped accepting payments. She corroborated Respondent Brickhouse and Mr. Harrell's testimonies regarding the layout of the house and that there are 10 independent occupancies. She further testified that she had several communications directly with Ms. Doby about her tenancy and that she never paid rent to Respondent Brickhouse.

Respondent Jerome Dixon testified that he lives in a room on the second floor of the subject premises. He was referred to Ms. Doby by an agency called Room Finders and took possession in July 2012, as a month-to-month tenant, paying $580.00 per month. When he first met Ms. Doby, he was shown a room on the first floor, which he did not like. They agreed on the room on the second floor, which he continues to occupy. A written receipt for his first month's rent, written and signed by Ms. Doby, was introduced into evidence. Also introduced were 19 Bank of America receipts showing deposits made in 2012 through 2014 to the same account into which Mr. Thierno made deposits. Respondent Dixon stopped paying rent when Ms. Doby abandoned the premises in 2014. His description of the premises and its occupancy substantially comported with the testimony elicited from the previously testifying Respondents.

Next, testimony was elicited from Respondent Afua Otemea Opare, the longest occupying tenant of the premises. She took occupancy in 2004 and established a landlord-tenant relationship with Ms. Doby, at first, for a room in the third-floor attic, paying $90.00 per week. She, too, was informed of the room's availability through Room Finders. She took occupancy of another room in the attic with a friend, when Ms. Doby's daughter moved out of the room and had an agreement to pay $180.00 for both rooms. Approximately five years ago, she relocated to the first floor, when Ms. Doby moved to Virginia. On the first floor, she rented the living room, den and enclosed porch as one unit for $700.00 per month. She was the beneficiary of a HRA [*4]subsidy for half of the rent and paid the other half with her own funds. She currently occupies the 3-room unit with her daughter and a friend. Confirming the prior testimonies of the other Respondents, she stated that the first floor had two other independent dwelling units, one of which is vacant but was previously occupied by Ms. Doby's family member. The second floor contains four rooms used independently. The attic has three rooms now also occupied independently. The total number of dwelling units, excluding the basement, is 11. She stopped paying rent about three years ago because Ms. Doby had apparently abandoned the premises and the occupants were compelled to provide for upkeep of the premises. She further testified that, in 2014, the N.Y.C. Department of Housing Preservation and Development took over provision of the utilities at the premises, because Ms. Doby stopped providing essential services.

The Court also heard rebuttal testimony, via video conference, from the former owner, Maria Doby, also known as "Terry," who presently resides in Orlando, Florida. She testified that she purchased the subject two-family house in 2000 and sold it to the present owner in July 2017. Upon purchasing the house, she moved in with her large family, consisting of six relatives and several foster children. She stated that, as she could no longer pay the mortgage, in 2011 or 2013 she ceased occupying the house, stopped providing services and did not collect rent. Her memory was hazy when asked to confirm the bank account into which at least two of the tenants testified to have deposited rent for her benefit. She reluctantly confirmed the occupancy of the testifying Respondents and confirmed that she had at least five tenants occupying separate rooms.

FINDINGS OF FACT

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After evaluating the testimonies of the witnesses and the documentary evidence submitted, the Court is convinced that the tenant witnesses all testified credibly. Respondents have proven by a preponderance of the evidence that there exists at least 10 dwelling units, excluding the basement, which may comprise an eleventh unit. The Court also finds that the former owner, Maria Doby, created the separate rooms as dwelling units and rented them out as independent dwelling units, creating a landlord-tenant relationship with each of the occupants. Maria Doby's testimony did not, in essence, contradict the testimonies of the occupants. Certain portions of her testimony, especially pertaining to the mode of rent collection and the layout of the premises, were vague and borderline evasive.

The Court also notes that, in their post-trial memorandum, Petitioner's attorney is taking the position that the testimony presented shows that there were only five other tenancies created by Ms. Doby, in addition to the unit that she and her family occupied. Even adopting Petitioner's position, the total number of dwelling units, including Ms. Doby's unit which included the basement, would be at least six.

