Landlord & Tenant

Laches Precludes Judgment for Possession

A & E Tiebout Realty LLC v. Johnson

NYLJ 4/24/09, p. 27., col. 1

Civil Court, Bronx Cty.

(Madhaven, J.)

In landlord's summary nonpayment proceeding, tenant sought summary judgment. The court granted tenant's motion, holding that landlord's delay in seeking back rent precluded landlord from obtaining a judgment of possession.

Rent-stabilized tenant, who receives a section 8 subsidy, failed to pay her share of her rent for the months of December 2006 through February 2007 and September-October 2007. Since that time, she paid her share of the rent on time every month. In September 2008, landlord brought this nonpayment proceeding, alleging that tenant had failed to pay rent for August and September 2008, along with washing machine and air conditioning fees and other miscellaneous charges. Landlord contended that it had allocated tenant's payments to pay the rent arrears from 2006 and 2007, so that tenant's delinquency was with respect to the most recent months. Tenant moved for summary judgment dismissing the complaint, contending that laches barred landlord's claim for possession.

In granting tenant's summary judgment motion, the court relied on the fact that landlord's rent statements had never indicated that tenant was in arrears, a fact landlord conceded but contended was the result of a mistake. The court emphasized that tenant was indigent and elderly, and concluded that landlord's delay in seeking the rent arrears had unduly prejudiced tenant. The court conceded that ordinarily, when a debtor does not specify that a payment should be applied to a particular debt, the creditor is free to apply the payment as creditor sees fit, but the court held that the creditor's application of payments must be equitable and not work an injustice to the debtor. Here, the court held that application of monthly rent payments to past due debts would work prejudice to tenant if the result were to permit landlord to evict. As a result, the court held that landlord's eviction claim was barred by laches, and severed landlord's claim for back rent to a plenary action.

COMMENT

To establish the defense of laches in a landlord-tenant summary proceeding, the tenant must show that it was harmed by the landlord's unreasonable or inexcusable delay in enforcing its rights. In City of New York v. Betancourt, 79 Misc.2d 907, 908, the City waited in excess of three years before commencing a summary proceeding seeking rent and possession, and despite the continual existence of over $1,100 in arrears during the interval, the City accepted monthly payments on account of the rent as it accrued. The court affirmed the lower court's decision not to dismiss the proceeding, holding that the laches doctrine precluded landlord from obtaining a judgment of possession for “stale” rent, but holding that the case should proceed to trial for a factual determination of whether the rent was “stale.” Under the Betancourt rule, a landlord is only entitled to a judgment of possession based upon the non-payment of non-”stale” rent claims. If the rent is “stale,” then a landlord is limited to relief at law: an action for the back rent, and a right to bring an ejectment proceeding.

There is not a bright-line time test for staleness; rather, staleness is perhaps best understood as synonymous with when laches applies ' that is, when the tenant is prejudiced by the landlord's unreasonable delay. See Marriott v. Shaw, 151 Misc.2d 938, 944. In Marriott, the landlord, after acquiring the building, informed the 71-year-old indigent tenant that it would no longer accept rent from her, and then delayed for 25 months in bringing a proceeding against her, at which point it was impossible for the tenant to pay the many months' rent sought. Id. at 941. The court held that laches applied to a portion of the rent owed, but because the tenant did not make a specific showing to the contrary, the finding of laches did not cover the rent accrued in the three months before the proceeding was brought. Id. at 944-45. Although courts have often applied the laches doctrine to bar landlords from obtaining a possessory judgment for rent more than three months overdue at the time the landlord brings a summary proceeding, the laches doctrine does not apply to any of the overdue rent when the landlord's delay has not harmed the tenant. For instance, in R.M.H. Estates v. Hampshire, 13 Misc.3d 1222(A), the court held that the tenant could not invoke laches because the tenant was not prejudiced when the tenant had been living rent-free for approximately four years and could not have afforded pay the rent in 2002, much less the accumulated arrears four years later.

