Landlord & Tenant

Factfinder Must Decide Whether Expenditures Constituted Improvements

Jemrock Realty Co, LLC v. Krugman

NYLJ 1/15/10

Court of Appeals

(memorandum opinion)

In landlord's action for rent arrears and possession of the subject apartment, tenant appealed from the Appellate Division's determination that landlord had established that its improvements brought the legal rent above the threshold for removing the apartment from rent stabilization. The Court of Appeals reversed, holding that resolution of that issue is a question of fact, not to be determined by an inflexible rule, and the Appellate Division had erroneously decided the issue as a matter of law.

When landlord's prior tenant vacated the apartment, landlord completed repairs and improvements on the apartment, and then rented the apartment to current tenant for more than $2,000 per month, basing that rent on its conclusion that the repairs and improvements entitled it to a base rent in excess of $2,000, which would have resulted in removal of the apartment from rent stabilization. Later, when tenant defaulted in payment of the rent, landlord brought this proceeding in Civil Court. That court concluded that although landlord had spent more than $50,000 on the apartment, landlord had not demonstrated that it had spent enough of that money on improvements (as opposed to repairs) to justify the rent increase that would remove the apartment from rent stabilization. The Appellate Term reversed, and concluded that landlord had met its burden. A divided Appellate Division affirmed, applying a rule of law that would allow landlord to collect the rent increase so long as it proves that its expenditures exceed the requisite amount. The Appellate Division dissent would have held that landlord must establish an item-by-item breakdown. Tenant appealed.

In reversing, the Court of Appeals rejected both the position of the Appellate Division majority and the Appellate Division dissent. Instead, the court concluded that the factfinder should determine whether the landlord's expenditures constituted improvements “based on the persuasive force of the evidence submitted by the parties,” not by reference to an inflexible rule that a “landlord is always required, or that it is never required, to submit an item-by-item breakdown” between improvements and repairs. Because the Appellate Division had never exercised its power to review the facts in this case, the court remitted to that court for a review of the facts.

Owner Occupancy Proceeding Precluded By Prior Proceeding Brought by Another Co-Owner

Begum v. Tapia

NYLJ 1/13/10

Civil Ct. Kings Cty.

(Finkelstein, J.)

In an owner occupancy holdover proceeding brought by one of three co-owners, tenant moved for summary judgment dismissing the complaint. The court granted tenant's motion, holding that a prior owner occupancy proceeding by another co-owner precluded any subsequent owner occupancy proceedings.

In 2004, one of three co-owners brought an owner occupancy proceeding to recover an apartment in the subject building. Tenant in that proceeding ultimately consented to a final judgment of possession. That co-owner either did not move into the apartment, or long since vacated the apartment. A second co-owner currently occupies that apartment. In this proceeding, the third co-owner sought possession of a different apartment for her personal use. Tenant sought summary judgment, relying on Rent Stabilization Law section 26-511(c)(9)(b), which permits only one of the individual owners of a building o recover possession of one or more dwelling units for his or her own personal use. The owner, however, argued that the statute should not be read to preclude an owner use proceeding so long as the owner who prevailed in the prior proceeding is not longer occupying that apartment.

In rejecting owner's argument, the court held that the statute made it clear that only one of the individual owners may “recover possession of one or more dwelling units for his or her own personal use.” The court found no ambiguity, and awarded summary judgment to tenant.

District Attorney May Not Intervene in Illegal Trade Eviction Proceeding

40 Marcy, Ltd . Garcia

NYLJ 1/25/10, p. 34, col. 3

Civil Ct., Bronx Cty.

(McClanahan, J.)

In landlord's holdover proceeding to evict a tenant for committing a nuisance by knowingly and unlawfully possessing narcotic drugs with intent to sell, the Bronx District Attorney sought leave to intervene in the proceeding. The court denied the motion, holding that the District Attorney had no right to intervene.

