26 BNDO LLC v Mehmet

[*1] 26 BNDO LLC v Mehmet 2019 NY Slip Op 51595(U) Decided on October 8, 2019 Supreme Court, New York County Lebovits, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 8, 2019
Supreme Court, New York County

26 BNDO LLC, Plaintiff,

against

Badisse David Mehmet, KHEIRA MEHMET, JOY CIOCI, DANIEL WAI, AND HAYLEY MITCHELL, Defendants.



656994/2017



Golino Law Group, PLLC (Santo Golino of counsel), for plaintiff.

Badisse David Mehmet and Kheira Mehmet, Pro Se.
Gerald Lebovits, J.

The following e-filed documents, listed by NYSCEF document number (Motion 003) 38, 39, 40, 41, 42, 43, 44, 45, 46, 60, 61, 62, 63, 64, 65, 66, 67, 68, 69, 70, 71, 76, 77, 78, 79, 81, 82, 83

were read on this motion for DISMISSAL

The following e-filed documents, listed by NYSCEF document number (Motion 004) 48, 49, 50, 51, 52, 53, 54, 55, 56, 57, 58, 59, 84, 85, 91, 92, 93 were read on this motion for LEAVE TO RENEW AND REARGUE

Gerald Lebovits, J.

This case arises out of a default on rent payments for a luxury loft apartment in a building located at 26 Bond Street in New York County and owned by plaintiff, 26 BNDO LLC.

Defendants Badisse Mehmet and Kheira Mehmet had previously owned this building through their company, nonparty 26 Bond Street Management LLC (26 BSM). They sold the building to 26 BNDO in March 2016. Prior to the sale of the building, the Mehmets had also leased apartment 4F in the building, and subleased that apartment to defendants Joy Cioci, Daniel Wai, and Hayley Mitchell.

Plaintiff, alleging that it was not paid rent owed on apartment 4F between March 2016 through June 2017, brought a damages action in this court against the Mehmets, Cioci, Wai, and Mitchell, seeking among other things to hold them jointly liable for the alleged amount of unpaid rent (at least $50,000).

Badisse Mehmet moved to dismiss 26 BNDO's claims against him (motion sequence 001). This court initially denied Mehmet's motion, but later sua sponte amended its order to grant the motion to dismiss, holding that plaintiff was judicially estopped from seeking allegedly unpaid rent from Badisse Mehmet. (See Amended Order, NYSCEF No. 24.)

Kheira Mehmet now moves under CPLR 3211 to dismiss 26 BNDO's claims against her [*2]on the same judicial-estoppel ground and seeks an award of sanctions and fees (motion sequence 003). 26 BNDO moves under CPLR 2221 for leave to renew and reargue this court's amended order granting Badisse Mehmet's motion to dismiss (motion sequence 004). Motion sequences 003 and 004 are consolidated for disposition.

BACKGROUND

The Mehmets wholly own 26 BSM. Between 2013 and March 2016, 26 BSM owned the apartment building located at 26 Bond Street in Manhattan. The Mehmets leased apartment 4F in that building from 26 BSM; their lease ran until September 30, 2015. 26 BNDO asserts that following the expiration of their lease, the Mehmets continued in possession of apartment 4F under a month-to-month tenancy. (Aff. in Opp. to Mot. to Dismiss, NYSCEF No. 7, at 8.)

During the duration of the Mehmets' lease of apartment 4F, Cioci subleased the apartment from them. The sublease also ran until September 30, 2015. On September 25, 2015—prior to the expiration of the prime lease—the Mehmets subleased apartment 4F to Cioci, Wai, and Mitchell for a term ending on September 30, 2016. On March 21, 2016, 26 BSM sold the building, along with its existing leases and rents, to plaintiff 26 BNDO.

26 BNDO alleges that following the sale of the building, Cioci, Wai, and Mitchell lived in apartment 4F and enjoyed the benefits of residency and the services of a typical landlord-tenant relationship. (Compl., NYSCEF No. 1, at33-52.) 26 BNDO also alleges that "[i]mmediately following transfer of title," Cioci, Wai, and Mitchell "attorned to [26 BNDO] as their new landlord, and continued to pay rent directly to [26 BNDO] throughout the remainder of their respective tenancies" at apartment 4F. (NYSCEF No. 1, at 13; see also id. at22, 55.) 26 BNDO alleges, though, that Cioci, Wai, and Mitchell each failed to pay a substantial portion of the rent owed under the sublease. 26 BNDO also asserts that following the sale of the building the Mehmets did not pay any rent on apartment 4 F. 26 BNDO does not, however, allege that the Mehmets ever occupied apartment 4F following the transfer of title.