Commercial tenants may find it especially difficult to prove prejudice, and therefore to rely on the laches doctrine. For example, in City of New York v. Schmitt, 11 Misc.3d 145(A), the court held that the tenants' “bare assertions” that the City had unreasonably delayed in commencing commercial holdover proceedings against them to their detriment, were insufficient to establish prejudice. The court noted that the tenants, who owned and operated a marina, did not attempt to demonstrate any actual financial loss, and that because the tenants had the ability to make a profit from their commercial operations, the delay in bringing the proceedings may have actually accrued to their benefit.

Four-Year Rule Does Not Bar Overcharge Complaint When Rent Reduction Order Had Been Issued

Jenkins v. Fieldbridge Associates, LLC

NYLJ 4/16/09, p.26., col. 1

AppDiv, Second Dept.

(Opinion by Covello, J.)

In tenant's action to recover rent overcharges and treble damages, tenant appealed from the Appellate Term's reversal of Civil Court's award of overcharges and treble damages. The Appellate Division reversed and reinstated Civil Court's award, holding that Civil Court properly considered a rent reduction award in effect four years before tenant brought the overcharge proceeding, even though the award had been issued more than four years before tenant's complaint.

In 1993, a number of tenants, including the complaining tenants in this action, sought a rent reduction from DHCR, contending that landlord had failed to provide certain required services. In June of that year, DHCR issued an order reducing the legal regulated rent on each apartment, and prohibiting landlord from collecting any rent increases until DHCR issued a rent restoration order. Although the rent reduction order effectively fixed tenant's rent at $375.44 per month, tenant was unaware of the order and entered into a series of leases at higher rent. In 2002, after learning of the rent reduction order, tenant brought this action seeking to recover overcharges and treble damages. Civil Court granted tenant the requested relief, but the Appellate Term reversed, holding that any overcharges had to be based on a registration statement filed by the owner four years prior to filing of the complain. In this case, a rent of $449.68 per month. Tenant appealed.

In reversing and reinstating the Civil Court's order, the Appellate Division acknowledged a statutory conflict between the Rent Regulation Reform Act of 1997 (RRRA), which precludes examination of rental history prior to the four-year period prior to filing of an overcharge complaint, and the statutory obligation of an owner to comply with a rent reduction order. The court resolved the conflict by noting that nothing in the legislative history surrounding enactment of the RRRA suggested that the four-year proscription was intended to preclude consideration of a rent reduction order still in effect four years before the complaint was filed. Moreover, the court concluded that it should no countenance the failure of an owner to obey the terms of an order. As a result, the court concluded that tenant was entitled to recover overcharges based on the rent fixed in the rent reduction order.

COMMENT

CPLR 213-a and NYC Admin Code 26-516(a)(2) establish a four-year statute of limitations for rent overcharge claims in rent stabilized apartments. Additionally, the statutes preclude examination of rental history prior to the four-year period immediately preceding the commencement of a rent overcharge action. The legislature enacted the provisions to simplify rent overcharge proceedings and reduce the administrative burdens on landlords in retaining paperwork indefinitely.

Courts have found exceptions to the four-year rule at a tenant's behest in order to prevent landlords from abusing the rent regulation system. First, when a judicial rent reduction order remains in effect, the four-year rule doesn't preclude a tenant from relying on landlord's failure to comply with the order. In Condo Units v. DHCR, 4 A.D.3d 424, the appellate division held that DHCR can consider rents farther back than four years when existing rent-reduction orders are still in place. If courts did not allow tenants to look past four years, landlords could circumvent court orders by evading them for four years. Additionally, in East West Renovating Co. v. DHCR, 16 A.D.3d 166, the court held that rental histories can be examined past four years to determine whether an apartment is subject to rent regulation. In East West, tenant's initial lease represented that the apartment was deregulated, even though landlord's acceptance of J-51 tax benefits precluded deregulation. The court held that landlord could not rely on the four-year rule to prevent tenant from challenging landlord's assertion that the apartment was deregulated.