Tenant, a disabled 44-year-old woman, has lived in the subject apartment since 1992. In January, 2009, the police, acting pursuant to a search warrant, searched the apartment and recovered heroin. They arrested tenant and the District Attorney charged her with criminal possession of a controlled substance. When the District Attorney then served landlord with a notice demanding that landlord make an application to remove tenant from the premises, landlord brought this proceeding pursuant to RPAPL sections 711 and 715, which authorize landlord to bring an action to remove a tenant using the premises to conduct “an illegal trade, business or manufacture. The District Attorney then moved to intervene, and tenant opposed the motion.

In holding that the District Attorney was not entitled to intervene, the court concluded that the District Attorney did not have the sort of interest in the outcome of the proceeding that would justify intervention pursuant to CPLR 1012. The court emphasized in particular that a judgment in the premises would cause possession to revert to landlord or to remain with the tenant, and concluded that the District Attorney had no real interest in the property. The court rejected the District Attorney's argument that its interest in eradicating the illegal drug trade gave in a sufficient interest to permit intervention, noting that every law-abiding citizen has an interest in protection of health, safety, and welfare, but that those citizens are not vested with a right to intervene. Finally, the court relied on the statutory scheme which gives the District Attorney power to commence an action if the landlord fails to do so. The court indicated that the legislature had considered what powers the District Attorney should have, and the court then inferred that the legislature had decided not to give the District Attorney any further powers, including the power to intervene.

COMMENT

The court's opinion puts the District Attorney in a peculiar position. If the landlord simply refuses to bring a proceeding to remove a tenant engaged in an illegal business, the District Attorney has statutory authority to bring an action. By contrast, if the landlord brings the action half-heartedly, or if the landlord brings the action, and then settles with tenant, for instance on terms that allow the tenant to remain on condition that tenant agree not to conduct he illegal business in the future, the District Attorney appears to be without a remedy.

Nevertheless, the result reached by the court is consistent with the First Department's opinion in Perdomo v. Morgenthau, 60 AD3d 435, a 2009 case in which the court held that the District Attorney did not have the power to disapprove settlement agreements in illegal use proceedings. As the court in 40 Marcy noted, if the District Attorney does not have power to disapprove settlements, there is little reason to extend to the DA the power to intervene in illegal use proceedings.

Factfinder Must Decide Whether Expenditures Constituted Improvements

Jemrock Realty Co, LLC v. Krugman

NYLJ 1/15/10

Court of Appeals

(memorandum opinion)

In landlord's action for rent arrears and possession of the subject apartment, tenant appealed from the Appellate Division's determination that landlord had established that its improvements brought the legal rent above the threshold for removing the apartment from rent stabilization. The Court of Appeals reversed, holding that resolution of that issue is a question of fact, not to be determined by an inflexible rule, and the Appellate Division had erroneously decided the issue as a matter of law.

When landlord's prior tenant vacated the apartment, landlord completed repairs and improvements on the apartment, and then rented the apartment to current tenant for more than $2,000 per month, basing that rent on its conclusion that the repairs and improvements entitled it to a base rent in excess of $2,000, which would have resulted in removal of the apartment from rent stabilization. Later, when tenant defaulted in payment of the rent, landlord brought this proceeding in Civil Court. That court concluded that although landlord had spent more than $50,000 on the apartment, landlord had not demonstrated that it had spent enough of that money on improvements (as opposed to repairs) to justify the rent increase that would remove the apartment from rent stabilization. The Appellate Term reversed, and concluded that landlord had met its burden. A divided Appellate Division affirmed, applying a rule of law that would allow landlord to collect the rent increase so long as it proves that its expenditures exceed the requisite amount. The Appellate Division dissent would have held that landlord must establish an item-by-item breakdown. Tenant appealed.

In reversing, the Court of Appeals rejected both the position of the Appellate Division majority and the Appellate Division dissent. Instead, the court concluded that the factfinder should determine whether the landlord's expenditures constituted improvements “based on the persuasive force of the evidence submitted by the parties,” not by reference to an inflexible rule that a “landlord is always required, or that it is never required, to submit an item-by-item breakdown” between improvements and repairs. Because the Appellate Division had never exercised its power to review the facts in this case, the court remitted to that court for a review of the facts.