In January 2017 26 BNDO filed a nonpayment proceeding in Civil Court, New York County, seeking possession of the apartment and a money judgment. (See NYSCEF No. 55.) The petition named as respondents both the Mehmets as tenants and Cioci and Wai as undertenants. It alleged that the Mehmets were "the tenants in possession of said premises pursuant to a written rental agreement," and that Cioci and Wai "are occupants in the subject premises."[FN1] (Id. at 2.) The Mehmets did not appear. In June 2017 Civil Court awarded 26 BNDO possession and a money judgment. 26 BNDO ultimately regained possession of the apartment in August 2017.

In November 2017, 26 BNDO brought this action. The complaint asserted a claim for breach of contract against the Mehmets, Cioci, Wai, and Mitchell, presumably for failing to pay rent owed under the lease and sublease.[FN2] In addition, the complaint asserted claims for unjust enrichment and use and occupancy against Cioci, Wai, and Mitchell, based on allegations essentially that those defendants had gotten all of the benefits of living in apartment 4F without satisfying their obligations to pay rent. But the complaint did not assert a comparable claim [*3]against the Mehmets.

Badisse Mehmet moved to dismiss plaintiff's claims against him. This court initially issued an order on September 27, 2018, holding that none of Mehmet's arguments in favor of dismissal were meritorious and denying the motion. (See NYSCEF No. 21.) On October 1, 2018, however, this court determined sua sponte that its denial had been in error, and issued an amended order granting the motion to dismiss as to Badisse Mehmet. (See NYSCEF No. 24.) In issuing its amended order, this court held that 26 BNDO was judicially estopped from contesting Mehmet's argument that he and Kheira Mehmet had released their rights to the sublease for apartment 4F at the time of the sale, because 26 BNDO itself alleged in its complaint that after the sale, Cioci, Wai, and Mitchell had "attorned to Plaintiff as their new landlord and continued to pay rent directly" to 26 BNDO. This court concluded that 26 BNDO had thereby itself acknowledged that it was the direct landlord for the subtenants, and thus could not seek the subtenants' unpaid rent from the Mehmets as intermediaries. (Id.)

In motion sequence 004, 26 BNDO moves under CPLR 2221 for leave to reargue and renew its motion to dismiss (motion sequence 004). In motion sequence 003, Kheira Mehmet asks this court in essence to confirm its October 1, 2018, ruling, and therefore to dismiss 26 BNDO's claims against her for the same reasons as the dismissal of the claims against her husband.

DISCUSSION

I. The Branch of 26 BNDO's Motion Seeking Leave to Reargue

A motion for leave to reargue under CPLR 2221 (d) may be granted only upon a showing "that the court overlooked or misapprehended the facts or the law or for some reason mistakenly arrived at its earlier decision." (William P. Pahl Equip. Corp. v Kassis, 182 AD2d 22, 27 [1st Dept 1992] [quotation marks omitted].) A reargument motion "does not provide a party an opportunity to advance arguments different from those tendered on the original application." (Rubinstein v Goldman, 225 AD2d 328, 328 [1st Dept 1996] [quotation marks omitted].)

A motion for leave to renew "should be based on newly discovered facts that could not be offered on the prior motion." (Mejia v Nanni, 307 AD2d 870, 871 [1st Dept 2003].) To warrant the grant of leave to renew, the movant must also establish that these new facts "would change the prior determination." (CPLR 2221 (e).)

26 BNDO moves for leave to renew and reargue on two grounds: (i) that this court misapprehended the legal significance of the complaint's use of the term "attorned"; and (ii) that 26 BNDO would not in any event be judicially estopped from seeking unpaid rent from the Mehmets. (See Mem. of Law in Supp. of Mot. to Renew and Reargue, NYSCEF No. 50, at 4-7.) This court concludes that leave to reargue is appropriate so that the court may take into account certain facts that the court did not fully appreciate on the initial motion—in particular, the expiration of the Mehmets' lease—and to clarify the court's reliance on the doctrine of judicial estoppel. On reargument, however, this court adheres to its prior ruling granting Badisse Mehmet's motion to dismiss.

A. 26 BNDO's Request to Reargue This Court's Conclusion About the Significance of "Attornment"

This court's October 1, 2018, order held that in alleging that Cioci, Wai, and Mitchell had "attorned" to 26 BNDO as their new landlord after the sale of the building, the complaint [*4]effectively conceded that a direct lessor-tenant relationship arose between 26 BNDO and Cioci, Wai, and Mitchell, such that the Mehmets were no longer tenants responsible for ensuring the payment of rent.

