Landlord & Tenant

Landlord May Not Evict Tenant for Overcharging Roommates

First Hudson Capital, LLC v. Seaborn

NYLJ 8/7/08, p. 35, col. 1

AppDiv, First Dept.

(3-2 decision; memorandum opinion; dissenting memorandum by Saxe, J.)

In landlord's summary holdover proceeding against a tenant who had overcharged roommates in violation of section 2525.7(b) of the Rent Stabilization Code, tenant appealed from the Appellate Term's affirmance of Civil Court's award of possession to landlord. A divided Appellate Division reversed, holding that a landlord may not evict a tenant for overcharging roommates.

Section 2525.7(b) of the Rent Stabilization Code makes it a violation to charge a roommate more than a proportional share of the rent. The code provision, however, includes no remedy for its violation. In this case, tenant who moved into commercial space and invested in improvements in order to gain rent-stabilized status, advertised for roommates at a price in excess of their proportional share of the rent. Landlord brought this proceeding to recover possession, and Civil Court awarded possession, rejecting tenant's assertions that any violation had been minor and unwitting. The Appellate Term affirmed, characterizing tenant's actions as commercial exploitation of the stabilized apartment. Tenant appealed.

In reversing, the Appellate Division majority noted that in a case decided before enactment of section 2525.7(b), it had held that landlord could not evict a tenant for rent profiteering by overcharging a roommate. The court then concluded that when the legislature amended the code, and still provided no remedy, the code should be read to reaffirm the prior case law.

Justice Saxe, dissenting for himself and Justice Gonzalez, conceded that section 2525.7(b) contained no explicit enforcement provision, but argued that “it cannot seriously be suggested that it was intended to stand merely as an empty prohibition with no means of enforcement.” He endorsed the approach developed by the Appellate Term, under which a judgment of eviction would be available in cases of commercial exploitation, but not in cases of small overcharges made in good faith.

Landlord May Not Evict Illegal Aliens from Stabilized Apartment

Recalde v. BAE Cleaners Inc.

NYLJ 7/29/08, p. 26, col. 3

Supreme Ct., N.Y. Cty

(Madden, J.)

In rent-stabilized tenant's action for declaratory and injunctive relief, tenant sought a preliminary injunction preventing landlord from initiating eviction proceedings. The court granted the preliminary injunction, holding that tenant had established a likelihood of success on the merits of its eviction claim, despite landlord's contention that federal law requires landlord to remove illegal aliens from its building.

Tenant has occupied the rent-stabilized apartment since 2002. Landlord bought the building in 2006. The following year, before expiration of tenant's lease, landlord sent tenant a renewal application together with an application form seeking information from the tenant. Subsequently, landlord sent tenant a letter indicating that because of tenant's questionable immigration status, landlord would not accept further rent or offer a renewal lease to tenant. The letter indicated that landlord would seek advice from the federal immigration service about the legality of a landlord-tenant relationship with tenant. The letter further stated that if landlord found that it was legal to rent to tenant, landlord would be happy to extend the lease. Landlord later sent tenant a seven-day notice of termination on the ground that tenant's continued occupation of the premises was illegal because tenant had failed to submit any documentation to establish that tenant was legally in the country, and informing tenant that landlord would be subject to federal penalties if landlord knowingly permitted tenant to remain in the building. Tenant then brought this action, contending that landlord's action violates the rent stabilization code, the city Human Rights Law, and the General Business Law. Tenant sought a preliminary injunction.

In granting the preliminary injunction, the court noted first that tenant would suffer irreparable harm if tenant were evicted from his rent-stabilized apartment. The court then concluded that tenant had established a likelihood of success on the merits, holding that the Rent Stabilization Code permits landlord to evict a tenant for illegal use only after landlord has been actually charged with violation of federal law or actually subjected to criminal or civil penalties. In this case, neither event has occurred. The court then turned to the city Human Rights Law, and noted that the statute precludes discrimination based on alienage or citizenship status. Although the statute includes an exception when discrimination is required or expressly permitted by federal law, but held that the statute was inapplicable even though a federal statute does provide criminal and civil penalties for a person who harbors an alien “knowing, or in reckless disregard of the fact that an alien … remains in the United States in violation of law.” 8 U.S.C. sec. 1324(a)(1)(A)(iii). The court held that the statute does not require a landlord to verify a tenant's immigration status, and does not prohibit a landlord from renting an apartment to a tenant who lacks legal immigration status. Accordingly, tenant had established the requisites for grant of a preliminary injunction.