Owner Occupancy Proceeding Precluded By Prior Proceeding Brought by Another Co-Owner

Begum v. Tapia

NYLJ 1/13/10

Civil Ct. Kings Cty.

(Finkelstein, J.)

In an owner occupancy holdover proceeding brought by one of three co-owners, tenant moved for summary judgment dismissing the complaint. The court granted tenant's motion, holding that a prior owner occupancy proceeding by another co-owner precluded any subsequent owner occupancy proceedings.

In 2004, one of three co-owners brought an owner occupancy proceeding to recover an apartment in the subject building. Tenant in that proceeding ultimately consented to a final judgment of possession. That co-owner either did not move into the apartment, or long since vacated the apartment. A second co-owner currently occupies that apartment. In this proceeding, the third co-owner sought possession of a different apartment for her personal use. Tenant sought summary judgment, relying on Rent Stabilization Law section 26-511(c)(9)(b), which permits only one of the individual owners of a building o recover possession of one or more dwelling units for his or her own personal use. The owner, however, argued that the statute should not be read to preclude an owner use proceeding so long as the owner who prevailed in the prior proceeding is not longer occupying that apartment.

In rejecting owner's argument, the court held that the statute made it clear that only one of the individual owners may “recover possession of one or more dwelling units for his or her own personal use.” The court found no ambiguity, and awarded summary judgment to tenant.

District Attorney May Not Intervene in Illegal Trade Eviction Proceeding

40 Marcy, Ltd . Garcia

NYLJ 1/25/10, p. 34, col. 3

Civil Ct., Bronx Cty.

(McClanahan, J.)

In landlord's holdover proceeding to evict a tenant for committing a nuisance by knowingly and unlawfully possessing narcotic drugs with intent to sell, the Bronx District Attorney sought leave to intervene in the proceeding. The court denied the motion, holding that the District Attorney had no right to intervene.

Tenant, a disabled 44-year-old woman, has lived in the subject apartment since 1992. In January, 2009, the police, acting pursuant to a search warrant, searched the apartment and recovered heroin. They arrested tenant and the District Attorney charged her with criminal possession of a controlled substance. When the District Attorney then served landlord with a notice demanding that landlord make an application to remove tenant from the premises, landlord brought this proceeding pursuant to RPAPL sections 711 and 715, which authorize landlord to bring an action to remove a tenant using the premises to conduct “an illegal trade, business or manufacture. The District Attorney then moved to intervene, and tenant opposed the motion.

In holding that the District Attorney was not entitled to intervene, the court concluded that the District Attorney did not have the sort of interest in the outcome of the proceeding that would justify intervention pursuant to CPLR 1012. The court emphasized in particular that a judgment in the premises would cause possession to revert to landlord or to remain with the tenant, and concluded that the District Attorney had no real interest in the property. The court rejected the District Attorney's argument that its interest in eradicating the illegal drug trade gave in a sufficient interest to permit intervention, noting that every law-abiding citizen has an interest in protection of health, safety, and welfare, but that those citizens are not vested with a right to intervene. Finally, the court relied on the statutory scheme which gives the District Attorney power to commence an action if the landlord fails to do so. The court indicated that the legislature had considered what powers the District Attorney should have, and the court then inferred that the legislature had decided not to give the District Attorney any further powers, including the power to intervene.

COMMENT

The court's opinion puts the District Attorney in a peculiar position. If the landlord simply refuses to bring a proceeding to remove a tenant engaged in an illegal business, the District Attorney has statutory authority to bring an action. By contrast, if the landlord brings the action half-heartedly, or if the landlord brings the action, and then settles with tenant, for instance on terms that allow the tenant to remain on condition that tenant agree not to conduct he illegal business in the future, the District Attorney appears to be without a remedy.

Nevertheless, the result reached by the court is consistent with the First Department's opinion in Perdomo v. Morgenthau, 60 AD3d 435, a 2009 case in which the court held that the District Attorney did not have the power to disapprove settlement agreements in illegal use proceedings. As the court in 40 Marcy noted, if the District Attorney does not have power to disapprove settlements, there is little reason to extend to the DA the power to intervene in illegal use proceedings.