Courts have also held the four-year rule inapplicable when landlords have established that application of the rule would directly conflict with other provisions of the rent regulation scheme designed to benefit landlords. In Ador Realty, LLC v. DHCR, 25 A.D.3d 128, the court held that DHCR can examine rental history past four years when setting rents pursuant to a longevity increase. Because the regulatory provision entitles landlord to a longevity increase after eight years without a vacancy increase, it would be impossible ever to award a longevity increases if the court was limited to a four year review by CPLR 213-a. Furthermore, in H.O. Realty Corp. v. DHCR, 46 A.D.3d 103, the court allowed landlord to introduce evidence more than four years old to establish that any overcharge was not willful, and did not therefore trigger treble damages. The court reasoned that because landlords are the intended beneficiaries of the four year rule, allowing landlords to introduce evidence that potentially negates willfulness would be consistent with the intent of the statute.

Rent Obligation Independent of Landlord's Obligation to Maintain

91 East Main Street Realty Corp. v. Angelic Creations by Lucia

NYLJ 4/30/09, p. 42., col. 2

AppTerm, 9th and 10th Districts

(memorandum opinion)

In a commercial summary nonpayment proceeding, tenant appealed from Justice Court's award of possession and back rent. The Appellate Term affirmed, holding that tenant's obligation to pay rent was independent of landlord's obligations to make repairs or provide essential services.

Landlord brought this nonpayment proceeding, which was adjourned twice at tenant's request, and a third time to permit tenant an additional opportunity to obtain counsel. Justice Court denied tenant's request for a fourth adjournment to permit tenant to obtain counsel, but permitted a friend of tenant's to assist in the litigation. Tenant conceded that it had not paid rent, but argued instead that landlord had breached the lease. Justice Court refused to permit tenant to raise claims of breach, informing tenant's principal that she could raise such claims in another forum. The court then awarded landlord possession and back rent, and the tenant appealed.

In affirming, the Appellate Term held that in the absence of a clear intention to the contrary, a commercial tenant's obligation to pay rent is independent of landlord's obligation to make repairs or provide essential services. Tenant never alleged that the parties intended to the contrary, so that landlord's alleged breaches did not excuse tenant's failure to pay rent. Accordingly, landlord was entitled to possession and back rent.

Laches Precludes Judgment for Possession

A & E Tiebout Realty LLC v. Johnson

NYLJ 4/24/09, p. 27., col. 1

Civil Court, Bronx Cty.

(Madhaven, J.)

In landlord's summary nonpayment proceeding, tenant sought summary judgment. The court granted tenant's motion, holding that landlord's delay in seeking back rent precluded landlord from obtaining a judgment of possession.

Rent-stabilized tenant, who receives a section 8 subsidy, failed to pay her share of her rent for the months of December 2006 through February 2007 and September-October 2007. Since that time, she paid her share of the rent on time every month. In September 2008, landlord brought this nonpayment proceeding, alleging that tenant had failed to pay rent for August and September 2008, along with washing machine and air conditioning fees and other miscellaneous charges. Landlord contended that it had allocated tenant's payments to pay the rent arrears from 2006 and 2007, so that tenant's delinquency was with respect to the most recent months. Tenant moved for summary judgment dismissing the complaint, contending that laches barred landlord's claim for possession.

In granting tenant's summary judgment motion, the court relied on the fact that landlord's rent statements had never indicated that tenant was in arrears, a fact landlord conceded but contended was the result of a mistake. The court emphasized that tenant was indigent and elderly, and concluded that landlord's delay in seeking the rent arrears had unduly prejudiced tenant. The court conceded that ordinarily, when a debtor does not specify that a payment should be applied to a particular debt, the creditor is free to apply the payment as creditor sees fit, but the court held that the creditor's application of payments must be equitable and not work an injustice to the debtor. Here, the court held that application of monthly rent payments to past due debts would work prejudice to tenant if the result were to permit landlord to evict. As a result, the court held that landlord's eviction claim was barred by laches, and severed landlord's claim for back rent to a plenary action.