26 BNDO now argues, in effect, that this court misapprehended the law by overreading the significance of the complaint's use of "attorned." 26 BNDO contends that the complaint intended merely to say that for practical purposes the three subtenants treated 26 BNDO as having stepped into the shoes of the Mehmets for purposes of rent payments—not that the sale of the building had ousted the Mehmets' tenancy (and thus their responsibility for ensuring payment of rent) altogether. (See NYSCEF No. 50, at 6.) And 26 BNDO repeatedly emphasizes that under the terms of the Mehmets' written lease for apartment 4F, the Mehmets remained responsible for the rent even if for practical reasons the subtenants were paying rent directly to the owner.

This argument, however, founders on a simple fact that the parties did not directly address on the prior motion and which 26 BNDO's reargument papers do not grapple with now: the record indicates that the Mehmets' written lease expired months before 26 BSM sold the building to 26 BNDO—and that the Mehmets never became 26 BNDO's tenants after the sale at all. Because the significance of the expiration of the Mehmets' written lease was not fully explored on the original motion to dismiss, this court grants leave to reargue the issue whether the Mehmets remained tenants of 26 BNDO after the sale of the building. On reargument, though, this court adheres to its original conclusion that the Mehmets were not 26 BNDO's tenants.

As noted above, see supra at 2, the Mehmets' written lease for apartment 4F expired as of September 2015. Counsel for 26 BNDO stated in an affirmation in opposition to Badisse Mehmet's motion to dismiss that that after the lease expired the Mehmets held possession of the apartment as month-to-month tenants (presumably of 26 BSM). (See NYSCEF No. 7, at 8.) In that circumstance, the Mehmets' tenancy would continue on the same terms as under the written lease. (See City of New York v Pennsylvania R.R. Co., 37 NY2d 298, 300 [1975]).

That type of month-to-month tenancy exists only where the landlord has accepted a rent payment offered by the tenant that is holding over following the expiration of a written lease. (See Matter of Jaroslow v Lehigh Valley R.R. Co., 23 NY2d 991, 993 [1969]; RLR Realty Corp. v Duane Reade, Inc., 145 AD3d 444, 445 [1st Dept 2016]; 2955 Shell Assocs, L.P. v Kayani, 234 AD2d 287, 287 [2d Dept 1996].) Thus, to state a claim for unpaid rent owed by the Mehmets as holdover month-to-month tenants of 26 BNDO, plaintiff would have to allege that the Mehmets had become their month-to-month tenants in the first place by paying them rent. Plaintiff does not do so.[FN3]

To the contrary, 26 BNDO's counsel has specifically stated in multiple affirmations that the Mehmets never paid 26 BNDO rent. (See NYSCEF No. 7, at 12 [mot. seq. 001]; Aff. in Opp. to Mot. to Dismiss, NYSCEF No. 61, at 11 [mot. seq. 003].) The allegations of the complaint, and other evidence in the record, also indicate that following the sale of the building, [*5]the Mehmets never occupied apartment 4F, either.[FN4]

At most, a representative of 26 BNDO averred in opposing Badisse Mehmet's motion to dismiss that "it was understood that the Mehmets were retaining the Lease for Apartment 4 at 26 Bond Street and would pay the rent to the landlord." (Aff. of Steven Gautier, NYSCEF No. 8, at 12.) But absent a written lease, rent payments made and accepted, or physical occupancy, there was no legal basis under which the Mehmets could become 26 BNDO's tenants. Nor, therefore, could the Mehmets owe an obligation to 26 BNDO to ensure that 26 BNDO received rent payments owed under the terms of a tenancy.[FN5]

Instead, as 26 BNDO's complaint itself alleges, following the sale the Mehmets' erstwhile subtenants (Cioci, Wai, and Mitchell) attorned to 26 BNDO as their new landlord. Prior to the sale of the building, Cioci, Wai, and Mitchell held possession of apartment 4F and owed rent as undertenants of the Mehmets, who were in turn holdover month-to-month tenants of 26 BSM and responsible for ensuring that 26 BSM received the rent to which it was entitled. After the sale, Cioci, Wai, and Mitchell held possession of the apartment, and owed rent, simply as tenants of 26 BNDO. The Mehmets no longer owed an obligation to ensure the rent was paid. At that point, only Cioci, Wai, and Mitchell—not the Mehmets—were responsible for paying rent.[FN6]

26 BNDO also argues the Mehmets are collaterally estopped from challenging tenancy. But for collateral estoppel to govern a legal issue, that issue must previously have been both actually litigated and necessarily decided. (See Kaufman v Eli Lilly & Co., 65 NY2d 449, 456-457 [1985]; American Transit Ins. Co. v Hossain, 100 AD3d 421, 421 [1st Dept 2012].) Here, whether the Mehmets were tenants following the sale of the building was not actually litigated in the Civil Court proceeding. Rather, Civil Court awarded possession to 26 BNDO and entered a money judgment for back rent against the Mehmets only on default after the Mehmets failed to appear. In these circumstances the Civil Court order lacks collateral estoppel effect.