There is no dispute that the subject building existed as a two-family house prior to 1969, the effective date of the Rent Stabilization Law ("RSL"). No testimony was presented regarding any substantial rehabilitation or anything else occurring at the premises that would render the premises exempt from the RSL.

The central question presented at trial was the propriety of the termination notices utilized by Petitioner as predicates to commencing these holdovers.

Respondents argue that the present configuration and actual occupancy of the premises, where six or more dwelling units exist, brings the subject building and all the dwelling units within the ambit of the RSL. As such, Respondents contend that the predicate notices utilized, to wit: 30-day month-to-month tenancy termination notices, are improper and that only grounds [*5]under the RSL can be asserted by Petitioner in seeking to terminate the tenancies. Therefore, Respondents assert that the petitions fail to state a cause of action and must be dismissed.

Petitioner, while conceding the existence of at least six dwelling units, posits that the illegal nature of the conversion of this ostensible two-family home into an illegal Single Room Occupancy ("SRO") does not permit the application of the RSL, since the regulatory scheme cannot be imposed on illegal dwelling units that cannot be readily legalized.

DISCUSSION

It is well settled that a succeeding owner, who purchased a premises with the opportunity to investigate the layout of the premises, steps into the shoes of its predecessor and inherits the status of the tenancies created by that former owner. Clearview Apt. Assoc., LP v. Ocasio, 4 Misc 3d 1028A (Civ. Queens 2004), affd. by 17 Misc 3d 23 (App. Term 2nd Dept. 2007) and 116 Madison Street, LLC v. Seid, 25 Misc 3d 1207A (Civ. NY 2007).

The RSL is a local statute that first established rent stabilization regulation in New York City. The New York State legislature enacted the Emergency Tenant Protection Act of 1974 ("ETPA"), amending the RSL, to regulate residential rents in municipalities that declared a housing emergency, which included New York City. Pursuant to the ETPA, rent stabilization regulation applies to buildings with 6 or more dwelling units built before January 1, 1974. Wilson v One Ten Duane St. Realty Co., 123 AD2d 198 (1st Dept 1987). The ETPA provides for "the regulation of all housing accommodations," including class A or class B multiple dwellings, "which it does not expressly exempt, including previously unregulated accommodations. McKinney's Uncons. Laws of NY §§ 8623, 8625. (Matter of Salvati v Eimicke, 72 NY2d 784, 791)." Gracecor Realty Co., Inc. v. Hargrove, 90 NY2d 350, 355 (1997).

The Rent Stabilization Code ("RSC"), which was issued by the New York State Division of Housing & Community Renewal ("DHCR"), is a codification of the RSL. The RSC defines a "housing accommodation" as "that part of any building or structure, occupied or intended to be occupied by one or more individuals as a residence, home, or dwelling unit or apartment." RSC 2520.6(a). There is no distinction made between legal and illegal dwelling units and the units do not have to be occupied. Once converted to contain six dwelling units, the building and each of the dwelling units contained therein becomes subject to the RSC, even if one or more units are demonstrably illegal. A subsequent reduction in the number of units below six does not revert any of the remaining dwelling units to free market. Rashid v. Cancel, 9 Misc 3d 130A (App. Term 2nd Dept. 2005).

The issue of rent stabilization coverage of illegal dwelling units has been extensively addressed. In a case similar to the instant proceedings, the Appellate Term, in Robrish v Watson in which a two-family house was converted into an illegal ten-room SRO, found that the premises was subject to regulation and dismissed the matter based upon improper predicate notice in accordance with the RSL. Robrish v. Watson, 48 Misc 3d 143A (App. Term 2nd Dept. 2015).

In the case of Joe Lebnan, LLC v. Oliva, 39 Misc 3d 31 (App. Term 2nd Dept. 2013), under very similar facts to those herein, Petitioner commenced two separate holdovers to recover two legal apartments in a legal two-family house. The tenants proved, at trial, that there existed 8 illegal residential units and that the building was erected prior to 1969. As here, Petitioner, in that case, argued that the Court of Appeals in Wolinsky v. Kee Yip Realty, 2 NY3d 487 (2004), ruled that dwelling units incapable of occupancy as legal dwelling units are not covered by regulation. However, the Appellate Term ruled that the holding in Wolinsky was distinguishable [*6]because it was limited to buildings containing lofts. The Appellate Term concluded that the Civil Court properly found that apartment was rent stabilized and properly dismissed the petition for failing to state a cause of action.