COMMENT

To establish the defense of laches in a landlord-tenant summary proceeding, the tenant must show that it was harmed by the landlord's unreasonable or inexcusable delay in enforcing its rights. In City of New York v. Betancourt, 79 Misc.2d 907, 908, the City waited in excess of three years before commencing a summary proceeding seeking rent and possession, and despite the continual existence of over $1,100 in arrears during the interval, the City accepted monthly payments on account of the rent as it accrued. The court affirmed the lower court's decision not to dismiss the proceeding, holding that the laches doctrine precluded landlord from obtaining a judgment of possession for “stale” rent, but holding that the case should proceed to trial for a factual determination of whether the rent was “stale.” Under the Betancourt rule, a landlord is only entitled to a judgment of possession based upon the non-payment of non-”stale” rent claims. If the rent is “stale,” then a landlord is limited to relief at law: an action for the back rent, and a right to bring an ejectment proceeding.

There is not a bright-line time test for staleness; rather, staleness is perhaps best understood as synonymous with when laches applies ' that is, when the tenant is prejudiced by the landlord's unreasonable delay. See Marriott v. Shaw, 151 Misc.2d 938, 944. In Marriott, the landlord, after acquiring the building, informed the 71-year-old indigent tenant that it would no longer accept rent from her, and then delayed for 25 months in bringing a proceeding against her, at which point it was impossible for the tenant to pay the many months' rent sought. Id. at 941. The court held that laches applied to a portion of the rent owed, but because the tenant did not make a specific showing to the contrary, the finding of laches did not cover the rent accrued in the three months before the proceeding was brought. Id. at 944-45. Although courts have often applied the laches doctrine to bar landlords from obtaining a possessory judgment for rent more than three months overdue at the time the landlord brings a summary proceeding, the laches doctrine does not apply to any of the overdue rent when the landlord's delay has not harmed the tenant. For instance, in R.M.H. Estates v. Hampshire, 13 Misc.3d 1222(A), the court held that the tenant could not invoke laches because the tenant was not prejudiced when the tenant had been living rent-free for approximately four years and could not have afforded pay the rent in 2002, much less the accumulated arrears four years later.

Commercial tenants may find it especially difficult to prove prejudice, and therefore to rely on the laches doctrine. For example, in City of New York v. Schmitt, 11 Misc.3d 145(A), the court held that the tenants' “bare assertions” that the City had unreasonably delayed in commencing commercial holdover proceedings against them to their detriment, were insufficient to establish prejudice. The court noted that the tenants, who owned and operated a marina, did not attempt to demonstrate any actual financial loss, and that because the tenants had the ability to make a profit from their commercial operations, the delay in bringing the proceedings may have actually accrued to their benefit.

Four-Year Rule Does Not Bar Overcharge Complaint When Rent Reduction Order Had Been Issued

Jenkins v. Fieldbridge Associates, LLC

NYLJ 4/16/09, p.26., col. 1

AppDiv, Second Dept.

(Opinion by Covello, J.)

In tenant's action to recover rent overcharges and treble damages, tenant appealed from the Appellate Term's reversal of Civil Court's award of overcharges and treble damages. The Appellate Division reversed and reinstated Civil Court's award, holding that Civil Court properly considered a rent reduction award in effect four years before tenant brought the overcharge proceeding, even though the award had been issued more than four years before tenant's complaint.

In 1993, a number of tenants, including the complaining tenants in this action, sought a rent reduction from DHCR, contending that landlord had failed to provide certain required services. In June of that year, DHCR issued an order reducing the legal regulated rent on each apartment, and prohibiting landlord from collecting any rent increases until DHCR issued a rent restoration order. Although the rent reduction order effectively fixed tenant's rent at $375.44 per month, tenant was unaware of the order and entered into a series of leases at higher rent. In 2002, after learning of the rent reduction order, tenant brought this action seeking to recover overcharges and treble damages. Civil Court granted tenant the requested relief, but the Appellate Term reversed, holding that any overcharges had to be based on a registration statement filed by the owner four years prior to filing of the complain. In this case, a rent of $449.68 per month. Tenant appealed.

