41 E. 11th St., LLC v WSIP Realty Corp.
Annotate this CaseDecided on January 21, 2020
Civil Court of the City of New York, New York County
41 East 11th Street, LLC, Petitioner-Landlord
against
WSIP Realty Corp., d/b/a WASHINGTON SQUARE INSTITUTE, Respondent-Tenant, "ABC Corp," Respondent-Undertenant.
L & T 72012/19
CUTLER MINIKES & ADELMAN LLP
Attorneys for Petitioner
By: JONATHAN Z. MINIKES, ESQ
708 Third Avenue - 5th Floor
New York, New York 10017
212.983.0074
CANDACE C. CARPONTER, ESQ
Attorneys for Respondent
31 Smith Street - Second Floor
Brooklyn, New York 11201
212.367.9600
Sabrina B. Kraus, J.
BACKGROUND
Petitioner commenced this summary nonpayment proceeding seeking to recover possession of 411 East 11th Street a/k/a 95 University Place, 4th Floor, New York, New York 10010 (Subject Premises), based on the allegation that Respondent has failed to pay rent due pursuant to the parties' lease agreement.
PROCEDURAL HISTORY
Petitioner issued a fourteen (14) day rent demand dated October 15, 2019, seeking $240,007.99 in rent and additional rent for a period from August 2019 through October 2019, at a monthly base rent of $67,561.06. The petition was filed on November 13, 2019, and the notice of petition and proof of service were filed on November 21, 2019.
Respondent appeared by counsel on December 4, 2019, and filed an answer asserting some denials and one affirmative defense, that Petitioner failed to provide a proper rent notice as required by Section 235-e(d) of the Real Property Law.
An initial court date was set for December 13, 2019.
THE PENDING MOTION
On December 13, 2019, Petitioner moved for summary judgment. The motion was adjourned to January 16, 2020, for the submission of additional papers. On January 16, 2020, the motion was fully submitted and the court reserved decision. For the reasons set forth below, petitioner's motion is granted only to the extent of dismissing respondent's first affirmative defense and otherwise denied as there are questions of fact requiring a trial.
DISCUSSION
RPL § 235- e (d) Does Not Apply to Commercial Tenancies
RPL § 235-e governs the duty of a landlord to provide a written receipt to residential tenants. The statute reads: (a) Upon the receipt of the payment of rent for residential premises in the form of cash, or any instrument other than the personal check of the lessee, it shall be the duty of the lessor, or any agent of the lessor authorized to receive rent, to provide the lessee with a written receipt containing the following:1. The date;2. The amount;3. The identity of the premises and period for which paid; and4. The signature and title of the person receiving the rent.(b) A lessee may request, in writing, that a lessor provide a receipt for rent paid by personal check. If such request is made, the lessor, or any agent of the lessor authorized to receive rent, shall provide the lessee with the receipt described in subdivision (a) of this section. Such request shall, unless otherwise specified by the lessee, remain in effect for the duration of such lessee's tenancy. The lessor shall maintain a record of all cash receipts for rent for at least three years.(c) If a payment of rent is personally transmitted to a lessor, or an agent of a lessor authorized to receive rent, the receipt for such payment shall be issued immediately to a lessee. If a payment of rent is transmitted indirectly to a lessor, or an agent of a lessor authorized to receive rent, a lessee shall be provided with a receipt within fifteen days of such lessor or agent's receipt of a rent payment.(d) If a lessor, or an agent of a lessor authorized to receive rent, fails to receive payment for rent within five days of the date specified in a lease agreement, such lessor or agent shall send the lessee, by certified mail, a written notice stating the failure to receive such rent payment. The failure of a lessor, or any agent of the lessor authorized to receive rent, to provide a lessee with a written notice of the nonpayment of rent may be used as an affirmative defense by such lessee in an eviction proceeding based on the nonpayment of [*2]rent.
(Emphasis added).
As part of the Housing Stability and Tenant Protection Act of 2019, RPL 235-e(d) was added as a further predicate to commence of nonpayment proceedings, requiring written notice to the tenant that the rent was not received. The act, like the specific provision above, was aimed at extending protections to residential tenants in New York State. While each provision of RPL 235-e does not reiterate the fact that it only applies to residential tenancies, the intent seems clear as all the following provisions pertain to receipts for rent.
Examination of the legislative history also makes it clear that the primary purpose of the act was to protect residential tenants.