[*6]B. 26 BNDO's Request to Reargue This Court's Conclusion About Judicial Estoppel

26 BNDO also contends that this court misapprehended the law in holding that 26 BNDO was judicially estopped from asserting that the Mehmets were still tenants of apartment 4F after 26 BSM sold the building to 26 BNDO. In considering this contention, this court concludes that it is appropriate to grant leave to reargue to enable the court to clarify the extent to which 26 BNDO is judicially estopped from arguing that the Mehmets were its tenants. On reargument, though, this court again adheres to its prior conclusion that the Mehmets were not tenants of 26 BNDO.

As 26 BNDO correctly notes, a party is conclusively precluded from taking a position only if it previously obtained a "favorable ruling or judgment" by asserting a different, inconsistent position. (See 35 W. Realty Co. v Booston LLC, 171 AD3d 545, 545 [1st Dept 2019].) Even when not given full estoppel effect, however, "representations in the verified complaint and affidavit" constitute "informal judicial admissions" that are "some evidence of the facts as represented." (Id.)

Here, as discussed above, 26 BNDO's own allegations and affirmations of fact are simply irreconcilable with 26 BNDO's argument that following the sale of the building the Mehmets remained tenants of apartment 4F and were responsible for making up underpayments of rent by Cioci, Wai, and Mitchell. Thus, even if 26 BNDO is not conclusively barred by judicial estoppel from asserting that the Mehmets were its tenants, 26 BNDO's papers do not establish such a tenancy for purposes of its claims against the Mehmets.[FN7]

This court therefore adheres on reargument to its prior ruling granting Badisse Mehmet's motion to dismiss 26 BNDO's claims against him.

II. The Branch of 26 BNDO's Motion Seeking Leave to Renew

26 BNDO also seeks leave to renew its motion to dismiss to enable it to put before this court the Civil Court's nonpayment proceeding filings and decisions made after this court issued its October 1, 2018, amended order. In particular, the Mehmets moved to vacate Civil Court's default judgment, arguing that 26 BNDO had released the Mehmets from the lease and sublease and were no longer tenants in apartment 4F. (See NYSCEF No. 57). Civil Court granted vacatur of the money judgment against the Mehmets. (See NYSCEF No. 58.)

26 BNDO contends that in vacating the money judgment but not the award of possession, Civil Court necessarily held for estoppel purposes that the Mehmets had been tenants of apartment 4F. (See NYSCEF No. 50, at 6-7; see also NYSCEF No. 91, at 11-12.) That conclusion, however, does not follow. Civil Court could have reached the same result by accepting the Mehmets' argument that 26 BNDO had released them as tenants of apartment 4F: in that case 26 BNDO would still be entitled to a judgment awarding them possession of the [*7]apartment as against the Mehmets. Since the Civil Court order granting partial vacatur of its prior default judgment did not necessarily decide the issue of the Mehmets' tenancy, that order does not collaterally estop the Mehmets here. 26 BNDO's motion for leave to renew is denied.[FN8]

III. Kheira Mehmet's Motion to Dismiss

Kheira Mehmet seeks dismissal on the same grounds as this court relied upon to dismiss the claims against Badisse Mehmet. 26 BNDO, in opposing the motion, essentially relies on the same arguments that it made in favor of rearguing this court's dismissal of 26 BNDO's claims against Badisse Mehmet.

For the reasons given above, this court adheres to its ruling as to Badisse Mehmet, and concludes that the basis for that ruling applies equally to 26 BNDO's claims against Kheira Mehmet. Her motion to dismiss is granted; her motion for sanctions and attorney fees is denied.[FN9]

Accordingly, it is

ORDERED that 26 BNDO's motion for leave to reargue is granted, but that on renewal this court adheres to its prior decision; and it is further

ORDERED that 26 BNDO's motion for leave to renew is denied; and it is further

ORDERED that 26 BNDO's motion for leave to amend is denied; and it is further ordered that 26 BNDO LLC's cross-motion to hold defendant Kheira Mehmet's motion to dismiss in abeyance pending a decision on the motion for leave to renew and reargue is denied as academic; and it is further

ORDERED that Kheira Mehmet's motion to dismiss is granted, but her request for sanctions and attorney fees is denied; and it is further

ORDERED that defendant Kheira Mehmet shall serve a copy of this order with notice of entry on all parties and the County Clerk who shall enter judgment dismissing this action against her; and it is further

ORDERED that all remaining parties shall appear for a preliminary conference in Part 7, 60 Centre Street Room 345 on December 4, 2019, at 10:00am.