Tenant Organizations Not Liable for Tortious Interference with Economic Advantage

New Line Realty V Corp. v. United Committees of University Heights

NYLJ 7/28/08, p. 19, col. 1

Supreme Ct., Bronx Cty

(Manzanet-Daniels, J.)

In an action by landlords against tenant organizations for tortious interference with prospective economic advantage, tenant organizations moved for summary judgment. The court granted the motion, holding that landlords had failed to submit evidence in admissible form to oppose the summary judgment motion.

Landlords own several apartment buildings. Washington Mutual Bank (WaMu) holds a mortgage on the buildings, and landlord alleges that it had begun negotiations with WaMu to refinance the mortgage. Landlord alleged that tenant organizations had assisted tenants in advocating that WaMu enforce the good repair clause in the mortgages covering the apartment buildings, had circulated a flyer attacking WaMu's chairman, and had organized picketing of a WaMu branch. Landlord alleges that as a result of tenant's actions, WaMu had not approved refinancing of the mortgage.

In granting summary judgment to tenant organizations, the court first invoked the SLAPP statute, and indicated that because the activities of the tenant organizations involved public petition and participation, landlord bore the burden of proving that its claim had a substantial basis in fact a din law.

The court started by noting that landlords could not demonstrate that any contractual relationship existed with WaMu. In particular, the court relied on
affidavits by a WaMu credit officer that no mortgage refinance application was complete because the applicant did not want to fulfill the prerequisite of clearing violations on some of the buildings. In the absence of proof of a contractual relationship, tenant organizations were entitled to summary judgment.

Landlord May Not Evict Tenant for Overcharging Roommates

First Hudson Capital, LLC v. Seaborn

NYLJ 8/7/08, p. 35, col. 1

AppDiv, First Dept.

(3-2 decision; memorandum opinion; dissenting memorandum by Saxe, J.)

In landlord's summary holdover proceeding against a tenant who had overcharged roommates in violation of section 2525.7(b) of the Rent Stabilization Code, tenant appealed from the Appellate Term's affirmance of Civil Court's award of possession to landlord. A divided Appellate Division reversed, holding that a landlord may not evict a tenant for overcharging roommates.

Section 2525.7(b) of the Rent Stabilization Code makes it a violation to charge a roommate more than a proportional share of the rent. The code provision, however, includes no remedy for its violation. In this case, tenant who moved into commercial space and invested in improvements in order to gain rent-stabilized status, advertised for roommates at a price in excess of their proportional share of the rent. Landlord brought this proceeding to recover possession, and Civil Court awarded possession, rejecting tenant's assertions that any violation had been minor and unwitting. The Appellate Term affirmed, characterizing tenant's actions as commercial exploitation of the stabilized apartment. Tenant appealed.

In reversing, the Appellate Division majority noted that in a case decided before enactment of section 2525.7(b), it had held that landlord could not evict a tenant for rent profiteering by overcharging a roommate. The court then concluded that when the legislature amended the code, and still provided no remedy, the code should be read to reaffirm the prior case law.

Justice Saxe, dissenting for himself and Justice Gonzalez, conceded that section 2525.7(b) contained no explicit enforcement provision, but argued that “it cannot seriously be suggested that it was intended to stand merely as an empty prohibition with no means of enforcement.” He endorsed the approach developed by the Appellate Term, under which a judgment of eviction would be available in cases of commercial exploitation, but not in cases of small overcharges made in good faith.

Landlord May Not Evict Illegal Aliens from Stabilized Apartment

Recalde v. BAE Cleaners Inc.