In reversing and reinstating the Civil Court's order, the Appellate Division acknowledged a statutory conflict between the Rent Regulation Reform Act of 1997 (RRRA), which precludes examination of rental history prior to the four-year period prior to filing of an overcharge complaint, and the statutory obligation of an owner to comply with a rent reduction order. The court resolved the conflict by noting that nothing in the legislative history surrounding enactment of the RRRA suggested that the four-year proscription was intended to preclude consideration of a rent reduction order still in effect four years before the complaint was filed. Moreover, the court concluded that it should no countenance the failure of an owner to obey the terms of an order. As a result, the court concluded that tenant was entitled to recover overcharges based on the rent fixed in the rent reduction order.

COMMENT

CPLR 213-a and NYC Admin Code 26-516(a)(2) establish a four-year statute of limitations for rent overcharge claims in rent stabilized apartments. Additionally, the statutes preclude examination of rental history prior to the four-year period immediately preceding the commencement of a rent overcharge action. The legislature enacted the provisions to simplify rent overcharge proceedings and reduce the administrative burdens on landlords in retaining paperwork indefinitely.

Courts have found exceptions to the four-year rule at a tenant's behest in order to prevent landlords from abusing the rent regulation system. First, when a judicial rent reduction order remains in effect, the four-year rule doesn't preclude a tenant from relying on landlord's failure to comply with the order. In Condo Units v. DHCR, 4 A.D.3d 424, the appellate division held that DHCR can consider rents farther back than four years when existing rent-reduction orders are still in place. If courts did not allow tenants to look past four years, landlords could circumvent court orders by evading them for four years. Additionally, in East West Renovating Co. v. DHCR, 16 A.D.3d 166, the court held that rental histories can be examined past four years to determine whether an apartment is subject to rent regulation. In East West, tenant's initial lease represented that the apartment was deregulated, even though landlord's acceptance of J-51 tax benefits precluded deregulation. The court held that landlord could not rely on the four-year rule to prevent tenant from challenging landlord's assertion that the apartment was deregulated.

Courts have also held the four-year rule inapplicable when landlords have established that application of the rule would directly conflict with other provisions of the rent regulation scheme designed to benefit landlords. In Ador Realty, LLC v. DHCR, 25 A.D.3d 128, the court held that DHCR can examine rental history past four years when setting rents pursuant to a longevity increase. Because the regulatory provision entitles landlord to a longevity increase after eight years without a vacancy increase, it would be impossible ever to award a longevity increases if the court was limited to a four year review by CPLR 213-a. Furthermore, in H.O. Realty Corp. v. DHCR, 46 A.D.3d 103, the court allowed landlord to introduce evidence more than four years old to establish that any overcharge was not willful, and did not therefore trigger treble damages. The court reasoned that because landlords are the intended beneficiaries of the four year rule, allowing landlords to introduce evidence that potentially negates willfulness would be consistent with the intent of the statute.

Rent Obligation Independent of Landlord's Obligation to Maintain

91 East Main Street Realty Corp. v. Angelic Creations by Lucia

NYLJ 4/30/09, p. 42., col. 2

AppTerm, 9th and 10th Districts

(memorandum opinion)

In a commercial summary nonpayment proceeding, tenant appealed from Justice Court's award of possession and back rent. The Appellate Term affirmed, holding that tenant's obligation to pay rent was independent of landlord's obligations to make repairs or provide essential services.

Landlord brought this nonpayment proceeding, which was adjourned twice at tenant's request, and a third time to permit tenant an additional opportunity to obtain counsel. Justice Court denied tenant's request for a fourth adjournment to permit tenant to obtain counsel, but permitted a friend of tenant's to assist in the litigation. Tenant conceded that it had not paid rent, but argued instead that landlord had breached the lease. Justice Court refused to permit tenant to raise claims of breach, informing tenant's principal that she could raise such claims in another forum. The court then awarded landlord possession and back rent, and the tenant appealed.

In affirming, the Appellate Term held that in the absence of a clear intention to the contrary, a commercial tenant's obligation to pay rent is independent of landlord's obligation to make repairs or provide essential services. Tenant never alleged that the parties intended to the contrary, so that landlord's alleged breaches did not excuse tenant's failure to pay rent. Accordingly, landlord was entitled to possession and back rent.