10/3/2019

DATE

GERALD LEBOVITS, J.S.C. Footnotes

Footnote 1: The petition did not indicate which written rental agreement gave the Mehmets possession of the premises as of January 2017. As noted above, the lease under which the Mehmets had previously enjoyed possession of the apartment expired at the end of September 2015.

Footnote 2: The complaint also sought attorney fees for this alleged breach, as provided for under the lease and sublease.

Footnote 3: To be sure, the Mehmets could also have become tenants of 26 BNDO pursuant to a new written lease. But 26 BNDO does not allege—and the record does not suggest—that the Mehmets and 26 BNDO executed a written lease after the sale of the building.

Footnote 4: (See NYSCEF No. 1, at34-37, 44, 49 [alleging that Cioci, Wai, and Mitchell lived in the apartment between March 2016 and June 2017, without mentioning the Mehmets]; New York City Loft Board Letter Determination dated Dec. 6, 2016, NYSCEF No. 79, at 4 [listing Cioci, Wai, and Mitchell as "Current Residential Occupant[s]"]; Reply Aff. in Opp. to Kheira Mehmet Mot. to Dismiss, NYSCEF No. 81, at 8 [acknowledging that Cioci, Wai, and Mitchell "were the occupants of the Subject Apartment"].)

Footnote 5: The Mehmets maintain that at the sale closing, a principal of 26 BNDO required them to sign a document relinquishing any claim to tenancy. (See Aff. in Supp. of Badisse Mehmet Mot. to Dismiss, NYSCEF No. 2, at 2.) As this court noted in its October 2018 amended order (see NYSCEF No. 24), the court need not decide that issue: regardless whether the Mehmets ever executed such a document, 26 BNDO has not sufficiently alleged that the Mehmets ever became 26 BNDO's tenants after the closing.

Footnote 6: 26 BNDO suggests that the Mehmets would still have remained responsible for payment of rent because they improperly permitted their subtenants (i.e., Cioci, Wai, and Mitchell) to remain in the apartment after the sale.(See Reply Aff. in Supp. of Mot. to Reargue, NYSCEF No. 91, at 7-8.) This theory of liability is not properly before the court because plaintiff raised it for the first time only on reply in support of reargument. (See Frisenda v. X Large Enters., Inc., 280 AD2d 514, 515 [2d Dept 2001].) 26 BNDO also does not identify any provision in the Mehmets' original written lease requiring them to remove subtenants upon relinquishing possession of the apartment. And the argument is inconsistent with the allegation in the complaint that the subtenants attorned to 26 BNDO and paid it rent directly, because that allegation suggests that 26 BNDO accepted the subtenants' continued occupancy.

Footnote 7: 26 BNDO also seeks leave to amend its complaint to replace the allegations that Cioci, Wai, and Mitchell "attorned" to 26 BNDO as their new landlord with statements (i) that "[f]ollowing transfer of title to the Subject Building, the Mehmets never paid rent to the Plaintiff," and that instead "[f]or the Mehmets' convenience, following transfer of title to the Subject Building Cioci, Wai, and Mitchell began making rent payments directly to plaintiff." (Proposed Am. Compl., NYSCEF No. 59, at16-17.) For the reasons set forth above, these allegations do not support 26 BNDO's claims; quite the opposite. This court therefore denies this request for leave to amend as futile.

Footnote 8: 26 BNDO also seeks in light of the Civil Court vacatur of the money judgment to amend the complaint to increase the amount of damages for which the Mehmets are allegedly severally liable. (See NYSCEF No. 49, at 7.) In light of this court's conclusion that 26 BNDO has not stated a cause of action against the Mehmets, this request to amend is denied as futile.

Footnote 9: 26 BNDO cross-moved in motion sequence 003, seeking to hold any decision on Kheira Mehmet's motion to dismiss in abeyance pending this court's decision of 26 BNDO's motion for leave to renew and reargue. (See NYSCEF No. 61, at19-21.) The cross-motion is denied as academic.