In a recent decision, the Appellate Term expanded the definition of what constitutes a dwelling unit under the RSL, by determining that two spaces in the rear of a commercial space that were separated by a mere curtain were dwelling units and could be counted in the total number of dwelling units for purposes of determining applicability of the RSC, and reiterated its prior determination that non-loft illegally converted buildings that contain six or more units were covered by regulation. When counted with the other four legal apartments, the total dwelling units rose to at least six and, therefore, vested those legal four apartments with rent stabilization rights. The Court went on to dismiss the holdover proceeding against one of the four legal apartments, which the petition alleged to be a free market apartment. The Court, citing Commer. Hotel v White, 194 Misc 2d 26 (App. Term 2nd Dept. 2002), held "[g]iven that tenants were subject to rent stabilization, they can be evicted only 'upon the grounds set forth in section 2524.3 of the RSC [9 NYCRR] and only after being served with the notices required under section 2524.2 of the code.'" 124 Meserole, LLC v. Recko, 55 Misc 3d 146A (App. Term 2nd Dept. 2017).

As in Wolinksy, supra., the cases of Tan Holding Corp. v. Wallace, 187 Misc 2d 687 (App. Term 1st Dept. 2001) and Gloverman Reatly v. Jeffreys, 18 AD3d 812 (2nd Dept 2005) relied upon by Petitioner herein in support of its argument also deal with the illegal conversion of loft apartments and, thus, are distinguishable. The legislature has enacted a separate regulatory scheme for the transition of lofts into rent stabilization coverage, which temporarily exempts such dwelling units from coverage.

Petitioner also cites Arrow Linen Supply Co., Inc. v. Cardona, a case that supports Petitioner's interpretation of Wolinsky supra. that all illegal dwelling units should be exempt from regulatory coverage. The Court, in Arrow Linen, spoke extensively about its concern that dismissal of the petition, which could readily be brought again under the RSC given the hazardous and illegal nature of the occupancies, would prolong the occupancies and expose the occupants to health hazards. Arrow Linen Supply Co., Inc. v. Cardona, 15 Misc 3d 1143A (Civ. NY 2007). However, Petitioner's reliance on this case is misplaced, since the Appellate Term, in Joe Lebnan, supra., addressed Arrow Linen and found its interpretation of Wolinsky to be in error.

The Court, in Arrow Linen, relied heavily on concerns over the occupants' safety and the need to have a quicker resolution of the matter to avoid potential personal injury. This Court, too, is concerned about the circumstances existing at the subject premises and acknowledges the inherent safety hazard in having in a 10 room SRO carved from a two-family house without any of the required fire hazard suppression mechanisms. However, the appellate authority is clear that proper procedure must be utilized in terminating these tenancies and the rent regulatory rights should not be disregarded for the sake of expediency.

Notwithstanding, a finding that the RSL is applicable to the subject building does not deprive Petitioner of its remedy under Section 2524.3(c) of the RSC, which provides that a tenancy may be terminated when the "occupancy of the housing accommodation is illegal because of the requirements of law and the owner is subject to civil or criminal penalties therefore " 9 N.Y.C.R.R. §2524.3(c).

Based upon the evidence adduced at trial the subject premises and all 10 dwelling units [*7]located therein are hereby found to be subject to the RSL and the occupants are protected from eviction pursuant to its provisions. This Court further finds that the termination notices served by Petitioner, as predicates to these holdovers, are legally defective for failing to comply with the requirements for terminating a tenancy under the RSL. As a result, the herein petitions are fatally defective and are, therefore, dismissed for failing to state a cause of action.

Accordingly, the petitions in the instant holdovers are dismissed, with prejudice.

The Court need not reach any other grounds for dismissal.

This constitutes the Decision and Order of this Court.

Dated: February 26, 2018

Queens, New York

________________________________

Kimon C. Thermos, J.H.C.