Landlord & Tenant

AppTerm, First Dept

(memorandum opinion)

In landlord's summary nonpayment proceeding, landlord appealed from Civil Court's grant of tenant's motion to dismiss. The Appellate Term reversed, holding that landlord is entitled to proceed with an eviction for nonpayment of rent despite tenant's bankruptcy discharge.

Landlord brought a summary proceeding to evict tenant for nonpayment of rent that had accrued from May 1993 to June 1999. In November 1999, tenant secured a discharge in bankruptcy which absolved him from personal liability for the $42,000 in rent arrears. Civil Court dismissed the summary proceeding based on the discharge.

In reversing, the Appellate Term held that the bankruptcy discharge extinguished landlord's right to bring an action against tenant in personam, but did not immunize tenant from in rem proceedings like the proceeding for possession in this case. The court reasoned that a bankrupt tenant is no more immune from eviction than a bankrupt mortgagor is immune from foreclosure. As a result, the court granted landlord's motion to restore the proceeding to the trial calendar.

COMMENT

In Stahl Broadway Co. v. Haskins, 180 Misc. 2d 705, the Appellate Term dismissed landlord's nonpayment proceeding, holding that in light of tenant's bankruptcy discharge, tenant's rent was no longer in arrears.

Subsequently, federal courts rejected Stahl's reasoning, and held that a bankruptcy discharge shields debtors from actions to collect the debt, but not from other remedies. See United States v. Alfano, 34 F. Supp. 2d 827, (E.D.N.Y. 1999) (underlying debt not extinguished by discharge);. In re Hepburn, 27 B.R. 135 (noting that the discharge of bankruptcy “does not constitute the payment of rental”).

As a result, the court in Dulac disregarded the Stahl holding and held that a landlord can use state courts as a vehicle for recovering possession of the premises from a discharged tenant (so long as a landlord does not seek a judgment for rent in arrears).

DHCR Converts Overcharge Complaint to Fair Market Rent Appeal

1 Bk Street Corp. v. New York State Division of Housing and Community Renewal

NYLJ 2/24/03, p. 18, col. 5

AppDiv, First Dept

(4-1 decision; memorandum opinion; Ellerin, J. dissenting)

In landlord's article 78 proceeding to vacate a DHCR determination setting the fair market rent for the subject apartment and directing landlord to refund excess rent payments paid to landlord's predecessor, tenant appealed from Supreme Court's grant of the petition. The Appellate Division reversed and dismissed the proceeding, holding that DHCR's determination was rationally based in the record and not subject to judicial disturbance.

Although tenant's predecessor was a rent-controlled tenant, prior owner failed to furnish tenant with the notices informing him of the change in status of the apartment from rent-controlled to rent-stabilized, and of tenant's right to bring a fair market rent appeal. As a result, tenant's initial complaint to DHCR was styled as a rent overcharge complaint. DHCR converted the complaint into a fair market rent appeal, and determined that current landlord was liable to tenant for overcharges. Landlord brought this proceeding challenging the determination, and Supreme Court granted the petition.

In reversing, the Appellate Division first pointed to tenant's handwritten notation in his complaint indicating his understanding that the prior tenant was rent-controlled, and held that the notation was sufficient to put landlord on notice that the complaint was, in effect, a fair market rent appeal. Hence, the court concluded that DHCR's determination to convert the complaint was rationally based. The court then observed that the current owner is responsible for his predecessor's overcharges, and rejected landlord's contention that it had suffered actual prejudice.

Landlord May Evict Bankruptcy Tenant

Dulac v. Dabrowski

NYLJ 2/26/03, p. 22, col. 1

AppTerm, First Dept

(memorandum opinion)

In landlord's summary nonpayment proceeding, landlord appealed from Civil Court's grant of tenant's motion to dismiss. The Appellate Term reversed, holding that landlord is entitled to proceed with an eviction for nonpayment of rent despite tenant's bankruptcy discharge.

Landlord brought a summary proceeding to evict tenant for nonpayment of rent that had accrued from May 1993 to June 1999. In November 1999, tenant secured a discharge in bankruptcy which absolved him from personal liability for the $42,000 in rent arrears. Civil Court dismissed the summary proceeding based on the discharge.

In reversing, the Appellate Term held that the bankruptcy discharge extinguished landlord's right to bring an action against tenant in personam, but did not immunize tenant from in rem proceedings like the proceeding for possession in this case. The court reasoned that a bankrupt tenant is no more immune from eviction than a bankrupt mortgagor is immune from foreclosure. As a result, the court granted landlord's motion to restore the proceeding to the trial calendar.

COMMENT

In Stahl Broadway Co. v. Haskins, 180 Misc. 2d 705, the Appellate Term dismissed landlord's nonpayment proceeding, holding that in light of tenant's bankruptcy discharge, tenant's rent was no longer in arrears.

Subsequently, federal courts rejected Stahl's reasoning, and held that a bankruptcy discharge shields debtors from actions to collect the debt, but not from other remedies. See United States v. Alfano, 34 F. Supp. 2d 827, (E.D.N.Y. 1999) (underlying debt not extinguished by discharge);. In re Hepburn, 27 B.R. 135 (noting that the discharge of bankruptcy “does not constitute the payment of rental”).

As a result, the court in Dulac disregarded the Stahl holding and held that a landlord can use state courts as a vehicle for recovering possession of the premises from a discharged tenant (so long as a landlord does not seek a judgment for rent in arrears).

DHCR Converts Overcharge Complaint to Fair Market Rent Appeal

1 Bk Street Corp. v. New York State Division of Housing and Community Renewal

NYLJ 2/24/03, p. 18, col. 5

AppDiv, First Dept

(4-1 decision; memorandum opinion; Ellerin, J. dissenting)

In landlord's article 78 proceeding to vacate a DHCR determination setting the fair market rent for the subject apartment and directing landlord to refund excess rent payments paid to landlord's predecessor, tenant appealed from Supreme Court's grant of the petition. The Appellate Division reversed and dismissed the proceeding, holding that DHCR's determination was rationally based in the record and not subject to judicial disturbance.

Although tenant's predecessor was a rent-controlled tenant, prior owner failed to furnish tenant with the notices informing him of the change in status of the apartment from rent-controlled to rent-stabilized, and of tenant's right to bring a fair market rent appeal. As a result, tenant's initial complaint to DHCR was styled as a rent overcharge complaint. DHCR converted the complaint into a fair market rent appeal, and determined that current landlord was liable to tenant for overcharges. Landlord brought this proceeding challenging the determination, and Supreme Court granted the petition.

In reversing, the Appellate Division first pointed to tenant's handwritten notation in his complaint indicating his understanding that the prior tenant was rent-controlled, and held that the notation was sufficient to put landlord on notice that the complaint was, in effect, a fair market rent appeal. Hence, the court concluded that DHCR's determination to convert the complaint was rationally based. The court then observed that the current owner is responsible for his predecessor's overcharges, and rejected landlord's contention that it had suffered actual prejudice.