Rent regulations were enacted in response to an ongoing housing shortage crisis, as evidenced by an extremely low vacancy rate. Under tight rental markets, tenants struggle to secure safe, affordable housing, and landlords have little incentive to keep tenants in place long term by offering consistently low rent increases. Today, the City of New York and municipalities in Nassau, Westchester, and Rockland counties strug- gle to protect their regulated housing stock, which provides and main- tains affordable housing for millions of low and middle income tenants. Rent regulations have been proven to protect tenants while allowing owners to invest in their buildings. Municipalities struggling with the same housing pressures deserve to have the same access to rent regulations that New York City residents have had for decades. This would allow local governments the opportunity to protect their housing stock as well, so residents can afford to live there without the threat of eviction, the fear of rapid and unaffordable rent increases, or rent burden.
As has been extensively documented, New York State ranks only 39th in the nation for tenant protections. For tenants who rent market-rate units, this legislation would ensure they do not face unreasonable barriers to applying for and being offered leases; have more notice if a landlord wants to bring a court proceeding against them; allow more leniency throughout any eviction proceeding, including stays of eviction and executions of warrants; and ensure that any eviction that is executed is done so in the interest of justice.
2019 New York Senate Bill No. 6458, New York Two Hundred Forty-Second Legislative Session.
Certainly there are provisions of the act that implicate both residential and commercial tenancies ( see eg RPAPL § 711(2) which changed rent demand from five days to 14 days), however, there is no reason for the courts to widen the scope of this specific provision aimed at residential tenancies to commercial tenancies that involve sophisticated parties in business transactions. The reluctance of courts to assert themselves in such transactions was recently reaffirmed by the Court of Appeals when the court declined to rule a provision in a commercial lease waiving the right to a declaratory judgment as unenforceable. The court held
In keeping with New York's status as the preeminent commercial center in the United States, if not the world, our courts have long deemed the enforcement of commercial contracts according to the terms adopted by the parties to be a pillar of the common law. Thus, "[f]reedom of contract prevails in an arm's length transaction between sophisticated parties . . . , and in the absence of countervailing public policy concerns [*3]there is no reason to relieve them of the consequences of their bargain" (Oppenheimer & Co. v Oppenheim, Appel, Dixon & Co., 86 NY2d 685, 695 [1995]).159 MP Corp. v. Redbridge Bedford, LLC, 33 NY3d 353, 359, reargument denied, 33 NY3d 1136 (2019). The court concluded that "(e)ntities like those party to this appeal are well-situated to manage their affairs during negotiations, and to conclude otherwise would patronize sophisticated parties and destabilize their contractual relationships ...".
Given the fact that RPL § 235-e refers specifically to residential tenancies and not to commercial tenancies, given the clear intent of the Housing Stability and Tenant Protection Act of 2019 to extend protections to residential tenants and the general policy of this state to allow commercial transactions without undue interference, the court finds that RPL § 235-e(d) is not applicable to commercial tenancies and respondent's first and only affirmative defense is dismissed.
There are questions of fact requiring a trial
The motion papers establish that Petitioner is the owner of the Subject Premises pursuant to a deed dated August 15, 2005 (Ex A to moving papers and Ex A to reply papers). According to the lease attached to the moving papers, the tenant of record is Washington Square Institute Realty Corp. (Ex B to moving papers). This party is not named in this proceeding. The respondent herein is WSIP Realty Corp. d/b/a Washington Square Institute.
There is no explanation for this discrepancy in the petition. Petitioner does not address it at all in the moving papers and respondent denies the allegations of paragraph 2 of the petition except to admit that they are in possession pursuant to "an agreement". The affidavit of Marvin Weinstein states that respondent "substituted as Tenant" under a Lease, but does not provide any documentation showing said substitution or otherwise expand on the details of the substitution.
Additionally, while the court finds that the rent demand is sufficiently specific to serve as a predicate for this proceeding, the court agrees with respondent that more details should have been included in the moving papers as to how the monthly rent was calculated. These details and supporting documentation are provided in petitioner's reply papers, but this is insufficient to support an award of summary judgment. The function of reply papers is to address arguments made in opposition to the position taken by petitioner, not to permit petitioner to introduce new documents in support of the motion ( Dannasch v. Bifulco, 184 AD2d 415).
Finally, respondent disputes having received the underlying documentation for the additional rent charges such as the real estate tax bills plaintiff, (Woodlaurel, Inc. v. Wittman, 199 AD2d 497), while petitioner purports that the documents were given, this dispute raises a question of fact and again Petitioner's alleged documentation comes in the reply papers.
CONCLUSION
Based on the foregoing,
IT IS ORDERED that Petitioner's motion is granted to the extent of dismissing respondent's first affirmative defense and otherwise denied; and
IT IS FURTHER ORDERED that the proceeding is restored to the calendar for trial on February 5, 2020.
This constitutes the decision and order of this Court.
Dated: January 21, 2020
New York, New York
Hon. Sabrina B. Kraus, JCC
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