NYLJ 7/29/08, p. 26, col. 3

Supreme Ct., N.Y. Cty

(Madden, J.)

In rent-stabilized tenant's action for declaratory and injunctive relief, tenant sought a preliminary injunction preventing landlord from initiating eviction proceedings. The court granted the preliminary injunction, holding that tenant had established a likelihood of success on the merits of its eviction claim, despite landlord's contention that federal law requires landlord to remove illegal aliens from its building.

Tenant has occupied the rent-stabilized apartment since 2002. Landlord bought the building in 2006. The following year, before expiration of tenant's lease, landlord sent tenant a renewal application together with an application form seeking information from the tenant. Subsequently, landlord sent tenant a letter indicating that because of tenant's questionable immigration status, landlord would not accept further rent or offer a renewal lease to tenant. The letter indicated that landlord would seek advice from the federal immigration service about the legality of a landlord-tenant relationship with tenant. The letter further stated that if landlord found that it was legal to rent to tenant, landlord would be happy to extend the lease. Landlord later sent tenant a seven-day notice of termination on the ground that tenant's continued occupation of the premises was illegal because tenant had failed to submit any documentation to establish that tenant was legally in the country, and informing tenant that landlord would be subject to federal penalties if landlord knowingly permitted tenant to remain in the building. Tenant then brought this action, contending that landlord's action violates the rent stabilization code, the city Human Rights Law, and the General Business Law. Tenant sought a preliminary injunction.

In granting the preliminary injunction, the court noted first that tenant would suffer irreparable harm if tenant were evicted from his rent-stabilized apartment. The court then concluded that tenant had established a likelihood of success on the merits, holding that the Rent Stabilization Code permits landlord to evict a tenant for illegal use only after landlord has been actually charged with violation of federal law or actually subjected to criminal or civil penalties. In this case, neither event has occurred. The court then turned to the city Human Rights Law, and noted that the statute precludes discrimination based on alienage or citizenship status. Although the statute includes an exception when discrimination is required or expressly permitted by federal law, but held that the statute was inapplicable even though a federal statute does provide criminal and civil penalties for a person who harbors an alien “knowing, or in reckless disregard of the fact that an alien … remains in the United States in violation of law.” 8 U.S.C. sec. 1324(a)(1)(A)(iii). The court held that the statute does not require a landlord to verify a tenant's immigration status, and does not prohibit a landlord from renting an apartment to a tenant who lacks legal immigration status. Accordingly, tenant had established the requisites for grant of a preliminary injunction.

Tenant Organizations Not Liable for Tortious Interference with Economic Advantage

New Line Realty V Corp. v. United Committees of University Heights

NYLJ 7/28/08, p. 19, col. 1

Supreme Ct., Bronx Cty

(Manzanet-Daniels, J.)

In an action by landlords against tenant organizations for tortious interference with prospective economic advantage, tenant organizations moved for summary judgment. The court granted the motion, holding that landlords had failed to submit evidence in admissible form to oppose the summary judgment motion.

Landlords own several apartment buildings. Washington Mutual Bank (WaMu) holds a mortgage on the buildings, and landlord alleges that it had begun negotiations with WaMu to refinance the mortgage. Landlord alleged that tenant organizations had assisted tenants in advocating that WaMu enforce the good repair clause in the mortgages covering the apartment buildings, had circulated a flyer attacking WaMu's chairman, and had organized picketing of a WaMu branch. Landlord alleges that as a result of tenant's actions, WaMu had not approved refinancing of the mortgage.

In granting summary judgment to tenant organizations, the court first invoked the SLAPP statute, and indicated that because the activities of the tenant organizations involved public petition and participation, landlord bore the burden of proving that its claim had a substantial basis in fact a din law.

The court started by noting that landlords could not demonstrate that any contractual relationship existed with WaMu. In particular, the court relied on
affidavits by a WaMu credit officer that no mortgage refinance application was complete because the applicant did not want to fulfill the prerequisite of clearing violations on some of the buildings. In the absence of proof of a contractual relationship, tenant organizations were entitled to summary judgment.